Texas Occupations Code Chapter 901: Public Accountancy Act

The Texas Public Accountancy Act, codified at Chapter 901 of the Texas Occupations Code, is the statute that controls who may call themselves a CPA in Texas, what firms must do to practice here, and how the Texas State Board of Public Accountancy enforces the rules. It sets education, examination, and experience requirements for individual certification, licenses accounting firms, mandates continuing education and peer review, and authorizes administrative penalties up to $100,000 per violation.¹

Who the Act Actually Applies To

Section 901.451 defines the practice of public accountancy as offering or performing services for a client using accounting or auditing skills. That includes issuing reports on financial statements, consulting and advisory work, preparing tax returns, and giving tax advice. You are also practicing if you simply hold yourself out to the public as a CPA or public accountant, whether or not you are doing a specific job at that moment.¹

There is a carve-out worth knowing. If you perform those same services solely as an employee of a single business and you do not hold yourself out to the public as a CPA, you are not considered to be in the practice of public accountancy under Chapter 901. In-house accountants at a corporation are outside the licensing rules. The moment someone advertises CPA services to the public or takes on outside clients, they are inside the Act.¹

Becoming a CPA in Texas

Subchapter F sets the path to certification. Under Section 901.252, you need to meet the board’s education standards, pass the Uniform CPA Examination, and complete the required work experience.²

The education standard is 150 semester hours of college credit with accounting and related business coursework. Section 901.254 delegates the exact breakdown to the board rather than fixing it in the statute, so candidates should check the board’s current rules for the precise accounting and business hour requirements.²

Work experience is handled under Section 901.256. You need one year of full-time employment under the supervision of a licensed CPA. Applicants also submit official transcripts and must show good moral character. Texas does not require U.S. citizenship, though applicants generally need a connection to the state such as residency or employment within Texas.¹

What the Exam Looks Like

The Uniform CPA Examination uses a core-plus-discipline model. Every candidate sits three core sections: Auditing and Attestation, Financial Accounting and Reporting, and Regulation. Each core section runs four hours. Candidates then choose one discipline section from three options: Business Analysis and Reporting, Information Systems and Controls, or Tax Compliance and Planning.³

Total testing time across all four sections is 16 hours. The exam fee for all four sections is approximately $1,050 through NASBA, separate from any state-level application or licensing fees.

Keeping the License Active

Subchapter J requires continuing professional education as a condition of renewal. Section 901.411 sets the baseline at 120 hours of approved education over a rolling three-year period, including at least four hours of ethics and the board’s rules of professional conduct. Board rules also require at least 20 hours in each individual year within that three-year window, so loading everything into one year and skipping the next two is not allowed.¹

Renewal runs on an annual cycle through the board’s online system. The compliance check looks back over the 36 months immediately before the renewal date. A CPA who falls short can be moved to inactive status, which prohibits practicing or holding out as a CPA until the deficiency is cured.

The code of professional conduct that applies at renewal and throughout practice requires independence, integrity, and avoidance of conflicts of interest. A CPA who issues a financial statement for a company they partly own has an independence problem the board can act on regardless of whether the statement itself is accurate.

Rules for Accounting Firms

Subchapter H governs firms. Section 901.354 requires a simple majority of firm ownership to belong to individuals holding valid CPA licenses, keeping professional accountability with licensed practitioners rather than outside investors. Firms file an application identifying the entity name, primary office, and ownership status, and must update that information whenever ownership changes or the firm restructures. If the CPA-owned majority slips below the threshold through a partner departure, the firm’s license is at risk until the split is corrected.¹

Every firm must designate a resident manager who is a CPA in good standing. That person is the board’s primary contact for compliance.

Peer Review

Section 901.159 requires the board to run a peer review program for licensees and firms performing attest services. The review verifies that anyone supervising attest work and signing accountant’s reports on financial statements meets the competency requirements of applicable professional standards. Reviews generally occur on a three-year cycle, and the board can charge firms up to $200 per peer review.⁴

Participation is not optional. Compliance is a condition of keeping a firm license, and firms that skip or fail peer review face disciplinary consequences.

Out-of-State CPAs Practicing in Texas

Section 901.462 lets CPAs licensed in other states practice in Texas without a separate Texas license if they meet substantial equivalency. The home state’s education, examination, and experience standards must be comparable to the Uniform Accountancy Act, as verified by NASBA’s National Qualification Appraisal Service. If the home state’s requirements fall short, the individual CPA can still qualify by having their personal credentials verified as meeting the standard.¹

Texas is permissive here. A qualifying out-of-state CPA can offer or perform services in Texas, in person or electronically, without notifying the board. In exchange, that CPA is automatically subject to the board’s jurisdiction and must follow Texas professional conduct rules just as a Texas licensee would.⁵

Client Records When an Engagement Ends

Disputes over records are one of the most common triggers for board complaints, so the ownership question is worth getting right. Under the AICPA Code of Professional Conduct, which Texas CPAs are expected to follow, the answer depends on the category of record.

Records that belong to the client, whether originally provided by the client or created as part of the engagement, must be returned on request. A CPA may charge a reasonable fee for retrieval and copying but cannot hold client-owned records back over unpaid fees. Working papers the CPA created solely for the engagement, such as audit programs and analytical review schedules, are the CPA’s property and do not have to be turned over unless a statute, regulation, or contract says otherwise.⁶

Deliverables like completed tax returns sit in between. They must be made available to the client, but the CPA may withhold them if the client has not paid for the specific work product, if the work is incomplete, or if there is pending litigation related to the engagement.⁶

Enforcement and Penalties

When a complaint is filed, the board investigates. If evidence of misconduct exists, Section 901.501 provides for a formal hearing before an administrative law judge at the State Office of Administrative Hearings, with written notice of the charges and the hearing. Many cases resolve through informal settlement conferences before reaching that stage.¹

The penalty range is substantial. Section 901.552 caps administrative penalties at $100,000 per violation. The board can also revoke or suspend a license, place a licensee on probation, or impose practice restrictions. In setting the penalty, the board weighs the severity of the violation, the licensee’s history, and whether the public was actually harmed.¹

Practicing Without a License

Subchapter M reaches people who practice public accountancy without a valid certificate or license. The board can seek injunctive relief in court to stop unauthorized practice, and the person is subject to the same administrative penalty framework that applies to licensed CPAs. With the $100,000 per-violation ceiling in play, preparing returns or issuing financial reports without being licensed is not a minor regulatory risk.¹

1
State of Texas. Texas Occupations Code Chapter 901 – Accountants
2
State of Texas. Texas Occupations Code 901-252
3
National Association of State Boards of Accountancy (NASBA). How to Strategically Approach Each Section of the CPA Exam
4
State of Texas. Texas Occupations Code Section 901-159
5
NASBA. Substantial Equivalency
6
American Institute of Certified Public Accountants (AICPA). Code of Professional Conduct