05/07/2021 08:00 AM House LABOR & COMMERCE

            HB 44-PRACTICE OF ACCOUNTING; LICENSURE                                                                         
                                                                                                                                
8:05:42 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced  that the next order  of business would                                                               
be  HOUSE BILL  NO.  44,  "An Act  relating  to  the practice  of                                                               
accounting."                                                                                                                    
                                                                                                                                
[Before the committee was CSHB 44(STA).]                                                                                        
                                                                                                                                
8:05:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STEVE  THOMPSON,  Alaska  State  Legislature,  as                                                               
prime sponsor, shared that the  proposed legislation would update                                                               
Alaska's  public accountancy  statutes  to bring  Alaska more  in                                                               
line with  national standards.   The updates would help  ensure a                                                               
uniform approach  to the regulation  of accounting in  Alaska, he                                                               
said, which would protect the public's interest.                                                                                
                                                                                                                                
8:07:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY referred  to the  term "mobility  model,"                                                               
which would allow business entities  outside the state to provide                                                               
services within the  state.  He asked  whether those out-of-state                                                               
professions currently pay professional license  fees as well as a                                                               
business license fee.                                                                                                           
                                                                                                                                
REPRESENTATIVE THOMPSON deferred to Ms. Chambers.                                                                               
                                                                                                                                
8:08:40 AM                                                                                                                    
                                                                                                                                
SARA CHAMBERS, Director, Division  of Corporations, Business, and                                                               
Professional   Licensing   (CBPL),    Department   of   Commerce,                                                               
Community, and  Economic Development  (DCCED), shared  that other                                                               
states  that   have  implemented   mobility  measures   have  not                                                               
experienced  a  meaningful  increase  in  investigative  expenses                                                               
targeting out-of-state practitioners.   She noted that only those                                                               
out-of-state  practitioners performing  non-attestation functions                                                               
would be  able to practice  without a license;  anyone performing                                                               
the higher-level attestation functions  would be required to have                                                               
a  license  within   the  state.    She   compared  the  proposed                                                               
legislation to the  Nurse Licensure Compact and said  that of the                                                               
35 states that have adopted the  compact, there have not been any                                                               
reports   of   legitimate,    demonstrable   problems   for   the                                                               
jurisdiction.                                                                                                                   
                                                                                                                                
REPRESENTATIVE MCCARTY  asked Ms.  Chambers to clarify  whether a                                                               
professional licensed in another  state could provide services in                                                               
Alaska without paying licensing fees.                                                                                           
                                                                                                                                
MS.  CHAMBERS said,  "Yes,  that's what  this  bill is  proposing                                                               
under certain  circumstances."  She  explained that not  all out-                                                               
of-state  firms  or individuals  would  be  able to  practice  in                                                               
Alaska  without a  license,  but there  are  some practices  that                                                               
could take place  with a business license but  not a professional                                                               
license.                                                                                                                        
                                                                                                                                
REPRESENTATIVE MCCARTY asked whether  Alaska would waive the fees                                                               
for in-state licensees.                                                                                                         
                                                                                                                                
MS.  CHAMBERS responded,  "That is  not my  understanding."   She                                                               
explained   that   a   professional's  home   state   bears   the                                                               
responsibility for due diligence  and ensuring public protection.                                                               
A professional with  an unencumbered license who  meets the other                                                               
standards within HB  44, she said, could  practice within Alaska.                                                               
She said the question of  equity is addressed by allowing Alaskan                                                               
licensees the privilege of practicing in other states.                                                                          
                                                                                                                                
REPRESENTATIVE  MCCARTY wondered  whether there  is an  agreement                                                               
between Washington and Alaska regarding mobility.                                                                               
                                                                                                                                
MS.  CHAMBERS responded  that  under a  compact,  like the  Nurse                                                               
Licensure Compact,  there's a standard  agreement adopted  by the                                                               
legislatures.  Under the less  formal "mobility model," she said,                                                               
states  which  meet  the   national  standards  for  requirements                                                               
independently adopt the standards.                                                                                              
                                                                                                                                
