The UAA and you: plenty of reasons to care about Uniform Accountancy Act.

The Uniform Accountancy Act is jointly developed by the AICPA and the National Association of State Boards of Accountancy. It is essentially a model for how the CPA profession is regulated in the United States.

Among other issues related to the CPA profession, the UAA includes model statutes for education, experience, peer review, continuing education, reciprocity and cross border practice. The vision of the UAA is that every state would adopt laws that mirror it.

Education

The UAA requires everyone sitting for the CPA exam to have completed 150 semester units/hours that includes a bachelor's of arts degree or bachelor's of science degree with 24 units of accounting and 24 units of business.

The majority of states have adopted this requirement in that a bachelor's of arts is required and 30 additional units. Some states have modified the 24/24 recommendation and require more units in accounting or only allow upper division units to count toward the requirement.

States that have the requirement are considered "substantially equivalent" under the UAA, which means their CPAs, whether or not they personally meet the requirement, are considered substantially equivalent for purposes of mobility.

There are 48 states or jurisdictions that have passed the 150-hour requirement, and it is effective in 47. California is one of the few states that allows CPAs the option of becoming licensed without completing the 150 units.

Because California does not have the 150-hour requirement as the only option, it is not considered a "substantially equivalent" state. Individuals must go through a difficult process to establish their personal credentials, rather than take advantage of practice privilege statutes that allow CPAs from substantially equivalent states to practice temporarily in another state through a notification process.

New Hampshire, Vermont, and Colorado have not passed a 150-hour requirement.

Experience

The UAA also requires one year of general experience working under the supervision of a CPA with an active license prior to licensing.

California law allows candidates meeting the 150-hour requirement to become licensed with one year of general experience. However, candidates who want to sign audits and reviews must work under the supervision of a CPA, including a minimum of 500 hours of attest experience, for a minimum of one year. Successful candidates must document that they can plan and complete an audit with minimal supervision.

Most experienced practitioners understand that a CPA with just 500 hours of audit experience cannot be considered competent to conduct all audits. By the same token, an experienced school district auditor would be foolish to audit a publicly traded company, and vice versa, without spending extensive time studying the applicable standards, understanding the industry and consulting with other experienced auditors.

The UAA addresses the issue of audit competence by requiring mandatory peer reviews every three years for all firms performing audits, reviews and compilations. California is one of a handful of states that has chosen not to implement a mandatory peer review requirement.

CalCPA has a long history of supporting mandatory peer review to ensure that the CPAs performing audits understand and follow current professional standards and complete appropriate continuing education. Legislation mandating peer review passed in the 1990s, but implementation has been repeatedly delayed.

CPA=CPA

Under the UAA, anyone who uses the "CPA" designation must complete 80 hours of continuing education every two years. Many states require CPAs not completing CPE to place "inactive" after the CPA designation. California does not comply with this requirement, so the public thinks that everyone using "CPA" is qualified to enter public practice--whether or not their CPE is current.

UAA Mobility Update

UAA Sec. 23 addresses the issue of CPAs practicing across state lines. It was envisioned as a method of allowing CPAs to provide services to clients in other states without obtaining a full license from that other state.

The proposal would work like a driver's license, but states were free to enact a notice requirement if they felt the need. Virtually every state felt that notice was required, and in many cases additional fees and hurdles were imposed.

California's attempt last year to implement a notification requirement that out-of-state CPAs would use proved to be unworkable on a number of levels.

A revised Sec. 23 would state that no notice to a visited state would be required unless a CPA firm was auditing an entity with a headquarters or home office in that state. CPAs from substantially equivalent states would be allowed to provide seamless services in those states where the "no notice" statues are enacted without having to worry about notifying the state board of accountancy.

The CPAs would be required to follow the laws of the states that they are entering or in which they are providing services to clients, and they could be held accountable in that state and the states where they have a license. In no case would they be allowed to open an office in a visited state without obtaining a license in that state.

Missouri, Ohio, Virginia and Wisconsin already allow this practice. Tennessee, Indiana and Texas enacted the new Sec. 23 without opposition this year, and legislation has been introduced in Hawaii, Maine, Oklahoma, Massachusetts and Rhode Island.

Additionally, Louisiana and Pennsylvania have introduced legislation to allow their state boards to eliminate the notification requirement. And effective Jan. 1, 2008, Oregon will permit out-of-state tax practitioners to perform tax preparation services without notifying its state board of accountancy.

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