Legislature(2021 - 2022)ADAMS 519
04/13/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB79 | |
| HB80 | |
| SB22 | |
| HB126 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 79 | TELECONFERENCED | |
| += | HB 80 | TELECONFERENCED | |
| + | SB 22 | TELECONFERENCED | |
| + | HB 126 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 126
"An Act extending the termination date of the Board of
Public Accountancy; and providing for an effective
date."
2:38:02 PM
REPRESENTATIVE STEVE THOMPSON, SPONSOR, introduced himself.
He thanked the committee for hearing HB 126. He read the
sponsor statement (copy on file):
HB 126 extends the termination date for the Board of
Public Accountancy for eight years until June 30,
2029.
Legislative Audit conducted their review of this board
and concluded that "the board served the public's
interest by conducting meetings in accordance with
state laws, amending certain regulations to improve
the public accountancy occupation, and effectively
licensing and regulating certified public accountants
and partnerships/corporations engaged in the practice
of public accountancy."
The Board of Public Accountancy consists of seven
members appointed by the Governor. Five members are
certified public accountants or public accountants,
and two members are public members.
Extending the Board of Public Accountancy is critical
in protecting the public interest by ensuring that
only qualified persons are licensed, and that
appropriate standards of competency and practice are
established and enforced.
Representative Thompson indicated Ms. Curtis with the
Division of Legislative Audit would present the audit
findings.
2:39:58 PM
AT EASE
2:40:52 PM
RECONVENED
Co-Chair Merrick asked Ms. Curtis to present the audit
findings.
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, drew attention to a transmittal letter
that accompanied the audit (copy on file). She clarified
that the audit was conducted in accordance with auditing
standards with the exception of the standard of
independence, which she and her staff did not meet because
they were CPAs.
Ms. Curtis reported that the audit found the Board of
Accountancy to be serving the public's interest by
conducting its meetings in accordance with law and by
effectively licensing CPAs and partnerships and
corporations engaged in public accountancy. The audit
recommended an eight-year extension. She directed members
to page 8 of the audit for standard licensing statistics.
She highlighted that Exhibit 2 showed 1,328 active licenses
and permits as of January 2020. When compared to the prior
sunset audit in 2012, the number represented a 10 percent
increase. She explained that the audit had found Alaska to
be one of the few states that did not require a social
security number for licensure, consequently there were a
high number of international applicants.
Ms. Curtis directed attention to page 7 of the audit and
highlighted the schedule of revenues and expenditures. As
of the end of FY 19 there was a surplus of over $84,000.
She noted the fees were shown on page 8. The audit made one
recommendation for improvements beginning on page 11. The
audit recommended the Division of Corporations, Business
and Professional Licensing (CBPL) chief investigator ensure
investigations were completed timely. She detailed there
had been 101 complaints open during the audit period and 40
of the complaints had taken over six months to complete.
Auditors had reviewed five of the 40 and found that two had
unjustified periods of inactivity ranging from 64 days to
219 days. According to staff, the inactivity was the result
of turnover and competing priorities.
Ms. Curtis addressed management's response to the audit
beginning on page 21. She relayed that the Department of
Commerce, Community and Economic Development (DCCED)
commissioner agreed with the report conclusions except for
the conclusion that 40 percent of investigations took over
six months to complete. She reported the commissioner
stated that CBPL had no control over how an investigation
would unfold or how long it would take, and the division
did not have a policy to complete all investigations within
a specific timeframe. However, the commissioner agreed to
authorize an additional investigative supervisor to help
with the caseloads. The commissioner also took exception
regarding the audit conclusion that the use of technology
impacted board operations and believed that the
technological tools had been successful for all boards.
Ms. Curtis relayed that the board chair's response was
located on page 25 of the audit report. She stated that the
chair did not disagree with any of the report conclusions
but had taken the opportunity to highlight a disagreement
the board had with DCCED regarding what should be
considered essential travel.
2:44:39 PM
Representative Josephson referred to the April 8, 2020,
audit and asked about the 101 board related cases. He asked
how many accountants there were [in Alaska].
Ms. Curtis responded that as of January 2020 there were
1,328 active licenses and permits.
Representative Josephson asked if the issue should be cause
for a shorter extension period.
Ms. Curtis answered that the criteria used to evaluate the
sunset process included the efficiency to which the
complaints were addressed. She elaborated that some
occupational boards had continuing education requirements.
She detailed there could be investigations related to the
continuing education requirements, which most people would
consider less concerning than something like malpractice.
The sunset extension recommendation did not take the number
of complaints into consideration, rather it considered the
efficiency aspect of the time it was taking to complete
investigations.
