STATE OF NEW YORK

________________________________________________________________________

4445

2001-2002 Regular Sessions

ASSEMBLY

February 8, 2001

___________

Introduced by M. of A. FARRELL, TOKASZ, CANESTRARI, DiNAPOLI, LAFAYETTE, ORTIZ -- Multi-Sponsored by -- M. of A. CHRISTENSEN, M. COHEN, ENGLEBRIGHT, LENTOL, SANDERS, TOCCI, VANN, VITALIANO -- read once and referred to the Committee on Higher Education

AN ACT to amend the education law, in relation to the profession of public accountancy

[ ] is old law to be omitted.

LBD08013-01-1

Page 2

1 laws of 1989 and section 7409 as added by chapter 805 of the laws of

2 1990, is amended to read as follows:

3 ARTICLE 149

4 PUBLIC ACCOUNTANCY

5 Section 7400. Introduction.

6 7401. Definition of practice of public accountancy.

7 7402. Practice of public accountancy and use of title "certified

8 public accountant" [or "public accountant"].

9 7403. State board for public accountancy.

10 7404. Requirements for a license as a certified public account-

11 ant.

12 [7405. Requirements for a license as a public accountant.]

13 7406. Limited permits.

14 7407. Exempt persons.

15 7408. Special provisions.

16 7409. Mandatory continuing education.

17 7410. Mandatory review of certified public accountancy firms.

18 § 7400. Introduction. This article applies to the profession of

19 public accountancy. The general provisions for all professions contained

20 in article one hundred thirty of this title apply to this article,

21 except that insofar as the provisions of this article are inconsistent

22 with the provisions of such article one hundred thirty, the provisions

23 of this article shall be controlling.

24 § 7401. Definition of practice of public accountancy. The practice of

25 the profession of public accountancy is defined as [holding one's self

26 out to the public, in consideration of compensation received or to be

27 received, offering to perform or performing for other persons, services

28 which involve signing, delivering or issuing or causing to be signed,

29 delivered or issued any financial, accounting or related statement or

30 any opinion on, report on, or certificate to such statement if, by

31 reason of the signature, or the stationery or wording employed, or

32 otherwise, it is indicated or implied that the practitioner has acted or

33 is acting, in relation to said financial, accounting or related state-

34 ment, or reporting as an independent accountant or auditor or as an

35 individual having or purporting to have expert knowledge in accounting

36 or auditing.] offering to perform or performing for the public one or

37 more of the following services:

38 1. any audit to be performed in accordance with the generally accepted

39 auditing standards or other similar standards developed by a recognized

40 international or national accountancy organization, approved by the

41 department that establishes auditing standards;

42 2. any review of a financial statement or compilation of a financial

43 statement to be performed in accordance with standards developed by a

44 recognized international or national accountancy organization, approved

45 by the department that establishes such accounting principles; and

46 3. any attestation engagements to be performed in accordance with

47 attestation standards developed by a recognized international or

48 national accountancy organization, approved by the department that

49 establishes such accounting principles.

50 § 7402. Practice of public accountancy and use of title "certified

51 public accountant" [or "public accountant"]. 1. Only a person licensed

52 or otherwise authorized to practice under this article shall [practice

53 public accountancy and] use the title "certified public accountant" or

54 the designation ["C.P.A." or "public accountant"] "CPA" or any other

55 derivative or designation provided in section seventy-four hundred eight

56 of this article.

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1 2. Only a certified public accountant or CPA shall engage in the prac-

2 tice of public accountancy, as defined in section seventy-four hundred

3 one of this article, provided that such person may engage in such prac-

4 tice only in a firm registered pursuant to section seventy-four hundred

5 eight of this article.

6 § 7403. State board for public accountancy. A state board for public

7 accountancy shall be appointed by the board of regents on recommendation

8 of the commissioner for the purpose of assisting the board of regents

9 and the department on matters of professional licensing and professional

10 conduct in accordance with section sixty-five hundred eight of this

11 title. The board shall be composed of not less than twenty [licensed

12 accountants, not less than fifteen of whom shall be licensed as] certi-

13 fied public accountants in this state[, and the board should be kept in

14 such proportion if it is ever increased]. An executive secretary to the

15 board shall be appointed by the board of regents on recommendation of

16 the commissioner and shall be a certified public accountant licensed in

17 this state.

18 § 7404. Requirements for a license as a certified public accountant.

19 1. To qualify for a license as a certified public accountant, an appli-

20 cant shall fulfill the following requirements:

21 a. (1) Application: file an application with the department;

22 (2) Education: have (i) for any applicant who applies for licensure

23 prior to August first, two thousand seven, received an education,

24 including a bachelor's or higher degree based on a program in accountan-

25 cy, in accordance with the commissioner's regulations;

26 (ii) for any applicant who applies for licensure on or after August

27 first, two thousand seven, received an education of at least one hundred

28 fifty semester hours of college education including a baccalaureate or

29 higher degree conferred by a college acceptable to the department based

30 on a program that includes an accounting concentration or its equiv-

31 alent, as determined by the department;

32 (3) Experience: have (i) for any applicant who applies for licensure

33 prior to August first, two thousand seven, experience satisfactory to

34 the board and in accordance with the commissioner's regulations provid-

35 ing any type of services or advice using accounting, attest, management

36 advisory, financial advisory, tax or consulting skills. The experience

37 may include employment in private sector, government, academia or public

38 practice and shall be verified by a certified public accountant in good

39 standing licensed in this state;

40 (ii) for any applicant who applies for licensure on or after August

41 first, two thousand six, one year's experience satisfactory to the board

42 and in accordance with the commissioner's regulations providing any type

43 of services or advice using accounting, attest, management advisory,

44 financial advisory, tax or consulting skills. The experience may include

45 employment in private sector, government, academia or public practice

46 and shall be verified by a certified public accountant in good standing

47 licensed in this state;

48 (4) Examination: pass [a written] an examination satisfactory to the

49 board and in accordance with the commissioner's regulations and the

50 requirement with respect to such examination may not be waived. To the

51 extent possible, the board shall ensure that the examination, the exam-

52 ination process and the passing standard shall be uniform with those of

53 the other states, and may use all or any part of the Uniform Certified

54 Public Accountant Examination and Advisory Grading Service of the Ameri-

55 can Institute of Certified Public Accountants. The department may

56 contract with third parties to administer the examination;

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1 (5) Age: be at least twenty-one years of age;

2 (6) Citizenship: meet no requirements as to United States citizenship;

3 (7) Character: be of good moral character as determined by the depart-

4 ment; and

5 (8) Fees: pay a fee of two hundred twenty dollars to the department

6 for admission to a department conducted examination and for an initial

7 license, a fee of one hundred fifteen dollars for each reexamination, a

8 fee of one hundred thirty-five dollars for an initial license for

9 persons not requiring admission to a department conducted examination,

10 and a fee of two hundred ten dollars for each triennial registration

11 period[.

12 2. In lieu of professional requirements specified in subparagraphs (2)

13 and (3) of subdivision one of this section, fifteen years in the prac-

14 tice of public accountancy satisfactory to the board may be accepted by

15 the department.

16 § 7405. Requirements for a license as a public accountant. To qualify

17 for a license as a public accountant, an applicant shall fulfill the

18 following requirements:

19 (1) Application: file an application with the department;

20 (2) Declaration of intention: a. Have filed a declaration of intention

21 to practice as a public accountant with the department on or before

22 October first, nineteen hundred fifty-nine, on the basis of evidence

23 that the applicant was engaged for a total of six years during the ten

24 years immediately preceding April twenty-third, nineteen hundred fifty-

25 nine, in the practice of public accountancy as an individual practition-

26 er or as a partner of a partnership or as an employee of such an indi-

27 vidual practitioner or partnership engaged in the practice of public

28 accountancy or as an employee of a department, agency or instrumentality

29 of the United States, the state, or a political subdivision of the state

30 in which employment his duties entailed the performance of all or some

31 of the services which would constitute the practice of public accountan-

32 cy, or a combination of the foregoing duties, or in the opinion of the

33 board the equivalent thereof;

34 b. Establish by evidence satisfactory to the board that at the date of

35 the filing of said declaration of intention, the applicant had complied

36 with the conditions established by law on April twenty-third, nineteen

37 hundred fifty-nine, has not violated the provisions relating to practice

38 in public accountancy, and is about to engage in the practice of public

39 accountancy as his principal occupation as an individual practitioner or

40 as a partner of a partnership;

41 (3) Character: be of good moral character as determined by the depart-

42 ment; and

43 (4) Fees: pay a fee to the department for an initial license of two

44 hundred twenty dollars, and a fee of two hundred ten dollars for each

45 triennial registration period.]; or

46 b. (1) Application: file an application with the department;

47 (2) Declaration of intention: (a) Have filed a declaration of inten-

48 tion to practice as a public accountant with the department on or before

49 October first, nineteen hundred fifty-nine, on the basis of evidence

50 that the applicant was engaged for a total of six years during the ten

51 years immediately preceding April twenty-third, nineteen hundred fifty-

52 nine, in the practice of public accountancy as an individual practition-

53 er or as a partner of a partnership or as an employee of such an indi-

54 vidual practitioner or partnership engaged in the practice of public

55 accountancy or as an employee of a department, agency or instrumentality

56 of the United States, the state or a political subdivision of the state

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1 in which employment his or her duties entailed the performance of all or

2 some of the services which would constitute the practice of public

3 accountancy, or a combination of such duties, or in the opinion of the

4 board the equivalent thereof;

5 (b) Establish by evidence satisfactory to the board that upon the date

6 of the filing of such declaration of intention, the applicant had

7 complied with the conditions established by law on April twenty-third,

8 nineteen hundred fifty-nine, has not violated the provisions relating to

9 practice in public accountancy, and is about to engage in the practice

10 of public accountancy as his or her principal occupation as an individ-

11 ual practitioner or as a partner of a partnership;

12 (3) Character: be of good moral character as determined by the depart-

13 ment; and

14 (4) Fees: pay a fee to the department for an initial license of two

15 hundred twenty dollars, and a fee of two hundred ten dollars for each

16 triennial registration period.

17 2. a. For the purposes of this section, the term "state" shall mean

18 any state of the United States, the District of Columbia, Puerto Rico,

19 the U.S. Virgin Islands and Guam, except that "this state" shall mean

20 the State of New York.

21 b. Notwithstanding the provisions of subdivision one of this section

22 and section sixty-five hundred one of this title, a person not licensed

23 in this state may also qualify to practice public accountancy in this

24 state as a certified public accountant if:

25 (1) the person possesses a valid and current certificate or license as

26 a certified public accountant from such state and is in good standing in

27 such state;

28 (2) the person does not have his or her principal place of business in

29 this state; and

30 (3) the board of regents has determined that (a) the educational,

31 examination and experience requirements of the jurisdiction in which the

32 individual is licensed are substantially equivalent to the uniform

33 certified public accountant licensure requirements established by the

34 American Institute of Certified Public Accountants and the National

35 Association of State Boards of Accountancy; or (b) the person's educa-

36 tion, examination and experience qualifications are comparable or exceed

37 the uniform certified public accountant licensure requirements estab-

38 lished by the American Institute of Certified Public Accountants and the

39 National Association of State Boards of Accountancy.

40 3. A person not licensed in this state whose certificate or license

41 has been determined by the board of regents as substantially equivalent

42 under this section and who intends to practice public accountancy in

43 this state shall notify the department in a manner and in accordance

44 with procedures established by the department. The department may

45 request and review any information which reasonably appears to relate to

46 the individual's professional misconduct in his or her professional

47 practice in this state and in any other jurisdiction.

48 4. A person not licensed in this state whose certificate or license

49 has been determined to be substantially equivalent pursuant to subdivi-

50 sion three of this section and is practicing public accountancy in this

51 state:

52 a. shall have all of the rights and privileges of certified public

53 accountants licensed in this state;

54 b. shall comply with all applicable laws and regulations relating to

55 such profession;

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1 c. shall be subject to the jurisdiction of the department in matters

2 relating to the professional misconduct committed in this state; and

3 d. agrees to the appointment of the secretary of the board as his or

4 her agent upon whom process may be served in any action or proceeding by

5 the board against the person.

6 5. A person who is practicing public accountancy pursuant to subdivi-

7 sion two of this section and who commits professional misconduct in this

8 state shall be subject to the disciplinary proceedings described in

9 section sixty-five hundred ten of this title. In addition, the depart-

10 ment shall immediately notify and refer the matter to the appropriate

11 bodies or officials in the jurisdiction in which the individual is

12 licensed for appropriate disciplinary action.

13 6. Notwithstanding any provision of law to the contrary, no person

14 whose principal place of business is located in this state may engage in

15 the practice of public accountancy in this state without obtaining a

16 license pursuant to subdivision one of this section.

17 7. The department shall establish in regulations the necessary and

18 appropriate procedures to implement the provisions set forth in this

19 section.

20 § 7406. Limited permits. 1. On recommendation of the board, the

21 department may issue a limited permit to an applicant of good moral

22 character who is the holder of a certificate, license or degree in a

23 foreign country constituting a recognized qualification for the perform-

24 ance in such country of the acts set forth in section seventy-four

25 hundred one of this article, provided the applicant has professional

26 qualifications satisfactory to the board, the applicant resides or has a

27 place for the regular transaction of business within the state, and

28 equal recognition is granted by the foreign country concerned to certi-

29 fied public accountants [and public accountants] licensed in this state.

30 Such limited permit shall be valid for a period of two years and may be

31 renewed on recommendation of the board. Such permit shall authorize the

32 applicant to use only the title or designation under which he is gener-

33 ally known in his own country, followed by the name of the country from

34 which he received his certificate, license or degree, notwithstanding

35 the provisions of subdivision [two] four of section seventy-four hundred

36 eight of this article.

37 2. Fees. The fee for each limited permit and each renewal shall be one

38 hundred five dollars.

39 § 7407. Exempt persons. Nothing contained in this article shall be

40 construed to prohibit:

41 [a.] 1. Any person who is an officer of a corporation or partner of a

42 partnership or sole proprietor of a business enterprise or a member of a

43 joint venture or member of a committee appointed by stockholders, credi-

44 tors, courts, trustees, executors or administrators, or an employee of

45 any of the foregoing, in his capacity as such, from signing, delivering,

46 or issuing any financial, accounting or related statement or report

47 thereon, relating to said corporation, partnership, business venture,

48 joint venture, committee, trust or estate[, provided, however, that in

49 so doing such person does not hold himself out to be a certified public

50 accountant or public accountant];

51 [b.] 2. An attorney-at-law or a partnership or limited liability part-

52 nership, limited liability company or professional corporation of attor-

53 neys-at-law from signing a financial, accounting or related statement or

54 report thereon, prepared by [him or them] the attorney, partnership,

55 limited liability partnership, limited liability company or professional

56 corporation as incidental to the practice of law;

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1 [c.] 3. Any individual from serving as an employee of a certified

2 public accountant, [public accountant or partnership licensed under this

3 article] or any firm as defined in section seventy-four hundred eight of

4 this article;

5 [d.] 4. Any individual, not engaged in practice as a certified public

6 accountant [or public accountant] within the state, from performing

7 services within the state which are incidental to the practice conducted

8 by him outside the state;

9 [e.] 5. Any official or employee of a governmental unit, agency or

10 instrumentality in the performance of his official duties from signing,

11 delivering or issuing any financial, accounting, or related statement or

12 report thereon relating to said unit, agency or instrumentality; or

13 [f.] 6. A corporation chartered in the state of New York to engage in

14 the practice of public accountancy and so engaged as its principal

15 activity on and before the first day of July, nineteen hundred fifty-

16 nine, from continuing in such practice as long as its corporate acts

17 comply with the board of regents rules, provided all employees of such

18 corporation performing any acts constituting the practice of public

19 accountancy as defined herein and who are not certified public account-

20 ants [or public accountants] licensed under this article shall in the

21 performance of such acts be under the supervision of certified public

22 accountants or public accountants licensed in this state.

23 § 7408. Special provisions. 1. [Nothing contained in this article

24 shall be deemed to prohibit two or more certified public accountants or

25 two or more public accountants, or any combination thereof, from forming

26 a partnership; provided, however, that no partnership shall use the

27 words "certified public accountants" or the letters "C.P.A.'s" in

28 connection with its name unless each partner of such partnership, resi-

29 dent or engaged within the United States in practice is in good standing

30 as a certified public accountant of one or more of the states or poli-

31 tical subdivisions of the United States, and each partner thereof resi-

32 dent or engaged in practice within the state is licensed under this

33 article.

34 a. A registration shall be issued to a partnership upon payment of the

35 fee prescribed by the commissioner upon application showing that:

36 (1) At least one partner of such partnership is licensed under this

37 article and his license to practice is not currently suspended, annulled

38 or revoked in any jurisdiction and he is regularly engaged in practice

39 on behalf of the partnership within the state;

40 (2) The partnership consists of at least two present members; and

41 (3) The partnership contains at least as many present partners as the

42 total number of names in the firm name, or, where the word "company" or

43 abbreviation "co." is used, the number of present partners shall be

44 greater than the number of names in the firm name.

45 b. Such registration may be revoked after a hearing conducted in

46 accordance with the provisions of section sixty-five hundred ten of this

47 title upon proof:

48 (1) That the registration was obtained by either misrepresentation or

49 suppression of any material fact;

50 (2) That the license or authorization to practice of any partner is

51 suspended, annulled or revoked in any jurisdiction;

52 (3) That any partner in such a partnership is or has been engaged in

53 the practice of public accountancy in this state who is not licensed in

54 this state; or

55 (4) That the partnership failed to file the written notification

56 required pursuant to paragraph d of this subdivision of this section.

1 c. Personal service on any general partner of a notice of hearing to

2 revoke a partnership registered hereunder shall be deemed service on the

3 partnership.

4 d. A partnership registered to practice pursuant to this section shall

5 file with the department on or before July first of each year written

6 notification of:

7 (1) Any admission of a partner,

8 (2) Any retirement or death of a partner,

9 (3) Any termination of partnership, or

10 (4) Any occurrence of any event or events which would eliminate as to

11 such partnership conformity with the applicable requirements of this

12 section.

13 e. Partnerships shall register triennially and pay a fee of fifty

14 dollars.] For the purposes of this section, the term "firm" shall mean a

15 partnership, a limited liability partnership, limited liability company,

16 professional corporation or a sole proprietorship.

17 2. a. No firm shall engage in the practice of public accountancy as

18 defined in section seventy-four hundred one of this article in this

19 state or use the title "CPA" or "CPA firm" without a registration from

20 the department. As a condition of registration or its renewal, the firm

21 shall demonstrate that it has complied with the provisions of this arti-

22 cle, any other applicable laws and such other requirements as the

23 department may impose, consistent with this article.

24 b. The commissioner, in consultation with the board, shall establish

25 in regulations a registration process for certified public accountancy

26 firms, including the imposition of application and registration fees and

27 procedures to suspend or revoke a registration for cause.

28 3. Notwithstanding any other provision of law to the contrary, a

29 certified public accountancy firm may include owners who are not

30 licensed or not otherwise authorized to practice under this article,

31 provided that:

32 a. the majority of the ownership of the firm, in terms of equity

33 interest and voting rights of all partners or share holders, belongs to

34 persons who are licensed or otherwise authorized by law to practice

35 public accountancy;

36 b. those members of the firm whose principal place of business is

37 located within this state and who engage in the practice of public

38 accountancy in this state are licensed to practice pursuant to subdivi-

39 sion one of section seventy-four hundred four of this article;

40 c. all non-licensed owners are actively engaged in the firm or an

41 affiliated entity thereof as his or her principal occupation;

42 d. the firm has designated a partner or an officer who is duly

43 licensed pursuant to this article to be responsible for the registration

44 of the firm;

45 e. any individual certified public accountant who is engaged in or is

46 responsible for supervising the practice or public accountancy for the

47 firm shall meet the experience requirements set forth in the profes-

48 sional standards for such services;

49 f. the firm undergoes a review of its practice of public accountancy

50 pursuant to section seventy-four hundred ten of this article at least

51 once every three years; and

52 g. the firm does not use the words "certified public accountant" or

53 the letters "CPAs" in connection with its name unless each licensed

54 partner or licensed shareholder is in good standing as a certified

55 public accountant in the state or states in which the partner or share-

56 holder is licensed.

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1 4. Any person shall be guilty of a class A misdemeanor who shall use,

2 in connection with the practice of public accountancy, or in any manner

3 tending to imply that he is an independent accountant or auditor, the

4 designations "chartered accountant", "certified accountant", "expert

5 accountant", "certified tax accountant", "tax accountant", "enrolled

6 accountant", "enrolled public accountant", "registered accountant",

7 "licensed accountant", "incorporated accountant", "registered public

8 accountant", "licensed public accountant", or any abbreviation thereof,

9 or the letters "C.A.", "E.A.", "C.T.A.", "T.A.", "E.P.A.", "R.A.",

10 "L.A.", "I.A.", "P.A.", "R.P.A.", or, "L.P.A.", except as provided else-

11 where in this article, or any other designation tending to imply that he

12 has expert knowledge in accounting or auditing.

13 5. Commissions and referral fees. a. Notwithstanding any provisions of

14 law to the contrary, a certified public accountant licensed or otherwise

15 authorized to practice under this article or such certified public

16 accountant's firm may accept or be paid a commission or referral fee

17 from or for any client for whom the certified public accountant or firm

18 is not engaged to perform the practice of public accountancy, as defined

19 in section seventy-four hundred one of this article, except that no

20 commission or fee may be accepted or paid for a compilation of a finan-

21 cial statement in which the compilation report does not disclose a lack

22 of independence.

23 b. Any certified public accountant or firm that is paid or expects to

24 be paid a commission, or accepts a referral fee shall provide written

25 disclosure to the client of such payment or acceptance.

26 6. Contingent fees. A certified public accountant licensed or other-

27 wise authorized to practice pursuant to this article shall not perform

28 for a contingent fee any professional services for, or receive such a

29 fee from, a client for whom the licensee or the licensee's firm engages

30 in the practice of public accountancy or prepare an original or amended

31 tax return or claim a tax refund for a contingent fee for any client,

32 except that no fee shall be deemed to be contingent if fixed by a court

33 or other public authority or, in tax matters, if determined on the basis

34 of the results of judicial proceedings or the findings of a governmental

35 agency.

36 § 7409. Mandatory continuing education. 1. [(a)] a. Each licensed

37 certified public accountant and public accountant required under article

38 one hundred thirty of this chapter to register triennially with the

39 department to practice in the state shall comply with the provisions of

40 the mandatory continuing education requirements except as set forth in

41 [paragraphs (b) and (c)] paragraph b of this subdivision. Certified

42 public accountants [and public accountants] who do not satisfy the

43 mandatory continuing education requirements shall not practice until

44 they have met such requirements, they have paid all applicable fees, and

45 they have been issued a registration or conditional registration certif-

46 icate.

