BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 431|
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THIRD READING
Bill No: AB 431
Author: Ma (D)
Amended: 8/30/11 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 9-0,
6/20/11
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Walters, Wyland
SENATE APPROPRIATIONS COMMITTEE : 9-0, 8/25/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
ASSEMBLY FLOOR : 72-0, 5/12/11 - See last page for vote
SUBJECT : Retired public accountants
SOURCE : California Board of Accountancy
DIGEST : This bill authorizes the California Board of
Accountancy to establish a retired status license for
certified public accountants and public accountants.
ANALYSIS :
Existing law:
1. Licenses and regulates some 80,000 certified public
accountants (CPAs) and public accountants (PAs) under
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the Accountancy Act by the California Board of
Accountancy (CBA) within the Department of Consumer
Affairs (DCA).
2. Authorizes any board or bureau within DCA to establish,
by regulation, a system for an inactive license category
for persons not actively engaged in practice, subject to
certain provisions, including: (Business and
Professions Code �BPC] Section 462)
A. The inactive licensee shall not engage in any
activity for which a license is required.
B. The inactive license shall be renewed in the same
time period as an active license, and any continuing
education requirements are not required.
C. The active license renewal fee shall apply for
renewal of an inactive license, unless a lesser fee
is specified by the board.
D. An inactive license may be restored to active
status upon payment of the renewal fee and completion
of any continuing education required for renewal of
an active license, as specified.
3. Requires the holder of an inactive CPA license, when
lawfully using the title "certified public accountant,"
"CPA," or any other reference that suggests the person
is licensed on materials such as correspondence,
Internet Web sites, business cards, nameplates, or name
plaques, to place the term "inactive" immediately after
that designation. (BPC Section 5058.2)
4. Provides that expiration, cancellation, forfeiture, or
suspension of a license, practice privilege, or other
authority to practice public accountancy or the
surrender of a license shall not deprive the CBA of
jurisdiction to discipline the licensee. (BPC Section
5109)
This bill:
1. Authorizes CBA to establish, by regulation, a system for
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placement of a license on a retired status, upon
application, for CPAs and PAs who are not actively
engaged in the practice of public accountancy or any
activity which requires them to be licensed by the CBA
subject to certain provisions, including:
A. The retired licensee shall not engage in any
activity for which a license is required.
B. Requires CBA to deny an application for a retired
status license if the applicant's permit (license) is
canceled, suspended, revoked, or otherwise punitively
restricted by the CBA or subject to disciplinary
action.
C. Beginning one year from the adoption of the
retired status regulations, requires the CBA to deny
an application for a retired status license if the
applicant's license is delinquent.
D. The active license renewal fee shall apply for
renewal of an inactive license, unless a lesser fee
is specified by the board.
E. Requires the board to establish minimum
qualifications for a retired status license.
F. Authorizes the CBA to exempt the retired status
license from any renewal requirements.
G. Requires the CBA to establish qualifications to
restore a retired license to an active status,
including a requirement for continuing education and
payment of a fee, as specified.
2. Requires the holder of a retired license, when lawfully
using the title "certified public accountant," "CPA," or
any other reference that suggests the person is licensed
on materials such as correspondence, Internet Web sites,
business cards, nameplates, or name plaques, to place
the term "retired" immediately after that designation.
3. Provides that the placement of a license on a retired
status shall not deprive the CBA of jurisdiction to take
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disciplinary action.
4. Establishes fees which shall be fixed by CBA:
A. Application for a retired status license at a
maximum of $250.
B. Application for restoration of a retired status
license to active status at a maximum of $1,000.
5. Makes conforming, clarifying and technical changes,
including removing outdated references to the enactment
of practice privilege provisions.
Background
According to the CBA, presently, licensees who wish to
retire and no longer renew their license have only two
choices available. Licensees may either allow their
license to expire and eventually cancel, or they may
voluntarily surrender their license.
