BILL NUMBER: SB 542 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 14, 2011
INTRODUCED BY Senator Price
FEBRUARY 17, 2011
An act to amend Sections 5000, 5015.6, and 6510 of the
Business An act to amend Sections 5000, 5015.6, 5076,
5076.1, 6510, and 6530 of, and to add Section 6582.2 to, the Business
and Professions Code, relating to professions and vocations.
LEGISLATIVE COUNSEL'S DIGEST
SB 542, as amended, Price. Professions and vocations: regulatory
boards.
Existing law provides for the licensure and regulation of various
professions and vocations by boards within the department
Department of Consumer Affairs , including
, the California Board of Accountancy and the
Professional Fiduciaries Bureau. Existing law authorizes the board to
appoint an executive officer and authorizes the Governor to appoint
the chief of the bureau. Under existing law, these provisions are
repealed on January 1, 2012. Under existing law, boards scheduled for
repeal are required to be evaluated by the Joint Sunset Review
Committee.
This bill would extend the operation of these provisions until
January 1, 2016, and would specify that these boards would be subject
to review by the appropriate policy committees of the Legislature.
With respect to accounting firms, existing law, until January 1,
2014, requires a firm, in order to renew its registration, to have a
specified peer review report accepted by a board-recognized peer
review group. Existing law, until January 1, 2014, requires the board
to appoint a peer review oversight committee of certified public
accountants to provide recommendations to the board relating to the
effectiveness of mandatory peer review. Existing law also requires
the board, by January 1, 2013, to provide the Legislature and the
Governor with a report regarding specified peer review requirements.
This bill would extend the operation of the peer review report
requirement and the peer review oversight committee to January 1,
2016, and would require the report to the Legislature and the
Governor to be submitted by January 1, 2015.
With respect to professional fiduciaries, existing law prohibits a
person from holding himself or herself out as a professional
fiduciary without a license issued by the bureau. Existing law
exempts from the license requirement a person enrolled as an agent to
practice before the Internal Revenue Service, as specified. Under
existing law, a license may be suspended, revoked, denied, or other
disciplinary action may be imposed for various reasons.
This bill would revise the exemption requirement by additionally
requiring that the enrolled agent provide only fiduciary services
that are ancillary to the primary services of an enrolled agent and
that those services be provided at the request of a client with which
the enrolled agent has an existing professional relationship. The
bill would authorize the bureau, instead of issuing an accusation or
statement of issues against a licensee or applicant, to enter into a
specified settlement with a licensee or applicant.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 5000 of the Business and Professions Code is
amended to read:
5000. There is in the Department of Consumer Affairs the
California Board of Accountancy, which consists of 15 members, seven
of whom shall be licensees, and eight of whom shall be public members
who shall not be licentiates of the board or registered by the
board. The board has the powers and duties conferred by this chapter.
The Governor shall appoint four of the public members, and the
seven licensee members as provided in this section. The Senate Rules
Committee and the Speaker of the Assembly shall each appoint two
public members. In appointing the seven licensee members, the
Governor shall appoint members representing a cross section of the
accounting profession with at least two members representing a small
public accounting firm. For the purposes of this chapter, a small
public accounting firm shall be defined as a professional firm that
employs a total of no more than four licensees as partners, owners,
or full-time employees in the practice of public accountancy within
the State of California.
This section shall remain in effect only until January 1, 2016,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2016, deletes or extends that date.
Notwithstanding any other provision of law, the repeal of this
section renders the board subject to review by the appropriate policy
committees of the Legislature. However, the review of the board
shall be limited to reports or studies specified in this chapter and
those issues identified by the appropriate policy committees of the
Legislature and the board regarding the implementation of new
licensing requirements.
SEC. 2. Section 5015.6 of the Business and Professions Code is
amended to read:
5015.6. The board may appoint a person exempt from civil service
who shall be designated as an executive officer and who shall
exercise the powers and perform the duties delegated by the board and
vested in him or her by this chapter.
This section shall remain in effect only until January 1, 2016,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2016, deletes or extends that date.
SEC. 3. Section 5076 of the Business
and Professions Code is amended to read:
5076. (a) In order to renew its registration, a firm, as defined
in Section 5035.1, shall have a peer review report of its accounting
and auditing practice accepted by a board-recognized peer review
program no less frequently than every three years.
