BILL ANALYSIS �
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|Hearing Date:August 30, 2011 |Bill No:SB |
| |773 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 773Author:Negrete McLeod
As Amended:August 15, 2011 Fiscal: Yes
SUBJECT: Accountants.
SUMMARY: Establishes requirements for ethics courses that certified
public accountants must complete to gain licensure.
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 (DCA).
2)Requires an applicant for the CPA license to comply with
education, examination, and experience requirements under one of
two provisions that establish different criteria (Pathways) for
CPA licensure as follows:
a) Until January 1, 2014, completion of a baccalaureate or
higher degree, as specified, including 24 semester units in
accounting and 24 semester units in business related
subjects, passing the examination prescribed by the Board,
and two years of qualifying experience (120-hour pathway)
(Business and Professions Code (BPC)
� 5092).
b) Completion of a baccalaureate or higher degree, as
specified, including 24 semester units in accounting and 24
semester units in business related subjects, passing the
examination prescribed by the Board. In addition, requires
proof of completion of at least 150 semester units (including
the baccalaureate degree), and one year of qualifying
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experience (150-hour pathway) (BPC � 5093).
3)Establishes criteria for education to be qualifying for purposes
of licensure, including:
a) The education must be from university, college or other
institution accredited by a regional or national accrediting
agency, as specified (BPC � 5094).
b) After January 1, 2014, the education shall include 10
units of ethics consistent with regulations promulgated by
the Board, as specified.
c) After January 1, 2014, the education shall include 20
units of accounting study consistent with regulations
promulgated by the Board, as specified.
4)Establishes an Advisory Committee on Accounting Ethics Curriculum
(Advisory Committee) within the Board to recommend to the Board
ethics study guidelines, as specified, and authorizes the
committee to determine that a course or a portion of a course of
accounting education satisfies the ethics study requirement.
(BPC � 5094.5).
a) Repeals the authorization for the Advisory Committee on
the later of: January 1, 2014, or following the date the
Advisory Committee issues its final report, as required.
5)Requires the Advisory Committee to, no later than June 1, 2012,
to recommend to the Board ethics study guidelines consisting of
not less than 10 units of ethics study, and requires the Board
to adopt, by regulation, the recommendations made by the
Advisory Committee. Requires the Advisory Committee to issue a
report during the public comment period of the Board's
regulatory process, and to offer an opinion as to whether the
regulations will implement the Advisory Committee's
recommendations, within 30 days after the regulations are final.
This bill:
1) Revises the 150-hour pathway to require, after December 31, 2013,
the total educational program required for licensure as a CPA to
include a minimum of 10 units of specified ethics study established
pursuant to the bill, and 20 units of accounting study consistent
with regulations to be adopted by the Board by January 1, 2012,
pursuant to current law.
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2) Provides that the Advisory Committee may determine that a course or
portion of a course satisfies this ethics study requirement.
3) Requires CPA license applicants to provide, to the satisfaction of
the Board, documentation of completion of 10 semester units or 15
quarter units of ethics study to meet the requirement of Item #1
above, and meeting the following:
a) Between January 1, 2014, and December 31, 2016, the 10
semester units or 15 quarter units of ethics study to be
completed from the following course areas:
i) Business, government, and society; business law; corporate
governance; corporate social responsibility; ethics; fraud;
human resources management; business leadership; legal
environment of business; management of organizations; morals;
organizational behavior; professional responsibilities; or
auditing.
ii) A maximum of three semester units or four quarter
units in philosophy, religion, or, theology.
iii) A maximum of one semester unit of ethics study for
completion of a course title specific to financial statement
audits.
b) Requires, beginning January 1, 2017, the 10 semester units
or 15 quarter units of ethics study ethics study to be completed
as follows:
i) A minimum of three semester units or four quarter units in
courses at an upper division level or higher devoted to
accounting ethics or accountants' professional
responsibilities, unless the course was completed at a
community college, in which case it need not be completed at
the upper division level or higher;
ii) A maximum of seven semester units or 11 quarter units
in courses in the following areas: Business, government, and
society; business law; corporate governance; corporate social
responsibility; ethics; fraud; human resources management;
business leadership; legal environment of business; management
of organizations; morals; organizational behavior; professional
responsibilities; or auditing.
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iii) A maximum of three semester units or four quarter
units in: philosophy; religion; or, theology.
iv) A maximum of one semester unit of ethics study for
completion of a course title specific to financial statement
audits.
