CPA Inactive Means What It Says

CPA Inactive Means What It Says

CPA Inactive Means What It Says INACTIVE, and that means that when a CPA isn’t current with their CPE and is required to use the inactive designation that does NOT mean pick and choose it means what it says. The California Accountancy Act says

ARTICLE 3. Application of Chapter 5058.2 states

The holder of an inactive license issued by the board pursuant to Section 462, when lawfully using the title “certified public accountant,” the CPA designation, or any other reference that would suggest that the person is licensed by the board on materials such as correspondence, Internet Web sites, business cards, nameplates, or name plaques, shall place the term “inactive” immediately after that designation.

The language of the statute is very clear, if a person that would otherwise meet the licensing statute but doesn’t keep their CPE and ethics current, the are INACTIVE and must add the designation in any public representation of their being a CPA. We have a couple of client situations where we have asked for a ruling on the topic. Here are a couple of fact patterns we asked about.

Example 1 – Haywood Jablomie [“HJ”] practiced with a public accounting firm for twelve years. Thereafter, HJ went to work for a Sand Hill Road venture capital firm in California, where he was wildly successful. One of the venture investment firms added HJ to their Board of Directors. HJ wants to be listed on the firm’s website as HJ, CPA. His position is that because he isn’t associated with an accounting firm, the Inactive designation should matter. The response was unequivocal that HJ MUST add CPA Inactive rather than just CPA after his name. 

Example 1A – If HJ was licensed outside of California, but was working in California and the state where HJ’s original license was issued doesn’t require INACTIVE designation would HJ be required to use CPA-Inactive if he was resident in California. The response was YES the Inactive designation was required, and the California Board of Accountancy would sanction HJ and report an ethics violation to HJ’s home state of licensure in such a situation. 

What is an inactive renewal?

If you are not practicing public accountancy, you may renew your license in inactive status without completing CE. However, you must pay the renewal fee and submit a renewal form to maintain a current license. An inactive license may be converted to active status prior to the next expiration date by applying for license conversion on the License Status Conversion Form from Inactive to Active License Status and meeting all license status conversion requirements. The license will not become active until it has been processed and approved by the CBA.