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Cool Careers in Accounting Ep. 31 - The 120 Pathway: New Licensure Mobility Rules and Hidden Pitfalls with Lindsay Patterson
167 Plays23 hours ago
What if the biggest risk in your firm isn’t a technical accounting issue—but a quiet licensing and mobility misstep you didn’t know you were making? In this episode, CPA QualityPro CEO Lindsay Patterson shares how she went from journalism to the AICPA, earned her CPA while working full-time and raising kids, and then built a platform to help firms stay compliant across 55 jurisdictions. You’ll hear practical insights on mobility myths, common renewal and registration pitfalls, and what the 120-hour pathway—and even potential 90-hour degrees—could mean for substantial equivalency, multi-state practice, and your talent pipeline.
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Transcript
Introduction and Lindsay Patterson's Career Journey
00:00:02
Speaker
Music
00:00:09
Speaker
Hey, everybody. It's Mike Potenza from Becker Accounting Podcast. Thank you so much for tuning in to this new podcast with our special guest, Lindsay Patterson. Lindsay has a really amazing story.
00:00:21
Speaker
She is a CPA and she has parlayed that into a career in the world of accounting that you don't hear from most people. I think you'll really find her whole story and what she does very interesting. So I'd like to say, Lindsay, thank you so much for being a part of this podcast today.
00:00:37
Speaker
Thank you for having me. Well, it is great and it is our pleasure. So, Lindsay, let's just start right off the bat. Tell me, where do you work?
Founding CPA Quality Pro and Career Insights
00:00:46
Speaker
So I work at CPA Quality Pro. It is a platform that helps CPA firms with licensure and mobility compliance. And I'm actually the co-founder and CEO.
00:00:56
Speaker
Okay, so you started your own business. You want to find out what your history was to get to the position to do this. And tracking licenses, compliance, that sounds pretty niche.
00:01:09
Speaker
So how did you get the skill set? you That's one of the things I want to go back into your past story. and figure out not just anybody could do this. So let's go way back first. Before you tell me exactly how you started the business and what you do in that business, tell me, where'd you grow up? Where'd you go to school?
00:01:27
Speaker
So I grew up in South Texas. um My undergrad degrees were actually in journalism and government. I did not start out in the world of accounting. I started out as a reporter, then doing political communications. And it was through that background that i got introduced to the accounting profession through the American Institute of CPAs. i Initially got hired there on their state regulation and legislation team to do more government communications.
00:01:53
Speaker
But it was through that experience that I fell in love with the accounting, which is something that, you know, I didn't ever think I would be saying. And i really started learning more about the licensure process. All right. So you grow up up grow up and go to school in Texas, no accounting major, but you somehow get hired by the AICPA.
00:02:12
Speaker
So now you're working for the AICPA in more of the legislative field, not so much with accounting. But now you're telling me as you're working for the AICPA, like the light bulb goes off over your head. You're like, you know what? Maybe I want to become an accountant. That's really what happens.
00:02:27
Speaker
That is literally what happened. I was like, this profession actually seems really cool. And I was writing a lot about, you know, SOC compliance or the Uniform Accountancy Act, um risk assessment standards. And I'm like, this is actually exactly how I think. So I went back to school, got a master's degree in accounting. I'd actually got a master's in international relations years before that, but I don't really use that now. But went back to school, got my master's of accounting um from UNC, and then sat for the exam, got my experience while I was at the AICPA, and really just fell in love with the profession that way. And that experience has opened up so many doors
Balancing Work, Family, and CPA Exam Preparation
00:03:05
Speaker
for me. It's not like I went straight from working in state regulation and legislation to starting Quality Pro. um I've had years of experience in between there that would have never been possible without the CPA license. So I'm a big fan. I will tell everybody like the CPA license, the accounting world changed my life, changed my trajectory. So I am very appreciative and grateful just to this profession.
00:03:27
Speaker
So you you graduate, you go to work at the AICPA, you're getting this experience, a light bulb goes off. see So say, getting the master's, I'm to take the CPA exam. What's the timeline? Is that being done in three years, 30 years? How long does that process take?
00:03:41
Speaker
I think it took me about four to five years. I had to, you know, finish my master's degree. I had to sit for all four sections of the exam. I was working full time. I had kids. I think I took the first section of the exam when I was nine months pregnant with my youngest. So it took a little bit, but it's completely doable.
00:03:59
Speaker
Nine months pregnant and you took a section of the exam. Thank God you didn't have to make a 911 call or anything like that. That would have been a more fun story, I guess. but All right. So you get you do all of this. You get your master's, you get your CPA license, you're working at AICPA, but you said it wasn't a straight shot to CPA quality pro. So what'd you do from the AICPA? Why'd you leave? And what did you do before starting a
Insights from M&A Firm Experience
00:04:24
Speaker
business?
