Ignorance of the Law Is Not a Defense
Grumet, Louis, The CPA Journal
In this digital age, most of us have installed software on a computer. It's basically the same process every time. After downloading a program off the Internet or loading a CD, you click "Next" through a series of screens before arriving at the ubiquitous License Agreement You know the one: warning you to PLEASE READ THE FOLLOWING LICENSE AGREEMENT CAREFULLY; written in legal jargon; and the approximate length of War and Peace. Below the Agreement are two small buttons asking you to either accept or decline the terms of the License Agreement. In order to move forward, you must accept the terms of the Agreement
So what usually happens at this point? Do most people carefully read the Agreement? Mark key stipulations with a red pen? Call their lawyer? No. For better or worse, most people simply click the button to accept the terms without even reading the first sentence. After more finger-numbing "Nexts," the software is installed and, more often than not, everything is fine.
But let's say that-having hastily accepted the Agreement-some users unknowingly violate its terms by installing a copy of the software on another computer. The software company discovers the violation and decides to sue. Can the users say they are not liable because they didn't read the Agreement? Of course not! Once users accept the Agreement they are responsible for upholding its terms-whether they have read them or not
The CPA's Responsibility
The same applies to New York State CPAs when it comes to upholding New York State laws. The very fact that practicing CPAs in New York State have been granted a license means they have implicitly agreed to obey the state's laws, even if they haven't read them all. Knowing the law is a CPA's responsibility and, like the case above, ignorance is not an excuse. CPAs can make a business decision to not practice in New York State, or to not practice in certain areas. But once CPAs have made a decision to practice in New York State, or to audit certain stateregulated entities, they have the responsibility to know and uphold all the state's laws affecting their practice. Although this may sound obvious (of course New York State CPAs should know and uphold New York State laws!), it may be so fundamental ... so seemingly simple ... that it may be overlooked.
CPAs who provide professional services to a client that is regulated by a state agency must fully understand applicable state statutes and regulations to ascertain whether state law includes requirements pertaining to the services to be rendered to that client Interpretation 501-3 of the Society's Code of Professional Conduct states, in part, "Engagements for audits of government grants, government units, or other recipients of government monies typically require that such audits be in compliance with government audit standards, guides, procedures, statutes, rules and regulations, in addition to generally accepted auditing standards," and members are obligated to follow such requirements. …