For many years, the issue of cross-border practice (or mobility) of CPAs and CPA firms has been of interest to the profession.
In 1997, the AICPA, working with the National Association of State Boards of Accountancy (NASBA), added the concept of substantial equivalency to the joint Uniform Accountancy Act (UAA), the profession's model state accountancy statute. Under Section 23 of the UAA, if a CPA has a license in good standing from a state that utilizes CPA certification criteria that are essentially those outlined in the UAA (i.e. 150 hours of education, the Uniform CPA Examination and at least one year of experience), then the CPA would be qualified to practice in another state that is not the CPA’s principal place of business.
In order for substantial equivalency to form the rationale for CPAs to serve clients across state lines, as well as give state boards the ability to protect the public, each state needed to enact and implement the provision in a manner similar to what appeared in Section 23. Previously, the law was anything but uniform. Many states had enacted a substantial equivalency provision with complicated and varying notification requirements that did little to protect the public interest. The result was a patchwork system of individual state requirements that was inefficient and increasingly difficult to navigate.
After further study, the AICPA and NASBA concluded that the original concept of substantial equivalency was not working. In 2006, the AICPA and NASBA, working with state boards of accountancy and state CPA societies, developed a plan that would allow clients to receive timely services from the CPA best suited to the job, regardless of location, without the hindrances of unnecessary filings, forms, and increased costs. At the same time, they wanted to make certain that any system which eliminated the artificial barriers to interstate practice also maintained the regulatory system that protects the public interest.
The AICPA and NASBA decided to amend the Uniform Accountancy Act to allow interstate mobility, by adding a provision stating that a CPA with a valid license from a state with CPA licensing criteria “substantially equivalent” to those outlined in the UAA could practice in another state without obtaining another license. Substantial equivalency is commonly described as those states requiring the “three E’s” – examination (passage of the Uniform CPA Examination), experience (the one-year experience requirement), and education (the 150-hour education requirement).
The notification requirement previously within Section 23 was also removed, and AICPA and NASBA added language to give Boards of Accountancy automatic jurisdiction over out-of-state CPAs and firms practicing in their states. The idea was that licensed CPAs should be able to practice across state or jurisdictional lines — personally or electronically — as long as they were in good standing in their jurisdiction of principal residence and met the substantial equivalency criteria. The new mobility laws also help protect the public and enforcement efforts by the state boards since a CPA practicing under mobility is automatically subject to the jurisdiction of the state boards without the requirement of an official registration or filing.
Since 2006, a national effort has been underway to adopt a uniform system that will allow licensed CPAs to provide services across state lines. More than five years later, a total of 49 states and the District of Columbia have passed mobility laws and are now in the implementation and navigation phases. The Commonwealth of the Northern Mariana Islands, Guam, Hawaii, Puerto Rico, and the Virgin Islands are the only states and jurisdictions that have yet to adopt mobility laws.
Importance to CPAs
Because the electronic age makes conducting business across state borders an everyday occurrence, there is a critical need for states to adopt a uniform mobility system that will allow licensed CPAs to provide services across state lines without unnecessary burdens that do not protect the public interest. Compliance and enforcement of the existing system is almost impossible, with multiple, cumbersome processes and disparities in requirements. Business realities, including an increase in interstate commerce and virtual technologies require a uniform system that allows fluid practice across state lines. Businesses today are often located in multiple states and have compliance responsibilities in multiple jurisdictions. A uniform process will give CPAs the flexibility to better serve these clients. Implementation of a uniform provision would allow consumers to receive timely services from the CPA best suited to the job, regardless of location, without the hindrances of unnecessary filings, forms and increased costs that do not protect the public interest.
AICPA supports uniform adoption of the substantial equivalency provisions included in the UAA to create a national uniform system that will provide CPAs with mobility while retaining and strengthening state boards’ ability to protect the public interest.
In order to help CPAs and accounting firms around the country understand the implications of CPA Mobility, the AICPA and NASBA have developed a free online tool to answer the common question “Does Mobility apply to me?” The tool, located at CPAmobility.org, focuses on services that are most likely to trigger a firm registration requirement in a target state. In just four clicks, CPAs can determine whether their state license will allow them to work in another state without additional notice or fees, or whether they need to obtain a reciprocal license.
CPA Mobility Tool