00:04:24
Speaker
um I was just looking for experience elsewhere. um i went and actually started working for an M&A firm in New York and it was great experience. I am so thankful for it. It wasn't quite the right fit for me. um I live in New York now and you might've heard like, oh, 40 is the new 30.
00:04:41
Speaker
In my experience, maybe it's like 40 is the new 25. I think I was the only person with kids who was going home Friday nights to you know do math tutoring with my youngest. So it wasn't quite a great fit for me for I was out with my family, but that was okay because I got the experience and then i got roped back into the association world. I spent some time at the Institute of Internal Auditors, which again, amazing experience. I got to travel the world, meet some amazing people. And a big part of that, that launching pad was because I had the CPA and the accounting background.
00:05:18
Speaker
And then I was able to go on and get my CIA certified internal auditor. certification as well. So great experience there. ah And then I'd been there for four years. i loved it. And I met this gentleman in New York, ah Joe Mafia. He was on the New York State Board of Accountancy. He was volunteering a lot with NASBA. And he was seeing from the regulatory side, a lot of issues that CPA firms were having with compliance and licensure compliance in particular and
Identifying Market Gaps and Starting a Business
00:05:48
Speaker
mobility. And we just started talking about some of the challenges and my own experience and what I had seen when I was doing state regulation legislation at the AICPA.
00:05:58
Speaker
And we were like, Why don't we create a tool to help firms with this? Because shockingly, like nothing existed on the market. So that's what we did. We got together two people who did not have a background in software engineering, worked with some software developers and were like, well, here's what we want the tool to do. And here's all the rules and regulations across 55 jurisdictions and built out this tool in a little under a year.
00:06:21
Speaker
Wow, that's pretty incredible. And and i want to dive deeply into CPA Quality Pro. I have so many questions I want to ask about that. I'm just trying to wrap my hands around, you know, you go to the AICPA, then you leave, you try the M&A, not good family lifestyle for you with young kids and everything. So you need some a little more, well, little more stability, better hours.
00:06:41
Speaker
So you go to the IIA and you said you travel the world. Are you teaching? Are you, you know, you're trying to recruit people? what What are you doing traveling the world? So I was our executive vice president over membership marketing and communications. So we're having board meetings, we're having conferences all over the world, we're growing membership.
00:07:01
Speaker
It was a great experience. And I know the IA has been doing some work with Becker too, which I'm so excited about because I love Becker's training materials. I took, I used Becker to get the CPA exam or to pass the CPA exam.
00:07:12
Speaker
And Becker did not exist when I sat for the CIA exam. So I'm so thankful, but also a little jealous for the people who will get to sit for the CIA exam using Becker's materials. Well, yeah, the IIA has been a great partner, as is AICPA and the IMA. they're They're all really great partners, and we love working with them. So we always love to hear those success stories like yours. and And I would think that that job for IIA, traveling around the world, I mean, that's a pretty interesting job. You know, you probably could have partly.
00:07:40
Speaker
I'm sorry? it was amazing. Yeah, yeah. but But something said, you know what, I have a conversation with a gentleman named Joe, and he kind of turned me on to saying, you know, we might be able to fill a void that firms really are having difficulty navigating around.
00:08:00
Speaker
But why you and how did you use your experience and what did you and Joe see together that you could build? Yeah, well, in full disclosure, Joe was interviewing me for a CEO role at another organization. So he got to know me through the interview process because he was on the selection committee. And while I ultimately didn't get that position, i think it worked out for the best because we met that way and we started talking about this tool.
Licensure Compliance and Industry Impact
00:08:25
Speaker
And we, I don't think had any idea how big it would grow, but. As we were building it and we started talking to some of our partners in the profession, we realized that with all of the new mobility and pathways laws that were coming down the pipeline, that this was really gonna impact firms and firms are gonna have challenges with it. So we ended up partnering with four state CPA societies
00:08:46
Speaker
who invested in us, they really financed the development of the product, and they have just been instrumental in bringing it to life. And I think it was really that support from ah Florida, from Washington, Illinois, and the Georgia State CPA Societies that just brought it to fruition and helped get us to market.
00:09:04
Speaker
I love that. That is amazing. And you said, I you know never would have thought how big it could grow. like How do we judge that? What is big? How many clients are you servicing? Yeah, so I think when I started the tool, i the product, I'm like, this is probably going to help small, medium firms because they're the ones who probably don't have a tool. And, you know, the top 100 firms, they're going to have something, right They're going to have something already and they're not going to need this. They're going to have their own proprietary tools.
