Accounting Reform Bill Passes State Senate

Accounting Reform Bill Passes State Senate
Similar Bill Also Passes Assembly

By Stephanie R. Myers

NEW YORK—On June 22, the New York State Senate passed bill S-4642, bringing the state the closest it’s ever been to accounting reform.

The bill, sponsored by Sen. Kenneth P. LaValle (R–Port Jefferson), expands the regulated scope of practice, enhances due process in disciplinary hearing regulations, requires mandatory peer review, expands qualifying experience to include tax preparation and tax advisory services, requires continuing professional education for all CPAs, including those in industry, and makes other changes in an attempt to bring regulation of the profession up to date.

The NYSSCPA backed the passage of the bill, which is similar to an earlier version that passed twice before, S-302-D.

The earlier version of the bill contains many parallels to the current bill. The new bill, however, contains a section on substantial equivalency. Substantial equivalency is the concept whereby an out-of-state licensed CPA who maintains a main place of business in another state can practice in New York if he or she gives notice to the state, pays a fee, and is licensed in a state that is deemed by the State education department to have licensure requirements that are substantially equivalent to New York’s qualifications. The CPA is also subject to disciplinary action for unprofessional behavior while practicing in New York.

The Society called for a resolution in the differences in the language in the Senate’s bill and the Assembly bill A-8358 through negotiations, but discussions did not result in a compromise version of the bill.

LaValle said that he will continue to work on accounting legislation.

“While the 2005 legislative session was another missed opportunity to move forward on important reforms, I am encouraged that the Assembly has finally taken an interest in this issue,” said LaValle. “I remain committed to working with the various stakeholders to develop legislation that is fair and effective in enhancing our oversight of licensed CPAs in New York State.”

Kevin McCoy, chair of the New York State Society of CPAs’ Legislative Task Force, said that the passing of the Senate bill is a welcome step.

“It’s something that we’ve been promoting and we’ve been asking to have pass for the last several sessions, and fortunately it has,” he said. “I think it shows that the Senate realizes the importance of getting accounting reform legislation in place and are willing to listen to us and our concerns and are willing to incorporate appropriate language into the legislation.”

Reaching a compromise on the Assembly and Senate bill is unlikely to happen before spring, McCoy said.

“While we will continue our efforts to get the two bills to be similar, it would be unlikely that anything will pass before fall at the earliest,” he said.

Alan Weiner, of Holtz Rubenstein Reminick LLP, said that the new legislation, particularly the substantial equivalency provision, will “open up staffing” in New York firms.

“We have good qualified people that work for us in the tax area that find it very difficult to become certified,” Weiner said. “If the board permits it, this bill will allow these people who work in the tax committee to become certified.”

Weiner said that the legislation bears a similarity to the Uniform Accountancy Act, which also contains a substantial equivalency provision.

“We were all trying to get the UAA passed,” he said. “Because of all of these other problems, the Legislature has finally heard the call and is acting.”

The Senate bill will also give more power to the board, Weiner said.

“The main purpose of the legislation is to put some more teeth in the hands of the Board of Accountancy, the Board of Regents, and I’m not sure that the board could have done these things before,” he said.

Accounting firms should already be abiding by the rules set forth in the legislation, Weiner added.

“I think it’s good for the public to see that the state legislature is acting in the public’s best interest,” said Alan Weiner, of Holtz Rubenstein Reminick LLP. “My preference would be that the accounting profession would continue to regulate itself, but now the profession will have to deal with the government looking over its shoulder.”