CPA Mobility Rules

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We have an opportunity to bid on some HUD audits. The accounting records/headquarters are in one state but the locations of the building/facilities for these jobs are not necessarily all in that same state (they are in at least 2 other states as well). We can see that the predecessor auditor is noting on his “Auditor Information” schedule that his firm “is licensed in the state where the property is located and the state of where the accounting records are maintained”. We were thinking that being licensed in the state where the property is located might have been an old “HUD” rule that has since changed – can you confirm this understanding? If not, can you provide the guidance where this is still required? We understand with the CPA mobility rules that as long as an individual is licensed in their home state and in good standing, they do not have to have a license in the target state of business. We may still have to register our Firm, however, depending on the state. So we just want to make sure that we only need to register our firm in one state and not the other states where some of the buildings/facilities actually reside. Thanks for your timely response to these questions!
Kathy Christensen

From Mike Olsen:

My understanding is that you need to be licensed in the state where the accounting records are located and in the state where the property resides. As far as guidance for that… First let me say that when QASS shows up to do an audit on you, the CPA, one of the 1st things they ask for is a copy of your licenses, as stated previously. We know they have been enforcing this. In the past, there was some language in Chapter 1 of the HUD Audit Guide 2000.04 Rev-2 CHG-10 (4/2011) which said:

1-3. Auditor Qualifications. An auditor must meet the auditor qualifications requirements as contained in GAGAS. including the qualifications relating to independence and continuing
professional education. Additionally, the audit organization is to meet the quality control standards of GAGAS. Further, GAGAS requires audit organizations to make their peer reports available to the public and specifically requires that they are to be provided to the client. It is not necessary to submit the report to the servicing HUD program office, DEC. or HUD OIG unless requested to do so by representatives of those offices or specifically required to do so in other chapters of this guide. The standards on auditor qualifications in GAGAS require that accountants and accounting firms comply with the applicable provisions of the public accountancy laws and rules of the jurisdictions in which they are licensed and where the audit is being conducted. If the auditee is located in a State outside the home State of the auditor and the auditor performs substantial fieldwork in the auditee’s State, the auditor should  document his/her compliance with public accountancy laws of that State regarding licensing in the audit documentation. This guide does not impose additional licensing requirements beyond those established by the individual State boards of accountancy (although some States allow temporary practice without a license).

The latest version of the HUD Audit Guide does not have this language in it. In the current Yellow Book 2011 Revision (12/2011) it states:

Additional Qualifications for Financial Audits and Attestation Engagements
3.75 Auditors engaged to perform financial audits or attestation engagements should be licensed certified public accountants, persons working for a licensed certified public accounting firm or for a government auditing organization, or licensed accountants in states that have multi-class licensing systems that recognize licensed accountants other than certified public accountants.

That’s all the documentation I can give you. As I said before, it is our understanding the QASS is still enforcing the licensing requirement.

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