00:09:31
Speaker
And that's really not been our experience at all. um Almost everyone that we've been working with so far, almost everybody is a top 100 firm, which is so exciting for us to see movement that fast.
00:09:45
Speaker
um We were recently named, you know Accounting Today top product of the year. So all of that is exciting and so unexpected for me since we really just started this a little over a year ago.
00:09:56
Speaker
Well, that is great. It must be very rewarding to see something that you've built from the ground up become so successful. So you kudos to you and to Joe on that. Now, let's just talk about how you're staying busy right now. There's so much going on One of the hot topics, of course, is 120-hour alternate pathway as opposed to the traditional 150 the license. it to get the license so is it enough that this is all you deal with, or it's just one of the small pieces? And how do you help companies navigate that?
00:10:28
Speaker
It's one of the small pieces, but it's the one that's getting the most interest right now. So when I talk about the tool and how we're helping firms, everybody's talking about mobility. And I am happy to talk about mobility because I just love licensure compliance and I nerd out about it. And you're right. It's a very niche thing to nerd out about. But so much is happening and so much is changing that that's what's driving headlines.
00:10:51
Speaker
But then there's just licensure compliance in general that firms have always needed help with, right? Because, you know, there are 55 different U.S. jurisdictions. If CPA firms are serving clients across state lines, they probably need to be aware of mobility. um And we're seeing firms just innocent mistakes over the years where...
00:11:11
Speaker
This license renews annually and this one every you know two years, this other one every three years. And missing those deadlines can result in fines for the firm. Or maybe they didn't notify the state board of an address change within 30 days. Those are the sorts of compliance issues that seem simple, but we're tripping up firms left and right.
00:11:34
Speaker
And then you have mobility. And that's the new one that's really come down the pipeline just the last couple of years, because you have over half the states already who have introduced this new pathway, you know, the bachelor's degree slash 120 hours to get your license plus two years of experience. And how does that impact mobility? So that's something that firms are now having to grapple with in a way that they didn't really over the last few decades.
00:11:57
Speaker
Right. So, um you know, I'm licensed under 150, you're licensed under 150, I assume. yeah And we don't have any problem with mobility. But now we have these new people that are going to be licensed with 120. And we have what we call, you know, outward mobility. If I want to leave my state, go practice in another state or inward mobility. If someone from another state is going to come in and want to practice in my state. So What are you anticipating or maybe even seeing already are the biggest problems for people practicing due to the 120 versus 150 and the mobility laws?
00:12:29
Speaker
So right now, I think the biggest challenge is we just don't know how state boards are truly going to implement some of these changes. so I'm actually going to take a step back. Let's explain like why mobility exists and how these new pathways laws are changing it.
00:12:44
Speaker
And it's because mobility has existed under this concept of substantial equivalency. Right, so we all have 150 hours. We have the one year of experience. We pass the CPA exam. So you have those three E's or for the generation before us, they were grandfathered in and under a previous 120 iteration. But we have these three E's. Every single state was substantially equivalent in how you got the license. And because of that substantial equivalency,
00:13:11
Speaker
You could have mobility. States were like, all right, somebody from Texas, you got your license in more or less the same way that somebody from Oklahoma did. So we're going to honor that license. But now with 120 plus two years or a bachelor's degree plus two years, you have states needing to relook at that and say, does that 120 plus two, is that substantially equivalent to 150 one? fifty plus one So what a lot of states have been doing is they are passing mobility laws proactively to go ahead and address this. And that's the good news. um
00:13:45
Speaker
The I don't want to say bad news, but slightly confusing news maybe is that to date, there hasn't been complete uniformity in what these mobility laws look like.
00:13:57
Speaker
ah Most of them have been somewhat similar, but they're going toward um an individual based mobility system. So it's not, oh, Texas is substantially equivalent to Florida. So Florida is going to recognize all of the Texas CPAs.
00:14:13
Speaker
Rather, it's how did you, you know, Mike, or how did I, Lindsay, how did I get my license? And I think something that people overlook is it's not just the newly licensed people. Like this applies to everyone.
00:14:25
Speaker
Like you're not automatically grandfathered into any of these states when you're looking at individual mobility. Very interesting. and And just to throw an added monkey wrench into it, there's a lot of colleges out there saying, you know, we're investigating a 90 hour or a three year bachelor.
