03/08/2005 09:00 AM Senate FINANCE

                                                                                                                                
     HOUSE BILL NO. 64                                                                                                          
     "An Act extending the termination date for the Board of Public                                                             
     Accountancy; and providing for an effective date."                                                                         
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  MIKE HAWKER testified this housekeeping  legislation                                                            
would extend  the Board of Public  Accountancy. This Board  consists                                                            
of five certified  public accountants (CPA) and two  public members,                                                            
who adopt  regulations,  issue final  licensing  decisions and  take                                                            
action against  violators of licensing laws. Upon  completion of the                                                            
sunset  review, the  auditor determined  the Board  was meeting  its                                                            
statutory requirements  and that the occupational licensing fees are                                                            
sufficient to cover the regulatory costs of this occupation.                                                                    
                                                                                                                                
Representative  Hawker  noted the  auditor made  one recommendation                                                             
relating  to  the  Board's  need  to  conform  to  recently  adopted                                                            
national professional  testing standards.  The previous legislative                                                             
session,  statutes  were amended  to  provide  for the  new  testing                                                            
procedures.  The Board  has undertaken  efforts to  secure a  second                                                            
testing location  in Fairbanks and  must secure a third location  in                                                            
Juneau.                                                                                                                         
                                                                                                                                
Senator Olson  asked the  number of disciplinary  actions the  Board                                                            
has taken.                                                                                                                      
                                                                                                                                
Representative  Hawker deferred to the audit report  or the Chair of                                                            
the Board. He estimated the number was limited.                                                                                 
                                                                                                                                
Senator  Olson  asked  the  number  of  licensed  certified   public                                                            
accountants in Alaska.                                                                                                          
                                                                                                                                
Representative  Hawker  estimated  the amount  to  be approximately                                                             
1,700.                                                                                                                          
                                                                                                                                
Co-Chair  Wilken cited  language  on page  12 of  the audit  report,                                                            
which reads as follows.                                                                                                         
                                                                                                                                
     In June 2004,  13, or just over half, of the  complaints [filed                                                            
     during  the period between July  2001 and May 2004]  were still                                                            
     open.  Six of those  13 complaints had  been opened for  longer                                                            
     than  120 days.  We reviewed  five of these  six complaints  in                                                            
     detail. Four  of the five complaints had no evidence  of having                                                            
     any investigative  activity for the last 90 days.  Based on our                                                            
     review,  we  concluded  the  public  inquiries  and  complaints                                                            
     regarding BOPA activities  were not being resolved efficiently.                                                            
                                                                                                                                
Co-Chair  Wilken asked for  an explanation  of this and whether  the                                                            
delays are cause for concern.                                                                                                   
                                                                                                                                
Representative  Hawker  replied that  concern is  warranted for  all                                                            
boards. The audit statement  relates to the timing in which disputes                                                            
are  resolved.  The  Board  of  Public  Accountancy  is  working  to                                                            
establish more  comprehensive guidelines  for resolving complaints.                                                             
The Board may  not have been timely  in resolving complaints  in the                                                            
past, but  is now aware of  the need to  address these matters  more                                                            
timely. None  of the delays were of  specific concern that  arose to                                                            
the attention of the Ombudsman.                                                                                                 
                                                                                                                                
PAT DAVIDSON,  Legislative Auditor,  Division of Legislative  Audit,                                                            
informed  the  Committee  that  although  audits  are  performed  in                                                            
accordance  with General  Accounting  Procedures,  these  procedures                                                            
require  independence  and because  the  professional  staff of  the                                                            
Division  is  CPAs  and the  Division  is  statutorily  required  to                                                            
perform these audits, this  independence standard is not obtainable.                                                            
                                                                                                                                
Ms. Davidson  stated  the Division  had overall  concerns about  the                                                            
timeliness   of  investigations   conducted   by   all  boards   and                                                            
commissions. Historically,  the audits have reviewed  this matter on                                                            
an individual  board basis;  this method  does not require  accurate                                                            
information from  which recommendations could be made.  However, the                                                            
audit  did   review  the   timeliness  for   this  Board  and   made                                                            
recommendations  to  the  Department   of Commerce,   Community  and                                                            
Economic  Development.  The Department  concurred  and changes  were                                                            
made to structure of the investigative process.                                                                                 
                                                                                                                                
