Bill S6307B-2009

Relates to the practice of public accountancy by accountants who are not licensed in New York state; repealer

Relates to the practice of public accountancy by accountants who are not licensed in New York state; allows accountants licensed in other states to have practice privileges in New York.

Details

Actions

  • Jun 7, 2010: referred to higher education
  • Jun 7, 2010: DELIVERED TO ASSEMBLY
  • Jun 7, 2010: PASSED SENATE
  • May 26, 2010: ADVANCED TO THIRD READING
  • May 25, 2010: 2ND REPORT CAL.
  • May 24, 2010: 1ST REPORT CAL.616
  • Apr 28, 2010: REPORTED AND COMMITTED TO CODES
  • Apr 22, 2010: PRINT NUMBER 6307B
  • Apr 22, 2010: AMEND AND RECOMMIT TO HIGHER EDUCATION
  • Apr 8, 2010: PRINT NUMBER 6307A
  • Apr 8, 2010: AMEND AND RECOMMIT TO HIGHER EDUCATION
  • Jan 6, 2010: REFERRED TO HIGHER EDUCATION
  • Nov 20, 2009: REFERRED TO RULES

Votes

VOTE: COMMITTEE VOTE: - Higher Education - Apr 28, 2010
Ayes (18): Stavisky, Oppenheimer, Schneiderman, Krueger, Parker, Huntley, Foley, Onorato, Serrano, Aubertine, LaValle, Seward, Flanagan, Robach, Alesi, Griffo, Maziarz, Hannon
VOTE: COMMITTEE VOTE: - Codes - May 24, 2010
Ayes (16): Schneiderman, Breslin, Duane, Parker, Huntley, Sampson, Klein, Perkins, Squadron, Volker, Saland, DeFrancisco, Bonacic, Golden, Lanza, Flanagan

Memo

 BILL NUMBER:  S6307B

TITLE OF BILL :

An act to amend the education law, in relation to the practice of public accountancy by accountants who are not licensed in New York state; and to repeal certain provisions of such law relating thereto

PURPOSE :

To enact mobility legislation which will promote uniformity in state CPA licensing laws in order to allow accountants to provide services across state lines via travel or electronic communication; to serve the needs of a wide array of clients; and to ensure a higher uniform bar for protecting the public interest.

SUMMARY OF SPECIFIC PROVISIONS :

The term "practice permits" is changed to "practice privilege" throughout.

Section 1. Section 7406 of the education law, as amended by chapter 651 of the laws of 2008 is amended.

Section 3. Subdivision 2 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008, is amended.

Section 4: Paragraph a of subdivision 3 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008 is amended.

Section 5. Subparagraph 1 of paragraph b of subdivision 3 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008 is amended.

Section 6. Subdivision 3 of section 7408 of the education law is amended by adding a new paragraph h.

JUSTIFICATION : Historically, each state has had its own rules, regulations, and requirements to allow out of state CPAs to provide services in that state resulting in an unworkable patchwork system that was costly, inefficient, and increasingly untenable. If a CPA has a license in good standing from a state that utilizes CPA licensure criteria that are essentially those outlined in the Uniform Accountancy Act, the CPA would be qualified to practice in a state other than the CPA's principle place of business. Effective August 2009, with New York State's implementation of the 150 hour requirement to become a CPA, New York has virtually the same requirements for becoming a CPA in all but 5 states.

In the Final Report on the Future of the Accounting Profession issued by the US Office of the Treasury in October 2008, a recommendation was made calling on states to adopt a uniform system of mobility, allowing licensed CPAs to provide services across state lines to provide crucial services in a national and international economy.

For instance, CPAs auditing a company with operations across state lines are often required to perform audit functions in multiple states. Experts in particular areas are often brought in to consult on technical issues. state licensure and/or notification requirements present huge obstacles to the provision of integrated audit services, particularly where urgent consultations are required.

CPAs frequently provide tax services to entities and individuals who are required to file federal returns and state returns in multiple jurisdictions. Pre-mobility licensing laws often required the CPA to be licensed in every state where a return is filed or required the client to hire a separate CPA in each state - an enormous and unreasonable cost burden for consumers.

