APEC Economy: The United States

Accountancy Services – General background

In the United States of America, provision of accountancy services requires a license from a regulatory body.

The National Association of State Boards of Accountancy (NASBA) is the forum for 55 jurisdictions which regulate the accounting profession through the individual state boards of accountancy in the United States and its territories. The state boards have the sole authority to issue a license to practice public accountancy or allow an individual to use the Certified Public Accountant (CPA) designation.

The provision of the following accountancy services requires a license from a regulatory body:

The financial statement attest function must be performed by a CPA properly licensed and in good standing with the appropriate state board of accountancy. CPAs must comply with the laws and rules of the state boards of accountancy in any accounting service that they perform. This includes periodic license renewals, compliance with continuing education requirements, quality review (for firms providing attest functions), and other specifications that ensure competency of the professional.

The Securities and Exchange Commission, Public Company Accounting Oversight Board and the Internal Revenue Service require additional registration for CPAs involved in performing services for public companies and preparing federal taxation forms.

“Bookkeeping” services do not require a license. Tax preparation does not require a license, although it does require registration with the Internal Revenue Service. What are commonly termed “accounting” services generally require a CPA license. In the United States, membership in a professional accounting body is not required. Membership is on a voluntary basis.

Licensing Requirements

The contact details of the organisation(s) that control the licensing of accountants and the applicable regulations to licensing in this jurisdiction are the 55 State Boards of Accountancy at http://www.nasba.org/stateboards/ . In addition, the Accountancy Licensing Library is a subscription-based searchable database of state licensing requirements, found at https://www.alllibrary.com/index

Below you will find the contact information for the state board of accountancy in each of the 55 jurisdictions.

Licensing of Foreign Nationals

A foreign accountant can obtain a license to provide accountancy services in this jurisdiction. Foreign credentials must be evaluated for substantial equivalency with CPA requirements subject to approval by the state board of accountancy issuing the license.

There are specific restrictions or requirements relating to education and experience (other than nationality or residency) that limit the ability of foreign nationals or residents to become fully licensed local accountants in this jurisdiction. The minimum level of education is specified in the state laws/rules which requires that the CPA applicant obtain a specified level of education and experience; and successfully complete the Uniform Certified Public Accountant Examination testing competency. Other requirements include: completion of 150 semester hours of education including a baccalaureate degree; passing the CPA Exam; and completion of one year of experience in public accounting, government, private industry or academia verified by a CPA.

The relevant legislation are found on the individual sites of the 55 state board of accountancy (see above).

Limited Licence

A foreign accountant cannot obtain a limited licence to provide accountancy services in this jurisdiction.

Professional Accounting Bodies

A license is required from a state government in order to provide certain professional accountancy services in this jurisdiction; membership in a professional accountancy body is not required.

The largest professional accounting association in this jurisdiction:

Organisation:

American Institute of Certified Public Accountants AICPA

Address:

222 Leigh Farm Road

City/Town:

Durham

State:

North Carolina

ZIP/ Postcode:

27707

Economy:

US

Email address:

sjolicoeur@aicpa.org

Phone number:

1-919.402.4500

Website:

www.aicpa.org

Levels of membership:

  • Regular Member
  • Associate Member
  • CPA Candidate
  • International Associate
  • Non-CPA Faculty Associate
  • Non-CPA Section Associate Student Affiliate

Alliance, MRAs & MOUs

A U.S. CPA in good standing can take advantage of the mutual recognition agreements with the following organizations. The CPA would need to comply with certain economy-specific requirements before they would be properly licensed in the other economy.

MRA designations

  • Institute of Chartered Accountants of Australia (ICAA)
  • Canadian Institute of Chartered Accountants (CICA)
  • Chartered Accountants of Ireland (CAI)
  • Instituto Mexicano de Contadores Publicos, AC (IMCP)
  • New Zealand Institute of Chartered Accountants (NZICA)

(MRA expected to be ratified later in 2011 with Hong Kong Institute of Certified Public Accountants)
These MRAs allow eligible members to take the shorter International Qualification Examination (IQEX) to become a CPA.
These agreements facilitate licensure for foreign professionals through recognition of foreign credentials that have been deemed substantially equivalent by the state boards of accountancy.

Temporary practice arrangements

A foreign accountant is not allowed to provide professional accountancy services on a temporary basis.
There is no express rule allowing temporary practice in this jurisdiction.

Rules on firms and commercial association

In this jurisdiction:

Other regulatory issues

In this jurisdiction there are:

Additional information relevant to the Accounting profession

Foreign entities, firms, and accountants should understand the authority of state boards of accountancy in the regulation of the profession in the US. Please read the following.

APPENDIX
I. STATE REGULATION OF ACCOUNTANCY IN THE U.S.
The U.S. Constitution reserves professional licensing to the States.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved for the States respectively, or to the people. – Amendment X
With this authority in our Bill of Rights, States have empowered its Boards of Accountancy with sole authority to establish licensing requirements for all Certified Public Accountants. State licensure is required by all independent accountants and auditing firms seeking to practice before the SEC and other Federal agencies.

