Legislature(2021 - 2022)BELTZ 105 (TSBldg)
01/19/2022 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB44 | |
| HB85 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 44 | TELECONFERENCED | |
| *+ | HB 85 | TELECONFERENCED | |
HB 44-PRACTICE OF ACCOUNTING; LICENSURE
1:30:47 PM
CHAIR COSTELLO announced the consideration of CS FOR HOUSE BILL
NO. 44(STA) "An Act relating to the practice of accounting."
[CSHB 44(STA) was before the committee.]
She noted that there was an amendment for the committee to
consider and following that she would look to the will of the
committee.
1:31:55 PM
SENATOR REVAK joined the committee.
1:32:26 PM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, Juneau,
Alaska, Sponsor of HB 44. explained that he introduced the bill
after members of the Alaska Board of Public Accountancy
contacted his office to share that the National Association of
the State Boards of Accountancy (NASBA) and the American
Institute of Certified Public Accountants (AICPA) had reached
out to ask them to work to update Alaska statutes to meet the
standards of the Uniform Accountancy Act (UAA) and the Institute
of CPA's Code of Professional Conduct. The national
organizations provided the Board of Public Accountancy 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 of a bill to
address the issues.
REPRESENTATIVE THOMPSON stated that HB 44 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 listed the individuals who were available to answer
questions, deferred to Ms. Bergh to provide a sectional
analysis, and mentioned an amendment he would like the committee
to consider.
CHAIR COSTELLO made a motion to clarify that the bill version
that passed the House was before the committee.
SENATOR STEVENS commented that HB 44 appears to simply align
Alaska statutes with national standards.
REPRESENTATIVE THOMPSON agreed.
CHAIR COSTELLO offered her understanding that the bill removes
current regulations that are beyond what the federal law
requires. She asked what impact this would have to the public.
REPRESENTATIVE THOMPSON deferred to one of the subject matter
experts who were available online.
CHAIR COSTELLO asked Ms. Bergh to walk through the sectional
analysis.
1:37:23 PM
LYNETTE BERGH, Staff, Representative Steve Thompson, Alaska
State Legislature, Juneau, Alaska, stated that many of the
changes in the bill are redundant to replace antiquated
accountancy terminology, which makes the sectional lengthy. She
asked if the committee would prefer a summary rather than the
complete sectional.
CHAIR COSTELLO conveyed her preference to hear the complete
sectional.
1:38:21 PM
MS. BERGH provided the following sectional analysis for HB 44:
[Original punctuation provided.]
Section 1. AS 08.04.020(b)
Appointment and qualifications of board. Revises the
qualifications for public members for board
appointments by deleting "out-of-state exemption'
license holders.
Section 2.
AS 08.04.100 Certificate granted. Eliminates "out-of-
state exemption" and "practice privilege" from those
certificate holders who are not authorized to engage
in the practice of public accounting without a current
license or permit.
Section 3. Amends AS 08.04.105 (b)
License for individual to practice as a public
accountant. The individual requirements for the board
to renew a license granted in this section are amended
by deleting reference to repealed statutes [AS
08.04.360-AS 08.04.380] and inserts statutes [AS
08.04.360 and AS 08.04.370]. Substitutes the word
"peer" review for "quality" review.
Section 4. AS 08.04.195(d)
Reciprocity with other states. Deletes references to
repealed statutes [AS 08.04.360-AS 08.04.380] and
inserts revised statutes [AS 08.04.360 and AS
08.04.370].
Section 5. AS 08.04.240(a)(1-4)
Application of partnerships, limited liability
companies, corporations, and other legal entities for
permits. Replaces the phrase "as a partnership to a
partnership" to "a firm with an office in the state".
Replaces the term "partnership" with the term "firm".
The term "partner" is replaced with the term "owner"
as relates to the board or an individual who is
engaged in the practice of public accounting.
