Why is this legislation necessary?

The proposed legislation has two purposes: 1) to modernize the current law regulating the profession, and 2) to clarify the scope of practice of public accountancy.

The principal purpose of the proposed legislation is to bring the practice into the 21st century. The current law (Art. 149 of the Education Law) was first enacted over 50 years ago, in 1947, a time when the terms "review," "compilation," and "prospective financial information" did not exist in the profession. The law has not changed in any substantial form since then. In this age of jet travel, the Internet, and intense competition among states for corporate businesses, the traditional structure of state by state regulation of the profession of public accountancy is obsolete.

In today's global and technology-driven marketplace, it is vital that New York state licensed CPAs be able to practice their profession beyond state lines. Differing requirements for CPA certification, reciprocity, temporary practice, and other aspects of state accountancy legislation constitute artificial barriers to the interstate practice and mobility of CPAs. Such barriers hurt New York CPAs disproportionately because the state of New York is the principal place of business or headquarters for many businesses and companies, a large number of which have out-of-state subsidiaries or plants.

The second purpose of the legislation is to clarify scope of practice. The current definition of scope of practice is vague, imprecise, and outdated and, therefore, needs to be clarified. Professions are established and regulated in law because the government has determined that it is in the best interest of the public to impose a minimum level of education and experience for those who hold themselves out as having special knowledge or skill in a particular area that serves the public. Since practice of the profession of public accountancy has changed dramatically over the past 50 years, it is important for the public to know more precisely the type of services that deserves public protection.

Of the many services currently being performed by CPAs, government intervention is clearly justified in those that are relied upon by the public, such as audits and other assurance services performed in accordance with professional technical standards. The proposed legislation replaces the current definition with one that clearly identifies the activities and services performed by CPAs that justify particular attention and regulation by the government.

As more CPAs provide their services to the public through nontraditional business entities, the law must be clarified for the public to know what type of services will be subject to government regulation.

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