A Q&A With Chuck Schoff, Chairman of the New York State Board for Public Accountancy

Q: What is the primary purpose(s) of the New York State Board for Public Accountancy?
A: Basically the Board is an advisory body to the Regents [New York State Board of Regents] and the [New York] State Education Department on matters of professional licensing, practice and conduct. The Board approves or disapproves candidates for licensure based upon requirements for education, examination and experience. Members of the Board also serve on hearing panels, both formal (disciplinary/professional practice issues) and informal, to determine if a candidate meets the “good moral character” requirement as well as other licensing requirements. In addition, the Board meets at least five times during the year, at which time current topics are discussed and, if necessary, comment is made by way of correspondence to non-state organizations (AICPA [American Institute of CPAs], NASBA [National Association of the State Boards of Accountancy], NYSSCPA [New York State Society of CPAs]).

Q: At this time, what do you believe are the main concerns of practitioners in public practice?
A: I believe most practitioners are concerned today with meeting their staffing requirements. The number of CPA candidates graduating from colleges and universities today are a fraction of what they were 10 years ago. The next biggest concern would have to be the Enron issue and the impact it could possibly have on the profession.

Q: Are colleges currently able to prepare students for the computerized Certified Public Accountant (CPA) exam set to take effect in November 2003?
A: The AICPA’s report “CPA Examination Reform Student and Young Professional Focus Group Research” suggests that many candidates and potential candidates are not familiar with the change to computer-based testing. This study also suggests that one of the best ways to inform students of these changes is to inform the colleges and universities and the instructors. However, I find the graduates we hire to be computer literate. All of our entrants into the profession have no trouble using self-study CPE [continuing professional education] on CD-ROM or over the Net. I’ve actually seen an AICPA demonstration of the CBT [computer-based test] and it didn’t seem much different to me.

I think the biggest difference will be taking an examination that forces a candidate to take testlets of an exam section in a specified order. The candidates will have to tackle a question or series of questions, then move on. The CBT will not allow toggling between sections in order to review answers. This could create a stress level most would find uncomfortable.

Q: Will the computerized CPA exam affect recruitment into the profession? And if so, how?
A: No one can guess the impact that computerization will have on the number of candidates taking the CBT. Some estimate there will be an increase in candidates; others believe there will be no significant change. It is important to remember that passing the CBT is only one of three requirements for licensees. Typically, candidates are employed in the profession before passing the exam, so the exam itself will have no impact. I believe compensation, workload compression and life-style issues are far greater problems affecting recruitment than the CBT issue.

Q: What are your thoughts on the Prometic, NASBA, AICPA contract for the computerized CPA exam?
A: I recently wrote to NASBA’s President, David Costello, to express the views of the New York State Board for Public Accountancy. At our Dec. 18 [2001] board meeting there was extensive discussion of critical issues such as cost of the examination, conflicts of interest, confidentiality of candidate information and the contract. We had hoped that many of our major concerns would be resolved before NASBA’s examination meeting in Atlanta on Jan. 9; unfortunately, they were not. I reiterated the Board’s views, which focused on conflict of interest and exam costs. Further, I cautioned NASBA’s leadership about negotiating a contract with a weakened AICPA leadership, which in a recent membership vote suffered an embarrassing defeat. Also, I mentioned the Enron scandal and how the public and the federal government would be looking at the profession very closely. The slightest hint of conflict of interest (which our Board believes this contract does [have]) is going to draw much ridicule.

Q: If the Prometric, NASBA, AICPA contract is approved, would the New York State Education Department consider looking into a separate CPA exam?
A: New York and six other states voted against the contract at the Jan. 9 meeting. The contract was approved by NASBA’s board at their meeting the following Friday. The New York State Board for Public Accountancy advises the SED [state education department] on matters such as the CPA examination. The ultimate decision regarding the exam rests with the New York State Board of Regents and the department. The Board has spoken with staff from the SED about the various options that are available, and we are confident that the SED will make the correct decision when required to do so.

