State Board Speaks Out Against SED Proposal to Allow Reviews and Compilations by Non-Licensees

By Jay Dismukes

ALBANY—Members of the New York State Board for Public Accountancy on Feb. 18 sent a loud message to the New York State Education Department (SED) to remove from proposed legislation (S.4108 LaValle/S.7928) a controversial provision that would allow non-licensees to perform services currently reserved for CPAs.

The proposal provides that the non-licensee may “perform compilation and services contemplated by the ‘Statement on Standards for Acccounting and Review Services’ (SSARS) or any other standard acceptable to the department” so long as specified safe harbor language is used.

The New York State Society of CPAs has vigorously opposed the provision, maintaining that review and compilation services must be performed only by licensed CPAs and licensed public accountants, and that so-called “safe harbor language” is not sufficient to protect the public interest. The Society testified on this point at a public hearing held by the New York State Senate Higher Education Committee on Feb. 6.

“CPAs who report on financial statements of clients for third parties are held to a high standard of education, relevant experience, examination, licensure, registration, professional standards, ethics codes, and disciplinary processes,” stated written testimony submitted to the committee. “The NYSSCPA has supported all these regulatory checks and balances and is poised to work for significant extensions and strengthening of the current regulatory environment. Allowing unregulated individuals without such qualifications to offer similar services seriously misleads the public and undermines the integrity of the services offered by the regulated professional. The NYSSCPA has consistently opposed allowing unregulated individuals to perform such services and again requests that New York state aggressively enforce statutory prohibitions against the unlicensed practice of public accountancy.”

An organization known as the National Coalition for Affordable Accounting has worked against Society efforts in Albany to protect the franchise of CPAs. Support for the non-licensees in the SED’s legislation has also proven to be an obstacle to the NYSSCPA’s work.

But, state board member John P. Laschenski moved at the Feb. 18 meeting to call upon the SED to delete from its legislation the provision that would authorize non-licensees to perform reviews and compilations with safe harbor language.

Laschenski strongly advocated for passage of his motion on the basis that the removal of the non-licensee practice language from the bill would assist the Society in its lobbying efforts to limit the performance of reviews and compilations to only CPAs and licensed public accountants. The motion passed unanimously.

State Board Executive Secretary Daniel J. Dustin noted that the SED is neutral on this issue, but Laschenski persisted with his motion because the bill now sends the wrong message to legislators.

“I’m very grateful for this courageous action by the state board,” said Louis Grumet, NYSSCPA executive director. “It will support our message to legislators that compilations and reviews be performed only by licensees. In the post-Enron era, when the legislature is considering legislation to raise the quality bar for the CPA profession, we must certainly protect the public against performance of reviews and compilations by non-licensees.”