BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 467|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 467
Author: Hill (D)
Amended: 4/21/15
Vote: 21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/27/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Professions and vocations
SOURCE: Author
DIGEST: This bill requires the Department of Consumer Affairs
(DCA) to receive approval of the Legislature to levy any pro
rata charges against any of the boards, bureaus, or commission
for DCA's administrative expenses; requires the Attorney
General's (AG) Office to submit specified reports and
information to the Legislature annually; requires the DCA
Director (Director), through the Division of Investigation
(DOI), to work with the health care boards to standardize
referral of complaints; extends until January 1, 2020, the
provisions establishing the California Board of Accountancy
(CBA) and the term of the executive officer; and authorizes CBA
to provide for certain practice restrictions on an accountant
license for disciplinary reasons.
SB 467
Page 2
ANALYSIS:
Existing law:
1)Provides that a charge for the estimated administrative
expenses of the DCA, not to exceed the available balance in
any appropriation for any one fiscal year, may be levied in
advance on a pro rata share basis against any boards, bureaus,
commissions, divisions, and agencies, at the discretion of the
Director and with the approval of the Department of Finance.
(Business and Professions Code (BPC) § 201 (a)(1))
2)Requires the Director to transmit any valid complaint to the
appropriate local, state or federal agency whose authority
provides the most effective means to secure the relief and it
shall be the continuing duty to the Director to discern
patterns of complaints and to ascertain the nature and extend
of action taken with respect to the probably violations or
pattern of complaints. (BPC § 326)
3)Provides that the CBA within the DCA is responsible for the
licensure and regulation of accountants and is required to
designate an executive officer and repeals these provisions on
January 1, 2016. (BPC § 5000 et seq.)
This bill:
1)Requires the DCA to receive approval of the Legislature to
levy in advance a charge for the estimated administrative
expenses of the DCA on a pro rata share basis against any of
the boards, bureaus, commissions, divisions, and agencies for
the estimated administrative expenses of the DCA.
2)Requires the AG to submit a report to the DCA, the Governor,
and the appropriate policy committees of the Legislature on or
before January 1, 2017, and on or before January 1 of each
subsequent year that includes specific statistical information
regarding cases referred to the AG by each constituent entity
comprising the DCA and the DOI of the DCA.
3)Requires the Director, through the DOI, to work cooperatively
with the health care boards to standardize referral of
complaints to the DOI and those that are retained by the
SB 467
Page 3
health care boards for investigation in order to implement the
2009 DCA complaint prioritization guidelines titled "Complaint
Prioritization Guideline for Health Care Agencies."
4)Extends until January 1, 2020, the provisions establishing the
CBA and the term of the executive officer.
5)Authorizes the CBA to, after notice and hearing, permanently
restrict or limit the practice of a licensee or impose a
probationary term or condition on a license which prohibits
the licensee from performing or engaging in any of the acts or
services of accountancy due to unprofessional conduct, as
specified.
6)Provides that a practice restriction may include, but not be
limited to, the prohibition on engaging in or performing any
attestation engagement, audits or compilations.
7)Allows a licensee to petition the CBA for a penalty reduction
or reinstatement of the privilege to engage in the service or
act restricted or limited, as specified.
8)Provides that the authority of sanctions provided are in
addition to any other civil, criminal, and administrative
penalties or sanctions provided by law, and do not supplant,
but are cumulative to, other disciplinary authority, penalties
or sanctions.
9)Specifies that failure to comply with any restrictions or
limitation imposed by the CBA is grounds for revocation of the
license.
Background
Oversight hearings and sunset review of licensing boards and
programs. In 2015, the Senate Committee on Business,
Professions, and Economic Development and the Assembly Business
and Professions Committee (Committees) conducted joint oversight
hearings to review 12 regulatory entities, including DCA and
CBA.
DCA pro rata. The DCA provides centralized administrative
services to all boards. Most of these services are funded
through a pro rata calculation that is based on "position
SB 467
Page 4
counts." Other functions (call center services, complaint
resolution, and correspondence unit) are based on past-year
workload. The pro rata charges fund the entire DCA operations.
For FY 2015-16, DCA is budgeted $94 million with 727 employees.
The boards have no control over the pro rata charges, regardless
of the quality or quantity of services provided by the DCA, and
pro rata can be as much as 40% of a board's annual operating
budget.
This bill requires legislative approval, through the budget
process, for DCA's annual pro rata assessment.
