BILL ANALYSIS
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|Hearing Date:July 6, 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 minutes from
board meetings, 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 the 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 notice
that an accusation has been filed when there has not yet been a
formal disciplinary order.
As a matter of administrative policy, the Board currently publishes
the final documents of final disciplinary decisions on its Website
for a minimum of 7 years, but in some cases may publish that
information indefinitely. Specifically, for each final disciplinary
action, the Board posts the licensee's name, the disciplinary action
imposed (revocation, probation, suspension, stipulated decision),
the basis of the disciplinary action (code sections violated) and a
summary of the allegations (the acts the licensee committed that
constituted violations of the law), and a link to a copy of the
formal accusation and the disciplinary order (the Board's adopted
decision) in "PDF" format.
Since accusations are legally public records, a person 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 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, including the basis for the accusation, and the alleged
violations filed by the Board against the licensee.
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
public on its Internet Website."
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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 was heard in
this committee on June 29, and passed 10 to 0.
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
access to board proceedings and their decisions."
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Consumer Attorneys of California recognizes the strong need for
increased accountant accountability and improved enforcement
policies, and believes that by increasing transparency and expanding
access to Board proceedings the bill enhances existing law and
amplifies the protections afforded to the citizens of California.
8.Policy Issues : 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 there is clear and convincing evidence
that a serious violation or violations of the law have been
committed by the licensee. The case had been sent to the Office of
the Attorney General (AG) and the facts and allegations have been
put in the form of a formal accusation by the AG, and have been
officially served upon the licensee and filed with 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 the bill to clearly state what
information will be provided in the clearest terms possible, and how
that information will be provided. The stated intention of the bill
is to increase public access and transparency of the accountancy
regulatory process. The following issues are raised in order to
more nearly attain the stated purpose.
8. Should the bill more clearly state who may request a copy of
the accusation? The bill requires that the notice must contain a
link to where a consumer can request a copy of the formal
accusation. The California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of the Government
Code) gives the public a right of access to documents and
proceedings of a state agency, and uses the term "person" rather
than the term "consumer" in describing who may have access to
public records. To more clearly indicate that it is not only the
consumer of accountancy services, but any person who may request
a copy of the accusation, the bill should be amended to provide
that a "person" rather than a "consumer" may request a copy of
the accusation.
8. Should the bill more clearly identify what may be received
relative to the accusation? The bill requires that the notice
must contain a link to where a person can request and have sent
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to him or her a copy of the formal accusation, including the
basis for the accusation and alleged violations. The basis of
the accusation are the provisions of law 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, the intention is not clear. While an
accusation of necessity includes both the basis and the
violations as elements essential to the filing, it is unclear
whether the bill requires a separate listing of the basis for the
accusation and the alleged violations. As previously noted, the
Board's policy for each final disciplinary action is to post, not
only a link to the disciplinary order, but a separate listing of
the basis of the disciplinary action (code sections violated) and
the allegations (the acts the licensee committed that constituted
violations of the law).
8. Should the bill more fully describe how a copy of the
accusation may be requested? In discussing this bill with Board
staff, it has been indicated that the Board plans to have a link
posted with the notice, and when clicked, the link will advise
that the accusation may be requested, and gives the person the
option to request a copy by mail, by electronic mail, or by
calling the Board. Staff recommends that the bill be amended to
more clearly describe these provisions.
9.Suggested Amendments : To make the changes recommended in (a), (b)
and (c) above, Committee staff recommends the following amendments
to the bill:
5103.5. (a) 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 contain
a link to where a consumer person can request and have sent to
him or her a copy of the formal accusation, including and the
basis for the accusation and alleged violations filed by the
board against a licensee.
(b) The link to where a person can request and have sent to
him or her a copy of the formal accusation shall be clearly and
conspicuously located on the same Web page where the notice is
posted and the link shall permit a person to request and receive
the information required by subdivision (a) by electronic mail
or by regular mail, at the election of the person making the
request.
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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 30, 2009.
Consultant:G. V. Ayers