Meeting of the Board of Regents | April 2009

THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

 

TO:
FROM:	Frank Muñoz
SUBJECT:	Update on the Public Accountancy Practice Act
DATE:	April 1, 2009
STRATEGIC GOAL:	Goal 3
AUTHORIZATION(S):

 

Summary

 

Issue for Discussion

 

The purpose of this item is to inform the Professional Practice Committee that the Governor signed into law extensive revisions relating to the practice of public accountancy, effective July 26, 2009; to summarize the key provisions of the new law; and to provide information regarding the development of implementing regulations. 

 

Reason(s) for Consideration

             

              For Information and advice.

 

Proposed Handling

 

This item is being shared for informational purposes. Discussion and potential action on emergency regulations will take place at the May 2009 meeting of the Board of Regents.

 

Procedural History

 

Prior to the enactment of chapter 651 of the Laws of 2008, the last significant amendment to the public accountancy statute was made in 1947. The new law is a significant public protection initiative and updates the scope of regulated practice to include many peripheral functions provided by certified public accountants (CPAs) and public accountants (PAs), such as tax preparation and advisory services, management consulting, financial planning and advisory services, estate planning and computer consulting.

 

Emergency regulations implementing the law will be brought to the Board of Regents for action in May. The Department has begun extensive discussions with legislators, legislative staff, professional associations, and others concerning the implementation of the law. Department staff has also begun conversations with the Department of Civil Service and the Division of Budget regarding additional staff positions that would be needed in both the State Board for Public Accountancy office and the Office of Professional Discipline in order to implement the new provisions and public protection elements of this bill.  It is estimated that the bill will be revenue neutral, assuming that waivers and expenditures will be approved to allow the implementation.

 

Background Information

 

The regulation of the practice of public accountancy by the Board of Regents has been limited to professional services in the areas of audits and attestation services.  Under the new law, the Board of Regents will be responsible for the oversight of all professional services rendered by CPAs and PAs.

 

Key Elements of the Bill

 

• Specifies that offering to perform or performing attest and compilation services and incidental professional services relating to accounting concepts and the recording, presentation, or certification of financial information or data are within the scope of practice.  These services are at the core of the attest and compilation services performed by CPAs and PAs.

 

• Expands the regulated scope to include the types of services that involve the use of professional skills and competencies in matters related to accounting concepts or the recording of financial data or information or the preparation or presentation of financial statements, including but not limited to management advisory, financial advisory, and tax preparation and advisory services. The law clarifies that such professional services rendered for one's employer are within the scope of practice of public accountancy.

 

• Expands oversight to include the use of a professional title or the performance of professional services by a licensed CPA or PA.

 

• Modifies the education requirement for licensure to include the recognition of foreign equivalent education.

 

• Provides greater clarity regarding the issuance of foreign limited permits.

 

• Allows CPAs who are licensed by another state that the Board of Regents has determined to have significantly comparable CPA licensure requirements and who are in good standing to apply for a temporary practice permit to provide attest and compilation services.  The permit would be valid for up to 180 days during a 12-month period and could be renewed a maximum of four times.  Any CPA practicing under a temporary practice permit and any firm employing such a CPA to perform services in New York would have to consent to be subject to the disciplinary authority of the Board of Regents.

 

• Permits out-of-state licensed CPAs to provide management advisory, financial advisory, and tax preparation and advisory services in this state without a temporary practice permit so long as the CPA agrees to be subject to the jurisdiction and disciplinary authority of the Board of Regents, to comply with the laws, rules and regulations of New York, and to cease practice in New York if his/her license to practice is no longer valid in his/her principal place of business.

 

• Provides language that must be used by non-licensed individuals and entities when preparing financial statements. This language would be distinct from the standard reporting language used by CPAs so the public can differentiate between licensed and non-licensed practice.

 

• Requires all firms that perform attestation or compilation services or use the title “CPA firm” or “PA firm” to register with the Department.  Public accounting firms created to provide tax or consulting services may register with the Department under the new law.

 

• Requires firms to provide annual notification to the Department of the revocation of their registration or other disciplinary action for cause requires firms to notify the Department of any change in the number or location of their offices within the state, including any change in the identity of the persons in charge of such office.

 

• Provides that the Board of Regents may revoke a firm’s registration or take other disciplinary action against a firm to the same extent as an individual licensee, or pursuant to a settlement in which the firm neither admits nor denies the allegations of professional misconduct, or based on other grounds, including failure to undergo the required quality review every three years.

 

• Mandates participation in mandatory continuing education for all CPAs, even if employed in private industry, government or academia, and changes the requirement for complying with mandatory continuing education from a fiscal year to a calendar year.

 

• Expands the recognized areas of continuing education study to those that contribute to professional practice and growth in professional knowledge and professional competence.

 

• Requires accounting firms that provide attestation services to undergo an independent quality review of the firm’s administrative controls over those services at least every 3 years.  The law exempts sole proprietorships and firms with two or fewer owners from the quality review requirement; however, the exemption does not apply to any firm that performs attestation services for any New York State governmental entity.

 

Timetable for Implementation

 

              If adopted at the May 2009 meeting, the amendment would take effect on May 26, 2009.