1. Audit Office New York State Accountancy Law Reform

2. Audit Office Summary of Public Accountancy Law Changes Becoming a CPA Maintaining a CPA Overview

3. Audit Office Broadens the definition of Public Accountancy Expands disciplinary authority to all CPAs Provides recognition of foreign equivalent education as a basis for licensure Summary of Changes

4. Audit Office Removes the exemption from mandatory CPE for individuals in private industry, government, and academia Changes the CPE period from state fiscal year (9/1 – 8/31) to calendar year Requires all public accounting firms to register with the state if they perform attest or compilation services and requires peer reviews every three years Summary of Changes

5. Audit Office Bill signed into Law by Governor Patterson on January 27, 2009. Effective July 26, 2009: CPA’s whose principal place of business is in NYS must be registered and comply with the CPE requirements CPA firms doing business in NYS must be registered Effective January 1, 2012: CPA firms must submit a copy of its most recently completed Quality Review Report (Peer Review) with its application for re- registration Effective Dates

6. Audit Office Enhance public protection Update law to reflect current profession Prevent confusion from inconsistent standards Align law with public perception of CPA designation Require CPA’s in industry, government, university, and non-profit to apply ethics to their jobs Why was the law reformed?

7. Audit Office Accounting Scandals … WorldCom – CFO was a CPA from NYS and wasn’t found to have broken any state laws because they didn’t apply because he was not practicing public accountancy. According to an SED memorandum … “ …Approximately 45 percent of all discipline referrals to the SEC between 1991 and 2001 were related to incidents of alleged misconduct by NY CPAs that fell outside the Regents regulatory authority …” Why is it important for all CPA’s to be regulated?

8. Audit Office Old definition 1.Performing attest and or compilation services; New definition adds the following 1.Performing professional services for clients, in any or all matters relating to accounting concepts and to the recording, presentation, or certification of financial information or data; 2.Performing for others one or more of the following services including but not limited to Accounting, Management Advisory, Financial advisory, and Tax, involving the use of professional skills or competencies of a CPA. Definition of Public Accountancy

9. Audit Office Application of Accounting Skills Preparation of financial statements & note disclosures Analysis of the effects of transactions on account balances Analysis of account balances Calculation of key financial ratios and interpretation of the results Application of GAAP in practice Application of Transaction Processing Cycles and the Control Environment Preparing flow charts to explain transaction processing cycles Identification of potential weaknesses in the internal control structure Professional Skills & Competencies

10. Audit Office Application of Auditing Procedures Evaluation of statements or representations made by management & others Application of appropriate current generally accepted auditing standards Identification of potential violations of ethical behavior Fraud detection & deterrence Application of Tax Law Application of federal or state tax laws for individuals or businesses Calculation of payroll taxes Professional Skills & Competencies

11. Audit Office Job Functions Preparing financial reports for internal purposes Preparing budgets, forecasts, and variance analysis Performing ratio analysis and other financial analytics Conducting internal audits Preparing or approving financial transactions Preparing financial statements Preparing 990 and other tax returns Evaluation of investment opportunities using discounted cash flow, net present value, and risk analysis Practice of Public Accountancy in the Cornell Environment

12. Audit Office Other Examples of the Practice of Public Accountancy Retired CPA who provides free accounting services for their church Retired CPA who prepares tax returns for relatives for free  Yes, if they sign the return as preparer  No, if they do not sign the return as preparer Retired CPA who sits on a Board of Directors Yes, if they are on the Audit Committee, Finance Committee, Budget Committee, or other similar committee No, if they do not serve on any of the above committees

13. Audit Office 1.Be of good moral character and at least 21 years old 2.Education 3.Exam 4.Experience Becoming a CPA

14. Audit Office Education New requirements effective August 1, 2009 150 credit hours 33 hours accounting 36 hours general business Must include components of communication, ethics, and research Program must be registered OR accredited OR deemed equivalent by the DOE. Must meet education requirements to sit for exam. Becoming a CPA

15. Audit Office Exam NY recognizes the four-part computerized exam administered by the AICPA. 1.Auditing & Attestation 2.Financial Accounting and Reporting 3.Regulation 4.Business Environment and Concepts Passing score is 75. If all or part of the exam is taken outside New York State, scores must be officially “exchanged” with New York. Each exam part may be taken individually ONCE during a calendar year and ALL must be passed during one 18 month window of time. Becoming a CPA

16. Audit Office Experience Formerly, individuals needed 2 years of auditing experience to attain licensure. 1 year of experience could be waived if an individual had a masters (150 hour requirement). As of the August 1, 2009 change, all new CPA candidates must meet the 150 hour requirement and thereafter attain 1 year of qualify experience. “The amendment 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 … in public practice, government, industry, or educational institutions.” Becoming a CPA

17. Audit Office Must keep registration active ($290 for 3yrs) Must comply with annual CPE requirements Can no longer claim “inactive” status Are subject to disciplinary authority of NYSED Failure to comply may result in charges of unprofessional conduct and can lead to revocation of one’s CPA license. How does this affect CPA’s in industry?

