Legislature(2005 - 2006)CAPITOL 17

01/25/2006 03:15 PM House LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 242 UNEMPLOYMENT INSURANCE FUND & TAXES TELECONFERENCED
Heard & Held
*+ HB 274 PUBLIC ACCOUNTANTS TELECONFERENCED
Heard & Held
*+ HB 373 ALCOHOL:TRANSPORT MANUFACTURE; FORFEITURE TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 274-PUBLIC ACCOUNTANTS                                                                                                     
                                                                                                                                
3:58:07 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be SPONSOR  SUBSTITUTE FOR HOUSE  BILL NO. 274, "An  Act relating                                                               
to the  practice of  accounting; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
3:58:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MIKE HAWKER, Alaska  State Legislature, sponsor of                                                               
SSHB 274, explained that this  legislation is the product of work                                                               
that began  in 2001  when the Alaska  Society of  CPAs [certified                                                               
public  accountants]   and  the   Board  of   Public  Accountancy                                                               
identified  the direction  the state  should  take in  regulating                                                               
CPAs.   He  related that  in the  last 50  years the  practice of                                                               
public accountancy  has evolved and thus  the statutes regulating                                                               
the  profession should  as well.    Representative Hawker  stated                                                               
that the  nationwide guiding principle  of public  accountancy is                                                               
to  promote   uniformity  and   consistency  among   the  states.                                                               
Ultimately,  public  accountancy  is consumer  protection.    The                                                               
industry has  a central think-tank  body, the  American Institute                                                               
of CPAs  (AICPA), that promulgates  rules and  national standards                                                               
for accounting  and reporting.   One of  the standards  the AICPA                                                               
has developed,  in cooperation with  the National  Association of                                                               
State  Boards of  Accountancy, is  the  Uniform Accountancy  Act.                                                               
The   aforementioned  Act   is  model   legislation  to   promote                                                               
uniformity  amongst the  states.   Representative Hawker  pointed                                                               
out that much  of SSHB 274 is simply  about eliminating ambiguity                                                               
and  modernizing  existing language.    In  fact, throughout  the                                                               
legislation   the    term   "accountancy"   is    replaced   with                                                               
"accounting."   This legislation  also clarifies  the distinction                                                               
between "certificate"  and "license" because a  certificate means                                                               
that the holder  has met the qualifications, although  it isn't a                                                               
license to practice.                                                                                                            
                                                                                                                                
REPRESENTATIVE   HAWKER   recalled   the   debacle   with   Enron                                                               
Corporation,   and  noted   that  since   that  states   and  the                                                               
accountancy industry have been looking  to increase and provide a                                                               
stronger  and   more  definitive  regulation  of   CPAs  who  are                                                               
performing   audits.     Therefore,   the  legislation   proposes                                                               
improvements to  the quality control  with accountants  and moves                                                               
toward the  consistency embodied  in the Uniform  Accountancy Act                                                               
such that the portability of  licenses is increased.  The ability                                                               
of a  CPA to work in  another state is increasingly  important in                                                               
light  of the  fact  that  only one  of  the approximately  eight                                                               
international accountancy  firms that were  in the state  in 1979                                                               
remain.  Although there are  some extremely competent accountants                                                               
and firms  in the state,  as Alaska looks  to the future  with an                                                               
expanding economy  and possibly a gas  line there is the  need to                                                               
facilitate    the   participation    of   nationally    qualified                                                               
[accountancy] firms.  He reminded  the committee that SSHB 274 is                                                               
the work product of the  Board of Accountancy, the Alaska Society                                                               
of CPAs, and the accounting industry.                                                                                           
                                                                                                                                
