NASBA Lauds NYSSCPA Ethics Bylaw

NASBA Lauds NYSSCPA Ethics Bylaw
Others Should Share Disciplinary Info with State Boards, Too

Continued from the Home Page

The National Association of State Boards of Accountancy is urging its members to promote the policy in CPA societies in their jurisdiction. The association’s board of directors approved the motion at its October meeting, citing a recent change to the New York State Society of CPAs’ bylaws adopting referrals of discipline cases.

According to a statement submitted to the Society, the NASBA board “approved a motion…urging all state boards to promote their state’s CPA society’s adoption of bylaws changes similar to those passed by the New York State Society of CPAs that provide for referrals of discipline cases to the state board.”

“We applaud the Society for taking the lead and being the first to do this,” NASBA President and CEO David Costello said. “We think this is the way it ought to work. We’re working to try to motivate the (American Institute of CPAs) and other societies to follow the example of New York.”

The NYSSCPA approved changes and additions to the Society’s bylaws in July. These included the addition of a rule that puts an onus on the NYSSCPA’s Professional Ethics Committee (PEC) to refer certain professional conduct matters to the New York State Education Department and “any other applicable state or regulatory agency” under certain circumstances, such as when a member fails to cooperate with a PEC investigation or after the member enters a settlement with the PEC.

As of this writing, the NYSSCPA is the only society in the United States to have such a policy.

Costello said his organization had worked with some societies and the AICPA in the past to develop similar policies. NASBA task forces recommended encouraging the societies to adopt disciplinary referrals in their bylaws, and included a measure in the organization’s recently released guidelines on compliance with the Sarbanes-Oxley Act at the state level.

“We in the profession have said for years that we’re self-regulated, but sometimes we don’t act that way,” Costello said. “This time we’ve really put our action where our mouth is, and New York has done the profession a tremendous credit…(and) New York has put (states) in the position where they have to do something.”

So What’s the Scenario?

Under the Society’s bylaws, a number of scenarios automatically impel the NYSSCPA’s PEC to refer cases to regulatory authorities. Aside from member’s lack of cooperation with a PEC investigation, or coming to an agreement with a PEC, referrals happen after a request has been granted to a member to defer a PEC investigation.

Complaints that are referred to the Joint Trial Board (composed of members of the AICPA and participating state societies including the NYSSCPA) or Society trial board are forwarded. Serious cases that result in suspension or termination of Society membership also are forwarded, as well as cases where a letter of required corrective actions has been accepted by a member.

For more information on the bylaw, see the story “Society to Share Ethics Complaints with Regulatory Authorities” in the September 2003 Trusted Professional.