Legislature(2003 - 2004)

04/25/2003 03:30 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 242-EXAM FOR CPA'S                                                                                                         
                                                                                                                                
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE  BILL  NO.  242,  "An  Act  relating  to  licensing  of                                                               
certified public accountants."                                                                                                  
                                                                                                                                
Number 1150                                                                                                                     
                                                                                                                                
REPRESENTATIVE MIKE HAWKER, Alaska  State Legislature, sponsor of                                                               
HB 242, noted  that he'd once been a  certified public accountant                                                               
(CPA).   He explained that  the bill  was brought forward  at the                                                               
request  of the  Alaska Society  of Certified  Public Accountants                                                               
(ASCPA)  as  well  as the  Division  of  Occupational  Licensing.                                                               
Relating to  testing for CPAs,  the bill is necessary  because of                                                               
changes  made  by  the American  Institute  of  Certified  Public                                                               
Accountants   (AICPA),  which   has  administered   a  nationwide                                                               
standardized test for  CPAs since the early 1960s.   This uniform                                                               
examination has  been adopted  by all  jurisdictions in  the U.S.                                                               
The  AICPA  has  changed  the   format,  however,  and  now  will                                                               
administer the  exam via  computer using a  keyboard; it  will be                                                               
given four times  a year, whereas the  old paper-and-pencil exams                                                               
were  given twice  a year.   In  addition, there  are some  other                                                               
changes that he characterized as "a technical issue."                                                                           
                                                                                                                                
REPRESENTATIVE  HAWKER told  members  that  Alaska's statute  was                                                               
written in  the early  1960s and  says there  shall be  a written                                                               
examination.   Thus  the Division  of Occupational  Licensing was                                                               
concerned  that it  implied  a  paper-and-pencil examination  and                                                               
that a computerized examination  wouldn't qualify.  Therefore, on                                                               
page  1,  line 4,  the  bill  deletes  the requirement  that  the                                                               
examination be written.  Furthermore,  on page 1, lines 7-11, the                                                               
bill [specifies that the board  shall use] "the Uniform Certified                                                           
Public  Accountant  Examination  of  the  American  Institute  of                                                           
Certified  Public  Accountants"  and  "the  institute's  advisory                                                       
grading service, if available."                                                                                                 
                                                                                                                                
REPRESENTATIVE  HAWKER  explained   that  Alaska's  statute  also                                                               
codifies   the  frequency   of   the   exam,  the   reexamination                                                               
procedures, and  the standards for passing  the examination; this                                                               
is to  mirror criteria established by  the AICPA.  The  ASCPA and                                                               
the Division of Occupational Licensing  have requested that those                                                               
criteria be  put into regulation instead;  furthermore, those are                                                               
inconsistent with  the new  computerized system.   Thus  the bill                                                               
deletes them from statute, with  the proviso that the Division of                                                               
Occupational  Licensing  work with  the  [Alaska  State Board  of                                                               
Public  Accountancy] to  put  those  provisions into  regulation.                                                               
There  also is  a transitional  period [in  Section 4];  that was                                                               
taken  from  language  suggested  by the  AICPA  to  explain  and                                                               
provide for  a transition from  the current  twice-a-year testing                                                               
to   the   four-times-a-year   testing,   which   has   different                                                               
requirements for passing the test.                                                                                              
                                                                                                                                
Number 1418                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  inquired about the standard  for "good moral                                                               
character" on page 2, line 16.                                                                                                  
                                                                                                                                
REPRESENTATIVE  HAWKER  recalled  that  when  he  applied  for  a                                                               
license in  Alaska he  had to  sign an  affidavit that  allowed a                                                               
background  examination and  had  to  complete "a  one-inch-thick                                                               
course and  about a  half-inch-thick examination  in professional                                                               
ethics."                                                                                                                        
                                                                                                                                
Number 1448                                                                                                                     
                                                                                                                                
CHAIR ANDERSON suggested it is  similar to the ethics examination                                                               
required as  of 1998 of  a person  who has completed  law school,                                                               
which must be passed in addition to the bar exam.                                                                               
                                                                                                                                
REPRESENTATIVE  LYNN  said it  is  similar  in real  estate,  but                                                               
questioned whether ethics can be taught.   "You either have it or                                                               
you don't have it," he remarked.                                                                                                
                                                                                                                                
Number 1464                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG surmised  that the  AICPA has  its own                                                               
grading service  available.   He asked  whether the  language "if                                                               
available" is necessary on page 1, line 11.                                                                                     
                                                                                                                                
REPRESENTATIVE HAWKER answered that  the Uniform Certified Public                                                               
Accountant Examination  [specified in  the bill]  is a  term that                                                               
describes the examination  given by the AICPA; it  isn't a change                                                               
[except that  the words aren't  capitalized in the statute].   He                                                               
explained that  the exams are  taken and  administered nationwide                                                               
by the local accounting organizations,  but grading is consistent                                                               
and centralized in one location  in the country.  Indicating he'd                                                               
discussed  the  wording  "if  available"  with  the  Division  of                                                               
Occupational Licensing, he said:                                                                                                
                                                                                                                                
     The sense was that we'd  have a statute here that would                                                                    
     ...  give  a  priority   to  require  that  institute's                                                                    
     examination.  If something  highly unusual happened and                                                                    
     that institute  ceased to function,  we would  still be                                                                    
     in  the   position  of  being  able   to  continue  the                                                                    
     licensing  process  for  prospective  accountants  with                                                                    
       whatever ... nationalized examination process may                                                                        
     [become] available.                                                                                                        
                                                                                                                                
