|
|
Capitol Beat: Welcome 150 HoursCaliforna CPA November 2009Governor Signs Four Bills Critical to Profession By Bruce C. Allen & Jeannie Tindel Gov. Schwarzenegger signed the four bills that CalCPA sponsored and supported. SB 819 (Yee, Niello, Ma): Changes California law so CPA candidates applying for licensure after Jan. 1, 2014, will have to meet the national standard of 150 semester hours of education prior to obtaining their license. Currently, all candidates are allowed to sit for the Uniform CPA Exam after completing a bachelor’s degree that includes 24 semester units in accounting and 24 units in business. In California, candidates then have the choice of Pathway 1, licensure with 120 units and two years of experience; or Pathway 2 licensure with 150 units and one year of experience. SB 819 will sunset Pathway 1 effective Jan. 1, 2014. By adopting this national standard, California should be considered a substantially equivalent state for purposes of mobility. This would allow current California CPAs to provide services in most other states without first notifying the affected state board of accountancy and without paying a fee to the state. California CPAs would be subject to discipline by the other state and required to follow that state’s laws. Many states only require that the out-of-state CPAs register with the other state board of accountancy when the CPA is providing audit services to an entity headquartered in that other state. A few states also have other rules, so check the state’s law prior to providing services. Out-of-state CPAs providing services in California are still required to register with the California Board of Accountancy when providing any services in California other than preparation of a personal or estate tax return, or providing temporary services incidental to an engagement in another state. As with all state laws, out-of-state CPAs are not allowed to open an office in California or become a practicing CPA resident of this state unless they are licensed by the CBA. Paul Regan, CalCPA’s Government Relations Committee chair, expressed appreciation of this accomplishment by stating that the move means “California CPAs will no longer be treated as second-class citizens in the national marketplace. SB 819 makes life much better for those of us engaged in daily interstate transactions and will help us serve our clients much more effectively.” California’s law is unique in that additional units must be related to improving the competence of practitioners and 10 of the units must be devoted to ethics. Advisory committees are being formed to define qualifying subjects. Fleshing out the requirements will require creativity and flexibility on the part of the academicians, students and the CPA community. AB 138 (Hayashi): Requires mandatory peer reviews for firms and sole practitioners providing audits, reviews and compilations. The bill is effective Jan. 1, 2010, but firms will not be required to provide evidence of completion of a peer review until the following year. Those firms and sole practitioners with the last digits of the license number 1-33 that provide audits, reviews or compilations will be required to submit to the CBA no later than July 1, 2011, evidence of completion of a peer review within the previous three years. All other affected firms and individuals will be phased in over the next two years. By the third year, all firms will have been reviewed. Since peer review already is required for many engagements and for AICPA membership, it is anticipated that the mandate will have little impact on the population. However, it does ensure that everyone is operating on a level playing field. Peer review is one more consumer protection and provides an incentive for firms to stay up to date on changing standards. The CBA has been developing emergency regulations so the peer review program can begin in January. The first step will be approving peer review administrators. CalCPA administers the AICPA’s peer review program for firms with their main offices in the state. Additional information is available online. To participate in the program, you need to register with the program, but individuals wanting to know more about peer review and the process prior to registering are invited to review the online resources that explain the program and process. The CBA, which sponsored the CalCPA-supported legislation, is preparing advisories for CPAs and consumers about peer review. Peer review is mandated by state law in more than 40 other states. Substandard reports will be sent to the CBA for possible enforcement, but it is not anticipated that during the initial phases any disciplinary action would be taken. Most other states that have a referral requirement only refer after the second substandard report. AB 117 (Niello ): Requires, effective Jan. 1, 2010, that CPAs with inactive licenses indicate that fact whenever they use the CPA designation. They will be required to use John Smith, CPA (inactive) unless they renew as an active licensee by completing continuing education. AB 129 (Ma): Reinstates the taxpayer privilege for those taxpayers using the services of CPAs and enrolled agents consistent with the Internal Revenue Code Sec. 7525 enacted in 1998 as part of the Taxpayer Bill of Rights. IRC Sec. 7525 allows for limited confidentiality for communications between tax practitioners and their clients as defined in the law. The confidentiality is limited to tax advice, other than advice regarding tax shelters, and applies only in non-criminal situations. Bruce C. Allen is CalCPA’s director of government relations. Jeannie Tindel is CalCPA’s director of legislation. |