Title 49--PROFESSIONAL AND VOCATIONAL STANDARDS STATE BOARD OF ACCOUNTANCY [49 PA. CODE CH. 11] CPA Examination [34 Pa.B. 1768] The State Board of Accountancy (Board) amends §§ 11.4, 11.16 and 11.18 (relating to fees; examination completion requirement; and character references for examination) and deletes §§ 11.11--11.15, 11.17 and 11.19 to read as set forth in Annex A.
Statutory Authority
Section 3(a)(12) of the CPA Law (act) (63 P. S. § 9.3(a)(12)) authorizes the Board to promulgate regulations necessary to carry out the provisions of the act.
Omission of Proposed Rulemaking
Under authority of section 204 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1204), known as the Commonwealth Documents Law (CDL), the Board has omitted procedures for proposed rulemaking set forth in sections 201 and 202 of the CDL (45 P. S. §§ 1201 and 1202). Proposed rulemaking has been omitted because: (1) examination candidates affected by the final-omitted rulemaking have been given actual notice of the Board's intention to adopt the amendments prior to the publication of this final-omitted rulemaking; and (2) public comment is unnecessary in that the final-omitted rulemaking adopts National standards regarding new completion requirements for the uniform certified public accountant (CPA) examination and deletes or clarifies other regulations relating to agency procedures and examination administration.
Overview of CPA Examination
Section 3.1(b) of the act (63 P. S. § 9.3a(b)) provides, consistent with earlier statutory provisions, that the CPA examination must be a written examination covering four broad subject areas, that the examination must be held at least twice each year and simultaneously in at least two counties in this Commonwealth and that the Board may use the uniform CPA examination adopted by the American Institute of Certified Public Accountants (AICPA).
All states have adopted the AICPA examination as the required examination for certification as a CPA. Through 2003, the examination was a four-part, paper-and-pencil examination that was administered over a 2-day period during May and November of each year. States had differing requirements regarding how many times an examination candidate could take the examination to achieve a passing score on all parts of the examination and the circumstances under which a candidate could receive ''conditional credit'' for passing one or more parts of the examination.
Effective April 5, 2004, the AICPA examination will be a four-part, computer-based examination with reorganized subject matter that will be administered at least 5 days a week during an examination window that consists of the first 2 months of each quarter of every year beginning April 5, 2004. All states are adopting uniform completion standards, jointly developed by the AICPA and the National Association of State Boards of Accountancy (NASBA), that require an examination candidate to pass all parts of the examination during a rolling 18-month period beginning on the date the candidate first passes one part of the examination. All states are also adopting special completion requirements for an examination candidate who, as of the launch date of the computer-based examination, retained conditional credit for passing parts of the paper-and-pencil examination. In addition, all states are eliminating or revising examination administration regulations that conflict with the more flexible arrangements permitted under the computer-based format.
The Board's test administration contractor, CPA Examination Services (CPAES), a unit of the NASBA, has provided information about the new computer-based examination, including completion requirements, to all initial candidates for the computer-based examination as well as to all candidates with conditional credit from the paper-and-pencil examination for whom there is current address information.
Description of Final-Omitted Rulemaking
§ 11.4
Section 11.4 lists examination fees, license renewal fees and fees charged for Board services. The final-omitted rulemaking deletes the references to examination fees. Examination fees for the licensing boards within the Bureau of Professional and Occupational Affairs are established by contract between the Commonwealth and the independent testing organizations that process examination applications; develop, administer and grade the examinations; and report examination scores. The AICPA develops and grades the CPA examination. The NASBA reports examination scores and maintains a National examination database. CPAES processes examination applications. Effective April 5, 2004, Prometric, a division of the Thomson Corporation, will administer the examination at its computer-based test centers throughout the United States. The Board has no role in establishing or collecting any of the fees charged by the AICPA, the NASBA, CPAES and Prometric.
