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| September, 2003 | The
Monthly Newspaper of the NYSSCPA |
Vol.
8, No. 9 |
Society to Share Ethics Complaints with Regulatory Authorities
Bylaw Change Gives Ethics Process More Bite
Continued from the Home Page
Previously, the PEC had no authority to communicate such information to regulatory agencies, which may have only learned of ethics violations by NYSSCPA members upon publication in The Trusted Professional of the findings of an investigation that resulted in suspension or expulsion.
“This bylaw change enables us to cooperate more effectively with regulatory authorities. This is really a matter of treating them as a partner to the state Society in maintaining the high quality and integrity of the profession,” PEC Chair Ian J. Benjamin said. “This is very important. We are selling our integrity every day and we need to maintain that at the highest level.”
There are a number of scenarios that automatically result in disclosure by the PEC to regulatory authorities, including the New York State Education Department, which licenses CPAs in the state. These include, but are not limited to, the following:
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After a request has been granted to a member to defer the investigation by the PEC
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After a member fails to cooperate with the PEC
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If a complaint is referred to the Joint Trial Board or Society trial board. The Joint Trial Board is comprised of members of the
American Institute of CPAs and participating state societies, including the NYSSCPA.
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If an investigation results in suspension or termination of membership
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After a settlement agreement has been entered into between a member and the PEC
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After a letter of required corrective action has been accepted by a member.
The bylaw also empowers the PEC to inform regulatory authorities of an investigation “on any other occasion” the PEC deems appropriate. In the event that the PEC concludes that an ethics violation did not occur, the investigation and initial complaint typically will not be shared with regulatory authorities.
According to Benjamin, the bylaw will allay the concerns of those who believed the Society’s and the AICPA’s ethics systems lacked the ability to address cases in a timely manner and make decisions with meaningful consequences. Not only does the bylaw allow the Society to be a “major player” in the preservation and assurance of the high quality of the CPA profession in New York state, Benjamin feels it also significantly increases the value of NYSSCPA membership and its code of ethics.
Though the PEC now has the authority to put regulatory agencies on notice of professional conduct matters concerning members, Benjamin stressed that the confidentiality of these matters will remain intact, with the Society publishing only those cases that result in termination or suspension. He further pointed out that despite the new information-sharing arrangement, the regulatory authorities already are aware of the most egregious cases and through subpoena power could obtain the PEC’s case documents regardless of the bylaw. Additionally, many of the ethics complaints are brought to the PEC’s attention by state and federal regulators, as well as by disgruntled clients, successor accountants and clients’ attorneys, among others, he said.
“Most CPAs have always understood the importance of ethics to the accounting practice and continue to do so,” said Benjamin, a managing director with American Express Tax and Business Services Inc. But, in his opinion, the financial reporting scandals of the last several years have increased the profession’s sensitivity to ethics and placed more significance on monitoring and enforcing the code.
“The vast majority of CPAs are ethical,” Benjamin said. “It’s the rare exception that gets the attention.”
The PEC is in the process of developing procedures to best implement the new bylaw requirements and plans to hold discussions with regulatory authorities, including the state education department, to inform them of the change.
