1:45:29 PM HOUSE BILL NO. 274 An Act relating to the practice of accounting; and providing for an effective date. Vice Chair Stoltze MOVED to ADOPT work draft #24-LS0176\C, Bannister, 2/8/06, as the version of the legislation before the Committee. (Copy on File). Representative Weyhrauch OBJECTED. 1:46:44 PM Representative Weyhrauch WITHDREW his OBJECTION in order to hear the proposed changes brought forward by Representative Hawker. There being NO further OBJECTION, the work draft was adopted. REPRESENTATIVE HAWKER, SPONSOR, explained that the committee substitute resulted from a review by the Division of Occupational Licensing. The Division made technical corrections providing the version currently before the Committee. Representative Hawker spoke to the basis of the bill, which updates the Alaska statutory framework regulating the professional practices of accounting. The bill moves the statues toward the standardized structure recommended in the model of the National Uniform Accountancy Act developed by the American Institute of Certified Public Accountants (AICPA). Representative Hawker advised that adoption of the changes would: • Facilitate the practice of Alaska public accountants in other jurisdictions, • Ensure that qualifications of non-resident public accountants practicing in Alaska, and • Aid conduct of interstate commerce. The changes are important to keep Alaska competitive in the international business environment and provide the greatest possible consumer protection for the public relying upon the work performed by Certified Public Accountants (CPA). Representative Hawker highlighted what the bill would accomplish: • Increases the supervision and regulation of public accountants who provide auditing services; • Establishes a mechanism to grant temporary practice privileges to public accountants and public accounting firms licensed in other states; • Expands peer quality review requirements; and • Ensures that public accountants meet appropriate education and experience standards. 1:53:32 PM Representative Hawker noted that there had been a lengthy discussion in the House Labor and Commerce Committee regarding concerns by non-licensed accountants. He pointed out the "do pass" recommendations from that Committee. 1:54:08 PM Vice Chair Stoltze inquired if there were "issues" for CPA's regarding license and non-licensure. Representative Hawker addressed the difference between a licensed accountant and a non-licensed one. The key points for obtaining CPA licensing are: • A minimum education requirements with a degree in accounting, • Passing the uniform certified public accountant certification, and • Applying to the Board to practice as a CPA. To actually perform audits requires further experience; there is an apprenticeship appointment. There are non- licensed record keepers. Currently, there is little regulation of the work product. Representative Hawker pointed out that Alaska has some of the "least stringent regulations" of any state in the Nation, which is of concern to the licensed accounting profession. The bill would not impinge any non-certified accountants. 1:58:13 PM Vice Chair Stoltze asked the percentage of people that initially, fail the CPA examine. Representative Hawker thought that those passing the test the first time fell into the 25% range. He acknowledged that it is a difficult test to pass, adding that his class set a national pass record at 67% graduates succeeding. 1:59:01 PM Representative Holm inquired whose responsibility it was to regulate the service. 1:59:35 PM Representative Hawker responded that was a function of the State's Board of Accountancy. The Governor, as an independent body, appoints that Board. He added that there are stipulations regarding the composition of the board. 2:00:21 PM Representative Weyhrauch inquired if the legislation would affect "bookkeepers". Representative Hawker responded it would not. 2:01:02 PM Representative Weyhrauch noted that there are people who advertise themselves as a bookkeeping service. Representative Hawker stated that they would not be able to express or imply that they have special knowledge or competence issuing any report on the books. There is a 100% exclusion on bookkeeping. The substance on the bookkeeping work is where it crosses the professional line. 2:02:02 PM LISA ROGERS, (TESTIFIED VIA TELECONFERENCE), CERTIFIED PUBLIC ACCOUNTANT (CPA), ALASKA SOCIETY OF CPA'S (ASCPA), ANCHORAGE, testified that the legislation provides a much- needed update and revision to the statutes governing the practice of public accounting. The National Association of the State Board of Accountancy (NASBA) and the American Institute of Institute of Certified Public Accountants (AICPA) drafted the Uniform Accountancy Act. She stated that both organizations participated in drafting and reviewing the proposed legislation. She urged support of HB 274. 2:03:38 PM Representative Hawker applauded Ms. Rogers for the work she provided on the drafting process. 2:04:10 PM DON RULIEN, (TESTIFIED VIA TELECONFERENCE), CHAIRMAN, CERTIFIED PUBLIC ACCOUNTANT (CPA), LEGISLATIVE COMMITTEE, ALASKA SOCIETY OF CPA'S (ASPCA), ANCHORAGE, pointed out that the policy by which an accountant becomes a CPA is not being changed. The intent was to address language and make it more uniform so that accountants can practice in other states without a lot of trouble. Mr. Rulien noted statewide support of the legislation. He requested that the legislation move from Committee as soon as possible. 2:05:54 PM ROBLYN WEIBE, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, ALASKA SOCIETY OF INDEPENDENT ACCOUNTANTS (ASIA) NORTHERN CHAPTER, ANCHORAGE, voiced appreciation for the proposed legislation and urged its' consideration on behalf of ASIA. She noted that ASIA helps to maintain a professional expertise amongst accountants. 2:08:08 PM Representative Kerttula noticed that the reprocosity requirement was being changed from five years to four years; she asked if that was the national standard. Representative Hawker stated it was. Representative Hawker MOVED to ADOPT Amendment #1. Co- Chair Meyer OBJECTED for purposes of discussion. Representative Hawker explained that the amendment was brought forward by Department of Law for a language clean up and does not make substantive changes. Page 10: Delete (b) and insert (c) Page 15, Line 6: Delete "required by" and Insert "under" Page 17, Line 21: Insert "[or suspension]" 2:10:25 PM Co-Chair Meyer WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment #1 was adopted. 2:10:46 PM Vice Chair Stoltze MOVED to REPORT CS HB 274 (FIN) out of Committee with individual recommendations and with the accompanying zero note. There being NO OBJECTION, it was so ordered. CS HB 274 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero note by the Department of Commerce, Community & Economic Development. 2:11:20 PM AT EASE: 2:11:36 PM RECONVENE: 2:17:11 PM