Section 6. AS 08.04.240(f)
References a new subsection (k) to the list in which
initial permits can be issued and deletes subsections
(b), (d), and (e).
Section 7. AS 08.04.240(g)
References subsection (k) and deletes (b), (d), or (e)
for a permit renewal. Deletes references to repealed
statutes [AS 08.04.360-AS 08.04.380] and inserts
revised statutes [AS 08.04.360 and AS 08.04.370].
Substitutes the term "peer" for "quality" review and
deletes specific competency requirements.
1:41:50 PM
Section 8. AS 08.04.240(i)
Replaces the terms "partnership, corporation, limited
liability company or other legal entity" with the term
"firm".
Section 9. AS 08.04.240.(j)
Replaces the terms "partnership, corporation, limited
liability company or other legal entity" with the term
"firm".
Section 10. AS 08.04.240
Adds a new subsection (k) that mandates that the board
shall grant a permit to engage in the practice of
public accounting to a firm that does not have an
office in the state but offers or provides attest
functions in the state. The permit shall be granted If
the firm applies to the board as a firm of certified
public accountants and meets the requirements as set
out in AS 08.04.240(k)(1-4).
Section 11. AS 08.04.360 Supervision required.
Deletes the requirement of "in residence" for an
individual who holds a license as a supervisor.
Deletes the phrase "practice privilege" and inserts
the phrase a license "issued under this chapter". Adds
that a 3 supervisor may serve for each office in the
state that is maintained by a firm.
Section 12. AS 08.04.370 Use of title "certified
public accountant" by office of "firm".
Replaces the term "legal entity" with the term "firm".
Deletes "out-of-state exemption" as a permit holder.
Section 13. AS 08.04.420(a) Practice privileges.
Deletes subsection (b) as an exception to the
requirements for licensure (repealed).
Section 14. AS 08.04.420(c) Practice privileges.
Deletes subsection (b) as a requirement for engaging
in the practice of public accounting in this state
(repealed).
Section 15. AS 08.04.422 Conditions of Practice
Privileges.
Deletes "out-of-state permits and out-of-state
exemptions" as conditions for practice privileges.
Substitutes the term "firm" for "legal entity".
Removes the phrases "exemption under AS 08.04.421, and
"under the permit exemption" as that statute is
repealed.
Section 16. AS 08.04.426(a) Quality review.
Adds that the board may require that an applicant who
is seeking a license renewal or permit "provide
evidence of enrollment in" a peer review program
approved by the board by regulation. Deletes the term
"quality" review and inserts the term "peer" review.
Substitutes the phrase "program approved" for the
phrase "conducted as required".
1:45:00 PM
Section 17. AS 08.04.426(c) Quality review.
References new subsection "(f)" which directs that the
Board shall require a peer review of a firm that has
in its employ an applicant scheduled for renewal of a
permit in that firm. *[See Section 19. New subsection
on (f)].
Section 18. AS 08.04.426(d) Quality review.
References new subsection "(f)" for the Board's
quality review regulations. Amends Section AS.
08.04.426(d)(1-3) by replacing the term "quality"
review with the term "peer" review. Deletes the phrase
"quality reviews" and inserts the phrase
"administration of a peer review". The term
"oversight" replaces the term "supervision". 4 Deletes
the term "operated" and replaces it with "performed".
Amends Section 08.04.426(d)(4) by striking current
text and replacing it with text to clarify that
organizations who administer peer review programs must
provide information requested by the board.
Section 19. AS 08.04.426 Quality review.
Adds a new subsection (f). This subsection sets the
guidelines that the board must follow to conduct peer
reviews by regulation.
Section 20. AS 08.04.440 Effect of failure to obtain
license or permit.
Deletes the terms "partnership", "limited liability
company", "corporation", "or other legal entity" and
replaces them with the term "firm". Deletes the
paragraph that defines the calculated fee for penalty
of an untimely renewal of license with the phrase "the
department shall determine" the fee.
Section 21. AS 08.04.450(a) Revocation or suspension
of license, practice privilege permit.
Eliminates the "out-of-state exemption" license holder
status. Adds a clause that the board may require peer
reviews or continuing education courses. Cleans up the
language in this section by substituting "comply with
the peer" review for the phrase "satisfactorily
complete a quality" review. Deletes the word
"committing" an act and replaces with "commission of"
an act. Adds subsections (12-15) as additional board
findings for possible revocation or suspension of
licenses.
Section 22. AS 08.04.450(c) Revocation or suspension
of license, practice privilege permit.
Adds a new subsection (c) that states that the board
may hold a disciplined license holder to bear the
costs of any disciplinary proceedings.
1:47:55 PM
Section 23. AS 08.04.470 Revocation of "firm" permit.
Deletes the terms "of partnership", "limited liability
company", "corporation", "or other legal entity", and
"it" and replaces the terms with the word "firm".
Section 24. AS 08.04.480 Grounds for censure of, or
the revocation, suspension, or refusal to renew a
permit for a "firm".
Uses the term "firm" to replace the terms "of
partnership", "limited liability company",
"corporation", "or other legal entity". Amends AS
08.04.480(1) by adding the "refusal to renew" as 5 an
additional cause for suspension or revocation.
Replaces the terms "a partner", "a member", "a
shareholder", "or if the permittee is a legal entity
other than a partnership, corporation or limited
liability company", "an owner of the permittee" with
the phrase ""an owner of the firm in this state or in
another state". AS 08.04.480(3) adds refusal to renew
the "permit or authority of the firm" to replace the
terms cited above.
Section 25. AS 08.04.500(a) Individual posing as a
certified public accountant.
Delineates the statutes required to be met to use the
CPA title. Specifically, AS 08.04.360 and AS
08.04.370.
1:49:32 PM
Section 26. AS 08.04.505 Issuance of reports. Deletes
the term "out-of-state exemption".
Replaces the term "financial statements" with on
"behalf" of. Replaces the terms "sole proprietorship",
"partnership", "corporation", "limited liability
company", "or other legal entity" with the term
"firm".
Section 27. AS 08.04.510(a) Partnership, limited
liability company, corporation, or other legal entity
posing as a certified public accountant.
Uses the term "firm" to replace "partnership",
"corporation", "limited liability company", "or other
legal entity".
Section 28. AS 08.04.520 Individual posing as a public
accountant.
Delineates the statutes that are required to be met to
use the title of public accountant. Those statutes are
AS 08.04.360 and AS 08.04.370. Deletes AS 08.04.380.
Section 29.
AS 08.04.530 "Firm" posing as a public accountant.
Replaces the terms "partnership", "corporation",
"limited liability company", "or other legal entity"
with the term "firm".
1:50:59 PM
Section 30. AS 08.04.540 Use of deceptive title or
abbreviation. Replaces the terms "partnership",
"corporation", "limited liability company", "or other
legal entity" with the term "firm".
Deletes the phrase "out-of-state exemption".
Delineates the statutes that are required to be met
and maintained by individuals or firms whose offices
are in this state. If requirements are met, they may
use the titles public accountant or auditor. Those
statutes are AS 08.04.360 and AS 08.04.370.
Section 31.
AS 08.04.560 Individual may not assume title. Deletes
the phrase "on any accounting or financial statement"
as it relates to reports. Deletes the phrase that
refers to individual's offices in this state for the
practice of public accounting. 6
Section 32.
AS 08.04.565 Prohibited acts. Replaces the terms
"partnership", "corporation", "limited liability
company", "or other business entity" with the term
"firm".
Section 33. AS 08.04.600 Disclosure of lack of license
or permit. Replaces the terms "partnership",
"corporation", "limited liability company", "or other
entity" with the term "firm".
Deletes "or a current out-of-state exemption" from the
list of individuals or firms holding licenses,
practice privileges or permits.
1:52:28 PM
Section 34. AS 08.04.610 Deceptive use of title or
designation by "firm". Replaces the terms
"partnership", "corporation", "limited liability
company", "or other legal entity" with the term
"firm".
Deletes "or a current out-of-state exemption" as a
holder of a permit.
Section 35. AS 08.04.620(1) Exceptions. Replaces terms
"partnership", "corporation", "limited liability
company", "or other legal entity" with the term
"firm".
Deletes the phrase "or a current out-of-state
exemption so long as". Amends AS 08.04.620(3) by
inserting new language to describe the requirements
that entitles a holder to a certificate, license, or
degree from a foreign country. Deletes previous
language used.
Section 36. AS 08.04.662(a) Confidential
communications. Deletes "(an) out-of-state exemption
holder".
Replaces the term "quality" review with "peer" review.
1:53:41 PM
Section 37. AS 08.04.680(1)(E) Definitions.
Adds a qualifier under the definition of attest
function that clarifies accepted examinations.
Section 38. AS 08.04.680(4) Definitions.
Clarifies the definition of "compilation service".
Deletes the subsection in AS 08.04.680(4)(B).
Section 39. AS 08.04.680(14) Definitions.
Delineates AS 08.04.240 as the sole statute to issue a
permit under; thereby deleting AS 08.04.421(a).
Section 40. AS 08.04.680(15) Definitions.
Deletes the phrase "on financial statements" as
pertains to issuing reports.
Section 41. AS 08.04.680(19) Definitions. Updates the
definition of "report" to include an "attest
function".
Amends AS 08.04.680(19)(A)(i) by adding the phrase
"the attested information or compiled" to describe the
financial statements. Amends AS 08.04.680(19)(B)(ii)
by deleting "or an out-of-state exemption". 7
Section 42. AS 08.04.680(20) Definitions.
Adds clarifying language, "Commonwealth of the"
Northern Mariana Islands.
Section 43. AS 08.04.680 Definitions.
Adds new definitions for (21) "firm", (22) "peer
review" and (23) "preparation of financial
statements".
Section 44.
Repeals statutes
1:56:31 PM
CHAIR COSTELLO observed that the bill appears to remove the out-
of-state exemption to practice accountancy in Alaska and instead
allows a person to practice in an Alaskan firm if an Alaska
certified manager oversees the CPAs. She asked the sponsor if
that was accurate.
REPRESENTATIVE THOMPSON said he believes so but he would defer
to the subject matter experts for clarification.
CHAIR COSTELLO asked if HB 44 allows anyone to practice public
accountancy without either Alaska certification or under the
oversight of a certified accountant with an office in Alaska.
REPRESENTATIVE THOMPSON deferred the question to either Ms.
Bergh or one of the subject matter experts who were online.
CHAIR COSTELLO said her final question related to Section 14,
page 6, line 10. It is amended to remove reference to AS
08.04.420(b) for those individuals who may engage in the
practice of public accountancy. Then it says those individuals
are not required to provide notice to the board. She asked why
that language is included and how onerous it might be for
somebody to have to notify the board that they are practicing
accountancy in Alaska.
1:58:34 PM
SENATOR GRAY-JACKSON said the chair articulated the questions
she had related to out-of-state exemptions.
SENATOR STEVENS asked when these statutes were last amended.
REPRESENTATIVE THOMPSON said he did not know.
SENATOR STEVENS said he would like someone to provide an answer.
1:59:29 PM
MS. BERGH explained that the accountancy statutes were modified
in 2006 when Representative Hawker carried the bill in the 24th
legislature. That bill changed the language to talk about
practice privilege for out-of-state applicants and had
regulations relating to the test function and licenses for
individuals to practice as public accountants. Some definitions
were also changed.
The statutes were revisited again in 2010 in the 26th
legislature when Representative Kurt Olsen carried the bill.
That bill addressed the concept of mobility for accountants,
out-of-state exemptions, and practice privileges.
The statutes were visited again in 2018 in the 30th legislature
when Representative Steve Thompson carried the bill. That bill
addressed the national standards in the first half of the
accountancy statutes and HB 44 addresses the second part of that
effort.
2:01:18 PM
CHAIR COSTELLO turned to invited testimony and asked the
individuals to respond to the questions that were asked earlier
in the hearing.
2:01:37 PM
CRISTA BURSON, President and CEO, Alaska Society of CPAs
(AKCPA), Anchorage, Alaska, stated that AKCPA has worked
collaboratively with the State Board of Public Accountancy on
the changes proposed in HB 44. On behalf of the more than 600
AKCPA members in public and private practice, educators, and
students she was speaking in support of HB 44.
2:02:54 PM
At ease
2:03:20 PM
CHAIR COSTELLO reconvened the meeting and asked the individuals
invited to testify to talk about whether or not HB 44 addresses
the out-of-state exemption that is being removed.
2:03:55 PM
KAREN BREWER-TARVER, Member, Alaska Society of CPAs, Juneau,
Alaska, stated that she is a CPA and partner at the Juneau-based
accounting firm Elgee Rehfled LLC, and in 2020 she completed
eight years on the Board of Accountancy. In 2018, the board
reviewed the accountancy statutes and HB 44 reflects the
subsequent four-year review the board worked on in collaboration
with NASBA and AICPA.
Responding to earlier questions, she said the board compared the
Alaska statutes to the model licensing law in the Uniform
Accountancy Act (UAA) that provides a uniform approach to the
regulation of the accounting profession. That model law is
modified as needed for each jurisdiction.
MR. BREWER-TARVER addressed the out-of-state exemption. She
explained that current statute requires a firm that does not
have an office in Alaska but wants to provide services to a
client in Alaska to obtain a firm permit. HB 44 eliminates that
requirement if the out-of-state firm meets certain statutory
criteria and understands that the board has oversight of their
work when they are serving an Alaska-based business. If the out-
of-state firm does not meet the criteria they would be required
to apply for a firm permit.
CHAIR COSTELLO referenced the list of criteria in Section 10 and
the language in Section 14 that says an individual who may
practice public accounting in the state is not required to
provide notice to the board. She asked how the board would be
aware that an individual has met the criteria and is practicing.
MS. TARVER replied that an out-of-state firm that meets the
criteria does not have to apply for a permit or provide notice.
Board oversight only occurs if an issue is brought to the board
or investigator's attention.
2:08:09 PM
THOMAS G. NEILL, Chair, Uniform Accountancy Act Committee of the
American Institute of Certified Public Accountants, stated that
he is speaking in support of HB 44, which modernizes the Alaska
accountancy statutes. He explained that UAA is model legislation
whose goal is to provide the 55 licensing jurisdictions in the
United States a consistent framework for regulation of the CPA
profession. He relayed that the accounting profession has faced
challenges the last few years that has affected businesses'
access to needed professional services. The mobility provision
in HB 44 addresses this challenge. He explained that when the
concept of mobility was first contemplated 20 years ago, a
concern was that businesses licensed in Alaska would lose work
to out-of-state firms. That has not proved to be the case in
either Alaska or other states. Another concern related to the
potential loss of revenue but that, too, has not been the case.
When a firm crosses a state line it may have to file and pay
occupation and individual taxes or taxes for staff that worked
in that state. To date, 31 states have enacted mobility statutes
and two others, and Alaska, are in the process. He reported
having received no negative feedback from states, firms, or
clients. A key advantage to firm mobility is that Alaska
businesses will have more access to these professional services,
which may help them grow and thrive.
2:11:03 PM
LESLIE SCHMITZ, Member and past Chair, Alaska Board of Public
Accountancy, Anchorage, Alaska, stated that the board has been
working on this legislation for several years and is in full
support. She explained that the board worked with the State
Society of CPAs (AKCPA) to assure a transparent process. They
sought assistance from the American Institute of CPAs (AICPA) to
help with the technical edits to bring Alaska practices and
terminology to current industry standards. The board also
reached out to interested parties throughout the process. She
related that the Uniform Accountancy Act is an "evergreen" model
licensing law developed to provide a uniform approach to
regulation of the accounting profession. The board believes HB
44 will enhance public protection and modernize terminology
referenced in the law. Despite the length, she advised that HB
44 addresses just a few main topics. These include updates in
the definition of "firm," updated terminology from "quality
review" to "peer review," and updating the law to allow firm
mobility.
SENATOR STEVENS asked if she could say that this in no way harms
Alaska CPAs and businesses.
MS. SCHMITZ replied the bill will provide mobility for Alaska
CPAs to do business in other states, which will open new
markets. Thus, she did not believe it would harm Alaska CPAs or
businesses. She deferred further comment to Mr. Neill.
SENATOR STEVENS said it makes sense but he would like to hear
from Mr. Neill as well.
2:14:17 PM
MR. NEILL explained that HB 44 allows Alaska accountancy firms
to work in Washington and other states and firms from Washington
and other states to work in Alaska. He offered his belief that
the bill would not harm Alaska CPAs or Alaska accountancy
businesses.
CHAIR COSTELLO noted that Sara Chambers was available to answer
questions about licensing.
SENATOR GRAY-JACKSON asked if out-of-state accountants need a
sponsor to work in Alaska.
2:15:51 PM
MR. NEILL answered that sponsorship would not be required. For
example, as a Washington accountant he could serve a client in
Alaska through the mobility statute. His main concern would be
to ensure compliance with any taxation laws that might apply.
2:16:36 PM
CHAIR COSTELLO opened public testimony for HB 44; finding none,
she closed public testimony.
She noted that she worked with the sponsor on a [conceptual]
amendment.
2:17:10 PM
SENATOR STEVENS moved Conceptual Amendment 1 to HB 44.
CONCEPTUAL AMENDMENT 1
Page 4, lines 23-24:
Delete: applies to the board as a firm of certified
public accountants and
CHAIR COSTELLO objected for discussion purposes. She related
that she worked with the sponsor on the amendment. The intent of
the legislation is that a firm will not apply to the board, but
instead meet certain requirements. The amendment aligns with the
intent. She asked the sponsor to comment.
REPRESENTATIVE THOMPSON agreed with the characterization. The
board identified this language as a problem and requested the
committee pass the amendment.
CHAIR COSTELLO read Conceptual Amendment for the listening
public.
2:18:53 PM
CHAIR COSTELLO removed her objection. Seeing no further
objection, Conceptual Amendment 1 to HB 44 passed. She asked the
will of the committee.
2:19:14 PM
SENATOR REVAK moved to report CSHB 44, work order 32-LS0302\I,
as amended, from committee with individual recommendations and
attached fiscal note(s).
CHAIR COSTELLO found no objection and SCS CSHB 44(L&C) was
reported from the Senate Labor and Commerce Standing Committee.
SENATOR STEVENS offered his assumption that this was the only
committee of referral.
REPRESENTATIVE THOMPSON said he believed that was accurate.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 44 (STA) Sectional Analysis version I - 01.19.21.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 44 |
| HB 44 Fiscal Note 2360 - DCCED.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 44 |
| CSHB 44 (HSTA) Conceptual Amendment 1 - 1.19.22.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 44 |
| HB 85 Fiscal Note 2360 - DCCED.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 85 |
| HB 85 Fiscal Note 2808 - DCCED.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 85 |
| HB 85 Fiscal Note 3094 - DEC.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 85 |
| CSHB 85 (HL&C) Conceptual Amendment 1 - 1.19.22.pdf |
SL&C 1/19/2022 1:30:00 PM |
HB 85 |