Prudential
180x150_compliance%5b1%5d
IllinoisCPA-180x150

Preamble

The following changes to the Illinois Public Accounting Act are in effect as of January 1, 2008:

Section 9.1, the requirement for a Temporary Practice Privilege license, has been repealed. Effective January 1, 2008, the Division will no longer process applications for the Temporary Practice Privilege license.

Section 5.2 has been added and supersedes Section 9.1. This new provision generally allows the practice of accounting by out of state licensees under certain terms and conditions.

You may find the new provision at the Illinois Department of Financial and Professional Regulation website under Division of Professional Regulation.  Select a Profession, choose Accountant. Readers are advised that the sample questions and answers that follow are for informational purposes only and can vary significantly based on the particular facts at issue.  The following information is for information only and is not intended to serve as legal or professional advice.

Out of state licensees should familiarize themselves with these changes prior to practicing in the State of Illinois to assure compliance with the Act.

Individual CPAs 

1.  QUESTION:  If a CPA is licensed in a state other than Illinois but resides in Illinois and works in a CPA firm located in Illinois, does the CPA have to maintain an Illinois individual CPA license or registration?

ANSWER:  Yes.  If the Illinois individual performs audit or review services (defined as “public accounting” in Section 8 of the Illinois Public Accounting Act), he/she must maintain a license.  If the Illinois individual performs other services or simply wants to hold himself/herself out as a CPA in Illinois (through business cards, resume, advertisements, signing tax returns as a CPA, etc) he/she must maintain a registration.

2.  QUESTION:  Does an out-of-state licensed CPA who prepares an Illinois tax return for an Illinois resident have to obtain an Illinois individual CPA license or registration to sign as a CPA?
 
ANSWER:  No, if the individual is licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements the individual is allowed to practice as described in Section 5.2 of the Illinois Public Accounting Act.  The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

a. Does the answer change if the client is a non-resident or part-time resident of Illinois?

ANSWER:  No, the answer remains the same.

3.  QUESTION:  An out-of-state licensed CPA has several clients who file multi-state tax returns (including Illinois) that have property and/or income in Illinois. Does the out-of-state CPA have to obtain an Illinois individual CPA license or registration?

ANSWER: No, if the individual is licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements the individual is allowed to practice as described in Section 5.2 of the Illinois Public Accounting Act.  The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

4.  QUESTION:  An out-of-state licensed CPA occasionally travels to Illinois to consult with or attend audit committee meetings for clients of his/her CPA firm, which has offices in multiple states (including Illinois).  Does this out-of-state licensed CPA need to obtain an Illinois individual CPA license or registration?

ANSWER: No, if the individual is licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements. The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

NOTE:  If the individual granted the practice privilege per Section 5.2 performs services as defined in Section 5.2(d) of the Illinois Public Accounting Act, they may only do so through a firm licensed in Illinois under the Act.  See Question #7 below for details.

5.  QUESTION:  Does an out-of-state licensed CPA who does not have an Illinois office and is contacted occasionally by a company/individual in Illinois to perform accounting (non-audit) services need to obtain an Illinois individual CPA license or registration?

ANSWER: No, if the individual is licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements. The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

NOTE:  If the individual granted the practice privilege per Section 5.2 performs services as defined in Section 5.2(d) of the Illinois Public Accounting Act, they may only do so through a firm licensed in Illinois under the Act.  See Question #7 below for details.

6.  QUESTION:  A CPA licensed in State “A” performs limited audit services in Illinois for a subsidiary of a company headquartered in State “A” (outside of Illinois).  If the audit for the subsidiary is directed and controlled by the out-of-state headquartered company,

a. Does the out-of-state CPA need to obtain an Illinois individual CPA license?

ANSWER: No, if the individual is licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements. The individual is allowed to practice as described in Section 5.2 of the Illinois Public Accounting Act.  The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

b. Does the out-of-state CPA firm where the out-of-state CPA works need to obtain an Illinois CPA firm license?

ANSWER:  No, so long as the company being audited in Illinois is a subsidiary company of a parent company headquartered out of Illinois. 

Out-of-state licensed CPA Firms 

7.  QUESTION:  If an out-of-state licensed CPA firm that does not have offices in Illinois performs public accounting services for any entity headquartered in Illinois,

a. When does an out-of-state firm need to obtain an Illinois CPA firm license?

ANSWER:  Section 13(b) of the Illinois Public Accounting Act requires out-of-state firms to obtain a firm license if the service performed is one defined in Section 5.2(d):
(i) a financial statement audit or other engagement in accordance with Statements on Auditing Standards;
(ii) an examination of prospective financial information in accordance with Statements on Standards for Attestation Engagements; or
(iii)an engagement in accordance with Public Company Accounting Oversight Board Auditing Standards

If the services performed are other than those defined in Section 5.2(d), the firm does not need to obtain an Illinois CPA firm license as long as the services are performed through individuals with practice privileges under Section 5.2.  See Section 13 of the Illinois Public Accounting Act for further information.

b. Do the out-of-state partners need to obtain an Illinois CPA individual license in order for the firm to obtain a license?

ANSWER: No, if the individual is licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements the individual is allowed to practice as described in Section 5.2 of the Illinois Public Accounting Act.  The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

8.  QUESTION:  If a CPA firm is licensed in another state and the firm performs an audit of a nonprofit organization located in Illinois for submission to a State of Illinois agency,

a. Does the out-of-state firm need to be licensed in Illinois?

ANSWER:  Yes, as required by Section 13(b) of the Illinois Public Accounting Act.

b. Do the individual partners of the out-of-state firm need to be individually licensed in Illinois in order for the firm to obtain a license?

ANSWER: No, if the individuals are licensed in a state that is substantially equivalent to Illinois in its CPA certification/licensure requirements the individuals are allowed to practice as described in Section 5.2 of the Illinois Public Accounting Act.  The individual can also meet the substantial equivalency requirements individually if the state in which they are licensed does not meet the requirements.

9. QUESTION: If an out-of-state licensed CPA firm prepares audited financial statements for retirement plans for companies located in Illinois and the “field work” is performed by an Illinois CPA firm but the audited financial statements are prepared in the out-of-state firm’s domicile, does the out-of-state firm need an Illinois CPA firm license?

ANSWER: Yes, as required by Section 13(b) of the Illinois Public Accounting Act.

10. QUESTION:  An out-of-state licensed CPA firm prepares payroll, tax returns and non-audited financial statements for a client who relocated to Illinois.  Does the out-of-state firm need to obtain an Illinois license in order to continue to provide these same services to the relocated Illinois client?

ANSWER: No. If the services performed are other than those defined in Section 5.2(d) of the Illinois Public Accounting Act, the firm does not need to obtain an Illinois CPA firm license as long as the services are performed through individuals with practice privileges under Section 5.2.  See Section 13 of the Illinois Public Accounting Act for further information.