00:14:42
Speaker
So how is that going to affect everything? OK, I'm so glad that you said this because I have been flagging this for people. A lot of states have adopted the bachelor language, but New York is one of the states, just as an example, that has adopted the 120 language. So if it's saying 120 specifically, how does that impact somebody who got ah accounting degree about, you know, they have a degree conferred to them, a bachelor's degree, but they got it with 90 hours. And I just got this question today. So it's very relevant. This is happening more often than people realize. More states are starting to look at the 90-hour degree requirements. And when you have that, how is that going to impact mobility in the states that hard code into law 120 hours?
00:15:28
Speaker
Right. Are you going to open up those laws or rules again? Because you're not going to be substantially equivalent. You're not going to have mobility right away. So these are questions that firms are now having to ask their licensees that they've never really had to ask before. Like, how did you get licensed? How many hours did you have?
00:15:47
Speaker
So the way I think of it, you know like you said, it's it's pretty wild right now because we're going universities may be going from 150 to 120 to 90.
00:15:59
Speaker
So something's got to give, right? There's a lot of credits that may be disappearing. So you just... take out a lot of elective classes? You know, do you just focus on major? Again, that's not a Lindsay question to answer or my question to answer, but we have to know how to deal with it because those people who graduate and want to get a license, we need to know what the answers are. So again, we don't know them yet, but it's good to know that we have people like you and your company that if we have to go to an expert that you will know what those answers
Advice for CPA Candidates on Licensure
00:16:26
Speaker
are.
00:16:26
Speaker
So that leads me into my next question that I want to give to you. if If I'm someone in school right now and I'm trying to interview with the firm or trying to figure out my career moving forward, are there any key questions that we should be asking during the licensure process and while we're going for our education?
00:16:47
Speaker
Yeah, and I actually want to comment on something that you said just a bit ago, too, about what are we cutting out? So most states still, even you know with the new pathways, they do prescribe in either law or rule um that you have to have an accounting concentration. So you have to have 36 hours of upper-level credits in accounting in order to qualify for your license.
00:17:07
Speaker
So even if we see that drop down to 90, that would still be in play. So it would have to be things like electives or other areas that get cut in order to qualify for licensure, again, in most states. But then when it comes to getting a job and working at a firm, I think there are a few things that you should be asking yourself. Like, where are you going to be living? First off, that's the number one thing. You want to have a license where you live. um One thing that I have already been seeing and speaking with firms is individuals, particularly since 2020, who moved And they're like, oh, I got my license in Washington state, but now everybody's remote. So I'm living in Florida and I'm just using my Washington license under mobility.
00:17:49
Speaker
No, that is not mobility. You're breaking the law. Mobility is for temporary practice privileges. So if you are living in a state, if that is your primary residence, you need to have a license there. So that would be the first thing I'd say, like regardless of where you get hired.
00:18:04
Speaker
um Second, just talk to the firm about, you know, what clients do you think I will be working on, like their location? and Because that's going to impact mobility as well.
00:18:14
Speaker
But the biggest thing for me would just be, where do you live? Make sure you're licensed there. And if that's going to change because of your job, make sure that you know that in advance. Don't go into it thinking like, oh, I will get a license in one place and then get a reciprocal license somewhere else. because i have heard some candidates say that, like, I'll get licensed in Texas, because it's easier there. And then I'll just move to New York next summer, and I'll apply for a reciprocal license.
00:18:43
Speaker
Well, states like New York have a four in 10, some have a five in 10 rule, where you have to have spent at least four of the last 10 years working in the profession before you can get that reciprocal license.
00:18:55
Speaker
So unless you want to wait four years, just get the license where you're going be living. that That makes a lot of sense. That sounds like very, very solid advice. But you you brought up the example of working remotely from Florida with the Washington license.
00:19:09
Speaker
Let me ask you, you live in New York, I live in New York, but we know it's very expensive. So a lot of people live in New Jersey and they might be licensed in New York and maybe they're in the New York office three days, but they're working remotely from New Jersey from their home for two days. What what effect does that have when you're kind of one foot in, one foot out?
00:19:27
Speaker
All right, accountant's favorite answer, it depends. um Are you holding out as a CPA? Are you providing a test services? Are you just, are you providing consulting services? All that is gonna come into play in determining whether you need a license in that state or not. um If i lived in New Jersey and I was working at a firm in New York, I would have a license in both states.
00:19:53
Speaker
That's me. um But you would have to look at each state or um each individual instance and say, well, here's what I'm working on. And you know here's how I'm holding out or not holding out. And that's like one of the things that I love about our tool that like even I can use is just to go in and do a dropdown and say, you know, I'm Lindsay, here's my license. Here's my primary place of residence here, how i I got my license. That's all going to be already tracked in the tool. And here's a service I want to provide to a client in New York. And we'll tell you like, either you're good to go or you're not. And if you're not, here's why. And here's what you need to do to make sure you're in compliance.