REPRESENTATIVE  HAWKER then  reviewed  the process  by which  the                                                               
sponsor  substitute before  the  committee  today was  ultimately                                                               
developed.  He  related that as the legislation  went through the                                                               
process, some  of the traditional  accountants had  concerns with                                                               
regard to  the aggressiveness of the  original proposals embodied                                                               
in HB  274.  Although the  sponsor substitute pulls back  on some                                                               
of the more  aggressive stances of the  original legislation, the                                                               
sponsor  substitute leaves  the  ability for  the [Alaska  Public                                                               
Accountancy  Board]   to  develop  the  regulations   that  would                                                               
facilitate  the  next  step  of   actually  moving  some  of  the                                                               
statutory changes.   He specified  that the  regulatory authority                                                               
was left  in the legislation,  although the actual  policy change                                                               
was not in  order that the accounting and  business community can                                                               
review and evaluate the proposed regulations.                                                                                   
                                                                                                                                
4:11:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN inquired as to  the difference between a CPA,                                                               
a public accountant, and a bookkeeper.                                                                                          
                                                                                                                                
REPRESENTATIVE HAWKER deferred to Ms. Rogers.                                                                                   
                                                                                                                                
4:12:35 PM                                                                                                                    
                                                                                                                                
LISA ROGERS,  CPA, Alaska Society  of CPAs, explained  that there                                                               
used  to be  a  license for  what  was referred  to  as a  public                                                               
accountant, which is  no longer issued.  In fact,  it hasn't been                                                               
issued  for   some  time,   and  therefore   she  could   make  a                                                               
distinction.   There  are  certified  public accountants  (CPAs),                                                               
which are  the only  individuals licensed  to opine  on financial                                                               
statements, that is, perform an  audit and certify that financial                                                               
statements  are fairly  presented  in  accordance with  generally                                                               
accepted  accounting principles.    She noted  that CPAs  perform                                                               
reviewed  financial  statements,  which  are a  lesser  level  of                                                               
assurance.   Also  CPAs  perform  compiled financial  statements,                                                               
which  includes doing  tax returns,  expert witness  work, and  a                                                               
variety  of other  services.   With regard  to a  bookkeeper, Ms.                                                               
Rogers stated that  there is no statutory definition  of such and                                                               
thus  anyone  can  call  themselves a  bookkeeper.    In  further                                                               
response to Representative Lynn, Ms.  Rogers said that nothing in                                                               
SSHB 274 pits  CPAs against bookkeepers, although  she noted that                                                               
there are concerns.                                                                                                             
                                                                                                                                
4:17:16 PM                                                                                                                    
                                                                                                                                
JEANETTE  JAMES,   Alaska  Society  of   Independent  Accountants                                                               
(ASIA), related that she isn't a  CPA and what she mostly does at                                                               
this  time  is training  small  businesses  with regard  to  what                                                               
information needs to be presented  to the individuals doing their                                                               
CPA work.   Ms.  James expressed  the need to  be sure  that this                                                               
legislation  doesn't  impact those  who  refer  to themselves  as                                                               
independent  accountants.   She mentioned  that the  lobbyist for                                                               
ASIA is  present with the  changes in which [ASIA]  is interested                                                               
in being considered.                                                                                                            
                                                                                                                                
4:19:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  inquired as  to what Ms.  James viewed                                                               
SSHB 274  as achieving in  so far as independent  accountants are                                                               
concerned.                                                                                                                      
                                                                                                                                
MS.  JAMES  expressed  concern  with the  change  from  the  term                                                               
"prepared" to  the term "compiled" because  the information given                                                               
to  an  [independent  accountant]  is  prepared  by  the  client.                                                               
Furthermore, the regulations that may  be drafted are of concern.                                                               
Ms.  James concluded  by stressing  that independent  accountants                                                               
want to be able to stay in business.                                                                                            
                                                                                                                                
4:20:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER highlighted  the  purpose  section of  the                                                               
establishment of  the Board  of Public  Accountancy, specifically                                                               
AS 08.04.005(4):  "the use of  titles relating to the practice of                                                               
public accountancy  that are likely  to mislead the public  as to                                                               
the  status  or competence  of  the  persons using  these  titles                                                               
should be  prohibited."   The aforementioned  provides protection                                                               
for  the public.   With  regard to  promulgating regulations,  he                                                               
emphasized  that  there is  a  lengthy  public process  requiring                                                               
public    disclosure   and    testimony.       Furthermore,   the                                                               
Administrative  Regulation Review  Committee also  has a  role in                                                               
protecting the public interest.                                                                                                 
                                                                                                                                
