December 1999

Industry CPAs Support Changes to CPE and Licensure Requirements

CPAs from diverse industries testified before the New York State Assembly on November 16 on A. 8600, the proposed legislation to update the state's accountancy law. Witnesses addressed issues such as mandatory CPE regulations, licensure requirements, and the CPA designation.

Industry No Longer Exempt from CPE

"Continuous learning is important to us in industry," said Rudolph L. Hertlein, senior vice president of corporate development at Viacom, in support of the Assembly bill's expanded CPE requirement for industry CPAs. "We need our industry professionals to be up-to-date on various subjects. We at Viacom have a tax compliance department with over thirty people to prepare federal and various state returns. They need continuous learning and the added benefit of being a CPA."

The current state law mandating CPE calls for 40 hours of "acceptable formal continuing education" or 24 hours of accounting, auditing, or taxation annually and also states that CPAs not engaged in public practice are exempt from CPE. The Assembly bill--and companion legislation (S. 4402) now pending in the state Senate--removes this exemption in an effort to equate all CPAs, regardless of their employment in industry or public practice. Under the proposal, all licensed individuals must participate in at least 120 hours during a three-year period, with a minimum of 20 hours in each year, of any program that "contributes to the growth in the professional knowledge and professional competence" of the licensee.

"Broadening the definition to include programs contributing to the growth in the professional knowledge and professional competence of the licensee is so appropriate in today's world of broad financial contexts," said Michael Hand, vice president and controller of Sotheby's.

While supporting the provisions of the proposed bill, Thomas A. Sullivan, vice president of internal audit for the National Football League, called for CPE to be more relevant to CPAs in industry.

"I support nontechnical courses for CPE, but I believe the current CPE program is flawed because it doesn't serve either the practicing CPA or the CPA in industry," Sullivan said. "If you are a practicing CPA, over a two- or three-year period you've taken most of the technically relevant courses."

Broadened Experience Requirement

The CPAs in industry who testified before the state Assembly also supported licensure changes, including broadened experience requirements. The proposed bill allows for one year's experience in any type of services or advice using general accounting, financial advisory, or tax skills, and the experience needs to verified, though not necessarily supervised, by a CPA. Individuals can go outside public accounting firms for their experience requirement.

"There are many qualified individuals in business, industry, and education who would become CPAs if the one-year experience requirement were allowed under the direction of a CPA not in public practice," Hertlein said. "There are a number of qualified people in my department now who could potentially benefit from this position."

Importance of CPA License

Neville Grusd, chief financial officer of Merchant Financial Corporation and chair of the NYSSCPA Industry Division Oversight Committee, also testified in support of the bill. He pointed out that the CPA designation remains important to individuals even when they no longer work in public accounting.

"Why does a CPA in industry remain a licensed CPA?" Grusd said. "I believe it's because it's a professional qualification to the employer and others that they are a trusted advisor."

Nadine Gordon Lee, managing director of U.S. Trust Company of New York and a member of the NYSSCPA board of directors, echoed Grusd's view that the CPA designation is important to industry employers. She advocated the bill's provisions that would hold CPAs in industry to similar regulations as CPAs in public accounting.

"Once people are in industry, they don't seem to feel bound by mandatory CPE," she said. "If people hold themselves out as CPAs, I want them to be regulated as CPAs."

New York State Assembly Majority Leader Michael J. Bragman (Syracuse) and Assembly Higher Education Committee Chair Edward C. Sullivan (Manhattan), both of whom heard all testimony from the 41 witnesses, will review the submitted testimony and determine how it will impact proposed bill A. 8600. Watch this and future issues of The Trusted Professional for more on proposed bills A. 8600 and S. 4402. *

CPE

A. 8600 replaces current CPE requirements with those set forth in UAA; that is, 120 hours, with a minimum of 20 hours per year. The bill also removes exemption from CPAs who are not engaged in public practice.