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It's Been a Long Time Coming

Louis Grumet

New York is one step closer to accountancy reform now that the state legislature has delivered to Governor David A. Paterson's desk a bill that will make sweeping changes to the state's regulation of the accounting profession

On December 15, the state senate unanimously passed A.11696-A/S.7497-B to amend the state's education law. The assembly unanimously voted for the same bill this past summer. It has been 62 years since the law governing CPAs in the state was last updated. The legislation brings regulation of the profession into the 21st century, adds extra levels of public protection, and upholds the highest standards of the CPA profession.

The bill comes as a result of 10 years of effort by the Society, working in conjunction with the State Education Department. The bill raises the bar on CPA performance at a time when users of CPA services need extra assurance that a CPA's work is of the highest quality. With individuals, businesses, and nonprofit organizations caught in the fallout of today's financial crises, the timing could not be better.

Many CPAs who historically were unaffected by the accountancy law in New York State will now find themselves in a new environment.

What Does It Mean for You?

Once signed into law, the scope of professional services will include management advisory, financial advisory, and tax preparation services, as well as the professional services provided by CPAs to their non-CPA-firm employers (i.e., CPAs in industry, government, and academia). In bringing all New York State CPAs under state regulatory oversight, all CPAs will also be mandated to meet continuing professional education (CPE) requirements. Enhanced mobility will also be provided through temporary practice permits that would cover attest and compilation services performed by out-ofstate CPAs working in New York. Unfettered cross-border practice privileges for out-of-state CPAs providing nonattest services will also be provided.

In order to improve public protection, all New York State CPA firms will have to be registered, and those with two or more accounting professionals that provide attest services will have to undergo quality (i.e., peer) review every three years, beginning in January 2012. In addition, any CPA firm that performs attest services for a New York State or municipal governmental entity will now have to undergo an external peer review in accordance with the government auditing standards of the comptroller general of the United States.

These changes are long overdue.

The law that governs New York State CPAs was instituted in 1897, the official birth of public accountancy as a profession in the country, and was last substantially updated in 1947.

Many CPAs who historically were unaffected by the accountancy law in New York State (i.e., those who did not perform attest and compilation services in public accounting firms) will now find themselves in a new environment—everything will change under the new law. At the Society, it will be our job to ease the transition of those CPAs who find themselves with new responsibilities and obligations

This legislation will usher in an era of regulation that suits the 21st century responsibilities of CPAs. The Society will be working with state officials to develop the regulations that will implement the new law, and to ease our transition into this new era. As regulation of the profession redefines itself in the coming months, we will make sure that you are prepared.

The profession can be proud of its state government for recognizing and responding to a need for regulation that better serves the public and enhances the quality of service provided by the CPA profession. Once the bill is signed into law by Governor Paterson, every CPA in the state must rise to the occasion and accept the challenges and requirements of the new legislation

Louis Grumet. Publisher. The CPA Journal, Executive Director, NYSSCPA, lgrumet@nysscpa.org.

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