Mar 04, 2019

Your License Is Under Attack

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.

Rules and Regulations stampsPublic 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


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  • James DeLuccia | Mar 29, 2019


    The PICPA's Government Relations team is working on an issue brief that will be released after tax season. Thank you.

    Jim DeLuccia - PICPA Communications Team

  • Edward | Mar 27, 2019
    I agree with Thomas McClelland.  Further, nobody is talking about allowing a non-CPA to express an opinion on financial statements, arguably, one of the only things a CPA can do, that others cannot.  What ALEC is after is nonsense licensing.  Does one really need a license to be an interior decorator or tour guide?
  • Thomas McClelland | Mar 27, 2019

    This is the slippery slope opened up when organizations like PICPA went along for the ride of replacing *experience* (2 years in public accounting) with education (a 5th year of college). And then watering down the CPE requirements by eliminating A&A credits altogether.

    Adding a 5th year of college to the requirements right into the teeth of soaring college costs paid for with debt non-dischargeable in bankruptcy has got tobe one of the most short-sighted decisions ever made by the profession.

    When state legislatures see the profession itself devaluing experience and profession driven CPE, what did everyone expect to have happen?

    i realize Pennsylvania was only following along with what was already happening in other states, but the PICPA supported these changes, and our PICPA President championed them.

    We don’t need to accept this outcome; perhaps the PICPA can lead this time insteadof follow, and begin the immediate and rapid rollback of these foolish changes. 

    A minimum 2 year requirement for paid working experience in public accounting in the attest function - or even better, 3 years, and rollback the absurd 5th year of college requirement, and tighten up the CPE requirement, with much more tax and A&A required.

    The profession itself invited this sabotage by starting the ball rolling.  Time to roll it back.

  • Kay Stonemetz | Mar 27, 2019
    Thank you John!  Couldn't have said it better myself.  And the 5 year requirement was championed and pushed by the AICPA, which has long supported policies that benefit the large firms to the detriment of small firm practitioners.  Not only has peer review added significant cost, but it was compounded by the requirements for Qualify Control Policy Standards that force small firms out of the attest function.  I would also add Pennsylvania's relaxation of the experience requirement, which has contributed to the struggle for public accounting firms to find quality staff.  Between the added cost of an additional year of graduate work and the ability for accounting graduates to obtain their license with experience outside of public accounting, why would most graduates choose to begin their careers at a CPA firm?  Without significant changes to our compensation policies for new staff, we will continue to struggle to find qualified people willing to be our next leaders. 
  • Anonymous Coward | Mar 27, 2019
    If you want to see this go away, propose that occupational licensing for attorneys be abolished. 
  • James Rogers | Mar 27, 2019

    PICPA - I strongly oppose the possible elimination of licensing CPA's.There is much effort, time and endurance in obtaining the CPA recognition.;There are people today who believe that change is always progress -sometime it is but in this case it would be regression.

    James C. Rogers

    Member 2223

    Member for 58 years

  • David Zalles | Mar 27, 2019

    I was appalled that the PICPA did not object strongly to the change that removed the requirement of at least 8 hours per year of CPE to be required in TAX for anyone who prepares tax returns, as well as 8 hours per year in A&A for anyone who prepares financial statements. Equally disturbing is the new legislation that will allow CPE credits to be carried over to succeeding periods.

    Can you imagine anyone preparing tax returns for 2018 who did not attend any seminars on the new tax laws (TCJA) ? Can you imagine anyone preparing financial statements without attending a seminar when these requirements are changed ? I'm surprised that H&R Block, et al, have not had a major advertising campaign in PA extolling the fact that their tax preparers are required to have xx hours of tax training every year, but CPAs are not required to have any tax CPE at all !!!!

    We are getting to the point where we may no longer be considered a PROFESSION, but merely an occupation !!!!

  • Jeffrey J. Broker, CPA | Mar 27, 2019

    We did it to ourselves when we permitted non-CPA's to be owners of CPA firms - I hope this does not happen in PA - but lok back at our history.



  • John A. Demetrius | Mar 27, 2019
    If any new law permits unlicensed practitioners to perform auditing, accounting and review services without having a peer review, you can say good bye to your license. I have had mine for over  50 years, so I am in my twilight years, but still productive.
  • John | Mar 27, 2019
    Does the PICPA think requiring staff to have five-year degrees helps ALEC support the idea that our services are overpriced and excluding individuals who would be capable to do the job at a lower cost?  These five-year graduates are no better than the four-year new hires.  With the rising cost of college tuition this was and is a big mistake.  Add to that employee benefit plans get peer reviewed individually during peer review (one for defied benefit, one for defined contribution).  Then the AICPA reviews the peer reviewer and the firm again costing time and money.  Between peer review cost and fees to belong to Audit Quality Centers the PICPA is trying to drive out the small firms, which will only increase the price forcing the government to open up our services to non-certified public accountants.  AICPA and PICPA need to choose small firms or non-certified practitioners.   Who does the PICPA want to support?
  • Rich | Mar 27, 2019
    Is the PICPA preparing any resources for members to use to contact their representatives? I know the article ends with an encouragement to attend the Day on the Hill event, but for those that can't attend the event, it would be nice to have resources to make it easy to contact our representatives regarding the topic.

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    Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.