4:22:44 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  surmised that Ms.  James was  questioning whether                                                               
SSHB 274  is legislation that  would put  independent accountants                                                               
out of work.                                                                                                                    
                                                                                                                                
MS. JAMES specified that she makes  the changes at the end of the                                                               
year and  prints a financial  statement at  the end of  the year,                                                               
although she doesn't  attest to its accuracy or  audit it because                                                               
it's based  on the information provided  by the client.   If such                                                               
an attestment/audit  is necessary,  she said  that she  sends her                                                               
work to  a CPA for  completion.  Ms.  James, noting that  she has                                                               
worked in Washington and Oregon,  recalled that in Washington one                                                               
can't be  referred to as  an accountant  unless he/she is  a CPA.                                                               
She said she didn't want the aforementioned to happen in Alaska.                                                                
                                                                                                                                
4:24:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER emphasized  that there  is no  intent with                                                               
SSHB 274  to interfere  with the conduct  of business  of someone                                                               
who is not  a public accountant, outside of  the existing statute                                                               
that  addresses the  consumer  protection  aspects of  regulating                                                               
CPAs.   Therefore, there  are things that  those who  aren't CPAs                                                               
can't  do.   "In the  best of  my absolute  knowledge," he  said,                                                               
"we're  not  in any  way  changing  that relationship  with  this                                                               
legislation, from what it exists today."                                                                                        
                                                                                                                                
4:25:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  compared paragraph  (4) of Section  2 with                                                               
Section  7, and  asked whether  there is  the possibility  of the                                                               
[Board of Public Accountancy]  developing regulations that outlaw                                                               
the use of the term accountant  for anyone other than someone who                                                               
is a CPA.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  HAWKER  indicated that  although  it  would be  a                                                               
possibility, he  didn't envision such a  degree of transgression.                                                               
Should the  Board of Public  Accountancy attempt to  do something                                                               
like  that,  the public  process  and  regulatory review  process                                                               
would mitigate  such.   However, the CPA  community does  want to                                                               
develop  regulations regarding  the  attest  functions, which  is                                                               
encompassed in  Section 7.  He  said that SSHB 274  is tightening                                                               
the  regulations on  CPAs.   The  provisions allowing  regulatory                                                               
development  are effective  immediately  while  the remainder  of                                                               
SSHB 274 isn't effective until 2008  in order to be cautious with                                                               
any changes.                                                                                                                    
                                                                                                                                
4:27:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked if  the Board of  Public Accountancy                                                               
has any members who are independent accountants.                                                                                
                                                                                                                                
MS. ROGERS said that the  Board of Public Accountancy consists of                                                               
seven members of which five are  CPAs and two are public members.                                                               
The two public members can't be CPAs nor can they work for CPAs.                                                                
                                                                                                                                
REPRESENTATIVE  LEDOUX   said  that  the   aforementioned  makeup                                                               
doesn't necessarily  assure that [independent  accountants] would                                                               
have a seat on the Board of Public Accountancy.                                                                                 
                                                                                                                                
4:29:03 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON,  posing an analogous situation,  pointed out that                                                               
there  isn't a  physician's  assistant on  a  governing board  of                                                               
physicians.  He  said he didn't know why  a physician's assistant                                                               
would sit  on a  governing board of  physicians, which  should be                                                               
made up of  physicians and perhaps individuals who  aren't in the                                                               
medical industry.                                                                                                               
                                                                                                                                
4:30:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER   said  that  [the   relationship  between                                                               
independent accountants  or bookkeepers  and CPAS]  is symbiotic.                                                               
Although he didn't  believe that any members of  ASIA have wanted                                                               
to sit  on the Board  of Public  Accountancy in recent  years, he                                                               
related  his  belief  that  an ASIA  liaison  attends  the  board                                                               
meetings.                                                                                                                       
                                                                                                                                