These barriers have the harshest impact on small CPA firms and sole practitioners. Larger firms have developed libraries, databases and significant staff resources to assist their CPAs in navigating the maze of state licensing requirements. Small firms are often unable to match those resources and thus provide effective interstate services.

These barriers are unnecessary and unjustifiable in the context of modern CPA practice and client needs. The licensing standards for CPAs are virtually identical in each state and the standards that CPAs follow in their practice, such as Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS) do not vary from state to state.

This legislation would not change the current law's provisions on New York CPA licensure. This bill would allow an out-of-state individual, who has a valid license in good standing in another state where the education, examination, and experience qualifications are substantially similar to New York's, to perform accounting, management advisory, financial advisory, or tax services without registering himself or herself, or his or her firm.

Mobility would not decrease New York's ability to enforce its laws and regulations against individuals and firms who are practicing from outside New York. Mobility would strengthen New York's disciplinary authority by establishing under Section 7406(2)(d) that a CPA would consent to jurisdiction simply by entering the state to provide the audit or other attest or compilation services.

Under mobility, New York consumers would have immediate access to the services they need from the service provider they desire. That service provider will be subject to the jurisdiction of New York regulators.

LEGISLATIVE HISTORY : New bill.

FISCAL IMPLICATIONS : To be determined.

EFFECTIVE DATE : This act shall take effect 90 days after it shall have become a law.

