Understanding at what point CPAs are considered to be “active” and when they have continuing professional education (CPE) responsibilities can sometimes be a bit of a challenge for those New York CPAs who are no longer working in a public accounting firm—whether they have retired, taken an accounting or financial position in an enterprise outside a public accounting firm, or simply left accounting altogether and have entered a new profession.

From the outset, it’s important to realize that, with rare exceptions (e.g., misconduct issues such as a license suspension, revocation or annulment), a licensed New York CPA remains a CPA for life. There is a difference, however, between being licensed as a CPA and being registered to practice public accountancy in New York under the state’s definitive scope of practice. 

The scope of practice

A CPA’s scope of practice is defined in Education Law, Section 7401, and Regulations of the Commissioner of Education, Section 70.1. (All New York CPAs are encouraged to go to the Commissioner’s Regulations to see just how all-encompassing that sphere of coverage really is) The following excerpt from the regulations provides the basic idea:

 Pursuant to Education Law section 7401, the practice of public accountancy is defined as:

1. offering to perform or performing attest and/or compilation services …
2. incident to the services described in subdivision (a) of this section, offering to perform or performing professional services for clients, in any or all matters relating to accounting concepts and to the recording, presentation, or certification of financial information or data; or
3. offering to perform or performing, for other persons one or more types of the following services including but not limited to accounting, management advisory, financial advisory, and tax exclusive of services within subdivisions (a) and (b) of this section, which involve use of the professional skills or competencies described in paragraph (1) of this subdivision of the licensed accountant, including professional services rendered to one's employer not required to register under section Education Law  section 7408 [an employer other than a public accounting firm], in any and all matters related to accounting concepts and to the recording of financial data or the preparation or presentation of financial statements. 

In a nutshell, a New York CPA is subject to the scope of practice if he or she works in a public accounting firm; is a financial officer, accounting officer or an employee of a corporation; has an accounting or financial role with a governmental entity; or is a college professor who teaches those subjects. The important thing to remember is that it is not where the CPA works, but whether he or she performs the type of services that fall within the scope of practice. A CPA who leaves the practice of a public accounting firm, for example, is not necessarily abdicating his or her responsibilities as a CPA.  As long as a CPA is working within the very broad scope of practice, he or she must meet New York state’s mandatory annual CPE requirements. 

Confusion typically arises when a CPA accepts a position within an entity which duties were not previously considered to be within the scope of practice. While the scope of practice is very broad, a few examples of CPAs who are now considered to be working within the scope of practice include the following:

• A corporate controller at a bank in New York
• A bookkeeper at a high school in New York
• A chief operating officer of a law firm in New York
• A tax attorney in New York
• A tax preparer in New York
• A tax preparer who lives outside New York but prepares taxes for residents of New York
• A real estate broker in New York
• A merchandise planner in New York.

Registration 

As previously noted, a license to practice public accountancy is only the starting point for a New York CPA. In order to practice as a CPA—in whatever field or capacity that might be under the scope of practice, and to use the title “CPA”—a licensee must be currently registered. Registration is for a three-year period, except for the second registration period, which is prorated to move the licensee to a birth-month renewal cycle. Each triennial registration requires a fee payment and certifications stating that appropriate CPE has been attained and that no inappropriate acts, as defined, have been committed. 

If the CPA is appropriately registered, he or she is “active” and allowed to work within the scope of practice. However, in some circumstances CPAs may simply let their registrations lapse without explanation, or they may decide to leave working within the scope of practice and, thus, become “inactive.” In such cases, those CPAs are no longer permitted to use the title or “representation” of “CPA,” in any of the circumstances described as follows, in Rules of the Board of Regents, Section 29.10(a)(14)(iii)(c):

A representation shall include, but not be limited to, any oral, electronic, or written communication within the control of the licensee, indicating that the person holds a license, including without limitation the use of titles or designations on letterheads, reports, business cards, brochures, resumes, office signs, telephone directories, websites, the Internet, or any other advertisement, news article, publication, listing, tax return signature, signature on experience certifications for licensure applicants, the display of licenses as a certified public accountant or public accountant from this or any other jurisdiction, or the display of certificates or licenses from other organizations which have the designation “CPA” or “PA” or use of the title “certified public accountant” or “public accountant” with the licensee’s name. 

It’s important to note that CPAs with inactive registrations may still be permitted to serve on, and provide counsel to, governing boards of commercial and not-for-profit entities. Although they may be allowed to describe themselves as retired or “former” CPAs, and also be exempt from CPE requirements, they must be careful not to 1) provide attest or compilation services to those boards; 2) become employees or consultants of the entities; or 3) otherwise provide services covered by the scope of practice, lest they become subject to active registrations again. 

Work location 

One last thing for New York CPAs to consider is that, regardless of their state of residence, their licensing and registration requirements are tied to New York if New York is their primary place of business, or if they have New York clients. They may have an active CPA license and registration in another state; however, if a New York CPA works within the scope of practice principally in New York, or for New York clients, he or she must also be licensed and registered in New York.  

Where to get answers 

The New York State Education Department Office of the Professions has recently established a very informative website that provides an overview of the scope of practice, licensing and registration, and active and inactive registrations.  Additionally, any CPA with a question about his or her professional status should contact the Office of the Professions, State Board for Public Accountancy in Albany, at cpabd@nysed.gov or 518-474-3817, ext. 160.

Jennifer Winters, CPA, is the executive secretary for the New York State Board for Public Accountancy.