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

Summary of 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

2009: S.6307B

Fiscal implications

To be determined.

Effective date

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