Functions and History of the CBA
To protect consumers by ensuring only qualified licensees practice public accountancy in accordance with established professional standards.
All consumers are well informed and receive quality accounting services from licensees they can trust.
The California Board of Accountancy (CBA) regulates the accounting profession for the public interest by establishing and maintaining entry standards of qualification and conduct within the accounting profession, primarily through its authority to license. The CBA currently regulates over 97,000 licensees, the largest group of licensed accounting professionals in the nation, including individuals and CPA firms.
By authority of the California Accountancy Act, the CBA:
- Qualifies California candidates for the Uniform CPA Examination.
- Certifies, licenses, and renews licenses of individual CPAs and PAs.
- Registers CPA partnerships, PA partnerships, corporations, and out-of-state accounting firms.
- Receives and investigates complaints.
- Takes enforcement action against licensees for violation of CBA laws and rules.
- Ensures compliance with continuing education requirements.
- Monitors the work products of CPAs, PAs, and CPA firms to ensure adherence to professional standards.
The CBA is self-funded, supported by fees imposed upon the professional community it regulates. The CBA draws no monies from California’s General Fund.
The CBA performs its consumer protection mission for many stakeholders, including:
- Consumers of accounting services who require audits, reviews, and compilations of financial statements, tax preparation, financial planning, business advice and management consultation, and a wide variety of related tasks.
- Lenders, shareholders, investors, and small and large companies who rely on the integrity of audited financial information.
- Governmental bodies, donors, and trustees of not-for-profit agencies, which require audited financial information or assistance with internal accounting controls.
- Regulatory bodies such as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Public Utilities Commission, Department of Insurance, Department of Labor, the Government Accountability Office, and federal and state banking regulators; and local, state, and federal taxing authorities.
- Retirement systems, pension plans, capital markets and stock exchanges.
- Other state boards of accountancy.
The Enforcement Division’s primary responsibility is to oversee the enforcement of California laws and rules governing the practice of public accountancy. It does this by:
- Conducting complex investigations regarding practice issues that require the expertise of a licensed CPA
- Conducting investigations for administrative violations and unlicensed activity
- Issuing citations and fines for violations that do not rise to the level of discipline
- Filing accusations and imposing discipline
- Assigning and monitoring referrals to the Attorney General’s Office
- Monitoring licensees on probation
- Monitoring compliance with the mandatory peer review program
The Licensing Division’s primary charge is to regulate entry into the profession by ensuring that only those who are qualified are issued a license to practice public accountancy. It acts as a gatekeeper for the profession by ensuring:
- Applicants meet education requirements prior to taking the Uniform CPA Examination (CPA Exam);
- Applicants for licensure who have passed the CPA Exam meet the education and experience requirements necessary for licensure;
- Accountancy partnerships and corporations are registered so they can offer services in California;
- Licensees have paid the required fees and have completed the required CE hours to renew their license and demonstrate minimum competency;
- Out-of-state licensed accounting firms that intend to perform specified accounting services for entities headquartered in California meet the minimum registration requirements.
A Brief History of the CBA
From its inception in 1901, by statute the CBA has been charged with regulating the practice of accountants the public could rely upon as being competent. The original law prohibited anyone from falsely claiming to be a certified accountant, a mandate which still exists today.
The standards for licensure have always been high. The first accountants certified by the CBA in 1901 were required to sit for a written examination, including questions on Theory of Accounts, Practical Accounting, Auditing and Commerce Law, with a passage rate of at least seventy percent for each section. Applicants were required to provide a notarized affidavit certifying at least three years accounting experience, at least two years of which must have been in the office of a certified public accountant performing actual accounting work. In addition, each applicant was required to submit three references testifying to his character, in the form of a "Certificate of Moral Character." Today's mandate that each CBA licensee pass an ethics exam finds its antecedent in the CBA's original requirement of this certificate.
Sixty-five applicants were certified as licensees between 1901 and 1906. On April 18, 1906, the great San Francisco earthquake and fire destroyed all the records of the original board, including the documents of the CBA's first 65 licensees. In 1907, the CBA's Secretary-Treasurer, Mr. T. E. Atkinson, meticulously reconstructed those records by corresponding with each licensee from his new Market Street address. Today, thanks to Mr. Atkinson's diligence, the CBA retains the papers of its original 65 licensees in its archival material.
From the beginning of the 20th Century, consumer protection has been the undertaking of the CBA. A December 1, 1913, letter to Governor Hiram Johnson signed by Secretary-Treasurer Atkinson states, "For the further protection of the business public, a statute should be enacted regulating the practice of public accounting so as to require all persons holding themselves forth as being qualified to obtain from this board the certificate of certified public accountant. Public accounting is now generally recognized in business to be of such importance that a standard should be set by public authority and no one allowed to practice without proper credentials."
In 1929, the Legislature placed the CBA within the Department of Professional and Vocational Standards. In 1945, the Legislature substantially revised the Accountancy Act. In 1971, the Legislature placed the CBA within the newly-created Department of Consumer Affairs. Shortly thereafter, the CBA moved its office from San Francisco to Sacramento.