BILL ANALYSIS Ó
SB 1405
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1405 (De Leon) - As Amended: June 19, 2012
Policy Committee: Business and
Professions Vote: 9 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill revises California's practice privilege statutes for
the practice of accountancy to allow out-of-state licensees to
practice in California with no notice or fee paid to the
California Board of Accountancy (CBA), and allows certified
public accountants (CPAs), public accountants (PAs) and public
accounting firms to have their permits placed on military
inactive status (MIS). Specifically, this bill:
1)Allows, beginning July 1, 2013, and ending January 1, 2019, a
qualified individual to practice accountancy in California
under a practice privilege without notice to the CBA, a fee,
or any other requirement imposed by the CBA.
2)Allows an individual qualified to practice accountancy in
California under a practice privilege to perform the specified
services only through a firm of CPAs that has obtained a
registration from the CBA.
3)Requires an individual to notify the CBA and cease practice
until authorized by the CBA if any of the following has
occurred within the last seven years immediately preceding the
date on which the individual wishes to practice in California:
a) He or she has been the subject of any final disciplinary
action by the licensing or disciplinary authority of any
other jurisdiction with respect to any professional license
or has any charges of professional misconduct pending
against him or her in any other jurisdiction.
b) He or she has had his or her license in another
jurisdiction reinstated after a suspension or revocation of
SB 1405
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the license.
c) He or she has been denied issuance or renewal of a
professional license or certificate in any other
jurisdiction for any reason other than an inadvertent
administrative error
d) He or she has been convicted of a crime or is subject to
pending criminal charges in any jurisdiction other than a
minor traffic violation.
e) He or she has otherwise acquired a disqualifying
condition.
4)Requires, by July 1, 2014, the CBA to convene a stakeholder
group consisting of members of the CBA, CBA enforcement staff,
and representatives of the accounting profession and consumer
representatives to consider whether penalties established in
this bill are sufficient to deter violations of the bill's
self-reporting requirements.
5)Requires, by January 1, 2018, the CBA to prepare a report to
be provided to the relevant policy committees of the
Legislature, the director of DCA, and the public that explains
the CBA's implementation of this bill, whether its provisions
are more, less, or equivalent in the protection it affords the
public compared to current law; and how other state boards of
accountancy have addressed referrals to those boards from the
CBA, the timeframe in which those referrals were addressed,
and the outcome of investigations conducted by those boards.
6)Allows, beginning January 1, 2014, a holder of a permit to
practice pubic accountancy to apply to have his or her permit
placed on military inactive status if the permit holder is
engaged in, and provides sufficient evidence of, active duty
as a member of the California National Guard (National Guard)
or the U.S. Armed Forces.
FISCAL EFFECT
1)Waiving the fees for out of state CPAs who wish to practice in
California would reduce revenue by approximately $200,000 per
year. A $50,000 reduction in expenditures due to reduced
workload would partially offset the loss of revenue.
2)Costs associated with convening the workgroup and producing
the required report for the Legislature would be minor and
absorbable within existing resources.
SB 1405
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COMMENTS
1)Purpose . According to the author, this bill seeks to bring
California law into alignment with the laws of 48 other
states, which allow out-of-state licensees to practice across
state borders without first filing a form and paying a fee to
exercise a practice privilege.
The author contends, this bill functions as a pilot by
enacting the changes only until January 1, 2019, when current
law will be reinstated.
2)Background . California's current practice privilege program
requires out-of-state CPAs to provide notice of their intent
to practice accountancy in California to CBA by filling out a
form, which can be completed online, and paying a $100 fee.
The practice privilege form is four pages in length and
requires basic professional identifying information such as
name, address, CPA certificate, nature of the intended
practice in California, etc.
This bill eliminates the requirement to submit the form and
fee to CBA beginning July 1, 2013, and ending January 1, 2019,
and instead allows out-of-state licensees to practice under a
practice privilege without any fee or notification to the CBA.
It maintains many of the consumer protection provisions that
exist in current practice privilege statutes, adds
stop-practice provisions, and adds consumer information
provisions by requiring the CBA to post information on its
website about out-of-state licensees operating under a
practice privilege.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081