My name is Ben Harlan Boyd, National Society of Accountants, General Counsel and Director of Legislative Affairs. Though the legislative interests of the National Society of Accountants and ACAT coincide, I appear today as an ACAT representative.

The ACAT Board of Directors commends the efforts of this esteemed Committee to amend Article 149 of the education law in a way that protects the public and provides for a diverse and openly competitive accounting profession. We urge the Committee, as it goes forward, to adopt only those amendments to Article 149 that continue the permitted the use of earned credentials and that will further advance the interests of New York small businesses.

ACAT Issues Credentials on the Basis of Education, Examination and Experience.

The Accreditation Council for Accountancy and Taxation, founded in 1973, is a private, non-profit corporation located in Alexandria, Virginia. ACAT is affiliated with the National Society of Accountants and the College for Financial Planning. ACAT offers and administers the credentials of Accredited Business Accountant (ABA), Accredited Tax Preparer (ATP), and Accredited Tax Advisor (ATA) to individuals who meet required elements of education, examination, and experience. In order to maintain an ACAT credential, individuals must meet continuing professional education requirements and adhere to the Council's strict Code of Ethics.

The designation ABA, "Accredited Business Accountant," is designed to support the financial needs of small businesses, individuals, and sole proprietors. The required comprehensive accountancy examination tests the technical proficiency of candidates in financial accounting, compilation and review services, managerial accounting, taxation, business law, and ethics. Accreditation demonstrates a high technical proficiency, a commitment to continued professional development, and adherence to the Council's Code of Ethics. ACAT Credential Holders Provide Small Businesses with Affordable Accounting Services.

The Accreditation Council for Accountancy and Taxation is a member of the Coalition for Affordable Accounting (CAA). The CAA has identified three fundamental practice rights of the non-CPA practitioner. The CAA believes that each of these fundamentals should be reflected in the body of any accountancy law. They are:

(1) The ability of non-CPA Practitioners to perform compilations and reviews, v (2) The explicit statutory availability of safe harbor language, and

(3) The right of all accountants, certified and non-certified, to use earned credentials.

The ACAT Board of Directors applauds the efforts of this Committee to enact legislation that balances the need to protect the public with these legitimate practice right Issues of non-CPA practitioners and their clients.

ACAT's Legislative Outlook

ACAT credentials are designed to provide the assurance of qualification in small business accounting and tax practice. The ACAT Board of Directors urges this Committee to give careful consideration to amending Article 149 to explicitly recognize, where the accounting engagement is limited to compilations or reviews, the use of earned credentials such as ABA, ATA, ATP, and EA as viable substitutes for the initials CPA.

New York Assembly Reports that the Job Growth Rate Lags the National Average

According to a report released by the Assembly Majority in March 1999, entitled the "1999 Assembly Jobs Agenda," job growth in New York State, at 2%, trails the national average of 2.6%. (*1) Nationally, 4 out of every 5 new jobs are created by small businesses. ACAT credential holders are small business owners themselves. Moreover, the client market served by ACAT credential holders consists overwhelmingly of other small business owners.

The current form of Article 149 promotes diversity and competition in the accounting profession which in turn keeps down the cost of small business accounting services such as compilation and review of financial statements. Lower small business costs translate into small business job growth. Any legislation that either: 1) restricts the ability of ACAT credential holders to use their rightfully earned credentials, or 2) restricts the ability of non-CPAs to offer historically permissible compilation and review services will drive up small business accounting costs and slow job growth.

ACAT Poll Indicates that the Public Interest is Protected by Diversity and Competition

On March 19, 1999 ACAT commissioned an independent poll of 1000 adults. The poll was conducted to assess public opinion on the accounting profession. The polls showed the following(*2):

(a) When asked whether a CPA designation should be required to perform certain basic accounting services, fewer than half the people polled agreed, and

(b) When asked whether accountants should be permitted to hold alternative designations (such as ABA, ATA, ATP and EA) if they meet certain educational and competency requirements, an overwhelming 64% agreed.

The poll results demonstrate the public is knowledgeable as to the use of titles, designations, and earned credentials other than CPA. This result stands opposed to the argument that the public is confused by the distinction between CPA and ABA. Further, the poll results indicate that the public supports the right of non-CPAs to use alternative earned credentials. The public views it as beneficial to allow the use of alternative designations and does not believe that holding a CPA designation should be mandated or is necessary to the performance of basic accounting services.

ACAT Looks to New York State as a Leader in the Field of Accountancy Law.

The Accreditation Council for Accountancy and Taxation looks to the State of New York as a progressive leader in the field of accountancy law. In fact, we consider the current version of Article 149 to be a leading example of an accountancy law that properly balances the need to protect the public with the interests of all the citizens of New York in a diverse and competitive profession. Our only significant concern is with §7408(2), under "Special provisions."

Sub-section 7408(2) is the unlawful titles and designations section of Article 149. This sub-section contains a list of prohibited designations, none of which, we believe, could reasonably be confused with ACAT designations. ACAT's concern with §7408(2) ties in the use of the word "accounting" along side the word "audit" in the sub-section's last sentence. The last sentence serves as a catch-all prohibition against the use of "any other designation tending to imply that he has expert knowledge in accounting or auditing."

Obviously, the ACAT designation of Accredited Business Accountant (ABA) does so imply. We believes that when read in its entirely, Article 149 does not prohibit the use of ACAT credentials. Nonetheless, we are concerned that the last sentence of §7408(2) introduces some ambiguity. ACAT believes the intent of §7408(2) is to protect the public from a false or deceptive claim to the CPA designation where none was earned. Such a false claim would naturally lead the public to believe that person was qualified to do "audits."

