Sunday, May 3, 2009

California Accountancy Board: Proposed Legislation And Regulations Affecting Accountants

2009 Proposed Legislation.
This is a busy time of the year for proposed legislation, regulations and rules relating to certified public accountants and the California Board of Accountancy (CBA). Here are recent developments:

Continuing Education. The CBA recently held a regulatory hearing on proposed amendments to the Continuing Education Regulations. Under the proposal, California CPAs are still required to complete 80 hours of continuing education every two years, but the regulations will require completion of a minimum number of hours annually. CPAs renewing an active license after December 31, 2011, must complete a minimum of 20 hours annually with at least 12 of the 20 hours in technical subject areas. The CBA will require that licensees complete two hours of ethics focused on regulatory and statutory review every six years. Additionally, four hours of ethics will be required every renewal period.

Proposed Legislation Re: Educational Requirements
Senate Bill 691 (Yee, Niello, Ma) would require all candidates entering the profession after January 1, 2014, meet to the Uniform Accountancy Act’s 150-hour educational requirement (i.e., a bachelor’s degree plus 30 units, including 24 semester hours or units in business and 24 hours in accounting). This legislation would allow current and future California CPAs to represent the needs of taxpayers and clients with interests in other states.

Inactive License Status Disclosure
Assembly Bill 117 (Niello, Ma) would require CPAs with inactive licenses to disclose that fact when using the CPA designation. The CBA currently allows CPAs employed by private business or government to use the title CPA on their business cards, résumés and in other business communications even if their license is “inactive.” CPAs in industry and government are often employed in the finance and accounting department of the business or government agency and involved in the preparation of financial statements for audit or in obtaining financing from banks or investors. AB 117 would require that CPAs with inactive licensees disclose that fact when using the CPA title by placing the word “(inactive)” immediately after CPA on business cards, stationery, résumés or other business communications. AB 117 has already passed the Assembly Business and Professions Committee.

Peer Review
Assembly Bill 138 (Hayashi) would enact a mandatory peer review requirement for California firms providing any audit, review or compilation services. The mandate would be phased in beginning in 2010. Peer review is already mandatory in most states, most recently in New York.

Taxpayer Privilege Sunset Extension
Assembly Bill 129 (Ma) introduces urgency legislation to re-enact the taxpayer confidentiality provisions for enrolled agents and CPAs that expired December 31, 2008. This privilege was enacted in 2000 and can be asserted in non-criminal tax issues that do not involve abusive tax shelters and conforms to Internal Revenue Code provisions.

Fiduciaries Bureau Exemption
Assembly Bill 276 (Hayashi) would clarify the exemption from licensing by the Professional Fiduciaries Bureau for enrolled agents and CPAs who provide ancillary fiduciary services to clients. The Fiduciaries Bureau was created recently to require registration from individuals who assume control of the financial and medical affairs of unrelated individuals. CPAs and enrolled agents are exempted from registration as long as they are acting within the scope of their practice. However, the Fiduciaries Bureau recently adopted the position that enrolled agents are required to register with it because fiduciary services are not within their scope of practice. This is presently disputed since the intent of the legislation was to provide an exemption for CPAs and enrolled agents as long as they were not holding themselves out as professional fiduciaries.

The text of the bills, as well as additional legislative information, can be found on the Internet at

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses (including accountants) in civil, business, administrative and criminal proceedings.


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