President’s Memo: Firm Mobility Revisited

State Board Report

February 2017

The regular turnover of both State Board members and staff brings fresh ideas and new perspectives to NASBA, and is one of the positive attributes of the organization. However, it also brings some challenges. Decisions and agreements made years ago by volunteers and staff, many of whom are no longer Board members or have retired, are occasionally challenged or, minimally, misunderstood.

At the January meeting of the Committee on Relations with Member Boards, we heard that a State Board was unhappy that their State CPA Society was introducing firm mobility legislation with which the Board was uncomfortable. The Board members reported that the Society was motivated by the belief that both NASBA and AICPA were “pushing them to get the legislation passed.” While technically not true, it is certainly understandable that the Society would come to that conclusion. I thought it might be helpful to review, for everyone, the history of what got us to where we are today.

First, NASBA will always support a State Board’s determination of what is best for its jurisdiction. However, NASBA officially advocates both individual mobility and firm mobility. The current language of the Uniform Accountancy Act that includes firm mobility was unanimously adopted by the members of the joint NASBA/AICPA Uniform Accountancy Act Committee, exposed to all Boards of Accountancy and Societies for comment, and ultimately adopted unanimously by the NASBA and AICPA Boards of Directors. Several states and individual State Board members questioned the adoption of the firm mobility language. As a result, both NASBA and AICPA leadership committed to not push or strong-arm any jurisdiction that was opposed to the legislation to adopt it. NASBA continues to stand by that commitment.

Now the history: The desire for CPA mobility in the U.S. began decades ago. Several attempts at developing and promoting language for the UAA were made, but were unsuccessful. In late 2006, NASBA Chair Wesley P. Johnson and AICPA Chair Jimmy L. Williamson decided the time was right to make a joint effort to pass mobility language. I am keenly aware of this as I was asked by NASBA Chair Johnson to head the Mobility Task Force that was charged with enacting mobility legislation in every state.

Initially, the UAA mobility language covered both individuals and firms. After reviewing the proposed language, the Task Force identified a fatal flaw related to firm mobility. In 2006, many states did not mandate peer review and a significant effort was underway to implement it in every state. The proposed mobility language would have allowed firms in states without peer review to practice in states that did require it. After a quick meeting of leadership of both organizations, it was decided that we would only pursue individual mobility legislation until issues around firm mobility could be resolved. In the meantime, a few states had already passed the original language — which would become important later.

We were successful with the individual mobility legislative effort. Several states adopted it immediately and, within five years, almost every state had passed individual mobility language. Today only one state, Hawaii, has not adopted individual mobility, but we are hopeful that will change.

Six years ago, as President and CEO of NASBA, I inaugurated the “Back to Our Roots” campaign, to ensure that NASBA’s focus was on our members, the State Boards of Accountancy. In discussions with states that had pulled away from active participation in NASBA, we discovered that some were disgruntled because, in good faith, they had passed firm mobility as originally promulgated in the UAA, only to be left high and dry when NASBA and AICPA stepped back from firm mobility. This allowed firms from other states to practice in the early adopting states while their home firms were denied that reciprocal privilege. Those Boards were justifiably unhappy.

In 2012, NASBA and AICPA revisited the firm mobility issue and concluded the landscape had changed significantly since 2006. Almost every state had mandated peer review and addressed other issues, such as firm ownership and names, resolving what were “fatal flaws” in 2006. The time had come to reboot the firm mobility effort.

In 2017, as several states are considering firm mobility legislation (either favorably or not), I hope it is helpful to consider the history of the effort. We know that some states remain opposed for different reasons, including possible financial consequences to the Board. Local circumstances differ and NASBA absolutely supports your determination as to what is best for your jurisdiction. We would welcome the opportunity to discuss your opposition to something we believe enhances regulation, and together we may find a way to mitigate your concerns, but in the end be assured that we will stand steadfastly with you and your ultimate decision.

Semper ad meliora (Always toward better things).

-Ken L. Bishop
President & CEO