Cassiello Testimony

TESTIMONY of
Gary Cassiello, CPA
Judelson, Giordano and Siegal
before the
Committee on Higher Education of the
New York State Assembly
concerning
Proposed Amendments to the State Accountancy Statute (A.8600)
November 16, 1999

Two years, but no less than one year, of broad-based experience (A& A, Tax or MAS) WITHIN A CPA FIRM, as part of the UAA--related bills before the Legislature.

YES. See the opinion of John Peace, Chairman of the NASBA Committee which certifies states as being "Substantially Equivalent".

No. See the NASBA chart. This chart also shows that NY is substantially equivalent under the UAA, under existing law.

No. AICPA charts show the major states that have passed the UAA. No state with more members than NY has adopted the UAA.

Substantial equivalency under the UAA requires that the State legislature must draft a law that is no less and no greater in terms than the model UAA document.

The concept of substantial equivalency means that the State law must meet or exceed the minimum standards set forth by the UAA -

The 4 page grid enclosed herein is an internal NASBA document, authenticated by Kate Mosely of NASBA, who drafted it. The document clearly demonstrates that states which were accepted as Substantially Equivalent by NASBA (identified by a checkmark in all of the boxes under the headings of Education, Examination and Experience) had close, but different state requirements.

If New York State had maintained its former 2 year experience requirement within a CPA Firm, it would not be substantially equivalent.

The New York State legislature could maintain the current two year requirement for persons achieving a bachelors degree (1 year for Masters Degree candidates), within a CPA FIRM, and the taw would still meet the standard of substantial equivalency under the UAA.

The NASBA 4 page grid, which is current (revised 2/3/99) clearly shows that New York State is presently substantially equivalent in the experience requirement. Further, an e-mail memo is attached from John Peace, who is Chair of the Equivalency Rating Committee of NASBA, further attesting to this fact.

My name is Gary Cassiello. I am a Certified Public Accountant (CPA) and partner in the firm of Judelson, Giordano & Siegel, CPA, PC located in Middletown, New York. I have and continue to hold various offices in the Mid-Hudson Chapter of the New York State Society of CPA's.

My experience both as a partner of my firm and as a chapter officer has brought me into a great deal of contact with other CPA's as well as the general business community at large. During the last two years, I have had many discussions with CPA's and business leaders on the UAA bill before you not only in my Mid-Hudson region but in Buffalo, Rochester, Syracuse, Albany, Westchester, New York City and Long Island. My personal observation is that over three-quarters of those I've talked to disagree strongly with the experience requirements in the bill.

The bill before you shortens the time it takes to become a CPA from the current 2 years to I year. Additionally, the bill would allow the experience to be done outside of a CPA firm or under a CPA's direction as is now the current requirement. Those who did not, under the bill before you, receive experience, would not be permitted to perform an attest function in public practice, therefore, in effect, creating 2 types of CPA's. If I just confused you, just think how the average consumer of CPA services might be confused.

I would like to explore the merits of the experience requirements of the bill vs the current practice. First, shortening the requirement to I year would seem shortsighted in light of the CPA's status as the most trusted business professional. Why would you, the ladies and gentlemen of the New York State assembly charged with protecting the public's interest, reduce an experience requirement in a world which grows more complex each and every day. The proponents of this portion of the bill state that in order to conform to other states experience requirements thereby allowing New York to sign on to the UAA we must change. This is inaccurate. The National Association of State Boards of Accountancy has stated, in writing, that New York's current experience requirements are enough to allow its participation in the UAA. The proponents state that New York's expanded educational requirements (150 hrs) compensate for the lesser experience requirement. I fail to see this connection as I and my fellow CPA's all believe that while we were educated in college, it wasn't until we were out in the "real world" that we understood what was required to be a CPA. One year is just too short a time to know the demands of your profession and the expectations of the public. I believe the expanded education assists the CPA to deal with increased complexity in the business world, however, he/she still needs the two year requirement to apply knowledge learned in school.

The proponents would also put forth that other states like Maryland and Illinois have no experience requirements and these states show no more incident of accountant malpractice than New York. To this I say that since New York is the financial capital of the world, substantial differences in practice exist between New York and all other states. New York's dominance in the financial sector makes demands on its professionals no other state can match therefore, in order to keep the quality high we need to keep the current experience requirement.

If we currently have no more incident of accountant malpractice with the 2 year experience requirement, do you believe we will be able to maintain that ratio if it is cut in half. The bill's proponents for the lower experience requirement also point to the fact that keeping a higher experience requirement drives potential CPA's to other states with lower requirements. Since the UAA will require at least I year experience from all states, I believe the fact New York would require 2 years will be of little consequence in what state a CPA will locate. If you intended to practice a profession for any significant length of time, would a 1-year difference dictate where you lived and worked?

The second portion of the experience requirement I object to is what type of experience would qualify in obtaining the CPA license and the creation of an "attest CPA" and a "non-attest CPA". The current standard of obtaining a CPA license requires the two year experience to be done in a CPA firm or under a CPA's supervision. Further, the experience must be in several practice areas. I and the majority of the people who I have discussed this with believe the experience needs to be directly supervised by a CPA and not just verified by a CPA as would be the case under the bill before you.

A current CPA has been brought up in a professional environment which must be independent in practice and appearance. He/She does not work for the entity and holds no interest in it. This environment fosters independent thinking which benefits the public good. In my own professional career I have taken positions contrary to my client's as I felt the financial statements would otherwise be misleading. If I came from an environment other than an independent CPA firm, I may have circumstances (such as job security, financial benefits, etc.) which would cloud my judgment. People who have come into the profession from private companies are amazed at the CPA's level of objectivity and integrity. This has to mean those ideals are not being reinforced from where they came and yet, under this bill, those individuals would have the same accreditation that I currently possess. I believe over time as more of these new CPA's come into practice, the ideals previously mentioned will be diluted and it is the public who will suffer. The new experience requirement will also differentiate between CPA's who can perform attest functions (audit, reviews, compilations of financial statements and agreed upon procedures engagements) and those who cannot.

This has to create confusion in the marketplace especially since there is no differentiation between the "attest CPA's" and "non-attest CPA's" license or designation -both will have CPA after their name. While I would like to think otherwise, the public little knows or cares about such things and believes a CPA is a CPA is a CPA. I think we need to be as explicit as possible with our designation or have potential CPA's conform to one standard. There are plenty of other designations (CH-certified financial planner, CIA-certified internal auditor) which are available to denote one's expertise: why cloud the public's mind with more than one kind of CPA? Proponents of this portion of the bill point to states where this is already the case and say there is no public confusion or infiltration by unscrupulous individuals pretending to be "attest CPA's" when, in fact, they are not. They further point to the American Institute of Certified Public Accountant's (AICPA) position that they will regulate this through the peer review process. Do you really think anyone dishonest enough to portray him/herself as an attest CPA when, in fact, they are not will submit him/herself to peer review? When the questionnaire arrives asking if you do any attest work, do you think it will be honestly filled out? As to other states having no confusion on the attest/non attest CPA issue, it is fair to say that it may be 1) too early to tell and, 2) New York's needs are different from theirs?

Finally, I ask one simple question on these issues: does anyone in this more complex and changing business environment, believe lower standards of a profession are better in protecting the public?

I thank you for your kind attention and wish to submit some materials which I believe confirm my opinions and statements made in the testimony before you. I urge you and your colleagues to speak to your own accountants and business leaders and solicit their opinions. I believe you will find what I opened my comments with, a vast majority believe the experience requirements of this bill are injurious to the profession and the public good.