UAA Exposure Draft - International Pathway to Licensure And Exam Rules

In April, the AICPA and NASBA Boards of Directors each approved for exposure changes to the Uniform Accountancy Act that would simplify the international pathway for licensure, and the NASBA Board approved exposing changes updating the Uniform CPA Examination Model Rules. Comments on this proposal are requested by September 1, 2016.

The AICPA and NASBA have worked together since 1984 to produce the Uniform Accountancy Act (UAA) and UAA Model Rules to serve as reference documents for all U.S. states and jurisdictions as they update their own statutes and regulations. They are evergreen documents that are regularly reviewed and updated by the joint AICPA/NASBA UAA Committee. The UAA is subject to the final approval of the two organizations’ Boards of Directors, while the Model Rules are subject to the final approval of NASBA’s Board.

For several years, there have been discussions about the global economy and the worldwide demand for skilled CPAs and their foreign counterparts to meet the needs of international business. Since 1991, the AICPA and NASBA have entered into six Mutual Recognition Agreements (MRA) that recognize substantially equivalent foreign designations and allow holders of these designations to apply for state licensure as a CPA so long as the foreign authority that granted the designation allows a licensed U.S. CPA to obtain the foreign authority’s comparable designation to practice.

To qualify for licensure as a U.S. CPA, the applicant’s foreign designation must be issued by a foreign authority that regulates the practice of public accountancy and the individual must be in good standing. In addition, the foreign designation must have been issued upon the basis of education, examination and experience requirements established by law, and must entitle the holder to issue reports on financial statements.

Existing differences in licensure requirements as well as political hurdles have made the development of functioning MRAs extremely difficult to achieve. Recognizing that in a global economy there are foreign accountants who meet or exceed the high standards for licensure as a U.S. CPA, the AICPA and NASBA Boards of Directors approved for comment an Exposure Draft of a change to the UAA that provides a unilateral pathway for qualified holders of a foreign credential.

Under the unilateral pathway, the NASBA/AICPA International Qualifications Appraisal Board (IQAB) would evaluate the foreign designation to verify that the foreign designation has substantially equivalent, or higher, licensing requirements as those contained in the UAA and recommend that applicants holding that foreign credential be eligible to apply to a state for a U.S. CPA license. The in-depth reviews of the education, examination and experience requirements of foreign designations, plus the professional environment of the designations would continue by the IQAB, and those with approved designations would still have to pass the International Qualification Examination (IQEX), but the need for reciprocal recognition of U.S. CPAs by the foreign body would be eliminated.

As foreign professionals are working in the United States, bringing them under the jurisdiction of the State Boards would strengthen public protection. This would allow for increased transparency as those who are qualified to sign financial reports could sign them. It is in the public interest to license qualified individuals, without regard to whether the foreign authority reciprocates, therefore, the international pathway would make the quid pro quo licensing requirement obsolete. It is anticipated that other countries will want to similarly move to recognition of qualified U.S. CPAs as the European Union and other areas of the world require more frequent rotation of auditors and firms make it clear to regulators that the ability to provide high quality talent should not be limited by geographic barriers.

In 2013, the AICPA initiated a practice analysis to update the Uniform CPA Examination. The revised examination will be launched in April 2017 and will require updates to the Model Rules.

Updates to the Model Rules include:

  • Identifying the Uniform CPA Examination as the examination required for licensure.

  • Eliminating the definition of the two-month testing window and replacing it with a new definition of the testing window equal to a calendar quarter with a minimum of two months of testing.

  • Highlighting that examination content tests the knowledge and skill of a newly licensed CPA and that passing all sections of the examination is only one component of qualifying for a license.

The AICPA/NASBA Uniform Accountancy Act Committee believes these modifications of the UAA and the Model Rules will positively impact the ability of the State Boards of Accountancy to effectively regulate the evolving accounting profession and to therefore meet the public’s needs.

The full Exposure Draft can be viewed here.

Please submit comments by September 1, 2016, to: