Pathway to Illinois CPA Licensure
New licensing requirements for Illinois CPAs became effective July 1, 2012.
Throughout the past year, ICPAS has been working to educate its members about these changes. This report summarizes the new law. Please review and provide any feedback and/or questions you may have regarding these new requirements. Feedback and questions can be submitted to firstname.lastname@example.org or by fax at 217.789.7924.
In 2004, legislation passed the Illinois General Assembly and was signed into law to move Illinois to a one-tiered license only state requiring all CPAs who hold themselves out to the public to be licensed CPAs consistent with the Uniform Accountancy Act (UAA) and consistent with a majority of states. Today, 45 states have a one-tiered licensing structure.
Effective July 1, 2012, an individual must be Licensed in order to hold themselves out to the public as a CPA in Illinois unless the licensee is a Registered CPA. In proposed legislation, the definition of “Licensed CPA” will be expanded beyond attest services to include other “accountancy activities” as described below.
When the legislation was passed in 2004, CPAs at the time who were not licensed were given the opportunity to become a Registered CPA as a transitional step towards becoming a one-tiered licensed state. This was designed to be a temporary class of licensure with a defined end date (see below).
DETAILS OF NEW ILLINOIS CPA LICENSURE REQUIREMENTS
One-tiered License only for all CPAs
Individuals obtaining their CPA credential after June 30, 2012 will be required to be licensed in order to use the title “CPA” on business cards, letterhead, or any other way in which they hold themselves out as a CPA.
“Practice of Public Accounting” vs. “Accountancy Activities” Proposed in Legislation
The “practice of public accounting” as currently defined in the Illinois Public Accounting Act limits the ability to express or disclaim an opinion on a financial statement based on an audit or examination of that statement, or to express assurance on a financial statement, to active Licensed CPAs only. The concept of the “practice of public accounting” will be replaced with upcoming proposed legislation with the concept of “accountancy activities” as defined below:
“Accountancy Activities” are services performed for a client or employer that involve the following:
1. Attest services defined as “the ability to express or disclaim an opinion on a financial statement based on an audit or examination of that statement, or to express assurance on a financial statement”; these services may only be performed by an active licensed CPA; or
2. Offering to perform or performing one or more types of the following services, including but not limited to: accounting; management, financial or consulting services; preparation of tax returns or furnishing advice on tax matters involving the use of professional skills or competencies of the licensed CPA. This includes the teaching of any of these areas at the college or university level. Note: Nothing in paragraph 2 shall be construed to prohibit individuals who are not licensed CPAs from performing these services.
The non-performance of “accountancy activities” will be a determining factor as to a CPA’s ability to use the title “CPA (inactive)” and therefore be exempt from the licensing educational requirements.
120 Hours of Continuing Professional Education
All licensed CPAs will be required to complete 120 hours of CPE within the three- year license cycle. Broader recognition of formal and informal credit hours is now in effect for continuing learning that contributes to the professional competencies of the licensee.
With the passage of upcoming proposed legislation, Licensed CPAs who want to use the CPA title but do not use their accounting or auditing skills or perform management advisory, financial advisory, consulting or tax services for clients or employers and wish to be exempted from the 120 hours CPE requirement may use the CPA title and must place the word “inactive” adjacent to the CPA title on business cards, letterhead or on any other document or device. (Practitioner's Note: The Public Accounting Act is scheduled for renewal in 2013. Information regarding "CPA(Inactive)" is proposal only and will be enacted only if the General Assembly passes and the Governor signs into law legislation enacting this proposal.)
After June 30, 2012, the registered licensed certified public accountant category will not be available to new CPAs. Those registered before that date will continue to be able to use the Registered CPA option for life as long as they continue to renew it.
EFFECTIVE JULY 1, 2012 ...
• All CPAs must be Licensed or Registered to use “CPA” title.
• Licensed CPA title is the only option available for newly-certified CPAs after June 30, 2012.
• Ongoing requirement of 120 CPE hours for license renewal will continue.
• Broader recognition of what qualifies for the 120 CPE hours requirement will be sought.
• “CPA(inactive)” title option will be proposed in legislation for licensees who are not engaged in “accountancy activities. (See Practitioner's Note above.)
• Registered CPA title will no longer be available for new applicants - all active Registrations as of June 30, 2012 can continue to be renewed.