03/11/2021 03:00 PM House STATE AFFAIRS

            HB 44-PRACTICE OF ACCOUNTING; LICENSURE                                                                         
                                                                                                                                
3:19:54 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS  announced that  the next order  of business                                                               
would be HOUSE  BILL NO. 44, "An Act relating  to the practice of                                                               
accounting."                                                                                                                    
                                                                                                                                
3:20:10 PM                                                                                                                    
                                                                                                                                
CHAIR  KREISS-TOMKINS  moved  to  adopt  the  proposed  committee                                                               
substitute (CS)  for HB 44, labeled  32-LS0302\B, Fisher, 3/8/21,                                                               
as the working document.                                                                                                        
                                                                                                                                
REPRESENTATIVE EASTMAN objected for the purpose of discussion.                                                                  
                                                                                                                                
3:21:14 PM                                                                                                                    
                                                                                                                                
LYNETTE  BERGH, Staff,  Representative  Steve Thompson,  reviewed                                                               
the changes  to HB 44, proposed  in the CS, Version  B, on behalf                                                               
of Representative  Thompson, prime  sponsor.  She  explained that                                                               
Version B removes  the language "or compilation" on  page 8, line                                                               
4; removes the language "the  board" and inserts "the department"                                                               
on  page 8,  line 28;  and removes  the language  "or compilation                                                               
reports" on  page 20, line 5.   She said these  changes were made                                                               
at  the  request  of  the  Alaska  Society  of  Certified  Public                                                               
Accountants.                                                                                                                    
                                                                                                                                
3:23:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN  withdrew his  objection.  There  being no                                                               
further objection, Version B was before the committee.                                                                          
                                                                                                                                
3:23:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STEVE THOMPSON,  Alaska State  Legislature, prime                                                               
sponsor, introduced  HB 44, Version B.   He stated that  the bill                                                               
originated  after   members  of   the  Alaska  Board   of  Public                                                               
Accountancy (ABPA)  contacted his office  to share that  they had                                                               
been  asked  to  update  Alaska  statutes  to  meet  the  Uniform                                                               
Accountancy Act  and the American  Institute of  Certified Public                                                               
Accountants'  (AICPA's)  Code  of  Professional  Conduct  by  the                                                               
National Association  of the State Boards  of Accountancy (NASBA)                                                               
and  AICPA.   The  national organizations  provided  ABPA with  a                                                               
summary  of  areas  where  Alaska's  statutes  do  not  meet  the                                                               
national standards.   The board reviewed those  statutes over the                                                               
past several  years and developed a  rough draft for the  bill to                                                               
address  the  issues.    He  conveyed  that  HB  44,  Version  B,                                                               
incorporates   these  changes   and  would   update  the   public                                                               
accountancy statutes to  bring Alaska more in  line with national                                                               
standards  while continuing  to  protect the  public interest  by                                                               
ensuring  that  only qualified  persons  are  licensed, and  that                                                               
appropriate standards of competency  and practice are established                                                               
and enforced.   He deferred to  Ms. Bergh to provide  a sectional                                                               
analysis of the bill.                                                                                                           
                                                                                                                                
3:26:07 PM                                                                                                                    
                                                                                                                                
MS. BERGH  noted the length  of the sectional  analysis [included                                                               
in the  committee packet], which  covered 44 sections.   She said                                                               
many  of the  items  in  the sectional  are  redundant as  common                                                               
language was added or removed.   She offered to provide a summary                                                               
of the sectional analysis, which  would highlight the changes and                                                               
be less time intensive.                                                                                                         
                                                                                                                                
CHAIR KREISS-TOMKINS welcomed the sectional summary.                                                                            
                                                                                                                                
MS. BERGH presented  a summarized sectional analysis  of the bill                                                               
[included  in  the  committee  packet],  which  read  as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     The  changes  in  HB44 are  intended  to  better  align                                                                    
     Alaska  accountancy statutes  with national  standards,                                                                    
     using the  Uniform Accountancy Act  (UAA) as  a guiding                                                                    
     document.  These changes  will  help  ensure a  uniform                                                                    
     approach to regulation of  the accounting profession in                                                                    
     Alaska.  Throughout the  current accountancy  statutes,                                                                    
     there are antiquated industry terms and definitions.                                                                       
                                                                                                                                
     HB 44 updates the following terms:                                                                                         
     •  "out-of-state  exemption"  is  removed  entirely  to                                                                    
     allow for firm mobility                                                                                                    
     •    "Partnership,     limited    liability    company,                                                                    
     corporation, or  other legal entity" are  replaced with                                                                    
     the term  "firm"; the updated  definition of  firm will                                                                    
     now include sole proprietors                                                                                               
     • "quality review" is replaced with "peer review"                                                                          
     • Sections  37-43 updates/adds new definitions  for the                                                                    
     following accountancy terms:                                                                                               
          o "attest function"                                                                                                   
          o "compilation service"                                                                                               
          o "permit"                                                                                                            
          o "practice of public accounting"                                                                                     
          o "report"                                                                                                            
          o "state"                                                                                                             
          o "preparation of financial statements"                                                                               
                                                                                                                                
