A top-20 CPA firm in Minnesota got hit with a $15,000 fine. The fine didn’t stem from shoddy audit work, but from letting a license lapse. Worse, they had to reissue every single report completed during the lapsed period. Imagine making that call to your clients. And they’re far from alone.
In a recent Earmark webinar, Lindsay Patterson, co-founder and CEO of CPA QualityPro, and Julia Woislaw, the company’s VP of Strategic Partnerships and Regulatory Affairs, laid out the seismic changes reshaping CPA licensure and mobility laws across the country. Every day, their company works with firms, state societies, and state boards on compliance issues just like this. And what they’re seeing right now is unprecedented. As Lindsay put it, this isn’t just the biggest and fastest change in licensure they’ve seen in their careers.
The sweeping adoption of alternative CPA licensure pathways across nearly every U.S. jurisdiction has shattered the profession’s long-standing uniformity. What was once a simple, state-based mobility system is being replaced by a complex, individual-based model that demands every firm rethink how it tracks qualifications, verifies practice privileges, and engages with state boards. This affects every practicing professional. And firms that don’t adapt risk joining a growing list of practitioners facing fines, probation, and forced report reissuances for compliance failures they never saw coming.
During the webinar, we discussed what the new licensure pathways look like, why the loss of uniformity matters so much, how both individual and firm mobility rules are shifting and where the compliance gray zones are hiding, and the real disciplinary consequences firms are already facing. We also shared practical steps you can take to protect yourself.
The biggest licensure shake-up in decades, and why it affects you
For roughly two decades, becoming a CPA looked basically the same no matter where you lived. You passed the uniform CPA exam, logged one year of experience, and completed 150 credit hours of education that included a bachelor’s degree. Sure, there were minor variations and safe harbors between jurisdictions, but the core formula was consistent across all 55 U.S. jurisdictions. That uniformity was the foundation on which everything else rested, including mobility and reciprocity. A state board in Texas could look at a Washington-licensed CPA and say, “You’re good.”
That foundation is cracking.
States are now preserving the traditional 150-hour route while adding a second pathway to licensure. Under the new option, candidates still take the uniform CPA exam, but they can get licensed with a bachelor’s degree (approximately 120 credit hours) and two years of experience instead of 150 hours and one year. The intent is sound. It lowers the cost barrier to entry, potentially expands the pipeline, and gives aspiring CPAs more flexibility. Nearly every state has either passed this new pathway legislation or is actively pursuing it.
And it happened fast. As Lindsay noted, the original move to CPA mobility took about 20 years to roll out across jurisdictions. These recent changes swept through state legislatures in just the past couple of years. “This is the biggest change we’ve seen in licensure in my whole career,” Julia agreed.
It’s great news for the profession’s talent pipeline. But it gets complicated for everyone else.
Each of those 55 jurisdictions writes its own laws and rules. They have their own legislatures, their own boards of accountancy, and their own political dynamics. Nobody was going to pass identical language, even if they wanted to. The result is a growing web of state-specific discrepancies that practitioners need to understand.
Take something as seemingly straightforward as what “bachelor’s degree” means. New York has defined it as 120 credit hours. Washington state simply references “a bachelor’s degree” without specifying a number. That distinction might seem academic right now, but it won’t stay that way. Universities are already exploring accelerated degree programs, such as 90-hour bachelor’s degrees and three-year tracks. A CPA who earns one of those degrees and gets licensed in Washington could face a very different reception from the New York State Board of Accountancy.
Then there’s the experience requirement. Most states have moved to what’s called “verified” experience, meaning any CPA who’s familiar with your work. They don’t necessarily have to be your direct supervisor, but they can vouch for you to the state board. But New York and a handful of other states still require “supervised” experience, where your direct supervisor must be a CPA who personally signs off on your qualifications. If you got licensed under the verified model in one state, that distinction could matter enormously when you try to practice in a supervised-experience state.
Julia and Lindsay distilled the new-pathway landscape into three takeaways that every firm should internalize:
- New talent opportunities are real. More pathways mean more people can become CPAs, which is genuinely positive for a profession facing serious workforce challenges. If your firm is thinking about recruiting, this opens doors.