00:20:29
Speaker
Cause you don't want to find out the hard way, right? You don't want to get a notice from the state board that you've been doing something wrong. No, nobody wants that. answer church So you you gave some good advice that you're saying get licensed where you live and presumably that's where you work.
00:20:44
Speaker
But what other advice do you have for you know these young people that are getting ready to graduate and they're going for their job interviews and there's just so much going on? They may have 90 hours, 120 hours. They may not know where they're going to live. They may be interviewing for a company that has offices around the country or around the world. is Are there specific questions that these young people should be prepared for that will most likely be asked of them that you think that they need a little guidance on?
00:21:14
Speaker
I have questions that I hope will be asked. I don't think that a lot of firms are quite there yet because these laws are so new, but things that a new candidate should know about themselves, and I hope that CPA firms will start asking and tracking, how did you get your license? What was the pathway? Was it 150, 120, or 90? 90 would be something you certainly want to share with your firm. um Did you have the accounting concentration? That's probably gonna be yes if you're pursuing the license, because otherwise you you know you you would not qualify. ah Also, did you how was your experience done? Was it supervised or verified? That's a little bit of a new one, but I will explain why it matters. So supervised means you know the person was a CPA directly who I was reporting into who managed me and oversaw the work. A verified experience is a little bit of a lower threshold. It just means that this person knows of my work. They may not have supervised me. They may not even have worked in the same company as me, but they were able to attest that I have the experience requirement. And the reason that that's important, and that's, again, brand new, firms have not been asking that, is some of these new mobility laws that are being passed, they have guardrails in place that say, hey, as long as you have you know a bachelor's degree with an accounting concentration and your experience was supervised, you're good to go.
00:22:44
Speaker
Well, what if your experience was verified? like You're going to need to know that. Interesting. And how does that tie into another phrase you used earlier, um substantially equivalent? Is that also based on this type of experience and a number of other factors?
00:23:00
Speaker
Exactly. So a state board might come in and say, well, we don't think verified experience is substantially equivalent. That's not the case yet. We don't know yet how a lot of state boards are going to start implementing these laws because a lot of them just got passed last year or they're just getting passed this year. So even after the law is passed, the state board still has to you promulgate or write and adopt rules that implement those laws. And that's still happening.
00:23:31
Speaker
So maybe you and I should plan on doing this once a week so we can get the latest stuff on a weekly basis, right? Yeah, that's a good that's a good idea. I would say if you are applying for a license, you check that state board website regularly. All right, what are you doing on Fridays at 12 noon? Are you free every Friday? Okay, so the the next thing that I wanna talk about is something else you mentioned previously.
00:23:53
Speaker
We have 55 jurisdictions, right? You know, 50 states, five territories, and you can get a CPA license in any of those. We probably don't have time to talk about all 55 of them. Now, I know your organization, you said, was started up with the help of some of the state societies. And we know that there are probably, I'd say, six states that really account for vast. very large number of the CPA licenses across this country, right? We have yeah California, Illinois, Florida, New York, Pennsylvania, and Texas. So let's just, we were going to just take a moment and say, all right, let's focus on these six. Since there's so many CPA licenses from these six states, what are you seeing? Are they having a lot of things in common? Are they very different? Can you walk us through any of what you're seeing with respect to these very large states?
00:24:45
Speaker
Yeah, so Florida's legislation is still making its way through the process. It has not been adopted into law, but it is active right now. So that's something that if you're looking to get licensed in Florida, make sure that you're tracking. ah The Florida Institute does a great job of putting out regular updates. So If you don't want to go read a bunch of legislation, I would say the Florida Institute website really summarizes it quite well. California and New York have already adopted their new pathways legislation. um
00:25:16
Speaker
California goes into effect next year, New York later this year. Now, there are a couple of things with these two. So California is one that their new law on mobility says that the state board reserves the right at any point to determine that another state um is not substantially equivalent.
00:25:35
Speaker
They have not done that yet. So as of right now, every state is good to go. But if I were a CPA and I was going to go into the state of California to offer services, I would check with the state board at that time, just like just to make sure that our state is still deemed substantially equivalent. So that's one thing that I would pay attention to. If you're getting licensed for the first time in California, ah they also reserve the right to specify like the a test experience that you need in order to get licensed.
00:26:07
Speaker
So again, just make sure you're reading the most recent rules in California to see if there have been any changes there. um New York, i already mentioned, that's one of the states that hardcodes that 120 as opposed to saying a bachelor's degree. So if you're somebody who has a 90 degree, I would definitely have some conversations there. um That might be a little bit of a challenge for you.
