Revised UAA Offers New Rules for Retired CPAs, CPE, Foreign Credentials

Chris Gaetano
Published Date:
Feb 6, 2018

The AICPA and NASBA have released an updated version of the Uniform Accountancy Act (UAA), model legislation that serves as a guide for state regulators. The updated version allows for a new "retired CPA" designation, removes the mutual recognition requirement for substantially equivalent foreign designations, and dramatically changes CPE standards. It is up to each individual state regulatory body to adopt and implement the changes outlined in the new UAA as they see fit, and so it is not guaranteed that they will be applied universally across all jurisdictions. 

Right now if, for whatever reason, CPAs do not wish to maintain their license, they can change their status to "inactive," at which point they would no longer need to continue with continuing professional education (CPE) requirements. Once they do so, however, these CPAs cannot continue to perform or offer professional services associated with their title. Under the new rules, CPAs who are at least 55 years old may instead opt to change their designation to "retired," which allows them to continue performing some of their functions in limited ways. A retired CPA, under these new rules, would still be able to perform tax preparation services, participate in government-sponsored business mentoring programs, serve on a board of directors for a nonprofit or governmental organization, or serve on a government-appointed advisory body. They cannot be compensated for any of these activities, though. 

"These services are narrow in scope. ... The provision acknowledges that these CPAs still have much to contribute to their communities during retirement,"  states the new UAA's text. 

The new rules regarding foreign credentials say that a state board can issue a certificate to someone who holds a substantially equivalent foreign designation, provided that it was duly issued by a foreign authority that regulates the practice of public accountancy and has not expired; entitles the holder to issue reports upon financial statements; and was issued upon the basis of educational, examination and experience requirements established by the foreign authority or law. The applicants, for their part, must have received the designation based on educational and examination standards substantially equivalent to the country's own; have completed an experience requirement substantially equivalent to the country's own, or have completed four years of professional experience within the country, or meet equivalent requirements set by the board; and passed a uniform qualifying exam in national standards, laws, regulations and codes of ethical conduct that is acceptable to the board.

Under previous editions of the UAA, a foreign designation could  be recognized only if that country's regulators acknowledged the validity of the U.S. CPA license. 

Finally, the new rules introduce a wide variety of changes to CPE standards. For one, the new rules differentiate between "technical fields of study" versus "non-technical fields of study." Technical fields of study are those subjects that directly relate to the CPA's competence in the profession, such as audit, tax, finance or regulatory ethics. Non-technical fields of study are subjects indirectly related to a CPA's practice, such as personal development, business management and organizations, or communications and marketing. Under the new rules, at least 50 percent of someone's total CPE credits must come from technical fields of study. 

While subjects outside the technical or non-technical field of study classifications are acceptable for CPE credit as well, the licensee must demonstrate to the satisfaction of the board that it contributes to the maintenance and/or improvement of their professional competence. Beyond this, a practitioner would need to complete a minimum of 20 hours of CPE per year, an average of 40 hours of CPE per year over the reporting period, and an average of two hours of ethics CPE per year within the reporting period. This is in contrast to the UAA's previous versions, which say that the practitioner would need to complete 120 hours of CPE, including four hours of ethics, over the course of a three-year period, with a minimum of 20 credits per year. 

However, the new rules are similar to regulations already existing in New York state. New York state Public Accountancy Regulation 70.9, Continuing Education, requires the completion of a minimum of 40 hours of CPE per calendar year in accounting, attest, auditing, taxation, advisory services; specialized knowledge and applications related to specialized industries; and such other areas appropriately related to the practice of accounting as may be acceptable to the Department. In the alternative, it requires a minimum of 24 hours per calendar year of concentrated education in auditing, accounting or taxation. 

New York further requires that any licensee who supervises attest or compilation services or signs or authorizes someone to sign the accountant's report on financial statements on behalf of a firm must complete at least 40  hours of continuing education in audit, accounting, and/or attest during the three years immediately prior to the performance of such services. These contact hours may be counted toward the annual contact hour requirement in the calendar year that they are completed.

