Bill
HF 778
Iowa HF 778 rewrites CPA certification: two paths (150 hours/1 year vs 120 hours/2 years), clarifies degree/experience, tightens reciprocity and nonresident practice rules.
Subject: Accountancy — qualifications for CPA certificate
Status and timing
- Introduced: March 5, 2025.
- Passed House and Senate (unanimous majorities).
- Signed by Governor Kim Reynolds: May 1, 2025.
- Effective date: July 1, 2026.
Purpose
- To revise and clarify the educational and experience qualifications for initial issuance of an Iowa certified public accountant (CPA) certificate, to update related cross‑references for reciprocity and practice privileges, and to add an explicit compliance requirement for non‑resident practice privileges.
Key provisions and changes
1. Two alternative pathways for initial CPA certification (amends Iowa Code §542.5(7)):
- Path A: At least 150 semester hours (or trimester/quarter equivalent), a degree, and at least one year of qualifying experience.
- Path B: At least 120 semester hours (or trimester/quarter equivalent), a degree, and at least two years of qualifying experience.
2. Degree requirement clarified (§542.5(7)(b)):
- Degree must be at least a baccalaureate conferred by a college/university recognized by the Board, and the program must include a concentration in accounting or another area the Board determines substantially equivalent.
3. Experience requirement defined (§542.5(7)(c)):
- Experience must include providing services or advice involving accounting, attest, compilation, management advisory, financial advisory, tax, or consulting.
- Experience must be verified by the applicant and meet Board‑prescribed rules; may be gained in government, industry, academia, or public sector.
4. Removal of former subsection 12 (§542.5(12) is struck).
5. Grandfathering clause updated (§542.5(13)):
- Persons holding an Iowa CPA certificate issued prior to July 1, 2025 (previously July 1, 2002) are deemed to have met the section’s requirements.
6. Conforming edits to reciprocity and foreign designation provisions (§542.19):
- Cross‑references to the replaced subsection are updated (references to former subsection 12 → new subsection 7).
- Applicants relying on out‑of‑state or foreign credentials must show experience substantially equivalent to the newly defined requirement or four years’ professional experience in Iowa.
7. Practice privilege / non‑resident practitioners (§542.20):
- Clarifies that non‑resident persons/firms may practice in Iowa without Iowa licensure only if they hold a valid, unexpired license in their principal place of business that is substantially equivalent to Iowa licensure.
- Adds an express requirement that practice privilege holders “comply with the requirements of this chapter, and all rules adopted by the board.”
Who is affected
- CPA candidates: offers two alternative education/experience routes to initial certification, potentially broadening eligibility for those with a 120‑semester‑hour degree plus two years’ experience.
- Current Iowa CPAs: updated grandfathering date affirms prior certificate holders meet reformed requirements.
- Out‑of‑state and foreign licensees and non‑resident firms: modified reciprocity and practice‑privilege rules require substantially equivalent licensure and compliance with Iowa law and board rules.
- Iowa Accountancy Board: gains clearer rulemaking authority to define verification and equivalency standards for experience and degree concentrations.
Practical impact and considerations
- The bill provides flexibility for candidates who have a standard 120‑hour baccalaureate degree but more work experience, while retaining a 150‑hour/one‑year pathway consistent with many state standards.
- The Board will need to adopt or update rules to define verification procedures, the Board’s determination of “substantially equivalent” concentrations, and experience verification standards.
- Non‑resident practitioners must ensure their home‑jurisdiction licensure remains in good standing and that their practice in Iowa conforms with Iowa statute and Board rules.
Compiled from official sources — confirm details with the bill’s official record.
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