Overview of New York State Uniform Accountancy Act (UAA) Bill
(A.4445 and S.2456--Previously A. 8600 with Senate Companion S. 4402)

The State Assembly recently introduced a bill which, if enacted, will result in the first comprehensive change to New York State's accountancy law since 1947. The legislation reflects the reforms endorsed by the NYSSCPA board of directors as it deliberated the merits of the Uniform Accountancy Act and the accompanying regulations proposed by the AICPA and the National Association of State Boards of Accountancy. The bill seeks to:

• redefine the scope of practice to include only assurance services, such as audits, reviews, compilations, and other attest engagements;

• amend the current licensure requirements to require 150 hours of education and one year of experience in general accounting skills verified by a CPA;

• allow for interstate practice of public accountancy through substantial equivalency;

• require CPA firms that provide attest services to be registered by the State Education Department;

• allow for 49 percent ownership of CPA firms by non-CPAs;

• authorize CPAs to accept commissions and referral fees from non-attest clients; and

• establish in state law a peer review process for CPA firms that engage in attest services.

QUESTIONS AND ANSWERS ABOUT SENATE BILL 2456

Why is this legislation necessary? Answer

What services can a nonlicensed individual perform under this new act? Answer

Can a nonlicensed individual prepare and submit financial statements? Answer

Licensure Requirements

Under the proposed legislation, the state licensure requirements change the state's current education and experience requirements to conform with other states and with State Education Department regulations.

Education Requirement--150 hours

What is the purpose of requiring a standard of 150 hours of education in this state? Answer

Will this place an undue burden on current students, particularly students from low-income households? Answer

Experience Requirement--One Year

What is the purpose of the one-year requirement? Will this lower standards for the profession? Answer

Commissions and Referral Fees

The practice of the CPA has changed dramatically. Due to CPAs' intimate knowledge of the financial position of their clients, CPAs are now asked to serve as financial planners or investment advisors to their clients. As such, a CPA may become involved in financial or investment vehicles that lend themselves to a commission- or fee-based arrangement. At the same time, there could be instances where receipt of a commission or fee could compromise the CPA's independence or integrity. The proposed legislation merely clarifies those circumstances under which a CPA may be paid a commission or fee for his or her services.

A CPA cannot receive a commission or fee for services provided to any client for whom the CPA or the CPA's firm is retained to perform attest engagements. This prohibition applies to branch offices of the retained CPA firm. Thus, if a New York City-based CPA firm performs attest engagements for ABC company, the CPA firm's Albany office cannot receive commissions or fees for performing nonattest services for ABC.

Finally, a CPA who intends or expects to receive a commission or fee must provide written notice to the client of the commission or fee arrangement. Not only must the client be fully informed beforehand, the CPA must weigh the risk of losing a client over such an arrangement.

Would the authority to accept commissions and fees compromise the independence of a CPA? Answer

Will the CPA steer clients to products and services offered by the non-CPA side of the business? Answer

Will the CPA inform the client if the product or service is financially flawed? Answer

Will the CPA recommend an insurance policy because it pays the highest commission? Answer

What happens to an out-of-state CPA who commits in this state an act that is subject to disciplinary charges under state laws and regulations? Answer

Under the new ownership requirements, what protections exist to ensure that licensees actually will be in control? Answer

Does this legislation violate antitrust laws? Answer

What are the other states doing? Answer