4:31:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG opined that  Section 53, which relates to                                                               
Section 50, allows the board  to develop regulations prior to the                                                               
effective date of  the statute.  He explained  that he recommends                                                               
such  provisions  because the  legislature  has  found itself  in                                                               
situations in which  the proper effective dates  weren't in place                                                               
and the  implementing regulations had  to wait until  the statute                                                               
was in  effect.  He  reminded the  committee that under  Title 8,                                                               
the  law  mandates  that these  entities  establish  regulations.                                                               
Therefore, Sections  50 and 53  merely reiterate  current statute                                                               
and thus  the Board of  Public Accountancy already has  the power                                                               
to establish  regulations and Ms.  James' concerns  are unrelated                                                               
to  SSHB  274.   Although  some  have  held  up  Section 7  as  a                                                               
provision  that the  Board  of Public  Accountancy  could use  to                                                               
outlaw  [independent accountants],  Representative Rokeberg  said                                                               
he didn't believe that to be the case.                                                                                          
                                                                                                                                
4:34:19 PM                                                                                                                    
                                                                                                                                
BERNADETTE KOPPY,  Vice President, Alaska Society  of Independent                                                               
Accountants (ASIA), began by informing  the committee that she is                                                               
an  enrolled  agent  with  the  Department  of  Treasury  and  an                                                               
accredited   business  accountant   and   tax   advisor  by   the                                                               
Accreditation Council  for Accountancy and Taxation,  which is an                                                               
independent  accreditation agency  affiliated  with the  National                                                               
Society of Accountants.  She provided the following testimony:                                                                  
                                                                                                                                
     On behalf of ASIA I  would like to state the following.                                                                    
     ASIA  is  a  professional organization  of  independent                                                                    
     accountants  in private  practice that  was established                                                                    
     in  1972 and  affiliated with  the National  Society of                                                                    
     Accountants.     ASIA   is  dedicated   to  developing,                                                                    
     improving,  and extending  the standards  and practices                                                                    
     of independent  accountants across  Alaska.  We  have a                                                                    
     membership body  composed of approximately  150 members                                                                    
     that operate as  independent accountants statewide ....                                                                    
     Please  note  that  in   addition  to  the  independent                                                                    
     accountants   that   are   represented  by   the   ASIA                                                                    
     membership,   there   are    many   other   independent                                                                    
     accountants   that   are   not  represented   by   this                                                                    
     membership body.                                                                                                           
                                                                                                                                
     To state what we  do, the independent accountant offers                                                                    
     and performs all  of the same business  services that a                                                                    
     licensed CPA performs other  than reporting on reviewed                                                                    
     and  audited   financial  statements.     These  attest                                                                    
     functions  are reserved  for the  licensed accountants.                                                                    
     Within our  ASIA membership alone we  estimate that the                                                                    
     independent   accountant  represents   the  accounting,                                                                    
     payroll, and tax preparation needs  in a cost effective                                                                    
     manner of approximately  60,000 Alaskan individuals and                                                                    
     small businesses  across the state  of Alaska.   We are                                                                    
     unable to  estimate the constituency that  is served by                                                                    
     the  independent accountants  that are  not within  our                                                                    
     membership body.   Speaking on  behalf of myself,  I am                                                                    
     an  owner  and   practitioner  of  Interior  Accountant                                                                    
     Service, Inc.,  which has approximately  1,500 clients.                                                                    
     I have been serving my  clients from Fairbanks to Healy                                                                    
     since 1975.                                                                                                                
                                                                                                                                
     Regarding Amendment  A, I compile  financial statements                                                                    
     for my clients on behalf  of their banking and business                                                                    
     needs.  I do not  prepare them, and subsequently I will                                                                    
     not report on  them stating as such.  I  also would not                                                                    
     inaccurately  state that  I have  prepared accompanying                                                                    
     financial  statements  due   to  liability  issues  and                                                                    
     concerns regarding  coverage from errors  and omissions                                                                    
     insurance.  Since  Alaska law does not  prohibit me, as                                                                    
     an independent accountant,  from performing compilation                                                                    
     services  to  my fellow  Alaskans  and  clients, it  is                                                                    
     accordingly in my  clients' best interest for  me to be                                                                    
     able    to   complete    their   financial    statement                                                                    
     presentation in a  professional manner, using statutory                                                                    
     safe  harbor  language  that  references  the  compiled                                                                    
     financial statement.   I am concerned  that my clients'                                                                    
     financial statements will be  rejected by the banks and                                                                    
     bonding companies  if I cannot  use the  word compiled.                                                                    
     If  that happens,  my practice  is in  jeopardy and  my                                                                    
     clients will be faced with higher costs.                                                                                   
                                                                                                                                