47 [(b)] b. Certified public accountants [and public accountants] shall

48 be exempt from the mandatory continuing education requirement for the

49 triennial registration period during which they are first licensed. In

50 accordance with the intent of this section, adjustments to the mandatory

51 continuing education requirement may be granted by the department for

52 reasons of health certified by a physician, for extended active duty

53 with armed forces of the United States, or for other good cause accept-

54 able to the department which may prevent compliance.

55 [(c) A licensed certified public accountant and a public accountant

56 not engaged in public practice as an individual practitioner, a partner

1 of a partnership, a shareholder of a professional service corporation,

2 or an employee of such practice units, shall be exempt from the mandato-

3 ry continuing education requirement and payment of the mandatory contin-

4 uing education fee upon the filing of a statement with the department

5 declaring such status. Any licensee who returns to the public practice

6 of certified public accountancy or public accountancy during the trien-

7 nial registration period shall notify the department prior to reentering

8 the profession and shall pay the current mandatory continuing education

9 fee and shall meet such mandatory continuing education requirements as

10 shall be prescribed by regulations of the commissioner.]

11 2. a. During each year of the triennial registration period beginning

12 September first, nineteen hundred ninety and ending September first,

13 nineteen hundred ninety-three and each registration period thereafter

14 but ending on the period that ends on August thirty-first, two thousand

15 one, an applicant for registration shall have the option of [(a)] (1)

16 completing a minimum of forty contact hours of acceptable formal contin-

17 uing education in recognized areas of study, or [(b)] (2) completing a

18 minimum of twenty-four contact hours of acceptable formal continuing

19 education concentrated in any one of the following three subject areas:

20 auditing, accounting, or taxation.

21 b. During the triennial registration period beginning September first,

22 two thousand one and ending August thirty-first, two thousand four and

23 each registration period thereafter, an applicant for registration shall

24 complete no less than one hundred twenty hours of acceptable formal

25 continuing education in recognized areas of study, with a minimum of

26 twenty hours in each year.

27 c. A licensee who has not satisfied the mandatory continuing education

28 requirements shall not be issued a triennial registration certificate by

29 the department and shall not practice unless and until a conditional

30 registration certificate is issued as provided in subdivision three of

31 this section. No hourly credits may be transferred from one year to a

32 subsequent year. The individual licensee shall determine the selection

33 of courses or programs of study pursuant to subdivision four of this

34 section.

35 3. The department, in its discretion, may issue a conditional regis-

36 tration to a licensee who fails to meet the continuing education

37 requirements established in subdivision two of this section but who

38 agrees to make up any deficiencies and take any additional education

39 which the department may require. The fee for such a conditional regis-

40 tration shall be the same as, and in addition to, the fee for the trien-

41 nial registration. The duration of such conditional registration shall

42 be determined by the department. Any licensee who is notified of the

43 denial of registration for failure to submit evidence, satisfactory to

44 the department, of required continuing education and who practices pub-

45 lic accountancy without such registration, may be subject to discipli-

46 nary proceedings pursuant to section [six thousand five] sixty-five

47 hundred ten of this [chapter] title.

48 4. As used in subdivision two of this section, "acceptable formal

49 continuing education" shall mean formal programs of learning which

50 contribute to [professional practice and which meet the standards

51 prescribed by regulations of the commissioner] the growth in the profes-

52 sional knowledge and professional competence of the licensee. Recog-

53 nized areas of study shall include but not be limited to: accounting,

54 auditing, taxation, advisory services, specialized knowledge and appli-

55 cations related to specialized industries, and such other [technical]

56 areas appropriately related to the practice of accounting as may be

Page 11

1 acceptable to the department. To fulfill the mandatory continuing educa-

2 tion requirement, programs must be taken from sponsors approved by the

3 department, pursuant to the regulations of the commissioner.

4 5. The mandatory continuing education fee shall be determined by the

5 regents, shall be payable on or before the first day of each triennial

6 registration period, and shall be paid in addition to the triennial

7 registration fee required by section [seven thousand four] seventy-four

8 hundred four of this article.

