Bill Text: CA AB3251 | 2023-2024 | Regular Session | Amended
Bill Title: Accountancy.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed) 2024-07-01 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 13. Noes 0.) (July 1). Re-referred to Com. on APPR. [AB3251 Detail]
Download: California-2023-AB3251-Amended.html
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Amended
IN
Senate
June 25, 2024 |
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Amended
IN
Assembly
April 24, 2024 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 3251
| Introduced by (Principal coauthor: Senator Ashby) |
February 16, 2024 |
An act to amend Sections 5000, 5015.6, 5018, 5035.3, 5050, 5050.2, 5070.1, 5076, 5093, 5094, and 5096.21 of, and to add Sections 5062.3 and 5062.4 to, the Business and Professions Code, relating to professions and vocations.
LEGISLATIVE COUNSEL'S DIGEST
AB 3251, as amended, Committee on Business and Professions
Existing law establishes the California Board of Accountancy, which is within the Department of Consumer Affairs, and requires the board to license and regulate accountants in this state. Existing law authorizes the board to appoint an executive officer, as specified. Existing law repeals these provisions on January 1, 2025.
This bill would extend the repeal date for the above-described provisions until January 1, 2029.
Existing law requires an application to meet specified education, examination, and experience requirements to be qualified for licensure as a certified public accountant, including, except as specified, completion of a baccalaureate or higher degree conferred by a degree-granting university, college, or other institution of learning accredited by a regional or national accrediting
agency included in a list of these agencies published by the United States Secretary of Education under specified federal law.
This bill would instead require the university, college, or other institution of learning be accredited by an accrediting agency included in a list of these agencies published by the United States Secretary of Education under specified federal law.
Existing law authorizes an applicant for licensure as a certified public accountant to demonstrate compliance with the above-described educational requirement if the applicant’s institution mails the applicant’s official transcript or its equivalent together or separately with a signed letter, as specified.
This bill would instead authorize compliance to be demonstrated if the applicant’s institution sends electronically or provides the applicant’s official transcript or its equivalent together or separately with
a signed letter, as specified.
Existing law authorizes the board to prescribe, amend, or repeal rules of professional conduct by regulation, as specified. Existing law requires the board to mail a copy of the rules to every licensee at least 30 days before public hearing on the rules.
This bill would instead require the board to provide a copy of the rules to every licensee at least 30 days before public hearing on the rules.
Existing law requires a firm, in order to renew its registration in an active status or convert to an active status, to have a peer review report of its accounting and auditing practice accepted by a board-recognized peer review program, as specified.
This bill would require a board-recognized peer review program to utilize a secure web-based application to provide the board with objective information and data relating to the progress, participation, and results of a peer review and would require a firm to participate in the secure web-based application, as specified.
Existing law authorizes the board to establish a system for the placement of a license into a retired status, as specified. Existing law requires the board to deny an application to place a license in a retired status if the permit is subject to an outstanding order of the board, is suspended, revoked, or otherwise punitively restricted by the board, or is subject to disciplinary action.
This bill would instead require the board to deny an application if the permit is subject to an outstanding order of the board, is suspended, revoked, or is
subject to disciplinary action. The bill would specify that a permanent restricted practice order is not an outstanding order of the board for purposes of this requirement if the licensee has completed probation as part of any original disciplinary order. The bill would require a permanent restricted practice order to be reinstated if the license is restored from retired status to an active status, as specified.
Existing law requires a licensee to complete a minimum of 500 hours of experience in attest services to be authorized to sign reports on attest engagements.
This bill would specify that, for purposes of an enforcement action taken by the board, the licensee owners of an accounting firm are held to the same level of responsibility as a licensee that performs an attest engagement if an accounting firm provides attestation services and the licensee owners of the firm are not authorized to sign reports on attest
engagements. The bill would also require an accounting firm to make all working papers available to a licensee who signed a report on an attest engagement if the licensee is no longer employed by the accounting firm, as specified. By imposing new requirements on licensees, the violation of which is a crime, this bill would impose a state-mandated local program.
Existing law generally prohibits the practice of public accountancy in the state unless the person holds a valid permit to practice public accountancy issued by the board or holds a practice privilege, except as specified. Existing law, until January 1, 2011, specifies that these provisions do not prohibit a certified public accountant, a public accountant, or a public accounting firm lawfully practicing in another state from temporarily practicing in this state incident to practice in another state, subject to certain
conditions and limitations.
