Sign here, governor: inactive disclosure, equivalency bills await signing.

• Author: Alien, Bruce C.
• Position: Capitol Beat

When the governor signs AB 117, CPAs with inactive licenses will be required-effective Jan. 1, 2010--to disclose their inactive status when they use the designation. The legislation, authored by CPA Assembly members Roger Niello and Fiona Ma, was introduced at CalCPA's request and shepherded through the legislative process without receiving a single "No" vote because legislators share CalCPA's belief in increased transparency.

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The bill would allow California to join the majority of other states that require CPAs using the designation to either comply with continuing education requirements to renew as active CPAs or disclose the fact that their license is inactive. The Uniform Accountancy Act requires CPAs using the designation to comply with continuing education regardless of how they practice--setting continuing education as the hallmark of a professional. The public, employers, banks and others assume that those who use the designation "CPA" in a business setting arc able to practice public accountancy at any time.

"As a former CPA, I am aware that a distinction exists between CPAs who actively maintain their licenses through continuing education and those who do not," said Niello. "This is an important measure to end misrepresentation and ensure appropriate disclosure so clients know exactly who they're dealing with when making investment and employment decisions. I have enjoyed working with CalCPA and my co-author, fellow CPA and Assemblywoman Fiona Ma, on this necessary measure to enhance consumer protection."

Many CPAs in business or industry prepare financial statements that are reviewed by CPAs in public practice. And in July 2004, the California Board of Accountancy indicated that only 15,000 of the then almost 65,000 licensed California CPAs were inactive--meaning that they had not completed continuing education equal to that of active licensees.

It is vital that those involved in providing accounting services to public companies, nonprofits and governments are current on standards and understand their role as professionals maintaining the integrity of the financial marketplace and assisting the gatekeepers.

Most businesses in the United States are small businesses that provide livelihoods for a majority of American families. A well-trained CPA with current knowledge of financial markets, reporting standards and industry developments is an invaluable resource to these businesses.

Recognizing that there are...