Mobility: substantial equivalency, UAA Section 23 and the individual-based model

In this lesson you will

Explain the principal place of business test for licensure and practice privileges
Describe the individual-based mobility model and the December 31, 2024 safe harbor
Identify the consents a CPA gives when using practice privileges
Determine when an out-of-state firm needs a permit for attest work

The principal place of business test

Under the UAA, you hold a license in the state where your principal place of business is. UAA Ninth Edition Section 23(a)(1) gives an individual whose principal place of business is not in the state, and who holds a valid license in good standing from any state, all the practice privileges of the state's licensees without obtaining another license, if at initial licensure the individual had to show:

passing the Uniform CPA Examination, and
one of: a post-baccalaureate degree with an accounting concentration and at least one year of experience; a baccalaureate plus 30 semester credit hours with an accounting concentration and at least one year; or a baccalaureate with an accounting concentration and at least two years.

The UAA introduction explains that individuals are not denied reciprocity or practice privileges because of minor or immaterial differences in requirements between states.

What changed in the Ninth Edition

NASBA and the AICPA describe two mobility changes in the Ninth Edition:

Individual-based mobility. The UAA moved from state-based mobility to an individual-based practice privilege that keeps a CPA's ability to practice across state lines with one license. The test looks at the individual's qualifications at initial licensure rather than only at the licensing state.
Safe harbor. Section 23(a)(2) provides that an individual who held a valid active license as of December 31, 2024, and as of that date had practice privileges in the state under Section 23, keeps those privileges.

As with every UAA provision, a state's own statute decides whether these apply.

No notice, but consent

Section 23(a)(3) states that an individual practicing under this section, in person or by mail, telephone or electronic means, is granted practice privileges and no notice or other submission is provided. Section 23(a)(4) attaches consents. The individual and the employing firm consent to:

the personal and subject matter jurisdiction and disciplinary authority of the board;
compliance with the state's act and board rules;
ceasing to offer or render services in the state if the home-state license is no longer valid; and
appointment of the home-state board as agent for service of process.

UAA Model Rule 23-4 deems a CPA using practice privileges who meets the CPE rules of the principal-place-of-business state to have met the host state's CPE rules.

Attest work needs a permitted firm

Section 23(a)(5) states that an individual using practice privileges may perform attest services only through a firm that meets Section 7(a)(1)(C) or holds a permit under Section 7. Section 7(a)(1)(C) exempts a firm with no office in the state from the permit if it meets the ownership requirements of Section 7(c) and the peer review requirements of Section 7(h), performs the work through an individual with practice privileges, and can lawfully do so in the state where those individuals have their principal place of business.

Moving states

Under Section 6(c)(2), a CPA licensed elsewhere who establishes a principal place of business in a new state requests a certificate from that board before doing so. The board issues the certificate when the individual obtains verification from NASBA's National Qualification Appraisal Service that the qualifications are substantially equivalent to the UAA requirements.

Common mistakes

Treating mobility as covering a move. Relocating your principal place of business requires a license in the new state.
Ignoring the firm side of attest work across state lines.
Letting the home-state license lapse while serving clients elsewhere.

The mobility guide has more scenarios.

Worked example

An audit across a state line

Grace Holt, CPA, is licensed in State A, where her firm, Lakeshore Audit Group, has its only office and a permit. A new audit client is headquartered in State B. Both states have adopted UAA Sections 7 and 23 as written.

Step 1, Grace: her principal place of business is State A, and she met the exam, a bachelor's plus 30 credits and one year of experience at initial licensure. Under Section 23(a)(1) she has practice privileges in State B, with no notice required under 23(a)(3).

Step 2, the firm: the audit is attest work. Under 23(a)(5) Grace may perform it only through a firm meeting 7(a)(1)(C) or holding a State B permit. Lakeshore has no office in State B. It checks 7(a)(1)(C): CPA owners hold 4 of 6 ownership units, so 4 / 6 = 67%, above a simple majority under 7(c); it is enrolled in peer review under 7(h); the work runs through Grace's practice privileges; and State A allows it. No State B permit is needed.

Step 3, a change: two years later Grace moves to State B and runs the firm's new office there. Her principal place of business is now State B, so under 6(c)(2) she requests a State B certificate before establishing it, and the firm needs a State B permit for an office there under 7(a)(1)(A).

Conclusion: practice privileges cover the cross-border audit, but a move or a new office triggers licensing and permits.

Self-check

Answer each question before you open the answer.

Does a CPA using UAA practice privileges have to notify the host state board?
Show answer
No. Section 23(a)(3) grants the privileges with no notice or other submission, but the CPA and firm consent to the board’s jurisdiction and rules under 23(a)(4).
What does the Ninth Edition safe harbor protect?
Show answer
Section 23(a)(2) preserves practice privileges for individuals who held a valid active license and had practice privileges in the state under Section 23 as of December 31, 2024.
A CPA relocates and opens a practice in a new state. Do practice privileges cover her?
Show answer
No. Practice privileges apply only when the principal place of business is elsewhere; under Section 6(c)(2) she requests a certificate from the new board before establishing her principal place of business there.
An out-of-state firm with no office in the state performs a review engagement for a client there. What lets it skip a permit?
Show answer
Meeting Section 7(a)(1)(C): CPA majority ownership under 7(c), peer review under 7(h), performing the work through an individual with practice privileges, and lawful practice in that individual’s home state.

Sources

Back to the syllabus

Standards are paraphrased from the primary sources listed above; read the source before relying on a requirement. This lesson is training material, not professional advice. Report an error