Purpose and Role of State Boards of Accountancy

Author: Dan Dustin, CPA, NASBA Vice President of State Board Relations
Posted: April 26, 2012

State Boards of Accountancy are created in state statute to assist state government in the licensing and regulation of the public accounting profession. Professional licensing and regulation is a state-based regulatory system in the United States. Within the United States and its territories, there are 55 licensing jurisdictions that provide regulatory oversight whenever a CPA is practicing within the statutorily defined scope of practice of public accountancy.

In general, members of the state boards of accountancy are appointed by the Governor with input from the state Senate. Often, professional membership organizations, such as state CPA societies, provide the names of prospective board members to government officials for consideration for board appointment. In some jurisdictions, board members are appointed by the leader of an executive branch agency that provides regulatory oversight. In general, board member terms run from 3 to 5 years and a member may be re-appointed for additional term(s). In some jurisdictions, there is no limit on a member's term of service.

State boards can be independent or semi-autonomous in governance structure, or they can be housed within a state agency that provides services for multiple boards and/or professions. Often these agencies are termed “umbrella” agencies because they provide the same administrative functions for multiple state boards and professions. Several state statutes also require a periodic sunset review of a board's operations to provide the Governor and/or the legislature with a periodic update in order to gauge the effectiveness of a board's operations.

Among its many duties, state boards evaluate an applicant's education to qualify an individual for the profession's licensing examination, verify the successful completion of the Uniform CPA Examination and assess an applicant's supervised experience for licensure. Some boards also register continuing education providers and work with peer review oversight committees to maintain effective practice monitoring programs. In addition, boards monitor current events in the profession to determine whether regulatory amendments are necessary to maintain the relevance of the regulatory environment in contemporary practice.

Perhaps the most important role a state board plays is that of disciplinarian. Most boards hear disciplinary cases brought against a state's licensees for substandard practice, violation of the state's code of ethics or for disciplinary sanctions brought in other federal or state jurisdictions. Sanctions can range from cease and desist orders to monetary fines and penalties, to the revocation of a license to practice public accounting.

State board resources are provided by licensing and registration fees charged to individuals and/or firms, continuing education fees and fines and penalties. Independent and semi-autonomous boards generally have authority over the use of the fees, fines and penalties they collect, although some boards are required to remit a percentage of its revenue to the state's general fund to offset the cost of overall state operations. These boards tend to have their own bank accounts into which revenue is deposited and from which the board's operating expenses are paid.

In contrast, some state boards are governed by an umbrella agency. Under this structure, revenue tends to be commingled across multiple professions in order to offset board expenses and pooled administrative costs. All fees, fines and penalties are deposited into a common account that is used to offset appropriated expenses across all professions. In some jurisdictions, revenue from fines and penalties are deposited directly into the state's general fund without an offsetting allocation to state board operations.

State boards have evolved to provide a host of services beyond the licensing and regulation of CPAs. Some boards issue monthly newsletters, post responses to frequently asked questions on their website and provide useful information on compliance with state board rules and regulations on such matters as compliance with CPE requirements and firm mandatory peer review. In recent years, state boards have also launched the use of social media outlets, such as Facebook and Twitter, to disseminate timely, useful information to applicants, exam candidates and licensees.

NASBA was founded in 1908 and its mission is to enhance the effectiveness of state boards of accountancy. NASBA provides a forum for accounting regulators and practitioners to address issues relevant to the viability of the accounting profession.

Over time, NASBA has developed a suite of products and services that assist state boards in completing their mission of public protection. NASBA also provides many useful tools for the licensed CPAs and consumers, including a public oriented central database populated by official state regulatory data that allows consumers the opportunity to check the status of a CPA's license in one or more jurisdictions.

Together, state boards and NASBA provide the public with the assurance that only qualified licensees practice public accounting in accordance with state laws, rules and regulations and in accordance with professional standards.