8:15:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON  reminded  committee  members  that  the                                                               
purpose  of  the  proposed  legislation   is  to  bring  Alaska's                                                               
statutes up-to-date in  order to operate under  the same national                                                               
standards as other licensing jurisdictions.                                                                                     
                                                                                                                                
8:15:44 AM                                                                                                                    
                                                                                                                                
KAREN  TARVER,  CPA,  Elgee  Rehfeld,  LLC,  explained  that  the                                                               
American  Institute of  Certified  Public Accountants  introduced                                                               
the practice  of "firm mobility" in  2014; since then, 30  of the                                                               
55 licensing  jurisdictions have adopted  it.  She said  that the                                                               
model provides greater oversight  by the jurisdictional licensing                                                               
boards because a  professional is subject to  the regulations and                                                               
statutes  in the  state in  which the  professional is  providing                                                               
services.                                                                                                                       
                                                                                                                                
REPRESENTATIVE   MCCARTY   expressed   the   view   that   losing                                                               
accreditation does not mean that  an individual is no longer able                                                               
to  practice their  profession.   He  then asked,  "Where is  the                                                               
equitableness of  this, and  ... where's  the arm  of enforcement                                                               
upon this?"                                                                                                                     
                                                                                                                                
MS. TARVER responded,  "The equity through firm  mobility is that                                                               
I, as an Alaska CPA, could  provide services outside the state as                                                               
well [as]  in a state  that has  firm mobility without  having to                                                               
get  a permit  in that  state."   The  regulatory oversight,  she                                                               
said, is  ultimately held  by the  licensee's home  state; Alaska                                                               
retains the  ability to sanction  an out-of-state  licensee under                                                               
Alaska's statutes  and regulations.   She added  that there  is a                                                               
national database of CPAs, which  facilitates a smooth process of                                                               
information sharing.                                                                                                            
                                                                                                                                
REPRESENTATIVE MCCARTY  expressed understanding of  the equitable                                                               
nature of the mobility model.                                                                                                   
                                                                                                                                
8:22:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ asked  for clarification  on the  enforcement                                                               
mechanism.                                                                                                                      
                                                                                                                                
                                                                                                                                
8:23:30 AM                                                                                                                    
                                                                                                                                
MS.  CHAMBERS  explained  that  the  proposed  legislation  would                                                               
provide explicit language stating that  the board has the ability                                                               
to relieve  a practitioner  of the right  to practice  within the                                                               
state;  the   prohibition  would  be  communicated   through  the                                                               
national database to the licensee's home state.                                                                                 
                                                                                                                                
CO-CHAIR SPOHNHOLZ  asked Ms. Chambers to  clarify whether Alaska                                                               
would "rely on  a national database to protect  Alaskans from bad                                                               
actors."                                                                                                                        
                                                                                                                                
MS. CHAMBERS responded  that the national database  would let all                                                               
of  the  other licensing  jurisdictions  know  of the  complaints                                                               
against  the   individual.     Alaska's  licensing   board  would                                                               
undertake a regular investigation.                                                                                              
                                                                                                                                
CO-CHAIR  SPOHNHOLZ stated  that  professional  licensing is  the                                                               
enforcement mechanism  in the state.   She said that  she doesn't                                                               
understand what the  enforcement mechanism is if, as  a result of                                                               
the proposed legislation, the state  no longer requires licensing                                                               
of accountants.                                                                                                                 
                                                                                                                                
MS.  CHAMBERS replied  that there  is a  section in  the proposed                                                               
legislation  that  would  specifically  authorize  the  Board  of                                                               
Public  Accountancy  to  prohibit someone  with  an  out-of-state                                                               
license from being able to practice in Alaska.                                                                                  
                                                                                                                                