Upon implementation of the computer-based examination, the fees for taking all or individual parts of the examination will increase, with the fee for the complete (four-part) examination rising from $135 to $470. The fee for taking each part of the examination separately will range from $100.50 to $134.50, depending on the part taken. The fees for taking one part, two parts or three parts of the paper-and-pencil examination were $67.50, $90 and $112.50, respectively. The application processing fee charged by CPAES for the computer-based examination will be $75, which is $30 more than the application processing fee charged for the paper-and-pencil examination. An examination candidate may obtain information about all examination-related fees directly from CPAES or through links on the Board's website.
§ 11.11
Section 11.11 provided that an application for examination must be submitted in a manner prescribed by the Board. The final-omitted rulemaking deletes this section. An examination candidate submits the examination application directly to CPAES, which reviews the application for conformity with examination eligibility requirements in the act and the Board's regulations. The application form and instructions are customized by CPAES to reflect the Commonwealth's eligibility requirements.
§ 11.12
Section 11.12 provided that the examination was administered in at least two counties in this Commonwealth as directed by the Board, and that current examination locations were shown on the examination application. The final-omitted rulemaking deletes this section. Section 3.1(b) of the act requires that the examination be administered in at least two counties. It is not necessary or practical for examination locations to be listed on the examination application. An examination candidate will be able to take the computer-based examination at any of the approximately 300 Prometric test centers throughout the United States, including 10 locations in this Commonwealth. A candidate will be able to obtain test center information directly from Prometric.
§ 11.13
Section 11.13 provided that the examination was administered in May and November, and that the examination dates were shown on the examination application. The final-omitted rulemaking deletes this section. The paper-and-pencil examination was administered over a 2-day period in May and November of each year. The computer-based examination will be administered at least 5 days a week during the first 2 months of each 3-month examination window that begins April 5, 2004. An examination candidate will be able to obtain information about examination dates directly from CPAES and Prometric.
§ 11.14
Section 11.14(a) required that an application from a new examination candidate must be received by February 15 for the May examination and by August 15 for the November examination. Section 11.14(b) required that an application from a reexamination candidate must be received by March 1 for the May examination and by September 1 for the November examination. Section 11.4(c) provided that the date of receipt would be determined by the postmark date.
The final-omitted rulemaking deletes this section. There is no need for application deadlines with the new computer-based examination. CPAES will accept an examination application at any time. An eligible candidate will receive a ''notice to schedule'' from CPAES. A candidate uses the ''notice'' to schedule an appointment with Prometric to take the examination at one of its test centers. Depending upon the availability of the date, time and location selected, a candidate will be able to schedule an appointment with as little as 6 days' notice to Prometric.
§ 11.15
Section 11.15 provided that an examination candidate in this Commonwealth with a permanent or temporary location in another state could have taken the examination in the other state if the state's accountancy licensing board allows it. The candidate had to obtain permission from the other state's accountancy licensing board before submitting an examination application and must indicate on the application the out-of-State location where the examination will be administered.
The final-omitted rulemaking deletes this section. An examination candidate in this Commonwealth who satisfies examination eligibility requirements will be able to take the computer-based examination at any Prometric test center in the United States without seeking prior approval of the accountancy licensing board of the state where the test center is located. Section 3.1(a)(1) of the act requires that an examination candidate in this Commonwealth must have a connection to this Commonwealth at the time the examination is initially taken. The connection is established through maintaining a residence in this Commonwealth, being a graduate of, or being currently enrolled in, a college or university in this Commonwealth or being employed in this Commonwealth under the supervision of a licensed CPA.
§ 11.16
Section 11.16(a) sets forth the examination completion requirements for a candidate who initially took the examination on or after November 1, 1990. A candidate must initially sit for all parts of the examination and must pass at least two parts to receive credit. A candidate who does not pass at least two parts must retake the entire examination. A candidate who passes at least two parts may sit for one or both of the remaining parts at the candidate's discretion. A candidate who does not pass all parts within 5 years (that is, ten examination opportunities under the paper-and-pencil examination) must reapply as a new candidate and retake the entire examination.
