AICPA State Regulation and Legislation Team Issues Registration Compliance Advisory to CPA Firms

The AICPA’s State Regulation and Legislation Team has issued an advisory to CPA firms urging them to review their registration compliance procedures  to ensure that they are in compliance with out-of-state registration requirements, when performing attest engagements.  The recommendation was released in light of recent activity by some state boards of accountancy to ensure out-of-state firms operating in their states have met their registration obligations.

The impetus for the renewed focus on this matter stems from a heightened focus by regulators on CPA firms performing employee benefit plan (EBP) audits.  Over the past several months, the AICPA Peer Review team has been working on a collaborative effort with state society Peer Review administrators to investigate and appropriately address situations where peer reviews of firms failed to properly include an employee benefit plan (EBP) audit. The AICPA identified these firms by comparing AICPA’s peer review database and a list of EBP auditors provided by the Department of Labor (DOL).

The AICPA has subsequently learned that several state boards of accountancy are also comparing firm information from their licensee databases against a list of auditors who performed EBP audits in their state.   Earlier this year, the DOL provided the National Association of State Boards of Accountancy (NASBA) with a list of firms that performed EBP audits during 2012. NASBA parsed the list by state and provided each state board a list for its jurisdiction. The list was provided to NASBA as part of a DOL initiative to ensure that CPA firms performing EBP audits are in compliance with ERISA requirements for the auditor to be licensed.
Some state boards are now examining that data provided to them by NASBA to ensure that the CPA firms are complying with the state’s registration requirements.

Under most state accountancy statutes, CPA firms must register when performing an attest engagement for a client (either in person, or by mail, telephone or electronic means) in a state which isn’t the CPA firm’s home state.  In contrast, almost a third of the country currently have “CPA firm mobility” laws which do not require out-of-state firms to register or pay any fees when performing attest engagements in those states.  To help navigate state-by-state requirements, the AICPA State Regulation and Legislation Team is encouraging CPA firms’ compliance officers to go to – a joint website of the AICPA and the NASBA.  The site explains state registration requirements for the performance of various attest services, depending on the home state of the CPA firm and the state in which the attest service is to be performed for the client.  

The AICPA has learned that several state boards (e.g., Texas, Oregon, Mississippi, Arkansas, Maryland, and Connecticut) have already examined the DOL audit information and compared it to licensed firms in their state; some have begun to send letters to those CPA firms which appear not to be appropriately licensed.  The individual state boards’ responses and requests of CPA firms have varied. For example, Texas sent 120 letters to firms requesting they sign a Cease and Desist Order to close the investigation (with no administrative penalty or costs), while Arkansas sent firms a license application form and a short questionnaire.  Some state boards may opt to take more punitive actions, including monetary penalties.  CPA firms which find themselves in non-compliance are urged to work quickly with state boards to address any lapses.  However, the AICPA is also urging CPA firms that perform attest services to undertake a pro-active review of their registrations in all states in which they perform these services. 
The AICPA’s State Regulation and Legislation Team will continue to monitor Boards of Accountancy compliance actions and work to help educate CPA firms and to promote enhanced awareness and proper compliance.

For additional information and questions on firms licensing requirements please contact the applicable state board of accountancy.  Click here for contact information for the state boards of accountancy.  Otherwise, for more information, please contact Mat Young, AICPA Vice President for State Regulation and Legislation, (202) 434-9273,