The Accounting Podcast

The requirements to become a licensed CPA differ across states, yet CPAs maintain mobility to practice in multiple jurisdictions. How does this work? David Knoble, Chair of the South Carolina Association of CPAs (SCACPA), joins the show to bust myths around substantial equivalency and mobility rules for CPAs and discuss the SCACPA's proposed changes to licensure requirements in the state to encourage more accountants to become CPAs.

Knoble clarifies how states have flexibility in setting licensing requirements under existing standards while still enabling cross-border practice privileges. With an in-depth look at the Uniform Accountancy Act, including real examples of alternative pathways, we shed light on this complex topic to provide an accurate understanding of what substantial equivalency and mobility mean for you as an accounting professional.

Tune in as we separate fact from fiction around these critical concepts impacting the CPA profession.

Meet Our Guest, David Knoble

LinkedIn: https://www.linkedin.com/in/davidmknoble/
Twitter: https://twitter.com/knoblecpa

Learn more about Knoble Ingle CPAs
https://www.knobleingle.com/


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Creators & Guests

Host
Blake Oliver
Founder and CEO of Earmark CPE
Host
David Leary
President and Founder, Sombrero Apps Company
Guest
David Knoble
David has over 25 years of experience as a North and South Carolina CPA, including a BS in Business Administration and Masters of Accounting from Kenan-Flagler at UNC Chapel Hill. ‘Big Six’ audit experience and real-estate experience as the CFO of a $100 million company, assisting in the ultimate sale of the company to a southeastern regional builder, has given David significant industry experience. He also has Litigation Support experience in federal court and his service on local and state non-profit boards rounds out his ability to successfully help integrate financial statements, tax planning, capital planning, and exit strategies for his clients.

What is The Accounting Podcast?

The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:03] Hello, everyone, and welcome back to the show. I'm Blake Oliver.

David Leary: [00:00:06] And I'm David Leary.

Blake Oliver: [00:00:07] We have been talking a lot on this show about pipeline challenges. We've been talking about the 150 hour rule, that extra year of education to become a CPA. We've been having folks on the show to talk about these issues. We have invited David Noble from the South Carolina Association of CPAs. David, welcome to the show.

David Knoble: [00:00:29] Thanks, Blake. I'm looking forward to being with you.

Blake Oliver: [00:00:31] What is your involvement in this whole discussion about pipeline issues?

David Knoble: [00:00:37] I am the chair this year for the South Carolina Association of CPAs, but I've also spent the last 4 or 5 years working in our Governmental Affairs Committee, which means I helped rewrite regulations. We've rewritten the Accountancy Act once already and are working on that again.

Blake Oliver: [00:00:54] When you think of pipeline problems, what does that mean to you?

David Knoble: [00:00:58] We've got a large aging population around the country. This is not just South Carolina specific, and this aging population is retiring in the field of accounting. The problem is that we have a smaller number of students. Students in every profession demands increasing because there's more work to do. It's more complex. More governmental agencies need need audits done. Tax law gets more complicated. So high demand, low supply is a problem. So the pipeline question is how do we get these students to decide they want to spend time studying in accounting and then spend the the work necessary to become a certified public accountant? That's our pipeline problem.

Blake Oliver: [00:01:39] I understand that South Carolina is considering some changes to the Accountancy Act there. What are you working on?

David Knoble: [00:01:46] We started this process almost a year ago and sent a law, a proposed law out to Nasba, the CPA, to review, and we got comments back from them. As we went through that process, we rethought what we were going to do and how we were going to do it. South Carolina's not being radical. We spent a lot of time researching it to make sure what we were doing was something that made sense and had been done in other places. We're not changing our initial licensure process at all, and so our substantial equivalency has to remain because we didn't change our process. But we're making it clear that they can come up with different things to change or to make equivalent. We're changing mobility consistent with other state laws so that we're protecting the public for folks that might might come in that aren't substantially equivalent. We're getting folks into the profession that might not otherwise be here. If we can do low cost certificate programs, we're getting folks into the profession that might not otherwise be here. We're not making it easier. We're making it less costly. And we're actually improving the 30 hour education and taking away the concept of doing anything you want, instead guiding them to more business skills to make them a better, well rounded professional.

David Knoble: [00:02:54] So with this this law that we have now proposed and we've sent it to Nasba again, we've sent it to the AICPA, we've actually just sent it on the last day or two to our board of Accountancy, and we've asked to be on their agenda for an October meeting. We always talk with our board, get feedback from them. We found over time that there are some folks in there that have practiced accounting much longer than we have and have good, insightful thoughts. There's a person in South Carolina that was very instrumental at Nasba as a chair during this process of becoming substantially equivalent. He's a good friend of mine and I always run things by him to get his perspective. He's got a perspective on both sides. He's been chair of our board, chair of the Board of Accountancy and chair of Nasba. So we solicit comments and we want to hear what people think. We just believe that this time we really hit it, that it's not radical. And so this is the right thing to do for everybody, including the nation.

