Proposed bylaws changes address associate memberships, ethics

The NYSSCPA Executive Committee on Nov. 17 approved several proposed changes to the Society’s bylaws, recommended by the Governance Subcommittee and the Professional Ethics Committee, and forwarded the proposals to the Board of Directors. On Dec. 15, the NYSSCPA Board of Directors approved the 11 recommended changes to the Society’s bylaws; the board voted on March 16 to submit those changes to the membership.

View the proposed bylaws changes here.

Revisions to the Society’s bylaws require a general membership vote. A ballot that features the proposed bylaws changes and the slate of 2012–2013 board and officer nominees is included with the April issue of The Trusted Professional. The Nominating Committee report and biographical information for the nominees appear on pages 3–5 of the print edition. The 11 proposed changes are printed in their entirety beginning on page 6. Deletions and additions to the bylaws have been published as a single document to illustrate the exact changes being proposed. Members should carefully read and then vote to approve or oppose the revised definitions and rules to the bylaws, to which they will be held accountable if adopted.

The Governance Subcommittee, a subcommittee of the Board of Directors, is charged with continually reviewing the Society’s governance documents and recommending appropriate changes to the Board of Directors. The subcommittee includes board members Robert E. Sohr, who serves as chair; Anthony Cassella; Douglas L. Hoffman; Anthony J. Maltese and F. Michael Zovistoski; and FAE President-elect John Kearney.

Changes to membership categories
Two bylaws changes would modify the Society’s terms for associate membership. Currently, CPA candidate members of the Society are accepted for a five-year term, during which time they are expected to obtain a CPA license. If after five years, the member has failed to become a licensed CPA and thus become a CPA member of the Society, the individual’s membership is terminated.

The proposed change (Prop. 1, page 6) would allow a CPA candidate to remain a member of the Society until notifying the Society of his or her qualification to become a CPA member, eliminating the five-year deadline and extending CPA candidate membership indefinitely. The board unanimously approved the proposal.

The second proposed membership-related change (Prop. 2, page 6) addresses student memberships. Currently, student members are required to reapply and renew their membership every 12 months, or the membership is terminated. The proposal would allow a student member to maintain Society membership throughout the entirety of his or her matriculation, eliminating the 12-month renewal requirement. The board unanimously approved the proposal.

Procedural change
A change to the bylaws amendment process (Prop. 11, page 7) would allow the board to make administrative changes to Society bylaws—such as fixing grammatical errors, renumbering or reformatting text—without a membership vote. Substantive changes that would alter the underlying meaning of a bylaw provision would still go to membership vote, and any proposed administrative changes would require a supermajority (two-thirds) vote of the board for approval. The board unanimously approved the proposal.

Ethics changes
The Professional Ethics Committee also recommended bylaws changes (Prop. 3–10, page 6) to the Governance Subcommittee and Executive Committee in November. The proposed changes were the work of a PEC task force chaired by NYSSCPA Past President Jo Ann Golden and included Gary E. Carpenter and Victoria L. Pitkin, all members of the PEC. The Executive Committee and Governance Subcommittee reviewed the PEC’s proposed changes, and the following four proposals were approved and forwarded to the Board of Directors. The board approved the changes on Dec. 15, and voted on March 16 to put them up for membership vote.

Criminal convictions
The proposal would clarify the Society’s existing bylaws pertaining to the criminal conviction of a member, impairment of license to practice public accounting and denial of license. The proposed change makes various omnibus revisions to Sections 2, 3 and 4 of Article XII, the ethics provision, to provide clarity in the language and make the existing bylaws consistent with the AICPA’s Code of Professional Conduct.

Currently, the bylaws state that a member convicted of a felony is subject to automatic suspension of membership without a hearing. One revision would replace the term “felony” with “a crime punishable by imprisonment for more than one year,” consistent with the AICPA’s bylaws.

Additional language would give the Board of Directors the ability to consider a petition from the member or the PEC to suspend discipline of the member, with or without a hearing.

“The concern was if there is an auto suspension or expulsion from membership, is there an opportunity for an individual to file for reinstatement?” said Sohr. “We made it clear in the bylaws that the board may consider a timely written petition that’s filed by either the PEC or the member, that the member should not be disciplined automatically. Otherwise it’s automatic, and there’s no hearing.” The board unanimously approved the proposal.

Automatic discipline
Another proposed change to Article XII would adopt the AICPA’s language regarding automatic discipline for specified government agencies.