00:26:30
Speaker
And then Texas, um Illinois and Pennsylvania, their mobility laws are very similar to each other. And you will see this. A lot of them are very, very similar, but they just have slight nuances in how they define those guardrails for mobility into the state. So it might say,
00:26:49
Speaker
like, um you know, an accounting concentration plus a bachelor's degree or, you know, a master's degree plus X hours. So just make sure that you're reading the specific rules. If you are already licensed for the most part, you will probably be fine in those states. So you'll be good to go. And Pennsylvania's um new pathways already in in effect, Texas later this year, and then Illinois ah next year, 2027.
00:27:16
Speaker
All right. So that's great to know. I really appreciate all that insight. So you said if you're already licensed, you're probably going to be fine. And I'll agree with you on that one. What I'm seeing questions, I get a lot of these questions where I have people who are about to graduate have already graduated, about to sit for the CPA exam. Some of them are graduating with just the 120 and not the 150. And they Mike,
00:27:39
Speaker
and they say mike Can i sit for the exam now? Can I apply for licensure with the 120 even if the 150 is not passed? Do I have to wait till it's passed? Can I be grandfathered in? There's a lot of unknown by these candidates on when they should actually start this process and do they have to wait for the law to be in effect. So what are you seeing the interpretation on most of the states related to that?
00:28:03
Speaker
So on sitting for the exam, you know, most states allow you to sit at 120 now. So go ahead and start sitting for the exam. Like, get that out of the way. um In terms of applying for licensure, though, you're going to need the education, the experience and the exam. so you're going to need that two years of experience anyway.
00:28:21
Speaker
um And then you can't apply until the laws are implemented. So, for example, you know, Illinois 2027, you're not going to be able to apply right now. You need to wait until that law is actually in effect.
00:28:34
Speaker
Okay, so that's good to know. So they can still sit, they can pass all four parts with the 120, but if you wanna be licensed under the 120 hours rules, don't apply for licensure until your state has that law in effect. Am I understanding that right?
Common Compliance Errors and the Future of CPA Pathways
00:28:49
Speaker
Right, but you know what, by 2027, if you've done all the steps, maybe January one comes and you're like, all right, I've got all three, I've got that two years of experience, I have the degree, I've passed all four parts of the exam, I am applying today.
00:29:03
Speaker
Got it. Excellent. All right. Now let's just go back to your company again, ah CPA Quality Pro. I didn't ask you this question. How long ago did you start it? How long have you actually been in business?
00:29:15
Speaker
So we officially formed as a company in January of last year. So just 14 months, but we didn't really get started doing much for several months until about last summer. And we really went live with the product in November. So it has been very, very fast. Again, much faster than I would have ever anticipated.
00:29:36
Speaker
So you're still private. I still have a chance to get in on the IPO when you go public? yeah Yes, and please do. I will make sure to add you to the email list. keep Keep one share on the side for me. I appreciate that. So let me ask you this question. With the, you know, over a year that you're doing this now, are you seeing any firms making the same mistake over and over? Are the same firms doing the same thing wrong? Any advice you could give to firms out there related to this licensure?
00:30:03
Speaker
Mike, like hot take. If they are operating across state lines, pretty much every firm is violating at least one law that they're not aware of or they are and they're like, oh, just hope I don't get caught by the state board.
00:30:17
Speaker
um Things that we see over and over again. The mobility piece that I mentioned where somebody moves to a new state and they think I'm good to go here. um That's something that happens a lot. I've had multiple firms tell me that they're practicing and doing a test work in Hawaii under mobility.
00:30:35
Speaker
They are not. Hawaii does not allow that. Please, if you're listening to this webcast and you talk to me in or this podcast and you're talking to me in the future, stop telling me how you're violating laws.
00:30:46
Speaker
um That's a big one that a lot of firms will volunteer. um And then there's the inadvertent stuff like they just. didn't remember to renew their license.
00:30:57
Speaker
That happens a lot more than you would think. Actually, if you go back and look in the state board minutes in New York, there is several years where literally over a thousand firms a year were not renewing. Now, to be fair, the state had failed to send out some renewal reminders, but ultimately it's on the firm to manage this, right? Whether the state sends that renewal reminder or not,
00:31:18
Speaker
um And then there are some states like Florida that have little nuances that say like, hey, you can practice here under mobility, but make sure that you meet like our capitalization laws, things like that.
00:31:30
Speaker
um So it's the little things that I think sometimes firms miss and then they get dinged on because somebody reports them or a different issue came to light and then that gets tacked on.