Co-Chair Green  asked if the complaints relate to  the boards or the                                                            
Department.                                                                                                                     
                                                                                                                                
Ms. Davidson explained  that the Division of Occupational  Licensing                                                            
staff receives  the complaints and  "works" the investigations.  The                                                            
results of  those investigations are  brought before the  boards for                                                            
determination.  The  boards  serve  as administrative  adjudication                                                             
rather than detail investigative.                                                                                               
                                                                                                                                
Co-Chair  Green   concluded  the   complaint  is  directed   to  the                                                            
Department.                                                                                                                     
                                                                                                                                
Ms. Davidson affirmed  and pointed out that criterion  for review is                                                            
provided in statute. Delays  would impact the licensing of CPAs, and                                                            
is the concern of the Department and not the Board.                                                                             
                                                                                                                                
Co-Chair Green  referenced other language  on page 12 of  the audit,                                                            
which reads as follows.                                                                                                         
                                                                                                                                
     Efficiency   issues   related  to  investigations   are   being                                                            
     evaluated  in another audit report.  This report addresses  the                                                            
     history,  and  evaluates  the  effectiveness,  of  the  State's                                                            
     overall sunset process.                                                                                                    
                                                                                                                                
Co-Chair Green asked if this audit has been released.                                                                           
                                                                                                                                
Ms. Davidson replied this report has been issued.                                                                               
                                                                                                                                
Co-Chair Green  members may want to review that report  to determine                                                            
if additional questions are warranted.                                                                                          
                                                                                                                                
Senator Olson  asked if  the investigator  writes the Memorandum  of                                                            
Understanding to the applicable board.                                                                                          
                                                                                                                                
Ms. Davidson responded  that the investigator makes a recommendation                                                            
to the  board  of a Memorandum  of  Agreement, licensing  action  or                                                            
fine.                                                                                                                           
                                                                                                                                
Co-Chair  Green asked  for  an explanation  of the  examination  and                                                            
whether it is computerized.                                                                                                     
                                                                                                                                
Representative  Hawker answered that until recently  the examination                                                            
was administered  as a paper test administered in  multiple parts in                                                            
three locations  of the State. The  American Institute of  Certified                                                            
Public Accountants  "guides"  this testing  process. A decision  was                                                            
made "outside  of the State  of Alaska" to  conduct the examination                                                             
using  a professional  testing agency  as a  computerized test.  The                                                            
legislature amended  statute to allow for this change,  as it became                                                            
the only testing  methodology available.  The company  administering                                                            
the tests offered the CPA  examinations four times annually although                                                            
only offered in Anchorage.  Previously, the tests were offered twice                                                            
each year. It was discovered  that the contractor provides unrelated                                                            
testing  services in  Fairbanks and  therefore  the CPA examination                                                             
could be administered at that location as well.                                                                                 
                                                                                                                                
Co-Chair  Green   was  surprised  at  the  difficulty   in  securing                                                            
locations  given  the  commonality  of  this type  of  testing.  She                                                            
expected that  the tests should be available at any  location with a                                                            
proctor available  once a pass code  is provided to the examination                                                             
administrator.                                                                                                                  
                                                                                                                                
Senator  Olson asked  if a  person residing  in  Ketchikan would  be                                                            
required to travel to Anchorage to take this examination.                                                                       
                                                                                                                                
Representative  Hawker replied that  the examination could  be taken                                                            
at many locations  nationally. A university  student could  take the                                                            
take  the test  at their  school campus.  He  took the  test at  his                                                            
college  in Iowa before  traveling  to Alaska and  was certified  to                                                            
practice in Alaska once reaching this state.                                                                                    
                                                                                                                                
Co-Chair Green ordered the bill HELD in Committee.