HB 121-ACCOUNTING; PRACTICE PRIVILEGE  4:48:52 PM CHAIR KAWASAKI announced the consideration of HOUSE BILL NO. 121 "An Act relating to the practice of accounting; and providing for an effective date." 4:49:48 PM AMANDA NDEMO, Staff, Representative Calvin Schrage, Alaska State Legislature, Juneau, Alaska, presented the overview for HB 121 and moved to slide 2. She stated that Alaska faces a severe certified public accountant (CPA) shortage, with exam candidates down 30 percent nationwide since 2016. Current statutes create unnecessary barriers, and HB 121 seeks to fix this by aligning state laws with national standards.  4:50:30 PM MS. NDEMO moved to slide 3, Section Analysis Summary, and stated that HB 121 makes two key changes: lowers credit requirements for CPA licensure and allows out-of-state CPA firms to practice in Alaska through practice privilege. She said this aligns with prior legislative updates. 4:50:55 PM MS. NDEMO moved to slide 4, Education Requirement, and stated that Alaska requires 150 credit hours and two years of experience for CPA licensure, forcing candidates to complete 30 credits beyond a bachelor's degree. 4:51:20 PM MS. NDEMO moved to slide 5 and discussed the following: [Original punctuation provided.] Education Requirement  HB 121:  • Removes the 150 credit hour requirement for CPA licensure (moving to a bachelors + two years of experience model). • Retains essential qualification requirements -Passing CPA exam -Bachelor's degree with an accounting concentration -Two years of relevant experience 4:51:44 PM MS. NDEMO moved to slide 6, Practice Privilege: Current requirements for out-of-state firms, and stated that HB 121 removes the requirement for out-of-state CPA firms without a physical office in Alaska to obtain a state firm permit, reducing administrative burdens while still allowing them to serve Alaskan clients. 4:52:15 PM MS. NDEMO moved to slide 7 and discussed the following points: [Original punctuation provided.] Practice Privilege  Current requirements for out-of-state individuals (AS  08.04.420 and 08.04.422)  • Licensed to practice public accounting in another state • The individual's licensing state satisfies substantial equivalency requirements to the qualifications required of an applicant for a license in Alaska. • Principal place of business for the practice of public accounting is in that other state • Consent to Alaska's jurisdiction and disciplinary authority of the board • Assign home state's board as agent for service of process • Do not need to provide notice, pay a fee, or submit documentation CPA license: license granted by the state of application after all education, exam, and experience requirements have been met. "Principal place of business" office location designated by an individual for the purposes of substantial equivalency and reciprocity. AS 08.04.680(17). "Practice privilege" means a practice privilege authorized under AS 08.04.420. AS 0 MS. NDEMO said all the standards would be the same if Alaska implements current changes for out-of-state firms. 4:53:09 PM MS. NDEMO moved to slide 9 and discussed the following: [Original punctuation provided.] Benefits of HB 121  Increases the pipeline of CPA candidates MS. NDEMO said this is done by amending the education qualifications by lowering the credit hour requirements. Encourages business growth and supports business needs Regulatory oversight remains intact Makes Alaska a more accessible market for accounting professionals. 4:53:40 PM MS. NDEMO moved to slide 10, Public Protection, and stated that HB 121 ensures that high professional standards remain a central condition for granting practice privilege by requiring continued oversight from both the CPA's home-state Board of Accountancy and Alaska's Board of Public Accountancy. This dual accountability framework helps safeguard the quality and integrity of services provided to Alaskans. In addition, the bill strengthens the accounting profession, supports local businesses by creating reciprocal opportunities for firms and professionals, and positions Alaska to remain competitive in attracting and retaining qualified accounting talent. 4:54:27 PM CHAIR KAWASAKI referenced the 120- and 150-credit requirements and asked whether the additional 30 credits must meet specific criteria or if the credits are generally accounting related courses. 4:54:45 PM REPRESENTATIVE CALVIN SCHRAGE, District 12, Alaska State Legislature, Juneau, Alaska, sponsor of HB 121 replied that there are no specific requirements for the additional 30 credits. Students typically meet them either by taking extra, unrelated courses before committing to accounting, or by pursuing a master's degree after completing their bachelor's degree. He said many Alaska firms are concerned about losing prospective accountants to out-of-state programs and would prefer to keep candidates in state, combining education with on- the-job training.  4:56:07 PM SENATOR BJORKMAN stated there's separate legislation that contemplates the idea of CPA's as conservators, without addition training. He asked how would reducing CPA education requirements affect the proposal to let CPAs serve as conservators without additional training. 4:56:37 PM REPRESENTATIVE SCHRAGE replied that reducing CPA education requirements likely wouldn't affect their ability to serve as conservators, since the extra 30 credits are often unrelated to accounting. CPAs already gain significant financial expertise through their degree, exam, and job training. He noted he isn't an expert on conservatorship requirements. 4:58:01 PM CHAIR KAWASAKI announced invited testimony on HB 121. 