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Professional Resources

Ethics

Professional Ethics Resource Center

One of the cornerstones of the profession of public accountancy is the high ethical standards of its members. Such standards are set forth in the AICPA Code of Professional Conduct (the “Code”). While high ethical standards are essential in achieving public trust and confidence, such trust can be maintained only if the public is confident that the profession can regulate itself and discipline those members who violate or ignore the Code.

The AICPA adopted a revised Code that became effective December 15, 2014. The Conceptual Framework for Members in Business and the Conceptual Framework for Members in Public Practice  effective December 15, 2015. 

For updates to the Code, see the Table of Contents, Appendix C - Revision History Table.

Effective May 16, 2013, the NYSSCPA Adopted the AICPA Code of Professional Conduct.

Although since replaced by the AICPA Code, the last version of the NYSSCPA Code of Professional Conduct was adopted in March 2013 and can be found here. Prior historical versions of the NYSSCPA Code of Professional Conduct are available upon request.

I. Professional Ethics Introduction

II. Who We Are

III. Committee Objectives

IV. Committee Structure

V. Frequency and Conduct of Meetings

VI. Fee Disputes

VII. The Joint Ethics Enforcement Program (JEEP)

VIII. CPE Requirements for New York State-Licensed CPAs (Including Ethics CPE)

IX. Who to Contact with Independence and Ethics Inquiries

X. What to Do If You Are Being Investigated

XI. Ethics Investigation Process

XII. Explanation of Ethics Sanctions

XIII. Concurrence

I. Professional Ethics Introduction

As the first state society established in the United States, the New York State Society of Certified Public Accountants (“NYSSCPA” or “Society”) continues to play a leading role in the development and promotion of high ethical standards within the profession. The Society’s bylaws state that the membership shall be bound by the Society’s Code; however, it is advisable for Society members who are also members of the American Institute of Certified Public Accountants (“AICPA”) to apprise themselves of the applicable laws and related regulations of governmental agencies that regulate certified public accountants in the United States.

The Code was adopted by the Society membership to provide guidance and rules to all members. This applies to members in public practice, members in business, and all other members, such as those members who are retired or unemployed.

Compliance with the Code, as with all standards, depends primarily on members’ understanding and voluntary actions; secondarily, on reinforcement by peers and public opinion; and ultimately, on disciplinary proceedings, when necessary, against members who fail to comply with the Code.

The best defense against ethics complaints or allegations of misconduct is prevention. Learn and apply the rules of ethical behavior. Be professionally competent, be diligent about continuing professional education (CPE), and take advantage of the Society’s members-only technical hotline

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II. Who We Are

The Professional Ethics Committee (“PEC”) is a standing committee within the Operations Division of the Society created under Article XI of the bylaws of the NYSSCPA. Its authority is defined in Article XII (Professional Conduct and Disciplinary Proceedings) of the Society’s bylaws.

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III. Committee Objectives

The Society, through its PEC, educates and provides guidance to its members on ethical behavior and standards, and ensures members’ adherence thereto by considering complaints, and jointly with the AICPA, disciplining those who violate or ignore the rules. The Society is a participant in the Joint Ethics Enforcement Program (JEEP) of the AICPA, (See Joint Ethics Enforcement Program Manual of Procedures (“JEEP Manual”)) and the Professional Ethics Committee Procedures Manual.

Effective June 2012, the Society changed its election from conducting investigations as an Option 1 state society, to a concurring only committee as an Option 2 state society, thereby transferring the task of conducting investigations to the AICPA Professional Ethics Division.

Specifically, the duties and responsibilities of the PEC include, but are not limited to:

  • Reviewing and drafting responses to proposed ethics rules and interpretations proposed by the AICPA and others.
  • Proposing strategic direction for the PEC;
  • Monitoring and proposing updates to the Society’s website;
  • Developing and implementing member education ethics programs;
  • Addressing issues relating to furtherance of the PEC missions, including changes to the Code; 
  • Providing revisions of the Society’s bylaws when necessary.

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IV. Committee Structure

The PEC is composed of experienced volunteer Society members representing diverse practices, from sole practitioners, to large international accounting firms, including but not limited to accounting, auditing, tax, consulting, and valuation services. The PEC has one chair, and one vice chair. The chair generally carries a two-year term. The PEC is also supported by two members of the NYSSCPA staff, consisting of Counsel and an Ethics Coordinator. 

V. Frequency and Conduct of Meetings

The PEC generally meets bimonthly and conducts conference calls on months where no meetings are scheduled. Additional meetings may be called by the chair, as necessary. All deliberations on active case investigations and other enforcement matters are held in executive sessions, which are closed to non-PEC members due to confidentiality requirements. Meeting dates and minutes of open sessions are posted on this site, here.

VI. Fee Disputes

As a general rule, complaints involving fee disputes are not investigated by the AICPA. However, if it is determined that a fee dispute includes allegations of professional misconduct, an investigation of those allegations may be initiated.

