In March, I warned readers that one of New York State's proposed budget bills included a provision that would have eliminated the required internal audit function for the state's public school districts—a provision that was part of a hard-fought public protection law enacted in 2005 after the Roslyn School District scandal.

I am happy to report that, because of the advocacy efforts of NYSSCPA members and staff, the internal audit function is still a requirement for most of New York's public school districts. All of our members should be proud of this accomplishment, because it means that the government relations plan adopted by the Board of Directors in September 2011 is working. The plan established a streamlined process that quickly puts issues identified by the NYSSCPA Legislative Task Force in front of the Board, which can then activate a rapid response from Society leadership and staff, as it did with the internal audit function issue.

Using a variety of outreach methods, including direct communication with legislators and state officials as well as media and public outreach, we effectively communicated the important role that internal auditors play in public school districts. Thanks to our government affairs program, we removed the most imminent threat to this important law. But our work is not done; several stand-alone pieces of pending legislation could further weaken or eliminate this important financial control requirement. As with other pieces of legislation the Society is monitoring, the NYSS-CPA will continue to watch these bills and mobilize our members as necessary.

Advocacy Initiatives

Chief among the bills the Society is tracking is S.4596, which would allow for non-CPA firm ownership in New York, sponsored by Senator Kenneth LaValle (Suffolk) and cosponsored by Toby Ann Stavisky (Queens). As proposed in the legislation that was introduced on April 12 and currently sits in the Senate's Higher Education Committee, firms would be allowed to bring on non-CPAs as owners as long as CPAs make up a simple majority of the firm's ownership group. The bill would require that all firm owners, even non-CPAs, comply with the rules of the New York State Education Department; it also includes provisions that the NYSSCPA has advocated, including a requirement that non-CPA owners be natural persons or an entity in which each beneficial owner of an entity interest is a natural person who actively participate in the firm's business. “Actively participates” is defined in the bill as providing “services to clients or to otherwise individually take part in the day-to-day business or management of the firm.” The NYSSCPA Board of Directors voted in December to support the concept of non-CPA firm ownership so that the Society would be in a position to engage with relevant stakeholders if legislation were introduced. As a result, Society leadership has met with several state senate legislators on the issue, including the bill's sponsors.

The Society is also monitoring a bill (S.3755/A.5422) that would reform New York's nonprofit corporation law. The bill, which exceeds 100 pages and was introduced in the State Senate by Michael H. Ranzenhofer (Genesee), aims to make widespread changes to the rules governing the operation of nonprofits. In addition, the NYSSCPA is working with senators on proposed legislation (S.2337) charged with preventing the financial exploitation of the elderly, sponsored by Jeff Klein (Bronx). Although the Society agrees with the intent of the bill—which would require certain individuals (including CPAs) to report the financial exploitation of the elderly—the proposed reporting procedures do not consider any of the legal or ethical rules that bind those in the accounting profession; thus, we are currently working with legislative leaders to add procedures for CPAs.