License, please: why Ohio is the model for interstate practice.

• Author: Rotaru, Ronald
• Position: Governmentrelations

Imagine taking a family trip to Florida. Instead of simply driving off, you sit down to a stack of forms. Before you can drive into Florida, or any of the states in between, you have to register with each state's Department of Motor Vehicles and pay a different registration fee.

Sound crazy? Well, CPAs are increasingly being required to meet a wide range of requirements when they practice in different states--sometimes even if they don't physically visit those states.

The Ohio Model

The Accountancy Board of Ohio views a CPA license as similar to a driver's license. Just as an out-of-state driver can drive in Ohio, an out-of-state CPA or accounting firm may perform public accounting work in Ohio on an incidental or temporary basis without notification if that CPA holds a license to practice public accounting in his or her home state.

The Ohio model has been in place since 1961. The accountancy law enacted Oct. 23, 1960, contained no provision for temporary or incidental practice. At the Feb 5, 1960, meeting, the Ohio board noted that an in-state license would be required of all out-of-state CPA partners who practiced in Ohio. Realizing the problem, legislation was introduced to correct the issue.

Section 4701.15 of the Ohio Revised Code became effective Jan 10, 1961. Though somewhat duplicative, a no-notification provision was added to the Ohio accountancy law in 1998--along with numerous other Uniform Accountancy Act provisions--to make identification of Ohio's longstanding practice clearer to out-of-state CPAs.

The concept of "substantial equivalency" with respect to the "Three Es" of education, examination and experience has been part of the accountancy law since the board was created in 1908. The 1998 statutory changes granted broader practice privileges to licensees from other substantially equivalent states.

Why Other States Are Different

Sec. 23 of the UAA was written in the mid-1990s and ratified over time by 33 states to facilitative interstate mobility of CPAs. However, not all states have the same interpretation of Sec. 23. In some circumstances, this has led to requirements that inhibit practice by out-of-state CPAs, counter to the intent of Sec. 23.

There are four main reasons for this:

1. A state may have CPAs with strong protectionist views and define "substantial equivalency" as being almost exactly equivalent to its accountancy law rather than good enough for a temporary practice authorization.

2. A state may refuse to grant...