CO-CHAIR SPOHNHOLZ said,  "We are, in fact,  asking another state                                                               
to enforce ... Alaskan licensing  practice standards, by adopting                                                               
this."                                                                                                                          
                                                                                                                                
MS. CHAMBERS replied  that the Board of  Public Accountancy would                                                               
be enforcing Alaska's practice standards  by prohibiting the out-                                                               
of-state  individual from  practicing  within Alaska.   She  said                                                               
that this prohibition would then  be communicated to other states                                                               
in a  manner similar  to what  is currently  done by  other state                                                               
licensing  boards; in  the health  care profession,  she said,  a                                                               
licensee  who   is  disciplined  is  reported   to  the  national                                                               
database, and other states in  which the practitioner is licensed                                                               
may investigate the  licensee for similar issues.   She said that                                                               
Alaska would  be similarly reliant  on other states  to determine                                                               
whether an accountant is qualified.                                                                                             
                                                                                                                                
CO-CHAIR  SPOHNHOLZ said  that all  healthcare practitioners  are                                                               
currently required to  be licensed in Alaska, and  that the state                                                               
licensing  board may  revoke  their  license at  any  time.   She                                                               
suggested that the proposed legislation  could mean that Alaska's                                                               
licensees would  be paying for enforcement  against practitioners                                                               
in another  state.   She expressed the  belief that  the proposed                                                               
legislation  would   give  other   states  control   over  Alaska                                                               
licensing regulations.                                                                                                          
                                                                                                                                
8:31:55 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS   asked  for  an  example   of  an  out-of-state                                                               
practitioner being disciplined within their home state.                                                                         
                                                                                                                                
MS.  CHAMBERS replied  that the  mechanism has  been working  for                                                               
many years  in other states  that have adopted the  firm mobility                                                               
language.                                                                                                                       
                                                                                                                                
8:33:34 AM                                                                                                                    
                                                                                                                                
LYNETTE  BERGH,  Staff,  Representative  Steve  Thompson,  Alaska                                                               
State  Legislature,   pointed  out  that  Mr.   Neill  previously                                                               
discussed  a case  in Washington.    He also  testified that  the                                                               
mobility method works, because  other licensing jurisdictions are                                                               
made aware of any disciplinary actions against a licensee.                                                                      
                                                                                                                                
CO-CHAIR FIELDS asked who operates the national database.                                                                       
                                                                                                                                
MS. CHAMBERS deferred to Ms. Hondolero.                                                                                         
                                                                                                                                
8:35:21 AM                                                                                                                    
                                                                                                                                
CORI   HONDOLERO,  Executive   Administrator,  Board   of  Public                                                               
Accountancy,   Divisions    of   Corporations,    Business,   and                                                               
Professional  Licensing, Department  of Commerce,  Community, and                                                               
Economic  Development,  said  that the  National  Association  of                                                               
State  Boards  of  Accountancy   runs  the  Accountancy  Licensee                                                               
Database (ALD), which 55  licensing jurisdictions participate in.                                                               
She  said that  the  investigator for  Alaska's  Board of  Public                                                               
Accountancy has access to the database.                                                                                         
                                                                                                                                
CO-CHAIR FIELDS  said, "I  have no confidence  that a  state like                                                               
Alabama would  ever be  capable of  overseeing this  or, frankly,                                                               
any other, program."  He  hypothesized about a situation in which                                                               
an Alabama licensee  failed to live up to  standards, and Alabama                                                               
subsequently declined to discipline the  licensee.  He asked what                                                               
recourse the Board of Public Accountancy would have.                                                                            
                                                                                                                                
MS. HONDOLERO replied that Alaska  could issue a cease and desist                                                               
order  prohibiting the  out-of-state practitioner  from operating                                                               
in Alaska.                                                                                                                      
                                                                                                                                
CO-CHAIR  FIELDS asked  what  legal threshold  would  need to  be                                                               
crossed in  order to issue a  cease and desist order  if there is                                                               
no proof of misbehavior in the licensee's home state.                                                                           
                                                                                                                                