Section 11.16(b) sets forth the examination completion requirements for a candidate who initially took the examination before November 1, 1990. A candidate must initially sit for all parts of the examination and must continue to sit for all parts not passed. A candidate will receive credit for each part of the examination passed provided the candidate scored at least 20% on the parts not passed. A candidate is not subject to a deadline for passing all parts of the examination. The Board imposed stricter completion requirements in November 1990, to make the Commonwealth's requirements more comparable with those of other states.
Section 11.16(c) provided that a candidate who passed the accounting practice part of the examination before May 1994 will receive credit for passing two parts of the examination. This section reflects a restructuring, in May 1994, of the examination format from a five-part examination, including two parts on accounting practice, to a four-part examination, including one part on accounting practice.
The final-omitted rulemaking amends § 11.16 in its entirety by establishing new completion requirements for the computer-based examination based on model regulations developed by the AICPA and the NASBA.
Amended § 11.16(a) provides that a four-part, computer-based examination will replace the four-part, paper-and-pencil examination effective April 5, 2004. The examination will be administered during an examination window that consists of the first 2 months of each quarter of every year beginning April 5, 2004. An examination candidate may take the four parts of the examination individually or in combination and in any order. A candidate may take each unpassed part once during each examination window. A candidate will receive conditional credit for passing each part of the examination, without regard to the scores on the parts not passed.
Amended § 11.16(b) provides that an examination candidate without conditional credit from the paper-and-pencil examination must pass all four parts of the examination during a rolling 18-month period (comprising six examination windows) that begins from the date the candidate first passes one part of the examination. If a candidate does not pass all parts within the 18-month period, conditional credit for any part passed outside the 18-month period will expire and that part must be retaken. There is no deadline or time period within which a candidate must first pass a part of the examination.
Amended § 11.16(c) establishes the completion requirements for an examination candidate who initially took the examination in November 1999 or thereafter and who, as of April 5, 2004, had received conditional credit for passing at least two parts of the examination. Because of the 5-year completion requirement (comprising ten examination opportunities) for candidates who initially took the examination on or after November 1, 1990, there are currently no candidates with conditional credit who initially took the examination between November 1990 and May 1999. A candidate must pass the remaining parts of the examination within a 5-year period from the date of initial examination. Consistent with the model regulations developed by the AICPA and the NASBA, a candidate will have the same number of opportunities to complete the computer-based examination as would have been available under the paper-and-pencil examination. For example, a candidate who initially took the examination in November 2000 would have had seven examination opportunities before implementation of the computer-based examination (that is, November 2000, May 2001, November 2001, May 2002, November 2002, May 2003 and November 2003) and, therefore, will have three examination opportunities, or windows, remaining as of April 5, 2004.
The following chart illustrates the relevant completion requirements based on when a candidate initially took the examination:
Available Initial Examination Examination Examination Date Windows Completion Date November 3-4, 1999 1 November 4, 2004 May 3-4, 2000 2 May 4, 2005 November 1-2, 2000 3 November 2, 2005 May 2-3, 2001 4 May 3, 2006 November 7-8, 2001 5 November 8, 2006 May 8-9, 2002 6 May 9, 2007 November 6-7, 2002 7 November 7, 2007 May 7-8, 2003 8 May 8, 2008 November 5-6, 2003 9 November 6, 2008 A candidate will be permitted to take a part of the examination during any examination window between April 5, 2004, and the appropriate examination deadline. If a candidate does not pass the remaining parts of the examination by the appropriate completion deadline, or after exhausting the remaining examination opportunities, whichever occurs first, conditional credit for parts of the examination passed before April 5, 2004, will expire, and a candidate will be subject to the regular completion requirements in § 11.16(b). In that case, a candidate will retain conditional credit for any part of the examination passed on or after April 5, 2004, that is timely to the regular completion requirements.
