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Ethics, Interrupted

Joanne S. Barry, CAE

Earlier this year, a New York State Board for Public Accountancy audit found that 50 percent of CPAs failed to meet their ethics CPE requirement. The audit found myriad reasons for this lack of compliance, but based on the state board's own findings, it boiled down to confusion about the requirement: CPAs either took the wrong kind of ethics course or got the timing wrong, believing that their ethics CPE requirement needed to be completed in accordance with their registration year and not a calendar-year period.

One look at the regulation language itself, and it may not be surprising that half the CPAs in New York, whose quality of work is predicated on knowing and following standards, are getting this wrong:

From the Regulations of the Commissioner, Section 70.9.b.5:

“During each triennial registration period ending on or before December 31, 2011, a registered licensee who is subject to the continuing education requirement shall be required to complete at least four contact hours in professional ethics. For each registration ending on or after January 1, 2012, a registered licensee who is subject to the continuing education requirement shall be required to complete at least four contact hours in professional ethics during the prior three calendar year period. For registered licensees who complete the calendar year contact hour requirement in the manner described in subparagraph (i) of paragraph (1) of this subdivision, the four contact hours of professional ethics may be counted toward the annual contact hour requirement in the calendar year that they are taken. For registered licensees who complete the calendar year contact hour requirement in the manner described in subparagraph (ii) of paragraph (1) of this subdivision, the four contact hours of professional ethics may be counted toward the annual contact hour requirement in the year that they were completed if the hours in professional ethics were taken in the recognized subject area of the concentration.”

As a result, the board charged its Education Subcommittee, headed by Priscilla “Penny” Wightman, to come up with a recommendation to the State Education Department's Board of Regents that would streamline the requirement. The recommendation, which is expected to be sent to the state Board of Regents this fall for approval, would require New York–licensed CPAs to earn two credits in ethics CPE every year, increasing the requirement from four ethics CPE credits every three years to six. While the number of ethics courses a CPA must take in a given year may be increasing, however, the number of CPE credits required within any given year would remain the same: 24 credit hours concentrated in a single subject area or 40 hours in general studies.

While two ethics course credits would be required to remain New York–specific, the remaining four credits could comprise a mix among behavioral ethics, professional ethics offered by a national or other state sponsor, or additional New York–specific ethics.

The NYSSCPA's Legislative Task Force is currently reviewing the proposal. While the recommended changes streamline the ethics CPE requirement in New York and provide more flexibility in terms of the types of ethics courses a CPA may take, it remains incumbent upon professionals to ensure that they are in compliance with professional standards. If your response to these changes or to the fact that you are required to earn ethics CPE at all is: “You are either ethical or you are not; a CPE course won't make a difference,” consider the fact that your clients may hold a very different opinion on the matter.

Joanne S. Barry, CAE. Publisher, The CPA Journal, Executive Director & CEO, NYSSCPA.

 
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