This bill would delete the above-described obsolete provisions.
provisions and would make conforming changes.
Existing law, on or before July 1, 2014, requires the board to convene a stakeholder group to consider whether existing law on the regulation of accountancy in this state is consistent with the board’s duty to protect the public, as specified.
This bill would delete the above-described obsolete provision.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 5000 of the Business and Professions Code is amended to read:5000.
(a) There is in the Department of Consumer Affairs the California Board of Accountancy, which consists of 15 members, 7 of whom shall be licensees, and 8 of whom shall be public members who shall not be licentiates of the board or registered by the board. The board has the powers and duties conferred by this chapter.(b) The Governor shall appoint four of the public members, and the seven licensee members as provided in this section. The Senate Committee on Rules and the Speaker of the Assembly shall each appoint two public members. In appointing the seven licensee members, the Governor shall appoint individuals representing a cross section of the accounting profession.
(c) This section shall remain in effect only until January 1,
2029, and as of that date is repealed.
(d) Notwithstanding any other law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature. However, the review of the board shall be limited to reports or studies specified in this chapter and those issues identified by the appropriate policy committees of the Legislature and the board regarding the implementation of new licensing requirements.
SEC. 2.
Section 5015.6 of the Business and Professions Code is amended to read:5015.6.
The board may appoint a person exempt from civil service who shall be designated as an executive officer and who shall exercise the powers and perform the duties delegated by the board and vested in the executive officer by this chapter.This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 3.
Section 5018 of the Business and Professions Code is amended to read:5018.
The board may by regulation, prescribe, amend, or repeal rules of professional conduct appropriate to the establishment and maintenance of a high standard of integrity and dignity in the profession. In addition to the requirements contained in Chapter 4 (commencing with Section 11370) of Part 1 of Division 3 of Title 2 of the Government Code, a copy of the rules shall be provided to every holder of a license under this chapter at least 30 days prior to a date named for a public hearing held for the purpose of receiving and considering objections to any of the proposed provisions. Every licensee of the California Board of Accountancy in this state shall be governed and controlled by the rules and standards adopted by the board.SEC. 4.
Section 5035.3 of the Business and Professions Code is amended to read:5035.3.
For purposes ofSEC. 4.SEC. 5.
Section 5050 of the Business and Professions Code is amended to read:5050.
(a) Except as provided in subdivision (b) of this section, in subdivision (a) of Section 5054, and in Section 5096.12, no person shall engage in the practice of public accountancy in this state unless the person is the holder of a valid permit to practice public accountancy issued by the board or a holder of a practice privilege pursuant to Article 5.1 (commencing with Section 5096).(b) Nothing in this chapter shall prohibit a person who holds a valid and current license, registration, certificate, permit, or other authority to practice public accountancy from a foreign country, and lawfully practicing therein, from temporarily engaging in the practice of
public accountancy in this state incident to an engagement in that country, provided that:
(1) The temporary practice is regulated by the foreign country and is performed under accounting or auditing standards of that country.
(2) The person does not hold themselves out as being the holder of a valid California permit to practice public accountancy or the holder of a practice privilege pursuant to Article 5.1 (commencing with Section 5096).
SEC. 6.
Section 5050.2 of the Business and Professions Code is amended to read:5050.2.
(a) The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), or otherwise restrict or discipline the holder of an authorization to practice under subdivision (b)(b) The board may administratively suspend the authorization of any person to practice under subdivision (b) or (c) of Section 5050, subdivision (a) of Section 5054, or
Section 5096.12 for any act that would be grounds for administrative suspension under Section 5096.4 utilizing the procedures set forth in that section.
SEC. 5.SEC. 7.
Section 5062.3 is added to the Business and Professions Code, to read:5062.3.
For purposes of an enforcement action taken by the board, an accounting firm providing attestation services where none of the licensee owners of the firm have authority to sign reports on attest engagements, the licensee owners shall be held to the same level of responsibility as the licensee or licensees who performed the engagement.SEC. 6.SEC. 8.
Section 5062.4 is added to the Business and Professions Code, to read:5062.4.
If a licensee is no longer employed with an accounting firm, the accounting firm shall make all working papers available to a licensee who signed a report on an attest engagement upon request by the board for purposes of conducting an investigation. The licensee shall return the working papers upon direction by the board and shall keep no copies.SEC. 7.SEC. 9.