(b) For purposes of this article, the following definitions apply:
(1) "Peer review" means a study, appraisal, or review conducted in
accordance with professional standards of the professional work of a
firm, and may include an evaluation of other factors in accordance
with the requirements specified by the board in regulations. The peer
review report shall be issued by an individual who has a valid and
current license, certificate, or permit to practice public
accountancy from this state or another state and is unaffiliated with
the firm being reviewed.
(2) "Accounting and auditing practice" includes any services that
are performed using professional standards defined by the board in
regulations.
(c) The board shall adopt regulations as necessary to implement,
interpret, and make specific the peer review requirements in this
section, including, but not limited to, regulations specifying the
requirements for board recognition of a peer review program,
standards for administering a peer review, extensions of time for
fulfilling the peer review requirement, exclusions from the peer
review program, and document submission.
(d) The board shall adopt emergency regulations in accordance with
the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code) to establish policies, guidelines, and procedures as outlined
in subdivision (c). The adoption of the regulations shall be
considered by the Office of Administrative Law to be necessary for
the immediate preservation of the public peace, health and safety, or
general welfare. The emergency regulations shall be submitted to the
Office of Administrative Law for filing with the Secretary of State
and publication in the California Code of Regulations, and shall be
replaced in accordance with the Administrative Procedure Act.
(e) Nothing in this section shall prohibit the board from
initiating an investigation and imposing discipline against a firm or
licensee, either as the result of a complaint that alleges
violations of statutes, rules, or regulations, or from information
contained in a peer review report received by the board.
(f) A firm issued a substandard peer review report, as defined by
the board in regulation, shall submit a copy of that report to the
board. The board shall establish in regulation the time period that a
firm must submit the report to the board. This period shall not
exceed 60 days from the time the report is accepted by a
board-recognized peer review program provider to the date the report
is submitted to the board.
(g) (1) A board-recognized peer review program provider shall file
a copy with the board of all substandard peer review reports issued
to California-licensed firms. The board shall establish in regulation
the time period that a board-recognized peer review program provider
shall file the report with the board. This period shall not exceed
60 days from the time the report is accepted by a board-recognized
peer review program provider to the date the report is filed with the
board. These reports may be filed with the board electronically.
(2) Nothing in this subdivision shall require a board-recognized
peer review program provider, when administering peer reviews in
another state, to violate the laws of that state.
(h) The board shall, by January 1, 2010, define a substandard peer
review report in regulation.
(i) Any requirements imposed by a board-recognized peer review
program on a firm in conjunction with the completion of a peer review
shall be separate from, and in addition to, any action by the board
pursuant to this section.
(j) Any report of a substandard peer review submitted to the board
in conjunction with this section shall be collected for
investigatory purposes.
(k) Nothing in this section affects the discovery or admissibility
of evidence in a civil or criminal action.
(l) Nothing in this section requires any firm to become a member
of any professional organization.
(m) A peer reviewer shall not disclose information concerning
licensees or their clients obtained during a peer review, unless
specifically authorized pursuant to this section, Section 5076.1, or
regulations prescribed by the board.
(n) (1) By January 1, 2013
2015 , the board shall provide the Legislature
and Governor with a report regarding the peer review requirements of
this section that includes, without limitation:
(1)
(A) The extent to which mandatory peer review of small
firms or sole practitioners that prepare nondisclosure compiled
financial statements on an other comprehensive basis of accounting
enhances consumer protection.
(2)
(B) The impact of peer review required by this section
on small firms and sole practitioners that prepare nondisclosure
compiled financial statements on an other comprehensive basis of
accounting.
(3)
(C) The impact of peer review required by this section
on small businesses, nonprofit corporations, and other entities that
utilize small firms or sole practitioners for the purposes of
nondisclosure compiled financial statements prepared on an other
comprehensive basis of accounting.
(2) A report to the Legislature pursuant to this section shall be
submitted in compliance with Section 9795 of the Government Code.
(o) This section shall remain in effect only until January 1,
2014 2016 , and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2014 2016 , deletes or
extends that date.
SEC. 4. Section 5076.1 of the Business
and Professions Code is amended to read:
5076.1. (a) The board shall appoint a peer review oversight
committee of certified public accountants of this state who maintain
a license in good standing and who are authorized to practice public
accountancy to provide recommendations to the board on any matter
upon which it is authorized to act to ensure the effectiveness of
mandatory peer review.
