Capitol Report | Winter 2025
Navigating the CPA Credential’s New Regulatory Frontier
As alternative practice structures grow and a new mobility framework emerges, questions around the use of the CPA credential are surfacing. Here’s what CPAs and CPA firms need to know.
Marty Green, Esq.
Senior VP and Legislative Counsel, Illinois CPA Society
The Latest on Advocacy and Legislation
The certified public accountant (CPA) credential is the stock and trade of our profession, demonstrating a practitioner’s integrity, experience, competence, and professionalism. It’s for these reasons that CPA regulators protect the public interest through regulation, state CPA societies serve as trustees of the CPA brand and their respective accounting acts, and licensees maintain the highest standards and expectations of the credential.
Recently, discussions over use of the CPA credential have come into focus for a couple of reasons. One being the rise of alternative practice structures and private equity (PE) ownership in accounting firms. Additionally, many state societies, including the Illinois CPA Society, were successful in passing legislation to add additional pathways to CPA licensure, moving from state-based mobility to individual-based mobility.
Here, I’ll be reviewing what professional statutes and regulations say about use of the CPA credential and address what’s currently playing out with the rise of alternative practice structures and PE in the profession.
What Do the Rules Say?
The Illinois Public Accounting Act and the AICPA Code of Professional Conduct both provide statutory and professional standards on the use of the CPA credential.
According to Section 1 of the Illinois Public Accounting Act (225 ILCS 450/1), a person must be either licensed or registered to use the CPA credential in Illinois or meet the requirements of substantial equivalency outlined in Section 5. This statutory order is by design. It reflects how the use of the CPA credential goes hand and glove with the protection of the public’s interest.
Section 9 of the act outlines restrictions on the use of the CPA credential. The act authorizes the Illinois Department of Financial and Professional Regulation (IDFPR) to investigate alleged and improper use of the CPA credential and assess whether a civil penalty is necessary (not to exceed $10,000 for each offense). This authority and steep penalty are to protect the public from those who aren’t licensed and may be illegally holding themselves out as CPAs.
The AICPA Code of Professional Conduct also addresses the use of the CPA credential in the Acts Discreditable Rule (ET Sections 1.400.001, 2.400.001, and 3.400.001). Collectively, these sections provide that members are required to follow accountancy laws and regulations when using the CPA credential in the jurisdictions which they practice. Failure to follow the rules on the use of the CPA credential in a manner that is false, misleading, or deceptive is a violation of the Acts Discreditable Rule.
Notably, failure to follow the AICPA Code of Professional Conduct can result in professional ethics complaints with state societies and the AICPA and possible professional sanctions. Additionally, a complaint can be filed against the CPA by the IDFPR under Section 20.01 of the act (Grounds for Discipline). Unethical conduct is further defined in the Illinois Public Accounting Act’s Administrative Rules (68 IAC 1420.200), which adopts the AICPA Code of Professional Conduct.
The State of Play
The growing emergence of alternative practice structures and PE ownership in accounting firms has raised issues with the use of the CPA credential. The National Association of State Boards of Accountancy Private Equity Task Force released a white paper, “Alternative Practice Structures and Private Equity: Considerations and Questions for Boards of Accountancy,” that poses core questions related to the areas of independence, professional standards, public disclosures, and regulatory oversight. While the white paper doesn’t provide guidance on the use of the credential, it does highlight that the credential’s usage is a part of broader independence and public interest concerns.
Select state boards of accountancy have sent inquiries to CPA firms who organize into alternative practice structures. These boards have requested background on the formal alternative practice structure, ownership arrangement, representation to the public on the consolidated forms, and firm names on signature lines.
For example, the Virginia Board of Accountancy has issued guidance regarding the use of the CPA credential on social media, particularly in cases where individuals no longer hold an active Virginia CPA license. The guidance provides that only those with current active Virginia CPA licenses may use the CPA credential in any professional context, including social media profiles. Misuse of the title, even unintentionally, can lead to disciplinary action by the Virginia board. This is yet an example of the new norms we’re living in.
In an effort to mitigate board discipline, some CPA firms have responded by telling their CPAs not to use their credentials on business cards and email signature lines. Their rationale behind this is that state regulators may determine they aren’t a CPA firm and therefore shouldn’t hold themselves out as CPAs.
Looking Ahead
As you can see, a great deal of evolution is occurring across the accounting enterprise. As a profession, we’re in reset mode.
Moving forward, practitioners must be mindful of regulatory requirements for the use of the CPA credential and the professional obligations of independence. As individual mobility provisions are enacted, practitioners should exercise due care of the respective state mobility laws. Firms implementing alternative practice structures should also ensure that the requirements and provisions of the AICPA Code of Professional Conduct are met and surpassed. If we overlook or short-circuit fidelity of the professional responsibility requirements, this creates high risk to the profession in an already high-risk regulatory environment.
Boards of accountancy also need to closely monitor these trends and developments to avoid regulatory overreach. After all, a proper regulatory balance must be achieved to protect the public interest and allow the evolving changes to ripen.
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