While acknowledging that the NYSSCPA is opposed to the changes, the New York State Board for Public Accountancy has approved regulatory language implementing new ethics continuing professional education (CPE) requirements. New York-licensed CPAs will be required to complete two credits of ethics CPE every year, rather than the current four credits every three years. In addition, two out of six credits every three years will have to include a New York state-approved ethics course, while the other four can be in a variety of ethics topics, including behavioral ethics. Currently, all four credits must be in a New York state-approved course. The changes will apply to registrations ending on or after Jan. 2, 2020, but because of a delay in new regulations going before the Board of Regents for approval, there is a possibility that the changes will go into effect later than that.
“We honestly believe this is a constructive change,” said Priscilla “Penny” Z. Wightman, the board’s Education Committee chair, at its Oct. 24 meeting, after noting the Society’s objection. “It’s a perfect time to make that change, in the long run, in terms of management of CPE compliance; two hours of ethics every year would satisfy the requirement.” With the approval of all but one member, the board voted to implement the regulatory language as drafted by the Education Committee.
The Education Committee proposed the change in July 2017 in response to an internal review that found that 50 percent of CPAs were not in compliance with their ethics CPE requirement. The board identified four root causes: sponsors that were not approved by the New York State Education Department to offer ethics CPE; behavioral ethics courses that were not approved for ethics CPE; out-of-state courses that were taken by CPAs but not licensed in the outside state; and confusion over the old triennial registration cycle vs. the current three-year calendar-year CPE cycle.
The Society has voiced its objection to the changes, both in a comment letter issued last December and in a conference call between members of its Professional Ethics Committee and members of the state accountancy board, which took place on Oct. 17, 2018. The Society’s position is that adding two more hours every three years does not address the root causes of noncompliance cited by the board, and that there are better ways of ensuring compliance, such as increased communication by the public accountancy board and clarification of terminology.
The regulatory language approved by the public accountancy board on Oct. 24 will appear in Section 70.9(b)(3) of the Regulations of the Commissioner of Education: “For each registration ending on or after January 2, 2020, a registered licensee who is subject to the continuing professional education requirement shall be required to complete at least two credits in ethics every calendar year period; including, at a minimum, a two-credit NYS approved ethics course must be completed every three calendar years. The two credits of ethics may be counted toward the annual requirement in the calendar year that they are taken.” (Because the board's changes also include eliminating current Sections 70.9(b)(1) and (b)(4), as they are no longer applicable or relevant, the provision for ethics CPE will appear in Section 70.9(b)(3) rather than (b)(5), where it is currently found.)
At the meeting, Wightman said that two hours a year was consistent with what other states are requiring, and that “ease of tracking” was another reason for the change. There were “multiple layers to that consideration,” she said. She added that she keeps hearing complaints about the repetitive nature of current ethics CPE: “At least with this, there’s a chance for variety. It makes for more choice for practitioners.”
D. Edward Martin, another board member, also addressed the Society’s objections. Although the Society has argued that CPAs are not going to be more ethical with six rather than four hours every three years, he said, “Two hours every year of your CPE has to be ethics, and [we will now] broaden what those areas are.” He also said there will no longer be a rush to get four credits in all at once: “In the end, that has to be a positive.”
Wightman addressed the Society’s concern about inadequate communication regarding the registration process, asking, “Are we clear about what ethics registration is? Are we making that information accessible enough?”
Jennifer Winters, executive secretary for the state board of accountancy, responded, “We did put a separate listing of ethics providers on our website.” (That list can be here.) “We are willing to make any other additional changes because we are informed we don’t have plain-language information,” she added, noting, “We do have a whole slew of FAQs.”
Winters also addressed an ongoing delay in regulatory changes getting to the Board of Regents for approval. She explained that there is only one full-time attorney in the State Education Department’s Office of Counsel reviewing regulatory changes, and that regulations approved by the board in late 2016 are still pending. Those changes were to Board of Regents Rules Section 29.10 (covering unprofessional conduct in the practice of public accountancy). If that delay continues and the Board of Regents doesn’t approve the ethics CPE changes before 2020, they will not go into effect until a later year.