Q: Is there anything that the public accountancy board can do to improve student enrollment in the accounting departments throughout the state?
A: We certainly support the efforts of the state Society regarding COAP [Career Opportunities in the Accounting Profession program] and the Excellence in Accounting Scholarship. Hopefully, efforts such as these improve the attractiveness of the profession to high school and college students. Many Board members are directly involved in the teaching profession or through the state Society chapters. Whenever any of us has the opportunity to speak about the profession to young people, we do so from the aspect of its rewards and challenges, as well as its importance to the public.

Q: What are your views as to how to recruit new people into the profession?
A: As I mentioned earlier, we must take every opportunity to enlighten young people about what exactly we do. I find a general lack of understanding about the economy and business in young people. My high school-age daughters and their friends look at me with dismay when we have any type of conversation about economy. Many college students can’t handle a checking account, not to mention plastic. If primary and secondary education curriculum is adjusted to include a greater focus on business, then perhaps students’ interests will be risen to view the profession as a possible career path.

Q: What do you think of the Uniform Accountancy Act (UAA)?
A: The UAA is an attempt at middle-of-the-road rules, which in some ways would weaken New York state laws, rules and regulations. The UAA is a cookie-cutter approach to regulation. New York is the financial capital of the world and we can not compromise our standards in order to find substantial equivalency. I believe that New York’s regulations must be as strong as possible in order to protect the people of the state of New York. If NASBA and the other states want to adopt New York state’s licensure and regulatory posture and elevate to New York’s level, so be it.

Q: In its survey on the accounting practice, the New York State Education Department posed the following question: “Should the scope of practice of CPAs and PAs be amended to include all professional services they provide to the public or just attest and compilation services, no matter where employed?” The question was ultimately discarded because it elicited separate answers, but allowed only a single yes or no response. How would you rephrase the question and what would be your answer?
A: It is unfortunate that some respondents found the question confusing. At this date I think it is irrelevant how the question could be reworded. During the 2000 New York State Senate roundtable discussions, which included representatives of the state Society and the state board for public accountancy, many believed that all licensees should be held accountable for all professional services rendered, no matter where employed. The SED’s recent legislative proposal would add that clarity. State Society representatives at the discussions included two of its former presidents, who not only agreed with this view, but felt most practitioners believed this was part of the current statute.

Q: What are your thoughts on the AICPA’s XYZ global credential initiative?
A: To say the initiative was defeated is an understatement. I was pleased with the state Society’s initiative to stop the implementation. What really concerns me about this issue is how the AICPA’s management, board of directors and Council could have misinterpreted its membership. It wasted millions of dollars promoting something no one wanted. I question the viability of the AICPA leadership, not to mention its financial position. We’ll have to wait to see what its membership does, now that our dues have been wasted.

Q: What are your views on proposed legislation to permit non-CPAs to perform reviews and compilations?
A: There is a great misunderstanding over the use of the terms “review” and “compilation” that needs to be explained. When CPAs use the terms “review” and “compilation,” they do so in the context of SSARS [Statement on Standards for Accounting and Review Services] 1 engagements. In contrast, non-licensed accountants use similar terms when collecting and aggregating financial information.

The issue is finding the right terminology that reserves certain services for the licensed professions while acknowledging that non-licensees may aggregate financial information without using professional reporting language. Using safe harbor language as recommended under the UAA may accomplish this. Recent legislation would have reserved SSARS reviews and compilations for licensees while acknowledging that non-licensees may aggregate financial information for their clients.

Q: What are your goals and objectives as chair of the New York State Board for Public Accountancy? Have you accomplished what you hoped to accomplish during your term?
A: I would like to see effective legislation enacted. I would like it to be strong, so that it best serves the public, and that it serves as a model for other states. However, the Board’s and my role is one of council. To be a good council one must have excellent abilities and be available when needed. To be a great council one must also have integrity. I think we have been, currently are, and will continue to be a great council for the Regents and SED.