What Services Non-CPA Provide California

The next piece of the puzzle to consider is the services being provided by non-CPAs’s. More specifically, there are a HUGE number of non-CPAs providing services that seem to be outside the scope of services permitted under the Accountancy statutes in any number of states. Let’s consider an example, of a “Cloud Bookkeeping and Accounting Firm. Let’s assume that is providing what seems to be the norm – Good, Better and Best plus Ala Cart Services. Here are the offerings….let’s assume they are located in California.

• STARTER
  • Accounting basics training
  • Monthly updates
  • Monthly reconciliations
  • Quarterly reports
  • Unlimited email support

• STANDARD
  • Weekly updates
  • Weekly reconciliations
  • Monthly reports
  • Integration Support
  • Payroll
  • Unlimited email/phone support

• PREMIUM
  • Standard plus:
  • Daily updates
  • Weekly reports
  • Advisor meetings
  • Budgeting
  • AP/AR Management

• ADDITIONAL & ALA CARTE
  • Accounts Payable,
  • Invoicing,
  • Payroll
  • Planning
  • Sales Tax
  • Reporting
  • Training

Accounting services are provided under the authority of Section 5052 of the California Accountancy Act for which a state license is not required[i].

The statute quote above from the California Accountancy Act states:

“5052. Exemptions Nothing in this chapter shall apply to any person who as an employee, independent contractor, or otherwise, contracts with one or more persons, organizations, or entities, for keeping books, making trial balances, statements, making audits or preparing reports, all as a part of bookkeeping operations, provided that such trial balances, statements, or reports are not issued over the name of such person as having been prepared or examined by a certified public accountant or public accountant.”

Lets focus on a part of the statute

• keeping books
• making trial balances
• statements,
• making audits
• or preparing reports,

Thus we find a situation where said hypothetical Xero Certified Accounting Partner is providing a substantial portion of its core services which seem to be a violation of the statutory exemption under the California Public Accountancy Act that is seeks protection under.

If I were a California CPA struggling to comply with all of the rules and regulations created by the State of California, plus the additional burdens imposed by AICPA which we have enumerated Ad Nauseum. I WOULD BE PISSED OFF!

The State of California is doing a PISS POOR job of enforcing the Accountancy Act, and should either step up its enforcement of the existing statute or change it. Xero which has its US headquarters in San Francisco is an accounting software vendor and not responsible for how it’s software is used. However, where they do maintain directories of accountants and bookkeepers there is a serious question about their permitting listings direct or indirect through website links which advertise for the provision of services which are KNOWN TO BE ILLEGAL IN THE JURISDICTION where the advertiser is located.

This goes right to the core of our concerns with respect to CPA firms that “play by the rules within the jurisdictions where they are located. The SOC Attest Engagement concept when applied to CPA firms that provide “virtual” outsourced bookkeeping, accounting, controller or CFO services provides a mechanism to review those operations and report on the service providers operating environment, procedures, and controls.

 Thus CPA firms that provide these services could be mandated to either be subject to Peer Review with those types of services, or undergo an SOC Attest Engagement. The non-CPA firms could be given a choice to come under CPA monitoring and review, undergo an SOC Attest Engagement, or restrict the services which they provide to those which are covered by the Accountancy Act.

Is asking a business to comply with a long-established such an unreasonable request??

[i] Source CA Accountancy Act Sec. 5052

Some comments and input from those firms would be appreciated. We do intend to share our efforts with CALCPA and the California State Board of Accountancy and AICPA as it is one more factor in the puzzle. 

Additional reference from California Accountancy Statute

• 5051. Practice of public accountancy Except as provided in Sections 5052 and 5053, a person shall be deemed to be engaged in the practice of public accountancy within the meaning and intent of this chapter if he or she does any of the following:

  • (a) 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 public accountant for compensation.
  • (b) Maintains an office for the transaction of business as a public accountant.
  • (c) Offers to prospective clients to perform for compensation, or who does perform on behalf of clients for compensation, professional services that involve or require an audit, examination, verification, investigation, certification, presentation, or review of financial transactions and accounting records.
  • (d) Prepares or certifies for clients reports on audits or examinations of books or records of account, balance sheets, and other financial, accounting and related schedules, exhibits, statements, or reports that are to be used for publication, for the purpose of obtaining credit, for filing with a court of law or with any governmental agency, or for any other purpose.
  • (e) In general or as an incident to that work, renders professional services to clients for compensation in any or all matters relating to accounting procedure and to the recording, presentation, or certification of financial information or data.
  • (f) Keeps books, makes trial balances, or prepares statements, makes audits, or prepares reports, all as a part of bookkeeping operations for clients.
  • (g) Prepares or signs, as the tax preparer, tax returns for clients.
  • (h) Prepares personal financial or investment plans or provides to clients products or services of others in implementation of personal financial or investment plans
  • (i) Provides management consulting services to clients.
  • The activities set forth in subdivisions (f) to (i), inclusive, are “public accountancy” only when performed by a certified public accountant or public accountant, as defined in this chapter. A person is not engaged in the practice of public accountancy if the only services he or she engages in are those defined by subdivisions (f) to (i), inclusive, and he or she does not hold himself or herself out, solicit, or advertise for clients using the certified public accountant or public accountant designation. A person is not holding himself or herself out, soliciting, or advertising for clients within the meaning of this section solely by reason of displaying a CPA or PA certificate in his or her office or identifying himself or herself as a CPA or PA on other than signs, advertisements, letterhead, business cards, publications directed to clients or potential clients, or financial or tax documents of a client.

• 5053. Employee or assistant under supervision of certified public accountant or public accountant; Attorney at law Nothing contained in this chapter precludes a person who is not a certified public accountant or public accountant from serving as

• 5054. Preparation of tax returns by individuals and firms licensed outside the state (a) Notwithstanding any other provision of this chapter, an individual or firm holding a valid and current license, certificate, or permit to practice public accountancy from another 23 state may prepare tax returns for natural persons who are California residents or estate tax returns for the estates of natural persons who were clients at the time of death without obtaining a permit to practice public accountancy issued by the board under this chapter or a practice privilege pursuant to Article 5.1 (commencing with Section 5096) provided that the individual or firm does not physically enter California to practice public accountancy pursuant to Section 5051, does not solicit California clients, and does not assert or imply that the individual or firm is licensed or registered to practice public accountancy in California. (b) The board may, by regulation, limit the number of tax returns that may be prepared pursuant to subdivision (a). 5055. Designation of recipient of certificate and permit as certified pub