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VII. The Joint Ethics Enforcement Program (“JEEP”)

JEEP is an AICPA/state society program for ethics enforcement that has existed since the early 1970s. The AICPA established JEEP in order to avoid duplicate investigations and enforcement of a potential disciplinary matter by the AICPA Professional Ethics Division and the ethics committees of one or more state societies.

The NYSSCPA PEC participates in the JEEP program pursuant to an agreement between the Society and the AICPA. Whether or not a Society member is a member of the AICPA, the JEEP agreement provides that investigations of potential disciplinary matters are to be conducted in accordance with JEEP procedures, with limited exceptions. In all investigations, the PEC is bound by NYSSCPA bylaws. The procedures following an investigation will either be comprised of the JEEP Manual (for all investigations beginning after May 2012) or the Professional Ethics Committee Procedures Manual (for all investigations commencing prior to June 2012). The Professional Ethics Committee Procedures Manual and the JEEP Manual provides that in the event that a hearing is required to dispose of charges, such hearing shall be conducted by AICPA’s Joint Trial Board under the operative “Rules of Procedure and Practice” of the Joint Trial Board.

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VIII. CPE Requirements for New York State CPAs (includes Ethics CPE)

A CPA has two options for obtaining professional ethics CPE depending on his or her annual election of either a minimum of 40 hours in a recognized area of study or 24 hours in a concentrated area of study approved by the New York State Education Department. If a CPA elects the 24-hour concentration areas of study, then he or she may count the four hours of professional ethics within the 24-hour concentration, only if the hours in professional ethics were taken in the same recognized subject area of the concentration. For example, an approved tax ethics course would count toward a 24-hour concentration in taxation but not toward a 24-hour concentration in advisory services.

Since the triennial registration period varies from licensee to licensee, the New York State Education Department mandated that professional ethics CPE is on a calendar year for each registration period ending on or after January 1, 2012. (Continuing Education) For more information, see the “MCE Questions and Answers” on the New York State Education Department’s website. NYS Public Accountancy - Continuing Education.

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IX. Who to Contact with Independence and Ethics Inquiries

NYSSCPA staff is available by phone or e-mail to provide assistance with processing a complaint. Contact Dolores Rodriguez at (212) 719-8361drodriguez@nysscpa.org if you require assistance. Beginning June 2012, the NYSSCPA Professional Ethics Committee (PEC) became an option 2 state, which indicates that it is solely a concurring committee and is no longer conducting its own investigations. The AICPA Professional Ethics Division will conduct investigations of NYSSCPA members on the Society’s behalf.

The AICPA's Ethics Hotline may also be consulted on independence and ethics issues at 888-777-7077, menu option number 6 or via email at ethics@aicpa.org. In addition, if your question has New York regulatory implications, you should contact the New York State Board for Public Accountancy for answers to questions concerning practice issues or continuing professional education requirements at:

NY State Education Department 
Office of the Professions 
State Board for Public Accountancy 
89 Washington Avenue 
Albany, New York 12234-1000

518-474-3817, ext. 160 (voice) 
518-474-6375 (fax) 
cpabd@nysed.gov

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X. What to Do If You Are Being Investigated

After determining that a complaint warrants further investigation, an AICPA staff member sends an "opening letter" to the member who was identified in the complaint (the “respondent”). The respondent is required to respond in writing to interrogatories in the opening letter within the time period specified, usually 30 days. The respondent should review the rules of conduct that are alleged to have been violated. It is helpful for the respondent to include any additional information that is relevant to the matter and any evidence to support the response. Failure to cooperate in an investigation is a violation of the Code that can result in a referral to the Joint Trial Board and possible expulsion from membership.

Many options are available to respondents, including the right:

  • to retain legal counsel without prejudice;
  • to be represented by legal counsel, by a reasonable number of representatives of his or her firm, by the firm’s legal counsel, by any individual the respondent chooses, or by any combination thereof at a personal interview;
  • to an interview conducted by the AICPA Professional Ethics Division;
  • to have the investigation deferred if the issues and parties involved are the subject of litigation or a regulatory proceeding;
  • to reject a letter of required corrective action. If rejected by the respondent, the matter may be referred to the Joint Trial Board for a hearing, or a decision may be made whether no further action will be taken; or
  • to reject a settlement agreement. If rejected the matter is referred to the Joint Trial Board for further action.

XI. Ethics Investigation Process

AICPA Professional Ethics Division staff will conduct an initial review of complaints, including those received by the NYSSCPA and, if actionable, an AICPA Technical Manager will be assigned to investigate the complaint in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures. Upon conclusion of an investigation, the AICPA Technical Manager assigned to the case presents a case summary to a quorum of the PEC with recommendations on findings, including remedial and disciplinary actions. The PEC must concur by majority vote to find a member in violation of the Code or bylaws and on proposed sanctions.

Possible findings that do not require concurrence by the PEC are: “no further action,” because no evidence of a violation was obtained, or “no violation,” based upon a finding of no prima facie evidence of a violation of the Code or bylaws. If new information becomes available, an investigation may be re-opened. The disciplinary action imposed for a violation may include a confidential letter of required corrective action (RCA). An RCA is remedial in nature and is not published. Failure to comply with the directives in an RCA can result in expulsion from the Society with publication.

