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CPAs Granted Exception To New York PI Licensing Statute

CPAs Granted Exception To New York PI Licensing Statute

An issue that periodically arises is the potential dual license requirement imposed on other regulated professions that may perform tasks which might otherwise necessitate being a licensed private investigator. Examples have involved computer forensic experts, fire, arson and explosion experts with reference to determining cause and origin, accident reconstruction experts, failure and design experts, audio/video technicians, and various professions that might be otherwise regulated, such as attorneys, engineers, Certified Public Accountants, individuals with certification designations of CFE, CFCS or CSAR designations and others who might be recognized as experts in state and federal courts.  

New York Senate Bill S.-4996 (Senator Michael Venditto) and Assembly Bill A.-7691 (Assemblyman Robin L. Schimminger) passed both houses. The bill was initially opposed by ISPLA and the Associated Licensed Detectives of New York State, Inc. (ALDONYS) on the grounds that it appeared that CPAs were seeking to obtain a private investigator license by exemption. This issue is similar to those in other states, some of which require PI licensing, some which do not, some that are not addressing this issue, and some which offer limited exceptions. ALDONYS eventually opted to support the latter choice. However, ALDONYS initial position opposed any concept of merely granting a license to another discipline as such action would be in conflict with the existing PI statute in New York and deleterious to the public since it would grant a PI license to those persons not qualified to perform such services either by training, experience or statute. Adding to the confusion over this bill had been the dissemination of a press release issued by the New York State Society of CPAs wherein they indicated that in conducting a forensic accounting investigation they routinely performed a background investigation of the subject. Such activity would clearly fall under the existing PI licensing statute in New York.

CPAs in New York presently are regulated under a provision of that state’s Education Law which in part allows them to perform the following:

• Identification of potential violations of ethical behavior
• Fraud Detection and deterrence
• Application of business law and laws relating to fraud, including:

Cognizance of the fundamental legal principles associated with contracts, civil and criminal matters, social justice goals associated with the legal system and the role of the justice system;

Familiarization with legal restrictions, privacy laws, and rights of individuals in gathering evidence of embezzlement, money laundering, and other issues related to fraud 

For several decades this writer has worked closely with Frederick M. Altman, the legislative counsel for ALDONYS who submitted the following memorandum regarding this legislation.    

SUBJECT: Amend General Business Law in Relations to Exemptions for Forensic Certified Public Accountants 

“This bill would grant an exemption to forensic certified public accounts from the requirement to obtain a private investigator’s license under Article 7 of the General Business Law as long as the forensic CPA limited their activities to those for which they are already licensed pursuant to the CPA licensing statute, Education Law §149.

“The bill originally caused some confusion as it appeared that CPA’s were seeking to obtain a PI license by exemption.  ALDONYS initially opposed that concept on the grounds that merely granting a license to another discipline would be in conflict with the existing PI licensing statute and would be deleterious to the public since it would essentially grant a PI license to persons who are not qualified to perform that service either by training, experience or statute.

“The proponents of the bill have, however, clarified their position.  CPA’s are not seeking to become PI’s.  They are merely seeking to avoid having to have duel licenses.  

“The bill, as presently introduced specifically provides that the exemption from obtaining a PI license is limited to those education law performing only activities for which they are already authorized.

“The limiting language of the bill states: “Any person licensed as a certified public accountant while engaged in the practice of public accountancy as defined in the Article 149 of the Education Law…while performing services regulated under Article 149 of the Education Law…and whose business does not embrace other activities described in §71 of this Article”.  Section 71 is the PI licensing statute.

“To the extent that certain earlier sponsoring memos may have been vague on this point, the clear language of the bill should control.

“ALDONYS position is, therefore, that as long as CPA’s do not seek to perform services that go beyond those for which they are already licensed under the Education Law they would not have to obtain a PI license.  To the extent that they go beyond those Education Law authorized services and  ‘embrace other activities’ described in §71 of Article 7 of the General Business Law, they would be then subject to being charged with unlicensed activities of private investigator.”

Thus, certified public accountants in New York were only seeking a restrictive clarification, not an expansion of their authority. Opponents of ALDONYS’ position failed to note that the initial statement put forth by the NYSSCPAs is not the controlling factor. Nor is the justification statement “In addition, CPAs often conduct background checks when performing assessments of work around a breach of privacy or cyber security attack” part of the bill.  The actual bill that was passed is! The officers of ALDONYS and an overwhelming number of the ALDONYS board were in favor of the bill as passed. Seven of them are also members of ISPLA. The undersigned, who also serves as  board member of the New York Chapter #14 of the ACFE, the Society of Professional Investigators, and INTELLENET represented only the positions of ISPLA and ALDONYS in this matter. 

Our profession’s state PI licensing programs are also under attack from professional associations representing other disciplines. The American Bar Association seeks to reverse the trend of state licensing of computer and digital forensic experts; the International Association of Arson Investigators and the National Association of Fire Investigators representing approximately 13,000 professional Certified Fire Investigators and Certified Fire and Explosion Investigators also are lobbying against licensing of their members as private investigators. The American Institute of Certified Public Accountants have made an online guide to their members detailing states and cities requiring CPAs practicing forensic accounting to be licensed as a private investigator. These associations have far more members and financial resources than the investigative profession. We have to pick our battles carefully.

Bruce Hulme

ISPLA Director of Government Affairs

www.ISPLA.org