BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 542|
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THIRD READING
Bill No: SB 542
Author: Price (D)
Amended: 5/5/11
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 9-0, 5/2/11
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Walters, Wyland
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/16/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
SUBJECT : Professions and vocations: regulatory boards
SOURCE : Author
DIGEST : This bill extends the provisions establishing
the California Board of Accountancy (CBA), and its
executive officer, and extends the Professional Fiduciaries
Bureau (PFB), and makes other changes, as specified.
ANALYSIS : Existing law:
1. Licenses and regulates some 40,000 certified public
accountants (CPAs) under the Accountancy Act by the CBA
within the Department of Consumer Affairs (DCA), and
makes the CBA inoperative and repealed on January 1,
2012.
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2. Authorizes the CBA to appoint an executive officer, and
makes that authority inoperative and repealed on January
1, 2012.
3. Requires, in order to renew its registration, that an
accountancy firm, must have a peer review report of its
accounting and auditing practice accepted by a
CBA-recognized peer review program every three years, as
specified.
A. Defines "peer review" as study, appraisal, or
review conducted in accordance with professional
standards of the professional work of a firm by
another licensee unaffiliated with the licensee or
registered firm being reviewed.
B. Sunsets the peer review provisions on January 1,
2014.
4. Requires the CBA, by January 1, 2013, to provide the
Legislature and the Governor with a report regarding
peer review of small firms or sole practitioners that
prepare nondisclosure compiled financial statements on
another comprehensive basis of accounting. The report
must include the following: the extent to which
consumer protection is enhanced; the impact upon those
firms; the impact on small businesses, nonprofit
corporations, and other entities that utilize these
firms' services.
5. Requires the CBA to appoint a peer review oversight
committee, composed of California-licensed CPAs, to make
recommendations to the CBA on any matter to ensure the
effectiveness of mandatory peer review, and sunsets this
provision on January 1, 2014.
6. Licenses and regulates some 516 professional fiduciaries
under the Professional Fiduciaries Act (PFA) by the PFB
within the DCA, and makes the PFB inoperative and
repealed on January 1, 2012.
7. Establishes a Professional Fiduciaries Advisory
Committee composed of seven members: three members of
which are licensed as professional fiduciaries, and four
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are public members. The three licensees and two public
members are appointed by the Governor and the Senate
Rules Committee and the Assembly Speaker each appoint a
public member of the committee.
8. Provides that if the PFB is repealed, the
responsibilities and jurisdiction of the PFB shall be
transferred to the Professional Fiduciaries Advisory
Committee, and that Committee shall be established as
board within DCA.
9. Provides that no person shall act or hold
himself/herself out as a professional fiduciary unless
that person is licensed as a professional fiduciary in
accordance with the PFA, or are exempt from the PFA.
Those exempt from the PFA include: attorneys, CPAs
acting within their scope of practice, and enrolled
agents acting within their scope of practice.
10.Authorizes the PFB to impose disciplinary action,
including: license denial, suspension, probation, or
revocation, and requires the PFB to provide on the
Internet information regarding any enforcement
action(s).
11.Requires all proceedings against a licensee for
violations of the PFA, including all accusations
statements of issues, and stipulated agreements, to be
conducted in accordance with the Administrative
Procedure Act.
This bill:
1. Extends the operation of the CBA and its executive
officer, until
January 1, 2016, and specifies that the CBA is subject to
review by the appropriate policy committees of the
Legislature.
2. Extends the sunset dates of the peer review program, and
the peer review oversight committee to January 1, 2016.
3. Extends the timeframe for the CBA to submit the report
to the Legislature and the Governor regarding the effect
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of peer review on specified small firms or sole
practitioners to January 1, 2015.
4. Extends the operation of the PFB, until January 1, 2015,
and specifies that the PFB is subject to review by the
appropriate policy committees of the Legislature.
5. Revises the exemption from the professional fiduciary
licensing requirement for enrolled agents, to instead
apply to an enrolled agent 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 solicits clients for fiduciary
services or holds himself /herself out as a professional
fiduciary shall hold a license in accordance with the
PFA.
6. Authorizes the PFB to enter into a stipulated settlement
agreement with a licensee or applicant prior to the
PFB's issuance of an accusation or statement of issues
against the licensee. Requires the settlement to
include language identifying the factual basis for the
action taken, and a list of the statutes or regulations
violated. Authorizes a licensee to file a petition to
modify the terms of the settlement or petition for early
termination of probation if probation is part of the
settlement.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Sunset extension (bureau) $155 $310
$310Special*
- fully offset by program revenue -
Enrolled agent exemption Unknown, minor loss of
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licensing Special*
revenue
Sunset extension (board) $5,600 $11,200
$11,200Special**
- fully offset by program revenue -
* Professional Fiduciary Fund (3108)
** Accountancy Fund (0704)
SUPPORT : (Verified 5/17/11)
California Society of Enrolled Agents
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is necessary to extend the sunset date of the CBA
and continue the regulation of CPAs in California.
Additionally, the author points out that there is a need to
extend the sunset date of the CBA's peer review program.
The author additionally states that this bill is necessary
to extend the sunset date of the PFB, in order to
appropriately license and regulate professional fiduciaries
in California, and to make other changes to the PFA.
JJA:kc 5/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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