DRL Accounting Board Schedule

The following are answers to some frequently asked questions received by the Department of Regulation and Licensing. These questions and answers are general in nature and are provided as a public service. Licensees and applicants with specific questions should refer to the Wisconsin statutes and administrative code provisions which govern their profession. In any instance in which an answer may differ from the provisions of the statutes and administrative code provisions, the latter will govern.

Complaints against certified public accountants

Q. How do I file a complaint against a CPA?

A. Information concerning filing a complaint is discussed in the Department of Regulation and Licensing website under Consumer Services.

Q. What is the difference between a Client's records and a CPA's records?

A. Client records are owned by the client and must be returned to the client. All records that are not client records are CPA records and do not have to be given to the client. Client records are original source documents that have been received from the client. During the course of rendering services, CPAs routinely examine and refer to client original source documents. These may include original W-2 forms, income statements, property tax invoices, asset purchase documentation, tax depreciation schedules, accounting records (for example, the general ledger), debt agreements, bank statements and other legal documents. CPA records are all statements, records, schedules, work product, working papers and memoranda made by the CPA during the course of rendering services to a client unless there is a contractual agreement to the contrary. Examples of CPA records are the CPA's original working papers, records of client communications or correspondence, and copies of client original source documents. For a more detailed review of this question see Wis. Admin. Code § 1.401(2). .

Q. Does the law prohibit my CPA from holding my financial records until I pay the CPA's bill?

A. Retention of client records after a demand is made for them by the client is considered an act discreditable to the profession and violates the code regulating the CPA profession. While it is a violation of the code for a CPA to retain a client's records to enforce payment, the working papers of a CPA are CPA's property and need not be surrendered to the client. See Wis. Admin. Code § 1.401(2).

Wisconsin law regulating certified public accountants:

Q. Where can I find the Wisconsin Statutes and Wisconsin Administrative Code regulating certified public accountants?

A. The chapter of the Wisconsin Statutes regulating certified public accountants, Wis. Stat. ch. 442, is available on the Internet at the website for the Wisconsin Revisor of Statutes. Select The Updated Wisconsin Statutes & Annotations and go to Chapter 442. The administrative code for the Accounting Examining Board can be selected from a Table of Contents for the code. Select Accy.

You may purchase a hard print copy form Document Sales, Department of Administration by calling Document Sales at 800-362-7253 or 608-264-9419 or by email at docsales@doa.state.wi.us.

Q. What are “attest services?”

A. Under Wis. Stat. § 442.001 (1) and Wis. Admin. Code §§ Accy 1.003 and 1.205, “Attest service” means any of the following:

• An audit or any other engagement that is performed or intended to be performed in accordance with the Statements on Auditing Standards issued as of June 1, 2003 by the Auditing Standards Board of the American Institute of Certified Public Accountants.

• A review of a financial statement that is performed or intended to be performed in accordance with the Statements on Standards for Accounting and Review Services issued as of June 1, 2003 by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants.

• An examination of prospective financial information that is performed or intended to be performed in accordance with Statements on Standards for Attestation Engagements issued as of June 1, 2003 , by the Auditing Standards Board, the Accounting and Review Services Committee, and the Consulting Services Executive Committee of the American Institute of Certified Public Accountants.

Q. When is a CPA certificate required to practice accounting?

A. Generally, if a person practices in Wisconsin as a certified public accountant (CPA), holds himself or herself out as a CPA or provides attest services, the person and the person's firm must be licensed as certified public accountants. The Wisconsin Supreme Court ruled in 1965 in Tom Welch Accounting Service v. Walby , 29 Wis. 2d 123; 138 N.W.2d 139 (1965) that non-CPAs may keep books, and make trial balances or statements and genera ll y practice accountancy, but the use of their audits or reports under the guise that they were made by a CPA or public accountant is prohibited. These general provisions are identified in Wis. Stat. ch. 442.

Wisconsin law provides in Wis. Stat. § 442.03 that,

“No person may lawfully practice in this state as a certified public accountant either in the person's own name, or under an assumed name, or as a member of a firm, unless the person has been granted by the examining board a certificate as a certified public accountant, and unless the person and firm have complied with all of the provisions of this chapter, including licensure.”

