State Senator Introduces Spitzer’s Accounting Legislation
Proposal Under Scrutiny by NYSSCPA Graduates to Bill

By Simon Eskow

ALBANY—State Sen. Kenneth P. LaValle, chairman of the Senate’s Higher Education Committee, last month introduced state Attorney General Eliot Spitzer’s proposed bill on accounting reform.

In February, Spitzer circulated the proposed bill, which touches on everything from scope of practice to definitions of professional misconduct, and from the composition of the state’s board of accountancy to firm registration. The New York State Society of CPAs responded with an 18-page point-by-point critique and a memo stating that the bill doesn’t adequately address existing problems in some cases or completely misses the mark in others. The memo states that the Society doesn’t support the bill at this time, generally criticizing it for an across-the-board application of the Sarbanes-Oxley Act in a way that would unduly burden CPAs who serve nonpublic clients.

The bills that tackled accounting issues last year remained on the back burner when Albany became enmeshed in other issues long into the summer. Similarly, Spitzer’s proposal, which became bill S4834, emerged as the legislature began a duel with Gov. George Pataki over the budget and spending and tax increases, and unlike many of the bills introduced in 2002, S4834 does not have a cosponsor in the Assembly as of this writing.

As this issue went to press on May 2, LaValle introduced another bill, authored by the New York State Education Department, to amend laws related to the practice of public accountancy. The legislation was simultaneously introduced in the Assembly by Assemblyman Ron Canestrati, chair of that house’s Higher Education Committee.

This bill, S04935 in the Senate and A8286 in the Assembly, calls for defining public accountancy and the services CPAs provide, requires firm registration with the SED, mandates reviews as a condition of licensure, creates a task force to investigate and prosecute in cases of professional misconduct, and increases penalties for misconduct.

To see the entire text of the legislation, go to www.nysscpa.org and click on S04935 under the “New Bills” in the “Gov’t Center.”

Different Strokes

The Society has taken issue with several of Spitzer’s provisions. Points include:

• The Society contends that the proposal’s scope of practice fails to distinguish services exclusive to the CPA from services provided by other professions as well.
• The critique states that Spitzer’s proposal doesn’t invest the accountancy board with enough power and resources to handle the long lists of conflicts of interest, misconduct and reportable events that the legislation would create.
• The Society contends that some items that would be regarded as misconduct under the proposed legislation are already covered under existing law. CPAs also would be put at risk of losing their license for acts that might be crimes, without being convicted by a qualified court.
• A broad application of the Sarbanes-Oxley Act, the Society asserts, fails to distinguish between public and certain private companies, and unfairly bars all nonattest services for both private and public attest clients.

To read the entire text of S4834 and the Society’s response, go to www.nysscpa.org and look for the “Att. Gen. Proposals” heading beneath the “Gov’t Center” banner near the center of the page.