Between January 1994 and December 1998, the CBA offered a
retired option to licensees. This option allowed licensees
to request a retired seal that would be affixed to their
wall certificate. By requesting a retired seal, licensees
were in fact voluntarily allowing their licensees to
expire, but were afforded the ability to use the
designation "Retired Certified Public Accountant" or
"Retired Public Accountant." Licensees were no longer
allowed to practice public accountancy, but could continue
to perform bookkeeping, tax, financial planning, or
management consulting as described in Section 5051 (f)
through (i) of the Accountancy Act, since these functions
did not require individuals to maintain a CPA or PAs
license. Retired licensees intending to render tax
preparation services were required to either register with
the Internal Revenue Service as an enrolled agent, or
register with the California Tax Education Council, which
is a nonprofit organization created by the Legislature that
requires tax preparers to be bonded, have a certain level
of education and continuing education.
The issuance of a retired seal did not affect the status of
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the license. After the CBA issued a retired seal,
licensees simultaneously held a retired seal and an expired
license. As with all expired licenses, for a five-year
period, licensees could reinstate their license to an
active or inactive status by paying all applicable license
renewal fees, and fulfilling all continuing education
requirements should the license be reinstated to an active
status. After the five-year period had elapsed, the
license was canceled, though licensees could continue to
display the wall certificate with a retired seal and hold
out as a retired licensee.
In 1996, the CBA became aware that some licensees were
attempting to avoid disciplinary action by requesting a
retired seal while a disciplinary matter or citation was
pending. This was a cause for significant concern as the
CBA had no legal mechanism to deny or delay the issuance of
a retired seal to a licensee with a pending disciplinary
matter. Additionally, licensees with revoked licenses were
permitted to continue to display their certificate with the
retired seal. This appeared inconsistent with the CBA's
intent to provide the seal as a positive acknowledgement of
licensees' years of service in the profession.
Based on these concerns, the CBA sponsored legislation SB
2239 ( Senate Business, Professions and Economic
Development Committee), Chapter 878, Statutes of 1998, to
eliminate the retired option for licensees, and repeal BPC
Section 5070.1. Since that time, the CBA has not issued
retired seals or permitted licensees to use the designation
"Retired Certified Public Accountant" or "Retired Public
Accountant." Subsequent amendments to the BPC allow a
retiring CPA or PAs to continue to display the wall
certificate, provided the license was not suspended or
revoked, and retired licensees may use the CPA or PAs
designation in a social context, with or without the word
"retired." Retirees, however, may not use the CPA or PAs
designation or perform any activity defined as the practice
of public accountancy.
In light of the concerns raised by licensees last year, the
CBA began reconsidering a retired license status. The CBA
believes that by building on past experience it is possible
to create a retired status that is beneficial to all
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stakeholders. By crafting legislation that allows for a
retired status, while still providing a legal mechanism for
the CBA to deny a retired status based upon enforcement
action, a compromise is possible between the licensees
requesting a retired status, and the ability to protect
California consumers from CPAs trying to avoid enforcement
action
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Revision of licensing Likely significant ($50 to
up to $300) Special*
categories and fees decrease in license fee
revenue annually
through 2017; fee revenue increase or
decrease may vary
at board discretion
* Accountancy Fund
SUPPORT : (Verified 8/26/11)
California Board of Accountancy (source)
California Society of Certified Public Accountants
ARGUMENTS IN SUPPORT : According to the author's office,
this bill provides consumers with protections by
prohibiting licensees facing disciplinary action from
receiving a retired designation. The author's office
indicates this bill allows retired CPAs and PAs to be
exempted from continuing education requirements, while
still performing bookkeeping, financial planning, or
management consulting, similar to inactive licensees
provided they do not hold themselves out as being licensed
by the CBA. The author's office indicates that this bill
also requires the CBA to provide licensees reconsidering
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retirement a pathway to restore their license to an active
status.
The author's office states that at least seven other DCA
boards offer their professionals a retired status option
including: doctors, dentists, pharmacists, architects, and
engineers. In the United States, at least 20
State-accountancy boards offer a retired designation,
according to the author.
ASSEMBLY FLOOR : 72-0, 5/12/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Campos, Carter, Chesbro,
Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani,
Gatto, Gordon, Grove, Hagman, Halderman, Hall, Harkey,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal,
Ma, Mansoor, Mendoza, Miller, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel P�rez,
Silva, Skinner, Smyth, Solorio, Swanson, Valadao, Wagner,
Wieckowski, Williams, John A. P�rez
NO VOTE RECORDED: Charles Calderon, Cedillo, Garrick,
Gorell, Mitchell, Portantino, Torres, Yamada
JJA:kc 8/26/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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