Text

STATE OF NEW YORK ________________________________________________________________________ 6307--B 2009-2010 Regular Sessions IN SENATE November 20, 2009 ___________
Introduced by Sens. STAVISKY, C. JOHNSON, SCHNEIDERMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -- recommitted to the Committee on Higher Education in accord- ance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the education law, in relation to the practice of public accountancy by accountants who are not licensed in New York state; and to repeal certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 7406 of the education law, as amended by chapter 651 of the laws of 2008, is amended to read as follows: S 7406. Limited permits and [temporary] practice [permits] PRIVILEGE. 1. Limited permits. On recommendation of the board, the department may issue a limited permit to an applicant of good moral character, who is the holder of a certificate, license or degree in a foreign country constituting a recognized qualification for the performance in such country of the acts set forth in section seventy-four hundred one of this article, provided the applicant has professional qualifications that are determined by the board to be [significantly comparable] SUBSTANTIALLY EQUIVALENT to the licensure requirements for certified public accountancy pursuant to this article, and the applicant resides or has a place for the regular transaction of business within the state, and equal recognition is granted by the foreign country concerned to certified public accountants or public accountants licensed in the United States. Such limited permit shall be valid for a period of two years and may be renewed on recommendation of the board. Such permit shall authorize the applicant to use only the title or designation under which he or she is generally known in his or her own country, followed
by the name of the country from which he or she received his or her certificate, license or degree, notwithstanding the provisions of subdi- vision two of section seventy-four hundred eight of this article. THE FEE FOR EACH LIMITED PERMIT AND EACH RENEWAL SHALL BE ESTABLISHED IN REGULATION BY THE BOARD OF REGENTS. 2. [Temporary practice permits] PRACTICE PRIVILEGE. a. [On recommenda- tion of the board] EXCEPT AS OTHERWISE PROVIDED IN SUBPARAGRAPH TWO OR THREE OF PARAGRAPH F OF THIS SUBDIVISION, a certified public accountant, licensed by another state which the board of regents OR ITS DESIGNEE has determined to have [significantly comparable] SUBSTANTIALLY EQUIVALENT certified public accountant licensure requirements, or whose individual licensure qualifications are verified by the department OR ITS DESIGNEE to be [significantly comparable] SUBSTANTIALLY EQUIVALENT to New York's requirements, and in good standing, who intends to perform ANY OF the services in [subdivisions] SUBDIVISION one [and], two OR THREE of section seventy-four hundred one of this article may [temporarily] prac- tice public accountancy in this state, if the certified public account- ant: (1) holds a valid license to practice public accountancy in the other state, AND (2) practices public accountancy in another state that is his or her principal place of business[, and (3) obtains from the department a temporary practice permit]. b. The [temporary] practice [permit] PRIVILEGE allows such certified public accountant, who meets the requirements of paragraph a of this subdivision to practice public accountancy in this state. [Each tempo- rary practice permit shall allow the holder to practice in this state for an aggregate total of one hundred eighty days during the twelve month period beginning on the effective date of the permit.] c. [Applications for the temporary practice permit shall be submitted to the department through an electronic means as prescribed by the commissioner. After the department renders a timely initial determi- nation that the applicant has submitted the information necessary to verify that the requirements of paragraph a of this subdivision are satisfied, applications for temporary practice permits shall be proc- essed by the department within thirty days. During such thirty day proc- essing period, the applicant may practice; provided, however, that if the application is denied the applicant shall cease the practice of public accountancy in the state of New York.] AN INDIVIDUAL WHO HAS BEEN GRANTED PRACTICE PRIVILEGES UNDER THIS SECTION WHO PERFORMS ANY OF THE SERVICES IN SUBDIVISION ONE OF SECTION SEVENTY-FOUR HUNDRED ONE OF THIS ARTICLE MAY ONLY DO SO THROUGH A FIRM WHICH HAS OBTAINED A REGISTRATION UNDER SECTION SEVENTY-FOUR HUNDRED EIGHT OF THIS ARTICLE. SUCH AN INDI- VIDUAL, AS WELL AS AN INDIVIDUAL WITH A NEW YORK LICENSE WHO DOES NOT HAVE A PRINCIPAL PLACE OF BUSINESS IN NEW YORK, MAY PROVIDE SERVICES IN SUBDIVISION TWO OR THREE OF SECTION SEVENTY-FOUR HUNDRED ONE OF THIS ARTICLE THROUGH A FIRM OF CERTIFIED PUBLIC ACCOUNTANTS THAT DOES NOT HAVE A REGISTRATION IN THIS STATE BUT THAT HOLDS A VALID LICENSE, REGIS- TRATION, OR PERMIT IN ANOTHER STATE. d. Any certified public accountant who practices in this state pursu- ant to this section, and any firm that employs such certified public accountant to provide such services in New York, consents to all of the following as a condition of the exercise of such [temporary] practice privilege: (1) to the personal and subject matter jurisdiction and disciplinary authority of the board of regents UNDER SECTIONS SIXTY-FIVE HUNDRED