4:58:30 PM BETH STUART, Office Managing Partner, Klynveld, PEAT, Marwick, Goerdeler (KPMG) LLC, Anchorage, Alaska, testified by invitation on HB 121. He shared his following testimony: [Original punctuation provided.] • Obtained my CPA license in 1996 and have maintained it in good standing since that time; nearly 30 years • Appreciate consideration of HB121 in committee today. • Accounting professionals around the country are concerned that the number of people entering the accounting profession is declining, and studies show this is in part because of the time and cost of education required beyond a bachelor's degree. • The Alaska board of accountancy is not alone in trying to address the concern. There is a wave of legislation across states to remove those "soft 30" additional credit hours required over a bachelor's degree. As Rep Schrage mentioned, these 30 credit hours are not required to be in accounting, or even business. They could be credits in underwater basket weaving. We do not believe removing those 'soft 30' credits will have an impact on quality of CPAs. • The other element of HB121 that is supported by the board relates to firm mobility. The purpose of this section is to conform Alaska's firm mobility laws with our existing individual mobility laws, moving to a mobility model widely recognized throughout the U.S. and recommended in the UAA. 5:01:44 PM KAREN BREWER-TARVER, Chair, Alaska Society of Certified Public Accountants (AKCPA) Legislative Committee, Anchorage, Alaska, testified by invitation on HB 121. She shared her following testimony: [Original punctuation provided.] The AK SOCIETY of CPAS, overall mission is the promotion, upgrading, continuation and unification of the accounting profession. Society members are CPA licensed in Alaska, as well CPA candidates. The AK SOC OF CPAs AK legislative committee meet and evaluated the changes proposed in HB 121. Our support of HB121 was provided to our SOCIETY board who have submitted a letter of support to the bill sponsors. As previously shared regarding the education requirements for licensure: • HB121 allows a modernized path to licensure, which will allow more candidates to become CPAs and be available to serve Alaska residents and businesses. • Under the current statute employees working full time often put off finishing additional credits and reach the point of not pursuing licensure due to the challenge of working while finishing additional college credits. As a CPA firm owner, I can share there is a shortage of qualified accountants. Employees who get their bachelor's degree (120 credits) want to start working immediately as their work responsibilities grow and personal obligations increase the challenge of gaining the additional 30 credits creates a barrier to pursuing their CPA license. The extra 30 credits also deters many accounting students from pursuing the CPA path and limits students entry into public accounting as many firms will not hire students without the 150 credits. If HB 121 were to pass this allows candidates to pursue their CPA licensure without the extra time and cost for the additional 30 credits. On a personal note, my son is graduating from high school in May and plans to become a CPA I am personally excited to let him know that he may only have 4 rather than 5 years of college. As previously shared related to FIRM mobility: • HB121 allows CPAs licensed from other states to serve clients in Alaska at a time when there is a looming shortage of available service providers. 5:04:09 PM MS. BREWER-TARVER continued with her testimony on HB 121: Firm mobility has been a long time project for Alaska STATE BOARD OF PUBLIC ACCOUNTANCY and the statue changes in the past were leading up to this change to align Alaska with other licensing jurisdictions. During my 8 years on the state BOARD OF PUBLIC ACCOUTANCY we worked with the AICPA and other licensing jurisdictions to understand the impacts firm mobility and the AK SOCIETY SUPPORTS THIS BILL AND ALASKA ALLOWING FOR FIRM MOBILITY. 1.The changes noted in HB121 allow Alaska to align with model national legislation, but more importantly, changes that are being proposed and/or enacted currently in many other jurisdictions 2.HB121 will allow more candidates to become CPAs and be available to serve Alaska residents and businesses. 3.HB121 allows CPAs licensed from other states to serve clients in Alaska at a time when there is a looming shortage of available service providers. 4.HB121 does not diminish the existing public protection provisions contacted in the Statues and regulations for Alaska CPAs. 5:05:32 PM CRISTA BURSON, President, Alaska Society of CPAs, Anchorage, Alaska, testified by invitation on HB 121. She shared her following testimony: [Original punctuation provided.] Chair Kawasaki and members of the Senate State Affairs committee my name is Crista Burson and I live in Anchorage and I am the President & CEO of the Alaska Society of CPAs. The Alaska Society of CPAs has over 600 members that include students, educators, and CPAs and accountants in both public and private practice. On behalf of our Board of Directors, the AKCPA would like to express our support of the changes proposed in HB 121. We are hopeful this legislation will assist in filling the CPA pipeline shortage. Recently I met with accounting students and faculty at the University of Alaska Anchorage and the University Alaska Fairbanks and discussions included HB 121. Students were especially excited that the proposed changes would help them enter the profession without the additional expense and time. Thank you for your continued efforts to protect the public interest and for ensuring that Alaska has CPA licensees to meet the current and future needs in Alaska. 5:07:13 PM TOM NEILL, Chair, Uniform Accountancy Act Committee, American Institute of Certified Public Accountants (AICPA), Seattle, Washington, testified by invitation on HB 121. He stated that this legislation aligns Alaska's CPA licensing laws with the Model Uniform Accountancy Act, bringing consistency with national standards. Similar changes are already underway in 25 states, including Washington, Oregon, and California. HB 121 also updates firm mobility provisions, joining 37 other states that allow out-of-state CPA firms to practice without added permits. 5:08:23 PM CHAIR KAWASAKI asked if most states were originally set at 150 credits and later reduced the requirement, or have they always required 120 credits. 5:08:35 PM MR. NEILL replied that most U.S. states currently require 150 credit hours, though recent changes to the Uniform Accountancy Act aim to reduce that to 120. Since the extra 30 hours have no specific requirements, the national trend is shifting back to a four-year degree with an accounting concentration. 5:09:28 PM CHAIR KAWASAKI opened public testimony on HB 121. 5:09:43 PM THERESA OBERMEYER, representing self, Anchorage, Alaska, testified in support of HB 121 and stated that the concept of "practice privilege" originates from the legal field. She cited Wisconsin's diploma privilege and similar rules in Washington and Oregon that allow law graduates to practice without a bar exam. Drawing on decades of family experience in law, she expressed support for the bill and urged lawmakers to recognize the parallels between accounting and legal practice. 5:11:58 PM CHAIR KAWASAKI closed public testimony on HB 121. 5:12:11 PM CHAIR KAWASAKI held HB 121 in committee.