Why B&I CPAs should care about legislation

One of the key benefits provided to you by the AICPA and your state society is representing your interests in front of Congress and state legislatures. I was recently at the TSCPA Midyear Board of Directors Meeting in Austin and was reminded why such connections are so important. Many B&I CPAs would prefer not to deal with the political end of our profession and when I ask them why, they say it does not affect or interest them. I always recall the quote “just because you aren’t interested in politics doesn’t mean politics won’t be interested in you” when I hear such a response. So this week I thought I would suggest a few reasons why all CPAS, including B&I CPAs, should be interested in what goes on in their state legislature and why you should be thankful your state society works to protect your interests.

The first and most important reason is to protect the value of your CPA license. Because you are still a CPA, I assume you see some value in holding that license. The reality is that a lot of other groups also see value in the CPA license and they want to get some of that value for themselves. Whether they want to call themselves registered accountants, or any of a dozen other terms, their desire is to benefit from public confusion over their purported license while not adhering to the educational, professional and ethical requirements of being a CPA. Your state society makes sure the legislators understand these distinctions and stop efforts to confuse the public.

A second important focus is to keep the tax laws as efficient as possible. One example in Texas are the principles on franchise tax reform that TSCPA has distributed to the legislators. Instead of supporting a specific bill, the TSCPA has recommended several principles for the legislators to consider in any changes to the franchise tax. If we have to have a tax, then we need to keep the process of calculating that tax as efficient as possible. In the case of the franchise tax one significant simplification would be to use the same cost of goods sold calculation as is required for federal income taxes. This would cut in half the work businesses have to complete. Instead of two separate calculations, a business could develop one calculation and use it twice. Paying a tax can be painful, but necessary. Paying excess cost to calculated the tax owed is just like rubbing salt in a wound. When a change can be made that makes the calculation less painful with little change in the actual tax, we all benefit.

I could cite additional examples, but brevity like efficiency has a luster all its own. The AICPA puts out a monthly newsletter on its activities and you can find out more about what is going on in your state from your state society website. Check it out; you might even be surprised to find an issue or two important to you.

Different States

One common theme for many business and industry (B&I) CPAs is that their CPA license is from a state different from where they currently reside. While CPA license mobility has helped ease the burdens on the need to get a license from any state where they may perform work, CPAs that work for public accounting firms generally must obtain a license from the state in which they reside in order to legally “hold out” as offering CPA services to the public. Because most B&I CPAs do not provide services to the public, but instead provide services only to their private employer, the same rules requiring licensure in the state in which they reside do not apply to B&I CPAs. Instead many B&I CPAs simply maintain their license in the state from which they originally were granted the license.

This makes perfect sense. Why go through the bureaucratic paperwork of getting reciprocity, and why pay for multiple licenses across multiple states if it is unnecessary? As a result of being licensed in a different state, many B&I CPAs also mistakenly believe that they are not eligible for membership in the CPA society of the state in which they reside. Nothing could be further from the truth.

Almost all state CPA societies allow a licensed CPA from another state to be a full member of their organization with all of the same rights and privileges of a CPA from their home state. And joining your local state CPA society provides B&I CPAs with enormous benefits. Being involved in a state CPA society is a great way to meet and network with CPAs from all parts of the profession including fellow B&I members that may be a great resource as they are dealing with the very same issues you are dealing with every day.

So if you’re a B&I CPA living and working in a state different from the one on your CPA license, check out your local state CPA society. They all have websites with information on the benefits of membership and what it takes to join. You might just find that your local state CPA society provides a great way to feel more at home in your new state.

State Boards of Accountancy

I got a chance to spend a long-weekend in Georgia last week.  It was a great time to catch up with family and friends including many of my professional friends at the GSCPA Fall Council meeting.  The major topic of conversation at the meeting was the Georgia State Board of Accountancy.  Georgia is facing many of the same issues that Texas faced a few years ago.  An underfunded, understaffed Board of Accountancy having difficulty meeting its commitment to protect the most valuable piece of property you own – your CPA license.  And if you think I am exaggerating on that last point, think again.  Your CPA license is a ticket to a lifetime of income that makes it worth more than anything else you own, unless of course you are an heir to an oil fortune or the Cox or Cathy families. 

A few years ago the TSCPA worked with the Texas State Board and the legislature to make the Texas State Board a semi-independent agency that gets to keep most of the money you pay in license fees to make sure that people aren’t holding out as CPAs when they haven’t met the requirements and to work to make sure the few bad apple CPAs are dealt with in an appropriate manner.  In addition they work with CPAs that have lost their way to get back on the right path provide services the way a CPA should.

Georgia is at a crossroads in the upcoming legislative session on what to do about its Board.  The Secretary of State has made some proposals, but the GSCPA is working with legislators to develop a better answer for CPAs and the Public in the State of Georgia.  Whatever happens, something needs to change.  Georgia spends only about 20% what other comparable size states pay to enforce and maintain its accountancy laws.  Less than half of your license fee actually goes to the operation of the State Board.  We have only about half of one staff person to handle all of the work and that person doesn’t even understand what CPAs really do. 

Yes, 2013 will be an important year for the State Board in both Georgia and Texas.  In Georgia, hopefully a new path forward will be forged and in Texas, the semi-independent structure that has worked so well will be under mandatory sunset review.  Your State Societies will be involved, but it is important that you be involved in the process as well.  After all, isn’t worth even just a little time to send an email or make a call to help insure that your most valuable possession is properly protected?

More on CPE

Following up on my CPE blog from a couple of weeks ago I noticed a recent poll of B&I members on CPE.  The results showed B&I members who work for companies paying for any CPE have dropped from 46% to 26% in last 6 years, and full reimbursement dropped from 29% to 5%. This got me thinking about the employers we work for. They say they value the CPA credential but they don’t put their money where their mouth is. 

In my last blog on this subject I talked about making a plan for your learning each year.  If employers are not paying, that makes planning even more important.  It also makes those plans more personal.  When my employer pays for my CPE, I feel the need to make sure that CPE applies to my current job or the next job the company is looking to move me into.  When I am paying for my own CPE I don’t feel that same compulsion. 

 Over time I think this will have two impacts on employers.  One is equally negative on individuals, but the other hits only the employer. 

The first impact is that B&I CPAs are considering letting their license expire.  This is not a route I recommend, but I see it too often in my colleagues.  Once they are out of public accounting and a CPA license is no longer required, they don’t feel the need to maintain their license.  I agree that an active license is no longer required to do the job, but an active license still represents something very important.  It represents a commitment to abiding by a code of ethics.  It represents a commitment to putting the public interest above personal gain.  It represents a commitment to continual improvement of skills and knowledge.

The last point is the negative for both the employer and employee.  Our companies value us as CPAs because of our skills and knowledge.  Without CPE that knowledge quickly becomes stale and the skills atrophy.  The employer is not getting what they are paying for and the employee quickly loses their edge and ability to advance their career.

The second impact relates to those that decide to maintain their license and pay for their CPE. As I mentioned, CPAs will take courses to advance their career, maybe for their current employer, but all too often for the next employer.  This is the unintended or short-sighted negative for the employer who decides to stop paying for CPE.  It is one more nail in the coffin of loyalty between employer and employee.  As one young CPA mentioned at the recent AICPA Council meeting, “what are you willing to invest in me?”