     Regarding  Amendment  B,  in the  interest  of  serving                                                                    
     Alaskans  and  meeting  their   financial  needs  in  a                                                                    
     professional manner,  without interruption, I  ask that                                                                    
     Section 7, page  3, lines 22-26, be deleted.   It is my                                                                    
     position that the attest  function activities should be                                                                    
     identified by law, not by regulation.                                                                                      
                                                                                                                                
4:37:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ROKEBERG   asked  if   independent   accountants                                                               
undertake any of the attest functions currently.                                                                                
                                                                                                                                
MS. KOPPY replied no.                                                                                                           
                                                                                                                                
4:38:17 PM                                                                                                                    
                                                                                                                                
DON  RULIEN,  President,  Alaska   Society  of  Certified  Public                                                               
Accountants  (ASCPA), informed  the  committee that  he has  been                                                               
working with  Ms. Rogers on  these changes for almost  two years.                                                               
He  stated that  there  was  never any  intent  to eliminate  the                                                               
ability  of  noncertified  accountants   to  prepare  or  compile                                                               
financial information  that doesn't  require an  attest function.                                                               
In fact,  Mr. Rulien opined  that [those working on  this matter]                                                               
have  tried  to   work  with  the  members  of   ASIA  and  other                                                               
independent  groups   to  provide  this  information   months  in                                                               
advance.  He recalled that  each time the information was shared,                                                               
[ASIA]  said it  looked fine.    No adverse  reactions were  ever                                                               
relayed until January 6, 2006,  when the [sponsor substitute] was                                                               
ready to  be introduced.  Mr.  Rulien said, "We think  we haven't                                                               
done anything  to jeopardize their  ability to  prepare financial                                                               
statements for banks, for any  other entity that may require them                                                               
of their clients."   He said that [ASCPA]  understands that there                                                               
will  always be  a need  for nonlicensed  accountants to  prepare                                                               
financial statements.  He opined  that SSHB 274 doesn't take away                                                               
any  of the  independent accountants'  ability to  continue their                                                               
livelihood.                                                                                                                     
                                                                                                                                
4:41:11 PM                                                                                                                    
                                                                                                                                
DAN  KENNEDY, CPA,  informed the  committee  that he  has been  a                                                               
licensed CPA in  Alaska for 24 years.  He  urged the committee to                                                               
pass SSHB  274 as it is  written.  He  noted that he is  a former                                                               
member of the  Board of Public Accountancy and  recalled that the                                                               
main  priority of  it was  to make  Alaska's statutes  consistent                                                               
with at  least 43  other states [that  have adopted]  the Uniform                                                               
Accountancy Act.  In regard to  the concerns of ASIA, Mr. Kennedy                                                               
related that  every quarterly  meeting of the  board there  was a                                                               
representative from  ASIA who was  allowed to  fully participate.                                                               
He emphasized  that there's no  intention to  prevent accountants                                                               
from participating and making a livelihood.                                                                                     
                                                                                                                                
MR. KENNEDY  recalled his involvement with  reaching a compromise                                                               
on the  language in  SSHB 274.   He related  his belief  that the                                                               
experience requirement  should've been  one year rather  than two                                                               
years, which  is what  is included  in SSHB 274.   Alaska  is the                                                               
only  jurisdiction that  would require  two years  of experience.                                                               
He noted  that last  year he  spoke with  over a  thousand eighth                                                               
graders to urge  them to pursue careers  in business, accounting,                                                               
and specifically certified public  accounting because there is so                                                               
much  work  for  both  CPAs  and  independent  accountants.    He                                                               
reiterated  the need  to make  Alaska's statutes  consistent with                                                               
the   rest  of   the  nation   [such  that   the  statutes]   are                                                               
substantially  equivalent to  the Uniform  Accountancy Act.   Mr.                                                               
Kennedy concluded by urging the committee to pass SSHB 274.                                                                     
                                                                                                                                
