September 11, 2001—A Word from the Society’s President My heartfelt condolences and prayers go out to the families and friends of victims of the World Trade Center, Pentagon and rural Pennsylvania disasters. On behalf of the Society, I would like to express our deep sense of gratitude to the firefighters, police and others aiding in the rescue efforts. It has been a time of horror and of profound sadness, yet the spirit of New Yorkers has shown through like a beacon of hope - people helping neighbors and strangers alike, bound by the common tie that New York is our home.

Take Advantage of Free CPE

Getting something for free is rare in life, especially when it is something that you can really use. Taking this into account, the New York State Society of CPAs has decided to give its members something that can be of great benefit to them. During upcoming chapter officer visitation meetings, the Society will offer two free credit hours of continuing professional education (CPE) in the area of ethics. And this will come in handy because beginning Sept. 1, 2001, the New York State Education Department started mandating that all licensed CPAs earn a total of four CPE credits in ethics during a single three-year licensing cycle.

We are all sensitive to allegations of auditors involved in fraud and accusations of a lack of independence and integrity. Therefore, we must reaffirm our commitment to protecting the public’s interest. Ethics rulings and interpretations are regularly promulgated by the American Institute of CPAs and state societies. Independence rules have recently been restructured by the Securities and Exchange Commission and the AICPA; and the General Accounting Office is in the process of analyzing comments it has received on its exposure draft pertaining to independence.

The AICPA currently has eight task forces active in its Professional Ethics Division. Add to their work a plethora of other laws such as the Federal Trade Commission’s regulations on privacy disclosures, not to mention the AICPA’s and New York state’s codes of professional conduct, and the body of information on ethics is overwhelming. However, staying abreast of the latest changes to regulations and doing everything in one’s power to not run afoul of an ethical conflict are just part of what it means to be a CPA.

So I am very pleased that Camico Mutual Insurance Company, the Society’s exclusively endorsed liability insurance company, is sponsoring the free course “Where Ethics and Liability Cross Paths.” The intent behind the course is to remind us of the rules and ensure that we manage our business risks within an ethical framework.

And just in case you think you’ve got ethics down pat, ask yourself the following questions: When was the last time you checked the code of conduct? Do you know where to find New York state’s code? Do you ever bother to look at the ethics and regulations Q&As in The Trusted Professional? Do you know who to call if you have an ethics inquiry? Do you know where to go with an ethics complaint? Do you know what JEEP stands for?

New York’s Code of Professional Conduct can be found on the Society’s website at nysscpa.org under the link Professional Resources. The rules of professional conduct include:

Rule 101	Independence
Rule 102	Integrity and Objectivity
Rule 201	General Standards
Rule 202	Compliance with Standards
Rule 203	Accounting Principles
Rule 301	Confidential Client Information
Rule 501	Acts Discreditable
Rule 502	Advertising and Other Forms of Solicitation
Rule 503	Commissions and Referral Fees
Rule 505	Form of Practice and Name

Note that, as interpretations have been developed by both, AICPA rulings and New York state rulings differ in some areas.

Real-life situations with ethical complications can arise at a moment’s notice. Here are but a few examples. An unknown soon-to-be ex-spouse of a divorcing tax client showing up on the doorstep and demanding copies of returns as well as backup presents an ethical dilemma. So too does the discovery of a fraud committed at a client company that also impacts your largest financial institution client. An e-mail mistakenly sent to you that suggests that an earlier representation management made is not reliable poses difficult questions.

Other situations with ethics-related issues appear on a less regular basis but have significant business implications. For example, when is it appropriate to sign a client confidentiality agreement? What kind of safeguards should be in place if two of your clients enter into a business transaction? Can you represent both clients in such a case? What do you do if you receive a request for client information from a third party? Knowing how to handle these situations can help avoid embarrassment and problems, underscoring the need for courses like the one Camico is sponsoring.

Responsibility for working papers is another potential morass of ethical problems. Situations arise when firms split up, clients leave, or bills are not paid. Determining when to allow third parties to look at working papers, which papers to permit for review and, in return, what type of protections should be set up are fraught with ethical considerations.

Commissions, contingent fees and referral fees can create a quagmire of potential ethical confusion, too. While a CPA may be permitted to accept a commission or referral fee from a client under AICPA rules, he or she may not be permitted to do so in New York, dependent on the types of services being performed and the written disclosures provided in connection with the services.

I know I’ve raised more questions than I’ve answered, but I think I’ve proven my point that ethical conflicts are around every corner and you must be prepared to handle them. Therefore, take advantage of a free opportunity—they don’t come around that often—and attend the CPE session. For more information, contact Sheila Griffiths, downstate chapter manager, at (212) 719-8391, sgriffiths@nysscpa.org, or Xiomara Fox, upstate chapter manager, at (212) 719-8395, xfox@nysscpa.org. You may also reach them by calling (800) NYSSCPA.

president@nysscpa.org