New York Discussion Heats Up on Proposed Computer-Based CPA Exam

NEW YORK—Charles (Chuck) Schoff chair of the New York State Board for Public Accountancy, is a man who speaks his mind. Currently, he is letting it be known that he is upset with the National Association of State Boards of Accountancy (NASBA), which is negotiating with the American Institute of CPAs (AICPA) and for-profit vendor Prometric for a contract to provide a computer-based CPA exam for a November 2003 start-up. Schoff recently indicated that he believes the negotiations are riddled with conflicts of interest.

During an Oct. 31 state board meeting, Schoff noted that Prometric has agreed to loan $10 million to the AICPA and $3 million to NASBA. Having practiced public accountancy for more than 20 years, Schoff said he does not accept NASBA’s assertion that a Prometric loan to NASBA is justified because without it, the association would have to use its own investment funds to implement the computer-based test.

At the state board meeting, Schoff reported on the events of the NASBA Annual Meeting held from Oct. 14-17, in which the computerized CPA exam dominated the agenda. Schoff said NASBA failed to produce a draft contract for the computerized exam at the meeting despite a promise to do so at its May 10 Examinations Conference. Instead, NASBA made a new promise to provide state boards with a draft contract by Nov. 30. NASBA delegates are to convene in Atlanta on Jan. 9, 2002, to consider the contract.

“They can’t cope with alternative points of view,” said Donald F. Johnson, a state board member, after hearing Schoff’s report. However, Johnson said he believes the final contract “will be close to what we want.”

NASBA is attempting to negotiate a contract that is acceptable to all 54 jurisdictions. Any single issue can be a deal breaker and one deal breaker is a “conflict of interest,” added Johnson. “If there is no contract with the AICPA and Prometric for a computerized examination, then there will be a Request for a Proposal (RFP),” he said.

New York’s concerns about the development of the computerized CPA exam were evident last April. At that time, the state board adopted a resolution calling on NASBA to notify the AICPA to suspend all activities related to the November 2003 computerization of the exam. The resolution also asked that NASBA issue RFPs to develop and maintain the exam as well as deliver it.

At the April meeting, Eileen Persoff, then chair of the state board’s Examination Committee, noted the following points regarding examination administration (excerpt from minutes of state board meeting):

A financial conflict of interest potentially exists between [the] AICPA and Prometric, a subsidiary of the Thompson Company. Thompson, the AICPA’s joint venture partner, recently invested $50 million in the AICPA’s web portal. The AICPA contracted with Prometric without consulting the licensing boards.

California’s delegate offered a resolution at the NASBA annual meeting that stated in part: “NASBA shall be authorized to sign the Agreement (computerized-based examination agreement) provided that two-thirds of the state boards have voted to approve the Agreement at [the Jan. 9] special meeting.” However, this resolution was not voted on at the annual meeting and instead NASBA agreed to an “advisory vote” of the state boards at the Jan. 9, 2002, special meeting.

Approximately 25 percent of CPA candidates nationwide are in New York and California, yet both states hold only one vote each in NASBA.

The state board has a responsibility to the public and is concerned about the cost, control, confidentiality and the contract related to a computer-based CPA exam. According to Persoff (excerpt from June 20 board minutes), “Four sections are proposed for the new computerized examination: Auditing and Attestation, Financial Accounting and Reporting, Regulation and Business Environment and Concepts. The latter is a new section that will comprise 40 percent of new material that covers areas such as organizational structure, finance, information technology, cost accounting, planning/budgeting, e-commerce, etc.”

The state board has scheduled its next meeting for Dec. 18 to review the draft contract between NASBA, the AICPA and Prometric, presuming that it receives the document by Nov. 30, as promised by NASBA.