June 2001

As the new president of the New York State Society of CPAs, I believe it is my role to speak out for our profession. The mission statement of the NYSSCPA includes promoting and protecting the interests of its members and the general public with respect to the practice of accountancy. The mission of a governmental body, such as the New York State Education Department (SED), is to protect the public interest and its constituents, which in this case are CPAs. So I was saddened and even a bit outraged by the survey, “Perspective on the Future of the Accounting Profession,” sent out in May by the SED under the direction of Deputy Commissioner Johanna Duncan-Poitier. The survey is clearly biased in its construction and so flawed that its interpretations are numerous. In short, the survey fails to serve the public interest.

Furthermore, the survey arrives too late. The survey’s purpose might have appeared more genuine had the department reached out to the entire licensed CPA community of New York for opinions on issues that could profoundly impact the profession prior to taking a legislative position. Outreach should be the basis for legislation rather than a rationalization for legislation, structured to elicit responses to support the SED’s own bill.

A two-page informational “summary of provisions contained in recent legislative proposals” accompanied the survey. Yet in this summary the Uniform Accountancy Act (UAA), a model of which is endorsed by the Society and currently awaiting action by the New York State Senate and Assembly, is never mentioned. Nor is it clear whether the department sought the insight and review of the questionnaire from its own advisory body for the profession, the New York State Board for Public Accountancy, before submitting it to all licensees. Therefore, those reading the survey will only be familiar with one position: the SED’s. Background information that only gives one side of the coin can greatly influence respondents’ answers.

I think we would all agree that the validity of any survey depends on the objective nature and clarity of the questions. Survey questions should be succinct and elicit a definitive yes or no answer. Otherwise, the results are unreliable.

For an example of a poorly written and ambiguous question, we need only look at question four on the survey—just one of many that left me puzzled. The question reads: Should the scope of practice of CPAs and PAs be amended to include all professional services they provide to the public or just attest and compilation services, no matter where they are employed?

As I scratched my head, I wondered which part of the question I was saying yes or no to. Was it the part concerning whether I think CPAs and PAs should be permitted to perform the same services? Or was the question really asking whether such services should be restricted to attest and compilation services? Then I thought, “Perhaps the survey wants to know whether I care if these services are performed based on whom someone worked for and where they were located.” As you see, I was forced to make my own determinations and answer the part I believed to be the primary intent behind the question.

The survey contained several other multiple-part questions. Question 11 asks: Should the exemption for mandatory continuing education for CPAs and PAs working in private industry, government or academia be removed from education law? The question is badly formed and fails to account for the possibility that I might favor exemption for only one of these groups instead of all three. Again, responses to this question should hardly be deemed reliable.

Other questions are blatantly biased. Take, for example, question eight: Should New York embrace the concept of substantial equivalency to make it easier for out-of-state CPAs to practice in New York even if this means lowering some of New York’s licensing standards? There are two underlying suggestions made here. First, is the idea that CPAs in other states are a competitive threat. Second, is the insinuation that substantial equivalency would somehow lower standards.

This stance is reinforced in the summary, which describes substantial equivalency as only permitting a CPA from another state to practice in New York, failing to mention substantial equivalency’s obvious benefit to New York licensees—permission to serve clients in other substantially equivalent states.

The summary is one-sided on other topics, too. With respect to the 150-hour accounting education requirement, the summary neglects to mention that the provision is a uniform licensing requirement under the model UAA, which has already been approved by 49 of 54 licensing jurisdictions. Instead, the summary states that “recent proposals have sought to reduce” New York’s high education standards, with some individuals suggesting that the reason for the decline in accounting graduates is the 150-hour requirement. However, there are no legislative proposals in New York to reduce the 150-hour accounting education requirement, which begins in 2009. Additionally, claims that the national decrease in accounting graduates is any higher in New York or has anything to do with the 150-hour requirement are unfounded. Rather, the national decrease in accounting graduates can be largely, and quite simply, attributed to the availability of higher paying jobs.

With respect to nonlicensee ownership, the summary fails to mention the UAA’s safeguard of mandatory peer review of CPA firms as a condition of renewal of firm registration. Mandatory peer review would strengthen the department’s oversight and enforcement of all CPA firms practicing public accountancy, including those with minority ownership by nonlicensees. Similarly, the summary excludes the significant fact that Regents’ Rule 29.10(b) already allows CPA firms to pay up to

35 percent of their annual net income to non-CPA employees (commonly referred to as principals).

I believe that the flaws in the survey are too many to validate any meaningful interpretation from the findings. Nevertheless, if you have not already replied, I encourage you to respond to the survey. Let your regulators know how you feel. And when in doubt, supplement your answers.