Albany Verges on Accountancy Reform Laws

Albany Verges on Accountancy Reform Laws
Signs of Compromise as Summer Recess Nears

By Simon Eskow

Continued from the Home Page

Meanwhile, two committees in the Assembly moved along in the legislative process a package of accounting and school audit reform bills that were introduced in May.

The Assembly’s actions and the Senate’s planned vote signaled a distinct possibility that lawmakers could come together to produce the first overhaul of state regulation of the profession in close to 60 years, and reform of fiscal management of public schools. But legislators will have to move quickly in order to emerge from the current legislative session with such laws in place before the summer recess begins in late June.

“I think this certainly gives an opportunity for some compromise to be reached and some discussions to look at the differences and come to some resolution as to appropriate language,” said Kevin McCoy, a former member of the New York State Society of CPAs’ Legislative Task Force. “There’s a possibility that if sufficient work is done and changes are made to both versions, we certainly are likely to have some legislation this year. The session’s ending soon, which gives us only so much time.”

The Education Committee early in the day held a meeting on the Assembly’s school audit reform bill—A-6082, sponsored by Assemblyman Thomas DiNapoli (D-Great Neck)—before referring the bill to the Ways and Means Committee.

The Higher Education Committee later in the day referred A-8358, sponsored by Assemblyman Ron Canestrari (D-Cohoes), and the linchpin of the Assembly’s reform package, to the Codes Committee. Canestrari said that the Assembly and Senate were working on a compromise on the legislation.

That bill differed significantly in certain aspects from the LaValle bill, which the NYSSCPA has supported in previous incarnations. (Last year, the Senate approved and referred an earlier version of LaValle’s bill—S-302-d—to the Assembly, which opted to push an earlier version of Canestrari’s bill instead. The Assembly then failed to act upon Canestrari’s bill before the end of the 2004 session.)

While both bills currently percolating in the legislature aim to expand the scope of practice, reduce conflicts of interests between auditors and their clients and implement mandatory peer review, the Canestrari bill allows for non-CPAs to perform compilations, as long as they don’t hold themselves out to be CPAs. The Society has opposed similar provisions in the past.

The Assembly bill also bans any firm from performing an attestation for a public company or government entity if “the lead or coordinating attestation partner having primary responsibility for the attestation, or the attestation partner responsible for reviewing the attestation, has performed attestation services for that (client) in each of the five previous fiscal years.”

A similar provision in the assembly’s school audit bill—A-6082, sponsored by Assemblyman Thomas DiNapoli (D-Great Neck)—would require school districts to issue a Request For Proposal for audit services lasting no longer than five years. The district would be able to continue to use that firm for another five years, however, if it determines that there are no other “independent certified public accountants or independent public accountants within a reasonable geographic region.”

This kind of audit-firm rotation requirement, the five-year extension notwithstanding, has worried practitioners, who foresee the cost of audit services rising for school districts in far-flung reaches of the state if they are forced to seek out new firms.

“This is going to be onerous for the small schools,” said Barbara Dwyer, an NYSSCPA director and member of the Adirondack Chapter. “What’s going to happen is, if you have to put the bidding out, you drive up the price for travel time alone.”

Similar objections were raised during the Education Committee’s brief hearing. Others said the extension would provide the necessary relief to school districts that are geographically spread thin.