TSBPA Seal
 
Texas State Board of Public Accountancy
  Home     Exam Candidates    Licensees 
  William Treacy, Executive Director  
 


Texas State Board of Public Accountancy Rules for Practice Privilege for Certain Out-of-State License Holders


Legislation effective September 1, 2007 created a “practice privilege” for CPAs and CPA firms licensed in a substantially equivalent state to temporarily practice in Texas without a Texas license. CPAs that qualify for the “practice privilege” are not required to provide notice to the Texas State Board of Public Accountancy (the "Board") or to pay a fee prior to practicing public accountancy in Texas in person or by mail, telephone or electronic means.

However, if a CPA who qualifies for the “practice privilege” intends to perform a financial statement audit or other engagement in accordance with Statements on Auditing Standards, an examination of prospective financial information in accordance with the Statements on Standards for Attestation Engagements, or an engagement in accordance with auditing standards of the Public Accounting Oversight Board, then he or she must perform the service through a firm licensed by the Board.

Requirements for Out-of-State Individuals

(Section 901.462 of the Public Accountancy Act)

If you are an out-of-state practitioner use the following checklist of requirements to determine your eligibility to practice in Texas without notice to the Board. To qualify you must be able to answer “Yes” to all requirements in the Individual Requirements Checklist below.

Individual Requirements Checklist - Requirements to Practice in Texas as an Out-of-State Practitioner
Requirement Yes No
I hold a license as a certified public accountant issued by a state other than Texas.    
My principal place of business is in a state other than Texas.    
The National Association of State Boards of Accountancy’s (NASBA) National Qualification Appraisal Service has verified that the state where I am licensed has education, examination, and experience requirements for certification or licensure that are comparable to or exceed the requirements for licensure as a certified public accountant of the American Institute of Certified Public Accountants (AICPA)/National Association of State Boards of Accountancy Uniform Accountancy Act.
                                         OR
I have obtained from NASBA’s National Qualification Appraisal Service verification that my education, examination, and experience qualifications are comparable or exceed the requirements for licensure as a certified public accountant of the American Institute of Certified Public Accountants (AICPA)/National Association of State Boards of Accountancy Uniform Accountancy Act.

Refer to the Substantial Equivalency list maintained by NASBA to respond to this requirement.
   

If you meet all the requirements in the Individual Requirements Checklist you may practice public accountancy in Texas without notifying the Board, but you must also be aware of the following conditions of your privilege to practice in Texas.

If you perform any of the following activities for an entity with its principal office in Texas, you must practice through a firm licensed by the Board. (That is, if you answer “Yes” to any activity listed in the Individual Practice Checklist below, you must practice through a firm licensed by the Board.)

Individual Practice Checklist - Activities that Require Practice through a Firm Licensed by the Board
Activity Description Yes No
Will you perform for an entity with its principal office in Texas a financial statement audit or other engagement in accordance with the Statements on Auditing Standards?    
Will you perform for an entity with its principal office in Texas an examination of prospective financial information in accordance with the Standards for Attestation Engagements?    
Will you perform for an entity with its principal office in Texas an engagement in accordance with auditing standards of the Public Company Accounting Oversight Board (PCAOB) or its successor?    

If you qualify for the out-of-state practice privilege in Texas, you must also be aware of the following conditions of your privilege to practice in Texas.

Your practice privilege:

  • is subject to the personal and subject matter jurisdiction and disciplinary authority of the Board;
  • must comply withThe Public Accountancy Act andthe Rules of the Board;
  • results in the appointment of the state that issued your license as the agent on whom process may be served in any action or proceeding by the Board against you;
  • ends if your certificate or registration is no longer valid. You must immediately cease offering services or rendering professional services in Texas.

Requirements for Out-of-State Firms

(Section 901.461 of the Public Accountancy Act)

If your firm is an out-of-state firm, use the following checklist of requirements to determine your eligibility to practice in Texas without obtaining a Texas firm license and without notifying the Board. You must be able to answer “Yes” to all requirements of the Firm Requirements Checklist to qualify.

Firm Requirements Checklist - Requirements to Practice in Texas as an Out-of-State Firm
Requirement Yes No
1. The firm holds a license issued by a state other than Texas.    
2. The primary place of business for the firm is in a state other than Texas.    
3. The firm has not established or maintained an office in Texas.    
4. The firm does not perform for an entity with its principal office in Texas a financial statement audit or other engagement in accordance with the Statements on Auditing Standards.    
5. The firm does not perform for an entity with its principal office in Texas an examination of prospective financial information in accordance with the Standards for Attestation Engagements.    
6. The firm does not perform for an entity with its principal office in Texas an engagement in accordance with auditing standards of the Public Company Accounting Oversight Board (PCAOB) or its successor.    
7. The firm’s practice in Texas is performed by an individual who meets the requirements of Section 901.462 of the Public Accountancy Act or is performed by an individual who holds a Texas license. (Use the checklists provided above to determine practice privilege for those individuals who practice based on Section 901.462 of the Public Accountancy Act.    

If the firm meets all the requirements in the Firm Requirements Checklist above, your firm is eligible to practice in Texas without obtaining a Texas license. If you answered "No" to requirements 3, 4, 5 or 6, then you must obtain a firm license from the Board.

To qualify for a Texas firm license your firm must meet all the requirements listed in the Firm Expanded Requirements Checklist below. You must be able to answer “Yes” to all requirements of the Firm Expanded Requirements Checklist to qualify for a license.

Firm Expanded Requirements Checklist - Additional Requirements for Out-of-State Firms
Requirement Yes No
The firm holds a license issued by a state other than Texas.    
The primary place of business for the firm is a state other than Texas.    
The firm has not established or maintained an office in Texas.    
A majority of the ownership of the firm, in terms of financial interests and voting rights, belongs to persons who hold certificates in Texas or are licensed in another state. The firm and all owners shall comply with Texas Board rules, even if some owners are not license holders.    
The firm may have non-license holders as owners if the non-license holders comply with the requirements of Section 901.354 (b) of the Public Accountancy Act.    
The firm complies with the Texas Board’s peer review program (Section 901.159 of the Public Accountancy Act).    
The services of the firm are performed by an individual who has been issued a Texas license or meets the requirements for out-of-state individuals above (Section 901.462 of the Public Accountancy Act).    

Any firm that qualifies for the out-of-state practice privilege in Texas must be aware of the following conditions of the privilege to practice in Texas.

The firm’s practice privilege:

  • is subject to the personal and subject matter jurisdiction and disciplinary authority of the Board;
  • must comply with the Public Accountancy Act and the Rules of the Board;
  • has appointed the state that issued the firm’s license the agent on whom process may be served in any action or proceeding by the Board against the firm;
  • ends if the firm’s license to practice as a certified public accountancy firm is no longer valid in the state in which the firm’s primary place of business exists. The firm must immediately cease offering services or rendering professional services in Texas.