BILL ANALYSIS Ó
SB 306
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Date of Hearing: June 28, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 306 (De Leon) - As Amended: April 25, 2011
SENATE VOTE : 39-0
SUBJECT : Accountancy
SUMMARY : Reinstates a five-day "safe harbor" period that has
expired, to allow a temporary California practice privilege for
certified public accountants (CPAs) licensed in other states.
Specifically, this bill :
1)Provides that an individual shall not be deemed to be in
violation of California practice privilege requirements for
CPAs solely because he or she begins practicing as a CPA in
California prior to notifying the California Board of
Accountancy (CBA) as required under current law, provided that
notice is given to the CBA within five business days. An
individual who properly notifies the CBA within the five day
period shall be deemed to have a practice privilege from the
first day of practice in California unless that individual
fails to timely submit a required fee to the CBA.
2)Specifies that this provision does not apply in instances in
which prior approval by the CBA is required because the
individual has a disqualifying condition, as specified.
3)Authorizes the CBA, in addition to any other sanction, to
impose a fine for notifying the CBA more than five business
days after beginning practice in California.
4)Repeals an obsolete requirement for the CBA to amend a
specified regulation to extend the current "safe harbor"
period from December 31, 2007, to December 31, 2010.
EXISTING LAW
1)Licenses and regulates CPAs under the Accountancy Act by the
California Board of Accountancy (CBA) within the Department of
Consumer Affairs (DCA).
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2)Prohibits a person from engaging in the practice of public
accountancy in California unless he or she holds either a
valid permit issued by the CBA or a practice privilege, as
specified.
3)Provides that an individual whose principal place of business
is not in this state and who has a valid and current license,
certificate or permit to practice public accountancy from
another state may, subject to certain conditions and
limitations, engage in the practice of public accountancy in
California under a practice privilege without obtaining a
certificate or license under from the CBA if the individual
satisfies one of the following:
a) Has continually practiced public accountancy as a CPA
under a valid license issued by any state for four of the
last ten years;
b) Holds a license, certificate, or permit from a state
which the CBA has determined to have education,
examination, and experience qualifications for licensure
substantially equivalent to California's requirements; or,
c) Possesses education, examination, and experience
qualifications which the CBA has determined to be
substantially equivalent to this state's qualifications.
4)To obtain a practice privilege, requires an individual who
meets the requirements of 3), above, to notify the CBA of the
individual's intent to practice, as specified, and pay a
required $100 fee.
5)Requires the CBA to extend the current "safe harbor" period
pertaining to practicing accountancy without a practice
privilege for up to five days prior to submitting a
notification form to the CBA, from December 31, 2007, to
December 31, 2010.
6)Provides, pursuant to CBA regulation, that, "During the period
January 1, 2006, through December 31, 2010, an individual
shall not be deemed to be in violation of the practice
privilege provisions solely because he or she begins the
practice of public accounting in California prior to
submitting the Notification Form, provided the Notification
Form is submitted within five business days of the date
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practice begins."
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "On
December 31, 2010 California's safe harbor provision, which
allowed out of state CPAs five business days to file a practice
privilege notification form following the commencement of
practice in California, expired. Since then, the CBA has
received various concerns and comments and deliberation on this
matter is pending at the regulatory level. This bill would
address this concern by re-establishing the safe harbor
provision previously in place."
Background . California's "safe harbor" provision, which allowed
out-of-state CPAs five business days to file with the Board a
practice privilege notification form following the commencement
of practicing in California, expired on December 31, 2010. As a
result, a practice privilege notification form must be filed
with the CBA prior to practicing public accountancy in the
state.
The safe harbor provision was enacted to give an "introductory"
period for out-of-state CPA's to gain familiarity with
California's new practice privilege requirements. The safe
harbor period was originally set to expire in 2007. AB 1868
(Bermudez), Chapter 458, Statutes of 2006, required the CBA to
extend the safe harbor period to match the sunset date for the
practice privilege program in conjunction with temporary and
incidental provisions that AB 1868 also reinstated. However, SB
819 (Yee), Chapter 308, Statutes of 2009, removed the sunset
date, yet the safe harbor period was still treated as
"introductory," and was not addressed.
The CBA has considered several alternatives to resolve the
problem of re-creating the safe harbor period, including pursing
regulatory action, adopting emergency regulations, or seeking a
statutory solution through legislation. At the CBA's March
meeting, the CBA determined it would support a legislative
solution to permanently establish the five-day safe harbor
period.
Related legislation . AB 431 (Ma) authorizes the Board to
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establish a retired status license for CPAs and PAs. This bill
is pending in Senate Appropriations Committee.
SB 542 (Price) extended the sunset date on the Board and
extended CPA peer review provisions to correspond with the
Board's sunset date. This bill has been amended to address an
unrelated subject.
SB 773 (Negrete McLeod) establishes requirements for ethics
courses that CPAs must complete to gain licensure. This bill is
pending in Assembly Business, Professions and Consumer
Protection Committee.
Previous legislation . SB 819 (Yee), Chapter 308, Statutes of
2009, makes several non-controversial, minor, non-substantive
and technical changes to various provisions pertaining to DCAs
regulatory boards, including removing the sunset date on the
practice privilege program.
AB 1868 (Bermudez), Chapter 458, Statutes of 2006, extends the
operative date of the practice privilege program.
SB 1543 (Figueroa), Chapter 921, Statutes of 2004, extends the
sunset date of the CBA and makes other changes to the
Accountancy Act, including establishing practice privilege
provisions.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301