July 2001

Society Opposes Legislation to Allow Non-CPAs to Perform Reviews and Compilations

NEW YORK—New legislation, bill S.5628, has been introduced into the State Senate that will allow non-CPAs to perform compilation and review services so long as the nonlicensees use safe-harbor language. Two other bills were introduced earlier in the legislative session to allow nonlicensees to perform reviews and compilations, one at the request of the New York State Education Department, S.4108/A.7928, and the other, S.3264/A.6487, as supported by the National Coalition for Affordable Accounting (NCAA). According to S.5628, the compilation and review may not be accompanied by any report or wording indicating that the nonlicensee is a CPA, public accountant, or auditor, or that the compilation or review was performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS). The new legislation is unacceptable to the New York State Society of CPAs.

On June 20, NYSSCPA Executive Director Louis Grumet expressed the Society’s opposition to S.5628 in a letter directed to Sen. Kenneth P. LaValle (Suffolk), who introduced the bill.

“Reviews and compilations are vitally important components of the CPA professional franchise, which the laws of New York entrust to the CPA profession to serve the public interest. We intend to vigorously defend the CPA franchise from encroachment by nonlicensees,” Grumet said. “Reports on financial statements must be reserved to CPAs who have the education, examination, experience and professional skills worthy of reliance by the public, business community, nonprofit organizations, government agencies and other third parties.”

To help the Society prevent nonlicensees from providing CPA services, Dennis O’Leary, the Society’s director of governmental affairs, said NYSSCPA membership involvement at the grassroots level is crucial.

“The lobbying effort on behalf of nonlicensees is being led by an organization known as the National Coalition for Affordable Accounting. Society members throughout New York state must contact their state legislators with one single message: ‘We oppose all legislation to allow non-CPAs to perform reviews and compilations,’” O’Leary said. “The CPA profession must speak up for the best interest of the profession and the public interest.”

Members of the New York State Board for Public Accountancy discussed and raised many questions regarding S.5628 at the board’s June 20 meeting. Board member Samuel Gunther said the bill’s language appears contradictory. In particular, he noted the component of S.5628 that would allow nonlicensees to perform “reviews,” but calls for a safe harbor statement that the nonlicensee has not reviewed the accompanying financial statement.

Board member Barry Seidel reiterated the position he took at the board’s April meeting. “The public interest is our main interest and nonlicensees should not be allowed to perfom compilations and reviews,” he said.

Kevin J. McCoy, the Society’s vice president for legislation, and O’Leary also spoke at the meeting and emphasized the Society’s opposition to the performance of reviews and compilations by nonlicensees.

“The model UAA limits nonlicensees to preparation of financial statements only with safe harbor language and does not authorize them to do reviews and compilations. New York should not go beyond the UAA standards regarding nonlicensees,” said McCoy, referring to Senate bill S.2456 and Assembly bill A.4445, which specifically prohibit nonlicensees from engaging in the practice of public accountancy. “I hope the New York State Board for Public Accountancy will stand with us against the lobbying efforts for nonlicensees by the National Coalition for Affordable Accounting.”