Blake Oliver: [00:03:46] The issue that we've been discussing specifically on our show extensively in the last few months is this 150 hour rule in pretty much every state that requires accountants who want to become CPAs to get the equivalent of a fifth year of education in an accredited university or college, which adds expense adds cost. We saw in Minnesota they're considering replacing or offering an alternative pathway that goes back to the 120 hours. What is South Carolina doing in this regard?

David Knoble: [00:04:21] I have a master's degree from the University of North Carolina, Chapel Hill, and if you ask me if I'd do it again, I'd say absolutely. But I'm also not first generation college student there. Wherewithal to spend $30,000 a year going to a public university for five years is not near what it is other folks. So it's not only whether they would produce good CPAs, it's partially whether they can afford to do the work to get to that point. And if you can't afford it, what happens? So there's also single parent households that have difficulty getting through that process. There are folks that are trying to get to a second career. So when we talk about alternative pathways or different ways we can get. To the CPA licensure. Part of what we're trying to do is capture those folks that would otherwise not be CPAs. How do we get someone that's not a CPA but almost there across the finish line and add them to to the pool? So that's that's one thing that we certainly address and talk about. You mentioned Minnesota. I have to give a shout out a kudos to Minnesota, because what they did was they forced us all to step back and take a look at not only our state, but look at how the other states work and really start discussion. It caused me to spend a lot of time looking at other state laws and how do they work. There are a lot of myths out there with some of the terms that we have. And I got to tell you, as I look at them, you have new meaning when you really study these things. So we're going to do some myth busting today for sure.

Blake Oliver: [00:05:48] I would love to do that with you because I've been I've been digging into this concept of substantial equivalency. And I'm finding that it's it's it's a very complex concept and not well understood by me for sure, but I think by most people.

David Knoble: [00:06:06] Let's talk about how we how we deal with education in terms of licensure. So, Blake, do you like pizza?

Blake Oliver: [00:06:15] Oh, I love pizza. You know, you love pizza. I mean, who doesn't? David, how about you?

David Knoble: [00:06:18] I'm on.

David Leary: [00:06:19] Board. I'm on board. I'm bored.

David Knoble: [00:06:20] All right, well, we used to have growing up with my kids, we'd have. Friday night was pizza and movie night. Pizza is a great way to talk about education when you're a CPA. So you got your crust. Your crust is your foundation and the crust is a bachelor's degree. So to sit for the CPA exam, we all have to have a bachelor's degree. That's 120 hours of education. The red sauce. The sauce. Well, that's the accounting courses that we're required to take. Most places, most states and jurisdictions have 24 hours of specific types of courses, audit and tax that you have to take to be that well-rounded CPA. And then you put the cheese on top and the cheese are your business courses that you got to take. You got to take marketing some operation again to be a well-rounded business professional. Now, now you got a cheese pizza. Well, this cheese pizza allows you to sit for the CPA exam. What happens after that? We're only at 120 hours and we have to go to 150. So we got 30 hours left to go. We're going to call that the toppings. And one of the toppings is going to be 30 hours on a transcript. It's going to be a master's degree.

David Knoble: [00:07:26] And that's one way we can turn that pizza into a we can put mushrooms on it. And now we got a mushroom pizza. So the question is, can we put other toppings on this pizza to deal with this last 30 hours? So my question is not is it 120 versus 150? My question is, how do we deal with the last 30 hours? It's 120 plus 30 all the time. But what's the 30? So, Blake, one of the things that we did to get to that was we took a really hard look at the Uaa. And I'm not talking about just the language and the model rule or suggested rule and not appendix B, which we hear frequently when we talk about substantial equivalency. But we looked at the introduction, we looked at the preface, we read it cover to cover. We also did something else, Blake. We took a look at the state requirements around the country because at the end of the day, we've got NASA with a really great suggestion for us to start with. And they made it clear that we could take the entire example. Uaa as a as a replacement statute, or we could take pieces of it and work it piecemeal as it fits.

David Knoble: [00:08:30] But each state at the end of the day, has their own choice as to how they're going to take care of licensing. So the Uaa was really, really picky as they talked about what they wanted to do and they said flexibility is the key. They said at all costs, we have to maintain mobility. We have to maintain mobility at all costs. And we cannot let minor differences. Discourage us from being able to work across state lines. Okay. This is what the data tells us. So the first thing I'll ask you is if we're dealing with the last 30 hours and right now, this is one of our myths. I believe this is a myth. 30 hours on a transcript. That's exactly what the FAA says. If we're going to be flexible in dealing with this last 30 hours, we have one of two things we can do. We can either lower the number of hours so it's less than 30 hours on a transcript or we can change the transcript requirement. Now, South Carolina made a governing requirement when we started this process. We will not do anything that degrades the CPA profession. I don't want to lower the 30 hour requirement, but I want to talk about the transcript requirement.

