My name is Francis T. Nusspickel. I am an audit partner with Arthur Andersen LLP, one of the large international accounting and consulting firms. I have been with Arthur Andersen for the past thirty-two years, all of which has been in our New York City office. I am also an active member of the New York State Society of CPAs, and was President of the Society in 1996 to 1997. 1 am also presently serving on the AICPA Council, which is its governing body.

I very much appreciate this opportunity to speak before this public hearing in support of Assembly Bill A.8600 and its companion Bill before the State Senate, S.4402. While these bills would substantially improve and modernize many aspects of the state accountancy laws, I would like to address two aspects of these bills that have significant importance to the business environment of New York State and to the CPA profession.

With the exception of five years in the U.S. Air Force, I have been in the practice of public accountancy in New York City for a total of 34 years. Thirty-two of those years have been with Arthur Andersen, and prior to that, two years with a small firm located across the street from City Hall. Over that period of time I have witnessed an incredible change in the practice of public accountancy and in the business environment in the City.

When I first graduated college, the majority of the CPAs time was spent in tax preparation and advice, auditing financial statements and providing other accounting and bookkeeping services to the business community. In retrospect, a CPAs life was relatively simple when compared to today's environment.

Over the years, the business environment in New York has significantly changed, and more importantly, the rate of change has accelerated each and every year. Businesses today have become more sophisticated, requiring a broader range of services that are more complex and time sensitive. With businesses expanding beyond local and regional boundaries to national and international operations, and with technology advancing with respect to products and services, the challenge to keep ahead of the game becomes increasingly more difficult. Today, businesses require a far broader range of services then what was required even a few years ago. For example, businesses looked to us for advice and assistance in selecting and installing financial and other computer systems intricate to their business. Businesses look to us for advice and consultation on matters such as E-commerce, capital structures to support growth and expansion, budgets, forecasts, and matters critical to employees such as the financial aspects of health and benefit plans, retirement programs and estate planning.

You may be asking why would the businesses in New York be looking to the CPA for these services. Well the answer is rather simple. Because of the services that we provide to our clients day in and day out, we know their business almost as well, if not as well, as they do. We understand the economics, the key success factors, and the strategies and basics of what makes the business tick. So when it comes to something new, something challenging, something that will have a direct impact on the business, the immediate reaction, in most cases, is to call the CPA and find out what he thinks. In addition, there is an advantage "One Stop Shopping". In addition to the scope or breadth of practice, other rather significant changes have taken place. Specifically, businesses in general no longer operate on a local or regional area, as had been the case. Successful companies have grown in all aspects of their business from sources of supplies to markets for their goods and services, and have expanded to a national and global basis. Companies need to have professional services that can be provided to them on the same basis as they operate. That is, companies require at least national, if not global capabilities that matches their operation.

Looking at New York State and specifically New York City, it's fairly evident that we are the financial capital of the world. In addition to being a source of prestige and pride, it is also a very significant source of revenue for its citizens and the government. New York is the financial capital due to its ability to provide to those companies the services necessary to operate in a global market. We have the most effective stock exchange, a well established banking community, an extremely sophisticated group of underwriters and a legal and accounting profession capable of pulling everything all together. And while, we have achieved the prominence of being a financial capital, maintaining that position, and growing it in the future, will be a significant challenge.

In order to meet that challenge, the provisions of Bill A.8600 will be of significant help. I would like to comment on two of those provisions. The first is being the experience requirement for licensing as a CPA and second being the substantial equivalency provision of the Bill.

With respect to the experience requirement, the current law, which was enacted in 1947 may have been appropriate and reflective of CPA practice at that time. The practice of a CPA has drastically changed and the law addressing experience requirements to be a CPA should reflect that change. Currently the law requires a diversified experience involving tile application of Generally Accepted Accounting Principle and Generally Accepted Auditing Standards. This experience is directly linked to the attest function and does not encompass any of the other services provided by CPAs. In addition, the current law requires two years of experience for candidates having a bachelor's degree and one year's of experience if a master's degree is held.

