CPA group turns up the heat on peers.

Transparency, one of the new mantras coming out of the recent regulation, is causing accountants to sharpen their scrutiny of ethical compliance and dole out discipline to those from their own ranks who fail to serve the public interest adequately.

"We see ethics, compliance with ethics and having strong ethical standards and a strong system of discipline to support those standards as very important in maintaining the public image of CPAs," says Ian Benjamin, the volunteer Chairman of the Professional Ethics Committee (PEC) of the New York State Society of CPAs (NYSSCPA).

So, according to bylaw amendments passed in July, professional ethics violations by members of the NYSSCPA will now be brought to the attention of the New York State Education Department--the licensing authority for CPAs working in New York, as well as other appropriate agencies.

In essence, the new bylaws have inserted an additional layer to further protect the public, explains Benjamin, a CPA and managing director for American Express Tax and Business Services. "As a volunteer professional organization, the state society can provide sanctions as they relate to membership, but further discipline, etc., is doled out by other levels, such as the Education Department." He notes, however, that really "we are only talking about a very small percentage of the professionals, as the vast majority of the group's 30,000 members do comply."

Why the change now? He says that much attention is being given to the group's ethical procedures--how it disciplines, what it does and the timeliness of action. After reviewing its processes, the Ethics Committee has recommended the changes. Benjamin adds, "They came about partly because of a request from the State Education Department for us to consider sharing information with them about members under investigation."

Additionally, he says, the change came about because "we believe that it makes for greater transparency--and a better position for all of the members who do comply on a day-to-day basis." New York is not the only state that is cooperating with regulatory agencies and licensing authorities; other states are already passing on such information.

Now, once a violation is found, the state education department will be notified, and the issue could become a matter of license review. Previously, PEC investigations were handled privately and not communicated to the state. "So, it does raise the stakes somewhat for our members who become involved in inquiries," says Benjamin. The strict rules of confidentiality will still apply, however, unless it comes to a hearing or a settlement; it is then published in NYSSCPA's monthly newspaper, The Trusted Professional. This new bylaw gives the education division an earlier look at cases where the state society has found violations.

Benjamin says that while corrective action is a "disciplinary process, it is also an educational process." Once a violation is found, actions can range from requiring individuals to take courses in continuing professional education, to a harsher level where, in addition to additional education, they would be required to have their work reviewed.

For repeat visitors to the Ethics Committee, he says, "We would look at suspending members and, in the most egregious cases, terminating them." Such actions would be published in print and on the NYSSCPA Web site.