 Federal laws recognize this Constitutional authority. For example the Sarbanes-Oxley Act acknowledges State regulatory authority over the audits of non-issuers.

In supervising nonregistered public accounting firms and their associated persons, appropriate State regulatory authorities should make an independent determination of the proper standards applicable, particularly taking into consideration the size and nature of the business of the accounting firms they supervise and the size and nature of the business of the clients of those firms. The standards applied by the Board under this Act should not be presumed to be applicable for purposes of this section for small and medium sized nonregistered public accounting firms. – Section 209

 Consistent with Federal and State laws, State Boards regulate all CPAs serving issuers and nonissuers, whether they are auditors in public practice or in private practice as officials of reporting entities. Foreign auditors must also be licensed within the states where they perform work.

 State Boards are empowered to establish accounting, auditing, independence, ethics and continuing practice standards for all CPAs and CPA firms engaged in financial reporting of nonissuers. Although not required to do so, State Boards have historically looked to private-sector standard setters to fulfill those requirements. Such private-sector standard setters currently include the FASB and the AICPA’s auditing and ethics standards boards. This approach to standards parallels that used by the SEC.

 State Boards enforce standards and discipline CPAs and their registered firms for violations of SEC, PCAOB, GAO, DOL and other Federal and State agencies’ standards, as well as their own separate and distinct State accountancy regulations. Disciplinary actions range from fines, reprimands, additional education, pre or post issuance report reviews, and practice restrictions all the way to suspension or revocation of licensure. These disciplinary remedies have the practical impact of State Boards serving as a gatekeeper for CPAs and CPA firms seeking to practice before the SEC and other Federal agencies.

 State Boards are solely responsible for establishing requirements of moral character, formal academic education, minimum experience and examination for licensure as a CPA. They also set standards for mandatory continuing education and quality reviews of auditing firms. In addition, State Boards have certain responsibilities under Sections 104 and 105 of the Sarbanes-Oxley Act in the inspection, monitoring, investigation and discipline of CPAs and auditing firms registered with the PCAOB.

 State Boards are composed of over 400 members of whom more than 100 are non-CPAs (“public members”). They are drawn from public and private practice, government, not-for-profit organizations, law and academia. Most are appointed by State governors and are highly accomplished individuals in their own right. Appointments are typically subject to specific term limits. None of the appointees are separately compensated for their voluntary service and they and their employers donate their substantial professional time. The focus of State Board members is solely on public service, including protection of investors.

II. NATIONAL ASSOCIATION OF STATE BOARDS OF ACCOUNTANCY

All 55 Boards of Accountancy constitute the membership of the National Association of State Boards of Accountancy, and respectively, regulate over 650,000 CPAs and 47,000 public accounting firms. As such, NASBA represents the largest collective body of accounting regulators worldwide.

NASBA’s mission is to enhance the effectiveness of its Boards by serving as a coordinator and forum for the Boards, allowing for exchange of views, and providing research and overall regulatory guidance.

 Founded in 1908 to aid States in developing uniform licensing procedures, NASBA has evolved into a broad-based organization dealing with all aspects of State regulation of CPAs and their firms.

 NASBA serves as the voice of State Boards in relationships with national and State regulators, Federal agencies, the U.S. Congress, professional organizations and the news media.

NASBA is led by a full-time CEO, David Costello, who is supported by approximately 210 professional and administrative staff, and a volunteer Chair elected by the member State Boards. The NASBA Board of Directors is composed of 20 State Board representatives.

 Since passage of the Sarbanes-Oxley Act and formation of the PCAOB, NASBA’s activities with the PCAOB and SEC on behalf of the 55 State Boards have increased significantly.

 Many of NASBA’s activities are directed toward cooperative coordination of Federal, State and foreign regulatory systems, U.S. and international professional practice standards, practice monitoring, discipline and mobility. NASBA is represented on the PCAOB’s Standing Advisory Group, the AICPA’s Auditing Standards Board, Board of Examiners, Professional Ethics Executive Committee, Peer Review Board, and the International Federation of Accountants (IFAC) Consultative Advisory Groups of its auditing, ethics and education boards.

 NASBA was represented on the U.S. Treasury Department’s Advisory Committee on the Auditing Profession, and more recently the FAF/AICPA/NASBA Blue Ribbon Panel of the Financial Accounting Foundation to consider the development and promulgation of accounting standards for private entities.

Contact Details

Additional information is available at:


Organisation 1:

PCAOB

Address:

1666 K Street NW

Address 2:

Suite 900

City/Town:

Washington

State:

DC

ZIP/ Postcode:

20006

Economy:

USA

Email address:

not available

Phone number:

(202) 207-9100

Website:

http://pcaobus.org

Organisation 2:

National Association of State Boards of Accountancy

Contact

Ken Bishop COO

Address:

150 Fourth Avenue North

Address 2:

Suite 700

City/Town:

Nashville

State:

TN

ZIP/ Postcode:

37209

Economy:

USA

Email address:

kbishop@nasba.org; aholt@nasba.org (assistant)

Phone number:

1.615.88.4200 or 1-615-880-4200

Website:

www.nasba.org