In November of 2007, the California Board of Accountancy began discussing allowing out-of-state accountants to practice in the state without making their qualifications available to the state. The rule has been that if you are a licensed CPA and want to practice here, you've got certain hoops to jump through; this protects California consumers from shady business practices and interstate scams perpetuated by unqualified and unethical individuals.
Though the CPA exam is uniform (meaning exam candidates receive questions from the same bank and are tested on the same subjects regardless of in which state they are applying for licensure), state requirements are not. Some states, like New York, are notorious for being difficult to get licensed in while others, like Colorado, are preferred for foreign candidates for their more relaxed requirements.
But NASBA Senior Vice President Ken Bishop told Orange County Register reporter Brian Joseph in January that forcing CPAs to register in each state they practice in would be like requiring a Californian to get a new driver's license on their way through Arizona on vacation.
Critics of the move, however, argue that not all states maintain a thorough database of licensed CPAs readily available to the public, making it difficult for their potential clients to make sure they're on the up-and-up. This task generally lies with the state board, an entity historically trusted to weed out the felons, the phonies, and the unqualified.
California's Practice Privilege requirement requires all out-of-state CPAs rendering services in California or preparing tax returns for California residents to register with the state board and pay a small fee.
In a decision last Friday, the California State Board of Accountancy voted to drop the proposal and focus instead on developing a comprehensive peer review system - a policing body of peers, as it were - to make sure CPAs in CA are up to snuff. Board spokesperson Lauren Hersch told the OC Register that "[the board] didnt want anything controversial to divert time or resources from that goal."
Interstate reciprocity has always been a hot topic among CPA exam candidates; since so many choose to get pursue licensure in the years directly following college graduation, few have even decided by that point where home base should lie.
But what happens when the lines are fuzzy between states? Especially in areas like the Midwest and the East Coast where the leap from one state to another can come down to a few miles and a "Welcome to New Hampshire" sign? In this age of digital communication, who is to say that unscrupulous CPAs or "bootleg accountants" aren't already preying on consumers in other states?
Though a shortage of accounting talent arguably exists, loosening rules and blurring state lines is not the way to address this deficiency.
At least that's what the California Board of Accountancy had to say about it on Friday. They will most likely revisit the issue again, though right now they've got IFRS and NASBA's 120/150 hour decision to worry about.