Section 5070.1 of the Business and Professions Code is amended to read:5070.1.
(a) The board may establish, by regulation, a system for the placement of a license into a retired status, upon application, for certified public accountants and public accountants who are not actively engaged in the practice of public accountancy or any activity that requires them to be licensed by the board.(b) No licensee with a license in a retired status shall engage in any activity for which a permit is required.
(c) The board shall deny an applicant’s application to place a license in a retired status if the permit is subject to an outstanding order of the board, is suspended, revoked,
or is subject to disciplinary action under this chapter.
(1) For purposes of this subdivision, a permanent restricted practice order shall not be considered an outstanding order of the board provided the licensee has completed probation as part of any original discipline order.
(2) If a license is subject to a permanent restricted practice order at the time the board approves the license to be placed in a retired status, the permanent restricted practice order shall be reinstated if the license is restored from retired status to an active status and shall remain in effect until the board modifies or terminates the permanent restricted practice order.
(d) (1) The holder of a license
that was canceled pursuant to Section 5070.7 may apply for the placement of that license in a retired status pursuant to subdivision (a).
(2) Upon approval of an application made pursuant to paragraph (1), the board shall reissue that license in a retired status.
(3) The holder of a canceled license that was placed in retired status between January 1, 1994, and January 1, 1999, inclusive, shall not be required to meet the qualifications established pursuant to subdivision (e), but shall be subject to all other requirements of this section.
(e) The board shall establish minimum qualifications to place a license in retired status.
(f) The board may exempt the
holder of a license in a retired status from the renewal requirements described in Section 5070.5.
(g) The board shall establish minimum qualifications for the restoration of a license in a retired status to an active status. These minimum qualifications shall include, but are not limited to, continuing education and payment of a fee as provided in subdivision (h) of Section 5134.
(h) The board shall not restore to active or inactive status a license that was canceled by operation of law, pursuant to subdivision (a) of Section 5070.7, and then placed into retired status pursuant to subdivision (d). The individual shall instead apply for a new license, as described in subdivision (c) of Section 5070.7, in order to restore the individual’s license.
(i) At the time of application, if the applicant has a valid email address, the applicant shall provide that email address to the board.
SEC. 10.
Section 5076 of the Business and Professions Code is amended to read:5076.
(a) In order to renew its registration in an active status or convert to an active status, a firm, as defined in Section 5035.1, shall have a peer review report of its accounting and auditing practice accepted by a board-recognized peer review program no less frequently than every three years.(b) For purposes of this article, the following definitions apply:
(1) “Peer review” means a study, appraisal, or review conducted in accordance with professional standards of the professional work of a firm, and may include an evaluation of other factors in accordance with the requirements specified by the board in regulations. The peer review report shall be issued by an individual who has a valid and
current license, certificate, or permit to practice public accountancy from this state or another state and is unaffiliated with the firm being reviewed.
(2) “Accounting and auditing practice” includes any services that were performed in the prior three years using professional standards defined by the board in regulations.
(c) The board shall adopt regulations as necessary to implement, interpret, and make specific the peer review requirements in this section, including, but not limited to, regulations specifying the requirements for board recognition of a peer review program, standards for administering a peer review, extensions of time for fulfilling the peer review requirement, exclusions from the peer review program, and document submission.
(d) Nothing in this section shall prohibit the board from initiating an
investigation and imposing discipline against a firm or licensee, either as the result of a complaint that alleges violations of statutes, rules, or regulations, or from information contained in a peer review report received by the board.
(e) A firm issued a peer reviewed report with a rating of “fail,” as defined by the board in regulation, shall submit a copy of that report to the board. The board shall establish in regulation the time period that a firm must submit the report to the board. This period shall not exceed 60 days from the time the report is accepted by a board-recognized peer review program provider to the date the report is submitted to the board.
(f) (1) A board-recognized peer review program provider shall file a copy with the board of all peer review reports issued to California-licensed firms with a rating of “fail.” The board shall
establish in regulation the time period that a board-recognized peer review program provider shall file the report with the board. This period shall not exceed 60 days from the time the report is accepted by a board-recognized peer review program provider to the date the report is filed with the board. These reports may be filed with the board electronically.
(2) Nothing in this subdivision shall require a board-recognized peer review program provider, when administering peer reviews in another state, to violate the laws of that state.
(g) The board shall define a peer review report rating of “fail” in regulation.