4:44:52 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON, upon  determining no one else  wished to testify,                                                               
closed  the  public  testimony.   Chair  Anderson  said  that  he                                                               
supports SSHB 274.                                                                                                              
                                                                                                                                
4:45:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER,  in responding to the  concerns mentioned,                                                               
turned attention to  the definition section located  on pages 26-                                                               
27, which he  opined is the crux  of the concerns today.   In the                                                               
CPA  industry the  term "compilation,"  which is  a term  of art,                                                               
defines a  specific scope of work  that a CPA has  performed to a                                                               
set of financial  statements.  He explained  that the compilation                                                               
level  is  the lowest  level  of  work,  and basically  puts  the                                                               
[financial  records] into  a set  of financial  statements.   The                                                               
concern  expressed by  ASIA, he  surmised, is  that they  want to                                                               
also  be able  to use  the term  compile.   Representative Hawker                                                               
specified, "We  want to make  certain that the  independents, the                                                               
nonaccountants, can do work --  they can put financial statements                                                               
together, but that clearly, we  don't use the same operative verb                                                               
as  is defined  in the  public  accountancy world  [and] that  is                                                               
'compiled.'"  He  noted that the National  Society of Accountants                                                               
(NSA) uses  the term "prepared"  rather than "complied"  and thus                                                               
the  distinction between  noncertified  accountants  and CPAs  is                                                               
maintained.                                                                                                                     
                                                                                                                                
4:50:24 PM                                                                                                                    
                                                                                                                                
MS. ROGERS  referred to the  October 8, 2005,  document entitled,                                                               
"Tax  Accounting  Guidelines  for   Small  Business,"  which  was                                                               
published by the  NSA.  She quoted from the  first section of the                                                               
document as follows:                                                                                                            
                                                                                                                                
     Tax  accounting guidelines  for small  business (TAGSB)                                                                    
     are  designed to  provide guidance  to accountants  for                                                                    
     the  preparation of  financial statements  presented in                                                                    
     conformity with  the principles  of accounting  used in                                                                    
     the preparation of tax returns.                                                                                            
                                                                                                                                
MS.  ROGERS explained  that the  aforementioned are  [guidelines]                                                               
used by some non-CPAs to  prepare financial statements.  She then                                                               
referred  to  the  definitions  sections  of  the  aforementioned                                                               
document, and quoted the following definition of compilation:                                                                   
                                                                                                                                
     For   purposes   of   these   guidelines,   the   terms                                                                    
     "compilation"  and  "preparation" are  interchangeable.                                                                    
     However,  in  many   jurisdictions,  local  law  places                                                                    
     certain   restrictions  on   the   use   of  the   term                                                                    
     "compilation" and the accountant  must follow the local                                                                    
     law requirements.                                                                                                          
                                                                                                                                
4:53:00 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON  surmised  then   that  the  distinction  between                                                               
"preparation"  and   "compilation"  isn't  an  anomaly   as  it's                                                               
referenced in the guidelines Ms. Rogers quoted above.                                                                           
                                                                                                                                
4:53:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked then if under  SSHB 274, independent                                                               
accountants   would  no   longer  be   able  to   use  the   term                                                               
"compilation."                                                                                                                  
                                                                                                                                
REPRESENTATIVE HAWKER  replied no because it's  associated with a                                                               
nationally  accepted standard  of work  performed by  CPAs.   The                                                               
safe  harbor   language  is  for   use  by  nonlicensees.     The                                                               
legislation creates a  legal distinction to ensure  that the work                                                               
of licensees versus nonlicensees isn't confused.                                                                                
                                                                                                                                
