Exam changes ahead? Armed with concerns, CBA has Uniform CPA exam in crosshairs.

The California Board of Accountancy expressed frustration during its May meeting with a number of issues related to the new computer-based CPA Exam, which was rolled out last year.

The CBA's concerns include scheduled cost increases, difficulty for candidates to schedule exam dates, instances of computers crashing during the testing, identity matching difficulties and one instance where an exam scheduled for future delivery was given to 500 candidates.

Approximately 40 of those candidates who received the wrong test were from California and all were offered the opportunity to re-sit for the affected sections without charge or wait until the next exam window closed (in three months) to receive their results.

All of these situations are troubling for the individuals affected, but no system of this magnitude is without issues and glitches.

Carol Sigmann, the CBA's executive officer, reported that she has communicated with the executive officers of other large states, including New York, Illinois, Florida and Texas, and there was some interest in pursuing an alternative to the current exam.

Additionally, Sigmann reported on a preliminary discussion with individuals in the testing unit of the Department of Consumer Affairs, who indicated that it would require $2 million and two to three years to develop a test for CPAs.

Sigmann also reported that a list of 91 concerns was developed by executive officers of other boards of accountancy during a March meeting on exam issues. While some improvements stemming from that list had been made, she said, there was general dissatisfaction with slow response times to board complaints.

The CBA authorized Sigmann to pursue releasing a Request for Information that would be sent to exam vendors to determine the feasibility of developing an independent exam.

Sigmann sent a letter via e-mail June 6 to the National Association of State Boards of Accountancy requesting that the organization issue an RFI by Dec. 31, 2005.

The letter copied every state board of accountancy and encouraged those boards to also contact NASBA and express support for issuing the RFI.

NASBA is a Tennessee-based, private nonprofit organization to which current and former members of regulatory boards belong. It has a for-profit subsidiary that administers testing services for a variety of professions.

The current Uniform CPA Exam is owned by the AICPA and administered to every candidate for a CPA license through a contract with NASBA and Prometric Testing Centers. State boards of accountancy then contract individually with NASBA.

CalCPA repeatedly has expressed strong support for continuing a national Uniform CPA Exam and is working to ensure that a California-only exam is not adopted to test California candidates.

Such a move would subject CPA candidates to additional expense as they would be required to pass both the national Uniform CPA Exam and the state exam to practice public accountancy beyond California.

In spite of the CBA's concerns, candidate satisfaction surveys have shown wide-spread satisfaction with the current testing experience.

Mandatory Peer Review

The CBA's Peer Review Task Force is recommending the statutory mandate that firms with four or more CPAs be subject to peer review if they perform audits, reviews or compilations be postponed until 2012.

If accepted, this would be the second postponement. Initially, the requirement would have become effective for renewals in 2006. That date was changed to renewals after 2008.

Additionally, the task force will recommend that the CBA re-evaluate the provision that excludes small firms from the requirement. Among other reasons for the delay, the task force report cited cost concerns and issues with the transparency of peer review reports.

Also, "the Task Force was unable to determine whether the AICPA peer review program sufficiently protects the interests of California's consumers." according to its report.

CalCPA supports mandatory peer reviews for all firms that provide audits, reviews and compilations as an important consumer safeguard and an educational tool for professionals providing these services.

Practice Privilege Update

The CBA continues to grapple with regulation of CPAs from other states who provide public accounting services to California residents.

Legislation passed last year will require CPAs licensed in other states who are providing services to California residents to register with the CBA prior to providing those services.

California is following the lead of 23 other states who already have enacted similar provisions as part of implementation of the Uniform Accountancy Act.

At its May meeting, the CBA approved a proposal that will exempt from the registration requirement CPAs from other states who prepare a small number of individual tax returns and estate tax returns if the deceased was a client at the time of death.

The CBA will determine the number of individual tax returns below which no registration will be required.

Bruce C. Allen is CalCPA's director of government relations.