Under Wis. Stat. § 442.02 (1m), a person shall be considered to be in practice as a certified public accountant, if any of the following conditions is met:

“(a) The person holds himself or herself out to the public in any manner as one skilled in the knowledge, science, and practice of accounting, and as qualified and ready to render professional service therein as a certified public accountant for compensation.

“(b) The person maintains an office for the transaction of business as a certified public accountant or, except as an employee of a certified public accountant, practices accounting, as distinguished from bookkeeping, for more than one employer.

“(c) The person offers to prospective clients to perform for compensation, or performs on behalf of clients for compensation, professional services that involve or require an audit of financial transactions and accounting records.

“(d) The person prepares for clients reports of audits, balance sheets, and other financial, accounting and related schedules, exhibits, statements or reports that are to be used for publication or for credit purposes, or are to be filed with a court of law or with any other governmental agency, or for any other purpose.

“(dm) The person provides or offers to provide an attest service.

“(e) The person, in general or as an incident to such work, renders professional assistance to clients for compensation in any or all matters relating to accounting procedure and the recording and presentation of financial facts.

“(f) The person signs or affixes his or her name or any trade or assumed name used by the person in his or her business or profession to an opinion or certificate attesting to the reliability of any representation or estimate in regard to any person or organization embracing financial information, financial transactions or accounting records.”

Q. When is a CPA certificate not required to practice accounting?

A. Specific exemptions from licensure are included in Wis. Stat. ch. 442. Under these provisions, a CPA certificate is not required for persons who:

• Are employed by a CPA or CPA firm to serve as accountants in various capacities if the employees serving as accountants work under the control and supervision of certified public accountants, do not issue any statements or reports over their own names except office reports to their employer that are customary and are not in any manner held out to the public as CPAs;

• Are practicing attorneys who render an accounting service in connection with their professional work;

• Are employed by more than one person for the purpose of keeping books, making trial balances, or statements, and preparing reports and the reports are not used or issued by the employers as having been prepared by a CPA, and do not sign opinions or certificates attesting to the reliability of any representation or estimate of financial information, financial transactions or accounting records .

• The holders of state-granted certified public accountant certificates from other states who may be temporarily in this state on professional business incident to their regular practice in the states of their domicile, but with neither residence nor office in this state.

• Is a public official or public employee in performing his or her duties

• Perform services involving the use of accounting skills, including management advisory services the preparation of tax returns, or the preparation of financial statements without issuing reports on the statements; or,

• Prepares financial statements and issues information on the statements that do not purport to comply with the Statements on Standards for Accounting and Review Services issued by the AICPA.

Q. What is the difference between a certificate and a license for a CPA?

A. A person must have both a Wisconsin certificate and license to practice as a CPA in Wisconsin. The Board issues certificates and the Department issues licenses.

To qualify for a certificate a person must have at least 150 semester hours of post high school education, a bachelor’s or higher degree with a concentration in accounting or its equivalent, at least one year’s of public accounting experience or its equivalent and has passed the examination of the American Institute of Certified Public Accountants. Those requirements must be met in the order in which they are listed. Once those requirements have been met, a person may apply to the Board for a certificate. The Board will evaluate the applicant’s experience to see if it is sufficient. If the Board is satisfied that the experience is sufficient, the Board will grant the applicant a certificate. A certificate is permanent unless revoked and it does not have to be renewed.

See Wis. Stats., § 442.03 and 442.04(1), (4) and (5) and Wis. Adm. Code Accy § 3.02, ch. 5 and 7.035.

The Department will issue a license to a person who holds an unrevoked certificate as a CPA and who submits an application for the license. A license must be renewed by December 14 of each odd numbered year. See Wis. Stats., § 442.08(1).

Q. If a licensed CPA is found to have violated a law related to public accounting, may discipline be taken against the CPA’s certificate and license?

A. Yes. A CPA who is found to have violated a statute or rule relating to public accounting may have disciplinary action taken against both his or her certificate and license based on the same violation. There is no distinction made in the statutes and rules between a certificate and a license for disciplinary purposes. When the Board issues an Order finding a violation, the Board generally imposes discipline against the CPA’s license and certificate. See Wis. Stats., § 442.12.