8:37:30 AM                                                                                                                    
                                                                                                                                
MS. CHAMBERS pointed out that  the Board of Public Accountancy is                                                               
constantly in  the process of  determining whether  an individual                                                               
should  be allowed  to  practice in  Alaska.   In  Representative                                                               
Fields'  example,   she  said,  the  board   would  independently                                                               
determine whether  the out-of-state  practitioner was  allowed to                                                               
practice in Alaska.  She said  that, through use of the database,                                                               
Alaska's board  can be aware  of any  issues in other  states and                                                               
prohibit any individual from practicing  within Alaska.  She said                                                               
that while a licensee's home  state could act on the individual's                                                               
license, Alaska's board would not  be waiting for the other state                                                               
to act  and could issue  a cease and  desist order with  no other                                                               
information.                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS asked  whether  there would  be  a mechanism  to                                                               
require that out-of-state  licensees to pay a fee to  stay in the                                                               
system.                                                                                                                         
                                                                                                                                
8:40:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON said that  those licensed in Alaska don't                                                               
have to pay fees to practice in Washington.                                                                                     
                                                                                                                                
8:40:47 AM                                                                                                                    
                                                                                                                                
MS. CHAMBERS  reminded committee members that  license fees cover                                                               
the costs  of operation  for all  professional boards  in Alaska.                                                               
She  said that  in any  program, whenever  there's an  unlicensed                                                               
practice concern,  the licensees  have to cover  that cost.   The                                                               
bigger  pictures,  she said,  is  that  there's no  mechanism  to                                                               
recover costs,  which is something  that has been  brought before                                                               
the legislature  in the  past.   She said that  HB 44  contains a                                                               
provision  that the  board may  require  that disciplinary  costs                                                               
against  an out-of-state  licensee be  covered by  the defendant,                                                               
but other mechanisms  would need to be included for  the board to                                                               
have  the  ability  to  receive   funding.    She  stressed  that                                                               
licensees pay  the costs  of all  investigations, whether  or not                                                               
the individual  is licensed.   She said the  proposed legislation                                                               
would give the board more  authority than that which is specified                                                               
under  current  law, allowing  the  "good  actors" to  face  less                                                               
bureaucracy, along  with stronger language and  oversight for the                                                               
"bad actors."                                                                                                                   
                                                                                                                                
8:43:48 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAUFMAN  asked how  many  states  are aligned  in                                                               
similar processes.                                                                                                              
                                                                                                                                
MS.  CHAMBERS  pointed out  that  Ms.  Tarver testified  that  30                                                               
states are already part of the network.                                                                                         
                                                                                                                                
REPRESENTATIVE KAUFMAN  asked, "In the  30 other states  that are                                                               
operating under  this model,  do we  have indications  of serious                                                               
problems - upon adopting this, have they spun out of control?"                                                                  
                                                                                                                                
MS. CHAMBERS responded that other  states have reported that they                                                               
have  not had  any  problems  out of  the  ordinary.   They  have                                                               
reported, she  said, that the  model reduces  bureaucracy without                                                               
forgoing jurisdictional authority.                                                                                              
                                                                                                                                
REPRESENTATIVE KAUFMAN asked Ms. Chambers  what she thinks of the                                                               
proposed legislation in its current form.                                                                                       
                                                                                                                                
MS. CHAMBERS responded  that the proposed legislation  would be a                                                               
good  move for  Alaska and  would help  keep Alaska,  and Alaskan                                                               
firms, competitive with firms in other states.                                                                                  
                                                                                                                                
8:47:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SNYDER asked  for  documentation on  the lack  of                                                               
problems experienced by other states.                                                                                           
                                                                                                                                
MS.  CHAMBERS  responded  that  CBPL  will  work  with  AICPA  on                                                               
documentation.                                                                                                                  
                                                                                                                                