- States are moving out of uniformity, and we’re in a messy transition. We don’t yet know how every state board will respond to CPAs licensed under pathways that differ from their own. Some boards haven’t even begun to address it publicly. That ambiguity is itself a compliance risk.
- These changes affect every CPA, not just new ones. Julia returned to this point several times because most practitioners miss it. Initial licensure isn’t just a historical footnote in your career. It’s the foundation regulators use to determine whether you have practice privileges in their state. How you got your license five, ten, or twenty years ago now matters in ways it never did before.
That last point deserves emphasis. If you’re a veteran CPA who earned your license under a pathway that no longer mirrors what another state requires, you could face questions about your right to practice there.
So if how you got licensed now determines where you can practice, what does that mean for the mobility privileges CPAs have long taken for granted?
From state-based to individual-based mobility: A new compliance equation
Under the old model, if you have an active license in Washington state, any other state can look at Washington’s licensure requirements, confirm they are “substantially equivalent” to their own, and waive you through. Your home state vouched for you. Simple.
That model is dying. In its place, states are building an individual-based system that asks a fundamentally different question: not where you got your license, but how you got it.
Most states adopting the new framework say that if you’re a CPA “in good standing,” you’re generally fine to practice across state lines. But (and this is a big but) some states are adding guardrails. They’re saying you have mobility privileges only if your initial licensure pathway matches one of their current pathways. And “in good standing” itself isn’t defined uniformly. A lapsed license in one state almost certainly kills your standing elsewhere, but beyond that, the definition can vary.
Consider Lindsay’s own situation. She’s licensed in Washington with verified experience. New York’s new mobility law grants mobility to CPAs whose qualifications match one of New York’s current licensure pathways. New York requires supervised experience. Will the New York board deny her practice privileges because her experience was verified rather than supervised? Nobody knows yet. The board hasn’t had to address the question publicly.
That uncertainty is the point. We’re in the gap between legislation and implementation, and that’s where compliance risk lives.
The map of states moving to individual-based mobility is already almost entirely purple, as Lindsay showed during the webinar. She anticipates 95% coverage within about 18 months. The notable holdout is Hawaii, which has no mobility and, as Lindsay bluntly put it, likely won’t anytime soon. “I would be shocked if they passed mobility any time soon,” she said. “You need to have a license in Hawaii.”
What you now need to know about every CPA in your firm
Lindsay and Julia said they haven’t found a single firm that already tracks the specific details of how each CPA in the firm got licensed. That means education (150 or 120 hours? bachelor’s or master’s?), experience (one year or two? supervised or verified?), and the states in which they hold licenses. Under the old model, none of this granularity mattered much. Under the new one, it determines who you can assign to which engagements in which states.
With these individual qualifications becoming so critical, firms face a new administrative burden that most aren’t prepared for. But individual mobility is only half the equation.
Firm mobility is a different animal entirely
Individual mobility is about people. Firm mobility is about entities and hinges heavily on the type of service you provide, especially attest services. Even in states that offer firm mobility with no notice and no fee, there are conditions. And those conditions have teeth.
The big ones include majority CPA ownership. This requirement is taking on new urgency as private equity investment reshapes firm structures. If a PE deal changes your ownership percentages, your firm’s mobility could evaporate in states you’re actively serving. Peer review enrollment is another trigger, and states don’t agree on which services require it. A compilation might not trigger peer review in your home state, even if it does in the state where your client sits. Change notification requirements also apply, sometimes even to notices of intent to practice that aren’t full licenses.
Julia walked through a scenario that makes this concrete. A firm with offices in Utah and Colorado picks up a new audit client in Florida. The good news is that Florida has firm mobility even for attest services. The bad news is that Florida’s conditions include majority CPA ownership, peer review enrollment, a requirement that non-licensed owners be principally engaged in the business, and compliance with Florida-specific rules on minimum capitalization, letters of credit, and liability insurance. “I don’t know any firm that checks that before they take on a client,” Julia admitted. While a state board might not look for these issues proactively, if something else triggers an investigation, suddenly every one of these conditions gets scrutinized.
Then there’s Mississippi, which requires the specific office providing attest services to hold a state license, not just the firm. If your Alabama office is licensed in Mississippi but you shift an engagement to your Arkansas team, that Arkansas office needs its own Mississippi license. That detail is easy to miss and expensive to get wrong.