Investigations are conducted in a confidential manner; however, the PEC is required to publish certain disciplinary actions (expulsion, suspension, admonishment or censure) in a Society publication pursuant to Bylaw section XII.15. The PEC is also required to disclose the conclusion of an investigation to the New York State Education Department and any other regulatory agencies under Bylaw Article XII.19, upon occurrence of specified events in an investigation. See bylaws, Article XII.19, effective May 10, 2012.

The PEC may also concur on a Settlement Agreement to expel, suspend, censure or admonish-- all require publication. Settlement Agreements require the approval of the Joint Trial Board of the AICPA, but may be rejected by the member. Upon rejection, the case will be referred to the Joint Trial Board for a hearing and final decision. Lastly, if a violation is of sufficient gravity to warrant formal disciplinary action, a referral to the Joint Trial Board may be recommended. The secretary of the Joint Trial Board will summon the respondent to appear at a hearing. The PEC cannot appeal a “not guilty” decision of a hearing panel; however, the respondent has a right to appeal a “guilty” decision of a hearing panel.

Members whose conviction of felonies, or conviction of filing false tax returns or failure to file tax returns becomes final, or whose licenses are revoked, are automatically expelled under the Society bylaws and are not investigated. Such automatic actions are published in the NYSSCPA newspaper, The Trusted Professional. Pursuant to Bylaw XII.1-b (3), the PEC may request that the AICPA conduct an investigation of any member who was “… finally convicted of a criminal offense which tends to discredit the profession.”

Three bylaw provisions under Article XII became effective May 10, 2012: XII.5 Automatic discipline; XII.6 Disciplinary action without a hearing; and XII.7 Timely written petition.

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XII. Explanation of Ethics Sanctions

Expelled or Suspended

A member may be subject to suspension from membership for a certain period through a Settlement Agreement entered into with the member and approved by the Joint Trial Board. During the suspension period, members must not identify themselves as a Society member on any letterhead or other written material, and may not vote, or hold a committee position or an office in the Society. During suspension, a member may be directed to complete specific CPE courses or take other actions (e.g. submit examples of his or her subsequent work product for review or a pre-issuance review of engagements may be imposed).

According to Society bylaws, a suspended member’s participation in any Society-sponsored insurance program may continue during the period of suspension provided the suspended member continues to pay the Society membership dues and the premiums for such insurance coverage. The member’s existing insurance coverage may not be increased during the suspension period.

Pursuant to Society Bylaw Article XII.2, a member can be automatically expelled or suspended without a hearing as a result of the member’s conviction of: a) a crime punishable by imprisonment for more than one year under the law of the convicting jurisdiction; b) the willful failure to file any income tax return which they are required by law to file; c) the filing of a false or fraudulent income tax return; or d) the willful aiding in the preparation and presentation of a false and fraudulent income tax return of a client. The suspension automatically shall become an expulsion from membership upon the filing of a final judgment of conviction and shall automatically be vacated if a reversal of the conviction becomes final. The Board of Directors, with or without a hearing, may consider a timely written petition by the PEC or the member that the member should not be automatically disciplined pursuant to paragraphs 3,4,5, or 6 of Bylaw Article XII.

The Society bylaws also require that if any member’s CPA license is suspended or revoked or otherwise impaired by a political authority issuing said license, the suspension or revocation, withdrawal, surrender, indefinite suspension, or cancellation as a disciplinary measure or in connection therewith shall automatically effect, respectively, the suspension (for the same length of time) or the expulsion of such member from the Society.

Publication of an expulsion and suspension is mandatory under Bylaw Article XII.15. The publication appears in The Trusted Professional.

Admonishment or Censure

Publication of admonishment or censure of a member who enters into a Settlement Agreement is mandatory under Bylaw Article XII.15. The publication appears in The Trusted Professional.

Required Corrective Action (RCA)

The AICPA Professional Ethics Division, with PEC concurrence, issues letters of required corrective action when the violation is not of sufficient gravity to warrant suspension, expulsion, admonishment, censure or referral to trial board.

A letter of required corrective action may direct a member to comply with one or more of the following: successful completion of specific CPE courses, submission of examples of his or her subsequent work for review or a pre-issuance review(s) of engagements may be imposed.

The terms of letters of required corrective action are not published; however, upon rejection by the member of an RCA, an AICPA subcommittee would then decide whether to refer the matter to the Joint Trial Board or whether no further action would be taken.

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XIII. Concurrence

In any investigation conducted by the AICPA Professional Ethics Division, where concurrence is not obtained from the PEC on a settlement agreement or letter of required corrective action, the PEC may decide to separately issue the settlement agreement or letter of required corrective action in which case, any reference to the AICPA will be removed.

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Disciplinary Matters

Members who have been admonished, suspended or terminated for violations of the Code of Conduct are posted online for a specified period of time.

View Disciplinary Matters