The current Public Accountancy law has been around since 1975. For some reason the Arkansas State Board of Public Accountancy now wants to increase its jurisdiction and powers and to increase fines to $10,000 on people for engaging in conduct that still today does not require a license and is not subject to their regulation.
I can’t think of an instance in which a licensing board decided it had too much power and wanted to give some back. Instead, licensing boards tend to grow their power and jurisdiction over time.
HB1189, which broadens the scope of the accountancy licensing law, quickly made its way through the House of Representatives. It is ironic that its passage occurred at a time when the House is also debating a bill to give more economic freedom concerning the right to engage in a lawful occupation (HB1158). The bill is now in the Arkansas Senate.
To some this bill may be construed as a turf war between the board and tax attorneys. But actually it affects anyone doing “accounting” work—from the new technical college graduate to those with years of accounting experience working to meet the needs of their small business owner clients. The Accountancy board’s bill is so broad that it will penalize even those engaged in helping non-profit organizations with their taxes or accounting work at no charge. These are the kind of individuals who are likely to find themselves facing a $10,000 fine from the board.
So what is the big problem faced by Arkansas State Board of Public Accountancy that needs to be addressed this session? I for one haven’t figured that out. If the Arkansas State Board of Public Accountancy has been having a problem (or just decided it would be a really cool idea to have more power), you would think the board would have been eager to have a full public discussion on both any problem and the least restrictive way to address the problem.
The House and Senate Committees on State Agencies & Governmental Affairs met many times in 2014. Their meetings would have provided a perfect opportunity to bring up any problems the board might have been encountering and their ideas on expanding their powers and jurisdiction. So when did Accountancy board bring up this issue? A review of the agendas of all meetings of both the House and Senate Committees on State Agencies & Governmental Affairs in 2014 shows that the Accountancy Board never brought the issue to the committees. It seems a bit unusual but HB1189 did not go through the House State Agencies & Governmental Affairs this legislative session, instead it was assigned to the the House Committee on Insurance & Commerce. So,was the issue discussed in the Insurance & Commerce committee during 2014? Nope.
In accounting talk that means the Accountancy Board has a “zero balance” on bringing the issue before the interim committees. Instead, the issue didn’t come up until this legislative session when opposition would be limited and there would be little time to discuss whether this is the least restrictive way to address issues.
Since, traditionally the General Assembly has been cautious about scope of practice bills here are some questions for which I would want to know the answer:
- What problems or risks to the public are being addressed by each section of the bill?
- How has the public been harmed? Examples?
- Is this the least restrictive way of addressing the issues?
- Who would be affected by the bill? Have you discussed the issue with them or their boards?
- Are the issues so pressing that they need to be addressed this session or could the issues be referred to interim study?
- How was it decided that the acts mentioned here are so egregious to warrant a $10,000 file? And what authority does this Board hold over the public to impose such a fine on the offender?
If you would like to learn more about the accountancy bill here is a link to the bill (HB1189 and its status), and here are some noteworthy provisions in the bill:
- The current law defines the “practice of public accounting” as the performance of “attest” services as defined in this section or the performance of “professional services.” What the bill does is substantially add to the services considered as “attest services” and brings more under the board’s control that are not now considered to be the sole domain of CPAs. (See page 2, lines 6-8)
- It is interesting that the bill dramatically increases penalties on non-licensees (from $1,000 to $10,000) per violation but retains the ($1,000) penalty when the violation is by a licensee. (Page 2, lines 10-16)
- There are many professionals who achieve a CPA license but end up in an area of business where they do not need to retain the license and do not hold themselves out as being CPAs. But, the bill appears to try to scare these people back into carrying a CPA license. A firm doing some kind of accounting or auditing services is prohibited from employing a person with an inactive CPA license to do some kind of accounting or auditing work unless the person agrees to restore their licensed status within a year. Never mind that the person is not holding themselves as a licensed CPA or doing work requiring a license. (Page 4, lines 27 – 32)