Certified Public Accountants Scope of Practice

The following information is being provided in response to questions the Department's Office of the New York State Board for Public Accountancy (Board) has received regarding the registration requirements for licensed certified public accountants (CPAs), the differences between active and inactive registration statuses and the effect that these different statuses have on a licensee's mandatory continuing professional education (CPE) obligations. However, it should be noted that, while the Department can provide information regarding the applicable laws and regulations, the Department does not answer hypothetical questions, issue advisory opinions or offer detailed legal advice. Additionally, although the Department is able to provide general guidance with respect to the practice of the professions, the appropriateness and legality of any particular activities performed by a licensed professional will depend on the particular circumstances presented.

There is a difference between licensure and registration. In New York, upon satisfying the licensure eligibility requirements, a license is awarded. Licensure is for life unless suspended, revoked or annulled for reasons of misconduct. However, in order to practice as a CPA in New York and use either one of these titles, a licensee must be currently registered. Registration is for a three-year period, except for the second registration period, which is prorated to move licensees to month of birth renewal.

Based on the questions the Board has received, it appears that there may be some misunderstandings regarding when a CPA's registration is "registered," "inactive" or "not registered." Those terms are briefly described below:

Registered – the licensee is "active" and allowed to work within the scope of practice.
Inactive – the licensee is not allowed to work within the scope of practice.
Not registered - a registration has lapsed without explanation. A licensee is not allowed to work within the scope of practice.
A New York CPA may decide to leave the "practice of public accountancy," as defined in section 7401 of the Education Law and section 70.1 of the Regulations of the Commissioner of Education (Commissioner's Regulations), and request to have his or her registration moved to an inactive status. However, a CPA cannot represent himself or herself as a CPA or perform any of the services described in section 70.1 of the Commissioner's Regulations, which are listed below, unless his or her registration is active.

In order to have an active registration, a CPA must satisfy all the requirements for active registration, which include paying the triennial registration fee and completing CPE, as set forth in section 7409 of Education Law. CPE is essential to a CPA's ability to both maintain his or her professional competence and provide quality services to the public.

All New York licensed CPAs are considered to be practicing public accountancy if they are providing the services described within the scope of practice provisions of section 70.1 of the Commissioner's Regulations.

Section 70.1 of the Commissioner's Regulations state that:

Pursuant to Education Law section 7401, the practice of public accountancy is defined as:

1. offering to perform or performing attest and/or compilation services, as defined in Education Law section 7401-a of this Article;
2. incident to the services described in subdivision (a) of this section, offering to perform or 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 (emphasis added); or
3. offering to perform or performing, for other persons one or more types of the following services, including, but not limited to, accounting, management advisory, financial advisory, and tax exclusive of services within subdivisions (a) and (b) of this section, which involve use of the professional skills or competencies described in paragraph (1) of this subdivision of the licensed accountant, including professional services rendered to one's employer not required to register under Education Law section 7408, in any and all matters related to accounting concepts and to the recording of financial data or the preparation or presentation of financial statements.
   1. Professional skills and competencies. The practice of public accountancy shall include accounting, management advisory, financial advisory, and tax exclusive of services within subdivisions (a) and (b) of this section, which involve, but shall not be limited to, use of the following professional skills or competencies:
      1. Application of accounting skills, which shall include:
         1. preparation of financial statements and note disclosures;
         2. analysis of the effects of transactions on account balances;
         3. analysis of account balances;
         4. calculation of key financial ratios and interpretation of the results of such calculations; and
         5. application of appropriate generally accepted accounting principles in practice.
      2. Application of transaction processing cycles and the control environment, which shall include:
         1. development of a flow chart to explain operational processes;
         2. identification of potential weaknesses in a company's internal control structure, including computer information systems controls; and
         3. evaluation of corporate governance and structure.
      3. Identification of potential violations of ethical behavior;
      4. Fraud detection and deterrence;
      5. Application of business law and laws related to fraud, including:
         1. cognizance of the fundamental legal principles associated with contracts, civil and criminal matters, social goals associated with the legal system and the role of the justice system;
         2. recognition of the advantages and disadvantages of the different forms of business organization;
         3. recognition of the ethical duties and legal responsibilities associated with confidentiality; and
         4. familiarization with legal restrictions, privacy laws, and rights of individuals in gathering evidence of embezzlement, money laundering, and other issues related to fraud.
      6. Application of tax law:
         1. application of current federal income tax laws for individuals and businesses;
         2. application of current state and local income tax laws for individuals and businesses;
         3. application of financial planning concepts to current gift and estate tax laws;
         4. calculation of payroll taxes; and
         5. calculation of sales and use taxes.
      7. Application of government and not-for-profit accounting principles, including:
         1. analysis of the differences between financial reporting for a business enterprise and a government or not-for-profit entity; and
         2. preparation of financial statements for a governmental or a not-for-profit organization by applying appropriate accounting concepts.
      8. Application of management accounting concepts, including:
         1. evaluation of data to support decision-making; and
         2. analysis of expenses to reduce a company's costs and improve profitability.
      9. Application of finance concepts, including:
         1. calculation of the time value of money;
         2. analysis of debt versus equity in business financing decisions; and
         3. evaluation of investment opportunities using discounted cash flow, net present value, and risk analysis.

