02/15/2010 03:15 PM House LABOR & COMMERCE

                    HB 315-PUBLIC ACCOUNTING                                                                                
                                                                                                                                
3:22:03 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced that the first order of business would be                                                                 
HOUSE BILL  NO. 315, "An  Act relating to public  accounting; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
3:22:12 PM                                                                                                                    
                                                                                                                                
JENNIFER SENETTE, Staff, Representative  Kurt Olson, Alaska State                                                               
Legislature,  stated   that  HB   315  bill  relates   to  public                                                               
accounting.   This bill  was drafted with  the assistance  of the                                                               
state Board  of Public Accountancy  (BPA) and the  Alaska Society                                                               
of Certified Public  Accountants (ASCPA) and is  supported by the                                                               
board and  the society.   This bill  is widely supported  and she                                                               
was unaware of any opposition.   She reported that 45 states have                                                               
passed some version  of this bill, which will bring  Alaska up to                                                               
date  and keep  Alaskan certified  public accountants  (CPAs) and                                                               
Alaskan accounting firms competitive nationally.                                                                                
                                                                                                                                
MS. SENETTE explained  that HB 315 does three things:   First, it                                                               
would  provide CPAs  mobility, which  would allow  a licensee  to                                                               
gain  practice  privilege  outside their  principal  jurisdiction                                                               
without additional  licensing or fees.   It would  allow licensed                                                               
CPAs  and   CPA  firms  in   Alaska  to  practice   across  state                                                               
jurisdictions  with greater  ease, which  is the  key to  keeping                                                               
CPAs and  CPA firms nationally  competitive.  Secondly,  the bill                                                               
alters  the ownership  requirements  for accounting  firms.   The                                                               
bill would provide for simple  majority ownership.  Under current                                                               
law,  an Alaskan  accounting firm  must be  owned 100  percent by                                                               
CPAs.   The  accounting profession  has evolved,  and many  firms                                                               
consist  of  more than  just  CPAs  and  many non-CPAs,  such  as                                                               
attorneys  and information  technology professionals  enhance the                                                               
firm's ability to serve its  clients.  Under current law, non-CPA                                                               
professionals are barred from ownership.   This bill "dials down"                                                               
these  stringent requirements.    Most states  allow non-CPAs  to                                                               
have minority  ownership in CPA  firms.  This provision  is aimed                                                               
to help CPA  firms attract and retain talent.   Finally, the bill                                                               
would enhance  the board's ability  to protect the public.   This                                                               
provision would  provide the board jurisdictional  authority over                                                               
any CPA practicing  in the state.  Basically,  all CPAs providing                                                               
public  accountancy  services  in  Alaska would  fall  under  the                                                               
jurisdiction  of  the  Alaska  Board  of  Public  Accountancy  to                                                               
address  any  violations  of the  professional  standards.    She                                                               
restated  that  45  states  have  passed  some  version  of  this                                                               
legislation,  which   provides  for  mobility,   simple  majority                                                               
ownership of  CPA firms,  and enhanced  CPA board  authority over                                                               
CPAs  licensed in  other jurisdictions  practicing  in Alaska  to                                                               
protect the public.                                                                                                             
                                                                                                                                
3:26:29 PM                                                                                                                    
                                                                                                                                
MAX  MERTZ, Member,  Alaska Board  of  Public Accountancy  (BPA),                                                               
stated he has been a member of  the Alaska BPA for six years, and                                                               
the chair  for four years  ending in 2009.   He related  that the                                                               
Alaska  BPA worked  on the  issues addressed  in the  bill.   The                                                               
Alaska BPA takes  its mission seriously, which  is regulating the                                                               
accounting  profession  in  Alaska   and  protecting  the  public                                                               
interest.    One   main  challenge  the  BPA  has   faced  is  to                                                               
effectively   pursue  out-of-state   practitioners  who   do  not                                                               
properly serve  their clients.   In  the electronic  age, out-of-                                                               
state practitioners have become  commonplace since CPAs can serve                                                               
clients  without  ever  speaking  to  them on  the  phone.    The                                                               
mobility  initiative  commenced after  a  thorough  study by  the                                                               
American  Institute of  CPAs and  National  Association of  State                                                               
Boards of  Accountancy found  that each state  had its  own rules                                                               
for out-of-state  licensees to provide services  in other states.                                                               
Additionally,  each state  had its  own enforcement  rules, which                                                               
resulted in an inefficient system  that is difficult to navigate.                                                               
Further, compliance  and enforcement  has been  nearly impossible                                                               
due  to  the  multiple  cumbersome  processes  and  disparity  in                                                               
requirements in various states.                                                                                                 
                                                                                                                                