DCA Consumer Protection Enforcement Initiative (CPEI). In
response to pressure from the media and the Legislature, the DCA
created CPEI in 2010, which was designed to reduce the average
length of time it takes health care boards to take formal
disciplinary action from three years to 12 to 18 months. While
significant steps have been taken, most boards have failed to
meet their performance targets.
Boards are not entirely in control of their disciplinary process
timelines, though; boards rely on the AG and the Office of
Administrative Hearings (OAH) to perform critical functions
within the enforcement process. While OAH is subject to
performance measures starting January 1, 2016, the AG's office
is not.
This bill requires the AG's office to provide performance
metrics annually to the DCA, the Governor, and the appropriate
policy committees of the Legislature beginning in 2017.
Another essential component of CPEI was enhancing the use of
non-sworn investigative staff to conduct less complex
investigations for the health care boards. To assist complain
prioritization, DCA issued "Complaint Prioritization Guidelines"
in 2009. These guidelines, coupled with staff training, were
designed to free up sworn staff so that they could work on
complex investigations. However, not all boards are complying
with these parameters.
This bill requires the Director, through the DOI, to work
cooperatively with the health care boards to standardize
referral of complaints to the DOI and internally in order to
SB 467
Page 5
implement the 2009 DCA complaint prioritization guidelines
titled "Complaint Prioritization Guideline for Health Care
Agencies."
Review of the CBA. CBA is a public majority board and is
composed of 15 members: seven CPAs and eight public members.
The CBA enforces the Accountancy Act which defines the practice
of public accountancy as the process of recording classifying,
reporting, and interpreting the financial data of an individual
or an organization. CBA's regulatory authority over certified
public accountants (CPAs), public accountants (PAs), and
accounting firms is guided by CBA's statutory mandate to protect
the public.
This bill extends the CBA's sunset date until 2020.
CBA permanent practice restrictions. The CBA has the authority
to revoke, suspend, or refuse to renew any permit or
certificate, or censure the holder of that permit or certificate
due to unprofessional conduct.
Currently, practice restrictions may only be imposed beyond the
probationary term when specifically agreed to by the licensee
via a stipulated settlement. Some circumstances may warrant
permanent practice restrictions in order to protect the public,
however; if the licensee is unwilling to agree to such terms via
a stipulated settlement, the only recourse for the CBA is to
seek revocation of the license.
This bill authorizes the CBA to permanently restrict or limit
the practice of a licensee or impose a probationary term or
condition on a license, after notice and hearing, which
prohibits the licensee from engaging in any acts of accountancy
due to unprofessional conduct, as specified. This change would
allow the CBA and ALJs to include permanent practice
restrictions as part of a disciplinary order, which permits the
licensee to retain a license and be able to practice and earn
income in such areas where competency is not compromised.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
SB 467
Page 6
Board of Accountancy: projected expenditures of approximately
$14.1 million annually (Accountancy Fund), supporting 98.8 PY,
until January 1, 2020, partially offset by annual fee revenues
of approximately $5.4 million in 2015-16, based on the
proposed 2015-16 budget. Annual fee revenues will increase to
approximately $11 million annually beginning July 1, 2016.
The AG's Office indicates that it would incur significant
increased workload and costs of approximately $1.45 million in
2015-16 ($537,000 General Fund and $911,000 Legal Services
Revolving Fund - LSRF), $1.8 million in 2016-17 ($268,000
General Fund and $1.534 million LSRF), and $1.534 million
ongoing (LSRF). AG costs from the LSRF would be reimbursed
from the funds of the boards and bureaus that refer cases to
the AG.
Unknown impact on the funds and accounts of individual boards
and bureaus as a result of transferring the authority to the
Legislature for setting pro-rata charges on boards and bureaus
to cover DCA's administrative expenses. There should not be a
net overall impact to the charges, but the change will likely
result in losses to some funds and gains to others. (various
special funds).
SUPPORT: (Verified5/29/15)
California Board of Accountancy
California Society of CPAs
OPPOSITION: (Verified5/29/15)
None received
ARGUMENTS IN SUPPORT: The California Board of Accountancy
(CBA) is in support of this bill and indicates that the Board
plays an important role in protecting consumers by ensuring only
qualified licensees practice public accountancy in accordance
SB 467
Page 7
with established professional standards. CBA believes it is
vital for the CBA to continue regulating the practice of public
accountancy, which includes both licensing and enforcement
functions of more than 97,000 licensees.
Prepared by:Sarah Huchel / B., P. & E.D. / (916) 651-4104
5/31/15 12:08:03
**** END ****