It is important to note that, even if a CPA is not actively providing any of the types of services described in the above-referenced scope of practice provisions for public accountancy, he or she is still not permitted to represent himself or herself as a CPA unless he or she has an active registration to practice.

Additionally, pursuant to section 29.10(a)(14) of the Rules of the Board of Regents (Regents Rules), unprofessional conduct in the practice of public accountancy includes, among other things, failing to maintain active registration with the Department when a licensee engages in the practice of public accountancy pursuant to section 7401 of the Education Law or uses the title "certified public accountant" or the designation "CPA" or the title "public accountant" or the designation "PA."

Section 29.10(a)(14)(iii)(b) of the Regents Rules defines the use of the title "certified public accountant" or "public accountant" or designation "CPA" or "PA" as any representation that a person holds a license as a CPA or PA, provided that the representation is made by the licensee, or by someone associated with the licensee who the licensee has knowingly allowed to make such representation, or by someone serving as the licensee's agent who the licensee has knowingly allowed to make such a representation.

Section 29.10(a)(14)(iii)(c) of the Regents Rules defines representation as follows:

A representation shall include, but not be limited to, any oral, electronic, or written communication within the control of the licensee, indicating that the person holds a license, including without limitation the use of titles or designations on letterheads, reports, business cards, brochures, resumes, office signs, telephone directories, websites, the Internet, or any other advertisement, news article, publication, listing, tax return signature, signature on experience certifications for licensure applicants, the display of licenses as a certified public accountant or public accountant from this or any other jurisdiction, or the display of certificates or licenses from other organizations which have the designation "CPA" or "PA" or use of the title "certified public accountant" or "public accountant" with the licensee's name.

The following is a non-exhaustive list of terms/descriptors frequently found in New York CPAs' professional titles, roles, job descriptions or in a list of their employment duties:

• "accountant" or "accounting" or "account"
• "auditor" or "auditing" (internal or external)
• "bookkeeper" or "bookkeeping" or "recordkeeping"
• "broker"
• "business"
• "compliance" or "internal control" or "risk management"
• "construction manager"
• "consulting" or "consultant"
• "controller" or "comptroller"
• "expert witness"
• "financial" or "finance" (such as with "manager," "officer," "analyst" or "planner")
• "forensic"
• "fraud"
• "insurance"
• "investment"
• "human resources / executive recruiting"
• "mergers" or "acquisitions" or "M&A"
• "payables" or "receivables"
• "payroll"
• "pension" or "actuary" or "actuarial" or "valuation"
• "portfolio" (such as with "investments" or "real estate" or "securities")
• "securities"
• "tax" or "taxation"
• "treasurer" or "treasury"

These terms/descriptors, which may be found in a variety of combinations and/or with various modifiers (e.g., "chief," "assistant," "professor," "deputy," etc.), usually indicate that the services provided by the CPA are within the scope of practice of public accountancy, even if the CPA is an officer or employee of an enterprise outside of public accounting and is not providing services to clients or customers.