2:46:27 PM
Representative Josephson noted that the cost of a two-year
license was much less compared to the license for another
profession discussed in committee the previous day. He
wondered whether there could be a fee increase (in separate
legislation) and a requirement for the hiring of additional
investigator positions.
Ms. Curtis responded that the question may be better
directed to Ms. Chambers. She relayed that the audit had
not looked at what type of policy could be put in place.
2:47:18 PM
SARA CHAMBERS, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS
AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT (via teleconference),
thought raising fees to hire additional staff was a sound
suggestion. The division had already added one or two
investigators to the team of 19 investigators responsible
for covering the 43 professional licensing programs and
business licensing investigations. The division was already
augmenting its team in order to address some of the
workload concerns addressed in the audits. She explained
that the investigators charged only to the programs as they
were working them. She used CPAs as and example and
explained that if there was an increase in CPA casework,
the CPA program would be charged that amount, which could
lead to an increase in fees.
2:48:31 PM
Representative Rasmussen observed that it appeared the
board anticipated a surplus of $531,524. She wondered if
the board remained in possession of the funds.
Ms. Chambers responded that all of the professional
licensing boards carried forward any surpluses or deficits
from fiscal year to fiscal year. The department was
required by AS 08.01.065 to do a fee analysis and set fees
to ensure a surplus or deficit was not too high. She
elaborated that as a program grew a surplus, the department
likely would reduce the fees. Conversely, if a program had
a deficit, the department would likely increase fees to
keep the program from sinking further into deficit. The
fees were always retained for use for the specific
licensing program's expenses.
Representative Rasmussen wondered why a board with a
$530,000 projected surplus was not granted the opportunity
for travel to meetings determined by the board. She asked
if statutory or regulatory change was needed.
Alternatively, she wondered if the decision was made by the
department.
Ms. Chambers responded that the fiscal expenditure
authority for each board was set at the division level. She
detailed that when the state budget was set via the
legislative process, the department was allocated a
specific amount of expenditure authority for all of the
licensing programs. She expounded that each board was not
allocated the independent authority by the legislature. She
explained that just because a board may have a surplus did
not mean the department had the expenditure authority from
the legislature to spend that much money during a fiscal
year.
2:51:56 PM
Representative Wool looked at page 6 of the audit report.
He observed that 40 out of 101 cases had been open for over
180 days. He reasoned they took too long to process. He
asked if his understanding was accurate.
Ms. Curtis responded that the audit indicated 40 percent
seemed high on a case-by-case basis.
Representative Wool asked for verification it was just
coincidence that five cases had been reviewed in the audit
and 40 percent of the five had periods of unjustified
inactivity within the 180 days. He noted the audit's
mention of staff turnover. He asked for verification the
turnover pertained to board staff only and not CBPL staff.
Ms. Curtis clarified that the investigative function was
carried out within CBPL, and the report was referring to
division staff.
Representative Wool thought it sounded like the same thing
the committee had heard about the midwifery board. He
stated that the boards were getting called out for taking
too long, but it had to do with the staff at CBPL, which
was out of the boards' control. He asked if his
understanding was accurate.
Ms. Curtis agreed that the audit highlighted the issue as
an area for improvement. However, she noted that the
recommended term of extension was not impacted by the
issue.
Representative Wool asked if CBPL was audited.
Ms. Curtis replied that the division was audited as part of
the sunset process as support to the board. She elaborated
that every time a board was audited, the auditors looked at
CBPL support. She detailed that licensing processing was
not done by board members. She explained that largely there
was an audit of CBPL every time the Division of Legislative
Audit looked at an occupational board.
2:54:28 PM
Representative Carpenter referred to page 7 and highlighted
a discrepancy in the licensing fees charged between the
years FY 17 and FY 19. He noted that the fees were $179,000
in FY 17 and $730,000 in FY 18.
Ms. Curtis responded that the board was on a biannual
renewal cycle causing an influx in fees every other year.
She relayed that the off-year fees collected included
people getting licensed in between or renewing a license.
She explained it was the reason an audit included at least
three years to see one full licensing cycle.
2:55:26 PM
Representative Edgmon knew from his time on the committee
that Ms. Curtis had done many audits. He remarked there had
been four bills in the last two days with wildly varying
fees. He asked if it was Ms. Curtis's experience that the
user fees were established board-by-board with no regard to
any uniformity standards or benchmarking. For example, for
the current bill, fees occurred under the realm of the
Board of Public Accountancy and were not related to
sportfishing, midwives, or other.
