New Jersey Division of Consumer Affairs - New Jersey State Board of Accountancy

The State Board of Accountancy licenses and regulates the public accounting profession in the State of New Jersey for the benefit of the public. All certified public accountants (CPAs) are examined, licensed and regulated under State accountancy laws. Such a law exists in every state and, in addition, in the District of Columbia, Puerto Rico, the Virgin Islands and Guam. However, there is a lack of uniformity among the 54 jurisdictions because of differing requirements for CPA certification, reciprocity and rules regarding professional conduct. This lack of uniformity has caused barriers to interstate practice and the mobility of CPAs. The American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy have jointly published a model statute, the Uniform Accountancy Act (UAA), urging each jurisdiction to revise its laws in order to bring about uniformity in licensing and regulating the public accounting profession.

On October 8, 1997, Governor Whitman signed the 1997 Accountancy Act, which revised the 1977 Public Accountancy Act in response to changes in the accounting profession and the practice of public accountancy. These changes became necessary due to the expectations of clients concerning their independent auditors and accountants, in addition to the expectations of the other users of financial statements in the business community, as well as the continuous responsibility of the Board to the public. At least 95% of the 1997 Act is in agreement with the UAA.

Appropriately designed regulation of the public accounting profession serves the public interest in two ways: (1) by providing a reasonable assurance of competence on the part of individuals and firms performing public accounting services that require a substantial degree of skill and competence; and (2) by preventing deception of the public regarding the level of competence that may reasonably be expected of a CPA or a licensed public accountant (PA). The public consists not only of clients of the practitioner but also third parties who rely on CPAs or PAs such as banks and other creditors, stockholders and government regulatory agencies.

Among the many different professional services provided in the practice of public accountancy, the expression of an opinion upon audited financial statements is to a far greater degree affected by the level of competence of the licensee than any other service. Of all the professional services provided by certified public accountants and licensed public accountants, the largest segment of the public by far relies on the accuracy and correctness of the audit function. When audit services are not competently performed, the adverse consequences are far greater than when that is the case with other services performed by licensed accountants. Only licensed individuals and registered firms may perform the attest function. In fact, the only kind of service for which licensing as a CPA or PA is required is the attest function, which includes issuing reports on audits, reviews and compilations of financial statements. Anyone, whether licensed or not, may offer and perform any other accounting service, including tax services, management advisory services, financial advisory services, recordkeeping and the preparation of financial statements without the issuance of such reports.

All services including accounting, auditing, tax preparation and consulting and management advisory services performed by a licensee of the Board are subject to all the rules and regulations promulgated by the New Jersey State Board of Accountancy. The Board consists of 12 members appointed by the Governor. Each member has a term of three years and may serve a maximum of two successive terms. The Board consists of seven certified public accountants, two licensed public accountants, two public members and one State government member who may be a CPA. The Board has jurisdiction over the licensing and professional conduct of approximately 19,000 certified public accountants (CPAs), 850 public accountants (PAs) and 240 registered municipal accountants (RMAs). In addition to sole practitioners, there are approximately 1,200 partnerships and corporations registered to practice public accounting in New Jersey.

The PAs are individuals who were practicing public accounting in 1977, including auditing, although they had not passed the Uniform CPA Examination and in some situations did not meet the educational requirements to be licensed as a CPA. These individuals and firms were grandfathered to continue to perform the audit function in order that they not be subjected to economic hardship. However, after 1977 no new public accountants were licensed. The RMAs are a specialized group of CPAs who by passing a special examination prepared by the Board are licensed to audit municipalities and counties. New Jersey is the only state that requires a special examination and license to perform audits of local governments. The examination is given in November or December of each year.

The New Jersey State Board of Accountancy charges fees to take the CPA exam, to obtain and renew licenses and to register as a firm to perform public accounting services in New Jersey. The Board also collects fines from individuals and CPA firms when there is a determination of noncompliance with Board rules and regulations, or violations of laws. The Board meets monthly, and it has various committees including continuing professional education (CPE), quality enhancement, CPA examination, rules and regulations, statute revision, and reciprocity, which meet as required.

Each month three members of the Board act as an investigatory committee to hear complaints brought against licensees for professional misconduct, performance of substandard work and failure to return records. The investigatory committee, in finding against a licensee, can recommend to the Board a fine, additional CPE, community service, or suspension or revocation of the license to practice public accounting.

Reviewing educational and experience requirements for new certified public accountants.
Administering the Uniform CPA Examination.
Continuing professional education (CPE) credits are required of all CPAs and PAs for license renewal. Forty-eight credit hours every two years with 16 credit hours in accounting and auditing are currently required for licensees engaged in public accounting. CPE is required in order to enhance the professional competence of licensees.

January 1, 2000,

Quality Enhancement Program - All public accounting firms or sole practitioners engaged in performing the attest function are required to participate in a recognized (AICPA or NJSCPA) peer review or quality review program, or participate in the State program. The purpose of the Board's Quality Enhancement Program is to improve the quality of financial reporting on which the public relies. The program emphasizes the value of continued education and is primarily remedial in nature.
Professional Conduct - Ensuring independence, integrity and objectivity; competency; compliance with generally accepted auditing standards; conformance with applicable and generally accepted accounting principles and standards for the charging of commissions and contingent fees; investigation of discreditable acts.