Q. May a CPA use the letters CPA as a credential when he or she is not licensed?

A. There is no absolute answer to that question. Wisconsin law is clear that a person must be licensed to practice as a CPA. The statutes say that a person is practicing as a CPA when “The person holds himself or herself out to the public in any manner as one skilled in the knowledge, science, and practice of accounting, and as qualified and ready to render professional service therein as a certified public accountant for compensation.” Wis. Stat. §. 442.02(1m)(a).

If a CPA wants to use the credential but not be licensed, he or she must ensure that the way in which it is used does not communicate both skill and readiness to provide services. If both are communicated, the CPA is required to have a license.

The first question is, does using CPA as a credential communicate that the person has skill in the knowledge, science and practice of accounting. The answer to that question is yes, it does. When the letters CPA are used by a person it is a common and reasonable assumption that the person has those abilities.

The next question is, does using CPA as a credential communicate that the person is ready to provide CPA services for compensation. Whether this is communicated will depend on the facts of each situation. Unless a CPA has a license, the CPA is responsible for ensuring that the manner in which he or she uses the credential does not imply readiness to provide CPA services for compensation. If a CPA presents that credential in a manner that implies a readiness to provide services for compensation, the CPA must have a license or can be found to be practicing without a license.

Q. May a licensed CPA use the CPA credential when working as a CPA for an unlicensed accounting firm?

A. There is no absolute answer to that question. A licensed CPA has the right to use that credential when practicing as a CPA in an unlicensed accounting firm. However, it is a conflict of interest for a CPA if the unlicensed firm offers accounting services in a manner and with an implication that a third party could interpret, that attest services are performed by both the unlicensed firm or individual and by the CPA. In this situation the CPA should ensure that his or her use of the credential does not create any such implication. See Wis. Stat., § 442.07 and Accy § 1.404(2)(c).

Applications - forms

Q. How do I receive application forms for a CPA certificate or a CPA firm license?

A. Forms and information about applying are available on the Department of Regulation and Licensing's website at: Applications - Forms.

Application- Requirements for Individual Certification

Q. How much work experience is required in order to obtain a CPA certificate?

A. Wisconsin law now requires an applicant for a CPA certificate to have one year of public accounting experience or its equivalent as determined by the Board. The experience of each applicant as described in the submitted application materials is reviewed on an individual basis. Wis. Stat. § 442.04 (5). The following lists of experience categories may be helpful in evaluating whether certain experience qualifies as equivalent experience that is equivalent to one year of public accounting. The sufficiency of the experience presented by each applicant is subject to the board's evaluation.

Experience Equivalent to Public Accounting

• Financial statement preparation

• Financial statement consolidation

• Trial Balance/General Ledger/Fixed Asset

• Audit support

• Software conversion/installation of financial systems

• Account reconciliation

• Expense account analysis

• Tax payments and returns, payroll management

• Budget preparation, operating and capital

• Product costing

• Developing, testing internal controls

• Capital budgeting support

• Analysis of financial statements or budgets

• Analysis of information flows and accounting processes

• Research of accounting literature or tax codes

• Conducting internal audits

• Assigning accounting codes to invoices

• Preparation of journal entries

• Income tax preparation and projections--individual and corporate

• Financial consulting

Experience NOT found Equivalent to Public Accounting

• Cash Register Clerk

• Restaurant Manager

• Secretarial support

• Preparation of real estate sale closing statements

• Bank Trust Department Account Officer

• Analysis of insurance claims

• Supervision of Purchasing Clerks

• Bank Teller

Q. May I use experience earned during an internship towards my 1 year of experience?

A. Not if the internship was completed before you earned your degree in accounting. One year of experience must be acquired after the applicant has earned a degree that qualifies the applicant to take the CPA examination. Wis. Admin. Code § 5.04.

Q. Does Wisconsin have a 150-hour educational rule?

A. Yes. A person may not take the CPA examination unless the person has completed at least 150 semester hours of education with an accounting concentration at an accredited institution. Wis. Stat. § 442.04 (4) (bm) and Wis. Admin. Code § Accy 7.035.

CPA Examination

Q. Where do I obtain a CPA examination application? When is the CPA examination given, and what are the application deadlines?

