By Peter N. Calcara, vice president - government relations
The nation’s first law licensing the public accounting profession was enacted in 1896 by the New York state legislature. A model bill to regulate the practice of public accountancy was first published in 1916 by the American Institute of Accountants, the predecessor of the American Institute of Certified Public Accountants (AICPA). Pennsylvania’s CPA Law was enacted in 1947.
Public accounting is built upon a legal and regulatory foundation that governs its members and their conduct. Every state requires CPAs to meet the three E’s for licensure: education, exam, and experience. All CPAs are required to maintain 80 hours of continuing professional education, regardless of which licensing jurisdiction they reside in. Because of this strong regulatory regime, consumers can trust that hiring a CPA means hiring a qualified and competent individual.
This well-established system to bolster integrity is under attack in many state legislatures.
The accounting profession is not typically the primary target of such legislative proposals, though ill-conceived laws always have the potential to produce unintended consequences. But over the past two years, more than 30 states have considered legislation that would reduce or remove professional licensing requirements. CPAs, in some cases, are not exempt from this movement.
Groups like the American Legislative Exchange Council (ALEC), Institute for Justice, and Americans for Prosperity are spearheading these efforts. One of ALEC's hallmark legislative policies is its “Occupational Licensing Relief and Job Creation Act.” According to ALEC, this policy is aimed at removing licensure as a prerequisite to lawful occupation. It also advocates against the use of occupational regulations that, in the opinion of ALEC, reduce competition and increase prices to consumers.
Here’s an example. In January, HB 2697 was introduced in the West Virginia House of Representatives. The bill would allow any nonlicensed individual to enter into a “nonlicensed disclosure” agreement with a potential client, allowing a non-CPA to provide a service for which an occupational license would otherwise be required. HB 2697 opens the door to consumer confusion as it permits unlicensed persons to “list the private trade organizations to which the unlicensed person belongs and any titles or credentials the unlicensed person earned from those organizations” on the disclosure agreement.
West Virginia is not alone. So far in 2019, anti-regulatory bills have been filed in Arizona (HB 2231), California (AB 193), Colorado (HB 1117), Indiana (HB 1271 and SB 384), Michigan (SB 40), Mississippi (SB 2375), North Dakota (SB 2353), New Hampshire (HB 662), Oklahoma (SB 651), South Carolina (S 330), and Tennessee (SB 196).
This trend has not yet infected Pennsylvania, but understand that it is coming. The PICPA is working with the AICPA and the National Association of State Boards of Accountancy (NASBA) to combat this legislation, but state lawmakers need to hear from you. Policymakers need to hear from you and your fellow CPAs in Pennsylvania about how this legislation would be a detriment to the profession and how your clients will be harmed if licensure requirements are taken away. A good way to make your voice heard by state lawmakers is to attend PICPA’s Day on the Hill program. The event is scheduled for Tuesday, June 11, 2019, in Harrisburg. Be sure to attend this year and register today.