Ms. Curtis responded that statute specified a fee had to be
set to cover the cost of regulation. She explained that the
cost of regulating each occupation was tracked. She
elaborated that the variance in fees was the variance in
regulating the occupation, which was often driven by
investigations (as was the case in the midwifery board seen
by the committee the previous day). She furthered that
boards with a large number of licensees (e.g., the Board of
Nursing) tended to have lower fees because they were spread
out over a larger number of people.
Representative Edgmon thought the information was helpful.
He stated it helped him understand why the midwifery board
fee was $3,800 for two years versus sportfishing licenses
and nonresident fees in the $100 to $200 range. He remarked
on the long schedule for the Board of Public Accountancy.
He asked for verification that the money would be swept
from the General Fund if the reverse sweep did not occur.
Ms. Curtis responded in the negative. She clarified the
money did not go into a sub-fund of the General Fund that
was subject to the sweep. She elaborated that the fees were
not dedicated revenue and went into the General Fund; there
was no separate tracking at the sub-fund level. She
explained that the appropriation to expend for regulation
of boards was at the division level and came from the
General Fund.
Representative Edgmon asked for verification that the fees
would not be subject to the annual vote on the reverse
sweep.
Ms. Curtis agreed.
2:58:23 PM
Representative Josephson stated his understanding that the
General Fund was sweepable.
Ms. Curtis replied that certain sub-funds of the General
Fund were sweepable.
Representative Josephson noted that in July 2019 the Senate
Finance Committee had discussed how the dollars could be
swept away and there had been consideration of the legal
consequences of that potential action.
2:59:13 PM
Representative Wool asked about the length of time it took
to process an investigation, which was in part due to CBPL
staffing. He remarked that the audit recommended an eight-
year extension. He pointed out that a separate audit of the
midwifery board included the board chair's response to the
audit. The midwifery board chair had pointed out that the
length of time it took to process an investigation was not
the board's fault and was due to CBPL. He stated that a
board was being charged with being deficient in its time
response for an issue that resided with the department.
Ms. Curtis addressed her testimony from the previous day
regarding the midwifery board. She had stated that the
board's term of extension was two years, significantly
below eight years due to an issue identified during the
audit and the board's reluctance to recommend statutory
changes in the public's interest. She elaborated that the
board did not want to increase fees, which was not
appropriate. She could not speak to the issue identified in
the audit on the record. She relayed that her separate
recommendation relating to the timeliness of investigations
did not factor into her recommended extension. She regarded
the nature of a health board's investigations and impact to
public safety as more important and more likely to
influence a recommended term of extension as opposed to
boards like public accountancy and barbers and hairdressers
that did not have as tight a connection to public health.
3:01:54 PM
Representative Wool understood that health and public
safety prevailed over accountancy. However, the issue of
timeliness had been addressed by the audit as something the
board needed to respond to. He highlighted the issue of a
CBPL staff shortage impacting timeliness. He felt that some
of the boards were being unfairly called out for something
beyond their control.
Ms. Curtis replied that the issue had been raised to her
multiple times from board chairs and House Finance
Committee members. She recognized that CBPL was not the
board itself; however, it was board support. She explained
that the audit was a legislative oversight mechanism, and
she always brought the issue to legislators' attention when
the support was not as good as it should be and whether she
believed it impacted the timeline of coming back in to do
more legislative oversight. She stated there were numerous
things that could impact delays apart from insufficient
staff. Whether a board had good procedures and supervision
also impacted delays.
Ms. Curtis reported that the audit did not address the
specifics of why something was not working. She had done a
deeper dive in 2005 when she had looked at the
investigative function and had found other contributing
aspects related to how it was organized. She clarified that
the current audit was not a specific evaluation of the
investigative section. The audit highlighted problems. She
believed that the delay in 40 percent of the board's
investigations indicated that things could be done faster.
She stated one would expect that if the cases were not a
priority or the evidence could not be obtained, the cases
should be cleaned up and closed out. She stated there were
many different things that could contribute to the
situation.
3:04:33 PM
Representative Carpenter stated there had been discussion
on money and potential staff shortages and whether it would
help to solve problems. He referenced the unjustified
inactivity on 40 percent of the board investigations. He
noted that the audit specifically identified staff
turnover, competing priorities, and an absence of
documentation showing supervisory reviews were occurring.
He noted that Ms. Curtis had just mentioned good
procedures. He thought Ms. Curtis was making the case that
better management would help to address the issue of
inactivity. He asked if the statement was fair.
Ms. Curtis responded that she had not done a deep enough
dive to say specifically what the department should do. The
auditors typically asked the department why something was
happening, and the department provided the cause such as
competing priorities and turnover. She thought Ms. Chambers
would like to speak to the issue.