A. To receive an application or any other examination related information, please call the CPA Examination Service at 615-880-4250 or 800- CPA-EXAM, or visit the website for the National Association of State Boards of Accounting (NASBA)

Q. How do I determine if I am eligible to take the CPA examination?

A. All inquiries regarding the CPA examination should be directed to the CPA Examination Service at 615-880-4250 or 800-CPA-EXAM; e-mail: cpaexam@nasba.org, or visit the website for the National Association of State Boards of Accounting (NASBA)

Q. May I take the examination if I do not have a degree in accounting?

A. Genera ll y, under Wis. Stat. § 442.04 (4) (bm) , a person may not take the CPA examination unless the person has completed at least 150 semester hours of education with an accounting concentration at an accredited institution, and has received a bachelor's or higher degree with an accounting concentration from an institution. However, under its rules, the examining board may review your educational experience to determine whether you have other qualifications that provide the reasonable equivalence of a resident major in accounting (also ca ll ed an accounting concentration).

The Board's rule governing your question is Wis. Admin. Code § 7.035:

Accy 7.035 Education requirement effective January 1, 2001 . (Pursuant to s. 442.04 (4), Stats., a person may not take the examination leading to the certificate to practice as a certified public accountant unless the person has, as part of the 150 semester hours education, met one of the following conditions:

(1) Earned a graduate degree with a concentration in accounting from an accounting program or department that is accredited by an accrediting agency recognized by the board.

(2) Earned a graduate degree from a business school or college of business that is accredited by an accrediting agency recognized by the board and completed at least 24 semester hours in accounting at the undergraduate level or 15 semester hours at the graduate level, or an equivalent combination, including courses covering the subjects of financial accounting, auditing, taxation, and management accounting.

(3) Earned a baccalaureate degree with a major in accounting from a business school or college of business that is accredited by an accrediting agency recognized by the board including all of the following:

(a) At least 24 semester hours in accounting at the undergraduate or graduate level, including courses covering the subjects of financial accounting, auditing, taxation, and management accounting.

(b) At least 24 semester hours in business courses, other than accounting courses, at the undergraduate or graduate level.

(4) Having obtained the reasonable equivalent of an accounting concentration by having earned a baccalaureate or higher degree from an accredited educational institution including all of the following:

(a) At least 24 semester hours of accounting, including courses covering the subjects of financial accounting, auditing, taxation, and management accounting.

(b) At least 24 semester hours in business courses, other than accounting courses, at the undergraduate or graduate level.

Note: In accounting, the courses covering the subjects of financial accounting, auditing, taxation, and management accounting under s. Accy 7.035 (3) (a) and (4) (a), would normally be all courses taken beyond the introduction level.

(5) Whether or not the person has 150 semester hours education, has graduated with a bachelor's or higher degree with a resident major in accounting, or its reasonable equivalence, prior to January 1, 2001.

Applicants who graduated with a bachelor's or higher degree with a resident major in accounting, or its reasonable equivalence, prior to January 1, 2001, should review Wis. Stat. § 442.04 (4) (c) and Wis. Admin. Code § 7.03.

Q. I received my education in another country and would like to sit for the CPA examination. What must I do to meet the educational requirements?

A. The applicant must also establish his or her substantial equivalence of the qualifications required under Wis. Stat. § 442.04. All foreign education must be evaluated by a credential evaluation service to determine if the education received at the foreign institute of learning is equivalent to a bachelor's or higher degree with a resident major in accounting from a school that is accredited by the North Central Association of Schools and Colleges or its regional equivalent. An official transcript must accompany the evaluation. A list of approved credential evaluation services is available from the board office or by contacting Naces.

The original evaluation done by the credential evaluation service must be submitted to the Accounting Examining Board for review. All applicants will be required to complete a course in U.S. Business Law and a course in U.S. Income Taxation in addition to any other course deficiencies as determined by the evaluation.

Q. If I hold a CPA license in another state, am I qualified to be licensed in Wisconsin ?

A. Under Wis. Stat. § 442.05, the examining board may grant a certificate to any applicant who holds a certificate or license to practice as a CPA issued under the laws of any other state or foreign country. The applicant must establish his or her substantial equivalence of the qualifications required under Wis. Stat. § 442.04. An evaluation of your specific qualifications is usually required.

