BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 2560 Hearing Date: June 20,
2016
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|Author: |Obernolte |
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|Version: |March 18, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Accountants: practice privileges: out-of-state
individuals
SUMMARY: Authorizes the California Board of Accountancy to promulgate
emergency regulations if it 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 California Board of Accountancy (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)
§§ 5000, 5000.1)
2) Defines "certified public accountant" (CPA) 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 § 5033)
3) Defines "public accountant" (PA) to mean any person who has
registered with the CBA as a public accountant and who holds
a valid permit for the practice of public accountancy. (BPC
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§ 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 § 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
experience qualifications for licensure which have been
determined by the CBA to be substantially equivalent to
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this state's qualifications under BPC Section 5093. (BPC §
5096)
1) Authorizes the CBA to administratively suspend the right to
public accountancy in California under a practice privilege
without notice or hearing. (BPC § 5096.4)
2) Provides that if the CBA determines that allowing individuals
from a particular state to practice in this state violates
the CBA's duty to protect the public, 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. (BPC § 5096.21)
3) 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 § 5096.21)
This bill:
1) Authorizes the CBA to adopt emergency regulations if it makes
a determination, in accordance with the Administrative
Procedure Act, that allowing individuals from a particular
state to practice in California violates the CBA's duty to
protect the public.
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.
FISCAL EFFECT: This bill has been keyed "fiscal" by Legislative
Counsel. According to the May 4, 2016 Assembly Appropriations
Committee analysis, this bill will result in minor and
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absorbable costs to the CBA.
COMMENTS:
1. Purpose. The California Board of Accountancy is the Sponsor
of this bill. 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."
2. The California Board of Accountancy. 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 CPA and PA. The
CBA currently regulates over 97,000 licensees, the largest
group of licensed accounting professionals in the nation,
including individuals, partnerships, and corporations.
3. 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
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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. It is also important to note that this new Practice
Privilege Program has a sunset date of January 1, 2019.
4. Arguments in Support. The California Board of Accountancy
(Sponsor) writes that, "This bill proposes amendments to
grant the CBA the legislative authority to adopt emergency
regulations pursuant to BPC § 5096.21(a) to expedite the
rulemaking process related to participation in the no notice,
no fee practice privilege program."
SUPPORT AND OPPOSITION:
Support:
The California Board of Accountancy (Sponsor)
Opposition:
None on file as June 14, 2016.
-- END --
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