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.
On October 4, the Financial Accounting Foundation (FAF) released their long awaited request for comment on a plan to deal with Private Company Standards. For those who have been eagerly awaiting the next step in establishing differential private company standards after the Blue Ribbon Panel recommendations, the FAF’s request for comment was a bitter disappointment. After eight months of the least transparent process to ever come from the FASB or FAF, the recommendation included three important facets:
- Creation of a “new” Private Company Standards Improvement Council
- Creation of a framework for deciding when differential standards are appropriate
- Leaving final say on all standards with the FASB
This plan falls significantly short of the Blue Ribbon Panel recommendation to have a separate Board with final authority over private company standards. While there are some good aspects to the FAF plan – the creation of a framework for deciding differential standards – I want to point out three major problems I have with the recommendations.
First, this “new” Private Company Standards Improvement Council isn’t new at all. It sounds a lot like the Private Company Financial Reporting Committee (PCFRC) to me. The PCFRC was set up 5 years ago as a last ditch effort to deal with Private Company Standards under the existing FASB standard setting structure. It failed miserably. The FASB refused to act on several PCFRC recommendations to make standards better for private companies. Unlike NASBA and the State Boards that took our last ditch effort to work together and deal with Mobility seriously, the FASB didn’t. As a result, today we have a Mobility framework that while not perfect, works while we are nowhere on private company standards. What are we supposed to do now, trust that the FASB has seen the error of its ways? After forty years of refusing to deal with differential standards I simply do not believe that any change in the FASB attitude will last more than a year and everything will be right back to where we are now.
Second, the FAF seems to have this idea that two separate sets of GAAP – one for Private companies and one for Public companies – is a bad thing and “is not a desired outcome.” I disagree. Two sets of GAAP is exactly the desired outcome. If you think that would cause all sorts of problems you need to take a look at the rest of the world. Most countries, in addition to adopting IFRS, also now have two separate sets of GAAP. Two sets of GAAP not only works, it often works better that one set of GAAP that satisfies no one.
Finally, as a public company employee I think it’s time for the public companies to get a little selfish about the FASB. The Sarbanes-Oxley Act changed the funding for FASB so that it comes from fees paid solely by public companies. As such, I think it only appropriate that the FASB focus on public company issues. We should get something for paying the freight.
Private Company Standards are sure to be a major topic at the AICPA Council meeting this week, so I’ll provide you a further update on this important topic along with other items of interest discussed at the Council meeting in my next blog.