00:31:42
Speaker
um So those are some of the challenges that I think have always existed that we're really seeing come to light right now. The other big one is private equity. um With private equity entering the profession more, we are seeing some issues there as well. There was one a rather public case last year where a firm you know had investment from private equity and was offering those attest services, ah but they did not have 51% CPA firm ownership anymore. And that's something that's been around forever. I
00:32:14
Speaker
Cannot imagine how that one was missed. um But that was an example. You have some states that require non-CPA firm owners to still complete a certain number of CPE requirements. And that's something that we're seeing missed by some of the investors that are coming in. But those are new and emerging risks.
00:32:33
Speaker
Well, I'll tell you, you know, I teach an ethics CPE course and, you know, those are some of the basics, right? 51%. You know, we can only use the CPA credential if you meet this or, you know, certain percentage of CPA. So the fact that, you know, firms are doing that, it seems so basic, such a basic ethical rule.
00:32:53
Speaker
Yes, it does. Yes, it does. And another another question on this practicing across state lines, and you know not to even list any specific states, but let's just say myself and most of the CPAs in my firm are licensed in state X. But yeah we have a very large or a few very large clients in state Y. And now I come to you and I'm using your company services to check all of our licensure and all the other requirements that we have to meet.
00:33:20
Speaker
and you see this happening, what would you say to me? And what would you tell me to do? So immediately, we'll flag that for you in our software. So we show like here are the rules for practicing in that state to provide whatever specific service you've selected. And usually it's a test services, right? Like audits that are going to have the most stringent rules. So we flag every single rule. ah We link directly to the rule. So if you want to go look at the actual law or rules, you know, on the state website, you can see that. But then we say, like, based on what you've told us, yes, you meet this or no, you don't. And if you don't, here's what you need to do, like go to the state board and get registered.
00:34:01
Speaker
um So we're not going to see that we're not reporting state or firms or anything, but we will advise them, like, please make sure that you go get registered with the board of accountancy appropriately. Yeah. and And I can even see that being an issue of let's just say you have a fee fee dispute with a client and you know, you're practicing across these lines.
00:34:19
Speaker
That's going to be a problem, right? If you need to somehow litigate this and all of a sudden you find out that you're not meeting all of the necessary requirements to practice in that state, that's probably going to bite somebody where you know they don't want to get bit. Absolutely.
00:34:34
Speaker
Yes, that is a great example. So, Lindsay, you've been doing it about a year now, and I know you don't have a crystal ball, but you probably see more than most of us some of the effects of the 120 alternate pathway.
00:34:48
Speaker
Do you think this is something that is going to be a boom to the profession or maybe it really won't have that much impact? What do you foresee? I know you don't have a crystal ball, but what do you foresee the impact on our profession?
00:35:02
Speaker
So I think that we're going to see more people become CPAs because of the new pathways being adopted. And I think that there's a lot of research to back that up, right? Because several professional associations over the past few years have done research into you know challenges in becoming a CPA. Why was the pathway shrinking? And we saw hard data from from several parties about how 150 hours did hinder people from getting licensed. And it really impacted specific demographics, like including my own, including working mothers, for example. So I think that this is gonna open up the pathway for more CPAs. And I also think it's good for the profession um in other ways. So when we looked at 150, I think one of the initial arguments there was, well, this is good for the public interest.
00:35:51
Speaker
But if you go back and you look at you know peer review reports, failed peer reviews, sanctions from state boards of accountancy, you're not seeing any substantial difference between people who became licensed under that 150 pathway and the original 120 pathway 25, 30 years ago. In fact, a lot of people that we're seeing you know at the partner level now, they came in under that 120 pathway. So I'm not concerned about the public protection. I think we're going to be good there and we're going to have more CPAs licensed who can do quality work. So I'm very excited about that. And I think we're already starting to see some improvements in you know the pipeline happening this year and last year. That's a direct reflection of that.
00:36:32
Speaker
ah But in terms of other just like licensure pathways, of compliance issues that are emerging, i think too that we're going to continue to be discussing, discussing even more are those 90 hour bachelor degrees, because I think that's going to be a challenge for many people in the profession. and we're going to have to look at how that impacts licensure and substantial equivalency.
00:36:55
Speaker
And then there have been a lot of states that have been looking at legislation related to CPE, you know, the average about 40 hours per year. And if a state were to drop those CPE requirements or you know get rid of them altogether, that would absolutely impact substantial equivalency and mobility.
00:37:13
Speaker
So those conversations, I think, are going to be happening more and more at different states over the next few years. Yeah, we will have to keep our eyes and ears open for that for sure and get you back to let us know what is happening. And you've been so gracious with your time. i'm going to let you go, I promise. But I just have one or two more questions that I just need to ask.