Blake Oliver: [00:09:43] So. You're saying that the way the Uniform Accountancy Act, which most of the states have adopted to some extent does not explicitly define? The 150 hours as a 150 hours of classes on a transcript.

David Knoble: [00:10:04] So the UAE as a model rule. Remember, this is a suggested rule because Nasba can't set state statutes. Each state has to do it as a model rule. The UAE requires 150 hours on a transcript. When you look at the underlying premises that they use to get there, that's one example. Their underlying premise throughout the preface. The introduction and Appendix B indicates that they've got to be flexible. Well, if you only have one example that can't be flexible, one example is one example. One example is 100 hours on a 150 hours on a transcript. And so my point is there's only two things you can change when you're talking about hours of education and a transcript to be flexible. Let's talk about experience, right? We have to have a year's worth of experience, am I right? Typically, if you have a master's degree, it used to be two years and. But. Right.

Blake Oliver: [00:10:57] But not every state is the same. There are small differences.

David Knoble: [00:11:00] So that's that's myth number two. Right? So everybody believes that your experience, how you work for a year and you can get your license. Right. So Hawaii says that you have to have 1500 hours of of experience. Now, if you just took 35 hours a week, that's 43 weeks of experience. They don't tell you how long it takes to get it. They just say you have to have 1500 hours. Well. North Carolina says that you have to have 30 hours a week for 52 weeks. That's 1560 hours. But it means that if you got a week where you get less than 30 hours, technically it doesn't count. So they set a requirement that's per week. And the total, if you get it all, is 1000 hundred and 60 hours. Right. Arkansas says, I need 2000 hours of work of experience to become publicly licensed. North Carolina's rule, though, also says that that one year experience is under the direct supervision of a CPA. They have another way to get experience. And if you get four years of experience without any CPA overseeing your work, that's equivalent to a year. So not only do they have a different number of hours, but you can actually get the experience without working for a CPA and still say it's North Carolina said it's functionally equivalent to have four years of experience without a CPA or one year of experience with a CPA.

Blake Oliver: [00:12:24] Okay. And let me toss another one at you. I was licensed in California where you have the option of doing audit hours or not. I chose because I don't ever plan on signing audits to pass on that. So I'm a CPA in California who never worked in audit. Other states, I understand, do require the audit hours.

David Knoble: [00:12:47] Some states do. South Carolina does not. But the way I understand it, too, in California, that means you cannot sign an audit opinion. You can't do the audit work until you've had that audit experience. Right?

Blake Oliver: [00:12:58] I can at any time. Go get the 500 hours. Don't quote me on that. I think it's 500. And then I could sign audits, but I can't now. But it's funny because I'm now licensed in Arizona. So I moved my license over to Arizona and gave up my California license. Can I now sign audits because I'm an Arizona CPA, even though I never did the audit hours.

David Knoble: [00:13:25] If you live in Arizona. And you do an audit that's not in California. I would not advise you to do one in California mobily. But if you did one in Arizona and you follow Arizona state laws and they allow you to sign an audit opinion. Absolutely.

Blake Oliver: [00:13:40] So then there's another difference that I've become aware of, which is CPAs or chartered accountants who are licensed abroad, who then become CPAs here in the United States. They have different work experience requirements and education requirements. They can get licensed here even though they didn't do the same exact requirements that, say, South Carolina may have or California may have through reciprocity.

David Knoble: [00:14:09] Correct. So you're talking internationally? Yes, Ireland is a good example. Ireland, actually, you can come to the United States. You'll have 120 hour, basically an undergraduate degree. But they have less than 150 hours of education. And we have a law that basically states a federal law that says they can be equivalent to a certified public accountant if they move here.

Blake Oliver: [00:14:30] So to summarize, there are differences among many jurisdictions. And yet. We still have mobility. There's differences among in the in the experience requirement. That's what we've been talking about. And also the education requirement among the states.

David Knoble: [00:14:49] The education is the easiest one to understand. So now now we've just learned that one year is not a year. One year means many different things. So each place is different. But that will help us now have a discussion about mobility. There's in and out mobility and I'm only in control of one. I cannot control which state will take my license as mobility. So, for example, Hawaii is the only one of the 55 jurisdictions that has no mobility. I cannot do a tax return or an audit in in the state of Hawaii while I'm residing in the state of South Carolina. And I have no control over that. Hawaii is the only one that has control over their laws. That's outbound mobility. As South Carolina, we have absolute control over inbound mobility. So, Blake, I can determine whether a CPA from Arizona or California has the right to work inside South Carolina mobility or through mobility. And for those that that are still not sure they understand the mobility concept, what it says is if you're going to work inside a state but you don't reside inside that state. Then if certain things are in alignment, you're going to agree to be bound by the laws in the state you're working in. So if you're working in if you're in Arizona and working in South Carolina, Mobily, you're agreeing to abide by South Carolina laws.