Since 2003, the AICPA has invoked automatic discipline procedures to respond to certain circumstances in which specified governmental and regulatory agencies—such as the SEC—suspended, prohibited or restricted the practice of members as a disciplinary measure, wrote the PEC in its revision proposal.

This proposed bylaws change would align the Society’s automatic discipline bylaws with those of the AICPA, with regard to specified governmental agencies or other organizations approved by the AICPA.

NYSSCPA members subject to any sanction as a disciplinary action by an authority approved by the AICPA would also be subject to suspension or termination without a hearing, according to the proposed bylaws change. The board approved the proposal with 35 votes, with one abstention.

Disclosure to regulatory authorities
To provide remediation to a member whom the PEC has determined violated the Society’s Code of Professional Ethics in a serious but nonegregious manner, the committee may decide to issue a letter of required corrective action. Violations that might warrant an RCA might include failing to perform an audit properly or erroneously filling out a tax form—unintentional mistakes that indicate a lack of understanding or education, not malice.

“A letter of required corrective action is one of the procedures that we use to quickly move a case to a conclusion,” said Sohr. “The intent of it is primarily remedial. We want to get the CPA involved as a respondent in an ethics case to agree with us that, yes, they messed up and didn’t do what they should have done, and agree that they should take, for example, additional CPE courses. The intent of the RCA is to improve the level of performance of CPAs and to give them the education needed so that they will not violate the Code of Professional Conduct again.”

Since 2003, the Society’s bylaws required the PEC to automatically notify the New York State Education Department every time an RCA was accepted by a Society member. Under the proposed bylaws changes (page 6), the PEC would no longer be required to notify the SED of such cases, though it would retain the right to do so.

“One of the things we want to do is encourage CPAs to really understand what it means to perform properly. We want to assist them, we want to help remediate,” said Golden. “In the spirit of what [the] PEC was really given to do, and what we, in terms of policing our own profession, were really trying to do is make better CPAs.”

This proposal inspired much discussion among the board before it was approved with a vote of 20-16.
Supporters of the bylaws change contended that a CPA charged with an ethics violation might feel that agreeing to an RCA—and essentially admitting to wrongdoing—would be to open himself or herself up to an investigation and potential disciplinary actions from the SED, which would automatically receive notice of the RCA agreement.

“The letter of RCA is remedial … it’s a helping tool,” said Golden. “But by automatically sending it to the SED, you might be putting somebody’s license in jeopardy.”

That’s not to say that the PEC can’t inform the SED, she emphasized, but the proposal would make it an option, not a requirement.

“It’s very important [to notify the state] when we sanction someone with suspension or expulsion — those are situations where we know they’ve crossed the line,” Golden said. But if the violation was not egregious, the CPA “needs the chance to improve without having to feel their license is in jeopardy,” she said.

But eliminating a measure of transparency that the Society already put in place would seem suspicious to the SED, said Sohr, who voted against the proposed change on those grounds.

“I think as the state CPA society, we have an obligation, which is part of our mission, to protect the public,” said Michele Mark Levine, a member of the board and Governance Subcommittee, who also voted against the proposal. “In order to do that, we need to be on the same side as the state licensing authority and share relevant information that we have. I think it is in our interest as a profession to promote transparency. We do a disservice when we fail to share information that we have. I think it is not in our interest to appear to be protecting or covering up for the failures of members of our profession.”

Levine said she is sympathetic to the reasons behind the proposed change, but that her opinion about it may be somewhat influenced by being a member in government (she works in the New York City Office of Management and Budget).

“I think my colleagues who disagree with me are well intentioned. I don’t question their motives,” Levine said. “But I question the outcome.”

The NYSSCPA is the only state society participating in the Joint Ethics Enforcement Program with the AICPA that voluntarily reports investigations to a state licensing regulatory body.

Notification letters
When a complaint is filed against a CPA with the Society’s PEC, the complainant is not directly notified of whether an investigation was opened as a result, or of the outcome of an investigation. The proposed bylaws change would require the PEC to notify complainants by letter that an investigation has been conducted and concluded as a result of their complaint, although the PEC would not be obligated to disclose the outcome of the investigation.

Sohr pointed out that in some cases, such as when a member is suspended or expelled from the Society, a complainant may discover the result of an investigation because those notices are published in The Trusted Professional. Likewise, if the PEC finds that there is insufficient information to support a complaint and justify opening an investigation, the complainant is notified.

“The PEC doesn’t need to tell them the outcome, just that the matter has been settled,” Sohr said.

The board voted 33-2, with J. Michael Kirkland and Pei-Cen Lin opposed, and Barbara A. Marino abstaining; the proposal was approved.