NINE THROUGH SIXTY-FIVE HUNDRED ELEVEN OF THIS TITLE, AS IF THE PRACTICE PRIVILEGE IS A LICENSE, AND AN INDIVIDUAL WITH A PRACTICE PRIVILEGE A LICENSEE, FOR PURPOSES OF THOSE SECTIONS; (2) to comply with this article, the rules of the board of regents and the regulations of the commissioner; and (3) to the appointment of the secretary of state or other public offi- cial acceptable to the department, in the certified public accountant's state of licensure or the state in which the firm has its principal place of business, as the certified public accountant or firm's agent upon whom process may be served in any action or proceeding by the department against such certified public accountant or firm. e. [No more than one temporary practice permit may be issued to any individual applicant provided that each permit may be renewed by the department up to three times such that an individual shall practice for no more than four years within a five year time period under the provisions of this section. Such renewals may be granted upon receipt of written notice from the permit holder, provided that the applicant remains in good standing and in compliance with all applicable laws, rules and regulations.] FOR PURPOSES OF THIS SUBDIVISION, THE BOARD OF REGENTS MAY DETERMINE THAT NATIONALLY-RECOGNIZED CERTIFIED PUBLIC ACCOUNTANT LICENSURE REQUIREMENTS ARE SUBSTANTIALLY EQUIVALENT TO NEW YORK'S REQUIREMENTS, SUCH THAT AN INDIVIDUAL LICENSED IN A STATE DETER- MINED TO HAVE LICENSURE REQUIREMENTS SUBSTANTIALLY EQUIVALENT TO THE NATIONALLY-RECOGNIZED CPA LICENSURE REQUIREMENTS, OR AN INDIVIDUAL WHOSE LICENSURE QUALIFICATIONS ARE DETERMINED TO BE SUBSTANTIALLY EQUIVALENT TO THE NATIONALLY-RECOGNIZED CPA LICENSURE REQUIREMENTS, MAY PRACTICE UNDER THE PRACTICE PRIVILEGE CONTAINED IN PARAGRAPH A OF THIS SUBDIVI- SION. f. (1) A person who wishes to practice public accountancy in this state but does not meet the requirements of paragraph a of this subdivi- sion is subject to the full licensing and registration requirements of this article. (2) In the event the license from the other state of the certified public accountant's principal place of business is no longer valid or in good standing, or that the certified public accountant has had any final disciplinary action taken [against his or her license] by the licensing or disciplinary authority of any other state concerning the practice of public accountancy THAT HAS RESULTED IN THE SUSPENSION OR REVOCATION OF HIS OR HER LICENSE, the certified public accountant shall cease offering to perform or performing such services in this state individually and on behalf of his or her firm. (3) ANY CERTIFIED PUBLIC ACCOUNTANT WHO, WITHIN THE LAST SEVEN YEARS, IMMEDIATELY PRECEDING THE DATE ON WHICH HE OR SHE WISHES TO BEGIN PRAC- TICE IN NEW YORK, (I) HAS BEEN THE SUBJECT OF ANY FINAL DISCIPLINARY ACTION TAKEN AGAINST HIM OR HER BY THE LICENSING OR DISCIPLINARY AUTHOR- ITY OF ANY OTHER JURISDICTION WITH RESPECT TO ANY PROFESSIONAL LICENSE OR HAS ANY CHARGES OF PROFESSIONAL MISCONDUCT PENDING AGAINST HIM OR HER IN ANY OTHER JURISDICTION, OR (II) HAS HAD HIS OR HER LICENSE IN ANOTHER JURISDICTION REINSTATED AFTER A SUSPENSION OR REVOCATION OF SAID LICENSE, OR (III) HAS BEEN DENIED ISSUANCE OR RENEWAL OF A PROFESSIONAL LICENSE OR CERTIFICATE IN ANY OTHER JURISDICTION FOR ANY REASON OTHER THAN AN INADVERTENT ADMINISTRATIVE ERROR, OR (IV) HAS BEEN CONVICTED OF A CRIME OR IS SUBJECT TO PENDING CRIMINAL CHARGES IN ANY JURISDICTION, SHALL SO NOTIFY THE DEPARTMENT, ON A FORM PRESCRIBED BY THE DEPARTMENT, AND SHALL NOT PRACTICE PUBLIC ACCOUNTANCY IN THIS STATE UNDER PARAGRAPH A OF THIS SUBDIVISION UNTIL HE OR SHE HAS RECEIVED FROM THE DEPARTMENT