David Knoble: [00:16:12] And if you don't, South Carolina Board of Accountancy is going to going to request to see you and then take it back to the Arizona board. You agree to that, then you can work inside the state. Now, there's a problem with the way some mobility works today, and there's a problem the way South Carolina mobility is written today. When I say problem, it's a it's a protection of the public issue. So one of our other guiding principles was we want to make sure we we maintain protection of the public. That's an important duty. That's part of why CPAs are trusted. And I don't know for a fact. So this is a personal opinion of David Nobles, not necessarily the state of South Carolina, but I believe that the FAA was written, the mobility requirements were written. With the thought that no state would ever decide not to be substantially equivalent. So why do I say that? Well, now, let me speak to South Carolina again. In most mobility laws and in the UK, the first test is whether you come from a substantially equivalent state. So whether or not you are substantially equivalent, Blake, as long as your state is, then you're presumed to be substantially equivalent in South Carolina. That's the. And note that we are we're the only profession that can do this. You don't have to register with South Carolina.

David Knoble: [00:17:30] You don't have to pay a fee to South Carolina. You don't have to get licensed in South Carolina. And, you know, lawyers have to pass the bar in every state they work in. I think nurses, if I'm right. Nurses are the only ones that really adapted to this. And they did it with the pandemic because nurses had to move between state boundaries to assist hospitals. And so the nursing profession decided that they'd practice a type of mobility. Right. So let's let's come back to this concept. The UAE says first test, if your state is substantially equivalent, then you can work with mobility. If your state is not substantially equivalent, if you are, then you get to work with mobility. What happens and I'm not picking on Minnesota, but let's assume that Minnesota decides that they wanted to put in a requirement of only 120 hours and two years of experience. And then let's say that South Carolina or another state decided they were not substantially equivalent. So, Blake, let's assume that you're that Minnesota CPA, so you're not substantially equivalent either. So so how does that work? You're still going to do my tax return in South Carolina. And if you look at South Carolina's law, which mirrors the UAE for the most part in terms of mobility, you're going to say, well, Blake doesn't come from a substantially equivalent state and Blake is not substantially equivalent.

David Knoble: [00:18:47] So he's not practicing with mobility. He's actually practicing the unlicensed practice of accounting, which is as if you weren't a CPA in South Carolina, even though you are in Minnesota. Right. So the law in South Carolina says that's okay, we'll issue you a letter. We're going to say, Blake, you can't do that anymore. And Blake's going to say, if I want to do the return, I sure will. That letter is not going to stop me. Right? So then we have to turn you over to administrative law court. They have to decide that they're going to get the notice from us. They're going to read it. They're going to determine if they have jurisdiction over you. Then they're going to decide if they have to hear the case or they're going to hear the case. Then they have to find you guilty of something. Then we worry about it. Well, by this time you're done and you may not ever work in here again. So what's it really going to happen? Right. So the fallacy of the existing mobility process is that we didn't anticipate a state might not be substantially equivalent. So what's the fix? Well, it's pretty simple. And this is the fix we've used. If you remove substantial equivalency from the mobility requirement and you say, look, if you're a CPA, then you agree to be bound by these laws and you can practice your mobility.

David Knoble: [00:19:57] Right now, it doesn't matter whether you come from a substantially equivalent state or not. This is not a radical idea. This is not new. It's clearly the right concept. Alabama has an existing law that says exactly that. Alabama already tells us that you don't have to be a CPA to work in that state. They say a person who's licensed as a certified public accountant in another state, blah, blah, blah can practice. You just have to be a certified public accountant in another state. Guess what? North Carolina has another one. The requirement is that the individual holds a valid and unrevoked certificate or license. There's no mention of substantial equivalency in either of those state laws. Alaska doesn't even go with this. This concept, this definition. They say if you have 150 hours a year experience in the CPA exam, then you can practice here mobily. Oh, and by the way, our definition of substantial equivalency is that the Board of Alaska CPAs determines it. It has no mention of Ncas or Nasbe or any other certifying organization. Alaska decides if their own on their own volition. If you are substantially equivalent. Some states rely on the board or nasba, and either one could determine their substantially equivalent. Some states require only rely on their own, on their own volition and whether you're substantially equivalent. So.

Blake Oliver: [00:21:23] So in all cases, it's going to be either the board in that state or nasba. Or the state simply doesn't even rely on substantial equivalency to determine mobility.

David Knoble: [00:21:36] Or the combination. Okay. You could be substantially equivalent, according to NCAA's, and then the board could override it and say, if you're not, we'll say you are right and.

Blake Oliver: [00:21:46] Is naspa.

David Knoble: [00:21:48] Correct. That's their their service that determines if a state or if an individual is substantially equivalent. Important to note, right now, every jurisdiction is substantially equivalent. So. Right that right there's according to. We're starting to get confused. Right.

