December 2000

By P. Gerard Sokolski, CPA

The last month has been an interesting one for the profession, with plenty of issues raising questions for the membership. Since the American Institute of CPAs’ Council meeting in Las Vegas in October, many of our members have been interested in learning more about the proposed international business credential that has been called XYZ and Cognitor.

In November, the AICPA was active in discussing issues related to the proposed business credential. Last month, John Hunnicut participated in a live national webcast that was designed to discuss the designation and other current AICPA initiatives. The meeting, hosted by TVAccounting.com, featured a panel including a proponent of the credential, John Hunnicut, AICPA senior vice president of public affairs, and a very vocal opponent of the AICPA’s international initiative, Michael Rosedale, the chief executive of CPAdirectory.com.

The forum was intended to help clear up some common misconceptions about the credential and explore some of the concerns shared by CPAs. The webcast allowed Hunnicut and the other members of the discussion to interact with not only New York CPAs, but also CPAs from across the country.

AICPA President Barry Melancon also went public to help explain the AIPCA’s position on the new credential and other current AICPA initiatives. Melancon graciously accepted the joint invitation of the Suffolk and Nassau Chapters to be the guest speaker at a breakfast meeting.

The meeting drew a number of curious NYSSCPA members including past president and former leadership conference chair Barry Seidel, who asked Melancon during a question-and-answer session about the effect the United Kingdom’s withdrawal from the international credential’s task force might have on the development of the credential.

One thing the meeting did show was that New York CPAs do have questions and concerns about the AICPA’s present course. Because of this, the NYSSCPA Executive Committee recently approved a plan to ask you, the membership, what you think about a number of issues related to the AICPA’s planned international credential.

In January, a 25-question survey will be sent to the membership asking for your thoughts and opinions on what the AICPA is currently doing. According to Victor Rich, the chair of the Furtherance Committee, which recommended the survey, the Society will take the results of the poll to see if there is a consensus among the membership as to the global business designation.

Rich believes the Society can get important feedback from the membership that the New York delegation can use when the global designation comes up for a vote at the AICPA’s spring Council meeting.

So I encourage you to complete the survey and send it back to the Society. You can complete the survey online at www.nysscpa.org in January.

The Society is also busy getting ready for the 2001 legislative session. Last year we helped introduce legislation that would update the accounting laws for New York in May.

Though not voted on last year, the proposed legislation included revisions that would have incorporated the concepts of the Uniform Accountancy Act (UAA), developed by the AICPA and the National Association of State Boards of Accountancy.

Next month, the Society expects to see the accountancy bills reintroduced. The new bills are expected to include many of the revisions that last year’s bill called for, including early adoption of the 150-hour requirement for the CPA exam, continued support for non-CPA ownership, and adopting the concepts of the UAA.

Turning from state legislation to federal regulations, the Securities and Exchange Commission came out with its final ruling on the revised standards for auditor independence last month. The Commission’s final version differs significantly in some areas from its proposed regulations, which had been hotly debated and discussed for months since their release last June.

One big difference in the final version is that auditing firms will not be prohibited from offering nonaudit services to audit clients, with the exception of operating or supervising the operations of the client’s information technology systems. A firm will be able to continue to provide IT consulting services to an audit client provided the client’s management informs its audit committee. The originally proposed rules would have banned audit firms from offering consulting services to their audit clients altogether.

Another major change, championed by the Society through President-Elect Nancy Newman-Limata and Vice President Jo Ann Golden during their testimony in front of the SEC, is the relief for smaller SEC registrants who depend on outside auditors to do their internal audits. The final regulations require SEC registrants to have less than 40 percent of their internal audit work to come from outside auditors, yet the regulations exempt SEC registrants with revenues less than $200 million from this requirement, allowing outside auditors to perform more than 40 percent of the internal audit work for these smaller clients.

Also, requiring the “four principles governing auditor independence” to be requirements, a source of controversy in the original proposal, has been removed from the text of the rule. Instead, the SEC plans to publish these principles in their preliminary notes to the regulations.

On a final note, for those of you who like chocolate, the Society’s Annual Leadership Conference will be held in “Chocolate Town, USA” this summer. Barry Seidel has not only been busy questioning Melancon on the global credential, but has also been hard at work getting ready for the conference, which will take place in Hershey, Pa.

The Annual Conference and the Annual Leadership Meeting, which were held separately in years past, are being combined in the coming year as one big Annual Leadership Conference. Seidel has done a fine job picking the site and making sure the two annual events work well together as one meeting.

A lot of important information will be discussed at the conference, including an update on the latest things going on at the Society and the AICPA. The conference is expected to include leadership activities and social events, including a conference run and a golf tournament, as well as a look into “business-to-business” e-commerce developments.

So make sure to mark June 9–12 on your calendars and get ready to see plenty of chocolate at the meeting in Hershey, Pa.