Bill Updating New Jersey's Accountancy Statute Signed Into Law
By Jeffrey Kaszerman, NJCPA Vice President of Government Relations –
January 31, 2019
Legislation that updates the statute governing the CPA profession in New Jersey was signed into law today by Governor Phil Murphy. The statute, which had not been updated in almost 20 years, urgently needed revisions to reflect changes in the business environment and CPA profession and to conform to the 2014 edition of the Uniform Accountancy Act (UAA).
The UAA is an "evergreen" model licensing law developed jointly by the National Association of State Boards of Accountancy and the American Institute of CPAs to provide a uniform approach to regulation of the accounting profession. It is designed to ensure protection of the public interest, respond to evolving changes in the practice of accountancy, and make the interstate practice of accounting efficient. All of the states in the country adhere as much as possible to the UAA.
The new law is effective immediately. Below are some of the most significant changes.
Update to the Definition of Attest
The definition of attest has been updated to include any examination, review or agreed-upon procedure engagement performed utilizing the Statement on Standards for Attestation Engagements (SSAE). Previously, the only SSAE under our Act’s attest definition was examinations of prospective financial information. This presented a potential risk to the public because some non-CPAs interpreted it to mean that they were not restricted from using the SSAE language or standards. However, non-CPAs are not required to have the same experience, education and competencies, nor are they regulated by boards of accountancy like CPAs are. They do not have to provide the same protections to clients that CPAs do.
Clients and third parties, including the general public, rely on attest reports issued under the SSAEs, and they need to be able to trust the quality of the information contained therein. Furthermore, the demand for attest services by CPAs has been changing over the past decade, and the change to the definition of attest reflects that evolution while also respecting the rights of marketplace competitors; non-CPAs can continue to offer these services, but they can no longer reference professional accounting standards and benefit from the implied quality and oversight accompanying those standards.
The statute’s “mobility” provisions now conform to the UAA. The previous provisions allowed for out-of-state CPAs providing tax and non-attest accounting services to practice temporarily in New Jersey without registering with the state or getting a CPA license. However, out-of-state CPAs who provided attest services still had to register with the New Jersey State Board of Accountancy. The revised UAA eliminates that restriction.
[For historical reasons, eliminating the restrictions on out-of-state CPAs providing attest services is known as “firm mobility.” However, firm mobility is really a misnomer as it applies to CPAs who are sole practitioners as well as firms and its focus is only on attest services. A more accurate description would be “Attest Mobility.”]
Out-of-state CPAs can now provide attest services in New Jersey without registering with the state and without having to have a physical office here. These CPAs can do attest work here under a process known as the “no notice, no fee, no escape” regime. The out-of-state CPAs do not need to give notice to the State Board nor pay a fee when coming into New Jersey, but the CPAs will be subject to the full regulatory oversight of the Board as well as the CPA’s home state. All of these out-of-state CPAs must also follow New Jersey's peer review requirements. In addition to making it easier for CPAs to practice in New Jersey, this removes some of the paperwork that the State Board must handle.
Continuing Professional Education Updates
The provisions regarding continuing professional education (CPE) have been updated to allow for what is often called “CPE reciprocity.” CPE reciprocity exempts CPAs who hold multiple state licenses from having to meet the individual CPE requirements of each state so long as the licensee meets the CPE requirements of their home state.
Additionally, the bill eliminates the requirement that CPE courses must be at least 50 minutes long. If the proposed regulations to overhaul and update all of the State Board’s regulations are adopted as currently drafted, nano learning and blended learning will be accepted. The proposed regulations have been published in the New Jersey Register. Interested parties have until March 8 to submit comments.