Can you call yourself a CPA?

Recently, we spoke with an acquaintance who was looking for a CFO position. He told us that he had been disqualified from many opportunities because he did not have a certified public accounting certificate, and that it had crossed his mind to just include the designation on his resume because nobody would know the difference.

While this is clearly unethical, it does highlight an important point. Are you sure you can legally call yourself a CPA? Are you (or someone who works for you) one of the many CFOs, controllers or accountants who may be inappropriately using the CPA title and violating state laws without even knowing it?

You probably assume you can use the designation on your business card or resume, with your signature on correspondence, or with your name in a directory. But unless you hold both a valid CPA certificate and are licensed by your state, you may very well be violating state laws by using the designation in any of these instances.

When state regulations are revised, the changes can affect whether a person can still legitimately use the CPA designation. During the past several years, the regulations have changed in many states, so it is quite possible that many individuals who once were considered CPAs may no longer qualify.

All states require licensed CPAs to report to them and to meet state requirements. Most require some type of continuing professional education (CPE) and require a minimum number of hours in technical topics. Many state boards of accountancy now require CPAs to complete two hours of CPE courses on state rules every two years.

Plus, some states specify an expiration date for a certificate or license. For example, in Colorado, if an individual has not renewed or had a license in the past six years as of May 1996, he or she must meet the requirements to become certified all over again, including retaking the CPA exam.

TRUTH OR CONSEQUENCES 

Financial executives have always stressed to their employees the importance of ethical behavior and compliance with established laws. Anyone inappropriately using the CPA designation should consider the stakeholders affected by that decision. The individual, his or her employer and the accounting profession are all affected.

If you suspect an employee may be inadvertently or deliberately using the CPA designation improperly, your company may be vulnerable to repercussions. Depending on your industry and the circumstances around the person's misconduct, your company could suffer adverse effects from current and potential investors, creditors, regulators and customers.

If you realize you are incorrectly using the CPA designation, you can, of course, become a licensed CPA, choose not to use the designation or get involved in changing the state laws to specifically allow accountants without a current license to use the designation. But many states have patterned their regulations after the Uniform Accountancy Act Rules, developed by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). In an October 1993 proposed revision, the NASBA and the AICPA recommended requiring an individual to have a certificate and license before granting the right to use the CPA title. Most states are gradually moving toward this recommendation, so it may be difficult to persuade your regulators to make allowances.

Given the variations in state laws, we highly recommend you examine your state's specific regulations to determine if you are properly using the CPA designation. And if one of your finance employees uses the CPA designation, you might want to check whether he or she is actually licensed. In most states, you simply need to call the state board of accountancy, which can tell you if the employee is or ever has been a CPA, if the designation is current and if the records show any complaints about the individual's professional performance or conduct.

State Laws on CPA Designations

CPA and License

The person must receive and hold an active CPA certificate and a permit or license from the state. This group includes states that renew CPA certificates.

CPA 1

The person must hold a valid CPA certificate from that state. If the person is in the practice of public accounting, an active license issued by the state is also required.

CPA 2

The person can use the CPA designation with qualifications. The designation must be used with wording that indicates "inactive status" or "not in the practice of public accounting."

CPA and License

Alaska Arkansas California Colorado Connecticut Florida Georgia Idaho Indiana Iowa Kansas Kentucky Maryland Massachusetts Michigan Missouri Nevada New Hampshire New York Ohio Oregon

CPA 1

Alabama Arizona Delaware Illinois Louisiana Maine Minnesota Mississippi Montana Nebraska New Jersey New Mexico North Carolina North Dakota Oklahoma Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin

CPA and License and CPA 2

Hawaii

CPA 1 and CPA 2

Wyoming

Mr. Ronald O. Reed is a professor, and Mr. Thomas Buchman and Ms. Martha S. Lilly are associate professors, at the University of Northern Colorado's College of Business Administration in Greeley, Colo. You can reach Reed, a member of FEI's Rocky Mountain Chapter, at [phone], or via e-mail at [e-mail].