May 2001

Proposal to Allow Non-CPAs to Perform Reviews and Compilations Raises Serious Concerns

ALBANY—At the request of the New York State Education Department (SED), Senator Kenneth LaValle and Assemblyman Edward Sullivan have introduced legislation in both the state Senate and Assembly that will allow non-CPAs to perform compilation and review services contemplated by the Statements on Standards for Accounting and Review Services (SSARS) or any other standards acceptable to the SED. According to Senate bill S. 4108 and Assembly bill A. 7928, nonlicensees must use safe-harbor language (see page 12). The compilation or review may not be accompanied by any wording indicating that the nonlicensee is a CPA, public accountant, or auditor.

The introduction of the legislative proposal came as a surprise to many professionals associated with the public accounting profession. Louis Grumet, executive director of the New York State Society of CPAs, recently expressed his concerns over the bill, which appears to conflict with the NYSSCPA-supported bill modeled after the Uniform Accountancy Act, which would prohibit nonlicensees from performing attest services.

“The [SED] proposal is grossly inadequate in protecting the public from the unauthorized practice of public accountancy by persons who are not licensed as CPAs or public accountants and do not have the education, examination, experience, and professional skills of CPAs,” Grumet said.

The Society voiced its disapproval last month when Dennis O’Leary, NYSSCPA director of governmental affairs, wrote to Daniel Dustin, executive secretary of the New York State Board for Public Accountancy, criticizing the SED’s proposal to allow non-CPA performance of reviews and compilations. In the letter, O’Leary recommended that the legislation be reviewed by the board, which met on April 25. Board members discussed the legislation at the meeting but did not vote on the matter.

“The state board for public accountancy must look out first for the interests of the public, but also for the licensed professionals. We need to stand up for licensed practitioners to do SSARS reviews and compilations,” said state board member Barry Seidel, a former NYSSCPA president. “I’m not happy with the department of education offering legislation to allow nonlicensees to perform SSARS reviews and compilations. Reports by unlicensed individuals cannot be substituted for reports by CPAs who have knowledge through education and examination and two years of attest experience for licensure.”

Seidel further stated that, if enacted, the legislation would harm small grassroots CPA practices and fail to properly serve the public.

And because of the lack of a quorum, various board members asked for a full discussion of the issue at the next board meeting, which is scheduled to take place on June 20 in Albany.

Meanwhile, the Society is continuing its grassroots efforts to persuade state legislators to pass the UAA bill.

“At this stage we need our members to contact their state legislators and emphasize the importance of the UAA bill to the CPA profession,” O’Leary said.