6 Things to Know About Recent Changes to the Accountancy Act
By John F. Dailey Jr., CPA –
March 18, 2019
For several years, the NJCPA has been lobbying for changes to the Accountancy Act of 1997 to bring New Jersey’s laws up to date with other states/jurisdictions and the Uniform Accountancy Act (UAA). The good news is that on Jan. 31, 2019, Governor Murphy signed P.L. 2019 Ch. 10 (Senate Bill 2962) into law. The following are six things to know about how these statutory amendments affect the state’s CPAs.
- New Definition of Attest
It has taken five years, but the revised definition of “attest” brings New Jersey in line with the rest of the universe. NJSA 45:2B-44 redefines attest engagements as audits, reviews, examinations performed in accordance with attestation standards (SSAE), agreed-upon procedures and PCAOB engagements. This change is consistent with the provisions of the UAA.
- Changes to the Third “E” — Experience
There are three “Es” that are required for CPA licensure: Education, Examination and Experience. The new language in NJSA 45:2B-51 revises the experience requirement. The revised requirement includes one year of experience providing services such as accounting, attest, compilation, management advisory, financial advisory, tax or consulting that must be verified by a licensee. This experience is acceptable if it was gained through not only employment in pubic practice, but also employment in government, industry or academia.
- Firm Registration Mobility
New Jersey has had “mobility” for about 10 years now, but the regulations only applied to individual licenses. What about firm registration mobility? A few years back, the UAA was revised to include provisions for mobility of firm registrations, and more than 30 states/jurisdictions adopted such mobility. New Jersey can now be added to that list. The amendment to NJSA 45:2B 54 includes language that allows a firm that does not have an office in New Jersey to offer attest services in the state without acquiring a firm registration provided that the firm can legally perform attest services in its principal state/jurisdiction of business. The New Jersey State Board of Accountancy (Board) will soon be updating its regulations to effectuate this change to the law.
- Managing Partner/Shareholder
Prior law required that a resident manager in charge of a practice unit in New Jersey had to be licensed and in good standing. The new amendments to NJSA 45:2B-54 removed the requirement for resident managers to be licensed. Lobbying efforts for this change have been made for years by larger firms that typically have owners (partners/shareholders) who practice in areas other than attest and may not be been licensed. These folks may now serve as managing partners/shareholders of their offices located in New Jersey.
- Accounting & Auditing CPE Requirement
NJSA 45:2B-68 has been amended to remove the CPE requirement that mandates 24 credits in areas of accounting or auditing (A&A) for those in public practice. Do not be misled by this change. The current regulations of the Board, NJAC 13:29-6.2 specifically, still require that 24 A&A credits be earned for those licensees engaged in public accountancy during each triennial period. There appears to be no consideration by the Board, to date, to change the regulations regarding this requirement. So, while the statutes have been amended, the regulations have not, and all licensees in public practice must continue to satisfy the 24 A&A CPE credit requirement.
- “Mobility” of CPE Credits
For many years, CPAs who are licensed by multiple jurisdictions have been asking for “mobility” of their CPE credits. In other words, if a CPA is licensed in New York, Pennsylvania and New Jersey, and their primary place of business is downtown Manhattan, why should that CPA have to comply with the CPE requirements in all three states? NJSA 45:2B-68 has been amended to state that non-resident licensees are determined to have met their New Jersey CPE requirement by complying with the CPE requirement in the state/jurisdiction in which the licensee’s principal place of business is located. Such licensees will have to demonstrate CPE compliance with the requirements in their “home” state by signing a statement verifying such compliance on their New Jersey license renewal application. However, if a non-resident licensee’s principal place of business is located in a state that has no CPE requirement, then the licensee must comply with New Jersey CPE regulations.
These statutory amendments took effect on Jan. 31, 2019, the day the Governor signed the bill. However, this is just the first act of a two-act play. On March 8, the comment period ended for various changes to the Board’s regulations under what is commonly referred to as the “sunset rule.” It would be wise to keep checking the NJCPA’s website for additional updates as the process of updating the Board’s regulations is completed.