In his last Chair letter, AICPA Chair Paul Stahlin called on all CPAs to display our credential whenever possible:
As I near the end of my very exciting and rewarding year as AICPA board chairman, I want to talk a little about introductions. That may seem like a strange topic to bring up so late in my tenure, but I’m not talking about myself here. Rather, I’m addressing how we CPAs introduce ourselves to others. Each time my name is printed, I seize the opportunity, where appropriate, to have the all-important letters, CPA, appear. The CPA credential represents someone who has worked hard to earn and maintain a professional distinction that is highly respected by business decision makers. So my final column is dedicated to encouraging you to display your CPA credential whenever possible, to benefit yourselves and the profession as a whole. [Read the entire letter]
I TOTALLY agree with Paul, however the model Uniform Accountancy Act doesn’t allow us to do what Paul suggests. My understanding (and it does vary some by state) is that if you are a CPA, but do not hold a current public practice permit, then you can’t put CPA after your name on business cards, correspondence, or anywhere else in writing unless you quantify it with “inactive” or “not in public practice”.
How would you like your business cards to say: Mary Smith, CPA (inactive) or Joe Honda, CPA (not in public practice)? I don’t think any of us would. And thus CPAs who don’t work for a public accounting firm are in reality UNABLE BY STATE LAW to comply wit Paul’s call to action.
CPA Licensing vs Public Practice Permit
For those of you that aren’t CPAs, the significance of the public practice permit above may be a technical distinction that seems unclear. And it is! Many CPAs don’t even understand it; I didn’t until just a year ago and I’ve been a CPA for 10 years now.
Basically there are two “levels” (in the states’ eyes) of being a CPA. If you meet all of the requirements (varies by state) and pass the CPA Exam, then you have earned a CPA license and you get a nice certificate to put on your wall.
There is however a higher “level”, which is the public practice permit. To meet public practice permit requirements, CPAs must continue to earn essentially 40 hours of continuing education credits each year, some states even require that the hours be distributed in certain subject areas. This requirement is one of the fundamental values of our profession–life long learning–and it is the way that CPAs stay current on everything that is going on with regard to standards, regulation, and emerging issues (like technology and sustainability).
So a person may earn their CPA license, but may choose not maintain their educational hours, and so they would have a license, but not a public practice permit. If they only have their license, then they usually have to put “inactive” or “not in public practice” after their CPA. And this is usually the case with most CPAs who leave the public accounting firms and work in business, industry, or government.
To make it even more confusing, many states also require that a CPA also work for a company that has a CPA Firm Permit to put CPA after their name. In a state like mine, this means that CPAs who don’t work for a CPA Firm also have to register themselves as sole proprietor CPA firms (even if they’re not actually doing any CPA-type work for clients) if they don’t want to have to qualify the CPA on their business cards and correspondence.
Each of these “levels”: CPA license (individual), CPA public practice permit (individual), and CPA firm permit (company), also comes with a separate application and associated fee that has to be paid to state–often totaling hundreds of dollars. Putting CPA after your name thus becomes a monetary question…are you willing to pay hundreds of dollars each year to be able to put CPA after your name?
The Public Protection Perspective
The original reasoning (as it was explained to me) is that when we put CPA after our name, the public perception is that we are attesting to the veracity of the information of the document in which our name/signature appears. This was explained by a comment from Orlando, Florida in response to Paul’s letter:
I’m very surprised by this letter’s virtually unqualified promotion of using CPA credentials. There is a small but very serious risk that the recipient of a communication (in which the sender used CPA after his/her name) may assume that the sender has confirmed and is attesting to the accuracy of the information provided in the communication. If the recipient relies on the accuracy of that information to his/her detriment because the sender identified him/herself as a CPA, there could be serious consequences for that CPA. I attended a class for the required NJ Law and Ethics CPE in which the instructor strongly recommended against any use of the letters after one’s name in any situation that it is not required. The instructor even asserted that simply attaching one’s business card (with CPA after the name) to a document could mislead the user, and therefore would be a breach of ethics. The AICPA should publish a guideline on the appropriate use of the credential to mitigate the concerns many of us have over the risk of using the letters.
To the rational reader, your initial reaction may be similar to mine…which is that sounds ridiculous. However, historical case law indicates otherwise. Perhaps CPAs are victims of their own success. The CPA is the trusted business professional who certifies the truth of financial statements and other assertions made by an organization’s management. So I should be able to trust ANY information that comes from someone who says they are a CPA right??
Personally I find this perspective ridiculous. I can potentially see the inference occurring when it is used in a formal communication in which the person sending the information is providing information for use by the receiving person to make a decision; but even that is a stretch for me. I mean there’s a reason that we have “audit opinion letters” right? Opinion letters are the formal communication of a CPA’s attestation to the veracity of information. After all, I see tons of CPAs who include their CPA after their name in their e-mail signatures. Does that mean that the CPA is attesting to the veracity of the information provided in the e-mail? Would any reasonable reader infer that assurance is being provided? I think not.
To CPA or not to CPA?
So the CPA who not longer works for a CPA firm is caught in the proverbial “rock and a hard place”. Do you put the CPA after your name and risk getting sued? Or do you not display the badge of accomplishment that you studied and worked REALLY hard to earn? That assumes that you are willing to pay out the cash to pay for the license, public practice permit, and firm permit–all of which is most likely not tax-deductible.
The bottom line is that there is currently no good answer. The real answer is a revision to the model Uniform Accountancy Act that enables CPAs not in public practice to proudly display their credentials, along with some statutory provisions or tort reform that sets a reasonable standard for when there is assurance attached to information provided by a CPA. Does anyone else see some kind of public “audited information” seal in the future…?