Board Takes Stance on Post-Enron Accounting Legislation

By David Cho

NEW YORK—In the wake of increased governmental scrutiny of the accounting profession, the Board of Directors of the New York State Society of CPAs took a firm stance last month on proposed New York state accountancy legislation.

Citing a need for the Society to be vocal about legislation pending in both houses of New York state’s legislature, the board of directors unanimously approved a set of guiding principles for the accountancy profession and agreed that non-CPAs should be precluded from issuing compilations or reviews.

In arguing for the guiding principles during its March 19 meeting, NYSSPCA President Nancy Newman-Limata said, “To convince legislators to do nothing is not a reality. We have to offer something up that is constructive and that can be done at the state level.”

According to the guiding principles accepted by the board, CPA auditors may not (1) have a direct or indirect financial interest in their audit clients or a mutual financial interest with their audit clients; (2) perform management functions or make management decisions for their audit clients; or (3) audit their own work.

These principles were based on a set of basic ethical rules of accountancy that Jo Ann Golden, NYSSCPA president-elect, noted were “textbook, learned by all CPAs in accounting school.”

In a related matter, the board also took a hard line against proposals that would permit non-CPAs to perform services for which CPAs are regulated. The board wanted to foreclose the possibility that unlicensed laymen could possibly circumvent state regulations affecting the CPA profession.

“For the past three years, our membership almost unanimously told us we don’t want unlicensed professionals doing compilations or reviews,” said Society Vice President for Chapters G. William Hatfield.

In a motion proposed by Hatfield, the Society’s board resolved to oppose any legislation that would allow non-licensees to issue reviews and compilations.

Other major issues the board acted on during last month’s meeting, held at the Society offices in New York City, included approval of the NYSSCPA operating budget for the 2002-03 year, the termination of nonpaying members, and an affirmative nod for the future of accounting education.

The unanimously approved budget for the 2002-03 fiscal year, hammered out and refined after four separate meetings of the Society’s Executive Committee and two additional Foundation for Accounting Education (FAE) Trustees meetings, included a number of department and program cuts and a consolidation and restructuring of membership dues categories.

As the Society is working to improve its educational programming, and is committed to professional recruitment and advocacy for the CPA name, the board voted to raise membership dues to cover the increased costs associated with these strategic objectives. The new dues structure, which varies according to membership class, also reflects a conscious decision to reduce dues for younger members.

Revamping the Society’s member education programs resulted in one of the biggest changes in the budget. For the coming year, FAE has focused on seminar and conference programs in key topics of interest to CPAs throughout New York. FAE also has decided to add registration fees for evening technical sessions and avoid canceling courses once a minimum number of members register. The moves are to ensure that members receive a larger number of courses in a range of popular topics. For more information on the Society’s education programs see the front-page story titled “Foundation Establishes Plan to Better Meet Members’ Educational Needs.”

The board also agreed to cut more than 1,300 CPAs from the Society’s membership list. The decision to terminate the CPAs, who have not paid their membership dues, came after repeated unsuccessful attempts since 2001 to contact them. The decrease in membership was offset by the board’s acceptance of 424 new members.
The NYSSCPA Board of Directors will next meet during the Annual Leadership Conference, scheduled for July 14-16 at Mohegan Sun Resort in Connecticut.