8:48:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SCHRAGE asked for more  discussion on the issue of                                                               
enforcement costs being paid for by license fees.                                                                               
                                                                                                                                
MS. CHAMBERS  explained that CBPL oversees  43 licensing programs                                                               
and 21 boards, and that each  program and board is funded by fees                                                               
from  its  licensees.     She  stressed  that   when  someone  is                                                               
practicing without  a license, the  licensees cover the  costs of                                                               
investigations.  She said that  investigations and appeals, which                                                               
can go  all the way through  the court system, sometimes  cost as                                                               
much as $100,000, which must be  covered by licensees.  She said,                                                               
"When you  hear complaints about  licensing fees ... if  the fees                                                               
go  up,   that's  often  because   there  is  a   very  expensive                                                               
investigation and  disciplinary action  and appeal of  that, that                                                               
licensees  are required  by  state law  to cover  -  not the  bad                                                               
actor."  She  said that CPBL would enjoy the  opportunity to look                                                               
at legislation to  make the system fairer to  those licensees who                                                               
are practicing in accordance with their licenses.                                                                               
                                                                                                                                
REPRESENTATIVE SCHRAGE  discussed the possibility  of legislation                                                               
allowing boards to recoup investigation  fees from defendants who                                                               
are found guilty.  He  expressed that the national database would                                                               
provide transparency in the case of  a "bad actor" who moves from                                                               
state to state.                                                                                                                 
                                                                                                                                
MS.  CHAMBERS stated  her agreement  with his  comment about  the                                                               
national  database,  pointing  out that  the  database  currently                                                               
exists and is utilized by the State Board of Accountancy.                                                                       
                                                                                                                                
8:52:42 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS asked  Ms. Chambers to talk  about enforcement of                                                               
the provisions under HB 44.                                                                                                     
                                                                                                                                
MS. CHAMBERS said:                                                                                                              
                                                                                                                                
     "We  don't   feel  the   bill  needs   any  enforcement                                                                    
     augmentation,  just  the  fee recovery  model,  and  if                                                                    
     we're  able to  accomplish  that with  this bill,  that                                                                    
     would be great  ... we currently don't  have a problem,                                                                    
     don't see  a problem,  and are  not hearing  from other                                                                    
     jurisdictions that this is a problem."                                                                                     
                                                                                                                                
CO-CHAIR FIELDS asked  whether Ms. Chambers was  referring to fee                                                               
recovery when  she mentioned possible  additions to  the proposed                                                               
legislation.                                                                                                                    
                                                                                                                                
MS. CHAMBERS said yes.                                                                                                          
                                                                                                                                
8:53:47 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  suggested  looking  at the  possibility  of  an                                                               
addition to the proposed legislation to address fee recovery.                                                                   
                                                                                                                                
8:55:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS opened public testimony on HB 44.                                                                               
                                                                                                                                
8:55:30 AM                                                                                                                    
                                                                                                                                
SPACIA STRALEY,  CPA, stated her support  for HB 44 as  the owner                                                               
of a small accounting firm in Alaska.                                                                                           
                                                                                                                                
8:56:08 AM                                                                                                                    
                                                                                                                                
KELLY WARD, CPA, Robinson and Ward, stated her support of HB 44.                                                                
                                                                                                                                
8:56:44 AM                                                                                                                    
                                                                                                                                
KAREN TARVER,  CPA, Elgee Rehfeld,  LLC, stated that  she "wholly                                                               
supports" HB  44, and she  shared her appreciation  for committee                                                               
members who are  working to ensure that  the proposed legislation                                                               
"gets it right."   She pointed out that AICPA  has a website that                                                               
addresses  firm mobility  and  contains  resources regarding  the                                                               
experience of other states.                                                                                                     
                                                                                                                                
8:57:40 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS,  after ascertaining that  no one else  wished to                                                               
testify, closed public testimony on HB 44.                                                                                      
                                                                                                                                
[HB 44 was held over.]