Blake Oliver: [00:22:04] And I'm glad we're talking about this because I feel like the issue is vastly oversimplified when it's discussed. Like this whole concept of substantial equivalency. There's a lot of room to change What that means and it seems has a lot of discretion. I mean, when it decides what substantial equivalency is, it can basically rewrite the law in the sense by by simply making a determination.

David Knoble: [00:22:33] And now, if so, remember, I told you that we have no control over outbound mobility. I can't control what all the other 54 jurisdictions do. I can only control what happens coming into South Carolina. So, yes, there's possibility, but there's always been the possibility for a state to just say, I don't like South Carolina, you cannot come practice here. Right? Mobily Hawaii said that to everybody. You just can't come in. You got to you got to move here and you got to get your own license.

David Leary: [00:22:59] So can I rewind just kind of what we've just what's what the discussion has been for the last half hour. There's the bar. And if there's let's say we add a 51st state, we're going to think you had an extra.

Blake Oliver: [00:23:10] I think you had an extra A on there.

David Leary: [00:23:12] Too many A's you a a.

David Knoble: [00:23:14] Uniform accountancy.

David Leary: [00:23:16] Act. So we add our 51st state. We're going to give them that You need to create a state society. You need to create some laws. Use this as a guide. They could take it very literal or they could do whatever they want. And you're arguing like it's kind of vague. In over eight editions of this, all 55 jurisdictions have just kind of made their own rules along the way in your bigger argument is because of that we South Carolina can interpret the 30 hours any way we want.

David Knoble: [00:23:43] So first, I don't think it's vague. I actually I'm taking the UAE at its word, especially when it comes to the introductory material because it is in its eighth edition. So I believe that the words and the terms and the concepts are very important and are there for a reason. The AA model rules and statutes, however, is one example. And they are very, very specific. And the answer is South Carolina can do whatever we want. And what I'm trying to tell you is we're not being radical in our law. What we're actually doing is studying what the intention of the AA is and looking at existing state laws, because we're all substantially equivalent today. So doesn't it make sense to you that if we study other state's laws than if we find a law that makes sense to use in our state? If we use that law, we should still be substantially equivalent. And remember, substantial equivalency only has to do with your initial licensure process. Regardless of what I say for mobility, regardless of what South Carolina does for reciprocity, it's really how you get licensed. So once I get this new license, am I now equivalent in the eyes of other other jurisdictions? I have no control over the mobility in the other states. So if another state says you have to be substantially equivalent and there's no room for error. Otherwise you're not mobile, then how do I break it? Well, I have to break it by doing something that is not considered a minor difference. That is not considered flexibility from the UAE. The UAE does not say you must follow this rule exactly to be substantially equivalent. It says the opposite. The exact opposite. The ultimate goal is flexibility. The key is flexibility. The key is allowing minor differences so we don't interrupt state law.

Blake Oliver: [00:25:35] But somehow we have ended up with a situation where any change is considered to be breaking mobility. So how do you square that with the intent of the UAE?

David Knoble: [00:25:45] It's very it's really interesting. Either the rule is we must follow this law. Exactly. Or it's flexible. Those are only two choices. And since it said flexible, we either change the number of hours this 30 hours, the toppings on our pizza, or we change the idea that it's on a transcript. And remember, all of this is from the process or the viewpoint of pipeline. We want incremental CPAs that would otherwise not be CPAs and we want to do it in such a way that we uphold the integrity and the the long standing tradition of the fact that a CPA is considered a very important business advisor. So we don't want to degrade the CPA profession. Did you know that New York has a law in place that says if you have 15 years of experience in public practice, you do not need an education to get a CPA license, you need to pass the exam. But that takes the place of education.

Blake Oliver: [00:26:41] Hold up. Hold up. This is blowing my mind here. So you're saying in New York if I never got a college degree, but I've practiced accountancy for 15 years, I can take the CPA exam and I can become a CPA.

David Knoble: [00:26:57] I wasn't clear whether you still needed a years experience or that was baked in, but yes, yes.

Blake Oliver: [00:27:02] I assume if I have 15 years of experience, right. I'm I'm good there.

David Knoble: [00:27:05] So maybe you need 16. So again, I don't want to split the hair.

Blake Oliver: [00:27:09] And then is so a CPA. So in that rule doesn't cause New York to somehow be not substantially equivalent?

David Knoble: [00:27:18] That's correct. So one question I'd ask is, well, how many people have ever used it? Right. Well, I don't know. Nobody really knows except potentially New York, because we don't submit to Nasba or anyone else how we got licensed. We simply ask the state to license us when we get there. So, number one, we don't know how many people have used it. But what we do know is that New York, who is the state that actually created the CPA CPAs, were created in the late 1800s, if I'm right, through the state of New York, first one, first State Society, New York. Right. They haven't removed the law from their books. What does that tell you? That tells you that somebody believes it's worth leaving no matter how often it's used. So I come back to its pipeline. Right. So. So I'm sorry.

