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Ethical Dilema

I've recently discovered our CPA is licensed but unregistered in NYS.  I've alerted those within the organization that need to know and it stopped there.  I know we are not this person's only client.  Do I have an obligation to contact the state authorities?



Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

What activities is the CPA (who is working as a CPA, not just in an accounting role) doing for your firm?

This is the broad criteria In New York State:

"Licensed accounting professionals - called certified public accountants (CPAs) or public accountants (PAs) - prepare, evaluate, and attest to the accuracy and completeness of financial statements and related information. Only a licensed CPA or PA may perform the attest function in New York State. CPAs and PAs may also provide tax planning, financial advisory and management advisory services. These particular services may also be provided by unlicensed individuals in NYS. The term "public" in the CPA and PA titles typically refers to third-party reliance on the integrity of the financial information presented by the licensed accountant. However, CPAs and PAs may also be employed in private industry, government, not-for-profit and educational institutions where they apply their professional skills and knowledge to help ensure that the employing entities books, records, management and financial operations are maintained in a manner consistent with applicable standards."

Is the person violating the aforementioned?

Peter Rennard
Title: Principal
Company: SBR Group
(Principal, SBR Group) |

I am A CPA who works for a major tax preparation software company. There is only one state, California, according to our internal guidance where for tax purposes a CPA has to hold a state unique license to prepare state taxes.

For the attest function (signing off on financial statements), there may very well be a different requirement in NYS. I do not know.

All that to say, is you need to be very careful about whether or not your CPA can practice in NYS. For example, his/her license may allow them to practice as an individual, but they cannot hold themselves out as a firm unless they are registered with NYS.

Bottom line, tread very lightly here. A discrete phone call to the NYS Board of Accountancy may provide some additional insight.

(treasury) |

If this person is holding himself/herself out as a CPA without being registered with the state, then you should notify the state board of NY.

He/she can do accounting work without the CPA designation, but that doesn't sound like the case here.

Do you have an obligation? Legally, probably not. But I suspect that since you have already notified certain people with the organization you know that what is occurring is wrong and you are really asking how to correct it.

Topic Expert
Dana Price
Title: Vice President, M&A
Company: McGraw Hill Education
(Vice President, M&A, McGraw Hill Education) |

Did you ask your CPA why he/she is not registered?

Does your CPA know the NYS requirements changed a couple years ago and there is no "inactive" status anymore (depending upon what they are actually doing) and all CPA's must register again?

(HR) |

Thank you all for your comments and replies. The CPA is a one man firm that is also listed as unregistered in NYS. He is preparing financial statements for us but I know he has other clients. He is a licensed CPA however, he is unregistered as per the NYSED site. If he's been under a rock for the past 4 years regarding the new requirements I think that is even worse than willful neglect.

Jason M. Jones LPA
Title: Client Service Coordinator
Company: Hemphill Wright & Associates CPAs
(Client Service Coordinator, Hemphill Wright & Associates CPAs) |

To the OP:

I have some questions in which the details your provide may answer your initial question:

First, I am confused. You say that he is licensed but not registered in NYS. First of all, if a person is licensed with a particular state, then s/he is already registered with that state by default. So my first question is, are they licensed in NYS or are they licensed in another state?

Also, you said that his CPA firm is not registered with NYS. Is his firm registered with the same state where he is licensed?

Third question, and this is very important: You say that he is preparing financial statements for your company, but are they compiled, reviewed, or audited financial statements (does he include a "cover letter" whereby he signs his name as a CPA on them)? Or is he just doing bookkeeping level informal financial statement preparation intended just for management use only?

Fourth question: Is your company primarily domiciled in NYS or is it domiciled out-of-state and he is merely working at a branch or satellite office located within NYS?

I ask this questions because what has not been clearly determined is in what state the CPA and his firm is licensed and registered in (if at all), what exactly is the scope of the services he is providing (not all accounting related services necessarily require a CPA license), and whether his services fall under incidental practice based on where the company is primarily located.


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