Experience Requirement Raises Member Debate

By George T. Foundotos, CPA

The proposed New York state legislation that incorporates provisions of the Uniform Accountancy Act is well on the way to enactment. We have a bill and prominent sponsors in the Senate, and the Assembly's leadership is finishing its review of our proposal. But there is concern from some NYSSCPA members that the membership was betrayed or ignored regarding the change to the experience requirement, which some believe was developed without members' consultation. Not true, not true at all. Let me explain the circumstances.

The act addresses three issues within the experience requirement: regulation of the firm, quality of experience, and recognition of the broad range of employment opportunities for accountants. Moreover, under the existing 150-hour regulation, the work experience already will be reduced from two years to one year once the 150-hour requirement takes effect in 2009. All we are doing is seeking to make it effective in 2005.

Currently, it is the firm that issues financial statements, not individuals, except where the firm is a sole proprietor. Yet the state does not regulate the firm. So, the act is strengthening oversight by regulating the individual and the firm--decidedly, an improvement. As we speak, the profession's standards setters are working on the quality of experience issue for those who choose to be attest qualified. For all practical purposes, the current requirement is a "time in grade" situation. Put in two years and someone signs. You may have done nothing but allowance for doubtful accounts exceptions, vouchering, tick and tie, and power tick--but you qualify.

Under consideration now is that the quality of the experience is more important that the quantity. As the standards setters work on this, they already have stated that they are using "one year" for discussion purposes only. Once they have established the quality, they will decide the time element. This could be a year, two, or perhaps nine months, or whatever. I remember what my experience was like at a small firm (the proprietor, secretary/bookkeeper, and me). This is a giant step in improving the quality of auditors and, consequently, audits and reviews--at least for those of us who choose to perform attest work.

And finally, the act recognizes the breadth of employment of accountants. Well over half of our members do not perform attest work. They are either in a firm doing tax work, valuations, or planning and the like or are in industry, government, education, or elsewhere. Attest work does not serve or mean anything to most of them, and recruitment of exceptional people to work for firms outside the attest arena is hampered by the old requirement. As attest work becomes less important to the practicing profession, this problem will become even more exacerbated.

In brief form, these are the issues we faced. There is more to it, but I don't want to write a book and you don't want to read a book, certainly not about accounting. Now let us discuss the process.

The process we followed was unprecedented in our Society's history. We visited all areas of the state at least three times and explained what we knew at that point in time. Those of you who participated will recall that I originally led the charge to maintain the sacred two-year experience requirement. I remember it well.

To cover all the bases, I also wrote to the other state society presidents and explained what we were doing. The intent was to elicit any support for the sacred experience requirement. None surfaced. At the October meeting of the AICPA council, the New York delegation mixed and mingled, and still there was no indication of any support outside of New York. I attended the four regional AICPA council meetings in March and continued the dialogue. The result is that there is no support for the old way. None of the other states could understand why we did not want to change.

Given this, I felt uneasy about submitting a bill to our Legislature that was out of step with the rest of the nation. You can be different provided there is a chance of getting others to follow. Being different without any support makes no sense.

The last chance to reconsider our position was at the Society's February board meeting. On my own motion, I invited Barry Melancon, AICPA president, to participate. I requested that his presentation concentrate on the experience issue only, and, if there was time, on the plain paper issue. He was introduced to the board with these stated ground rules. If the board chose to continue the discussion on its own, it could. If the board wanted to cast a vote, it could. Other than listening to Barry's presentation, the board was not obligated to do anything else.

Barry did his thing. The board asked questions and privately continued the discussion over lunch and during the remainder of the meeting. At the conclusion, the board decided to vote: The result was 24 to 3 to revert back to the original proposal of one year of relevant accounting and business experience to receive a certificate. The experience does not have to be under the supervision of a CPA; however, a CPA must sign off that the experience was relevant. If the CPA wants attest privileges, then the experience has to be in the attest arena or be in the attest arena after the one year of relevant experience. For discussion, we are saying one year, but, as mentioned above, the standards setters are still working on this aspect.

Folks, if this is not an open and accessible process and representative democracy, I do not know what is. We have fashioned an act that, while neither perfect nor acceptable to everyone in every respect, is in fact in the best interest of our membership, Society, and profession. If we do not change and accommodate the world and join with our brethren nationwide, we are doomed. Our brethren are every bit as competent and professional as we are. They have no problem with the experience segment of the act. We shouldn't either.