As described in more detail below, a CPA must, if he or she seeks an inactive registration status, submit a written request, via the Public Accountancy Registration Renewal Addendum Form , to the Department, which explains and documents, to the Department's satisfaction, why his or her employment does not include the provision of services that are within the scope of practice of public accountancy, despite the use of any of the above-referenced terms/descriptors and/or modifiers in his or her professional title, role, or job description or in a list of his or her employment duties.

Serving on a Board of Directors or Board of Trustees

A CPA , with an inactive registration, may in some circumstances be permitted to serve on governing boards of commercial and not-for-profit entities, or on committees of such governing boards, without being considered as providing services within the scope of practice of public accountancy. Accordingly, a CPA would not be subject to the CPE requirement, as long as he or she does not provide attest or compilation services, serve as an employee of the organization, or otherwise provide services specifically described as being within the scope of practice of public accountancy. However, if the CPA serves on a publicly held company’s governing board or committee and becomes the designated financial expert, as defined by the Sarbanes Oxley Act of 2002, he or she must maintain an active registration and be in compliance with the CPE requirements.

Preparing Tax Returns for Family Members

A CPA with an inactive registration may be permitted to prepare income tax returns, and other tax returns, for oneself and their family members, without being considered as providing services within the scope of practice of public accountancy, as long as the licensee does not perform these services for a fee, is not on the Internal Revenue Service’s Tax Preparer Identification Number (PTIN) registry, and does not sign the tax returns as a paid preparer. Otherwise, the CPA must be in compliance with the CPE requirements and maintain an active registration.

Teaching a college course, CPA review course, or CPE course

A CPA who teaches a college level accounting course; a CPA review course for the CPA examination; or a formal CPE course offered by an approved CPE provider must be in compliance with the CPE requirements and maintain an active registration.

It should be noted that there is no specific exemption, in law or regulation, from the registration and/or CPE requirements for CPAs who are dually licensed in New York State. Thus, it has been determined that if a licensed CPA is using the skills and competencies of public accountancy, regardless of the fact that he or she is doing so in the course of his or her practice in the other profession/occupation he or she is dually licensed in, the CPA is considered to be working within the scope of practice of public accountancy. Accordingly, the CPA must be in compliance with the CPE requirements and maintain an active registration. Examples of dually licensed individuals include, but are not limited to:

• "attorney"
• "insurance broker"
• "real estate broker"
• "securities brokers/dealers"
• "tax preparers"

​In order to be granted an inactive registration status, the New York CPA must complete the Public Accountancy Registration Renewal Addendum Form and submit it to the Board Office at cpabd@nysed.gov. The request may be submitted no more than five (5) months prior to the end of the current registration period and must include current employment information, including dates of employment, principal place of business, job title, and job description.

Please note: “N/A” will not be accepted as a job title. If you are employed, you must provide your employment information. If you are not working you must indicate, unemployed, retired, etc., as applicable.

The Board Office will review the submitted information, make a determination if the New York CPA is or has been working within the scope of practice, and will subsequently grant or deny, in writing, the CPA's request for inactive registration status.

An individual who is licensed as a CPA in another jurisdiction, practicing in the scope of practice noted above, and has a principal place of business in New York State, must file an application to become licensed in New York State.

Initial licensing requirements can be found here. Licensure by endorsement can be found here. Questions not found on the licensing pages may be sent to CPABD@nysed.gov.

If a New York CPA is uncertain as to whether he or she is eligible to be granted inactive registration status, he or she should contact the State Board for Public Accountancy in the Office of the Professions of the New York State Education Department, in Albany, New York at cpabd@nysed.gov or 518-474-3817 ext. 160.