SF5205

Purpose

This bill aims to change who is eligible to practice as CPAs and CPA firms in Minnesota. It updates permit requirements, outlines how out-of-state CPAs and firms can work in Minnesota (interstate mobility and practice privileges), and strengthens rules for keeping firms in compliance when ownership or personnel change.

Main Provisions

• Section 1 – Permits to practice as a CPA firm

  • The state board must issue or renew permits to firms that meet the requirements in this section.
  • A firm must hold a permit if it:
  • has an office in Minnesota and performs attest services (as defined in Minnesota law),
  • has an office in Minnesota and performs compilation services,
  • uses the title “CPA” or “CPA firm,” or
  • does not have an Minnesota office and does not qualify for interstate mobility but performs attest services for a client that has its headquarters in Minnesota.
  • A firm with a valid permit from another state (that does not have an Minnesota office) may:
  • perform the services described above for a Minnesota-headquartered client and use the title CPA or CPA firm without a Minnesota permit only if it meets interstate mobility qualifications under the board’s rules (including peer review requirements).
  • have its work performed through an individual who has practice privileges under Minnesota law.
  • A firm with a permit from another state that is not subject to the above mobility or peer-review requirements may:
  • perform other professional services under the CPA title without Minnesota-permit if it meets the specified qualifications and uses an individual with practice privileges, and can lawfully perform those services in the state where the individual’s principal place of business is located.

• Section 2 – Corrective actions for noncompliance

  • If ownership or personnel changes cause a firm to fall out of compliance, the firm must take corrective action quickly.
  • If the firm does not restore compliance within a reasonable period defined by board rules, its permit or practice privilege can be suspended or revoked.

• Section 3 – Interstate practice privileges for individuals

  • An individual whose principal place of business is not in Minnesota is presumed to have qualifications substantially equivalent to Minnesota’s requirements if they:
  • hold a valid CPA certificate/license/permit from another state in good standing and
  • have a bachelor’s degree or higher with an accounting concentration and have passed the Uniform CPA Examination.
  • Notwithstanding other law, such an individual offering professional services in Minnesota must be granted practice privileges and is subject to the board’s requirements (but may not need to submit additional notices).
  • The out-of-state licensee and the employing firm are considered to have consented to:
  • the board’s personal and subject-matter jurisdiction,
  • the board’s rules and disciplinary authority, and
  • appointment of the issuing state’s board as the agent for service of process.
  • cease providing services in Minnesota if the license from the other state is no longer valid or in good standing.
  • An out-of-state licensee with practice privileges who performs attest services for a Minnesota-headquartered client may do so only through:
  • a Minnesota-permitted firm or
  • through practice privileges under this section.
  • An individual may have Minnesota license privileges without a Minnesota license if:
  • the individual’s principal place of business is not in Minnesota, and
  • the individual holds a valid certificate/licence/permit from another state that Minnesota recognizes as substantially equivalent as of December 31, 2024, and
  • the individual held that license as of December 31, 2024.

What This Means in Practice

• Minnesota CPAs and firms will face more explicit rules about when a firm must have a Minnesota permit and when an out-of-state firm can operate using practice privileges.
• Out-of-state CPAs can provide certain services in Minnesota without a Minnesota license if they meet mobility and peer-review requirements and work through individuals with practice privileges.
• The state board gains clearer authority to enforce compliance and suspend or revoke permits if firms change ownership or personnel and fail to remedy problems promptly.
• There is a formal process for recognizing out-of-state credentials as substantially equivalent and for granting practice privileges to those licensees, with conditions about jurisdiction and disciplinary oversight.

Significant Changes to Law

• Expands and clarifies who must obtain a Minnesota permit (including scenarios involving out-of-state firms and use of the CPA title).
• Introduces or strengthens interstate mobility pathways with defined criteria (peer review, practice privileges) for out-of-state firms and individuals.
• Tightens corrective action rules for firms that fall out of compliance due to ownership or personnel changes.
• Establishes a framework for recognizing out-of-state credentials as substantially equivalent and granting practice privileges, with safeguards on jurisdiction and enforcement.

Relevant Terms - certified public accountant (CPA) - CPA firm - attest services - compilation services - office in Minnesota - permit to practice - practice privileges - interstate mobility / mobility under section 326A.14 - peer review - good standing - principal place of business - headquarters - board (Minnesota Board of Accountancy) - disciplinary authority - corrective action - revocation - suspension - Uniform CPA Examination - substantial equivalence - out-of-state license/credential - Minnesota-permitted firm - jurisdiction and service of process - reasonableness period defined by board rules