The California Accountancy Act (CAA) is the enabling act of the California Board of Accountancy, and is the comprehensive framework for Certified Public Accountants in California. It gives the California Board of Accountancy authority to license, regulate, and discipline California CPAs and covers a variety of topics, from continuing education to standards of professional conduct.
CPAs in California should do a comprehensive review of the CAA to ensure they are compliant with the regulations. Below, we’ll cover the basics of the California Accountancy Act and how it pertains to CPAs practicing in California. For a more in-depth review of the California Accountancy Act and a more comprehensive look at ethics for CPAs in California, check out our Ethics & Professional Conduct for California CPAs course.
Becoming a CPA
The CAA governs the granting of CPA licenses, including the requirements to sit for the CPA Exam and the requirements to gain licensure. A candidate must pass an exam deemed appropriate for licensure and there are reciprocal rules for candidates taking exams in other states.
As far as education and experience requirements, the CAA is a detailed source regarding what is specifically required to gain licensure. Education requirements include at least 24 semester hours in accounting related subjects, 24 semester hours in business related subjects, 20 hours in accounting study subjects, and 10 hours in ethics. Candidates must also complete at least 150 hours and earn at least a bachelor’s degree. The experience requirements are one year of experience under the employ or supervision of someone with a CPA or comparable license. Section 5093 covers both education and experience requirements to become licensed in the State of California in more detail.
It’s important to note that these sections are consistently being updated, with new sections added every few years to supplement or clarify previous sections. Before relying on outside information for education, experience, and examination requirements, CPA candidates should read through the CAA to ensure no recent updates were made to change the requirements to become licensed.
Standards of Professional Conduct
The CAA’s Code of Professional Conduct reviews what licensees should and should not do as Certified Public Accountants in the State of California. For the most part, the standards are pretty straight forward: don’t be false or misleading, only practice with a valid license in good standing, and notify the California Board of Accountancy of any crimes committed while licensed. This section mixes ethics along with specific rules required by the State of California. After obtaining licensure, CPAs practicing in California should review the Standards of Professional Conduct on a regular basis to make sure they are staying up to date and compliant with the laws. To learn more about California’s Ethics and Professional Conduct or to obtain your California CPE requirement for Ethics, head over to our Ethics and Professional Conduct for California CPAs course.
California, like many states, requires that licensed CPAs meet certain Continuing Professional Education requirements on a consistent basis. California has a two-year licensure period, so CPAs with California licenses need to meet their CPE requirements within that time frame. Licensees must meet an 80 hour CPE requirement within the two year period, and how a licensee practices determines which subject hours those CPE units need to be in. Those who audit governmental agencies need to complete at least 24 hours in governmental accounting and auditing, while those who audit financial statements will need to complete at least 24 hours in financial statement accounting and auditing. Again, changes to these requirements are inevitable as we navigate a dynamic profession, so be sure to always review any updates to the CAA before starting into your two-year requirements.
Discipline and Penalties
The CAA has several extensive sections regarding what may happen if you violate the Standards of Professional Conduct or otherwise breach any laws stated in the CAA. Discipline can include temporary license restrictions, permanent license restrictions, formal accusations, and payment of fines and penalties. Many of these disciplinary actions are related to the misrepresentation of your CPA license (aka using it in a way that doesn’t align with the California Standards of Professional Conduct) as well as CPA Exam cheating.
Professional ethics should be our accounting backbone, and we should use those ethics to avoid any breaches and subsequent disciplinary proceedings. The CAA takes ethics very seriously and allows the California Board of Accountancy to take action against everything, from minor infractions such as omissions on a licensure application, to more serious crimes such as embezzlement. As a CPA practicing in California, it’s essential you’re aware of the laws in the CAA and you review them consistently for changes to avoid any discipline or penalties, and to simply do the right thing on a day-to-day basis.
The California Accountancy Act should always be a source document for California CPAs, especially when they do an ethics review or take an ethics CPE course. Taking time to review the CAA every year or so will ensure you’re always compliant and can hold your CPA license with a sense of honesty and integrity.