Public Accountancy

Chapter 651, Laws of 2008

Frequently Asked Questions

Summary

On January 26, 2009, Governor Paterson signed into law, as Chapter 651 of the Laws of 2008, a bill that significantly changes the regulation and practice of the practice of public accountancy in New York.

The new law is effective on July 26, 2009, except for mandatory quality review provision that takes effect on January 1, 2012. The implementing regulations and guidance are still being developed. Questions and answers regarding the new law can be found below.

The new law includes many new or expanded provisions, including:

• broadening the definition of the scope of practice of public accountancy to include all professional services performed by a CPA or PA;
• providing the Board of Regents with disciplinary authority over CPAs and PAs based on all professional services provided to the public or based on use of his or her professional title;
• recognizing foreign equivalent education as a basis of licensure;
• modifying the foreign limited permit provision;
• providing a temporary practice permit for out-of-state licensed CPAs. The temporary practice permit would be valid for up to 180 days during a twelve month period and would be renewable no more than three times. Out-of-state CPAs and their firms consent to the disciplinary authority of the Board of Regents as a condition of the exercise of the temporary practice permit.
• providing CPAs, licensed and in good standing in another state, may provide accounting, management advisory, financial advisory or tax services in New York without a license or temporary practice permit. These individuals and any firm that employs the CPA consents to the disciplinary authority of the Board of Regents when performing these services in New York;
• providing an exemption to non-licensed individuals and business corporations performing accounting, management advisory, financial advisory or tax services. Non-licensed individuals may also issue financial statements using safe harbor reporting language defined in the law;
• requiring all firm types (sole proprietorships, partnerships. LLPs, LLCs, and PCs) to maintain a current registration with the Department if the firm performs attest or compilation services or if the firm uses the title “CPA” or “CPA firm” or the title “PA” of “PA firm”;
• requiring as a condition of re-registration that firms undergo a peer review of their attest services every three years. Sole proprietorships or firms with two or fewer professionals are exempt from the quality review requirement. Any firm, including sole proprietorships or firms with two or fewer professionals, that performs attest services specifically required under New York State law are required to undergo a peer review in conformity with government auditing standards of the Comptroller General of the United States;
• removing the exemption from mandatory continuing education for individuals employed in private industry, government and academia;
• changing the continuing professional education reporting year to a calendar year rather than an artificial September – August reporting year.

Please also see:

• A summary of proposed regulation changes.
• The text of proposed regulations.
• An article in the Sunday, June 28, 2009, edition of the Albany Times-Union outlining the rationale and provisions of the new law.

General

1. When does the new public accounting law take effect?

The new law will take effect on July 26, 2009. However, changes in Continuing Professional Education (CPE) requirements take effect on January 1, 2009.

Continuing Education

1. How will the new law change the reporting year for continuing professional education?

The new law changes the mandatory continuing professional education (CPE) reporting year from a September 1 to August 31 reporting year to a calendar year. All registered CPAs and PAs will need to meet their annual CPE requirement by December 31, 2009.

2. Who has to complete CPE?

All registered CPAs and PAs must meet the CPE requirements.

3. What are the CPE requirements?

A registered CPA or PA must complete either 40 hours of general studies or 24 hours of concentrated study in one recognized area of study during each calendar reporting year (January 1 – December 31).

The CPA or PA must complete 4 hours of professional ethics CPE during his or her triennial registration period as described in question 4, below.

4. Do the 4 hours of professional ethics count toward my annual CPE requirement?

The 4 hours of professional ethics will count toward an individual’s 40 hours of general studies in the year it is completed. It will count toward the 24 hours of concentrated study only if the ethics coursework is completed in the same concentrated field of study. For example, an approved tax ethics course would count toward a 24 hour concentration in taxation but not toward a 24 hour concentration in advisory services.

Peer Review

1. The new law requires the State Education Department to establish a roster of approved quality reviewers. Who will be included on the roster?

The implementing regulations are still being developed. It is anticipated that the roster will include quality reviewers from established lists of reviewers from organizations such as the AICPA and NYS Society of CPAs.

Registration Requirements

1. Who has to register?

Effective July 26, 2009, all licensed CPAs and PAs will need to maintain a registration with the Department unless the CPA or PA files a request for inactive status with the Department certifying that the licensee is not practicing public accountancy or using the title certified public accountant or public accountant or the designation CPA or PA.

2. I am a New York CPA or PA, officially retired, but I prepare tax returns for a few family members. Am I required to maintain a registration?

If you sign the return as a preparer then you need to be registered with the New York State Education Department.

Firm Registration

1. We’re an out-of-state public accounting firm; will we need to register to practice in New York under the new law?

Any firm that provides the services defined in State Education Law Section 7401 1 and 2, including but not limited to attest or compilation services in New York, or that uses the title “certified public accountants,” or the letters “CPA,” or “CPAs,” in connection with its name must register with the State Education Department.

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3. We’re an out-of-state public accounting firm that will need to register to practice in New York under the new law; will our firm be required to provide evidence of having undergone a peer review?

Beginning January 1, 2012, most firms registered in New York will be required to provide evidence of having undergone a peer review of their attest practice during the preceding three years.