Legislature(2021 - 2022)BARNES 124
03/31/2021 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB126 | |
| HB111 | |
| HB151 | |
| HB111 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 111 | TELECONFERENCED | |
| *+ | HB 126 | TELECONFERENCED | |
| += | HB 151 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 126-EXTEND BOARD OF PUBLIC ACCOUNTANCY
3:18:15 PM
CO-CHAIR FIELDS announced that the first order of business would
be HOUSE BILL NO. 126, "An Act extending the termination date of
the Board of Public Accountancy; and providing for an effective
date."
3:18:30 PM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature,
introduced HB 126 as prime sponsor, explaining that it would
extend the termination date for the Board of Public Accountancy
for eight years until June 30, 2029, as recommended by a
legislative audit. He read excerpts from the sponsor statement,
which read as follows [original punctuation provided]:
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."
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.
3:20:26 PM
KRIS CURTIS, Legislative Auditor, Division of Legislative Audit,
explained that the purpose of the audit is to determine whether
a board or commission is serving the public's interest and
whether its termination date should be extended. She stated
that the audit 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 (CPAs) and partnerships or corporations
engaged in public accountancy. She said that the recommended
extension is eight years.
MS. CURTIS directed attention to page 5 of the audit report
[included in the committee packet], showing licensing statistics
for the board. As of January 31, 2020, there were 1,328 active
licenses and permits, a 10 percent increase when compared to the
prior sunset audit in 2012. She noted that Alaska is one of the
few states that doesn't require a social security number for
licensure; consequently, the board receives many international
applicants, which accounts for the increase. She then directed
attention to page 7, showing a schedule of revenues and
expenditures, and noted that the board had a surplus at the end
of fiscal year 2019 (FY 19) of just over $84,000. She directed
attention to page 11 and noted that there is one recommendation
for improvement, which read as follows [original punctuation
provided]:
Recommendation No. 1: DCBPL's chief investigator
should ensure investigations are completed timely.
Forty of the 101 cases open or opened from July 1,
2016, through January 31, 2020, were open over 180
days. Five of the 40 were evaluated by auditors. Two
of five investigative cases selected for review had
unjustified periods of inactivity ranging from 64 to
219 days. According to DCBPL staff, the inactivity was
the result of turnover and competing priorities.
Auditors also noted that supervisory review of
outstanding investigations was not documented in the
case files as required by DCBPL procedure, indicating
that the reviews did not occur or did occur but were
not documented.
MS. CURTIS said that response from the Department of Commerce,
Community, and Economic Development (DCCED) begins on page 21.
She stated that the DCCED commissioner agrees with the report
conclusions, except for the finding that 40 percent of
investigations took over six months to complete. The response
stated that the Division of Corporations, Business, and
Professional Licensing (DCBPL) has no control over how an
investigation will unfold or how long it will take and has no
policy stating a specific timeframe of completion. The
commissioner did agree, however, to authorize an additional
supervisor to help reduce caseloads. Ms. Curtis also noted that
the commissioner didn't agree with the audit's conclusion that
the use of technology impacted board operations, saying that
technology tools have been successful for all of the boards.
The response from the chair of the Alaska Board of Public
Accountancy begins on page 25, Ms. Curtis said, and highlights a
disagreement between the board and DCCED regarding what
constitutes "essential travel."
MS. CURTIS stated that auditing standards require that, in cases
where management disagrees with an audit, the auditor must
respond; her response, she said, begins on page 27. She said,
"I explained that the report conclusions regarding technology's
negative impact on the board operations was based on the
auditor's observation of a board meeting in February 2020, and
discussions with the board members." In response to the
commissioner's comments on the investigations, she said,
"Management has a responsibility to implement controls over the
investigative process to ensure the accuracy, due process, and
timely completion of an audit."
3:25:34 PM
REPRESENTATIVE MCCARTY expressed his understanding that there
are investigations taking over 180 days, and DCBPL is of the
opinion that staying within 180 days is not that important.
MS. CURTIS read a quote from the DCCED commissioner, found on
page 21, which read [original punctuation provided]:
While a noble goal, the department finds the inference
that all investigative matters should be completed
within six months is unreasonable and unattainable in
many situations. The agency is more concerned with
ensuring the facts are correctly obtained in each
matter and that due process is secured than ensuring
the speed of concluding investigations meets an
arbitrary goal.
MS. CURTIS said that her response read, "I agree that accuracy
and due process are essential to an investigation; however,
investigations should also be timely. Some may argue that
timeliness is critical to due process." She described the six-
month timeframe as a performance measure that was developed over
prior administrations, and she said that one of the objectives
of the audit was determining how efficiently the complaints have
been addressed. She noted that there could be valid reasons for
periods of inactivity, such as awaiting a response from an
expert or having a competing priority. She said that the audit
only highlighted periods of unjustified inactivity. The
question of "What would be a good performance measure?" has been
discussed over previous administrations, and the 180-day
timeframe is in the board's procedures; therefore, she said,
it's "odd" to receive that response.
REPRESENTATIVE MCCARTY surmised that the board is operating
appropriately, and that DCBPL is of greater concern.
