EDU-26-09-00003-RP Definition of Unprofessional Conduct and the Licensure Requirements for Certified Public Accountants and Public Accountants

10/21/09 N.Y. St. Reg. EDU-26-09-00003-RP

NEW YORK STATE REGISTER

VOLUME XXXI, ISSUE 42

October 21, 2009

RULE MAKING ACTIVITIES

EDUCATION DEPARTMENT

REVISED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. EDU-26-09-00003-RP

Definition of Unprofessional Conduct and the Licensure Requirements for Certified Public Accountants and Public Accountants

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following revised rule:

Proposed Action:

Amendment of sections 29.10, 52.13; repeal of sections 70.1-70.7; and addition of new sections 70.1-70.9 to Title 8 NYCRR.

Statutory authority:

Education Law, section 207(not subdivided), 6501(not subdivided), 6504(not subdivided), 6506(1), (2) and (6), 6507(2)(a), (3), (4)(a), 6508(1), 7401, 7401-a, 7402, 7404, 7406, 7406-a, 7408, 7409 and 7410; and L. 2008, ch. 651

Subject:

Definition of unprofessional conduct and the licensure requirements for certified public accountants and public accountants.

Purpose:

To implement Chapter 651 of the Laws of 2008.

Substance of revised rule:

The Commissioner of Education proposes to amend section 29.10 of the Rules of the Board of Regents and section 52.13 of the Regulations of the Commissioner of Education and repeal and repeal and add a new Part 70 to the Regulations of the Commissioner of Education, relating to the education, examination and experience requirements for licensure of certified public accountants; endorsement of out-of-state licenses or foreign licenses; the issuance of foreign limited permits or temporary practice permits; registration of accounting firms; continuing education requirements and the definition of unprofessional conduct. The following is a summary of the proposed amendment:

A new paragraph (13) is added to subdivision (a) of section 29.10 of the Rules of the Board of Regents to define as unprofessional conduct in the practice of public accountancy a licensee's failure to meet certain competency requirements when supervising attest or compilation services or signing or authorizing someone to sign an accountant's report on financial statements. Required competencies for the supervision of compilation services shall include at least 40 hours of continuing education in the area of accounting, auditing or attest during the three years immediately prior to the performance of such services; and maintaining the level of education, experience and professional conduct required by generally accepted accounting standards. A licensee who supervises attest services shall also be required to have at least 1,000 hours of experience in the preparation or review of financial statements or reports on financial statements within the last five years or a peer review satisfactory to the department.

A new paragraph (14) is added to subdivision (a) of section 29.10 of the Rules of the Board of Regents defining as unprofessional conduct a licensee's failure to maintain an active registration with the Department when a licensee engages in the practice of public accountancy or uses the title "certified public accountant" or the designation "CPA" or the title "public accountant" or the designation "PA". Any certified public accountant or public accountant licensed in New York State who is not practicing public accountancy in this State pursuant to Education Law section 7401 and does not use the title "certified public accountant" or the designation "CPA" or the title "public accountant" or designation "PA" may request an inactive status from the Department and will not be required to register with the Department.

A new subdivision (h) is added to section 29.10 of the Rules of the Board of Regents, defining as unprofessional conduct any willful or grossly negligent failure to comply with substantial provisions of Federal, State or local laws, rules or regulations governing the practice of public accountancy by a CPA licensed in another state who is performing non-attest services or any firm that employs such CPA to perform non-attest services pursuant to Education Law section 7406-a and the failure of such licensee to identify his or her state of principal place of business in parentheses following his or her designation.

A new subdivision (i) is added to section 29.10 of the Rules of the Board of Regents to amend the definition of unprofessional conduct to prohibit a licensee or the public accounting firm employing such licensee to directly or indirectly, offer, give, solicit, or receive or agree to receive, a commission for the referral of any product or service to a client if the licensee is performing: attest services; compilation services when the licensee expects, or reasonably might expect that a third party will rely upon the financial statements and the licensee's compilation report does not disclose a lack of independence; an examination of prospective financial information; and/or any other attest service. The prohibitions apply during the period in which the licensee is engaged to perform any of the services defined in the subdivision and the period covered by any financial, accounting or related statements involved in such services. A licensee providing services other than those described in this subdivision may accept a commission for recommending products or services of a third party to a client, provided that the licensee discloses the receipt of the commission to the client prior to the performance of such service. The provisions of this subdivision do not apply to licensees who perform accounting, management advisory, financial advisory, consulting or tax services for an entity that is not required to register with the department under Education Law section 7408.