The intent is to make the point clear that only CPAs are qualified to perform the "audit" function. The particular placement of the generic word "accounting" along side of the word "audit," as the third from the last word in §7408(2), could lead to the finding of a much broader intent. ACAT contends that such a broad reading of intent would be inaccurate and that the use of the word "accounting" along side "audit," in §7408(2), is inconsistent with Article 149 as a whole.

The ACAT Board of Directors urges this Committee to amend Article 149, §7408(2), by striking the word "accountant," appearing as the third from the last word in the last sentence of the section. This simple, but critical, amendment will clear up any ambiguity and foster a consistent reading of Article 149 as a whole.

In Their Current Forms A.8600, and A.8789 Deny the Profession Diversity and Competition

This Committee has before it Assembly Bills 8600 an 8789. These two bills strike at the heart of programs administered and the credentials supported by the Accreditation Council for Accountancy and Taxation. ACAT urges the members of this Committee to consider the anti--competitive nature of these bills in their current forms. The small business clients of ACAT credential holders require professional and competent services, but as a practical matter they do not necessarily require these services from a CPA.

ACAT credential holders are accounting and tax professionals who have successfully completed a rigorous, psychometically balanced, and validated exam. We respectfully urge the Committee to support their right to truthfully state earned credentials, such as "Accredited Business Accountant." Further, we reiterate the claim to practice rights made by the other members of the Coalition for Affordable Accounting - namely 1) the ability of non-CPA practitioners to perform compilations and reviews, and 2) the explicit statutory availability of safe harbor language.

Assembly Bill 4962 Appropriately Reco2nizes the Value of ACAT Credentials

ACAT is gratified and very appreciative of the fact that Assembly Bill 4962, §7405(2)(a)(8), explicitly makes use of ACAT credentials as a means by which a person may satisfy the education and examination qualification under a new class of accountant created by this Bill, the "Registered Accountant." (*3) Speaking strictly for ACAT, if this Committee does recommend the creation a new class of registered accountant, it is our strongest conviction that ACAT credentials would indeed serve ideally as education and examination requirements.

Additionally, concerning Assembly Bill 4962, ACAT points to the fact that §7405(2)(b) would make the new registered class a dying class. Section 7405(2)(b) limits registration in the registered class to term of one year. To the extent the Committee proceeds with Assembly Bill 4962, ACAT would urge the members of this Committee to strike §7405(2)(b), the dying class provision, and thus provide for a continuing opportunity under the new registered class.

Uniform Accountancy Act, 3rd Edition Revised (November 1999).

The Accreditation Council for Accountancy and Taxation has no philosophical differences with the American Institute of Certified Public Accountants (AICPA) or the National Association of State Boards (NASBA) with respect to certification, licensing, and regulation of certified public accountants. We have no conflict with provisions of the UAA regarding the implementation or concept of substantial equivalency, reciprocity, portability of certificates, referral or contingency fee agreements, or firm ownership.

Dialogues between the Coalition for Affordable Accounting (CAA), AICPA, and NASBA are currently ongoing. ACAT anticipates that the new revised 3rd edition of the UAA, expected to be released in November, 1999 to: 1) acknowledge the right of non-CPA practitioner to render compilation and review services that do not use SSARS language, and 2) include acceptable safe harbor language to accompany those financial statements.

These amendments to the UAA represent a substantial step forward in crafting a model accountancy act that can both effectively protect the consumers of accounting services and be endorsed by all segments of the profession. These modifications also serve to suggest that the current form of Article 149 may, in fact, be the standard bearer that other states and national organizations are just now beginning to move towards. The current trend is toward innovation, diversity of practice, and embracing of competitive forces.

There are, however, other concerns with the current iteration of the UAA. In particular, ACAT is extremely concerned about the UAA's blanket prohibition on use of the term "accredited accountant" as it goes right to the heart of the programs administered and the credentials supported by ACAT. (*4) We respectfully submit that ACAT credential holders should have the right to truthfully state their earned credentials. Further, with respect to compilations and reviews, ACAT credentials should be statutorily recognized as valid substitutes for the CPA designation.

ACAT credentials, such as "Accredited Business Accountant," are descriptive titles of the qualifications and the ability to perform the accounting functions ACAT credential holders have historically marketed to their clients under Article 149. These accounting professionals have successfully completed a rigorous and validated ACAT exam and must adhere to ACAT's stringent professional stipulations and strict Code of Ethics as conditions to maintaining their status. Accordingly, they have earned, and deserve, the right to use ACAT designations.

Conclusion

Thank you for your consideration of the issues facing the non-CPA practitioner in the State of New York, and in particular to the credentialing Issue. Upon request, ACAT would be happy to provide further information about its program or credentials. Please contact Ben Harlan Boyd, I-800-966-6679 Ext. 1302, National Society of Accountants, General Counsel and Director of Legislative Affairs, or Lisa Washington, 1-800-966-6679 Ext. 1342, Accreditation Council for Accountancy and Taxation, Director of Accreditation.

*2 A full copy of the poll questions and results can be obtained by calling Ben Harlan Boyd at (800) 966-6679, Ext. 1302

*3 The designation of "Registered Accountant" in Assembly Bill 4962 is established in §7402. The qualifications requisite to becoming "registered" are contained in §7405(2)(a)(l)-(7). Section 7405(2)(a)(8) states that ACAT credential "may be" substituted for the "education" and "examination" qualifications contained in §7405(2)(a)(1) and (2) respectively.

*4 UAA 14-2(g).