Board of Directors Takes on UAA

Member Input Needed for October Vote

By Joanne S. Barry

On October 6, the NYSSCPA Board of Directors will vote on the provisions of the Uniform Accountancy Act. George T. Foundotos, Society President, has called for input from all segments of the membership as the leadership defines the Society's position.

Foundotos kicked off statewide discussion of the UAA at the June Board meeting. He has travelled to chapters throughout the state and has also solicited feedback from committees.

"The goal of the UAA is to allow CPAs to compete in a changing financial world while holding on to our core values of independence, objectivity, and integrity," said Foundotos. "We need to know how our membership feels about these provisions so we can define a position that best represents CPAs in New York."

The UAA, a collaborative effort of the American Institute of CPAs and the National Association of State Boards of Accountancy, addresses the acceptance of commissions, CPE requirements, CPAs working in non-CPA firms, regulation of CPA firms, experience for attest services, and other issues. Specifically, the Society's leadership seeks member input on the following provisions:

* Substantial Equivalency. Substantial equivalency means that the education, examination, and experience requirements of a jurisdiction are comparable to, or exceed, the education, examination, and experience requirements in the UAA. If a jurisdiction meets the test, its CPAs can offer services in other substantially equivalent jurisdictions without obtaining a permit to do so. If, however, a firm opens an office in a new state, the partners in that office would be required to obtain a license in that state. Substantial equivalency should ease the process of obtaining reciprocity.

* Experience Requirement. Under the UAA, there would be a one-year experience requirement for licensure. (The NY Board of Regents already approved shortening the experience requirement to one year with the recent approval of the 150-hour curriculum requirement.)

Under the UAA, CPAs doing attest work will be required to meet the experience requirements as established in the applicable professional standards. CPAs not doing attest work can have their one-year's experience in nonattest work. Nonattest experience can be earned while in industry or working for a non-CPA firm. Nonattest experience need only be "verified by," i.e., need not be under the supervision of, a CPA.

* CPAs Practicing in Non-CPA Firms. The UAA permits CPAs to practice in non-CPA firms so long as they do not offer attest services. The "holding out" approach in the current regulations has been rejected by the courts as being a violation of CPAs' freedom of speech. This provision is key to permitting companies like American Express to employ CPAs and offer nonattest services traditionally performed by CPAs.

* Non CPA-Ownership of CPA Firms. Currently, New York requires CPA firms to be 100% owned by CPAs, although non-CPA "principals" may have up to a 35% interest in the income of the firm. The UAA would require that CPAs own a simple majority of the firm (in terms of both financial interest and voting rights). All partners need to be active in the firm.

* Commissions. The UAA conforms to the arrangement worked out by the AICPA and the Federal Trade Commission several years ago, to allow disclosed commissions with regard to nonattest clients. For these purposes, compilations for which the accountant is not independent (perhaps because of receiving a commission) are not considered attest engagements.

* CPE. The UAA requires that all CPAs, regardless of specialty or employment take an average of 40 hours of CPE a year and a minimum of 20 hours each year.

* Peer Review. The UAA requires all CPA firms that provide attest services to have peer reviews. NYSSCPA staff estimates that between 80% and 90% of New York CPA firms are in the existing peer review program.

* CPA=CPA. All individuals wishing to publicize their CPA credential would be subject to the same licensing requirements, even if not offering services to the public. The most significant aspect for CPAs not providing services to the public is the CPE requirement for maintaining the license.

The Society's Board of Directors encourages members to provide their views on the UAA by responding to the survey accompanying this article or online at www.nysscpa.org. Chapters and selected committees will provide additional input. Members also can write to President George Foundotos, NYSSCPA, 530 Fifth Avenue, New York, NY 10036-5101, or e-mail him at president@nysscpa.org.

The Board will meet on October 6 to vote on each of the provisions and will study the input received from chapters, committees, and all other members who respond. A complete report on the Board's actions
will appear in the November issue of The Trusted
Professional. *