CPA Exam, or Turf Battle?

The concept of “substantial equivalency” is central to the Uniform Accountancy Act (UAA), which would modernize the laws establishing and regulating public accountancy to reflect practice in an increasingly interstate, even international, business world. Forty-one states have been deemed substantially equivalent with respect to the UAA requirements for education, examination, and experience. However, only 14 states have adopted the substantial equivalency provisions that would allow a licensee from one substantially equivalent state to practice in another state merely by notifying the second state board. Most readers will know that New York State has not yet passed the UAA, but the NYSSCPA is part of a coalition supporting bills (S. 2456 and A. 4445) currently before the state legislature that would do just that.

The Uniform CPA Examination, which the AICPA has developed and overseen since the 1930s, is a keystone of substantial equivalency, and the current exam mechanism is a vital part of the profession’s integrity. Although the AICPA has done a magnificent job of overseeing the exam, the Executive Committee of the New York State Board for Public Accountancy recently called upon its counterpart boards of accountancy in other states to support a proposal that would transfer oversight of the exam, including the development of a computerized exam (which the AICPA is slated to complete by November 2003), to the National Association of State Boards of Accountancy (NASBA). The proposal also calls on NASBA to issue a request for proposal (RFP) for the delivery of a computer-based exam. NASBA currently provides the delivery mechanism for the exam in many jurisdictions and also sponsors various programs and services for state boards. Its 54 member state boards of accountancy currently regulate the practice of public accounta ncy in their respective jurisdictions, with the exception of New York, where the Board of Regents regulates the accountancy profession.

At this point, the NYSSCPA has not formally taken a position on the New York State Board’s proposal, but I have serious concerns. The apparent theory behind the proposal is that the AICPA has contracted with a company owned by the Thomson Corporation (a strategic partner in the AICPA’s cpa2biz portal project) to develop the computerized exam, thereby creating a conflict of interest. I am not sure why NASBA would beat the conflict-of-interest drum and express such concern about the AICPA’s ability to support a computerized exam—unless a turf battle over exam revenue is brewing. If that’s the case, then I hope the AICPA Council will be wise enough to rise above the fracas. If conflict of interest is the New York State Board’s major concern, I expect they will make that issue the sole focus of discussion. I don’t foresee NASBA receiving the support from the professional community or the resources needed to assume the oversight responsibilities for the exam, both of which the AICPA currently possesses.

But here’s the real problem with this proposal: Everyone accepts the concept of one test for all jurisdictions and agrees that this will be a key component of open practice across state lines. The exam is crucial to the professional integrity of the CPA and to the modernization of professional regulation that we all desire. By all accounts, the AICPA does an exemplary job with the exam, always has, and is very much on track with the computerized exam.

So why switch teams? And whither the New York State Board and NASBA’s sudden yen to fix something that isn’t broken? Doing so may undermine an effective exam system and functioning relationships between many organizations, all at a time when the profession is—or should be—wrestling with bigger issues.

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