Society Board Endorses UAA Section 23 Mobility

The NYSSCPA Board of Directors voted unanimously on Jan. 25 to support Section 23 of the Uniform Accountancy Act (UAA), which would, if made law, allow out-of-state licensed CPAs to provide attest services in New York without having to notify the state or pay a fee as long as their home state is deemed to have licensing requirements “substantially equivalent” to those outlined in the UAA.

Under the UAA—model legislation drafted by the AICPA and the National Association of State Boards of Accountancy that has been adopted in more than 40 states—out-of-state CPAs who have their principal place of business in another substantially equivalent state can engage in cross-border practice without having to meet additional licensing or permit requirements, although UAA Section 23 would require any out-of-state CPA who performs audits or other specified attest engagements for an entity with a home office located in New York state, to do so only through a CPA firm registered in New York state.

 Out-of-state CPAs practicing under the UAA substantial equivalency in New York state would fall under the full jurisdiction and disciplinary authority of New York state if the CPA broke any rules, regulations or laws in New York while providing professional services for clients located in New York. This is sometimes referred to as “no escape. Therefore, the substantial equivalency practice cross-border practice mobility in UAA Section 23 is known as “no notice, no fee, no escape.”

“We will be urging the legislature to adopt it,” NYSSCPA President David J. Moynihan said after the board’s Monday vote, which occurred over conference call. “That’s really what the heart of the resolution is -- the last paragraph.”

The last paragraph reads: “[The] NYSSCPA calls upon the New York State Senate and Assembly to pass legislation to enact UAA Section 23’s “no notice/no fee/no escape” substantial equivalency cross-border practice mobility provision.”

New York state has had a long and sometimes ambivalent relationship toward Section 23 of the UAA.   In 1999, the NYSSCPA first supported and legislators introduced an accountancy reform bill that included Section 23 UAA mobility.

“Differing requirements for CPA certification, reciprocity, temporary practice and other aspects of State accountancy legislation constitute artificial barriers to interstate practice and mobility of CPAs,” sponsoring legislators said in their memorandum of support for the 1999 bill.

However, the effort failed and continued to do so for as long as the provision was included in the subsequent accounting reform bills over the next nine years.

The Society Board of Directors understood that the Assembly leadership in 2008 “expressed some concerns about consumer protection,” in the substantial equivalency cross-border practice provisions included in the Senate’s accounting reform legislation, Moynihan said, making an effort to get passed any accountancy reform bill with the mobility provision in it difficult.

The accountancy reform bill signed into law in early 2009 allows out-of-state CPAs to provide non-attest services in New York with no notice, no fee, no escape, but requires a temporary practice or a New York CPA license if the out-of-state CPA will perform any attest or compilation service in New York. If New York were to adopt UAA Section 23 legislation, additional permits or licenses would no longer be necessary for the out-of-state licensee performing professional services in New York.

The consumer protection issue has been addressed with the accountancy reform law that went into effect last year, Moynihan said.

The regulations also provide additional consumer protections by requiring that each New York-registered CPA firm that provides attest or compilation services to list in its triennial registration application all CPAs (including all out-of-state CPAs authorized to practice in New York state) who are responsible for supervising attest or compilation services or signing or authorizing the signature on the accountant’s report on financial statements on behalf of the firm, according to the resolution. The new regulations also require these firms to affirm that the CPAs listed meet the state Board of Regents’ competency requirements.

Moynihan said mobility is not just a national firm issue.

“There are those who portray that this has importance only to the larger firms,” he said. “It is also important to many firms of much smaller size that practice in other states.”

This is especially true, Moynihan said, of those New York state CPA firms with Pennsylvania clients.

“Pennsylvania and Georgia have laws that retaliate against New York State CPAs by applying their UAA Section 23 cross-border practice provisions only to CPAs from states that have enacted laws allowing for cross-border/substantial equivalency that includes no notice, no fee and no escape provisions,” according to the NYSSCPA’s resolution supporting UAA Section 23.

Other states could also enact retaliatory provisions similar to Pennsylvania’s, leaving New York state-licensed CPAs at a disadvantage, Moynihan said.

There is currently a bill in both legislative houses (S6307/A0943) introduced by Toby Ann Stavisky (D–Queens) and Assemblywoman Deborah Glick (D–Greenwich Village), respectively, that would implement substantial equivalency mobility provisions in New York state, but Moynihan said the board is not endorsing or opposing those bills with this resolution.

“Clearly we have not made a thorough enough of an analysis of the identical bills introduced in the Assembly and Senate  to understand that it is in complete agreement with what we adopted today,” he said. “We started this discussion candidly, before Assemblywoman Glick or Senator Stavisky put the bills into their respective chambers. Our [resolution] was more about showing a level of support to an issue that is important to our profession and members in New York and now we will begin to figure out the intricacies of getting this adopted in New York.”

The next step, Moynihan said, is for him to work with the Society’s legislative counsel to review the legislation that was introduced in the Senate and the Assembly to identify significant differences between that and UAA Section 23 legislation.

“How we educate and promote to our members the [Section 23 UAA] legislation is our next step to figure out,” he said.