Section 11.16(d) establishes the completion requirement for an examination candidate who initially took the examination before November 1, 1990, and who, as of April 5, 2004, had received conditional credit for passing at least one part of the examination. During the last few administrations of the paper-and-pencil examination, there were only a small number of candidates with conditional credit who initially took the examination before November 1, 1990. Under the current regulation, these candidates are under no deadline to complete the remaining parts of the examination. The model regulations developed by the AICPA and the NASBA do not contemplate that a conditioned candidate should have an unlimited amount of time to pass the remaining parts of the examination. A completion deadline contributes to the validity of the examination as a useful measurement of technical knowledge and skill because it requires a candidate to demonstrate more or less contemporaneous mastery of the complex subject areas related to the practice of public accounting.
Section 11.16(d) requires a candidate who initially sat for the examination before November 1, 1990, to pass the remaining parts of the examination during an 18-month period that begins on the date when the candidate next sits for the examination on or after April 5, 2004. If a candidate does not pass the remaining parts of the examination within the 18-month period, conditional credit for parts of the examination passed before April 5, 2004, will expire, and a candidate will be subject to the regular completion requirements in § 11.16(b). In that case, a candidate will retain conditional credit for any part of the examination passed on or after April 5, 2004, that is timely to the regular completion requirements.
The completion standard in § 11.16(d) allows a candidate with no prior completion deadline continued flexibility in determining when to resume the examination process, while requiring the candidate, upon retaking the examination, to pass the remaining parts within the same time frame as that required of a candidate who was not previously conditioned.
Section 11.16(e) provides that a candidate will retain conditional credit as of April 5, 2004, based on the following equivalency, as determined by the AICPA and the NASBA, between the four parts of the paper-and-pencil examination and the four parts of the computer-based examination:
Paper and Pencil Computer-Based Examination Examination Auditing (AUD) Auditing and Attestation Financial Accounting and Reporting (FARE)
(previously Accounting Theory)Financial Accounting and Reporting Accounting and Reporting (ARE)
(previously Accounting Practice)Regulation Business Law and Professional Responsibilities (LPR) (previously Business Law) Business Environment and Concepts The current completion requirements lack a provision allowing the Board to extend the term of conditional credit in cases of individual hardship. Section 11.16(f) provides, consistent with the model regulations developed by the AICPA and the NASBA, that the Board may extend the term of a candidate's conditional credit upon the candidate's showing that the conditional credit expired by reason of circumstances beyond the candidate's control.
§ 11.17
Section 11.17 provided that an examination candidate must submit the application required by § 11.11, together with the examination fee, to the Board's designee. The final-omitted rulemaking deletes this section. An examination candidate may obtain detailed information about the application procedures and examination fees directly from CPAES or through links on the Board's website.
§ 11.18
Section 11.18 requires a candidate for initial examination to submit character references from three nonrelatives, including a CPA, who are residents of this Commonwealth and who have been acquainted with the candidate for at least 3 years. A candidate must submit a statement of reference form that is completed by each character reference and must have each character reference sign the examination application in a space designated for that purpose. The requirements may be waived for good cause.
The Board requires an examination candidate to submit character references because section 3.1(a)(3) of the act requires a candidate to be of good moral character. The character references are presumptive evidence of good moral character (although the presumption may be rebutted by evidence such as a candidate's criminal record). In recent years, the Board has not required an examination candidate to submit the separate statement of reference form with the examination application because it is redundant of the character references' signatures on the application and thus creates unnecessary paperwork. Accordingly, the final-omitted rulemaking amends § 11.18 to delete the requirement of a separate statement of reference form. The final-omitted rulemaking also clarifies that an examination candidate may submit as character references on the examination application individuals who, for good cause shown by the candidate, do not satisfy all the requirements in the regulation.
§ 11.19
Section 11.19 provided that, effective with the May 1980 examination, an examination candidate received scores for each part of the examination by mail, that the scores of all candidates were mailed on the same day and that no prior disclosure of the scores was made to any candidate.
The final-omitted rulemaking deletes this section. The examination is graded by the AICPA, examination scores are processed by the NASBA and mailed to examination candidates by CPAES. A candidate is apprised during the application process of the procedures for the reporting of examination scores. Under the computer-based examination, all candidates will initially receive their scores at the end of each 3-month examination window. It is anticipated candidates will eventually receive their scores within 2 weeks of the date they took the examination.