Current requirements (until July 1, 2000) - a baccalaureate degree or its equivalent from an accredited college or university, based upon a curriculum which includes:

1. A minimum of 60 semester hours selected from courses in English, history, foreign languages, mathematics, general psychology, philosophy, biological sciences, economics, sociology, religion, government, political science, geography, fine arts and music.

a. At least 24 semester hours in accounting;
b. At least six semester hours in business law;
c. At least six semester hours in finance;
d. At least six semester hours in economics (additional credits in economics, over and above the required six, may be applied to the liberal arts requirement); and
e. At least 18 semester hours in related business subjects.

3. A candidate cannot sit for the Uniform CPA Examination unless he or she has previously obtained a baccalaureate degree as of the date of the exam.

Future Requirements - As of July 1, 2000, applicants for a New Jersey CPA license will be subject to new educational requirements. Applicants will be required to have at least 150 credit hours of education, including a baccalaureate or higher degree from an institution of higher education acceptable to the Board. Rules to implement the 150-hour requirement have been adopted by the Board as well as curriculum and accreditation requirements effective July 1, 2000. The new rules delineate how they apply both to applicants who will receive their degree before July 1, 2000, and to those applicants who will receive their degree after that date. Candidates must meet all educational requirements in order to qualify to sit for the Uniform CPA Examination.

The State of New Jersey has contracted with CPA Examination Services, Inc. (CPAES), a subsidiary of the National Association of State Boards of Accountancy, to review and evaluate qualifications for the Uniform CPA Examination. Candidates may request an application by calling 1-800-CPA-EXAM (272-3926), or by writing to CPAES at 150 Fourth Avenue North, Nashville, Tennessee 37219-2417.

First-time candidates are also charged a $15 fee for credential evaluation services.

The Uniform CPA Examination is a two-day examination comprising 15.5 hours. The examination is administered each May and November on a Wednesday and a Thursday.

FORMAT

Section	Hours	Day	Time	Four-Options Multiple Choice	Other Objection Answer Formats	Response
Business Law and Professional Responsibilities	3	Wed	9:00-12:00 Noon	50-60%	20-30%	20-30%
Auditing	4.5	Wed	1:30-6:00 p.m.	50-60%	20-30%	20-30%
Accounting and Reporting Taxation, Managerial, and Governmental and Not-for-Profit Organizations	3.5	Thur	8:30-12:00 Noon	50-60%	40-50%	---
Financial Accounting and Reporting Business Enterprises	4.5	Thur	1:30-6:00 p.m.	50-60%	20-30%	20-30%
Total (two days)	15.5

Writing skills are assessed on selected essay responses in the Business Law and Professional Responsibilities, Auditing and Financial Accounting and Reporting sections. Five percent of the total available points for each of these sections is allocated to writing skills.
For the Accounting and Reporting and Financial Accounting and Reporting sections, hand-held calculators are provided to candidates as a part of the examination materials.

1. An applicant is required to pass all sections of the examination in order to qualify for a certificate. If at the time that the examination is administered an applicant passes two or more but not all sections, then the applicant is given credit for those sections and need not sit for re-examination in those sections, provided that:

the applicant takes all sections of the examination at that session;
the applicant attained an average grade of 50 on sections not passed at that examination session;
the applicant passes the remaining section(s) of the examination within 10 consecutive examinations given after the one at which the first sections were passed;
at each subsequent examination session at which the applicant seeks to pass any additional sections, the applicant takes all sections not yet passed; and
in order to receive credit for passing additional sections in any such subsequent examination session, the applicant attains an average grade of 50 on the sections taken but not passed at such session.

1. Conditional credits granted by other jurisdictions may, upon proper application to the Board, be considered for transfer. Credits determined under the laws and regulations of the issuing jurisdiction may be recognized by the Board provided the issuing jurisdiction's educational and examination requirements are substantially equivalent to New Jersey's requirements.

1. An applicant for certification, having passed the examination, must provide satisfactory evidence of:

Individuals working in government, industry or education, whose experience is obtained without the direct supervision of a licensed PA or a CPA, are granted some special exemptions to the experience requirements outlined above. If an individual obtains four years of experience prior to the effective date of the Accountancy Act (April 8, 1998), the Board will accept that experience until April 8, 2004. If the individual was working in government, industry or education, without the supervision of a licensee, as of the effective date of the Accountancy Act, four years of experience will be accepted until April 8, 2002.

An individual holding a current valid license as a certified public accountant in most other U.S. jurisdictions*, having met similar education, examination and experience requirements, may apply to the Board for licensure by endorsement. The candidate must arrange for the original issuing state to issue written verification that the certification is valid and in good standing. An application fee of $75 and an endorsement fee of $100 must accompany the application. After approval, the applicant must remit a triennial registration fee of $90.

*The Board will not automatically accept applicants from the following states or territories: California, Colorado, Delaware, Florida, Maryland, Minnesota, New Hampshire, New York, Oklahoma, Pennsylvania, Vermont, or Virginia, or the territories of Guam, Puerto Rico or the Virgin Islands. Applicants from these states or territories will be reviewed on a case by case basis to ascertain if the applicant had met similar education,experience and examination requirements to those of New Jersey.

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