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.                                                                                  
                                                                                                                                
CHAIR KREISS-TOMKINS  hearing no further objection  to the motion                                                               
to  adopt  the proposed  committee  substitute  (CS) for  HB  44,                                                               
labeled  32-LS0302\B, Fisher,  3/8/21, as  the working  document,                                                               
announced that Version B was before the committee.                                                                              
                                                                                                                                
3:23:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STEVE THOMPSON,  Alaska State  Legislature, prime                                                               
sponsor,  introduced  CSHB 44(STA).    He  stated that  the  bill                                                               
originated  after   members  of   the  Alaska  Board   of  Public                                                               
Accountancy  contacted his  office to  share that  they had  been                                                               
asked to update  Alaska statutes to meet  the Uniform Accountancy                                                               
Act and/or AICPA's  Code of Professional Conduct  by the National                                                               
Association of  the State Boards  of Accountancy (NASBA)  and the                                                               
American Institute of Certified  Public Accountants (AICPA).  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 for the  bill to                                                               
address the issues.   He conveyed that  CSHB 44(STA) 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, 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 Section  5,  which                                                               
states that the board "shall" grant  a permit on page 2, line 18.                                                               
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 to renew a license].                                                                                                    
                                                                                                                                
3:31:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VANCE asked  if the  word "shall"  would be  more                                                               
appropriate  since  the board  does  not  utilize discretion,  to                                                               
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  creates  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,                                                               
informed the committee that the  UAA [Uniform Accountancy 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 for CSHB 44(STA).  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   their                                                               
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.                                                                        
                                                                                                                                
3:39:10 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS moved that  the House State Affairs Standing                                                               
Committee  delegate   the  duty   of  drafting   and  introducing                                                               
committee sponsored  legislation to  the committee chair  for the                                                               
duration of the Thirty-Second Alaska State Legislature.                                                                         
                                                                                                                                
REPRESENTATIVE EASTMAN objected.                                                                                                
                                                                                                                                
3:40:01 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS  explained that he  had no real  interest in                                                               
introducing  legislation that's  overly divisive.   Additionally,                                                               
he  expressed his  desire  to consult  with  every member  before                                                               
introducing a  committee sponsored bill  to avoid surprises.   He                                                               
further noted that he had  no immediate anticipation to introduce                                                               
any  committee  sponsored  legislation,   as  it  had  been  used                                                               
sparingly in past years.                                                                                                        
                                                                                                                                
3:40:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN  shared  his   belief  that  the  current                                                               
expectation  that  the  [committee]   majority  would  make  that                                                               
decision is  conducive to  discussion and  would ensure  that the                                                               
majority of  the committee  membership supported  [the committee-                                                               
sponsored legislation].                                                                                                         
                                                                                                                                
3:42:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAUFMAN expressed  his  appreciation and  respect                                                               
for   Chair    Kreiss-Tomkins   for   proposing    this   motion.                                                               
Nonetheless, he  said he would find  it difficult to vote  [for a                                                               
motion that would] "hand away authority."                                                                                       
                                                                                                                                
[REPRESENTATIVE EASTMAN maintained his objection.]                                                                              
                                                                                                                                
3:42:54 PM                                                                                                                    
                                                                                                                                
A  roll  call  vote  was taken.    Representatives  Tarr,  Story,                                                               
Claman,  and  Kreiss-Tomkins voted  in  favor  of the  motion  to                                                               
delegate  the   duty  of   drafting  and   introducing  committee                                                               
sponsored legislation  to the  chair of  the House  State Affairs                                                               
Standing Committee.  Representatives  Eastman, Vance, and Kaufman                                                               
voted against it.  Therefore, the  motion was passed by a vote of                                                               
4-3.