Blake Oliver: [00:28:05] I just. I just have to. So. So how could the how could nasba or any state deem Minnesota, for example, to be no longer substantially equivalent if they create an alternative pathway that has 120 semester hours and two years of experience, when in New York State it's possible to become a licensed CPA without a college degree.

David Leary: [00:28:25] Yeah, it feels like there's already existing alternative pathways. They already exist.

David Knoble: [00:28:30] Yeah, that's. That's part of my argument. Okay. Now, I think this is an extreme and it clearly doesn't help our current pipeline issue because if someone starts today, it's 15 years before they're here. By that time, we're going to be in a different cycle again. So I'm not suggesting that's a fixed pipeline, but it's one alternative that exists today. And I purposely didn't start with Ohio because, you know, Ohio's alternative path and passing the GMAT with a high score and accounting for some education requirements. I think folks have talked about that a lot. So I've not studied it because I wanted to find new things. I wanted to find other things that were out there.

Blake Oliver: [00:29:04] But but you're saying in Ohio, because I've heard that before, that Ohio has a pathway that doesn't require five years of education. And they are also deemed substantially equivalent by NCAA's and by all the other states.

David Knoble: [00:29:18] And what it tells me is that there's alternative ways to do things. We've seen experience in alternative ways. What it does tell me is that there's flexibility. So if I accept the fact that transcript is an item that can change, if I accept the fact that at least one state has replaced experience and education. What we're saying is there are ways to deal with state laws that. Bridge the gap for this last 30 hours, but aren't on a transcript. So I'm going to ask you a comparison question. I'm going to go out on a limb and say, let's see if you get this question right. Okay, David, you're you're in the middle here. So you're going to take you're going to take an advanced business writing course at the University University of South Carolina in Columbia. And it's going to be on your transcript for this last 30 hours. It's not a required course, but it certainly will help you with your business writing. Now, Blake, you're going to take the same course, but you're going to take it through the executive program, which means you're not going to get credit for it on a transcript. But you and David are actually in the same class. So here's the question Is there any difference in the education that you received? Between the two of you.

Blake Oliver: [00:30:32] As long as we took the same we attended the same lectures, we did the same homework. We took the same exams. No, the only difference is that transcript.

David Knoble: [00:30:41] That's my point. So why? Why would we not take our our universities across the country, let them use their executive programs and come up with lower cost education processes that are the same types of classes. And and you know what else you do when you create this process? I might call it a certificate program instead of a degree. Right. I've turned this these toppings of this other 30 hours where we've just decided and we've really we've determined that you can take any class you want. You take photography, you take psychology, you take whatever you want. It doesn't have to be business related. What if I give you the option to take some business courses that aren't on? A transcript provided by the same professors at the same universities and we say that's equivalent to 30 hours. I have to believe, based on these analysis, that that's a very minor difference as to whether it's on a transcript or not, especially when it's a really important class to make me a better and more well-rounded professional.

Blake Oliver: [00:31:46] Did you say earlier that the UA doesn't define the 30 hours as semester hours.

David Knoble: [00:31:51] So appendix B explicitly removes the term semester. Okay. Appendix B does not use it says 150 hour education requirement, and it says flexibility is the key. Right. Right. And I'm sure that, again, I have to rely on the eighth edition being that people have looked at this stuff eight times and decided that the way we've written it is clear, it's concise and it means what we want it to mean.

David Leary: [00:32:19] And it could be a combination. It's not one or the other, but it's not 30 on a transcript. It's really what the point of view is. And the argument is, now, look.

David Knoble: [00:32:26] All of this. So there's there's some very, very key components here. And I know for a fact that some of the folks that are going to be watching this are going to be in states outside of South Carolina. And I certainly hope they are, because just like Minnesota, we want to spark discussion. But we want to do it in something in a framework that makes sense. Part of what we need to do today, part of our responsibility is to future proof our profession. We need to make sure that the laws that we have will adapt with changing circumstances. How many of you today would have thought that most new graduates would only spend a day or two in the office every week? I put on my suit and tie and carry my briefcase every day to the office. Yeah. I went uphill in the snow both ways too. But the point is that that today we've already adapted with a pandemic, and we don't spend near the same time in the office. What else are we going to do when we. When we adapt? How are we going to future proof it? Well, we've added this additional path to to licensure dealing with it. Right? So now there's the whole exam has changed.