Continuing Education

Q. How many hours of CE credit do I need to renew my license and how do I report CE hours?

A. The Wisconsin Accounting Examining Board does not require continuing education for license renewal unless your license has lapsed for more than five years.

Firm License Requirements

Q. When is a firm license required?

A. A “firm” is defined as a proprietorship, partnership, limited liability partnership, corporation, service corporation, or limited liability company. A “member of a firm” is defined as a director, manager, employee, officer, owner, shareholder, principal, or partner of a firm. A firm may not practice in Wisconsin as a certified public accountant (CPA) or “hold out” that it practices as a CPA unless the firm has a Wisconsin CPA license. Wis. Stat. § 442.03. A firm is considered to be in practice as a CPA and must be licensed if the firm or a firm member:

• represents to the public that the firm is a CPA, such as by advertising for business or maintaining an office as a CPA; or,

• offers to perform professional services that involve an audit of financial transactions and accounting records; or,

• prepares reports of audits, balance sheets, and other financial, accounting and related information to be used for publication, credit purposes, filed with a court or governmental agency; or,

• signs an opinion or certificate attesting to the reliability of a representation or estimate of financial information or accounting records.

An exception to the general licensing requirement permits non-CPAs to keep books, and make trial balances or statements. This exception includes the preparation of audits or reports, but only if the audits or reports are not used or issued by the employers as having been prepared by a CPA and employees do not sign an opinion or certificate attesting to the reliability of the financial information or accounting records. Unlicensed accountants may practice accounting, but the use of their audits or reports under the guise that they were made by a CPA or public accountant is prohibited.

A CPA firm may employ persons who are not CPAs to work as accountants if the employees work under the control and supervision of CPAs in the firm. These employees may not issue any statements or reports over their own names except customary office reports to the employer. The firm may not advertise or otherwise represent that these employees are CPAs.

A CPA licensed outside of Wisconsin who is temporarily in Wisconsin on professional business incident to regular practice in the CPA's home state, is not required to become licensed in Wisconsin provided the CPA does not become a resident or have an office in Wisconsin.

CPA Firm Names

Q. May a CPA firm name include the name of firm members who have ownership interests in the firm, but who are not certified public accountants?

A. Not if the firm name, or associated advertising, letterhead, signs, etc indicate that the firm is a CPA firm, or if the name is used in a context that may mislead the public that the non-CPA owners are CPAs. See. Wis. Admin. Code § 1.405.

Q. If one of the owners of a CPA firm is not a CPA and the names of non-CPA owners may not be used in the firm name, are we allowed to use the term “and company” in the name to identify that other firm owners exist, e.g., the name Smith, Jones & Company, CPA's, LLC ?

A. Wis. Admin. Code § Accy 1.405 identifies restrictions on the use of the term “Company.” Under the rule, your firm may use the term “Company” if there are owners of the firm in addition to those specifically mentioned in the firm's name. The rule does not require that the additional owners be CPA's as a condition to using the term “Company.” Use of the term “Company” also gives the public additional information about the firm that may be of value in business relationships with your firm.

CPA Firm Ownership

Q. I operate a CPA firm as a sole proprietor. Must I obtain a license for my firm as well as for me, individually?

A. A sole proprietor who provides attest services or holds out as a Certified Public Accountant is required to obtain a firm license in addition to his or her individual license. Wisconsin law requires a certified public accountant (CPA) to practice as a member of a firm that is licensed as a certified public accounting firm. Wis. Stat. § 442.03

The Wisconsin law that regulates certified public accountants and CPA firms defines “firm” as “ . . . a proprietorship , partnership, limited liability partnership, corporation, service corporation, or limited liability company. Wis. Stat. § 442.001 (4). A “member of a firm” is defined as “. . . a director, manager, employee, officer, owner , shareholder, principal, or partner of a firm. Wis. Stat. § 442.001 (5). (Emphasis added.) Under Wis. Stat. § 442.03,

“[n]o person may lawfully practice in this state as a certified public accountant either in the person's own name, or under an assumed name, or as a member of a firm, unless the person has been granted by the examining board a certificate as a certified public accountant, and unless the person and firm have complied with all of the provisions of this chapter, including licensure.”