4:54:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD asked then if  a CPA would be required to                                                               
"compile" forms.  The aforementioned  is of concern, particularly                                                               
in light of the expense.                                                                                                        
                                                                                                                                
REPRESENTATIVE  HAWKER  directed  attention to  the  safe  harbor                                                               
language that exists in current  statute, which specifies that "a                                                               
report  doesn't   include  compilation  of   financial  statement                                                               
language  that does  not express  or imply  assurance or  special                                                               
knowledge  or   competence."    He   reiterated  that   the  term                                                               
"compiled" is a specific term and is defined as such.                                                                           
                                                                                                                                
4:58:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  pointed out that the  term "compilation"                                                               
will be defined in regulation.   Therefore, he questioned whether                                                               
the  term of  art would  be used  such that  the Board  of Public                                                               
Accountancy  could say  that only  CPAs can  perform compilation.                                                               
Representative  Crawford  expressed  the  need to  see  what  the                                                               
regulation is and then it can be placed in statute.                                                                             
                                                                                                                                
5:00:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER, in  response to  Representative Crawford,                                                               
said that he didn't believe  this is something about which anyone                                                               
should be  concerned.  He  informed the  committee that he  has a                                                               
book defining the term "compilation."   He reminded the committee                                                               
that   the  notion   is  defining   attest   functions  and   the                                                               
"compilation"  function is  a not  an attest  function.   He then                                                               
reminded the committee that the  term "compilation" isn't new and                                                               
has been  defined by the  national regulatory authority.   Again,                                                               
he  reiterated that  he  didn't  see any  risk  in a  nonlicensed                                                               
accountant to "put up a  financial statement."  Again, the desire                                                               
is to  ensure that  nonlicensed accountants  don't say  that they                                                               
"compile"  because  it's  a specific  report  noted  in  national                                                               
standards to be done only by CPAs.                                                                                              
                                                                                                                                
5:03:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX noted  that her mother is a CPA.   She then                                                               
related her understanding that to  "prepare" and to "compile" are                                                               
the same [activities] and that  independent accountants in Alaska                                                               
have  traditionally used  the term  "compile" to  refer to  their                                                               
activities.   Therefore, she questioned  why CPAs feel  that they                                                               
should  have  a  monopoly  in  regard to  the  use  of  the  term                                                               
"compile."                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HAWKER  reiterated  that  SSHB  274  is  consumer                                                               
protection  legislation [and  specifying  the  use of  "compile"]                                                               
ensures that consumers know what  services one receives from what                                                               
profession.  He pointed out  that existing statute specifies that                                                               
those who aren't licensees cannot  use language that expresses or                                                               
implies assurance, special knowledge,  or competence.  Therefore,                                                               
the use of the term "compiled"  by a nonlicensee implies that the                                                               
individual is a CPA with that  level of competence.  The language                                                               
from  the  National  Society   of  Accountants  acknowledges  the                                                               
aforementioned  and  that  the   term  "prepared"  is  acceptable                                                               
terminology.                                                                                                                    
                                                                                                                                
5:06:17 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON  indicated  his understanding  that  there  is  a                                                               
difference between "compiled" and "prepared."                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX  reiterated  her  understanding  that  the                                                               
terms are the  same, save that the term "compile"  means that the                                                               
work was performed by a CPA.                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD inquired  as to  who decides  what is  a                                                               
compilation versus a preparation.                                                                                               
                                                                                                                                
REPRESENTATIVE  HAWKER  answered that  it's  what  [SSHB 274]  is                                                               
defining  in  statute.    Representative  Hawker  clarified  that                                                               
independent  accountants   don't  have  a  universal   body,  and                                                               
therefore he  wanted to be  sure that folks understood  that ASIA                                                               
is  the  Alaska entity  of  which  some  subscribe to  the  small                                                               
business tax accounting guidelines mentioned earlier.                                                                           
                                                                                                                                
