Uniformity is attainable through the Uniform Accountancy Act.

With the globalization of the world's economies and increasing mobility among professionals, the need for uniformity of accounting licensing requirements has grown immeasurably. Increasing numbers of CPAs in firms of all sizes practice outside their original licensing jurisdictions and overseas, which has created a demand for reciprocity with other countries as well.

The United States is unique in having 54 licensing jurisdictions. The 54 jurisdictional accounting statutes are conceptually similar in their requirements for certification and licensure--all include an education requirement and mandate passage of the Uniform CPA Examination and most require experience for licensure and continuing professional education for relicensure--but the similarities end when the details of these requirements are examined. The lack of uniformity in licensing requirements was the major catalyst that motivated the American Institute of CPAs and the National Association of State Boards of Accountancy (NASBA) to develop the most recent (1992) edition of the Uniform Accountancy Act (the uniform act). Other catalysts were the significant increase in litigation against CPA firms and the lack of uniformity in the treatment of accountants under state liability laws.

FROM MODEL BILL TO UNIFORM ACCOUNTANCY ACT

In 1992, the respective boards of NASBA and the AICPA approved the uniform act, following the modification of the original 1984 Model Public Accountancy Bill, a process that had begun in 1990. An exposure draft of the new uniform act was prepared and distributed to a large number of constituency groups, including state boards of accountancy, state CPA societies, CPA firms, AICPA committees and individuals. After receiving feedback on the ED, the AICPA and NASBA, through the work of committees, finalized a new joint Uniform Accountancy Act. The act was drafted as a single comprehensive piece of legislation that could be adopted in place of existing public accounting laws. However, the individual provisions are separable, allowing them to be incorporated into existing laws.

FOCUS ON MOBILITY, RECIPROCITY AND LIABILITY

The focus of most revisions was on expanding mobility and reciprocity, although major provisions of the model bill were amended with the development of the new uniform act. In addition, the inclusion of provisions dealing with liability recognized that achieving equity in civil liability for the profession was in the public interest.

The "5-in-10 rule." One important feature of the uniform act is an option for interstate or international reciprocity. The act requires 5 years' experience in the practice of public accounting or its equivalent in the immediately preceding 10 years. This provision, called the "5-in-10 rule," allows reciprocity for experienced CPAs when the state that issued a CPA's original certificate does not have the same requirements as the state in which reciprocity is sought.

Adoption of the 5-in-10 rule by all jurisdictions is a top priority of AICPA and NASBA leadership, which views it as a critical provision of the uniform act. Currently just over half the jurisdictions have implemented this or similar rules (see the exhibit).

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STATE LEGISLATIVE PROCESS

During the state legislative sessions that immediately followed approval of the uniform act, approximately 10 states introduced provisions of the act in their legislatures. In April 1993, Indiana became the first state to sign into law a majority of the uniform act's provisions, including the one- and three-year statute of limitations for lawsuits involving negligent performance of accounting services and breaches of contract. Indiana also expanded the definition of firm to include forms of organization that limit the owners' personal liability. The state did not, however, enact the 5-in-10 rule.

Significant state legislative activity concerning the uniform act is expected to continue in the 1994 legislative sessions. The NASBA and AICPA staffs compiled research that is available to state societies and state boards of accountancy that compares their current accountancy statutes with the uniform act's major provisions.

THE PROCESS CONTINUES

The uniform act is intended to be a living and changing document that will continually address important issues confronting the accounting profession. To that end, certain modifications are being considered, including changes to expand the forms of practice open to accounting firms and minor changes to the examination and unlawful acts sections.

In addition, to further achieve the objective of uniformity, the adoption of rules to accompany the act's statutory language is a high priority. Through the work of committees, the AICPA and NASBA drafted uniform rules for the act's major provisions. The proposed changes to the uniform act and the uniform rules are currently being exposed to broad constituency groups during a comment period that will conclude at the end of 1993. A copy of the exposure draft, Proposed Uniform Accountancy Act Rules and Proposed Revisions to Uniform Accountancy Act, can be obtained through the AICPA order department at [phone].

CRITICAL ISSUES

Uniformity in state licensing requirements and reforms to make state liability provisions uniformly fair to the accounting profession are critical issues for the profession and those it serves.

These objectives will not be accomplished overnight. They require the cooperative efforts of the AICPA, NASBA, state CPA societies and state boards of accountancy. But, through a cooperative effort, uniformity can become a reality.

BORDER DISPUTES: DIFFERENT EXAM STANDARDS

The first time some CPAs pass the Uniform CPA Examination may not be the last. For example, Larry had practiced public accounting in state A for four years when his wife was transferred to state B. Larry is seeking reciprocity from state B, but the passing exam grade needed and the way the exam is administered are different there. Larry's only option may be to sit for the exam again in state B.

BORDER DISPUTES: CURRICULUM VARIATIONS

A sterling college record may not satisfy all states' requirements. For example, Amanda is moving from state C, where she has been practicing public accounting, to state D. She has a baccalaureate degree and an excellent academic record from a well-respected university. She does not have a concentration in accounting, however. Although her academic credentials were acceptable in state C, she will have to return to school for accounting credits to satisfy state D's requirements.

EXECUTIVE SUMMARY

* GLOBALIZATION AND GREATER mobility among professionals have increased the need for uniform accountancy licensing requirements. Accountancy statutes frequently are conceptually similar, but the similarities end when the details are examined, affecting CPA mobility, licensing reciprocity and liability treatment.

* THIS LACK OF UNIFORMITY led the American Institute of CPAs and the National Association of State Boards of Accountancy (NASBA) to develop the Uniform Accountancy Act. The act is drafted as a single comprehensive piece of legislation that can be adopted in place of existing public accountancy laws.

* APPROXIMATELY 10 STATES introduced provisions of the act in their legislatures. Significant state legislative activity on the Uniform Accountancy Act is expected to continue in the 1994 legislative sessions.

* THE COMMENT PERIOD for proposed changes to the act and its uniform rules will conclude at the end of 1993. A copy of the exposure draft can be obtained through the AICPA order department at [phone].

NOEL KIRCH, CPA, is the President of the National Association of State Boards of Accountancy. DOMINIC TARANTINO, CPA, is the chairman an the board of the American Institute of CPAs.