Sometimes it seems as if the three biggest issues facing the accounting profession today are mobility, mobility and mobility.Talk to enough CPAs about the problems facing the profession, and you're bound to hear that word - "mobility" - crop up. It's one of the profession's hottest, most-talked-about issues. But what exactly does mobility mean, and why is everyone so worked up about it?

When most people discuss mobility, they're talking about the ability (or, more precisely, the lack of ability) of CPAs licensed in one state to practice across state lines, freely and without restrictions. As it stands now, CPAs practicing across state lines, even via the Internet, often find themselves facing myriad obstacles, all of which, at their core, stem from two competing principles in the U.S. Constitution.

The first is the Constitution's Commerce Clause, which says that states should not be allowed to inhibit interstate commerce. The second is the constitutionally granted right of the states to protect their citizens. Both of these constitutional principles are sound, and both, individually, make sense. They are intended to be a check and balance on one another.

But checks and balances can create conflict.

For example, as the Internet economy has blossomed, so too has the potential for CPAs to serve clients doing business throughout the nation and the world. Many states, however, in their attempt to protect the public, have enacted laws saying that out-of-state CPAs and CPA firms must first register and pay a fee before doing business in their states, even if that business is conducted solely over the Internet. But there is no universal agreement on what it means to "do business" or how much "connection" to a state creates a responsibility to register to practice. Everyone seems to have a different view.

To many CPAs, this restraint on mobility does not seem fair. Shouldn't a CPA in one state have the same rights and privileges as a CPA in another state? Shouldn't the CPA license be considered substantially equivalent across state lines? Why should a CPA in Illinois or Iowa, for example, be forced to pay a fee or go through the (often lengthy) process of registering to practice in New York, when the educational qualifications and continuing professional education requirements for CPAs are similar?

Now let's look at the situation from the perspective of New York State officials. If this Illinois- or Iowa-licensed CPA does not have to register to practice in New York, how is New York to know if the CPA's credentials are properly disclosed, or if the CPA has a professional ethics or disciplinary problem? The answer: The state cannot know without some form of reasonable notice submitted by the out-of-state CPA, and it's unlikely to enact a law that is perceived to leave citizens vulnerable. Requiring out-of-state CPAs to submit a uniform, electronically transmitted notice to another state could be a simple way to notify a state of a CPA's intent to practice without mandating registration.

A WORKABLE SOLUTION

As these differing perspectives show, this is a complicated issue, and reasonable people can disagree. It is essential, however, that the mobility problem be resolved quickly and that the profession actively develop an appropriate solution.

Potential solutions abound, but one idea has been getting lots of press recently: Attempting to limit a state's ability to impose a notification or fee requirement on CPAs who cross state lines. Many within the profession believe that this idea has the potential to increase a CPA's mobility and unshackle the current inhibitions on interstate commerce. But whether or not the states that impose these requirements are inhibiting interstate commerce is another matter. To suggest that states do not have the authority to impose such requirements has the potential to offend state officials, who might view this as a challenge to their authority and their ability to protect their citizenry.

Eliminating fees or notifications is, therefore, unlikely to win approval from many states' legislators. Indeed, one of the reasons that the Uniform Accountancy Act's substantial-equivalency provisions have not been adopted uniformly by now is because many state legislators believe that these provisions would hamper their ability to protect citizens from unqualified out-of-state practitioners.

At this year's annual meeting of the National Association of State Boards of Accountancy, Ronald L. Blanc, president of the California Board of Accountancy, spoke about the importance of the notification requirement for out-of-state CPAs who intend to obtain a one-year California practice privilege. Blanc said that the notification ensures that proper credentials are disclosed; the board is alerted to the identity of out-of-state practitioners and any professional ethics or discipline problems to protect California consumers from harm; and the administration of enforcement action is improved by granting the board the power to suspend a license or practice privilege granted by the board.

He also recommended that NASBA develop a uniform, single notification form for CPAs to use for cross-border practice.

THE ROLE OF THE STATES

If the profession is to achieve substantial equivalency, it must not disregard the perspective of the states, whose duty to protect the public must be considered. State officials understandably want to know what's going on inside their borders, which is, in fact, the very idea behind state licensure and regulation of the profession by state boards of accountancy.

When hashing over potential solutions to the mobility crisis, the profession may want to focus more on when, exactly, a CPA achieves a "sufficient presence" within a state to warrant state regulation. Few would challenge a state's ability to regulate CPAs when they have a physical presence within a state and are doing business within that state's boundaries. Fewer still would agree that merely filing a state tax return via mail or the Internet should occasion state registration. The real challenge is to determine what constitutes a substantial presence within a state and what does not. In this regard, the profession would do well to help states define exactly what a "substantial presence" might mean.

Working to create a national license for CPAs or attempting to push every state to adopt the same statutory or regulatory language could be futile. The licensing of nearly every profession in the United States is handled by the individual states, not the federal government. State legislatures may want to work jointly with the profession and state boards to develop an interstate compact to establish a single electronic notice of intent to practice by out-of-state CPAs who meet the definition of substantial presence, and include provisions for cross-border cooperation on enforcement and discipline. The interstate compact may be the appropriate vehicle to achieve interstate practice mobility and public protection.

Achieving a solution is an important goal, and the profession should work to get there. The Internet economy and increasingly blurry geographic distinctions have expanded the reach of CPAs. But the profession should not forget that restrictions imposed on the licensure of the profession remain firmly in the hands of state legislatures, and are likely to stay there.

Lou Grumet is the executive director of the New York State Society of CPAs and publisher of The CPA Journal.

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