The Certified Public Accountant (CPA) designation is a professional license that signifies a high level of competence in the field of accountancy. While modern business practices and the national economy require CPAs to serve clients across state lines, the authority to grant and regulate this license remains decentralized. A CPA’s ability to practice in multiple jurisdictions depends entirely on a framework of interstate agreements designed to reconcile a national profession with a state-based licensing system.
The Foundation of CPA Licensure
The practice of public accountancy has historically been regulated at the state level, with each State Board of Accountancy setting its own specific requirements for education, examination, and experience. This decentralized structure means that a CPA license is not a federal credential but rather a state-issued certificate of qualification. In the past, a CPA who wished to serve clients or open an office in a state other than their home jurisdiction was required to obtain a separate, full license in that second state. This often involved a burdensome process, creating significant barriers for CPAs serving clients engaged in interstate commerce.
Understanding CPA Mobility
CPA mobility refers to the statutory privilege that allows a licensed CPA to practice temporarily in another state without needing to obtain a second license in that jurisdiction. This framework was developed to streamline interstate practice. Currently, 49 of the 50 U.S. states, along with the District of Columbia and U.S. territories, have adopted mobility laws for individual CPAs.
This system operates on a “no notice, no fee, no escape” principle for most CPAs. This means a licensed CPA in good standing can cross state lines to practice without notifying the state board or paying an additional fee. The “no escape” component means that by exercising this privilege, the CPA automatically consents to the disciplinary authority of the state board where they are practicing. The adoption of mobility laws by nearly all jurisdictions has significantly facilitated the ability of CPAs to serve clients across the country.
The Mechanism of Substantial Equivalency
The technical backbone that enables CPA mobility is the standard of “Substantial Equivalency.” This concept, based on the Uniform Accountancy Act (UAA), determines that a CPA’s home state licensing requirements are comparable to or exceed the requirements of the state where they wish to practice. A state is considered substantially equivalent if its licensing standards align with the UAA’s recommended three “E’s”: 150 semester hours of education, successful completion of the Uniform CPA Examination, and at least one year of qualifying experience.
If a CPA holds an active license from a state deemed substantially equivalent, they are presumed to have the qualifications necessary to practice in a mobility state. For individuals licensed in a jurisdiction not meeting the full UAA requirements, a process exists to have their individual credentials evaluated to demonstrate personal substantial equivalency. The vast majority of U.S. jurisdictions are currently recognized as substantially equivalent, making practice privilege readily available to most licensed CPAs.
Limitations on Interstate Practice
While mobility is the general rule for individual CPAs, important limitations exist, particularly concerning the type of service provided. The privilege of practice often covers non-attest functions, such as tax preparation, consulting, and management advisory services. Attest services, which include audits, reviews, and certain compilations of financial statements, are subject to more stringent regulation in many states.
In many jurisdictions, a CPA performing attest services must do so through a CPA firm that is registered or holds a permit with the state board where the client is located. Even for non-attest services, some states maintain a notification or fee requirement for out-of-state CPAs practicing within their borders. Furthermore, a state may impose specific experience requirements for certain services, such as a minimum number of attest hours, which can affect an out-of-state CPA’s ability to sign off on an audit report.
Requirements for Permanent Practice
The mobility privilege is intended for temporary or occasional practice across state lines and does not apply if a CPA changes their permanent location. If a CPA moves their principal place of business (PPOB) or primary residence to a new state, they must apply for a full license in that new jurisdiction. This process is typically handled through a mechanism called Licensure by Endorsement or Reciprocity.
The endorsement application requires the CPA to demonstrate that their existing license is active and in good standing with their original state board. The receiving state will review the CPA’s qualifications to ensure they meet the state’s current standards, which typically includes meeting the 150-hour education requirement, providing proof of passing the Uniform CPA Exam, and demonstrating compliance with Continuing Professional Education (CPE) requirements. The process may also require the CPA to pass a state-specific ethics exam.
Verifying State-Specific Mobility Rules
Given the nuances of practice privilege, a CPA must confirm the specific rules of the state in which they intend to practice before engaging a client. Although 49 states have adopted mobility, the specific requirements for firm registration and attest services can vary significantly. For instance, while most states allow practice without notice, one U.S. jurisdiction, Hawaii, has historically not fully adopted the standard mobility framework.
To navigate these jurisdictional differences, CPAs should use resources like the Accountancy Licensing Library (ALL), maintained by the National Association of State Boards of Accountancy (NASBA). This resource provides a centralized database of CPA and firm licensing requirements for all U.S. jurisdictions. Consulting the specific State Board of Accountancy is also a reliable way to ensure full compliance with the local statutes and rules before beginning any work.