Commentators suggest the advent and spread of IFRS could make
accountancy one of the first truly global professions. However, it
has only been in the past two years that momentum has been
gathering to form a national profession in the world’s largest
economy. The move is being welcomed by the profession as common
sense and is likely to have a significantly positive impact.

Each of the 55 licensing jurisdictions in the US has the ability
to set its own standards for CPA licensure and practice, meaning
CPAs and firms traditionally must be licensed separately in every
state where they serve client interests. According to the American
Institute of Certified Public Accountants (AICPA), gaining a
practice privilege differs so much from state to state it is almost
impossible for CPAs to navigate.

License overkill

Gaylen Hansen is the director of quality assurance for Ehrhardt
Keefe Steiner & Hottman (EKSH). The Leading Edge Alliance
member has about 400 staff and 40 partners. It has three offices,
all of which are in Colorado, and Hansen said the firm is the
second largest in Colorado behind KPMG.

Despite being based only in Colorado, EKSH operates in about 20
to 25 other states and does some work internationally. Having to be
registered in more than 20 states has a “big time negative impact”
Hansen said.

One of Hansen’s responsibilities at EKSH is taking care of
licensing requirements. He said this consumes about a quarter of
his time and about half the time of an assistant. “It’s significant
in terms of just our internal costs,” he said. “I wouldn’t hazard a
guess as to how much we pay for inter-state licensing.”

Hansen, who is also a member of the Colorado State Board of
Accountancy and a member of the board of directors of US National
Association of State Boards of Accountancy (NASBA), said the
time-consuming process includes “finding out what the regulations
are in the other states, which often means calling them or
searching on the website, [and] finding the right form. Sometimes
the other state requires confirmation of experience, exam grades
and education.

“Some of the states require a certificate of good standing
indicating you don’t have any discipline that has been filed
against you. So there are quite a few hoops that you can actually
end up having to go through… it’s pretty frustrating for our

The timeframe for acquiring a licence varies from being
instantaneous to two to three months. Typically, it is a matter of

Hansen names Florida, Texas, California and New York as states
that have always been difficult. “Some of these states require that
you not only meet all of their requirements, but they will have
[continuing professional education] requirements that are unique to
their states. Ethics is the prime example – [some states] won’t
accept the ethics continuing education that we have here in
Colorado,” Hansen said.

In addition to making sure individual CPAs are licensed, some
states also require a firm licence. “Sometimes that can take just
as long because they want even more information. For example, some
want a list of all the partners and they want you to have a
registered agent so if there is ever any complaint, they can file
that complaint with the registered agent,” Hansen explained.

However, the battle to break down the state barriers is gaining
pace. For about ten years the AICPA and the NASBA have been
advocating a single criterion called substantial equivalency.

AICPA vice-president for practice mobility and state regulatory and
legislative affairs Sheri Bango said that until two years ago there
had been little progress.

“Substantial equivalency had existed in the Uniform Accountancy
Act since 1997, but every state had their own take on what that
meant and they did not pass it in a uniform manner,” Bango said,
explaining that this led to a patchwork of regulations where each
state agreed that moving to a single requirement was in the best
interest of the profession and the public, but they all believed it
should be based on their own law.

Turning point

Two years ago the situation came to what Bango called “the
critical point of realising that we had a true problem”. At this
point the AICPA, the NASBA and the state accounting boards and
societies agreed that something needed to be done.

In December 2006, the AICPA and NASBA approved an exposure draft
of legislation that simultaneously removed the notification
requirement for CPAs entering a jurisdiction and gave states
regulatory authority over any CPA or firm practicing in their

The exposure draft was so well received that despite it being
open for comment until May 2007, many states introduced the
legislation in draft form when the 2007 legislative sessions opened
in January.

“By the end of 2007, we had 11 states that had removed their
notification requirement,” Bango said. That number now stands at
23, with about ten states still pending in the 2008 legislative
session. We were trying to provide a uniform system, a state-based
system but with national mobility… we’re a little bit less than
halfway there, but we hope that towards the end of the 2008
legislating sessions we will be able to say that we’re at least
half-way there,” Bango said.

Bango emphasised that by simultaneously removing the
notification requirement and giving the state regulators greater
power over CPAs practicing in their states, public protection has
been increased.

Hansen agreed: “Interstate licensing really does not add a whole
lot to the protection of the public. It’s pretty easy to find CPAs
as they are not typically the types of people that don’t have
websites and letterheads… I’m not sure how you’re really helping
the public by going through all of this paper shuffling and
permitting process.”

The first step

The removal of notification requirement is only one layer
towards opening up state boundaries. When a jurisdiction has
dropped the notification requirement, any CPA that is licensed in a
jurisdiction that is considered substantially equivalent can
automatically practice in the former jurisdiction.

For a jurisdiction to be considered substantially equivalent, it
must offer the uniform CPA exam and require its licensees to
complete 150 hours of education and at least one year of

The only jurisdictions that are not considered substantially
equivalent are California, Colorado, Delaware, New Hampshire,
Vermont and the Virgin Islands, which have not passed the 150 hour
education requirement. Florida and Puerto Rico do not have the
experience requirement although Florida has recently passed
legislation that will bring it up to speed. When a jurisdiction is
not considered substantially equivalent, individuals can meet those
requirements and then be considered substantially equivalent
through a process NASBA has in place.

Philip Politziner, the president and chief executive of Baker
Tilly International member Amper, Politziner & Mattia has
welcomed the move towards uniform practicing requirements: “We
believe that it makes sense to have commonality. It is a logical
way of the profession doing business so we are in support of


Carolyn Canham