Paragraph (1) of subdivision (b) of section 52.13 of the Regulations of the Commissioner of Education is amended to define specific curricular content in the professional accounting content area that is required for licensure and those subjects that may be taken to fulfill the credit hour requirement in this area for licensure. This paragraph is also amended to eliminate the requirement for mandatory subjects in the general business content area and replaces these requirements with a list of content areas that may be used to meet the credit hour requirement in this area for licensure.

Section 70.1 of the Regulations of the Commissioner of Education defines the practice of public accountancy and defines the professional skills and competencies used by a licensee when he/she performs accounting, management advisory, financial advisory, and tax services.

Section 70.2 defines the professional study requirements for licensure and requires an applicant to submit evidence of completion of a baccalaureate or higher degree in accountancy that is either registered with the Department; accredited by an acceptable accrediting body; or a degree that the Department has determined to be the substantial equivalent of a registered or accredited program. An applicant who applies for licensure on or after August 1, 2009 must have satisfactorily completed a curriculum of at least 150 semester hours in a program described above unless the applicant was licensed in another state prior to August 1, 2009, in which case, they may meet the education requirements through completion of at least 120 semesters in a program described above. An applicant who applies to the Department for licensure prior to August 1, 2009 is required to have satisfactorily completed a curriculum of at least 120 semester hours in a program prescribed in this section prior to August 1, 2009 and have submitted the required application forms for licensure to the Department prior to August 1, 2009. In lieu of meeting these education requirements and any experience requirements, the applicant may meet the following requirement: at least 15 years of full-time experience in the practice of public accountancy satisfactory to the State Board.

A new section 70.3 broadens acceptable experience for licensure to include providing any type of service or advice involving the use of accounting, attest, compilation, management advisory, financial advisory, tax or consulting skills under the direct supervision of a certified public accountant licensed in the United States or a public accountant licensed in New York. Two years of acceptable experience are required for applicants who meet the education requirement through completion of 120 semester hours and one year of acceptable experience is required for applicants who complete the education requirement through completion of 150 semester hours. Experience may be gained through employment in public practice, government, private industry or educational institutions. An applicant is required to obtain the necessary experience within 10 years of having passed the licensing examination or they will be required to complete continuing professional education, in an amount determined by the State Board for Public Accountancy.

A new section 70.4 defines the content, passing score and retention of credit criteria for the licensing examination. The proposed amendment provides students with the opportunity to apply for admission to the Uniform CPA Examination upon completion of 120 semester hours of professional study in a regionally accredited college or university which shall include at least one course in each of the mandatory professional accountancy content areas: financial accounting, cost or managerial accounting, taxation, and auditing and attestation services.

A new section 70.5 provides that a license as a certified public accountant in New York may be issued to an applicant licensed in another state or foreign country if the applicant has met licensure requirements significantly comparable to New York. An applicant licensed by a state with significantly comparable licensure requirements, meaning those states recognized by the Department to have significantly comparable requirements, is eligible for a license through endorsement. If the applicant was licensed in a state that did not have significantly comparable licensing requirements, the individual's credentials will be evaluated to determine if his or her credentials are significantly comparable to New York's requirements. In either case, the applicant shall demonstrate four years of professional experience in public accounting in the last 10 years immediately preceding the application for licensure by endorsement.

This section also permits licensure by endorsement of a foreign applicant with an acceptable license, certificate or degree from a foreign country with significantly comparable licensure requirements provided that the applicant meets certain requirements.

Section 70.6 authorizes the Department to issue a two-year limited permit to practice public accountancy in this State to a foreign credentialed accountant if the applicant meets certain requirements described in the proposed amendment. The regulation requires a $250 fee for issuance of the limited permit.

Section 70.7 authorizes CPAs licensed in another state, with a principal place of business in another state, to apply for a temporary practice permit in order to provide attest and compilation services in New York. The temporary practice permit is valid for up to 180 days during a twelve-month period and would be renewable no more than three times. The proposed regulations also require the submission of application materials and the payment of a $125 application fee and renewal fee.

Section 70.8 requires all firms, including sole proprietorships, partnerships, LLPs, LLCs, and PCs, to maintain a registration with the Department if the firm is performing attest or compilation services or using the title "CPA" or "CPA firm" or the title "PA" or "PA firm". Firms performing only non-attest services described in Education Law § 7401(3) are not required to, but may, register with the Department.