(h) Any requirements imposed by a board-recognized peer review program on a firm in conjunction with the completion of a peer review shall be separate from, and in addition to, any action by the board
pursuant to this section.
(i) Any peer review report with a rating of “fail” submitted to the board in conjunction with this section shall be collected for investigatory purposes.
(j) Nothing in this section affects the discovery or admissibility of evidence in a civil or criminal action.
(k) Nothing in this section requires any firm to become a member of any professional organization.
(l) A peer reviewer shall not disclose information concerning licensees or their clients obtained during a peer review, unless specifically authorized pursuant to this section, Section 5076.1, or regulations prescribed by the board.
(m) A board-recognized peer review program provider shall utilize a secure web-based application, such as Facilitated State Board Access, to provide the board with objective information and data relating to the progress, participation, and results of a peer review, including peer review reports, peer review status, and correspondence between the board-recognized peer review provider and the firm.
(1) Firms shall participate in the secure web-based application utilized by the board-recognized peer review provider.
(2) Firms shall authorize the board access to the secure web-based application and authorize the board-recognized peer review program provider to
comply with this subdivision.
SEC. 8.SEC. 11.
Section 5093 of the Business and Professions Code is amended to read:5093.
(a) To qualify for the certified public accountant license, an applicant who is applying under this section shall meet the education, examination, and experience requirements specified in subdivisions (b), (c), and (d), or otherwise prescribed pursuant to this article. The board may adopt regulations as necessary to implement this section.(b) (1) An applicant for admission to the certified public accountant examination under this section shall present satisfactory evidence that the applicant has completed a baccalaureate or higher degree conferred by a degree-granting university, college, or other institution of learning accredited by an accrediting agency
included in a list of these agencies published by the United States Secretary of Education under the requirements of the federal Higher Education Act of 1965 as amended (20 U.S.C. Sec. 1001 et seq.), or meeting, at a minimum, the standards described in Section 5094. The total educational program shall include a minimum of 24 semester units in accounting subjects and 24 semester units in business-related subjects. This evidence shall be provided at the time of application for admission to the examination, except that an applicant who applied, qualified, and sat for at least two subjects of the examination for the certified public accountant license before May 15, 2002, may provide this evidence at the time of application for licensure.
(A) An applicant enrolled in a program at an institution as described in this paragraph that grants
conferral of a baccalaureate degree upon completion of the 150 semester units required by paragraph (2) of this subdivision may satisfy the requirements of this paragraph if the applicant’s institution sends electronically or delivers the applicant’s official transcript or its equivalent together or separately with a letter signed by the institution’s registrar, or its equivalent, directly to the board pursuant to subdivision (c) of Section 5094. The letter shall include all of the following:
(i) A statement that the applicant is enrolled and in good standing in a program that will result in the conferral of a baccalaureate degree upon completion of either a master’s degree or the 150 semester units required by paragraph (2) of this subdivision.
(ii) A statement that the
applicant has completed all requirements, including general education and elective requirements, for a baccalaureate degree and the only reason the college or university has yet to confer the degree is because the applicant is enrolled in a program that confers a baccalaureate degree upon completion of either a master’s degree or the 150 semester units required by paragraph (2) of this subdivision.
(iii) The date on which the applicant met all of the college’s or university’s requirements for conferral of a baccalaureate degree.
(B) The total educational program for an applicant described in subparagraph (A) shall include a minimum of 24 semester units in accounting subjects and 24 semester units in business-related subjects. This evidence shall be provided at the time of application for
admission to the examination, except that an applicant who applied, qualified, and sat for at least two subjects of the examination for the certified public accountant license before May 15, 2002, may provide this evidence at the time of application for licensure.
(2) An applicant for issuance of the certified public accountant license under this section shall present satisfactory evidence that the applicant has completed at least 150 semester units of college education, including a baccalaureate or higher degree conferred by a college or university, meeting, at a minimum, the standards described in Section 5094, the total educational program to include a minimum of 24 semester units in accounting subjects, 24 semester units in business-related subjects, and, after December 31, 2013, shall also include a minimum of 10 units of ethics study
consistent with the requirements set forth in Section 5094.3 and 20 units of accounting study consistent with the regulations promulgated under subdivision (c) of Section 5094.6. This evidence shall be presented at the time of application for the certified public accountant license. Nothing in this paragraph shall be deemed inconsistent with Section 5094 or 5094.6. Nothing in this paragraph shall be construed to be inconsistent with prevailing academic practice regarding the completion of units.
