New Bill Reforms Accounting Laws

The New York State Society of Certified Public Accountants (NYSSCPA) announced the unanimous passage of legislation by the New York State Senate and Assembly that will amend the education law relating to certified public accountants in New York State and enhance public protection for users of CPA services.

The legislation, A.11696- A/S.7497-B, which included State Sen. Toby Stavisky as a co-sponsor, was passed by the Senate on Dec. 15 and returned to the Assembly to be submitted to Gov. David Paterson for signature into law.

Legislation to update the state's accounting laws, which have not been changed since 1947, has been considered by the Senate and Assembly for 10 years and passage comes at a time when the public needs additional assurances in the value of audit services.

"We are thrilled that the Senate and Assembly have addressed this issue to protect the public. The law has not been changed in 60 years and the world we live in has changed dramatically during that time," said Sharon Sabba Fierstein, CPA, NYSSCPA President.

Once signed into law, this legislation will:

• Expand the scope of the CPA profession to include tighter regulation of management advisory, financial advisory and tax preparation services, including CPAs in industry, government and academia.

• Require all New York state CPA firms to register and those that provide attest services will have to undergo peer review every three years (exempting sole proprietors and firms with two or fewer accounting professionals, except if they perform state or municipal governmental audits).

• Enable out-of-state CPAs to practice attest and compilation services in New York through a temporary practice permit if the CPA's home state has licensure requirements comparable to New York's.

Fierstein observed that the legislation's passage would strengthen the quality of audit services provided by CPA firms: "The serious problems uncovered at publicly traded companies such as Enron and Worldcom, and more recently the financial giants, Bear Stearns and Lehman Brothers, underscore the importance of CPAs' audit services to the investing public. Similarly, the Roslyn School District fraud in 2004, which was in excess of $11 million, is a further example of the importance of high quality govern- mental audits to protect the interest of New York taxpayers."

The law becomes effective 180 days after it is signed by the governor, except for the mandated peer review provision, which takes effect Jan. 1, 2012.