Section 70.9 implements statutory changes, deletes prior exemptions from mandatory continuing education for individuals who work in private industry or government and specifies that all registered CPAs and PAs are required to pay a $50 continuing education fee. Any licensee who does not engage in professional practice as defined in § 7401 may file a written request for an exemption from mandatory continuing education.

The proposed amendment also implements a statutory change in the tracking year for continuing education credit from a September 1 - August 31 year to a January 1 - December 31 year. The proposed amendment also allow licensees to meet their continuing education requirement by completing either 40 credits in any combination of the following subject areas: accounting, attest, auditing, taxation, advisory services, specialized knowledge and applications related to specialized industries, and such other areas appropriately related to the practice of accounting as may be acceptable to the Department or by completing 24 credits concentrated in any one subject area. Before this change, licensees were required to complete 40 credits in a combination of the following areas: accounting, auditing or taxation, or 24 credits concentrated, in either accounting, auditing or taxation.

Revised rule compared with proposed rule:

Substantial revisions were made in sections 29.10(a)(13), (h), (i), 70.1(c)(1), 70.8(c)(6) and (10).

Text of revised proposed rule and any required statements and analyses may be obtained from

Christine Moore, New York State Education Department, 89 Washington Avenue, Room 148, Albany, NY 12234, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Frank Munoz, Office of the Professions, New York State Education Department, 89 Washington Avenue, Albany, NY 12234, [phone], email: [e-mail]

Public comment will be received until:

30 days after publication of this notice.

Revised Regulatory Impact Statement

Section 29.10(a)(13) has been modified based upon public comment to allow certified public accountants or public accountants licensed prior to July 26, 2009 to meet the competency provisions by January 1, 2011, instead of July 26, 2009, to provide them with a sufficient amount of time to meet these requirements. The competency requirement was further revised to eliminate the 1,000 hour experience requirement for licensees performing only compilation services. These licensees, however, will be required to meet the 40 hour continuing education requirement and maintain the level of education, experience and professional conduct required by generally accepted profession standards relating to the compilation standards performed. Changes were also made to the competency requirements for licensees performing attest services to provide an alternative to the requirement that such licensees have 1,000 hours of experience providing attest services within the previous five years. The proposed amendment now permits licensees performing attest services to satisfy the competency requirement by having either at least 1,000 hours of attest experience within the previous five years or through employment by a registered firm that has undergone a peer review satisfactory to the Department which indicates that the firm has received a rating of pass or pass with deficiencies.

Section 29.10(h) is amended to include in the definition of unprofessional conduct the failure of any individual licensed as a certified public accountant in another state, who is performing non-attest services and uses the title "certified public accountant" or the designation "CPA" to identify his or her state of principal place of business in parentheses following his or her title or designation.

Section 29.10(i) has been revised to change the definition of commission to mean any compensation, including a referral fee, paid by a third party to the licensee or the public accounting form that employs such licensee, for recommending or referring any product or service to be supplied by another person. This section has also been revised to prohibit a licensee or a public accounting firm employing such licensee to offer, give, solicit or receive or agree to receive a commission for the referral of any product or service to a client if the licensee is performing an audit, compilation, examination and/or any other attest service instead of a service that may require a licensee to utilize independent judgment. This section is further revised to require a licensee who is not performing these services, to disclose the receipt of a commission to the client prior to the performance of such service.

Section 70.1(c)(1) is amended to revise the professional skills and competencies for accounting, management advisory, financial advisory and tax services to not include the application of auditing procedures.

Section 70.8(c)(6) is amended to require a firm to include in its application for registration an affirmation by the firm that any certified public accountant or public accountant that it employs whose principal place of business is New York or who is otherwise authorized to practice in New York and who is responsible for supervising attest or compilation services or sign or authorize someone to sign the accountant's report on financial statements on behalf of the firm meet the competency requirements set forth in paragraph (13) of subdivision (a) of section 29.10.

Section 70.8(c)(10) amends the firm registration fee to require $50 for each office of the firm located in New York State or $50 for the firm if the firm has no offices located in New York and $10 for the sole proprietor or each general partner of a partnership or partner of a limited liability partnership, member of a limited liability company or shareholder of a professional service corporation whose principal place of business is located in New York or who is otherwise authorized to practice in New York through a temporary practice permit issued pursuant to section 70.7 of this Part and for each certified public accountant or public accountant licensed in New York that signs or authorizes someone to sign an engagement on behalf of a New York client but whose principal place of business is not located in New York State.