9 § 7410. Mandatory review of certified public accountancy firms. 1.

10 a. As a condition of initial licensure, the department may require a

11 firm to undergo a review of its practice of public accountancy, except

12 that any such firm which within three years immediately preceding the

13 application has received a satisfactory review conducted in accordance

14 with a review program approved by the department, may submit a copy of

15 such review for the purposes of meeting this condition.

16 b. As a condition for renewing the registration of a certified public

17 accountancy firm registered in this state, the department shall require

18 the firm to undergo a review at least once every three years in accord-

19 ance with this section. The review shall be conducted by a reviewer who

20 shall be a certified public accountant in good standing, be independent

21 of the firm reviewed and possess such other qualifications as estab-

22 lished by the department. The department may authorize a third party to

23 administer the review. Failure to participate in the review shall

24 constitute immediate grounds for revocation of the registration of the

25 firm.

26 2. A certified public accountancy firm shall undergo a peer review

27 pursuant to standards and procedures approved by the board to determine,

28 verify and report:

29 a. on the degree of compliance of the firm in its practice of public

30 accountancy with generally accepted accounting principles, generally

31 accepted auditing standards, and other similarly recognized technical

32 standards, and

33 b. on the experience of those licensed individuals in the firm who

34 supervise the practice of public accountancy and sign or authorize any

35 individual in the firm to sign reports of financial statements on behalf

36 of the firm.

37 3. The standards for peer reviews promulgated by the department shall

38 include, at a minimum, procedures for:

39 a. selecting and training, if necessary, qualified reviewers;

40 b. developing criteria for assignment of reviewers to specific

41 reviews;

42 c. ensuring the independence and impartiality of the reviewer;

43 d. evaluating the findings of the reviewer by an oversight committee

44 or board, which may affirm, affirm in part, reverse, reverse in part or

45 remand the findings of the reviewer;

46 e. sanctioning firms or licensed individuals who are not in compliance

47 with applicable professional standards and practice, including referring48 the matter to the department for appropriate disciplinary action;49 f. developing grounds for exemption from the requirement to undergo a50 review; and51 g. ensuring that all records and files relating to a review are confi-52 dential.53 4. Notwithstanding any provision of law to the contrary, the records54 submitted by a certified public accountancy firm in accordance with this55 section; the comments of reviewers, the oversight committee or the board56 on reports submitted by a certified public accountancy firms or working

Page 12 1 papers relating thereto; or the results of the review shall not consti- 2 tute public records and shall not be subject to disclosure under article 3 seven of the public officers law. 4 § 4. Any applicant for a license as a certified public accountant 5 under article 149 of the education law who, as of the effective date of 6 this act, has already fulfilled or completed, or is currently engaged 7 in, the new experience requirements described in subparagraph 3 of para- 8 graph a of subdivision 1 of section 7404, as amended by section three of 9 this act, may submit proof of such experience to the department for the10 purpose of fulfilling the experience requirement.11 § 5. Separability clause. In the event that a court of competent12 jurisdiction shall adjudge any section or sections, provision or13 provisions of this act to be unconstitutional or void, such determi-14 nation shall affect only the section or sections, provision or15 provisions so adjudged to be unconstitutional or void, and shall not16 affect any other section or provision of this act.17 § 6. This act shall take effect immediately; provided, however, that18 paragraph a of subdivision 2 of section 7408 of the education law, as19 added by section three of this act, shall take effect on January 1,20 2003; provided further, that any partnership, limited liability partner-21 ship or professional services corporation engaged in the practice of22 public accountancy that, on the effective date of this act, possesses a23 valid registration or certificate issued by a state licensing entity24 shall be required to be registered by the department under this act by25 the later of the effective date of such paragraph a or the expiration26 date of the registration or certificate. Nothing herein shall be27 construed to prohibit or prevent the applicable state licensing entity28 from taking disciplinary action against any partnership, limited liabil-29 ity partnership or professional services corporation that has violated30 the terms of its registration or certificate