00:37:31
Speaker
you know, if I think back to your history and all your alphabet soup, AICPA, M&A, IIA, could you ever have predicted this would be the position or the business that you're in?
Reflections on Career Transition and Entrepreneurship
00:37:44
Speaker
No, never in a million years. And I have kids, one who's in college now, one who's a senior in high school. And when they stress out so much about like, what am I going to do? And what am I going to study? I'm like, man, I own a software company that helps CPAs with licensure compliance. And I studied journalism at your age. So don't worry about it. You have no idea where life is going to take you. But it's also amazing. And I didn't really talk about this too much, but I also have had the opportunity to serve on some really great boards and getting into like that governance role. And that's completely because of my CPA.
00:38:17
Speaker
So I would have never anticipated the life that I have, but I'm very thankful to for it. Love that. Love that. Okay. Last question, I promise. So you start this company, it's successful. You know, you and Joe were sitting down in a coffee shop somewhere, you know, knocking ideas across the table.
00:38:33
Speaker
Looking back now, what risks did you face? And are there any lessons learned as far as starting the business that you can share with the audience? Oh my gosh, what risks? um All of them. um Making sure that I have enough money to live on. um obviously is very important. I recruited people who had deep experience in these areas, but who had very secure jobs, right? And they're coming to work for a startup. So I think that that was a risk. And then for me as a founder, something that I think about every single day is not only have to take care of my family, but I have a responsibility
00:39:11
Speaker
to my employees who I stole and to their families to make sure that we're successful. I have a responsibility to the state societies that invested in us and the CPA firms that are trusting us.
00:39:22
Speaker
So I think that there's a lot of stress and risk involved, but it's also a great opportunity to do something that I'm passionate about, which I know it's weird to say I'm passionate about CPA licensure compliance, but I oddly am. ah So I would encourage anybody if you know, you have that passion and you have the opportunity, like take the opportunity.
00:39:44
Speaker
it it is risky, but I think in the long term, you'll benefit and grow so much from it. And I am just fortunate that I had made so many connections throughout my career that allowed me this opportunity and that found me investors really early on who were willing to take take a chance on me and the product.
00:40:02
Speaker
Yeah, we can probably spend a whole nother, you know, 10 podcasts talking about networking and the importance of those relationships, right? Because every experience we have just leads to another door that we can open up and and face these opportunities.
00:40:16
Speaker
Yeah, that's another podcast. Let's talk about that one another time. And yeah you think when any of the kids are out of college, you can kind of rope them on in and get them on as employees, maybe some good cheap labor?
00:40:28
Speaker
Um, maybe I can do one one kid might be a maybe, but they definitely still are like, what do you do? Mom? It's They're not there. They're not accounting majors yet.
00:40:39
Speaker
you know I got back to accounting right later in life. But one of the areas that I think is really surprising that I would have never anticipated is being on a podcast with you um and sitting on a board with the other Mike, Michael Brown, yeah because both of you were in videos that I watched when I was sitting for the exam.
00:41:01
Speaker
All right. Love it. Downtown Michael Brown. He's great. He is great. We love him. So that's great to hear. Just so happy we were able to help you along your journey and, you know, and just love to see how you flourished. And, you know, this business that you've created is just absolutely amazing.
00:41:15
Speaker
So with that said, I do not want to take up any more of your time, but I do want to get you back here maybe in a few months when we get a lot more insight into
Conclusion and Contact Information
00:41:24
Speaker
what's happening. So I'm going to hold that card. You're going to get that phone call. going to be like, hey, Lindsay, it's time. I need you. Okay.
00:41:31
Speaker
Absolutely. Happy to. All right. Well, thank you again so much. I really appreciate it. And if anybody wants to visit your company's website to see what you do, can you give the website and maybe your email if you want to share that? Yeah, sure. of Just CPAqualitypro.com and Lindsay, L-I-N-D-S-A-Y.Patterson at CPAqualitypro.com.
00:41:52
Speaker
Thank you again, Lindsay. We really appreciate it. It was great information you shared. And I really look forward to the next time that we cross paths. Great. Thank you so much for having me. Thanks for listening to this podcast with Lindsay Patterson. And thanks again to Lindsay for joining me. She was awesome.
00:42:09
Speaker
But I just want to make sure that everyone is aware that you can earn CPE credit for listening to this podcast. All you need to do is visit the link in the show notes to get your credit. And good news. If you're already a Prime CPE subscriber, you can earn CPE at no extra cost. Just log in to finalize your credits. So thanks again and hope to see you in a future Becker Accounting podcast.