BILL ANALYSIS Ó
SB 773
Page 1
Date of Hearing: July 5, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 773 (Negrete McLeod) - As Amended: June 28, 2011
SENATE VOTE : 38-0
SUBJECT : Accountants
SUMMARY : Establishes requirements for ethics courses that
certified public accountants (CPAs) must complete to gain
licensure. Specifically, this bill :
1)Requires, after December 31, 2013, the total educational
program required for licensure as a CPA license to include a
minimum of 10 units of ethics study as specified by this bill
and 20 units of accounting study consistent with regulations
to be adopted by the California Board of Accountancy (CBA) by
January 1, 2012, pursuant to current law.
2)Specifies that CBA's Advisory Committee on Accounting Ethics
Curriculum (Advisory Committee) may determine that a course or
portion of a course satisfies this ethics study requirement,
and that nothing in this bill shall be construed to be
inconsistent with prevailing academic practice regarding the
completion of units.
3)Deletes language that is redundant to 1), above.
4)Requires CPA license applicants to provide documentation of
completion of 10 semester units or 15 quarter units of ethics
study set forth in 1), above, to the satisfaction of CBA and
as prescribed below.
5)Requires, between January 1, 2014, and December 31, 2016, the
10 semester units or 15 quarter units of ethics study to be
completed from the following course areas:
a) Business, government, and society; business law;
corporate governance; corporate social responsibility;
ethics; fraud; human resources management; leadership;
legal environment of business; management of organizations;
morals; organizational behavior; or, professional
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responsibilities;
b) A maximum of three semester units or four quarter units
in: philosophy; religion; sociology; theology; psychology;
political science; economics; cultural studies; or, ethnic
studies; and,
c) A maximum of one semester unit of ethics study for
completion of a course title specific to financial
statement audits.
6)Requires, on and after January 1, 2017, the ethics study to be
completed as follows:
a) A minimum of three semester units of four quarter units
in courses at an upper division level or higher devoted to
accounting ethics or accountants' professional
responsibilities;
b) A maximum of seven semester units or 11 quarter units in
courses listed in a), above; and,
c) Courses as described in b) and c), above.
7)Specifies that qualifying courses must contain in their title
one or more of the terms "introduction," "introductory,"
"general," "fundamentals of," "principles," "foundation of,"
or "survey of," or have the name of the discipline as the sole
name of the course title.
8)Changes the sunset provisions for the Advisory Committee, to
remain in effect until January 1, 2014.
9)Removes a requirement that the CBA adopt Advisory Committee
ethics study recommendations via regulation, and related
language.
EXISTING LAW
1)Licenses and regulates CPAs under the Accountancy Act by the
CBA within the Department of Consumer Affairs (DCA).
2)Establishes education requirements for CPA licensure,
including specified ethics courses.
3)Establishes the Advisory Committee within the Board to
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recommend to the Board ethics study guidelines, as specified,
and authorizes the Advisory Committee to determine that a
course or a portion of a course of accounting education
satisfies the ethics study requirement.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "In
2009, the Legislature enacted a provision requiring applicants
for the CPA license to have at least 150 hours of education,
including 10 hours devoted to ethics.
"Current law requires an advisory committee to develop
recommendations for how the 10 hours of ethics education can be
achieved in the academic setting. That committee completed its
work on June 7th."
Background . Legislation enacted in 2009 revised CPA license
standards to increase the hours of education required for
licensure from 120 hours to 150 hours, beginning January 1,
2014. It also required that the education include at least 10
units of ethics study and 20 units of accounting study. The 10
units of ethics study must meet guidelines established by the
Board upon the advice of the Advisory Committee, which was also
created by the bill and charged with making recommendations to
the Board by June 1, 2012. The Advisory Committee has finished
that task and this bill implements its recommendations.
This bill establishes a set of ethics study requirements that
must be met in two different timeframes; between January 1,
2014, and December 31, 2016; and, on and after on and after
January 1, 2017. The latter timeframe adds courses at an upper
division level or higher devoted to accounting ethics or
accountants' professional responsibilities, and more
specifically delineates the number of hours that must be
completed from the other course areas outlined in the bill.
Support . The California Society of CPAs writes, "We believe the
Ethics Study Guideline adopted by the (Advisory Committee) and
set forth in your SB 773 contains both the breadth and depth of
course requirements needed to produce CPA candidates with the
necessary 'framework of ethical reasoning, professional values,
and attitudes for exercising professional skepticism and other
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behavior that is in the best interest of the investing and
consuming public and the profession' as required by SB 819."
Related legislation . AB 431 (Ma) authorizes the Board to
establish a retired status license for CPAs and PAs. This bill
is pending in Senate Appropriations Committee.
SB 542 (Price) extended the sunset date on the Board and
extended CPA peer review provisions to correspond with the
Board's sunset date. This bill has been amended to address an
unrelated subject.
Previous legislation . SB 819 (Yee), Chapter 308, Statutes of
2009, increases the education requirement to obtain a CPA
license from 120 hours to 150 hours, effective January 1, 2014,
and establishes the Advisory Committee to recommend ethics study
guidelines to the Board.
AB 138 (Hayashi), Chapter 312, Statutes of 2009, requires, until
January 1, 2014, California-licensed accounting firms to undergo
a peer review of their accounting and auditing services every
three years.
REGISTERED SUPPORT / OPPOSITION :
Support
California Society of CPAs
Opposition
None on file
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301