The New York State Board of Public Accountancy recently voted to change its own ethics requirement from a four hours every three years model to a two hours per year model, which matches the updated UAA. However, this change has not yet been presented to the New York Board of Regents, so it is not in effect this year.

The new rules also change how one reinstates an inactive license. Under the old UAA rules, someone whose certificate had lapsed needed to complete no less than 120 hours of CPE during a three-year period as well as take a program designed to demonstrate the currency of the licensee's competencies. Under the new rules, provided the certificate has been lapsed for fewer than five years, the practitioner would need to complete an average of 40 hours of CPE per year for the entire CPE reporting period prior to the date of reapplication. The board may also opt to require these practitioners to complete an additional program demonstrating their competence. For those whose license has been expired for more than five years, the board can determine the number and types of CPE credit necessary to reinstate them. 

In New York, right now, re-registering from an inactive status requires 24 hours of CPE in a 12-month period prior to the return to public practice and, following re-entry into practice, the completion of a pro-rata portion of the mandated yearly requirement on the basis of one-half of the number of hours required under the option selected for each full six-month period from the date of reentry to the end of the current reporting year.

The new UAA also goes over what counts as qualifying activities for CPE credit, which previous editions did not. Overall, it says that the program must be a "learning activity that complies with the Statement on Standards for Continuing Professional Education Programs, issued jointly by the [AICPA] and the [NASBA], and is coordinated and presented by a qualifying CPE program sponsor as set forth below in Rule 6-5(b)." It then gives examples of what exactly is meant by that. Among them are blended learning programs and nano-learning programs, both of which new additions were formally approved in 2016

Nano-learning is delivery of information in short, 10-minute increments, often covering topics specific to a certain task. That could include, for example, videos that may help CPAs master certain specific, technical tasks. Nano-learning programs must use instructional methods that clearly define a minimum of one learning objective, guide the participant through a program of learning, and provide evidence of a participant’s satisfactory completion of the program. This can be accomplished through completing a qualified assessment, which must consist of at least two questions, none of which are true/false questions. Nano-learning programs must be based on materials specifically developed for instructional use and not on third-party materials. They will not be considered acceptable if they only require the reading of general professional literature, IRS publications, or reference manuals followed by an assessment. 

Blended learning combines multiple delivery methods, such as live instruction and on-demand self-study. This allows for courses that incorporate different educational methods, such as lectures or simulations; delivery methods, such as live groups or self-study; levels of guidance, such as subject matter-led or group/social learning; and scheduling, which can be either synchronous or asynchronous. So, a series of lectures delivered over the Internet paired with quizzes that can be worked on asynchronously would count as blended learning, as would a live workshop supplemented with a self-study program that includes various readings, as would a group discussion on a collection of nano-learning modules guided by a subject matter expert.

Other examples of acceptable learning activities include self-study programs, group programs, serving as an instructor or developer of a qualifying CPE program, serving as a technical reviewer of CPE programs, and participating in independent study.  Acceptable activities also include taking a non-basic level college or university course, authoring published articles or books relevant to maintaining or improving professional competence, serving on a technical committee of a professional organization or government entity supporting professional services or industries related to a technical field of study, and group learning activities concerning a specific industry or sector.

The new rules also makes it clear who counts as a qualified CPE provider: those on the NASBA National Registry of CPE Sponsors, the AICPA and state-level CPA societies, accredited colleges and universities, and those approved by the state board. New York's regulations don't focus on who specifically can be a sponsor, but, rather, on how someone becomes a sponsor. Persons or organizations wanting to offer a recognized CPE program need to register with the state, and submit evidence the sponsor has the will and ability to maintain the programs, such as making sure they're qualified to give the program and that their materials are technically accurate. 

The Society weighed in on the changes in June. The comment letter was authored by members of the Foundation for Accounting Education (FAE) Exposure Draft Task Force.

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