Effective Date
The final-omitted rulemaking will take effect upon publication in the Pennsylvania Bulletin and will be applicable during all relevant time frames associated with implementation of the computer-based CPA examination on April 5, 2004.
Fiscal Impact and Paperwork Requirements
The final-omitted rulemaking will not have a fiscal impact on, or create additional paperwork for, the regulated community, the general public or the Commonwealth and its political subdivisions.
Regulatory Review
Under section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)), on February 17, 2004, the Board submitted a copy of the final-omitted rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the Senate Consumer Protection and Professional Licensure Committee and the House Professional Licensure Committee. A copy of this material is available to the public upon request.
On March 4, 2004, under authority of section 5.1(g)(1) of the Regulatory Review Act, the Board tolled the review period to clarify one of the amendments, and submitted revised amendments on that date to IRRC, the Committees and the Office of Attorney General.
Under section 5.1(g)(3) and (j.2) of the Regulatory Review Act, on March 16, 2004, the revised final-omitted rulemaking was approved by the House Committee and deemed approved by the Senate Committee. Under section 5.1(e) of the Regulatory Review Act, IRRC met on March 25, 2004, and approved the final-omitted rulemaking.
Additional Information
For additional information, submit inquiries to Dorna J. Thorpe, Administrator, State Board of Accountancy, P. O. Box 2649, Harrisburg, PA 17105-2649, (717) 783-1404, ST-ACCOUNTANCY@state.pa.us.
Findings
The Board finds that:
(1) Public notice of the Board's intention to amend its regulations under the procedures in sections 201 and 202 of the CDL has been omitted under section 204 of the CDL because examination candidates affected by the amendments adopted by this order have been given actual notice of the Board's intention to adopt the amendments prior to publication of this order and because public comment is unnecessary in that the amendments adopted by this order implement National standards regarding completion of the uniform CPA examination and delete or clarify other regulations relating to agency procedures and examination administration.
(2) The amendment of the Board's regulations in the manner provided in this order is necessary and appropriate for the administration of the act.
Order
The Board, acting under the act, orders that:
(a) The regulations of the Board, 49 Pa. Code Chapter 11, are amended by amending §§ 11.4, 11.16 and 11.18 and by deleting §§ 11.11--11.15, 11.17 and 11.19 to read as set forth in Annex A.
(b) The Board shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General for approval as to legality as required by law.
(c) The Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
FRANCIS J. LISON, CPA,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 34 Pa.B. 1865 (April 3, 2004).)
Fiscal Note: Fiscal Note 16A-5510 remains valid for the final adoption of the subject regulations.
Annex A TITLE 49. PROFESSIONAL AND
VOCATIONAL STANDARDSPART I. DEPARTMENT OF STATE Subpart A. PROFESSIONAL AND
OCCUPATIONAL AFFAIRSCHAPTER 11. STATE BOARD OF ACCOUNTANCY GENERAL PROVISIONS § 11.4. Fees.
Following is the schedule of fees charged by the Board:
Certification and initial licensure of certified public accountant $65 Initial licensure of public accounting firm $45 Temporary practice permit $25 Biennial renewal of license of certified public accountant, public accountant or public accounting firm $45 Reinstatement of inactive or expired license $35 Certification of scores $25 Verification of certification, registration or licensure $15 Initial approval of program sponsor or reapproval of previously approved program sponsor when application is submitted after April 30, 2001 $145 Reapproval of previously approved program sponsor when application is submitted by April 30, 2001 $120 Biennial renewal of approval of program sponsor beginning January 1, 2004 $120 EXAMINATIONS § 11.11. (Reserved).
§ 11.12. (Reserved).
§ 11.13. (Reserved).
§ 11.14. (Reserved).
§ 11.15. (Reserved).
§ 11.16. Examination completion requirement.