The above revisions require revisions to the Costs section in the previously published Regulatory Impact Statement as follows:

4. COSTS:

(a) Cost to State government: None.

(b) Cost to local government: There are no additional costs to local government.

(c) Cost to private regulated parties: The proposed amendment does not impose any costs beyond those imposed by statute. Chapter 651 of the Laws of 2008 authorizes the Department to collect fees for firm registration, a mandatory continuing education fee and fees for limited permits and temporary practice permits.

The fee for a firm registration is: (1) $50 for each office of the firm located in New York or $50 for the firm if the firm has no offices located in New York and (2) $10 for the sole proprietor or each general partner of a partnership or partner of a limited liability partnership, member of a limited liability company or shareholder of a professional service corporation whose principal place of business is located in New York or who is otherwise authorized to practice in New York through a temporary practice permit issued pursuant to section 70.7 of this Part and for each certified public accountant or public accountant licensed in New York that signs or authorizes someone to sign an engagement on behalf of a New York client but whose principal place of business is not located in New York State.

There is also a $250 fee for individuals applying for limited permits or a renewal of limited permits; $125 fee for individuals applying for a temporary practice permit or a renewal of such permit and on those licensees who must participate in mandatory continuing education. The proposed amendment also requires a mandatory continuing education fee of fifty dollars ($50) to be collected from a licensee in addition to the triennial registration fee required by Education Law section 7404 any licensee who is required to register triennially with the Department at the beginning of each triennial registration period.

Revised Regulatory Flexibility Analysis

The above revisions to the proposed rule require that the Compliance Cost section of the previously published Regulatory Flexibility Analysis be revised to read as follows:

4. COMPLIANCE COSTS:

The proposed amendment does not impose any costs beyond those authorized by statute. Chapter 651 of the Laws of 2008 authorizes the Department to collect fees for firm registration, a mandatory continuing education fee and fees for limited permits and temporary practice permits.

The fee for a firm registration is: (1) $50 for each office of the firm located in New York State or $50 for the firm if the firm has no offices located in New York and (2) $10 for the sole proprietor or each general partner of a partnership or partner of a limited liability partnership, member of a limited liability company or shareholder of a professional service corporation whose principal place of business is located in New York or who is otherwise authorized to practice in New York through a temporary practice permit issued pursuant to section 70.7 of this Part and for each certified public accountant or public accountant licensed in New York that signs or authorizes someone to sign an engagement on behalf of a New York client but whose principal place of business is not located in New York State.

There is also a $250 fee for individuals applying for limited permits or a renewal of limited permits; $125 fee for individuals applying for a temporary practice permit or a renewal of such permit and on those licensees who must participate in mandatory continuing education. The proposed amendment also requires a mandatory continuing education fee of fifty dollars ($50) to be collected from a licensee in addition to the triennial registration fee required by Education Law Section 7404.

Revised Rural Area Flexibility Analysis

The above revisions to the proposed rule require that the Costs section of the previously published Rural Area Flexibility Analysis be revised to read as follows:

3. COSTS:

The proposed amendment does not impose any costs beyond those authorized by statute. Chapter 651 of the Laws of 2008 authorizes the Department to collect fees for firm registration, a mandatory continuing education fee and fees for limited permits and temporary practice permits.

The fee for a firm registration is: (1) $50 for each office of the firm located in New York State or $50 for the firm if the firm has no offices located in New York and (2) $10 for the sole proprietor or each general partner of a partnership or partner of a limited liability partnership, member of a limited liability company or shareholder of a professional service corporation whose principal place of business is located in New York or who is otherwise authorized to practice in New York through a temporary practice permit issued pursuant to section 70.7 of this Part and for each certified public accountant or public accountant licensed in New York that signs or authorizes someone to sign an engagement on behalf of a New York client but whose principal place of business is not located in New York State.

There is also a $250 fee for individuals applying for limited permits or a renewal of limited permits; a $125 fee for individuals applying for a temporary practice permit or a renewal of such permit. The proposed amendment also requires a mandatory continuing education fee of fifty dollars ($50) to be collected from a licensee in addition to the triennial registration fee required by Education Law section 7404.

Revised Job Impact Statement

The proposed rule, as so revised, relates to the practice of public accountancy. The revised rule will not have a substantial adverse impact on job or employment opportunities. Because it is evident from the nature of the revised rule that it will have no impact on jobs or employment opportunities, no further measures were taken. Accordingly, a job impact statement is not required and one has not been prepared.

