Most states do not allow CPAs licensed in other states to do business within their borders unless the CPA first provides notification or pays a fee - and many CPAs find this practice unfair.States are increasingly attempting to enforce notice and fee requirements even if a CPA's business is being conducted over the Internet, by phone or by mail, and the CPA never physically enters the other state. A CPA may also face notice and fee requirements for simply preparing a tax return for a client with an investment in a business in another state. In the accounting profession, this issue has come to be known as the "mobility crisis."

The profession has been working hard to resolve the mobility crisis for almost a decade. The American Institute of CPAs and the National Association of State Boards of Accountancy first tried to improve CPA mobility in 1998, when they issued a revised model in the third edition of the Uniform Accountancy Act. Under that model, in theory, CPAs could work freely across state borders if their qualifications were "substantially equivalent."

States, however, did not adopt the UAA's provisions consistently, and substantial equivalency never took hold. The AICPA and NASBA subsequently released a fourth edition of the UAA in late 2005, but adoption of mobility provisions remained elusive and inconsistent.

Around the same time, the AICPA formed a high-level committee on its own - the Special Committee on Mobility - to address the issue. The committee's report was recently made public, and it recommended the creation of a federal statute mandating mobility across state lines. The AICPA board agreed that the creation of a federal statute is "the best alternative to the current situation," but chose to delay working toward its implementation because it would interfere with another mobility initiative that may sound familiar: another revision to the UAA.

Today, the AICPA and NASBA are once again pushing for revisions to the UAA to improve CPA mobility. The latest plan is to add "no notification, no fee" language to Section 23 of the UAA. In a perfect world, "no notification, no fee" would allow out-of-state CPAs to practice across state lines without having to submit notice or pay a fee.

Sounds ideal, right? Well, maybe not.

The reason no notification, no fee might not be an ideal way to achieve substantial equivalency is not because of any conceptual flaw, but because of its impact. While the policy might make some CPAs happy, it may not allow state legislators to feel comfortable with their duty to protect citizens from inappropriate professional practices. For instance, legislators are extremely concerned about consumer protection, but - if notice is eliminated - states would have no way to track down an unscrupulous out-of-state practitioner. No notification, no fee is, therefore, an uncompromising solution that is unlikely to win approval from many states' legislators. Indeed, so far only nine states have signed on to enact Section 23 revisions.

Without the chance to have a greater voice in the process, it is no more likely that the states that rejected the UAA's former revisions would now adopt the forthcoming revisions to Section 23.

In sum, eliminating notice could very well be out of the question in many states (legislatively speaking), but many substantially equivalent CPAs want notice eliminated to avoid a process that they know is time-consuming and that they believe is unnecessary. Is a solution to this impasse possible?


What if there were a fast and simple way for CPAs to submit notice, facilitated by a national, online CPA database? CPAs who wish to practice outside their home state would simply go online and fill out an electronic intent-to-practice form. This form would then be transmitted to the outside state's regulator, along with all pertinent information from the CPA's database record, including name, address and phone number.

As luck would have it, such a database is currently being built, and it may just be a solution to the mobility crisis.

It's called the Accountancy Licensee Database, and it was introduced by NASBA in 2001. With the ALD, NASBA hopes to compile, for the first time in history, a central source of accurate and current information on individual and firm licensees in the 54 accounting jurisdictions. Information about accountancy board licensees from eight states - Idaho, Indiana, Louisiana, Missouri, New Mexico, Oklahoma, Tennessee and Texas - is currently in the ALD, and four more states are in the process of having their information added to the database. The database has many uses. It can be used to:

* Create efficiencies in licensure, regulation and practice through standard enforcement;

* Facilitate state board enforcement and communication among boards;

* Provide an efficient means for independent auditors of companies listed with the Securities and Exchange Commission to validate state licensing information needed for registration with the Public Company Accounting Oversight Board;

* Provide a resource to the public for finding licensees and firms in good standing; and,

* Assist accounting firms in satisfying their employee's licensure requirements.

While it was not originally intended to be used as a notification tool, improving CPA mobility could be an unintended benefit of the ALD's creation. Therefore, I propose to add another bullet to the list above:

* Facilitate notification and provide a possible solution to the mobility crisis.

The beauty of using the ALD to improve CPA mobility is its simplicity. The process would be quick and easy for both CPAs and state legislators. CPAs could submit their contact information and intent-to-practice details automatically, with the click of a button. Legislators would have a simple way to review applications and keep track of what's going on inside their borders (which is, after all, the very idea behind the licensure and regulation of the profession by state boards of accountancy). Legislators could also easily validate a CPA's credentials to make sure the CPA does not have ethics or disciplinary issues, and ascertain a last known address in case of a dispute.

State legislatures may want to work jointly with the profession and state boards to develop an interstate compact to establish this uniform, electronic notice of intent to practice by out-of-state CPAs who meet a definition of substantial presence within a state, and include provisions for cross-border cooperation on enforcement.

If the profession is to achieve substantial equivalency, it must not disregard the states' duty to protect the public. Attempting to push every state to uniformly adopt the same statutory or regulatory language could be futile. How many times will the profession work to revise the UAA before it realizes that revising the UAA may not be the best way to solve the problem?

Instead, maybe the profession should be working to get every state into the NASBA database. A tool like the ALD might just solve the mobility crisis.

Lou Grumet is the executive director of the New York State Society of CPAs.

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