18. Audit Office How do I check my current status? The New York State Department of Education - Office of the Professions has an on-line professional license verification system. The verification system can be found at the following address: http://www.op.nysed.gov/opsearches.htm The online verification will show your: CPA License number Date of licensure Current Status (registered, not registered, inactive) Date current registration expires

19. Audit Office Out of state CPAs whose principal place of business is NYS must become licensed and registered in New York. Out of state CPAs whose principal place of business is not NYS but provide attest or compilation services in NYS for a short period of time may obtain temporary practice permits. How does this affect those with a license from another state?

20. Audit Office If you have a CPA license from another state with significantly comparable licensure requirements you can apply for “Licensure by Endorsement”. To qualify you must have four years of experience under the supervision of a U.S. licensed CPA since your initial license was issued and within the last ten years and provide evidence of: Passing the CPA exam Completion of education requirements Experience history Licensure in good standing for each state Licensure by Endorsement

21. Audit Office The State Board for Public Accountancy may accept evidence of five years of acceptable public accounting experience following initial licensure and within the ten years immediately preceding your application for licensure in New York State if, at the time of licensure in the other jurisdiction: the licensing standards were not fully equivalent to the current New York State standards or, you passed an acceptable examination but under conditions not acceptable to New York State (for example, not passing two or more parts together prior to passing parts singly or not completing the examination within a three year period) Licensure by Endorsement

22. Audit Office 40 hours of general studies or 24 hours of concentrated study in one recognized area of study during each calendar reporting year. Must complete 4 hours of professional ethics CPE during triennial registration period. New licensees are exempt during their first triennial registration period. Bonus: Instructors may claim an additional 2 hours of CPE for each hour taught. What are the CPE requirements?

23. Audit Office Recognized areas of study Accounting Attest Auditing Taxation Advisory services Specialized knowledge and applications related to specialized industries What are the CPE requirements?

24. Audit Office Since the CPE period changed from the state fiscal year (9/1 to 8/31) to a calendar year, we have an additional four months to complete CPE this year. For this year only all CPE earned between September 1, 2008 and December 31, 2009 count towards the CPE requirement (40 hours general studies or 24 hours of concentrated study) CPE requirements Cont.

25. Audit Office Licensees who are not performing any type of accounting, tax, financial or management advisory work in NYS May request “inactive status” by filing a written statement with NYS containing the following: Statement that you are familiar with the requirements of the new law and that you believe you are eligible for inactive status Current job title and employer name and location with a brief explanation of why you are eligible for waiver of CPE (e.g. explanation of job duties) Inactive Status

26. Audit Office People who are currently not registered or are returning to active status must: First complete 24 hours of CPE within the 12 month period prior to returning to active status; Notify the SED and provide documentation supporting the 24 hours of CPE; and Following re-entry complete a pro rata portion of CPE for the remainder of the calendar year Returning from Inactive to Active Status

27. Audit Office For a limited time only … You can return to active status without first completing 24 hours of CPE in the preceding 12 month period … If you submit an application to reactivate your registration between February 1, 2009 and July 31, 2010. Returning from Inactive to Active Status

28. Audit Office Existing CPAs How does this effect existing CPAs at the university? Do we have a comprehensive list of who these individuals are and where they are employed? Does the Audit Office need to coordinate their CPE or licensing needs? Is the university at risk under the new regulations if an employed CPA fails to meet the state’s new regulations? Implications for Cornell

29. Audit Office Potential CPAs Increased mentoring opportunities for current staff to promote licensure Formerly only available in Audit Office Implications for Cornell

30. Audit Office Make sure you are registered Complete CPE requirements by December 31, 2009 Spread the word Coordinate CPE training so others can benefit Wrap Up

31. Audit Office NYSED – Office of the Professions: http://www.op.nysed.gov/cpa.htm New York State Society of CPA’s: http://www.nysscpa.org/ Phone or email questions to NYS Board of Public Accountancy: Phone: 518-474-3817 ext.160 Email: cpabd@mail.nysed.govcpabd@mail.nysed.gov Where can I get more information?