BILL ANALYSIS
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|Hearing Date:June 22, 2009 |Bill No:AB |
| |1005 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND
ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 1005Author:Block
As Amended:April 30, 2009 Fiscal: Yes
SUBJECT: California Board of Accountancy.
SUMMARY: Requires the California Board of Accountancy to publish on
its Website documents related to disciplinary accusations, a live
audio or video broadcast of public meetings, and the meeting minutes,
as specified
Existing law:
1)Licenses and regulates some 40,000 certified public accountants (CPAs)
under the Accountancy Act by the California Board of Accountancy
(Board) within the Department of Consumer Affairs.
2)Requires all Board meetings to be open to the public, and provides that
the Board may hold executive sessions to deliberate on a decision
upon the evidence in a case under the Administrative Procedure Act,
and to take action on examinations or administrative matters as
specified in the Government Code.
3)Authorizes the Board to receive and investigate complaints against a
licensee and to initiate and take disciplinary action against a
licensee, as specified, through administrative procedures as
specified in the Accountancy Act and in the Administrative Procedure
Act.
4)Specifies that protection of the public shall be the highest priority for
the Board in exercising its licensing, regulatory, and disciplinary
functions. Whenever the protection of the public is inconsistent
with other interests sought to be promoted, the protection of the
public shall be paramount.
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This bill:
1) Requires the Board to post on its Internet Website, minutes
from Board meetings within
10 days of approval.
2) Requires the Board to provide a live audio or video broadcast
of Board meetings on its Internet Website, as specified.
3) Requires the posted minutes and recordings of broadcasts or a
link to the minutes or recordings to remain on the Website for at
least 3 years.
4) Requires the Board to post on its Internet Website, in an
easily marked and identifiable location, notice of all formal
accusations. Requires the notice of any formal accusation to
contain a link to where a consumer can request and have sent to him
or her a copy of the formal accusation; including the basis for the
accusation and alleged violations filed against a licensee.
FISCAL EFFECT: The Assembly Appropriations Committee analysis dated
April 30, 2009, cites unknown, moderate costs, likely less than
$75,000 in special funds, to implement the live webcasting of Board
meetings.
COMMENTS:
1.Purpose. This bill is sponsored by Center for Public Interest Law
(Sponsor) to increase public access and transparency as it relates
to the regulatory practices for the accounting profession in
California by requiring the Internet broadcasting of public Board
meetings, the posting of Board minutes and notices of formal
accusations on the Board's Website. The Sponsor states, "Many
public agencies offer live streaming of public proceedings and AB
1005 brings the Board of Accountancy into such a practice," and
points out that the bill provides that equipment failure will not
preclude the Board from moving ahead with a Board meeting.
The Sponsor states that existing law is silent on these issues, and
that the Business and Professions Code only requires that Board
hearings be open and public which means being there in person, but
does not require the Board to provide a live feed on its Website of
the hearings or to post the minutes of Board meetings. With respect
to the investigation of complaints, the Sponsor states that the Code
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does not specify how the public will receive access to the
information.
2.Background. The documents related to a formal accusation against a
licensee are considered a public record and obtainable upon request
to any of the more than 40 consumer protection boards, bureaus,
programs and commission in the DCA. As stated in the Assembly Third
Reading analysis of this bill, "Six of these DCA entities provide
documents related to a pending investigation on their Websites, two
publish supporting documents on final decisions, 21 entities provide
a summary of the final decision and order, and 14 do not publish any
information on their Websites."
Furthermore, on November 4, 2008, the Director of DCA sent a
memorandum to all executive officers and bureau chiefs in the DCA
all health related licensing boards and bureaus stating the
following:
While many entities currently post accusations on their
website, many only include summaries or require consumers to
contact them directly to obtain copies. As Director, I have
determined that greater transparency and consistency are in
the interest of consumer protection. Effective immediately, I
am directing all health-related entities to publish all
pending accusations on their websites in their entirety.
Furthermore, from this point forward, any new accusation shall
also be placed in its entirety on the board or bureau's
website.
3.Recent Board Action Regarding Posting Accusations and Disciplinary
Orders. In recent months controversy has swelled with the Board of
Accountancy on this issue. At its January meeting, the Board
rejected a proposal to post accusations against licensees on the
Board's Internet Website when a formal allegation of wrongdoing in
the form of an accusation has been filed by the Board.
That action by the Board was the subject of a January 28, 2009, Orange
County Register, OC Watchdog feature titled: " State's Accounting
Watchdog Opts to Keep Public in the Dark." According to the
article, the Board took this position in spite of separate
recommendations to the contrary from both the chief of the Board's
enforcement division and from the Department of Consumer Affairs.
Prior to that time, the Board's practice was that when a formal
accusation of wrongdoing was filed by the Board against a licensee,
the Board would post a statement of "accusation filed" on its
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Internet Website. For disciplinary actions adopted by the Board, a
brief summary of the wrongdoing in the accusation, and the Code
sections violated were posted, but the actual accusation and the
disciplinary order was not posted on the Website.
At the January meeting, the Board determined that going forward, once
a disciplinary order becomes final, the Board will post both the
disciplinary order and the accusation, but will only post a summary
of the accusation when a formal accusation has been filed.