MS. CURTIS answered, "Yes, this is [DCCED's] support for the
board, which is reviewed at the same time we reviewed the
board."
3:29:02 PM
REPRESENTATIVE KAUFMAN referred to Ms. Curtis's explanation that
the significant increase in the number of licenses since the
previous sunset audit is because Alaska does not require a
social security number. He asked for further explanation.
MS. CURTIS responded that it's a policy call. She said that the
report also stated that the number of new licenses issued from
FY 17 to FY 19 increased 36 percent compared to the three prior
years. She said that the increase was notable enough to lead to
more questions.
REPRESENTATIVE KAUFMAN said that a social security number
provides a certain level of "traceability," and he said that he
would like to know more.
3:30:39 PM
CO-CHAIR SPOHNHOLZ, referencing the schedule of revenues and
expenditures on page 7, noted that there's volatility from year
to year due to biannual renewals. She said asked about the
total number of licenses renewed.
MS. CURTIS replied that the licenses are on a biannual renewal
schedule, with the renewals happening every other year, which is
standard practice with occupational boards.
CO-CHAIR SPOHNHOLZ asked if an extension shorter than eight
years was considered.
MS. CURTIS said that it wasn't considered because there are
typically systematic issues in boards and, in every aspect other
than timeliness, the board is operating effectively.
CO-CHAIR SPOHNHOLZ asked about any liability issues arising from
taking more than six months to complete 40 percent of
investigations.
MS. CURTIS explained that the Board of Public Accountancy
doesn't deal with aspects of health or safety. Some of the
cases are likely dealing with lower-priority issues such as
continuing education or unlicensed activity, with the biggest
risk coming from complaints of unqualified or incompetent
license holders. She said that the audit didn't include a
review of the specific nature of the complaints, and expressed
that she is not surprised that the cases of this board take
longer because, in the big picture, they're less important
compared to the cases of other boards.
3:33:56 PM
REPRESENTATIVE KAUFMAN asked whether or not it is the policy for
investigations to finish in 180 days.
MS. CURTIS replied that the policy is quoted on page 28 of the
report, and read as follows [original punctuation provided]:
Investigative actions (regardless of category) open
over 180 days must be reviewed by supervisory staff
(Senior Investigators) to determine what (if anything)
remains to be done to complete the action and to spur
a discussion of possible means to resolve the action.
MS. CURTIS said that it's an internal control that's been
changed since the audit was done.
3:35:35 PM
LESLIE SCHMITZ, Chair, Alaska Board of Public Accountancy, said
she is currently serving her eighth and final year on the board.
She expressed gratitude for the recommendation of the maximum
extension. She stated that the board makes "every effort" to
interact with stakeholders and licensees, as well as to stay
active at the national level to address issues affecting the
profession. She said that the board maintains ongoing projects
to update and modernize its statutes and regulations.
3:36:29 PM
DON RULIEN, Member, Alaska Society of Certified Public
Accountants, said that in March 2021 he completed his second
four-year term on the Alaska Board of Public Accountancy. He
stated his belief that the board is an integral part of
providing protection to the public and ensures that all CPAs
meet the requirements put forth by statutes and regulations,
protecting the public's interest for all financial matters
concerning Alaskans.
3:37:32 PM
CO-CHAIR SPOHNHOLZ asked Mr. Rulien whether he has any concerns
about the timeliness of investigations, as identified in the
audit report.
MR. RULIEN replied that each investigation is different, with
some of them taking longer than the average of three months. He
mentioned that the seasonality of the industry can make it more
difficult to get information, and that CPAs normally have a good
rapport with the investigators. He said that while he would
like investigations to go more quickly, it's difficult.
3:38:49 PM
REPRESENTATIVE MCCARTY asked whether investigation cases come to
board members for review before the investigation moves on to
the next step.
MR. RULIEN replied that the case goes first to the board, which
determines whether or not to investigate. If the board
determines an investigation is in order, he said, it's "out of
our hands," and once the investigation is concluded it's
reviewed before going to the board for a vote.
REPRESENTATIVE MCCARTY asked whether there are individual board
members reviewing the cases.
MR. RULIEN responded that there are sometimes multiple
investigations occurring, so board members take turns reviewing
the cases on their own before presenting to the full board at a
meeting.
3:40:28 PM
REPRESENTATIVE MCCARTY asked why there exists a fiscal note on
the proposed legislation.
3:41:00 PM
SARA CHAMBERS, Director, Division of Corporations, Business, and
Professional Licensing, Department of Commerce, Community &
Economic Development, responded that all of the fund sources
require a fiscal note to reflect the cost of the board aspect of
the licensing program. This fiscal note, she said, is not funds
being requested from the legislature but an expenditure
authority for the licensing fees.
REPRESENTATIVE MCCARTY asked, "Are you saying that to manage the
board of over 600 people it's only going to cost $25,000?"
MS. CHAMBERS explained that the board is a group of seven people
appointed by the governor and that the licensing program is the
administrative program to license individuals. According to
state law, she said, DCCED would assume regulation of the
licensing program if the board sunsets. She clarified that this
audit was only of the governance of the board, not the licensing
itself.
[HB 126 was held over.]