WRITTEN PERMISSION TO DO SO. IN DETERMINING WHETHER THE CERTIFIED PUBLIC ACCOUNTANT SHALL BE ALLOWED TO PRACTICE IN THIS STATE, THE DEPARTMENT SHALL FOLLOW THE PROCEDURE TO DETERMINE WHETHER AN APPLICANT FOR LICEN- SURE IS OF GOOD MORAL CHARACTER. ANYONE FAILING TO PROVIDE THE NOTICE REQUIRED BY THIS PARAGRAPH SHALL BE DEEMED TO BE PRACTICING IN VIOLATION OF SECTION SIXTY-FIVE HUNDRED TWELVE OF THIS TITLE. g. (1) Notwithstanding subparagraph two of paragraph a of this subdi- vision or any other inconsistent law or rule to the contrary, a certi- fied public accountant licensed by another state and in good standing who [obtains a temporary] MEETS THE practice [permit] PRIVILEGE REQUIRE- MENTS under this section and files an application for licensure under section seventy-four hundred four of this article [on or before the expiration date of such temporary practice permit] may continue to prac- tice under such [permit] PRIVILEGE for a period coterminous with the period during which his or her application for licensure remains pending with the department, INCLUDING ANY PERIOD AFTER THE CERTIFIED PUBLIC ACCOUNTANT ESTABLISHES A PRINCIPAL PLACE OF BUSINESS IN NEW YORK WHILE HIS OR HER APPLICATION IS PENDING. (2) Nothing in this section shall limit the applicability of section seventy-four hundred seven of this article. [h. Fees. The fee for each limited permit and temporary practice permit and each renewal shall be established in regulation by the board of regents.] S 2. Section 7406-a of the education law is REPEALED. S 3. Subdivision 2 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008, is amended to read as follows: 2. No firm shall use the words "certified public accountant" or "certified public accountants" or the letters "CPA" or "CPAs" in connection with its name unless: A. the sole proprietor of such firm or each partner of a partnership or limited liability partnership, member of a limited liability company or shareholder of a professional service corporation engaged within the United States in the practice of public accountancy is in good standing as a certified public accountant of one or more of the states of the United States; OR B. THE FIRM DOES NOT HAVE AN OFFICE IN THIS STATE, HOLDS A LICENSE, REGISTRATION, OR PERMIT AS A FIRM OF CERTIFIED PUBLIC ACCOUNTANTS IN ANOTHER STATE AND DOES NOT PERFORM ANY OF THE SERVICES DESCRIBED IN SUBDIVISION ONE OF SECTION SEVENTY-FOUR HUNDRED ONE OF THIS ARTICLE. S 4. Paragraph a of subdivision 3 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008, is amended to read as follows: a. (1) Any firm that is established for the business purpose of lawfully engaging in the practice of public accountancy pursuant to [subdivisions] SUBDIVISION one [and two] of section seventy-four hundred one of this article [or] MUST REGISTER WITH THE DEPARTMENT. (2) ANY FIRM WITH AN OFFICE IN THIS STATE THAT uses the title "CPA" or "CPA firm" or the title "PA" or "PA firm" must register with the depart- ment. (3) A firm of certified public accountants or public accountants engaged in the practice of public accountancy pursuant to subdivision TWO OR three of section seventy-four hundred one of this article, but not engaged in the practice of public accountancy pursuant to [subdivi- sions] SUBDIVISION one [and two] of section seventy-four hundred one of this article, may register with the department under this subdivision.
(4) As a condition of registration or renewal, the firm shall affirm that it has not violated the provisions of this article, any other applicable laws and such other requirements as the department may impose, consistent with this article, except that the provisions of section seventy-four hundred ten of this article shall not apply on initial registration. S 5. Subparagraph 1 of paragraph b of subdivision 3 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008, is amended to read as follows: (1) At least one partner of a partnership or limited liability part- nership, member of a limited liability company or shareholder of a professional service corporation or the sole proprietor is licensed or otherwise authorized to practice under this article and his or her license to practice is not currently suspended, annulled or revoked in any jurisdiction and he or she is regularly engaged in practice on behalf of the firm within the state OR, IN THE CASE OF A FIRM THAT HOLDS A LICENSE, REGISTRATION, OR PERMIT AS A FIRM OF CERTIFIED PUBLIC ACCOUNTANTS IN ANOTHER STATE AND IS REQUIRED TO REGISTER IN THIS STATE, AN INDIVIDUAL WITH PRACTICE PRIVILEGES UNDER SUBDIVISION TWO OF SECTION SEVENTY-FOUR HUNDRED SIX OF THIS ARTICLE; S 6. Subdivision 3 of section 7408 of the education law is amended by adding a new paragraph h to read as follows: H. AN INDIVIDUAL LICENSEE OR INDIVIDUAL PRACTICING UNDER SUBDIVISION TWO OF SECTION SEVENTY-FOUR HUNDRED SIX OF THIS ARTICLE WHO SIGNS OR AUTHORIZES SOMEONE TO SIGN THE ACCOUNTANT'S REPORT ON THE FINANCIAL STATEMENTS ON BEHALF OF A FIRM SHALL MEET THE COMPETENCY REQUIREMENTS SET OUT IN THE PROFESSIONAL STANDARDS FOR SUCH SERVICES, AS RECOGNIZED IN SUBDIVISION ONE OF SECTION SEVENTY-FOUR HUNDRED ONE-A OF THIS ARTI- CLE, AND AS SET OUT IN THE RULES OF THE BOARD OF REGENTS. S 7. This act shall take effect on the ninetieth day after it shall have become a law.

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