SED Will Seek to Introduce Accounting Reform Legislation

ALBANY, N.Y. -- At the Regents Committee on Professional Practice on Monday, the State Education Department (SED) introduced a report calling for accounting reform (read the full report), and disclosed that the department will seek to introduce legislation to clarify the Regents regulatory authority over all licensees for all professional services provided to the public (scope of practice).

At the meeting, Daniel Dustin, executive secretary for the State Board of Public Accountancy, said that a major issue to be addressed in the current legislative session is an expansion of the definition of the scope of practice for public accounting. Dustin also said SED will seek the introduction of legislation to clarify the Regents regulatory authority over all licensees for all professional services provided to the public and to strengthen the Regents oversight over accounting practices in general.

Dustin also stressed how much CPA work is not subject to Regents' oversight. He also said that his department is in the process of evaluating the standards in Sarbanes-Oxley to determine which ones may be appropriate for state implementation. In this process, SED has met with the U.S. General Accounting Office, the New York state attorney general, NASBA and the Public Company Accounting Oversight Board.

Dustin presented SED's legislative proposals that include:

• the expanded scope of practice definition, individual and firm annual registration whether active in practice or not;
• mandatory peer review for all firms providing attest and compilation services;
• clarification of commission rules and the relationship of independence and disclosure;
• and increases in the statutory limits on fines for misconduct.

Dustin added that also under consideration is a proposal for implementation of a CPE requirement for all registered CPAs and changes to the specific requirements to be coordinated with the expanded scope of practice definition. Finally, he talked about creating a Public Accounting Task Force to inspect CPA firms separate from peer reviews, to be funded with registration fees paid by accounting firms.

Also under consideration at SED are:

• an investigation of a model to allow temporary practice permits for CPAs from other jurisdictions;
• SED notification by CPAs in events such as lawsuits, receipts of Wells notices and other investigations;
• and notifications of restatements of previously issued financial statements related to public companies located, incorporated or doing business in New York, as well as New York state government entities, charities and other entities required to make their financial statements public.

They are also considering requiring a disclosure in financial statements of percentage of fees charged for to a client by such categories as audit, tax, accounting, and consulting.

-- NYSSCPA.org News Staff

Posted on 02/13/03