Assessment of Public Comment

1. COMMENT: A few comments cited a lack of communication to those affected by the statutory and regulatory changes, the lack of a comment period prior to the effective date of the regulations and a short implementation period for the new law and regulations.

RESPONSE: Chapter 651 of the Laws of 2008 was signed by the Governor on January 27, 2009, with a 180-day implementation period, and became effective on July 26, 2009. When developing the emergency regulations, the Department complied with the State Administrative Procedure Act. The Department sought input from the State Board for Public Accountancy and the New York State Society of Certified Public Accountants and communicated with the press and worked with the state membership associations to communicate with licensees on the proposed amendment.

2. COMMENT: Several commenters focused on provisions of the competency requirement when a licensee supervises or signs or authorizes someone to sign the accountant's report on financial statements. Specifically, commenters suggested that small firms could not meet the competency standard; that prospective remediation be considered or that certain licensees be "grandfathered"; that certain engagements be exempt; that the requirement be limited to engagement partners; and that a specialist credential be considered. A commenter also suggested that the provision would be difficult to police and monitor.

RESPONSE: The Department has proposed several changes to the competency requirement including establishing a separate standard for compilation services. The proposed revisions also provide for a future implementation date for those licensed prior to July 26, 2009. The Department believes that it will be able to monitor compliance through firm registration and quality review.

3. COMMENT: A few comments suggested that CPAs who do not practice for a fee/salary but do perform certain charitable work such a serving on the Board of Directors of a non-for-profit entity will be prevented from continuing to do this work because of the cost of maintaining a registration and completing CPE.

RESPONSE: The Department believes that the registration and continuing professional education requirements are appropriate for individuals serving as board members if the individual uses his/her professional title, practices public accountancy or if the licensee participates on an organization's audit, finance, or budget committee, as the not-for-profit is relying on the licensee's professional skills and knowledge.

4. COMMENT: One comment disagreed that CPAs employed in private industry, government and academia should be required to meet mandatory continuing education requirements, viewing such requirements as a revenue source for national and state professional associations without any beneficial outcome.

RESPONSE: The new public accountancy law requires all licensed CPAs who practice the profession as defined in the law or who use the title "certified public accountant" or the designation "CPA" to participate in mandatory continuing education.

5. COMMENT: One comment suggested that an out-of-state licensed CPA whose principal place of business is in another state should be required to identify the state of their principal place of business in parentheses when performing non-attest services in New York.

RESPONSE: The Department proposed revisions consistent with this comment.

6. COMMENT: One comment suggested that the term "firm" be replaced with the term "entity" when defining the owner of the financial statements that the accountant is reporting on.

RESPONSE: The Department will propose replacing the word "firm" with the term "client".

7. COMMENT: One commenter suggested that additional wording be added to section 70.8 of the Regulations of the Commissioner to clarify that a firm that performs non-attest services may register with the Department and to section 70.9 of the regulations to clarify the applicability of continuing education requirements to licensees resuming practice during a registration period.

RESPONSE: The Department has proposed revisions to clarify the rule in these areas.

8. COMMENT: One comment suggested that the standards for endorsement of an out-of-state CPA license be changed to a standard that requires the applicant to meet either but not both endorsement requirements.

RESPONSE: The Department believes that the proposed regulation will streamline the endorsement of an out-of-state license process while maintaining public protection.

9. COMMENT: One comment suggests that the definition of skills and competencies be revised as it is over-inclusive and overly complex.

RESPONSE: The Department disagrees with this comment. The Department considered references to various professional standards when drafting the regulations, however, such standards do not define the skills and competencies necessary to complete a professional engagement.

10. COMMENT: One comment recommended a revised definition of "commission" and described the client disclosure provisions of the regulation as overly strict, troubling and too burdensome and formalistic to be applied in all circumstances.

RESPONSE: The Department has proposed revisions to the definition of commission. The Department believes that it is in the public interest for a client to receive appropriate disclosure about earned commissions from a CPA or a PA who is hired to perform professional services. The Department disagrees that the client disclosure requirement is too burdensome and formalistic to implement.

11. COMMENT: One comment noted that the Legislature, in its statement in support of the statute, made it clear that the application for a temporary practice permit was to be electronic.

RESPONSE: The Department is working on a process that will allow applicants to submit the temporary practice permit application electronically by fascimile or as an e-mail attachment.

12. COMMENT: The commenter urges the Department not to take the position that an individual may never apply for a new temporary practice permit once it has been issued.