Changes made in the 2001 Wisconsin Act 16 were intended to conform Wisconsin law with the Uniform Accountancy Act (UAA). Comments included in the UAA identify how the definitional sections relate to the requirement for licensing sole practitioners as firms:

COMMENT: . . . The definition of “firm” is designed to be broad enough to include any type of business entity or combination of business entities, recognized by the state.

Inclusion of sole proprietorships in the definition of the term “firm” has the effect of requiring sole practitioners to secure both individual certificates under section 6 and firm permits to practice under section 7. This will assure that all practice units have firm permits. The Board would have the power to alleviate the burden of duplicate applications (where the same person must secure both an individual certificate and a firm permit) by providing for joint application forms.

Additional comments regarding the requirement that sole proprietorships be licensed as firms are included in Section 7 of the UAA.

Another change in the 2001 Wisconsin Act 16 is the requirement for a peer review of firms that is set forth in Wis. Stat. § 442.087. Licensed firms, not individual CPAs, are required to meet the peer review requirement as a condition of license renewal. Fairness principles indicate that CPAs who operate their business as sole proprietorships and who provide professional services that bring them within the scope of the peer review requirement should not be in a position to avoid the requirement on the basis of the form of business organization chosen.

Q. May a CPA firm be owned by persons who are not CPAs?

A. A change in state licensing requirements made in the 2001 Wisconsin Act 16 permits non-CPAs to own less than 50% of a CPA firm. Non-CPA owners must be active participants in the firm. The law sets minimum standards for ownership requirements to assure that attest services as well as control and management of a CPA firm, are in the hands of CPAs.

Under the revised law, “firm” is defined to mean a proprietorship, partnership, limited liability partnership, corporation, service corporation, or limited liability company. A "member of a firm" is a director, manager, employee, officer, owner, shareholder, principal, or partner of a firm. Wis. Stat. § 442.001.

An applicant for a license as a certified public accounting firm must demonstrate that more than 50% of the ownership interest of the firm is held by individuals who hold certificates or licenses to practice as a CPA issued under the laws of any state or foreign country. Wis. Stat. § 442.08. The Accounting Examining Board has adopted an administrative rule defining ownership interest as “. . . any equity or voting interest in a firm.” Wis. Adm. Code § 1.408. Under the rule, the 50% ownership interest requirement is met if the owner of a sole proprietorship is a CPA, and, for other types of firms, if “. . . more than 50% of the voting rights are held by individuals who are certified public accountants.”

The Board's rule permits firms that do not meet the voting rights standard to submit details concerning the equitable interest and voting rights of its members to the Board for a determination as to whether the firm meets the ownership requirement. The rule states a general standard that the Board will consider in reviewing ownership interests, which is: whether the financial interests and voting rights of all members of the firm result in control and management of the firm by individuals who hold certificates or licenses to practice as a certified public accountant.

The owners of a CPA firm who do not hold CPA licenses have special obligations. If any person who holds an ownership interest in the firm is not licensed as a CPA in Wisconsin , the firm is required to designate a CPA as the individual responsible for the firm's compliance with Wis. Stat. ch. 442. Wis. Stat. § 442.08. As part of the application process, the firm itself must provide assurance that all attest services provided by the firm in Wisconsin are under the charge of an individual CPA. Non CPA owners must also be individuals who actively participate in the firm or an affiliated entity. The term “actively participates” is not defined in the law. Drafters of the Modernization Act indicate that the intent of this restriction is to prohibit passive investment in a CPA firm by a non-participant. Under the statute, ownership in a CPA firm by non-CPAs is available only to “hands on” participants in the firm.

Q. How do I apply for a CPA Firm license?

A. Submit a completed and notarized application form to the Board's office, along with the appropriate License Fee. A check or money order should be payable to the "State of Wisconsin " in U.S. funds only, drawn on a U.S. bank. The application form is available on this web site at Forms and may also be requested from the Board office by telephone, e-mail, or fax.

Q. I am currently a sole proprietor and offer only income taxes and bookkeeping services. Do I need to be licensed as a firm?

A. If you advertise your firm as a CPA firm, it must be licensed as a CPA firm. If you do not advertise or otherwise hold yourself or your firm out as a CPA, a license is not required to offer and provide income tax and bookkeeping services.

