Board of Regents Strengthen CPA Oversight Rules to Protect Public

Board of Regents Strengthen CPA Oversight Rules to Protect Public

For More Information Contact:
Jonathan Burman or Tom Dunn at (518) 474-1201
http://www.nysed.gov

The New York State Board of Regents recently strengthened oversight rules for CPAs. Now, when a Certified Public Accountant (CPA), licensed in New York State, loses the right to practice before the United States Securities and Exchange Commission (SEC) because of substandard practice, they will be subject to New York State disciplinary action as well.

The Regents revised the definition of “unprofessional conduct” for CPAs in New York State to include disciplinary actions by the United States Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB). If found guilty of unprofessional conduct by these Federal regulatory agencies, the CPA or firm is now also subject to penalties in New York State, ranging from censure and reprimand to the revocation of their professional license. The new definition of “unprofessional conduct” includes situations where an accountant has reached a settlement with those agencies.

The Regents also enacted rules that require CPAs to notify the New York State Education Department within 45 days of being convicted of a crime, reaching settlements in some civil proceedings or being disciplined by a state or federal regulatory agency. Until now, the requirement was to report these actions when re-registering with the State, which occurs every 3 years.

The financial disasters of the late 1990’s and early 2000’s, brought to light the need for significant reform in corporate governance and the accounting profession. The Federal Sarbanes-Oxley Act of 2002 established a new national regulatory agency, the Public Company Accounting Oversight Board (PCAOB), which investigates and disciplines CPA firms that audit large publicly-traded companies. In New York State, CPAs, as well as 46 other professions, are licensed by the New York State Board of Regents. The Regents are also responsible for taking disciplinary action against individual licensees and CPA firms when they violate standards of practice. The new Regents Rules allow the Board of Regents to take actions against the CPA or firm based on the actions taken at the Federal level.

In announcing the new disciplinary rules, Johanna Duncan-Poitier, Deputy Commissioner of the State Education Department’s Office of the Professions said, “New York State is the financial capital of the world, with more than 100 New York State public accountancy firms registered to perform audits of publicly traded companies. The Regents have acted to protect the public when a licensee violates Federal practice standards. This new Rule, together with the requirement that all CPAs and firms must report criminal, civil and regulatory actions within 45 days of occurrence, will enable the Regents to take timely action against a licensee or firm when appropriate.”

The new Rules take effect on July 13.