David Knoble: [00:33:24] Okay. So we want to make sure that we future proof our law. That's the the main reason that we think that Alabama and North Carolina made a great first step, removing substantial equivalency out of mobility. So let's future proof it by making sure if if a state goes a little rogue, even if it's for a short period of time, it's fine. We want to make sure that we protect the public by governing them. But number two, what we want to do is we want to make sure that we remain substantially equivalent because it's going to take time. We've spent the last 20 years putting this in place. And, you know, I really have a high respect for for Ken Bishop as the CEO of Naspa and for Sue Coffey, CEO of public accounting at AICPA. They're in a tough spot because they're trying to make 55 jurisdictions happy. That all differ. They're trying to find something that works for everybody, and in reality we're trying to find something that works for South Carolina and fits the framework such that that we work well with other states. Another state doesn't say we don't want to do business with South Carolina.

David Knoble: [00:34:26] So all these suggestions, all these toppings on the pizza, there's for those of you that are watching in other states, I think here's the way to do it. I think we build into the law something that we put in in our last law change. And I'll remind you, we're substantially equivalent today. And that is once we list our main requirements, our 150 hours on a transcript, a year of experience and exam, we give the board the opportunity to determine that certain things are equivalent to that 30 hours of education. The Board of Accountancy can then determine what it is that we're association that promotes and protects CPAs. The Board of Accountancy regulates CPAs, so sometimes we may be a little bit of a crossroads. So let the board make that decision. Our law already has it in place and the law changes that we're suggesting just further define it and give the board a little more direction and say they may create rules and regulations that deal with other programs that are substantially equivalent to the education piece, including items such as certificate programs. Right. So we're giving them opportunities to make decisions, but they've got to make the decision.

David Leary: [00:35:37] So really, you're making it you're giving it your future. Future proofing it because there's some elbow room in there because we don't know the way technology is three years from now, five years from now. College might be delivered in a whole different way.

David Knoble: [00:35:50] South Carolina is also doing something else new that sort of fits that realm. And we've started a pilot program this year. Right now, it's beginning in the fall that will have a dual enrollment process for high school kids. They'll be able to be students will be able to take a college level accounting course, intro to accounting, not audit or something fancy by streaming with an online university professor. So just like some of these students do engineering today or computer science, they'll do it with the tech schools during the school day and get credit for it. We have we have actually funded through our association. We've spent money to to work with one university and one local group of high schools to allow students to take the course, which will then give them college credit for accounting. They still have to pass it. But the point is, we're trying to introduce not only introduce accounting at the high school level, but let those folks get college credit for it as soon as they enroll in South Carolina. And so you talk about pipeline and talk about getting people interested in our profession. Clearly, it's best to do it at that that level. And so why not make it open and available for them to get college credit? There's a lot of talk about Stem and can we make accounting stem? There's federal law out there now that they're discussing and we told our federal folks we support it. We've got a law in South Carolina to promote Stem. So honestly, it's not just dealing with our laws and our regulations today and how you become an accountant, but each state, I believe, has a duty to start working with the younger folks and trying to pull them into the profession, let them experience it, but do it in such a way that they get credit for it as they move into the college profession and the college venue, which is what a lot of other professions do today.

Blake Oliver: [00:37:32] So if South Carolina or Minnesota or any other state, for that matter, changes its requirements. To alter the education requirement in some way because these states are already. Deemed substantially equivalent. Nothing will happen automatically to eliminate mobility. It would require another state or neighbor's national qualification appraisal service to. Then say after the legislation passes. South Carolina, Minnesota, whatever state you are no longer substantially equivalent. It would take action by them. To cause a problem with mobility for your CPAs.

David Knoble: [00:38:19] It would depend on the state law. So we've already said Alaska doesn't use NASA's substantial equivalency. They set their own right. But currently Alaska may or.

Blake Oliver: [00:38:29] May substantially equivalent already right now. Right. So there's nothing automatic would happen. It's not like in Alaska they have, you know, it written into the law. Right. They also have discretion because there are all these small changes. So their board would have to do something.

David Knoble: [00:38:45] Because if the keynote is flexibility, everything's about flexibility and promoting mobility across state lines. So yes, but the bigger point, Blake, you you've got it. I think I'm going to say you have a little bit backwards. It doesn't require a law change here in South Carolina. Every jurisdiction is free to make that decision right now today. But without a law change, exactly five years ago, they could have made that change as nothing to do with the current the current realm of where we are and has everything to do with what a state wants to do.

Blake Oliver: [00:39:16] So what I'm getting at is if all the states, you know, if all the leaders from all the boards of accountancy and all the state societies got together and said, let's give each other a little bit of wiggle room on this and said, we're not going to deem any of you all to be no longer substantially equivalent. We don't have to worry about reciprocity or not. Reciprocity. Mobility. Right. Mobility is only under threat if the leaders of these boards of accountancy or nasba decide to put it under threat.

David Knoble: [00:39:50] Depending on state laws. Yet that's what clearly has the authority to use the NCAA's service to determine that a state is not substantially equivalent.

Blake Oliver: [00:40:00] So it's not automatic, I believe.