Q. Do I need to obtain a new license if I change the name of my accounting firm?

A. If the ownership remains the same, you do not need to obtain a new license. If the ownership has changed, then you must complete a new application for licensure. Under Wis. Stat. § 440.11, if you change your name or address you are required to notify the department of the name or address within 30 days of the change in writing.

CPA firms from outside the state – licensing requirements

Q. My CPA firm has a client in Wisconsin , but is located in another state. Does the firm need to be licensed in Wisconsin?

A. If the CPA firm sends employees to Wisconsin to work in Wisconsin on a regular basis, or otherwise regularly does business in Wisconsin then it must be licensed. Board rules permit firms without an office in Wisconsin to be licensed if there is a licensed Wisconsin certified public accountant designated as the individual responsible for the firm's compliance with Wis. Stat. ch. 442.

If the firm does all of the accounting work in the home state, the firm does not need to have a Wisconsin license.

Q. If a Wisconsin licensed CPA who is located outside Wisconsin performs audit work for a client in the State of Wisconsin, do the employees that come into the State of Wisconsin to review the work for the CPA need to be licensed, or is it sufficient that the Wisconsin CPA wi ll sign the reports?

A. Wisconsin law is satisfied if the Wisconsin licensee manages the Wisconsin engagement and the firm is also licensed. Wis. Admin. Code § Accy 4.04, titled “Firms without office in this state” requires a license for the CPA who is designated as the manager for the Wisconsin engagement.

“Firms without a bona fide office in this state may apply for registration if there is a licensed Wisconsin certified public accountant designated as the manager for the Wisconsin engagement or engagements....”

Under Wis. Stat. § 442.025, a certificate or license is not required for persons employed by a licensed CPA firm to serve as accountants if all of the following conditions are met:

(a) The employees serving as accountants work under the control and supervision of certified public accountants.

(b) The employees serving as accountants do not issue any statements or reports over their own names except office reports to their employer that are customary.

(c) The employees serving as accountants are not in any manner held out to the public as certified public accountants.

Q. If I hold a valid current CPA license from a "substantially equivalent" state and meet all the other criteria for a practice privilege, am I able to conduct an audit if my firm does not hold a firm license in Wisconsin?

A. No, unless a firm license is not required as discussed in CPA Firms From Outside Wisconsin - Temporary Practice in Wisconsin. An out of state CPA practicing here under our practice privilege statute generally has the same rights as a Wisconsin licensee. In Wisconsin, in order to conduct an audit, even a sole proprietor must also have a firm license. In order to obtain a firm license, at least one CPA in the firm must have a Wisconsin license. If the firm is validly licensed in Wisconsin, then any CPA from that firm may supervise or conduct audits in Wisconsin if they qualify under the practice privilege statute.

CPA Firms From Outside Wisconsin – Temporary Practice in Wisconsin

Q. My CPA firm has an office outside of Wisconsin and does not have an office in Wisconsin. No members have their primary residence in Wisconsin. The firm is conducting an audit for a client that is headquartered in the state where our office is located, but the client has operating and administrative facilities in Wisconsin requiring that my CPA firm assign staff to work in Wisconsin for several months. Is my CPA firm or any members required to be licensed in Wisconsin?

A. As long as your practice in Wisconsin is temporary, a Wisconsin firm license is not required. Under Wis. Stat. § 442.025 (4), a Wisconsin CPA firm license is not required for CPA firms from states other than Wisconsin who are temporarily in Wisconsin on professional business incident to their regular practice in the states of their domicile, if they do not reside or have an office in Wisconsin. The Accounting Examining Board has interpreted "incident to their regular practice" to mean that the reason for serving a client in Wisconsin is because of a relationship between that client and the firm's client in their home state. In the question, the client in Wisconsin is likely a subsidiary or division of the parent company in the CPA firm's home state. If the out of state CPA firm seeks new business and obtains an audit client in Wisconsin, and that Wisconsin client has no ties to a client of the firm's regular practice in its home state, then the firm must obtain a Wisconsin firm license prior to conducting that audit.

CPA Firm – Renewal of License

Q. What is required to renew a firm license?

A. At the time of renewal, a firm must:

• Pay a renewal fee as required by statute. See Renewal Fees for amount.

