BILL ANALYSIS Ó
AB 2560
Page 1
Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2560
(Obernolte) - As Amended March 18, 2016
SUBJECT: Accountants: practice privileges: out-of-state
individuals.
SUMMARY: Authorizes the California Board of Accountancy (CBA)
to promulgate emergency regulations if the CBA determines, under
the current Practice Privilege Program, that allowing
individuals from a substantially similar state to practice in
California violates its duty to protect consumers.
EXISTING LAW:
1)Creates the CBA, within the Department of Consumer Affairs
(DCA), and provides that protection of the public shall be the
highest priority for the CBA in exercising its licensing,
regulatory, and disciplinary functions. (Business and
Professions Code (BPC) Sections 5000, 5000.1)
2)Defines "certified public accountant" to mean any person who
has received from the CBA a certificate of certified public
accountant and who holds a valid permit to practice under the
provisions of this chapter. (BPC Section 5033)
3)Defines "public accountant" to mean any person who has
AB 2560
Page 2
registered with the CBA as a public accountant and who holds a
valid permit for the practice of public accountancy. (BPC
Section 5034)
4)Authorizes the CBA to revoke, suspend, issue a fine, or
otherwise restrict or discipline the holder of an
authorization to practice for any act that would be a
violation of this code or grounds for discipline against a
licensee or holder of a practice privilege, or grounds for
denial of a licensee or practice privilege under this code.
(BPC Section 5050.2)
5)Authorizes an individual whose principal place of business is
not in this state and who has a valid and current license,
certificate, or permit to practice public accountancy from
another state to, subject to the conditions and limitations in
this article, engage in the practice of public accountancy in
this state under a practice privilege without obtaining a
certificate or license under this chapter if the individual
satisfies one of the following:
a) The individual has continually practiced public
accountancy as a certified public accountant under a valid
license issued by any state for at least four of the last
ten years.
b) The individual has a license, certificate, or permit
from a state which has been determined by the CBA to have
education, examination, and experience qualifications for
licensure substantially equivalent to this state's
qualifications under BPC Section 5093.
c) The individual possesses education, examination, and
AB 2560
Page 3
experience qualifications for licensure which have been
determined by the CBA to be substantially equivalent to
this state's qualifications under BPC Section 5093. (BPC
Section 5096)
6) Authorizes the CBA to administratively suspend the right to
public accountancy in California under a practice privilege
without notice or hearing. (BPC Section 5096.4)
7)Provides that if the CBA determines that allowing individuals
from a particular state to practice in this state pursuant to
a practice privilege as described in BPC Section 5096 violates
the CBA's duty to protect the public, pursuant to BPC Section
5000.1, the CBA shall require, by regulation, out-of-state
individuals licensed from that state, as a condition to
exercising a practice privilege in this state, to file the
notification form and pay the applicable fees as required by
BPC Section 5096. (BPC Section 5096.21)
8)Requires the CBA to consider specified factors when making the
determination that allowing individuals from a particular
state to practice in California, violates the CBA's duty to
protect the public. (BPC Section 5096.21)
THIS BILL:
1)Authorizes the CBA to adopt emergency regulations if it makes
a determination, pursuant to Section 5096.21, that allowing
individuals from a particular state to practice in California
violates the CBA's duty to protect the public.
AB 2560
Page 4
2)Provides that the adoption of the regulations shall be deemed
an emergency and necessary for the immediate preservation of
the public peace, health, safety, or general welfare for
purposes of Sections 11346.1 and 11349.6 of the Government
Code.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill is sponsored by the California Board of
Accountancy . According to the author, "[This bill] would allow
for a more efficient rulemaking process by authorizing the CBA
to adopt emergency regulations in the event the [CBA] determines
that allowing individuals from a particular state to practice in
California pursuant to a practice privilege violates the [CBA's]
duty to protect the public."
Background. The mission statement of the CBA is to protect
consumers by ensuring only qualified licensees practice public
accountancy in accordance with established professional
standards. Created by statute in 1901, the CBA's legal mandate
is to regulate the accounting profession for the public interest
by establishing and maintaining entry standards of qualification
and conduct within the accounting profession, primarily through
its authority to license. In California, the accounting
profession's licensed practitioners are the Certified Public
Accountant (CPA) and the Public Accountant (PA). The CBA
currently regulates over 97,000 licensees, the largest group of
licensed accounting professionals in the nation, including
individuals, partnerships, and corporations.
AB 2560
Page 5
Practice Privilege Act. SB 1405 (De León), Chapter 411,
Statutes of 2012 was signed by Governor Brown on September 20,
2012, enacting California's "mobility law," which included the
Practice Privilege Program. It applies only to the accountancy
profession and allows licensees from out-of-state to practice in
California without providing the state with notice or a fee, as
was required by the former practice privilege program. On July
1, 2013, new statutory provisions associated with the Practice
Privilege Program for out-of-state licensees took effect. Under
the new law, CPAs licensed in jurisdictions recognized by the
CBA as having "substantial[ly] equivalent" licensure standards
may practice in California under the CBA's "practice privilege"
criteria without any notice or fee requirements. Otherwise,
out-of-state licensees must obtain permission from the CBA in
order to practice in California if they have experienced any
specific events within the prior seven years, and all practice
privilege holders practicing in California must self-report any
change in conditions that disqualify them. One of the new
provisions instituted a new registration requirement for
out-of-state licensed accounting firms that want to perform
certain specified services for California-headquartered
entities.
Current law states that if the CBA determines that allowing
individuals from a particular state to practice in California
would violate its duty to protect consumers, then the CBA may
promulgate regulations that would require individuals from that
particular state file notice and pay a fee with the CBA. Since
the new Practice Privilege Program is a novel policy change that
has not yet been widely adopted by other regulatory entities,
the author asserts it will be safest for consumers if the
rulemaking process is expedited in the event that the CBA
determines there is a danger presented by individuals from a
"substantially equivalent" state. This bill aims to resolve
this issue by authorizing the CBA to promulgate emergency
regulations, should this determination be made.
AB 2560
Page 6
ARGUMENTS IN SUPPORT:
The California Board of Accountancy writes, "This bill proposes
amendments to grant the CBA the legislative authority to adopt
emergency regulations pursuant to BPC section 5096.21(a) to
expedite the rulemaking process related to participation in the
no notice, no fee practice privilege program. Current law
states that if the CBA determines that allowing individuals from
a particular state to practice in California under a no notice,
no fee practice privilege violates its duty to protect the
public, it shall require, by regulation, out-of-state
individuals licensed from that state, to file the notification
form and pay the fees as required under the prior notice and fee
practice privilege program. As the normal rulemaking process
takes between 12-18 months to complete, expediting the process
will better protect consumers."
REGISTERED SUPPORT:
The California Board of Accountancy (sponsor)
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Tessa Nevarez / B. & P. / (916) 319-3301
AB 2560
Page 7