4)Changes the sunset provisions for the Advisory Committee to remain in
effect until January 1, 2014.
5)Repeals the requirement that the Board adopt Advisory Committee
ethics study recommendations via regulation and related language.
6) Deletes redundant language relating to the criteria for qualifying
education, and makes conforming changes.
FISCAL EFFECT: The Assembly Floor Analyses indicates that according
to the Assembly Appropriations Committee, costs associated with this
legislation are minor and absorbable within existing Board resources..
COMMENTS:
1. Assembly Amendments "Re-Write" This Measure. This bill is before
the Committee under Senate Rule 29.10 to hear Assembly amendments
which are considered as a "Re-write" of this measure. As
unanimously approved by the Senate Business, Professions and
Economic Development Committee (Committee) on April 14, 2011, this
bill revised the requirement for the Board to broadcast Board
meetings over the Internet to require video broadcasts and made a
correcting and conforming change relating to the Advisory
Committee. The Assembly amendments deleted the portion of the bill
related to the internet broadcasting of Board meetings, and added
the current language to establish requirements for ethics courses
that certified public accountant must complete to gain licensure.
The Committee may : (1) hold the bill, (2) return the bill as approved
by the Committee to the Senate Floor, or (3) re-refer the bill to
the fiscal committee pursuant to Joint Rule 10.5.
2. Purpose. This bill is sponsored by the California Society of
Certified Public Accountants (Sponsor) to make updating and
conforming changes to the law governing public accountancy in
California. The bill establishes requirements for ethics courses
that certified public accountants must complete to gain licensure.
3. Background. Legislation enacted in 2009, established the Advisory
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Committee on Accounting Ethics Curriculum to make recommendations
on ethics study guidelines to the Board by June 1, 2012. The
Advisory Committee has finished that task and this bill implements
its recommendations.
That legislation, SB 819 (Yee, Chapter 308, Statutes of 2009), revised
the CPA license standards to increase the amount of education from
120 hours to 150 hours effective January 1, 2014. In increasing
the required hours, the legislation required that the education
include a minimum of 10 units of ethics study and 20 units of
accounting study, as specified. The 10 units of ethics study must
meet the guidelines established by the Board upon the advice of the
Advisory Committee.
This bill establishes a set of ethics study requirements that must be
met in two different timeframes: (1) between January 1, 2014, and
December 31, 2016; and, (2) then beginning on January 1, 2017. The
latter timeframe adds courses at an upper division level or higher
devoted to accounting ethics or accountants' professional
responsibilities, and more specifically delineates the number of
hours that must be completed from the other course areas outlined
in the bill.
4. Related Legislation. SB 819 (Yee, Chapter 308, Statutes of 2009)
increased the education requirement to obtain a CPA license from
120 hours to 150 hours effective January 1, 2014. These provisions
were originally introduced in SB 961 (Yee) in 2009.
AB 1005 (Block, Chapter 379, Statutes of 2009) required the Board to
broadcast public Board meetings live over the Internet, and to also
post Board minutes and notices of formal accusations on the Board's
Website.
AB 138 (Hayashi, Chapter 312, Statutes of 2009) required, until
January 1, 2014, California-licensed accounting firms to undergo a
peer review of their accounting and auditing services every three
years.
SB 543 (Price) extends the sunset date on the Board of Accountancy
from January 1, 2012 to January 1, 2016; and deletes the CPA peer
review sunset. That bill is on the Assembly Floor.
AB 431 (Ma) authorizes the Board to establish a retired status license
for CPAs and PAs. That bill was passed by the Senate
Appropriations Committee, and is being referred to the Senate
Floor.
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5. Arguments in Support. In sponsoring the bill, California Society
of Certified Public Accountants , states that the bill would codify
the Ethics Committee's recently adopted Ethics Study Guideline
required by SB 819 in 2009. According to the Sponsor, "Senate Bill
773 is the product of several months of dedicated work by the
California Board of Accountancy's Ethics Curriculum Committee. SB
733 would enact the recommendations of the Committee and move the
process up by a minimum of a year so that students and educators
will have clear guidance."
SUPPORT AND OPPOSITION:
Support:
California Society of Certified Public Accountants (Sponsor)
Opposition:
None received as of August 29, 2011.
Consultant:G. V. Ayers