• Identify each office of the firm that is located in Wisconsin .

• If any person who holds an ownership interest in the firm is not licensed, designate a CPA as the individual responsible for the firm's compliance with Wis. Stat. Ch. 442 and administrative rules of the Board.

• Complete a statement that:

1) All attest services provided by the firm in this state are under the charge of an individual CPA.

2) More than 50% of the ownership interest of the firm is held by individuals who are certified public accountants.

3) Each individual who holds an ownership interest in the firm, but who is not a CPA, actively participates in the firm or an affiliated entity.

4) The department may not renew a firm license unless the firm has had a peer review some time during the years 2002 through 2004.

Commissions and Referral Fees

Q. As a CPA, may I charge a contingent fee or receive a commission or referral fee?

A. Questions about commissions, contingent fees and referral fees are best resolved by consulting the Board's administrative rule, Wis. Admin. Code § Accy 1.302. Under the rule, a "contingent fee" is a fee established for any service according to an arrangement in which no fee wi ll be charged unless a specified finding or result is attained, or in which the amount of the fee depends on the finding or result of the service. A "commission" is compensation for recommending or referring any product or service supplied by another person, other than the services of a CPA. A "referral fee" is compensation for recommending or referring any service of a CPA.

With certain exceptions and under specified conditions, Wisconsin CPAs may charge contingent fees, and receive referral fees and commissions.

• Contingent Fees. With one general exception, a CPA may charge a contingent fee if the contingent fee agreement is in writing, signed by the client, states the method by which the fee is to be determined and describes all costs and expenses to be charged to the client. At the conclusion of the matter, the CPA must provide a written statement showing the fee and all the costs and expenses charged to the client. A CPA is prohibited from receiving a contingent fee from a client if the CPA performs attest services for the client and the contingent fee is paid during the period of the attest services engagement or the period covered by any historical financial statements involved in the attest services.

• Commissions. Generally, a CPA may receive a commission if at the time the referral or recommendation is made, the CPA informs the client in writing of the amount and reason for the commission. A CPA is prohibited from receiving a commission from a client if the CPA performs attest services for the client or may receive a commission for any products or services sold to any person for whom the accountant performs attest services. This restriction applies during the period of the attest services and the period covered by any historical financial statement involved in the attest services.

• Referral Fees. A CPA may receive a referral fee if the CPA discloses to the client, in writing, at the time the referral is made, the amount of and reason for the referral fee and the accountant who pays the referral fee discloses to the client, in writing, within 30 days after the referral is made, the amount of and reason for the referral fee.

There is no exception in the Wisconsin Code, similar to an AICPA rule, that permits a CPA to receive a contingent fee from a person for whom the CPA performs attest services where the fee is set by courts or other public authorities, such as in tax matters, where the fee is determined based on the results of judicial proceedings or the findings of governmental agencies.

Q. Is there conflict of interest for a CPA Sole Proprietorship Firm, if the CPA proprietor holds both a current Loan Originator's license with Department of Financial Institutions and a current Insurance Intermediary License through with the Office of the Commissioner of Insurance?

A. There is no conflict per se , but the CPA must follow the rules of the Wisconsin Accounting Examining Board in the operation of a CPA-related business and (of course) in the CPA practice. This CPA would want to pay special attention to the Accounting Examining Board's rules on independence and commissions.

Peer Review

Q. What is the Wisconsin peer review requirement?

A. A CPA firm that provides attest services must affirm on its renewal application that it has undergone a peer review during the prior three-year period. A peer review is a review of a CPA firm's attest services practices. The review covers a random sampling of engagements and includes an evaluation of relevant working papers and reports to determine if appropriate standards were followed. The reviewers' report must provide reasonable assurance that the firm's attest practices conform with professional standards. Attest services include audits, reviews, compilations (in accordance with the Statements on Standards for Accounting and Review Services) and attestation engagements. Some licensed CPA firms do not provide attest services. For example, a firm that provides only income tax planning and preparation services would not be required to undergo a peer review.

	State of Wisconsin Department of Regulation & Licensing Ensuring the availability of safe and competent professional services	Secretary Jackson
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Certified Public Accountant - Practice FAQ