(b) The committee may request any information from a
board-recognized peer review program provider deemed necessary to
ensure the provider is administering peer reviews in accordance with
the standards adopted by the board in regulations. Failure of a
board-recognized peer review program provider to respond to the
committee shall result in referral by the committee of the provider
to the board for further action. Any information obtained by the
board, its representatives, or the peer review oversight committee in
conjunction with its review of peer review program providers shall
not be a public record, and shall be exempt from public disclosure,
provided, however, this information may be disclosed under any of the
following circumstances:
(1) In connection with disciplinary proceedings of the board.
(2) In connection with legal proceedings in which the board is a
party.
(3) In response to an official inquiry by a federal or state
governmental regulatory agency.
(4) In compliance with a subpoena or summons enforceable by court
order.
(5) As otherwise specifically required by law.
(c) The members of the committee shall be appointed to two-year
terms and may serve a maximum of four consecutive terms.
(d) The board may adopt, as necessary, regulations further
defining the minimum qualifications for appointment as a committee
member and additional administrative elements designed to ensure the
effectiveness of mandatory peer review.
(e) This section shall remain in effect only until January 1,
2014 2016 , and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2014 2016 , deletes or
extends that date.
SEC. 3. SEC. 5. Section 6510 of the
Business and Professions Code is amended to read:
6510. (a) There is within the jurisdiction of the department the
Professional Fiduciaries Bureau. The bureau is under the supervision
and control of the director. The duty of enforcing and administering
this chapter is vested in the chief of the bureau, who is responsible
to the director. Every power granted or duty imposed upon the
director under this chapter may be exercised or performed in the name
of the director by a deputy director or by the chief, subject to
conditions and limitations as the director may prescribe.
(b) The Governor shall appoint, subject to confirmation by the
Senate, the chief of the bureau, at a salary to be fixed and
determined by the director with the approval of the Director of
Finance. The chief shall serve under the direction and supervision of
the director and at the pleasure of the Governor.
(c) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date. Notwithstanding any other provision of law, the repeal of
this section renders the board subject to review by the appropriate
policy committees of the Legislature.
Notwithstanding any other provision of law, upon the repeal of
this section, the responsibilities and jurisdiction of the bureau
shall be transferred to the Professional Fiduciaries Advisory
Committee, as provided by Section 6511.
SEC. 6. Section 6530 of the Business
and Professions Code is amended to read:
6530. (a) On and after January 1, 2009, no person shall act or
hold himself or herself out to the public as a professional fiduciary
unless that person is licensed as a professional fiduciary in
accordance with the provisions of this chapter.
(b) This section does not apply to a person licensed as an
attorney under the State Bar Act (Chapter 4 (commencing with Section
6000)).
(c) This section does not apply to a person licensed as, and
acting within the scope of practice of, a certified public accountant
pursuant to Chapter 1 (commencing with Section 5000) of Division 3.
(d) This section does not apply to a person enrolled as an agent
to practice before the Internal Revenue Service who is
acting within the scope of practice pursuant to Part 10 of
Title 31 of the Code of Federal Regulations , who is providing
fiduciary services that are ancillary to the primary services of an
enrolled agent, and those services are provided at the request of a
client with which the enrolled agent has an existing professional
relationship. However, an enrolled agent who is soliciting clients
for fiduciary services or holding himself or herself out as a
professional fiduciary is required to obtain a license in accordance
with this chapter .
SEC. 7. Section 6582.2 is added to the
Business and Professions Code , to read:
6582.2. (a) Notwithstanding Section 6582 and Section 11415.60 of
the Government Code, the bureau may enter into a settlement with a
licensee or applicant instead of the issuance of an accusation or
statement of issues against that licensee or applicant.
(b) The settlement shall identify the factual basis for the action
being taken and the statutes or regulations violated.
(c) A person who enters a settlement pursuant to this section is
not precluded from filing a petition, in the timeframe permitted by
Section 11522 of the Government Code, to modify the terms of the
settlement or a petition for early termination of probation, if
probation is part of the settlement.
(d) Any settlement with a licensee executed pursuant to this
section shall be considered discipline and a public record and shall
be posted on the bureau's Internet Web site. Any settlement with an
applicant executed pursuant to this section shall be considered a
public record and shall be posted on the bureau's Internet Web site.