Legislature(2005 - 2006)SENATE FINANCE 532

03/23/2006 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 222 PROTECTION OF PERSONAL INFORMATION TELECONFERENCED
Heard & Held
+ SB 284 SENTENCING FOR ALCOHOL-RELATED CRIMES TELECONFERENCED
Heard & Held
+ HB 274 PUBLIC ACCOUNTANTS TELECONFERENCED
Moved CSSSHB 274(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 206 DETENTION OF MATERIAL WITNESSES
Moved CSSB 206(FIN) Out of Committee
10:16:05 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
     CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 274(FIN)                                                                      
     "An Act relating to the practice of accounting; and                                                                        
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the first hearing for  this bill in the  Senate Finance                                                               
Committee.                                                                                                                      
                                                                                                                                
10:16:13 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MIKE  HAWKER, sponsor of the  bill, testified that                                                               
Alaska's accounting  statues were  written in 1960  through 1962.                                                               
Many accounting  practices have changed since  that time. Efforts                                                               
are  underway  nationally  to  standardize  accounting  practices                                                               
including education and licensing  requirements. The Alaska Board                                                               
of Public  Accountants has been  collaborating with  the American                                                               
Institute of  Certified Public  Accountants to  implement changes                                                               
to  comply  with the  Uniform  Accountancy  Act, written  by  the                                                               
Institute.  This  bill  represents  the first  portion  of  those                                                               
efforts.                                                                                                                        
                                                                                                                                
Representative Hawker  stated that most  of the language  in this                                                               
lengthy   legislation  is   technical,   conforming  to   current                                                               
standards.                                                                                                                      
                                                                                                                                
Representative  Hawker  informed  of the  shortage  of  qualified                                                               
Certified  Public Accountants  (CPA) in  Alaska. This  bill would                                                               
grant practice privileges  to out of state  accountants under the                                                               
Standard    of   Substantial    Equivalency.   The    reciprocity                                                               
requirements  are designed  to encourage  accountants to  work in                                                               
Alaska   by  not   requiring  them   to  redo   any  professional                                                               
credentials.                                                                                                                    
                                                                                                                                
Representative Hawker  told of the  current requirement  that all                                                               
communications  to the  accounting  community  must be  conducted                                                               
through  certified  mail.   At  the  request  of   the  Board  of                                                               
Accountancy  this provision  would be  repealed and  would reduce                                                               
operating costs of the Board by $6,000 to $8,000 a year.                                                                        
                                                                                                                                
Representative Hawker  emphasized the  public reliance  on audits                                                               
attesting  to  the  correctness   of  financial  statements.  The                                                               
national trend has been to  increase regulation and management of                                                               
CPAs performing  attest functions.  This bill would  mandate that                                                               
professional  accountants   undergo  peer  reviews,   a  practice                                                               
currently in  regulation. However,  regulations do not  include a                                                               
definition of  attesting, nor  do they provide  for a  process of                                                               
writing  regulations  to  address   attesting.  This  bill  would                                                               
require the Board of Accountancy  to develop regulations defining                                                               
attest functions  and providing special oversight  of accountants                                                               
who perform those functions.                                                                                                    
                                                                                                                                
10:21:40 AM                                                                                                                   
                                                                                                                                
Representative  Hawker  relayed  attempts within  the  accounting                                                               
community  in  Alaska  to  change practices  to  conform  to  the                                                               
national Uniform Accountancy  Act. Some have been  eager to fully                                                               
conform, while others  were reluctant to make  changes. The Board                                                               
held  internal  and  public  hearings   on  the  issue  and  this                                                               
legislation represents compromises made  to the various concerns.                                                               
Those  accountants  who  had  opposed  making  any  changes  were                                                               
satisfied with the proposal and  expressed willingness to see the                                                               
results.                                                                                                                        
                                                                                                                                
Representative Hawker  explained that the delayed  effective date                                                               
of the  statutory changes is  January 1, 2008.  Regulations could                                                               
be written  in the meantime  and, if deemed  necessary, statutory                                                               
changes could be offered in the next legislative session.                                                                       
                                                                                                                                
Representative Hawker  described the  support for this  bill from                                                               
different factions of industry.                                                                                                 
                                                                                                                                
10:23:59 AM                                                                                                                   
                                                                                                                                
Senator  Olson   remarked  that   businesses  are   dependant  on                                                               
accountants. He asked if any  negative criticism to this bill has                                                               
been voiced from business representatives.                                                                                      
                                                                                                                                
10:24:19 AM                                                                                                                   
                                                                                                                                
Representative Hawker had heard of  no negative comments with the                                                               
exception of  comments raised  by independent  accountants, those                                                               
who are not certified. Those concerns have been addressed.                                                                      
                                                                                                                                
10:24:34 AM                                                                                                                   
                                                                                                                                
Senator  Olson asked  if his  accountant would  therefore support                                                               
this legislation.                                                                                                               
                                                                                                                                
10:24:41 AM                                                                                                                   
                                                                                                                                
Representative  Hawker responded  this  would depend  on who  his                                                               
accountant  is. Those  who  have been  actively  involved in  the                                                               
process have reached agreement on the provisions in the bill.                                                                   
                                                                                                                                
10:25:12 AM                                                                                                                   
                                                                                                                                
Representative  Hawker  noted  that  the  oldest  member  of  the                                                               
association  supports  this  bill. This  person  represented  the                                                               
anchor  of the  "old school"  approach. Through  the process,  he                                                               
became supportive of  allowing regulations to be  adopted, and if                                                               
those regulations proved effective,  he would support their being                                                               
codified.                                                                                                                       
                                                                                                                                
Representative  Hawker predicted  this bill  would likely  not be                                                               
the  last  legislation  addressing   changes  to  the  accounting                                                               
statutes.                                                                                                                       
                                                                                                                                
10:26:18 AM                                                                                                                   
                                                                                                                                
Co-Chair  Green  recalled the  dissent  when  these changes  were                                                               
originally proposed.                                                                                                            
                                                                                                                                
10:26:26 AM                                                                                                                   
                                                                                                                                
DAN   KENNEDY,  Certified   Public   Accountant,  testified   via                                                               
teleconference  from Mat-Su,  acknowledging  that  this issue  is                                                               
relatively  insignificant in  comparison to  other issues  before                                                               
the  legislature.  He supported  this  bill,  a modernization  of                                                               
Alaska's  accounting procedures  that would  align with  40 other                                                               
states.  This  legislation  represents a  compromise  within  the                                                               
accounting  profession.  He  had advocated  for  more  aggressive                                                               
changes, including  a reduction of the  activity requirements for                                                               
becoming  a CPA.  Currently  an accountant  must  work under  the                                                               
supervision of  a CPA  for two  years. Alaska  is the  only state                                                               
with this requirement. He had  recommended one year of supervised                                                               
practice.                                                                                                                       
                                                                                                                                
Mr. Kennedy  defined the peer review  process as an audit  of the                                                               
auditors, which would strengthen  the profession. Therefore, only                                                               
one year  of supervised  practice is  necessary. However,  he was                                                               
willing to compromise on this item  in the interest of passage of                                                               
this legislation.                                                                                                               
                                                                                                                                
10:30:18 AM                                                                                                                   
                                                                                                                                
Senator Bunde offered a motion  to report the bill from Committee                                                               
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
Without  objection HB  274  was MOVED  from  Committee with  zero                                                               
fiscal note  #1 from  the Department  of Commerce,  Community and                                                               
Economic Development.                                                                                                           
                                                                                                                                

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