BILL ANALYSIS Ó AB 431 Page 1 Date of Hearing: April 12, 2011 ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION Mary Hayashi, Chair AB 431 (Ma) - As Amended: March 31, 2011 SUBJECT : Retired public accountants. SUMMARY : Authorizes the California Board of Accountancy (Board) to establish a retired status license for certified public accountants (CPAs) and public accountants (PAs). Specifically, this bill : 1)Authorizes the Board to establish, by regulation, a system for the placement of a license on a retired status, upon application, for CPAs and PAs who are not actively engaged in the practice of public accountancy or any activity which requires them to be licensed by the board. 2)Prohibits a retired status licensee from engaging in any activity for which a permit is required. 3)Requires the Board to deny an application for a retired status license if the applicant's permit is canceled or if the permit is suspended, revoked, or otherwise punitively restricted by the Board or subject to disciplinary action. 4)Requires, beginning one year from the effective date of the Board's regulations for placing a license on retired status, the Board to deny an application for a retired status license if the applicant's permit is delinquent. 5)Requires the board to establish minimum qualifications for a retired status license that may include, but are not limited to, a minimum age requirement and minimum years as a licensee. 6)Exempts a retired status license from any renewal requirements. 7)Requires the board to establish minimum qualifications for the restoration of a license in a retired status to an active status. These minimum qualifications shall include, but are not limited to, continuing education and payment of a fee, as specified. AB 431 Page 2 8)Provides that the placement of a license on a retired status shall not deprive the board of jurisdiction to commence or proceed with any investigation of or action or disciplinary proceeding against the licensee, or to render a decision suspending or revoking the license. 9)Provides for the following fees to be fixed by the Board: the application fee for a retired status license, at $250 or less; and, the application fee for restoration of a retired status license to active status, at $1,000 or less. 10)Requires retired license holders, when lawfully using the title "certified public accountant," the CPA designation, or any other reference that would suggest that the person is licensed by the Board on materials such as correspondence, Internet Web sites, business cards, nameplates, or name plaques, to place the term "retired" immediately after that title, designation, or reference. 11)Makes clarifying and technical changes. EXISTING LAW Regulates the practice of public accountancy under the California Accountancy Act by the Board within the Department of Consumer Affairs, requires persons licensed by the Board to complete specified continuing education (CE) requirements to maintain an active license, and sets various examination, certification, registration, and renewal fees for licensure. FISCAL EFFECT : Unknown COMMENTS : Purpose of this bill . According to the author's office, "?CPAs & PAs who want to retire from the profession, must either pay a renewal fee for an inactive license, or allow their license to expire (and thus become delinquent), and then "cancel" or "surrender" their license. "Accountants who have practiced for many years are very proud of their profession and believe a delinquent, cancelled, or surrendered status is undignified and try to avoid it. However, many retired licensees who simply want to stop paying for the AB 431 Page 3 active/inactive license fee have no other choice." Background . CPAs are Board certified, while PAs register with the Board. Both designations must hold a valid permit for the practice of public accountancy. Both must also pay license renewal fees and fulfill CE requirements. The Board offered a retired designation for CPAs and PAs in 1994, but discontinued the designation after abuse by some licensees attempting to skirt disciplinary action or avoid paying license renewal fees. CBA legislatively repealed the program in 1998. However, those in the profession have been requesting a reinstatement of the designation. Currently, CPAs and PAs who retire must continue paying renewal fees to maintain a license in good standing, voluntarily surrender their license, or stop paying renewal fees, which leads to a delinquent status and eventual cancellation. Support . The California Society of CPAs writes, "?current options leave good standing certified public accountants with a 'delinquent,' 'canceled,' or 'surrendered' status. Like many CPAs proud of their service, we consider such statuses to have a negative connotation that suggests the licensee was subject to a form of discipline. The retired status license designation provided for by Assembly Bill 431 will more accurately reflect the standing of CPAs who have chosen to retire from the profession in perfectly good standing." Previous legislation . AB 2191 (Emmerson), Chapter 548, Statutes of 2010, requires the Board of Behavioral Sciences to issue a retired license to a marriage and family therapist, educational psychologist, clinical social worker and professional clinical counselor, as specified. AB 2848 (Hernandez) of 2008, allows optometrists to apply for a retired license. This bill was held on the Senate Floor. REGISTERED SUPPORT / OPPOSITION : Support California Board of Accountancy (sponsor) AB 431 Page 4 California Society of CPAs (CalCPA) Opposition None on file. Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916) 319-3301