(c) An applicant for the certified public accountant license shall pass an examination prescribed by the board.
(d) (1) The applicant shall show, to the satisfaction of the board, that the applicant has had one year of qualifying experience. This experience may
include providing any type of service or advice involving the use of accounting, attest, compilation, management advisory, financial advisory, tax, or consulting skills.
(2) To be qualifying under this section, experience shall have been performed in accordance with applicable professional standards. Experience in public accounting shall be completed under the supervision or in the employ of a person licensed or otherwise having comparable authority under the laws of any state or country to engage in the practice of public accountancy. Experience in private or governmental accounting or auditing shall be completed under the supervision of an individual licensed by a state to engage in the practice of public accountancy.
(3) Notwithstanding paragraph (2), the board may, by regulation, allow
experience in academia to be qualifying under this section.
(e) Applicants completing education at a college or university located outside of this state, meeting, at a minimum, the standards described in Section 5094, shall be deemed to meet the educational requirements of this section if the board determines that the education is substantially equivalent to the standards of education specified under this chapter.
(f) An applicant who has successfully passed the examination requirement specified under Section 5082 on or before December 31, 2013, may qualify for the certified public accountant license without satisfying the 10 semester units of study set forth in Section 5094.3 or 20 semester units of accounting study consistent with the regulations promulgated under Section 5094.6, if
the applicant completes all other requirements for the issuance of a license on or before December 31, 2015.
SEC. 9.SEC. 12.
Section 5094 of the Business and Professions Code is amended to read:5094.
(a) In order for education to be qualifying, it shall meet the standards described in subdivision (b) or (c) of this section.(b) At a minimum, education shall be from a degree-granting university, college, or other institution of learning accredited by an accrediting agency included in a list of these agencies published by the United States Secretary of Education under the requirements of the Higher Education Act of 1965 as amended (20 U.S.C. Sec. 1001 et seq.).
(c) Education from a college, university, or other institution of learning located outside the United States may be qualifying provided it is deemed by the board to be
equivalent to education obtained under subdivision (b). The board may require an applicant to submit documentation of their education to a credential evaluation service approved by the board for evaluation and to cause the results of this evaluation to be reported to the board in order to assess educational equivalency.
(d) The board shall adopt regulations specifying the criteria and procedures for approval of credential evaluation services. These regulations shall, at a minimum, require that the credential evaluation service (1) furnish evaluations directly to the board, (2) furnish evaluations written in English, (3) be a member of the American Association of Collegiate Registrars and Admissions Officers, NAFSA: Association of International Educators, or the National Association of Credential Evaluation Services, (4) be used by
accredited colleges and universities, (5) be reevaluated by the board every five years, (6) maintain a complete set of reference materials as specified by the board, (7) base evaluations only upon authentic, original transcripts and degrees and have a written procedure for identifying fraudulent transcripts, (8) include in the evaluation report, for each degree held by the applicant, the equivalent degree offered in the United States, the date the degree was granted, the institution granting the degree, an English translation of the course titles, and the semester unit equivalence for each of the courses, (9) have an appeal procedure for applicants, and (10) furnish the board with information concerning the credential evaluation service that includes biographical information on evaluators and translators, three letters of references from public or private agencies, statistical information on the number of applications
processed annually for the past five years, and any
additional information the board may require in order to ascertain that the credential evaluation service meets the standards set forth in this subdivision and in any regulations adopted by the board.
SEC. 10.SEC. 13.
Section 5096.21 of the Business and Professions Code is amended to read:5096.21.
(a) (1) On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the board’s duty to protect the public, pursuant to Section 5000.1, the board shall require out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by Section 5096.22.(2) A state for which the board has made a determination pursuant to paragraph (1) to require
individuals licensed from that state to file a notification form and pay the applicable fees may subsequently be redetermined by the board, by majority vote of the board at a regularly scheduled meeting, to allow individuals from that state to practice in this state pursuant to a practice privilege as described in Section 5096.
(b) The board shall, at minimum, consider the following factors when making a determination or redetermination pursuant to subdivision (a):
(1) Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2) Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an internet website to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3) Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(4) Whether the state has in place and is operating pursuant to enforcement practices substantially equivalent to the current best practices guidelines adopted by the National Association of State Boards of Accountancy provided those guidelines have been determined by the board to meet or
exceed the board’s own enforcement practices.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
