Divider
Divider

Thomas Burrage Barbara Andrews
Thomas Burrage Barbara Andrews
Are CPAs in your state affected by private investigator licensing laws?

This case study looks at how New Mexico tackled the issue.

July 9, 2014
by Thomas Burrage, CPA/ABV/CFF, and Barbara Andrews

In several states, CPAs have become embroiled in controversy regarding whether forensic accountants need to obtain a private investigator’s (PI) license in order to perform their regular duties and work product as a forensic accountant. This issue recently arose in New Mexico after a local PI published an article and delivered talks claiming that PI licensure may be a requirement for practicing forensic accountants in the state.

Forensic accountants in the state contacted the New Mexico Society of CPAs and asked the society to review the issue. The society leadership met with key forensic accountants in the state to become more knowledgeable of the current state of the forensic accounting profession and the precise nature of the practice. Following these meetings, the society invited a prominent member of the forensic accounting profession to brief its board of directors.

After reviewing the state’s statutes and rules governing accountants and PIs, the society became convinced that forensic accountants did not need to obtain a PI license while engaged in the normal and regular course of their practice.

The society consulted closely with the AICPA in its fact-finding process. Forensic and government affairs experts at the AICPA provided valuable assistance to the society throughout the process.

The society contacted the New Mexico Public Accountancy Board (PAB) and requested that it review the issue. PAB members and staff were not aware of the issue previously being raised in the state. The PAB reviewed the issue and established a task force to study the issue in detail. Following task force meetings, members of the PAB and staff met with members and staff of the New Mexico Private Investigations Advisory Board (PIAB) and the General Counsel of the New Mexico Regulation and Licensing Department, the state cabinet department that oversees both the PAB and the PIAB. At this meeting, both regulatory bodies and the New Mexico Regulation and Licensing Department strongly agreed that there is no statutory or regulatory authority in New Mexico that supports required PI licensure of forensic accountants.

Both the PAB and the PIAB held public hearings during 2014 to discuss the issue. Following the public hearings, both regulatory bodies published the following identical policy statement on the home page of their respective websites. The AICPA has included links to both sites on its FVS Section website.

ATTENTION: A CERTIFIED PUBLIC ACCOUNTANT (“CPA”) LICENSED IN NEW MEXICO AND ACTING WITHIN THE SCOPE OF HIS OR HER PROFESSIONAL PRACTICE AND IN ACCORDANCE WITH THE 1999 PUBLIC ACCOUNTANCY ACT, AND THE RULES AND REGULATIONS ADOPTED PURSUANT TO SAID ACT, DOES NOT NEED TO OBTAIN DUAL LICENSURE AS A PRIVATE INVESTIGATOR.

Over 40 states have enacted legislation requiring the licensing of PIs or detectives. Some laws also require licensure or registration of PI firms. A number of activities performed by CPAs, and particularly forensic accountants, can fall within the broad definitions in PI licensing laws, even though that is plainly not what is intended by those laws. These laws typically create boards to oversee licensing and discipline, or entrust these functions to specific agencies (usually law enforcement). The laws set minimum standards for licensure and renewal. They usually define the activities that constitute private investigation and provide that only licensed persons can engage in these activities. Some states specifically exempt CPAs while others specifically include CPAs for PI licensing.

For more information on PI licensing in your state, members can visit the FVS PI Licensing Matrix. The AICPA supports an exemption from state PI licensing laws for CPAs, CPA firms, and their employees and encourages you to work with your state society personnel if PI licensing laws in your state provide no exemption for CPAs. 

Rate this article 5 (excellent) to 1 (poor). Send your responses here.

Thomas Burrage, CPA/ABV/CFF, CVA is an Albuquerque, N.M.-based accountant. Barbara Andrews is manager–Forensic and Valuation Services for the AICPA.