And what happens when state law and board guidance don’t match? Maine passed legislation allowing firm mobility with no notice or fee for attest services. But the Maine Board of Accountancy still hasn’t updated its rules. Its guidance still says you need a license. Lindsay’s advice mirrors how you’d approach an audit: “Not documented, not done.” If you call a board and get a verbal okay from a staff member, that’s not enough. Staff change. Board members change. Interpretations shift. Get it in writing, at minimum via email, but a formal guidance document is best.
Two more compliance traps are worth flagging. First, what counts as an attest service varies by state. Compilations may or may not qualify depending on the jurisdiction, which affects everything from peer review requirements to firm registration. Second, remote employees working from a different state than their firm’s office creates real questions about the principal place of business. If your CPA lives in New Jersey but works for a New York firm, and they hold themselves out as a CPA in New Jersey (even just on LinkedIn or in an email signature), they likely need a New Jersey license.
Firms are already facing real consequences for compliance failures, and many of those failures are entirely preventable.
Real consequences and what you can do about it
State boards aren’t waiting for the dust to settle on these changes before enforcing compliance. They’re already sanctioning firms, and the violations they’re catching aren’t exotic edge cases. They’re the kinds of mistakes that happen when busy professionals lose track of deadlines or assume their existing setup is fine.
The most common violations Lindsay and Julia pulled from state board minutes and client conversations boil down to a surprisingly short list:
- Not renewing licenses on time. This one tops the charts at both the individual and firm level. Different states renew on different timelines. Some annually, some biennially and even some triennially. And the trigger dates vary wildly. Some states renew in December. Some on the anniversary of your initial license. Some on your birthday. When you’re tracking licenses for dozens of CPAs across multiple states, missed deadlines become almost inevitable without a solid system.
- Providing attest services without proper licensing or notification. Say a firm takes on a new engagement type for an existing out-of-state client, such as stepping up from tax work to an audit, without checking whether that triggers additional registration or notification requirements. It does in many states.
- Failure to complete CPE. Self-explanatory, but still alarmingly common.
- Not knowing which states require a license at all. Lindsay noted that most firms they speak to are inadvertently breaking at least one small rule. Nobody’s acting in bad faith; they just haven’t checked.
- Individual CPAs lacking a license in their principal place of business. Post-COVID remote work has made this one pervasive.
The real disciplinary examples are sobering. Beyond the Minnesota top-20 firm that opened this article, there’s a Texas firm whose delinquent attest license was revoked entirely. A New York CPA received two years of probation and a $5,000 fine simply for holding out as a CPA with a lapsed license. And “holding out” doesn’t require anything dramatic. Your email signature or LinkedIn profile counts, as does your firm’s website listing you as “Jane Doe, CPA.”
North Carolina flagged four firms across three states that failed to file the required notice of attest when providing attest services in those states. None were trying to skirt the rules. They just didn’t know the requirement existed.
And a detail that surprised even Lindsay and Julia is that the people who most often let individual license renewals lapse are partners. They’re the busiest people in the firm, the ones signing audit reports, and the ones whose lapse carries the most consequences.
Building a compliance infrastructure that actually works
So what do you do with all of this? Lindsay and Julia laid out a practical framework that any firm can start implementing immediately.
- Assess your current tracking system. How are you monitoring license renewal dates, CPA qualifications, and state-specific practice privilege requirements right now? Many firms are running on aging Excel spreadsheets that one person maintains. When that person goes on leave or leaves the firm, the entire system breaks down. If that sounds familiar, you’ve identified your first point of failure.
- Map your full exposure. Identify every state where you have clients, what services you provide in each, how your firm advertises itself in those states, and whether your staff’s qualifications actually align with each state’s requirements. This exercise alone will likely uncover gaps you didn’t know existed.
- Trust but verify. Don’t assume your CPAs’ licenses are active just because they say so. Use CPA Verify or individual state board websites to independently confirm license status. Renewal deadlines get missed during busy season. It happens, but catching it before a state board does is the difference between a quick fix and a public disciplinary notice.
Watch the full webinar for more takeaways.