BILL ANALYSIS
AB 138
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 138 (Hayashi)
As Amended September 2, 2009
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |73-6 |(June 1, 2009) |SENATE: |28-6 |(September 3, |
| | | | | |2009) |
-----------------------------------------------------------------
Original Committee Reference: B. & P.
SUMMARY : Requires California-licensed accounting firms to
undergo peer review of their accounting and auditing services.
The Senate amendments :
1)Sunset the mandatory peer review program and peer review
oversight committee of certified public accountants on January
1, 2014.
2)Delete provisions making peer review requirements inoperative
if sufficient hiring authority is not granted to the
California Board of Accountancy (CBA) pursuant to a budget
change proposal.
3)Require CBA to report to the Legislature and the Governor on
the following peer review requirements by January 1, 2013:
a) The extent to which mandatory peer review of small firms
or sole practitioners that prepare nondisclosure compiled
financial statements on an other comprehensive basis of
accounting (OCBOA) enhances consumer protection;
b) The impact of peer review required by this bill on small
firms and sole practitioners that prepare nondisclosure
compiled financial statements (NCFS) on an OCBOA; and,
c) The impact of peer review on small businesses,
non-profit corporations, and other entities that utilize
small firms or sole practitioners for the purposes of NCFS
prepared on an OCBOA.
4)Delete the requirement that peer review emergency regulations
adopted by CBA must be replaced with final, permanent
AB 138
Page 2
regulations within 120 days of adoption, and instead requires
emergency regulations in accordance with the Administrative
Procedure Act.
AS PASSED BY THE ASSEMBLY, this bill required
California-licensed accounting firms to undergo peer review
without a sunset date or reporting requirements.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, special fund costs in excess of $400,000 per year
(Accountancy Fund) for the workload associated with creating and
maintaining a peer review program. Included in that funding is
an estimated $160,000 in enforcement costs related to the
Attorney General's Office investigating an additional 16 cases
each year as a result of audit findings.
COMMENTS: This bill was substantially amended in the Senate and
is inconsistent with Assembly actions. The bill, as amended,
includes a mandatory peer review program sunset date and
requires CBA to report to the Legislature and Governor on
programmatic effects with limited data available at the time of
the reporting deadline.
Analysis Prepared by : Ross Warren / B. & P. / (916) 319-3301
FN: 0002908