(a) Effective April 5, 2004, the four-part, paper-and-pencil CPA examination will be replaced with a four-part, computer-based CPA examination. The examination will be administered during an examination window that consists of the first 2 months of each quarter of every year beginning April 5, 2004. An examination candidate may take the four parts of the examination individually or in combination, and in any order. A candidate may take each unpassed part of the examination once during each examination window. A candidate will receive conditional credit for passing each part of the examination, without regard to the scores on the parts not passed.
(b) Except as provided in subsections (c) and (d), an examination candidate shall pass all parts of the examination during a rolling 18-month period that begins on the date the candidate first passes one part of the examination. If the candidate does not pass all parts of the examination within the 18-month period, conditional credit for any part passed outside the 18-month period will expire, and the candidate shall retake that part of the examination.
(c) An examination candidate who, as of April 5, 2004, had received conditional credit for passing at least two parts of the examination since November 1999 shall pass the remaining parts of the examination within 5 years from the date the candidate initially took the examination.
(1) The candidate shall be permitted to take the remaining parts of the examination during the following number of examination windows, depending on when the candidate initially took the examination:
Available Initial Examination Examination Examination Date Windows Completion Date November 3-4, 1999 1 November 4, 2004 May 3-4, 2000 2 May 4, 2005 November 1-2, 2000 3 November 2, 2005 May 2-3, 2001 4 May 3, 2006 November 7-8, 2001 5 November 8, 2006 May 8-9, 2002 6 May 9, 2007 November 6-7, 2002 7 November 7, 2007 May 7-8, 2003 8 May 8, 2008 November 5-6, 2003 9 November 6, 2008 (2) The candidate may take a part of the examination during any examination window between April 5, 2004, and the appropriate completion deadline.
(3) If the candidate does not pass the remaining parts of the examination by the appropriate completion deadline, or after exhausting the remaining examination opportunities, whichever occurs first, conditional credit for the parts of the examination passed before April 5, 2004, will expire, and the candidate shall thereafter be subject to the requirements of subsection (b). In that case, the candidate will retain conditional credit for any part of the examination passed after April 5, 2004, that is timely to the requirements of subsection (b).
(d) An examination candidate who initially took the examination prior to November 1990 and who, as of April 5, 2004, had received conditional credit for passing at least one part of the examination shall pass the remaining parts of the examination within 18 months from the date the candidate next takes the examination on or after April 5, 2004. If the candidate does not pass the remaining parts of the examination within the 18-month period, conditional credit for the parts of the examination passed before April 5, 2004, will expire, and the candidate shall thereafter be subject to the requirements of subsection (b). In that case, the candidate will retain conditional credit for any part of the examination passed after April 5, 2004, that is timely to the requirements of subsection (b).
(e) For purposes of subsections (c) and (d), an examination candidate with conditional credit under the paper-and-pencil examination will receive conditional credit under the computer-based examination based on the following equivalency between the four parts of the two examinations:
Paper and Pencil Computer-Based Examination Examination Auditing (AUD) Auditing and Attestation Financial Accounting and Reporting (FARE) (formerly Accounting Theory) Financial Accounting and Reporting Accounting and Reporting (ARE)
(formerly Accounting Practice)Regulation Business Law and Professional Responsibilities (LPR) (formerly Business Law) Business Environment and Concepts (f) Notwithstanding the requirements of subsections (a)--(c), the Board may extend the term of a candidate's conditional credit upon the candidate's showing that the conditional credit expired by reason of circumstances beyond the candidate's control.
§ 11.17. (Reserved).
§ 11.18. Character references for examination.
An initial candidate for the CPA examination shall have three individuals, including one certified public accountant, sign the examination application as character references. The individuals selected as character references shall be residents of this Commonwealth who have known the candidate for at least 3 years and who are not related to the candidate. The candidate may submit with the examination application other individuals as character references if the candidate, for good cause shown, is unable to obtain the signatures of individuals who satisfy the requirements of this section.
§ 11.19. (Reserved).
[Pa.B. Doc. No. 04-553. Filed for public inspection April 2, 2004, 9:00 a.m.]
