New Education Requirement for Calif. CPAs

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A law signed by California Gov. Arnold Schwarzenegger last week will make it easier for CPAs in the state to serve a wider range of clients.

Schwarzenegger signed Senate Bill 819, which will align California's education standards for accountants with those used by all but one other state. As a result, starting in 2014, CPA candidates in California must complete 150 hours of undergraduate coursework, including 48 hours of business and accounting classes, and one year in the work force.

The state's current standards provided an alternative pathway with fewer course hours. They allow candidates to either complete 120 undergraduate hours and two years in an accounting position, or 150 hours of classes.

The new law grandfathers in current CPAs. Before 2014, accounting students may attain a license under the old system.

Matching Standards Will Open Doors

California's position has bucked national trends since the 1980s, when most states adopted the 150-hour approach as their standard. Accounting and educational groups in the state had believed the 120-hour option would help economically disadvantaged students who might have trouble paying for 30 extra hours over a short period of time. "The idea was to leave the number of units flexible according to what the needs of students would be," says Greg Burke, a partner at the Sacramento-based accounting firm John Waddell & Co. and 2008 chair of the California Society of CPAs, the state's largest trade group.

But Burke says that over the years, a number of other states either wouldn't recognize California CPA licenses or made licensees wait for clearance because their educational background was different. As a result, some CPAs were reluctant to taken on clients from out of state.

Last year, Burke made changing the law a priority for his one-year term and rallied CalCPA members, other accounting groups, educators and lawmakers to the cause. An earlier bill introduced in February, SB 691, died in committee after a few education and policy groups reiterated concerns about its fairness to all students. But Burke says CalCPA and other groups were able to show that the benefits of a one-pathway approach outweighed its disadvantages and they agreed to a few minor changes, including a requirement for accounting students to take courses in ethics.

The groups added a powerful ally when state senator Leland Yee sponsored the later bill, SB 819. Yee had seen first-hand the downside of the dual pathway approach when an accountant helping a family member in a car sale couldn't practice in Washington. Yee personally lobbied Schwarzenegger on behalf of the bill. "Our argument was that the state was sending folks along a dead-end pathway," says Adam Keigwin, Yee's chief of staff.

CalCPA applauded the bill signing, saying it would be a boon for California consumers. "Without SB 819, California consumers would not receive the same level of service that consumers in other states enjoy and California CPAs would face insurmountable hurdles in representing their clients," says Bruce Allen, CalCPA's director of government relations.

Former chair Burke says accountants in the state will now be "on the same footing as the rest of the country. Cal CPAs will be substantially equivalent. They will have the same opportunities to practice public accounting as accountants in other states. It creates a level playing field."