Number 1546                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO, calling it a  minor detail, said there is a                                                               
difference, to him, between a  passing score and a passing grade.                                                               
For example, there can be grades of A,  B, C, D, and F, with C as                                                               
a passing  grade; however,  it can  be more  specific.   He asked                                                               
whether, the intention  is to have a passing score  rather than a                                                               
passing grade.                                                                                                                  
                                                                                                                                
REPRESENTATIVE HAWKER answered that  [the bill] uses the language                                                               
and semantics  that are  "customary and  normal in  the certified                                                               
public accounting world."                                                                                                       
                                                                                                                                
Number 1583                                                                                                                     
                                                                                                                                
STEVEN R.  TAROLA, CPA,  Chairman, Alaska  State Board  of Public                                                               
Accountancy, testified on behalf of  the board in full support of                                                               
HB 242.   He reported that the board's mission  is to protect the                                                               
public  interest  by ensuring  that  only  qualified persons  are                                                               
licensed  and  that  appropriate   standards  of  competency  and                                                               
practice   are   established   and    enforced.      Primary   is                                                               
administration of the uniform CPA  exam, which a person must pass                                                               
in order  to obtain  a license to  practice as a  CPA.   There is                                                               
only one exam available, which  is the four-part exam prepared by                                                               
the AICPA and  used in all 50  states as well as  the District of                                                               
Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.                                                                       
                                                                                                                                
MR.  TAROLA  agreed that  the  current  paper-and-pencil exam  is                                                               
being  discontinued  and  replaced  by  a  computerized  version,                                                               
noting that  the "roll-out date" is  no later than May  2004.  He                                                               
also  agreed  that  the  bill's  purpose  is  to  amend  Alaska's                                                               
statutes to accommodate the computerized  exam.  He added that it                                                               
provides  transitioning to  grandfather  in  candidates who  have                                                               
successfully passed  a portion of the  paper-and-pencil exam when                                                               
HB  242 becomes  law.    He said  the  new  computerized exam  is                                                               
available  "numerous times  a year"  and agreed  that without  HB
242, the  board would have no  legal means to administer  the new                                                               
computerized version.  He urged support of the bill.                                                                            
                                                                                                                                
Number 1652                                                                                                                     
                                                                                                                                
DAN F.  KENNEDY, CPA, MBA,  Member, Alaska State Board  of Public                                                               
Accountancy,  thanked  legislators  - Representative  Hawker,  in                                                               
particular - for supporting the  CPA profession on this important                                                               
change.  He requested that the committee support the bill.                                                                      
                                                                                                                                
CHAIR ANDERSON asked  whether anyone else wished to  testify.  He                                                               
then closed public testimony.                                                                                                   
                                                                                                                                
Number 1706                                                                                                                     
                                                                                                                                
REPRESENTATIVE   ROKEBERG   began    discussion   of   Conceptual                                                               
Amendment 1.    He referred  to  the  transitional provisions  in                                                               
Section  4, noting  that  on [page  2, lines  26-28]  there is  a                                                               
formula, [the  second part  of which] relates  to "the  number of                                                               
opportunities the applicant  had remaining on the  day before the                                                               
effective  date  of this  Act  multiplied  by  six months".    An                                                               
additional  provision on  lines 30-31  talks about  the effective                                                               
date.  He asked why there is no effective date for the bill.                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  answered that this  needs to be  in effect                                                               
by the end of  the first quarter of 2004.   He offered his belief                                                               
that  the automatic  passage of  this bill  into law  would allow                                                               
adequate time.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG  pointed  out that  the  effective  date                                                               
would be  uncertain because  of the  time it takes  a bill  to be                                                               
engrossed, transmitted to the governor,  and then taken up by the                                                               
governor.   It  could be  August 17  or August  28, for  example,                                                               
which  would make  the calculations  for dates  complicated.   He                                                               
noted that  if there is  no effective date, it  becomes effective                                                               
90  days after  signature [by  the  governor].   He suggested  it                                                               
would be  preferable to have a  date that begins on  the first of                                                               
some month.                                                                                                                     
                                                                                                                                
REPRESENTATIVE   HAWKER   indicated  legislative   drafters   had                                                               
informed him that it was  unnecessary, but he said Representative                                                               
Rokeberg  had made  a clear  and convincing  argument.   Agreeing                                                               
with amendment of the bill, he recommended January 1, 2004.                                                                     
                                                                                                                                
Number 1809                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  moved to  adopt Conceptual  Amendment 1,                                                               
to add a  new Section 5 such  that this Act shall  take effect on                                                               
January 1, 2004.                                                                                                                
                                                                                                                                
REPRESENTATIVE   HAWKER    asked   whether   that    includes   a                                                               
corresponding title amendment.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG agreed that is a good idea.                                                                             
                                                                                                                                
CHAIR  ANDERSON   asked  whether  there  was   any  objection  to                                                               
Conceptual Amendment  1, to adopt  a new Section 5  that provides                                                               
an effective date of January  1, 2004, with a corresponding title                                                               
change.   There being  no objection,  Conceptual Amendment  1 was                                                               
adopted.                                                                                                                        
                                                                                                                                
Number 1856                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM moved to report  HB 242, as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying zero  fiscal note.   There being no  objection, CSHB
242(L&C) was reported from the  House Labor and Commerce Standing                                                               
Committee.                                                                                                                      
                                                                                                                                

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