Currently, when a formal accusation of wrongdoing has been filed by
the Board against a licensee, the Board posts a statement of
"accusation filed" on its Internet Website. For disciplinary
actions that have been adopted by the Board, a brief summary of the
wrongdoing in the accusation, and the Code sections violated are
posted, but the actual accusation and the disciplinary order are not
posted on the Website. Since accusations and disciplinary orders
are legally public records, a consumer currently must write to the
Board and request a copy. I understand that going forward, once a
disciplinary order becomes final, the Board will post both the
disciplinary order and the accusation, but will still continue to
only post the statement that an accusation has been filed for all
other accusations.
Since accusations are legally public records, a consumer currently
must write to the Board and request a copy in order to obtain a copy
of the actual accusation. Under this bill, the Board would be
required to post a notice of the formal accusation, the basis for
the accusation, and the alleged violations filed by the Board
against the licensee. The notice of formal accusation would be
required to contain a link to where a consumer can request and have
sent to him or her a copy of the formal accusation.
4.Letter from Committee Chair. Following the January action by the
Board, the Chair of the Business, Professions and Economic
Development Committee sent a letter to the Board expressing strong
concern at the Board's policy direction, stating:
"This position the Board has taken stands in stark contrast to
the activities of other regulatory boards in the Department of
Consumer Affairs. The Medical Board of California, and the
California Board of Pharmacy, both post links to scanned 'PDF'
versions of accusations as well as final disciplinary actions.
It would seem that a regulatory agency with the welfare of
consumers at heart and not the protection of its licensees
would choose to be more expansive in what it discloses to the
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public on its internet website."
In reply, the Board stated that in its action, it was exercising
precaution to ensure that a licensee had a hearing and that the
disciplinary action was final before posting information that can
persist for years; as well as ensuring that consumers are
provided with the most accurate possible on the Internet. The
Board stated that once accusations are posted on the Internet
that are later dismissed, the information originally posted is no
longer under the control of the Board and can tarnish innocent
licensees' reputations for years to come, even after the
information is pulled down from the website.
5.Opposition to Prior Version of the Bill. In its January 20, amended
version, this measure would have required the Board to post all
formal accusations on its Internet Website. This provision was
strongly opposed by the California Society of Certified Public
Accountants writing, "We are concerned that posting the accusations
will have irreparable impact on the ability of the CPA to make a
living even if the allegations contained in the accusation are
dismissed. This is not an unprecedented occurrence as in the last
decade at least 9 accusations did not result in discipline and in
uncounted instances the allegations were modified in some way. To
tarnish the reputations of CPAs who have not been afforded due
process is unconscionable and serves no valid consumer protection
purpose."
The bill was amended to its current form and passed 11-0 by the
Assembly Business and Professions Committee on April 28, 2009.
6.Related Legislation This Session. AB 797 (Ma) requires the Board to
publish disciplinary decisions on its Website for a period of ten
years from the date the decision was issued. That bill is currently
pending before this committee.
SB 691 (Yee) seeks to establish California, as a state, as
substantially equivalent to every state that has adopted 150
semester units or hours as the only educational pathway available
for CPA licensure in that state.
7.Arguments in Support: The Sponsor of the bill, Center for Public
Interest Law , writes: "Existing law does not require meaningful
transparency for Board of Accountancy meetings or decisions. Given
the importance of the accounting profession to the operations and
disclosure requirements of public and private entities required
under state and federal law, this bill seeks to maximize public
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access to board proceedings and their decisions."
8.Policy Issue : Is it intended that the notice of the accusation
filed also contain the basis for the accusation and the alleged
violations? The stated intention of the bill is to increase public
access and transparency for consumers. In establishing the
requirement for the Board to post a notice of all formal accusations
on its Website, it appears that the bill seeks to require that the
notice must include both the basis for the accusation and the
violations that are alleged in the accusation. The basis of the
accusation are the provisions of law upon which are alleged to have
been violated, and the alleged violations are the actions by the
licensee which were in violation of the stated laws.
However as drafted, this intention is not clear. As currently worded
the bill requires the notice to contain a link to where a customer
can request to have a copy sent them, but it is not clear whether
the language requires the notice to contain the basis for the
accusation and alleged violations, or whether it is the accusation
sent to the consumer that is to include the basis for the accusation
and alleged violations. While an accusation would of necessity
include both the basis and the violations, it does not necessarily
follow that a notice of an accusation would have those same
elements.
It is important to note that there are other boards in DCA, such as
the Medical Board, the Dental Board and the Board of Pharmacy, that
post the entire text of an accusation on their internet website.
These are allegations that have completed the investigation process
and have been put in the form of a formal accusation by the Office
of Attorney General, and have been officially filed with the
licensee and the Office of Administrative Hearings. These
accusations are posted before the administrative hearing on the
violations alleged in the accusation has taken place.
While this bill falls short of that level of transparency and
disclosure, it is important for it to state what information the
consumer will be provided in the clearest terms possible.
Therefore, staff recommends the following clarifying amendment:
5103.5. The board shall post on its Internet Website, in an
easily marked and identifiable location, notice of all formal
accusations. The notice of any formal accusation shall
include the basis for the accusation and alleged violations
filed by the board against a licensee, and shall contain a
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link to where a consumer can request and have sent to him or
her a copy of the formal accusation , including the basis for
the accusation and alleged violations filed by the board
against a licensee .
SUPPORT AND OPPOSITION:
Support:
Center for Public Interest Law (Sponsor
California Alliance for Retired Americans
California Board of Accountancy
Consumer Attorneys of California
Opposition:
None on file as of June 17, 2009.
Consultant:G. V. Ayers