SED Seeks Regulatory Reform

SED Seeks Regulatory Reform
Officials Won’t Wait for Legislation

By Simon Eskow

Continued from the Home Page

Duncan-Poitier asked the board at its Nov. 10 meeting for cooperation in approving draft regulations that they would submit to the Board of Regents by early 2005. The board, in its capacity as advisory body to the Regents, would give the package more thrust. But members of the board questioned how much the SED could do through regulation changes.

“The Board supports the effort to advance as far as possible,” said Accountancy Board Chairman J. Dwight Hadley. He asked what could be done separate from legislative action.

Accountancy Board Executive Secretary Daniel Dustin said that scope of practice and the registration process could not be modified without changes to law. Attorneys with the SED have investigated areas that could be changed without legislative action, he said.

Legislative efforts to reform accountancy have frustrated more than just the SED. Earlier this year, a New York State Society of CPAs-supported bill (S-302d) passed in the state Senate and was referred to the Assembly. But Assembly members proposed another bill in its place in the last few days before the legislature went into summer recess. A swift and strong e-mail and telephone campaign by Society members helped to stop the Assembly bill in its tracks.

“The Society feels the same way the SED and the Board feels, which is we need meaningful reform, and last year all parties worked more closely together than we ever have,” said Board Member Jeff Hoops, former NYSSCPA president. “There was frustration when we didn’t get the legislation….While we were willing to negotiate, there was more in the Senate bill than in the Assembly bill that would have protected the public.”

What the Accountancy Board and SED decide to do in the coming months may depend on where they see their authority to overhaul regulation, a question that seemed unsettled during the meeting.

“We’ve all asked where we can move,” Dustin said. “Some things are pushing the envelope of where we can go (with regulations).”

Frank Munoz, an attorney with the SED, said other states had approached accounting reform from the regulatory side.

“An agency has the right and responsibility to implement legislation,” Munoz said. “The issue is, will we develop regulations that cross a line?”

Munoz added that he personally was not ready to concede that the Board of Regents didn’t have jurisdiction over scope of practice.

A particular change to regulations that officials will explore would state that if a federal regulator, such as the Securities and Exchange Commission, disciplines a licensee or firm, the state would consider them guilty of professional misconduct. Current regulations require the SED to prove its case against a firm or licensee by a preponderance of the evidence, including cases where a consent decree was signed with another regulatory body.

Some Board members objected to the possible lack of due process for the firm or licensee, particularly where the licensee or firm did not admit to any facts in drawing a consent decree with the federal agency.

Munoz said that without some new provision, the state would not be able to investigate 90 percent of the cases that regulators refer to them. He added that this particular provision was a “work in progress.”

Officials said that they hoped the Board would come to a consensus by January so the SED could recommend a body of regulation changes to the Board of Regents for final approval by June.