CPAs might meet experience requirement by working in industry

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Michigan became the latest state to accept industry experience for original CPA certification, leaving New Hampshire, Wyoming, and the U.S. Virgin Islands as jurisdictions that still do not accept industry experience.

Most state boards now accept experience gained by working in industry, government, and academia, as well as public accounting – a development that has received little attention in comparison with the movement to CPA mobility or changes in education requirements.

“Michigan CPAs supported this legislation for two reasons,” Peggy A. Dzierzawski, president and CEO of the Michigan Association of CPAs (MACPA) told AccountingWEB.

“Michigan CPAs were at a disadvantage because of the passage of CPA mobility legislation in so many states", Dzierzawski said. "CPAs from other states with industry experience would have been qualified to practice in Michigan. And the second reason was that we wanted to keep our wonderful, talented students. Candidates were asking, 'Do I have to leave Michigan?'"

Other factors that have influenced reform in the experience requirement were the drive toward national uniformity and changes in the marketplace. In many states, the majority of CPAs work in industry.

Uniformity has been an ongoing initiative for the American Institute of Certified Public Accountants (AICPA).

“The AICPA has supported for many years, through the AICPA/NASBA Uniform Accountancy Act (UAA), a one-year experience requirement that can be gained in public practice, industry, government, or academia because, regardless of where a CPA is employed, there is reliance on their work and it is important that the initial licensing criteria for CPAs be the same,” said Sheri Bango Cavaney, AICPA vice president, Practice Mobility and State Regulatory and Legislative Affairs.

The UAA states that:

An applicant for initial issuance of a certificate under this Section shall show thatthe applicant has had one year of experience. This experience shall includeproviding any type of service or advice involving the use of accounting, attest,compilation, management advisory, financial advisory, tax, or consulting skills all ofwhich was verified by a licensee, meeting requirements prescribed by the Board byrule. This experience would be acceptable if it was gained through employment ingovernment, industry, academia, or public practice.

This language appears on many state boards’ Web sites. California, Michigan, and other states add: “To be qualifying under this section, experience shall have been performed in accordance with applicable professional standards.”

Specific attest experience requirements

Many states, including Michigan under the new law, no longer have a separate audit requirement. As of 2009, for example, attest experience was not required of Connecticut applicants.

“State-specific requirements for additional experience, like specific audit hours or limitations on how the experience can be gained, have been especially problematic", as the AICPA and NASBA continue to work toward uniformity, Cavaney said.

California grants a license based on general experience and a license with attest experience. The CPA Licensing Handbook states that a CPA candidate in California may:

“Obtain a license without satisfying the attest experience requirement – 12 months of general experience is required.


“Obtain a license with attest experience – 12 months of experience is required which must include a minimum of 500 attest hours for those who want to sign attest reports as required under Section 5095.”

Attest experience in California includes participation in an audit, review of financial statements, or an examination of prospective financial information provided. Attest services do not include the issuance of compiled financial statements. Attest experience may be fulfilled by a combination of financial, operational, management, and compliance audits.

The Michigan Association of CPAs emphasizes the professional standards that will apply to the attest function. “A financial audit is no longer required. But . . . ultimately, the license obtained through experience outside of the attest function would not meet the competency requirement to offer to perform or perform attest services once licensed,” the association states on its Web site.


State boards of accountancy determine specific areas of experience that must be verified. In the case of Michigan, experience must be verified in one or more of 19 specific areas as outlined in Section 725(4) of the Occupational Code. CPAs may lose their license if they perform work in areas in which they have not met the education and experience requirements. Other states have similarly detailed categories of experience.

The UAA says that experience may be supervised by a non-licensee but must be verified by a licensee. State statutes expand on this requirement.

California requires the signatures of two individuals holding a valid license to practice public accounting to verify experience in public accounting except where the signer is the sole proprietor or a public accounting firm. For nonpublic accounting experience, only the person who supervises is required to be a licensee. The second signature should be from a person with a higher level of responsibility in the business/agency.

Under the new law in Michigan, “the work experience must be verified by a CPA, but not supervised. Also, the statute does not require the verifying CPA to be licensed – the individual may also be in registered-only status, the license status often preferred by CPAs in industry, according to MACPA’s Web site. The Michigan Board of Accountancy has not yet finalized forms for verification of experience.

Some practical issues

Harold Schultz, past president of the California Society of CPAs, spoke with AccountingWEB about some of the practical issues the California Board of Accountancy has encountered in determining whether or not a candidate’s experience qualifies for licensing.

“There are certainly practical issues in applying the state’s requirements to the multitude of reporting relationships and employment roles in private industry,” Schultz said. “There are issues regarding the nature of supervision in private industry; for example, when the candidate does not normally report directly to the CPA verifying the experience and to obtaining satisfaction that the experience in private industry is professional rather than some repetitive clerical task.”

Applicants for licensure in California may be required to appear before the Qualifications Committee to present audit work papers or other evidence substantiating that his or her experience meets the requirements of Section 5095 of the California Accountancy Act and Section 12.5(b) of the Accountancy Regulations, Title 16, Division 1.

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