RESPONSE: Chapter 651 of the Laws of 2008 provides that 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.

13. COMMENT: The commenter recommends that the Department make use of the National Association of State Boards for Public Accountancy's (NASBA) list of substantially equivalent states when making a determination of whether an applicant's licensure qualifications are significantly comparable to New York's requirements.

RESPONSE: The Department believes that the regulation provides sufficient authorization for the Department to utilize NASBA's list of significantly equivalent states.

14. COMMENT: One comment recommends that the phrase "upon the recommendation of the state board" as found in section 70.7(a) of the proposed rule, not be construed as an independent step in the process of issuing a limited permit or temporary practice permit.

RESPONSE: Education Law § § 7406(1) and (2)(a) require the recommendation of the State Board for Public Accountancy for the issuance of a limited license or a temporary practice permit.

15. COMMENT: One comment indicates that requiring an individual practicing with a temporary practice permit to identify his or her state of principal place of business in parenthesis following his or her title or designation will be burdensome in practice.

RESPONSE: The Department believes that it is in the public interest for the consumer to be informed that the person that it hired to perform professional services may have a principal place of business outside of New York State.

16. COMMENT: One comment suggests that the list of partners, owners, or shareholders of a firm and the list of all CPAs or PAs whose principal place of business is in New York that are required as part of the firm registration application be interpreted as requiring only a listing of partners whose principal place of business is in New York.

RESPONSE: The Department believes that the firm registration form and accompanying instructions clarify that the list of partners, owners, or shareholders of a firm be only those whose principal place of business is in New York.

17. COMMENT: One comment urges the Department to remove from the fee calculation partners who obtain a temporary practice permit in New York and also suggests that clarifying language be added to the regulation that limited liability partnerships may not have general partners and that the per capita fee be rewritten to apply to partners of limited liability partnerships.

RESPONSE: The Department disagrees with the suggestion that partners, owners or shareholders practicing in New York under a temporary practice permit be excluded from the fee calculation because removing these individuals from the fee calculation could result in some firms paying no fee to conduct business in New York. The Department, however, has proposed revisions to the regulations by adding clarifying language with regard to partners of a limited liability partnership as suggested.

18. COMMENT: One comment suggests that all affirmations required for firm registration be based on the knowledge of the firm or individual signing the firm registration or renewal application.

RESPONSE: The Department anticipates that the affirmations contained in the new firm application forms will address these concerns.

19. COMMENT: The commenter hopes that the new statute and proposed rule will create an opportunity to examine the possibility of e-filing.

RESPONSE: The Department, in conjunction with several other state agencies, is working on a request for proposals to identify possible vendors that could be hired to implement an on-line application and registration renewal process.

20. COMMENT: The commenter believes that greater attention needs to be paid to foreign applicants for licensure and that more elements of the process need clarification, including the Department's acceptance of the International Uniform Certified Public Accountant Qualification Examination (IQEX).

RESPONSE: The State Board for Public Accountancy recognized the IQEX examination for applicants licensed by the five foreign organizations that had entered into a mutual recognition agreement with NASBA and the AICPA.

21. COMMENT: The commenter believes that the Department should accept transcripts from applicants themselves rather than imposing a requirement that the applicant obtain a certified copy of their transcript directly from their university for provision to the Department.

RESPONSE: The department has a long-standing policy not to allow transcripts to be submitted directly by applicants due to the possibility of submission of fraudulent documents.

22. COMMENT: A commenter urges that the Department agree to either impose a pro-rated continuing education requirement appropriate for the remainder of the year or extend the deadline for compliance with the continuing education requirement for the same transition being given to active CPAs.

RESPONSE: Firms required to register with the Department would do so through the submission of a registration form that includes a list of partners, shareholders or owners who meet the competency requirements necessary to supervise or sign or authorize someone to sign the accountant's report on financial statements. The firm registration form provides that a firm could submit one list of all partners, shareholders or owners that includes an asterisk or other designating mark identifying those individuals who meet the competency requirement.

23. COMMENT: The commenter believes that the State Board for Public Accountancy in conjunction with the New York State Society of Certified Public Accountants and the Internal Revenue Service need to address the non-CPAs who are allowed to prepare tax returns as paid preparers.

RESPONSE: The Board of Regents regulatory authority is limited to individuals licensed under Article 149 of the Education Law. It is outside the Regents authority to regulate non-licensed tax preparers that are regulated by the Department of Taxation and Finance under Article 1 of Tax Law.