MR. MERTZ  stated that  with mobility, the  Alaska BPA  will gain                                                               
automatic  jurisdiction over  all CPAs  practicing in  the state.                                                               
This  will enable  Alaska to  discipline out-of-state  licensees,                                                               
whether they  are registered  and licensed in  the state  or not.                                                               
The  mobility bill  can be  likened to  drivers' licensing  laws,                                                               
which  will  provide CPAs  with  mobility  to practice  in  other                                                               
states  while strengthening  our  BPA's board  to protect  public                                                               
interest.  The effectiveness of  mobility laws is contingent upon                                                               
passage by all  states.  Currently, five states  remain and three                                                               
have  pending  legislation, including  Alaska.    The Alaska  BPA                                                               
unanimously  passed a  resolution in  support of  this bill.   He                                                               
said that he has presented  to several society members and groups                                                               
and  is  not  aware  of  any   opposition.    He  asked  for  the                                                               
committee's support for HB 315.                                                                                                 
                                                                                                                                
3:29:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH  asked whether the  main thrust of HB  315 is                                                               
to  authorize  reciprocity.    He  also  asked  about  the  term,                                                               
"practice  privilege,"   and  asked  for  clarification   of  the                                                               
standard of practice.                                                                                                           
                                                                                                                                
MR. MERTZ explained that "practice  privilege" is the ability for                                                               
those  CPAs who  are licensed  in  another state  to practice  in                                                               
Alaska with a permit.  The  permit applies primarily to firms but                                                               
also   for  individuals,   primarily   for  temporary   purposes.                                                               
Typically, it would  be used by an out-of-state CPA  who does not                                                               
have an office in Alaska  and is not primarily providing services                                                               
in Alaska.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  BUCH asked  whether  this  practice is  something                                                               
that is  standard adopted  by other states  and the  industry for                                                               
those CPAs in the process of obtaining certification.                                                                           
                                                                                                                                
MR. MERTZ answered  yes.  He related a scenario  in which an out-                                                               
of-state firm has  a client who is doing business  in Alaska, and                                                               
the  practice privilege  allows  the  out-of-state accountant  to                                                               
perform the services.   Under mobility, the  out-of-state CPA can                                                               
provide  the  services  without  going  through  the  process  of                                                               
obtaining a  practice permit.   Thus, the out-of-state  CPA would                                                               
provide the  services in Alaska  and be  subject to our  laws and                                                               
the jurisdiction of the BPA.                                                                                                    
                                                                                                                                
3:32:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH related his  understanding that the standards                                                               
for CPAs  are uniform  standards and HB  315 would  update Alaska                                                               
with the national standards.                                                                                                    
                                                                                                                                
MR. MERTZ agreed.                                                                                                               
                                                                                                                                
3:32:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON asked whether  more people will practice                                                               
in Alaska and create additional competition.                                                                                    
                                                                                                                                
MR. MERTZ stated that the  bill would bring Alaska's statute into                                                               
the 21st  century.   The services are  already being  provided by                                                               
Alaskan CPAs to  out-of-state clients and vice versa.   This bill                                                               
will  not  necessarily  change   the  groundwork  or  competitive                                                               
environment,  but it  will change  the  licensing environment  to                                                               
"bring it up to speed" with current practice.                                                                                   
                                                                                                                                
REPRESENTATIVE  T.  WILSON  understood that  basically  CPAs  are                                                               
breaking the rules now and this will bring them into compliance.                                                                
                                                                                                                                
MR. MERTZ agreed  that to some degree her  statement is accurate.                                                               
The American  Institute of  Certified Public  Accountants (AICPA)                                                               
study  found that  of  the 54  jurisdictions,  54 different  laws                                                               
applied.   This  was confusing  and complicated  for accountants.                                                               
This law makes the requirements uniform.                                                                                        
                                                                                                                                
3:33:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON asked who would oversee any violations.                                                                
                                                                                                                                
MR.  MERTZ  answered  that  the  BPA  oversees  violations.    In                                                               
instances  in   which  a   licensee  from   another  jurisdiction                                                               
practices without a permit in  Alaska and violates state law, the                                                               
BPA's ability to prosecute the  person is limited and cumbersome.                                                               
This bill will make enforcement actions much easier.                                                                            
                                                                                                                                
3:34:37 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 315.                                                                                     
                                                                                                                                
3:34:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN moved to report  HB 315 out of committee with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
There  being no  objection, HB  315 was  reported from  the House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
3:35:26 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:35 p.m. to 3:39 p.m.