Ms. Chambers responded that management of the investigative
process was important to CBPL, and the division had
operating procedures followed by its team. The division
agreed with the audit that it could improve, and it had
taken steps to hire an additional supervisor. Additionally,
the division had adjusted some of its policies and
procedures to ensure it was clarifying priority cases. She
reported there was a focus on life, health, and safety
cases.
Ms. Chambers explained that the auditor had identified the
concern that the division's team was not meeting its own
procedures in terms of documenting case activity. The
division was continuing to add resources and doubling back
to ensure its investigators and three-member investigative
team were ensuring the documentation happened. She noted
that on the next audit of any of the division's programs
(stretched across 21 licensing boards) the auditors would
be able to see the reasons why a case may have taken too
long according to the division's standards. She provided
examples such as a respondent not being forthcoming with
information, inability to reach witnesses, staff turnover,
and/or competing health and safety priorities. She
explained that it would enable the auditor to see the
reason and a finding like the one included in the current
audit would not occur. The division was continuing to
improve its management and always appreciated the auditors'
feedback.
3:07:39 PM
Representative Carpenter remarked that the question was not
intended to poke anyone in the eye. He stated his intention
to highlight that if the division was not following its own
procedures, it could be remedied fairly easily. He believed
it was not about needing more resources, but merely a will
for the division to follow its procedures in some cases. He
thought the issue was primarily management related and not
funding related.
Representative Josephson looked at page 6 of the audit and
the 101 board related cases spanning 3.5 years. He wondered
to what degree the cases were essentially complaints about
an accountant's negligence. For example, if a person was
audited or they did not like their return. He compared the
first examples to an accountant missing a deadline or
having a substance abuse problem, which was something the
board may want to know about. He wondered if there was a
clearing system where complainants were told their
complaint was outside the division's jurisdiction.
Ms. Curtis responded that there was a process in place if
something was not in the division's jurisdiction. She noted
the 101 number pertained to complaints or cases. She
explained that the division had a process to close them out
and not pursue them. There was a complaint phase and an
investigative phase, and one had to meet a threshold before
it was investigated.
Co-Chair Merrick moved to invited testimony.
3:10:07 PM
LESLIE SCHMITZ, CHAIR, ALASKA BOARD OF PUBLIC ACCOUNTANCY,
ANCHORAGE (via teleconference), thanked the audit process
for the recommendation of the maximum extension of eight
years. She relayed that the board made every effort to stay
interactive with stakeholders and licensees and it tried to
reach out to the people it was regulating or the people who
were looking to the board to protect public safety. The
board also made every attempt to stay active at the
national level to address issues affecting the profession.
She elaborated that the board maintained ongoing projects
to update and modernize its statutes and regulations in
order to remain current with the direction of the
profession. She thanked the committee for hearing the bill.
3:11:35 PM
DON RULIEN, PAST MEMBER, STATE BOARD OF PUBLIC ACCOUNTANCY
and CURRENT MEMBER, ALASKA SOCIETY OF CPAs, ANCHORAGE (via
teleconference), spoke in support of HB 126. He provided
detail about his work in the field and term on the board.
He stated that the State Board of Public Accountancy played
an integral part in providing protection to the public that
ensured all CPAs meet all statutory requirements and
regulations. He appreciated the committee hearing the bill
and supported the recommended eight-year extension.
3:12:55 PM
Co-Chair Merrick OPENED public testimony.
3:13:11 PM
CRISTA BURSON, PRESIDENT AND CEO, ALASKA SOCIETY OF CPAs
(AKCPA), ANCHORAGE (via teleconference), supported HB 126
in extending the termination date of the Board of Public
Accountancy. She reviewed the duties of the board. She
highlighted that the board was inclusive of all interested
parties including the AKCPA. She detailed that the AKCPA
and the Board of Public Accountancy had a very positive and
collaborative relationship. She thanked the committee for
its consideration.
3:14:17 PM
Co-Chair Merrick CLOSED public testimony. She asked the
department to review the fiscal note.
Ms. Chambers reviewed the fiscal note. The note reflected
that the board would sunset if the bill did not pass and
there would no longer be the $25,600 necessary to support
the activities of the board. The note reflected the $25,600
in the outyears to support the board's activities. She
remarked that sometimes fiscal notes for extension bills
were not intuitive. She explained that the licensing
program would continue if the board were to sunset. She
clarified that the note did not show the cost of the
licensing program; it showed the cost for board member
travel, the advertising of board meetings, and additional
meals and incidentals board members received while
traveling.
Co-Chair Merrick indicated amendments for the bill were due
to her office by the end of Saturday, April 17, 2021.
HB 126 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the schedule for the following
meeting.