Under the proposed bill, the experience requirement would include non-attest engagements. Under the current State Education Department Regulations, a CPA applicant must demonstrate diversified experience involving the application of Generally Accepted Accounting Principles and Generally Accepted Auditing Standards. The experience can be obtained in private or government accounting or auditing work, but must demonstrate that the applicant is able to conduct an independent audit of a small but complex entity. The current requirements have become a major barrier for young accountants seeking certification. The law was written at a time when the audit and other assurance services constituted a majority of the billings of a CPA or a CPA firm, which is no longer the case. These attest services now constitute a smaller part of the practice of many mid-size and smaller CPA firms. Many small firms or sole practitioners today don't even engage in audit or review services. Potential candidates are finding it more and more difficult to obtain the one or two year's experience in Generally Accepted Accounting Principles and Generally Accepted Auditing Standards. Maintaining the current requirements will adversely affect the practices of the small firms and sole practitioners. It would also adversely affect the practice of those that are providing other than attest services.

As one last point of the experience requirement, the one-year experience requirement is not new. Current State Education Department Regulations allow any applicant who has received an education consisting of 150 semester hours in an approved program in accountancy to have one year's experience to be eligible to sit for the CPA examination and be licensed. The alternative under the current regulations is two year's experience with 120 semester hours. The proposed legislation will now replace the two tracks with the one-track system.

The last provision of the proposed bill that I would like to comment on is one that probably has the greatest significance for the business environment in New York State and the ability of the CPA professional to meet the needs of business in this state. As I previously mentioned, New York City is the financial capital of the world, and businesses here truly deal on a global basis. Businesses headquartered in New York stretch out from here into markets around the world. Companies are acquired or opened to meet market needs, sources of supply are not restricted by geographical or political limitations and there is an absolute need to effectively do business in a very geographically dispersed environment while being cognizance of specific rules, regulations, customs and laws of many kinds. CPAs with practices of every size need to be able to serve business wherever their markets or sources of supplies take them. Without getting into the international aspect of this need, let me speak first to the national limitations that currently exist. At the present time, individuals CPAs who practice across state lines, or even serve clients in other state via electronic technology, are now required in most cases to obtain an additional reciprocal or temporary license in any state to which business takes them. For example, Connecticut requires a New York licensed CPA to apply for and receive a reciprocal license for them to serve a New York based client that may have a branch office or other activity in Connecticut if the CPA desires to serve that client at its location in Connecticut. This is an extreme administrative burden and limits the ability of a New York CPA to serve the needs of its New York client. For example, while I currently hold CPA licenses in Connecticut and New York, at one time I also held licenses in North Carolina and Louisiana only because my New York based clients had activities in those states for which we performed professional services.

Unlike the law profession, the body of technical knowledge required to practice as a CPA is the same in all 50 states, that is United States Generally Accepted Accounting Principles. In addition, the CPA examination is uniformly administered throughout the United States, and CPA candidates from all states must pass the same exam. However, between the states there are some differences in terms of requirements for education and experience for licensing.

The proposed bill embraces a concept of substantial equivalency. Under this concept, if a CPA has a license in good standing from a state with a CPA licensing criteria that is essentially equal to the criteria outlined in this bill, then a CPA would be granted the privilege of practicing in another state that is not his or her principal place of business. At the request of the State Board, the National Association of State Boards of Accountancy Qualification Appraisal Service makes these determinations of equivalency on a state-by-state basis. This would allow CPAs from New York to readily cross state lines to serve clients from this state that have legitimate business interests and needs in other states. While it is probably an oversimplified example, substantial equivalency is something New York driver's license being valid to operate a motor vehicle in any of the other 50 states. You don't need to apply to every state to get a driver's license if we wish to drive in that state so long as we have a valid driver's license from our state of residency.

The bill does not diminish the state's ability to protect the public interest. The bill would enable the State Board of Public Accountancy to discipline licensee from other states who practice in this state under substantial equivalency. In addition, the state of the licensee's principle place of business, which has the power to revoke his or her license, will have the authority to discipline licensees if they violate the laws in another state while performing services outside that state. Thus, from the standpoint of both the state and residency and the state of practice, both the state boards would have the authority to discipline licensees when the situation arises.

In summary, the proposed bill will update laws that are currently 52 years old and will enable the State of New York to regulate the profession as it is practiced today and in the future. It is also critical for the business environment in New York State. What makes New York attractive as the home of many businesses, is the ability of those businesses to obtain the services that they need in order to succeed in the world market. This bill will allow our profession to continue to meet those needs in a more efficient and effective manner.

Thank you for your time.