Anti-Regulatory Efforts Threaten CPA Licensure

February 18, 2019

Should state governments license trades and professions? It’s not a new question, and anti-licensure groups across the country are aggressively petitioning for the reform of occupational licensing. There are now more than 30 states considering legislation that would reduce or remove professional licensing requirements, and CPAs are not exempt from this legislation.

A new bill was recently introduced in the Tennessee legislature that would allow individuals easier access into some licensed professions by challenging the entry requirements (i.e. an expansion of the Right To Earn a Living Act). It would allow an individual who doesn’t satisfy the requirements for CPA licensure to challenge that requirement as contrary to the statute and force the State Board of Accountancy to defend it. If the bill is passed as introduced, it could affect substantial equivalency, threaten CPA mobility and reciprocity laws, and reduce a Tennessee CPA's ability to work across state lines without additional licensure requirements. TSCPA is currently working with the bill sponsors to “carve out” CPAs from the bill.

Right now, CPAs can work across state lines in 53 U.S. jurisdictions without providing any notification or paying any additional fees. CPA firms can operate the same way in 26 states thanks to CPA firm mobility.

However, this flexibility hinges on the idea that states all have the same requirements for licensure. Currently, every state requires CPAs to meet education, exam and experience requirements. All CPAs take the same exam, and all CPAs are required to maintain continuing professional education. Because of this, consumers can trust that hiring CPAs means hiring qualified and competent individuals. Changing licensure requirements in the states will lead to a higher compliance cost for CPAs and CPA firms. In today’s global economy, it’s an everyday practice for CPAs to have clients in multiple jurisdictions. The cost of obtaining licenses in multiple states would raise the cost of CPA services.

Similar regulatory reform in other states could change the requirements for licensure or even allow non-licensed individuals to offer CPA services. For example, the West Virginia legislature is considering a bill that would allow non-CPAs to perform attest services as long as customers sign agreements acknowledging that these service providers are not CPAs. This type of legislation is not unique to West Virginia and is gaining steam around the country.

The Tennessee Society of CPAs is working with the AICPA, other state CPA societies, state boards of accountancy and NASBA to combat state “occupational licensing reform” legislation that could harm the CPA license. Over 1,400 bills have been introduced in the Tennessee General Assembly prior to the bill filing deadline on Feb. 5, and TSCPA will review each of them to determine any impact on the CPA profession.