David Knoble: [00:40:02] Yeah. You know, I think I think Ken's a reasonable person. I think Nasba is a reasonable group. And I believe if we all work together, that we're going to find a way to do this. Without getting to that point, I know it's very important to Ken because he's told me personally that he wants to make sure that we all maintain that mobility and that reciprocity. And, you know, we didn't hit reciprocity, but in general, reciprocity follows very similar rules.

David Leary: [00:40:27] Yeah, it feels like all the wiggle room already exists, but they're really making it. It's being presented as in like, Oh, this is the domino that's going to cause everything to collapse. And it's the it could collapse anyways because all the wiggle room is already there.

David Knoble: [00:40:41] That's right. It's actually I may be going out on a limb, but I think mobility to a degree is already broken. There are so many different laws. You don't have to register. You don't have to license to practice mobily. How does another state even know if I'm working mobily. That's a dangerous concept to think of, but in reality it's irrelevant.

David Leary: [00:41:05] Yeah.

David Knoble: [00:41:06] It's irrelevant until someone does something they shouldn't, right? That's when you get noticed. If you do.

Blake Oliver: [00:41:10] Yeah, but even then, your clients. And if I'm. If I'm doing a tax return for a client in South Carolina, what jurisdiction does the, does the state of California or the state of South Carolina have over me in Arizona anyway?

David Knoble: [00:41:21] So if you're practicing using mobility and it works, right? Yeah. If let's say you never give me my documents back, you don't finish my return. You said you filed it and you didn't file it, and I got a complaint. I'm going to take it to South Carolina and they're going to sanction you and then they're going to tell your board what happened and your board will come after you. That's the way it's supposed to work, right? So in reality, there is a hook.

Blake Oliver: [00:41:44] But it's not like it's not like they're going to send state troopers.

David Knoble: [00:41:47] Going to look at the law to make sure it fits. And we want to make sure we future proof it so that it does fit, regardless of who you are as a CPA. That's right. That's right. So I can't speak for the other states. I can just tell you from South Carolina's perspective, we think for us, certainly the best way to deal with this is deal with the 150, one, 20 plus 30 and take the 30 and let the board decide what other things are are functionally the same as that 30 hours. And let's see if we can improve on the process, but cut the cost and get some of these folks in that can't afford to spend five years in school but are just as good as we are.

Blake Oliver: [00:42:25] David Noble I just I just got to say, I love what you have done here because this is like a work of art. You have managed to. You have managed to find. The flexibility that's already in the existing law that's already in the air. And I'm looking at it right now. I found that appendix B that you mentioned, Section A substantially equivalent states, and it just says 150 hours. It doesn't say semester hours and it says.

David Knoble: [00:42:53] Flexibility, right? Yeah.

Blake Oliver: [00:42:54] Oh, yeah. And that's at.

David Knoble: [00:42:55] The very front.

Blake Oliver: [00:42:56] Yeah. Flexibility is, is like in, in all of the principles there. So it seems like a very strong legal basis to make these changes. And I, I would have a hard time arguing the other side of this.

David Knoble: [00:43:10] Well, I was hoping you would and that's why I put it together. And once we decided that it made sense, it was easy to adjust the law. I really think we fit in it. And we've done nothing new, nothing out of place. And what I think we're proving is we can all do this and we can do it in such a way that it works. And again, kudos to Minnesota for sparking the conversation. I've talked with their board chair and their CEO. They're great folks and they're they're trying to make sure that we all do the right thing. They sparked us. Ken Bishop and Sue Coffey are working really hard at the national level and they've got a task force to try and come up with some things. So you never know. Our law might change a little bit before it goes in place. So keep in mind that laws take time. We have a two year cycle. Somebody else starts something today might take them three years to put things in place. We're going to have to deal with some law changes, but that's nothing new either. It's an exciting time to be a CPA for sure. It's an exciting time. If we can can put things, put options in front of people to get them into the program that couldn't otherwise get here and really add to the profession because it's the workload is only going to increase. And at some time, at some point, either people aren't going to get served or they're not going to get served with high quality. And that's unacceptable. As a professional.

Blake Oliver: [00:44:23] We can't let that happen as a profession. If we let the talent shortage impact the protection of capital markets and investors and taxpayers like that would be far worse than any of the potential mobility issues like we should put the public above our own interest in this regard.

David Knoble: [00:44:45] That's what our Board of Accountancy does. That's why they're the right ones to make the decisions.

Blake Oliver: [00:44:48] Well, David.

David Knoble: [00:44:49] Everything you guys do to getting the word out and telling people what's going on, this is a this is a great show. If you haven't listened to it, you got to listen to these podcasts. It's great stuff.

Blake Oliver: [00:44:59] Thank you so much for joining us. David Noble We will put links to anything you would like to share in regard to this initiative in our show notes. So dear listeners, or if you're watching on YouTube, do check the description, do check the show notes for the links and we'll put a link where you can contact David Noble and learn more about the South Carolina Association of CPAs.