5:08:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  noted  the   difficulty  he  is  having                                                               
reading  the  existing  law under  the  definitions  section  and                                                               
understanding  the  double  negative.   He  emphasized  that  the                                                               
bright  distinction isn't  achieved  with  the proposed  language                                                               
either.   He  related his  understanding that  from the  existing                                                               
statute   specified  on   page   27,   lines  9-18,   independent                                                               
accountants believe they can perform  compilations.  However, the                                                               
proposed language  seems to imply that  the disclaimer statements                                                               
are optional.   If compiling  is currently performed  and allowed                                                               
by  independent accountants,  then that  should be  clarified, he                                                               
stressed.                                                                                                                       
                                                                                                                                
5:11:04 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON,  acknowledging   the  various  concerns  stated,                                                               
inquired as to how the sponsor wanted to quell those concerns.                                                                  
                                                                                                                                
5:11:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER,  speaking on behalf of  the Alaska Society                                                               
of  CPAs  and   the  Board  of  Accountancy,   stated  that  both                                                               
organizations  feel  strongly  that   the  proposed  language  is                                                               
appropriate.   The  language in  ASIA's proposed  amendment would                                                               
establish, in statute,  opinion language on tax  reports that has                                                               
no  promulgated authoritative  basis,  he  said.   Representative                                                               
Hawker suggested  that if ASIA  wanted to bring  forward language                                                               
from an association  of national accountants to  be recognized in                                                               
Alaska  for independent  accountants, then  it should  be brought                                                               
forward in a  stand-alone bill.  Representative  Hawker said that                                                               
although he  had hoped  that SSHB 274  would've moved  forward to                                                               
the  House Finance  Committee, he  suggested that  if it  doesn't                                                               
there are  enough accountants  from [the  Alaska Society  of CPAs                                                               
and   the  Board   of  Accountancy]   to  meet   with  individual                                                               
legislators.                                                                                                                    
                                                                                                                                
5:13:35 PM                                                                                                                    
                                                                                                                                
MS. ROGERS  related her belief that  the language in SSHB  274 is                                                               
appropriate.   In fact, she said  that until January 6th  she had                                                               
thought that ASIA was okay  with the proposed language because it                                                               
was taken from the Uniform Accountancy  Act.  She offered to meet                                                               
with or leave information with  members to explain the definition                                                               
of  compilation for  CPAs versus  that  definition for  non-CPAs.                                                               
Two  different  parties, she  explained,  are  using a  word  and                                                               
defining it differently.                                                                                                        
                                                                                                                                
5:14:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG recalled that  SSHB 274 has been touted                                                               
as consumer protection.  However,  he questioned whether there is                                                               
any consumer  protection if  no non-CPAs are  involved.   He then                                                               
turned  attention  to  page  4  and  the  language  referring  to                                                               
"quality review requirements," and  inquired as to its definition                                                               
and how it would impact independent accountants.                                                                                
                                                                                                                                
5:16:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  agreed that he  would be happy  to provide                                                               
information on this matter on Friday.                                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG commented  that a  rewrite of  an entire                                                               
statute  deserves  a  thorough  review  by  the  committee.    He                                                               
restated  his  earlier  question  regarding  whether  independent                                                               
accountants are  confusing the term "compilation"  under existing                                                               
law and have been doing  compilations.  Therefore, SSHB 274 would                                                               
change the practice of independent  accountants and the impact of                                                               
such is unknown.                                                                                                                
                                                                                                                                
5:18:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN suggested  that it  might be  appropriate to                                                               
include the definitions of both "compile" and "prepare."                                                                        
                                                                                                                                
REPRESENTATIVE HAWKER  said that SSHB 274  does define "prepare."                                                               
He said he wasn't sure that  the term "compile" should be defined                                                               
because it's  subject to change  as the AICPA, and  the industry,                                                               
evolves and changes its rules, which  is why the state adopts the                                                               
standards of the AICPA by reference.                                                                                            
                                                                                                                                
REPRESENTATIVE LYNN,  referring to  the amount  of debate  on the                                                               
definitions of these terms, expressed  the need be as specific as                                                               
possible.                                                                                                                       
                                                                                                                                
5:19:57 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  indicated his agreement  and announced  that SSHB
274 would be held over.                                                                                                         
                                                                                                                                

Document Name Date/Time Subjects