3:28:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE VANCE referred  to language in Section  3, on page                                                               
2, line  11, which states  that the  board "may" renew  a license                                                               
granted  under  Section  3  if  the  licensee  meets  the  listed                                                               
criteria.  She then directed  attention to language in Section 5,                                                               
on page 2,  line 18, which states that the  board "shall" grant a                                                               
permit.   Referring  back  to page  2, line  11,  she asked  what                                                               
discretion the board would have  to renew a license under Section                                                               
3 if the licensee met the statutory criteria.                                                                                   
                                                                                                                                
MS.  BERGH deferred  to Karen  Brewer-Tarver or  Thomas Neill  to                                                               
speak to the technicalities of the bill.                                                                                        
                                                                                                                                
3:30:07 PM                                                                                                                    
                                                                                                                                
KAREN   BREWER-TARVER,  Alaska   Society   of  Certified   Public                                                               
Accountants, said the board would renew  a license as long as the                                                               
firm met  all of  the criteria.   She clarified  that if  all the                                                               
conditions  are  met, the  board  does  not have  discretion  [on                                                               
whether or not to renew a license].                                                                                             
                                                                                                                                
3:31:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VANCE asked  whether,  since the  board does  not                                                               
utilize discretion,  the word "shall"  would be  more appropriate                                                               
and protect against potential litigation.                                                                                       
                                                                                                                                
MS. BREWER-TARVER  said she would  have to think more  about that                                                               
question.   She offered her  understanding that "shall"  could be                                                               
used but  "may" would allow  for more discretion.   She explained                                                               
that the Uniform  Accountancy Act is a template  act, which NASBA                                                               
and AICPA create for state boards  to look to for best practices.                                                               
She deferred to Thomas Neill for further information.                                                                           
                                                                                                                                
3:33:39 PM                                                                                                                    
                                                                                                                                
THOMAS  NEILL, Chair,  AICPA Uniform  Accountancy Act  Committee,                                                               
advised  that  the  Act  is  a  template  for  all  55  licensing                                                               
jurisdictions  to align  with to  allow  for CPAs  and CPA  firms                                                               
around the  country to act  with some uniformity.   Regarding the                                                               
question  of  "may"  versus  "shall",  he  recalled  seeing  some                                                               
jurisdictions  go  both directions.    He  offered to  look  more                                                               
specifically at the  entirety of Alaska statutes  to consider the                                                               
cross-references and follow  up with a more  definitive answer at                                                               
the next hearing on the proposed  legislation.  He noted that the                                                               
Uniform  Accountancy  Act  doesn't   delve  into  this  level  of                                                               
specificity,   further  noting   it   is  left   to  each   state                                                               
jurisdiction to enact mobility as best fits its statutes/rules.                                                                 
                                                                                                                                
3:35:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN referred to paragraph  (3) on page 2, line                                                               
16, which states that the board  may renew a license issued under                                                               
Section  4 if  the licensee  "complies with  the requirements  of                                                               
this chapter".   He asked to  what degree the board  is competent                                                               
to make that determination.                                                                                                     
                                                                                                                                
3:36:05 PM                                                                                                                    
                                                                                                                                
MR. NEILL remarked:                                                                                                             
                                                                                                                                
     As  I've  seen  through  most  state  legislative  acts                                                                    
     relative to  how a CPA  gets the license,  they usually                                                                    
     have  a cross-reference  like this  to  make sure  that                                                                    
     they are complying with the  entirety of what's drafted                                                                    
     in that section of that state's Uniform Accountancy                                                                        
     Act.                                                                                                                       
                                                                                                                                
MR. NEILL said  with regard to complying, when a  CPA applies for                                                               
a license in  Washington there is a set of  criteria to consider,                                                               
which  looks  at whether  the  licensee  has met  the  continuing                                                               
education requirements;  whether the licensee has  other licenses                                                               
in or  outside the state; whether  the licensee has met  the peer                                                               
review  requirements.    He shared  his  understanding  that  the                                                               
language  in question  is part  of a  methodology or  criteria to                                                               
make sure that the licensee is eligible for licensure.                                                                          
                                                                                                                                
3:37:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CLAMAN noted that "may"  and "shall" are both used                                                               
throughout  Alaska  statutes.   He  suggested  that it  would  be                                                               
helpful to  hear perspective from Legislative  Legal Services, in                                                               
addition to  [Mr. Neill's] perspective,  on this discussion.   He                                                               
opined   that  changing   the  language   to  "shall"   could  be                                                               
problematic  if  it  were inconsistent  with  the  practices  and                                                               
statutes of other  professions throughout the state.   He posited                                                               
the  courts  would  conclude that  the  legislature  changed  the                                                               
language for some specific reason.   He emphasized the importance                                                               
of consistency across professions.                                                                                              
                                                                                                                                
REPRESENTATIVE  THOMPSON  offered  to  follow  up  with  a  legal                                                               
opinion.                                                                                                                        
                                                                                                                                
3:38:53 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS announced that HB 44 was held over.