PUBLIC HEARING HB 2195

TAPES 25- A-B, 26 A

HOUSE REVENUE COMMITTEE

FEBRUARY 1, 2005   1:30 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Tom Butler, Chair

                                                Rep. Vicki Berger, Vice-Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel                                       

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson

                                                Rep. Chuck Riley

                       

 

Witnesses Present:                      Carol Reves, Administrator, OR Board of Accountancy

                                                Alan Steiger, Certified Public Accountant

                                                Sandra Suran, private management consultant

 

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 25, SIDE A

002

Chair Butler

Calls meeting to order at 1:34 p.m.

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILL 2195

 

 

 

010

Paul Warner

Gives overview of bill (Exhibit 1), overview of the Oregon Board of Accountancy (Exhibit 2), and discusses summary handout from the Committee on Business, Labor and Consumer Affairs (Exhibit 3).

 

 

 

055

Carol Reves

Asks to include the -1 amendment in her testimony. Testifies against the bill for two reasons: lack of “cease and desist” wording in current statute, and the need for clarity regarding inactive licensees. Currently the only remedy against a person in violation (unlicensed or expired license) is a civil action, a costly action that most state agencies do not often use. The board advocates the addition of the ”cease and desist” authority because it will allow them  to order those people violating accountancy requirements to stop their actions. The cease and desist authority is enough grounds to go in front of a civil court to obtain a preliminary injunction.

 

085

Reves

Continues testimony. Discusses the inactive status of licensees. Requests that the word “retired” be removed from the statute for clarification purposes.

 

110

Reves

Testifies in support of the -1 amendment because peer review (the subject of the amendment) involves the protection of the public. Discusses the use of financial statements in the business world. The profession and the board feel that the need for public protection is much higher when there is a third party reliance on the services performed by licensed accountants. Discusses confidentiality of peer review and concern by board that the peer review reports that are now confidential would be made public.

 

 

 

165

Chair Butler

Comments about why financial statements are kept confidential. Has never seen a peer review report that contained anything “super-confidential” that contained specific financial information about clients.

 

 

 

175

Reves

Responds that review reports generally do not contain confidential financial information. However, at the time of the passage of the statute, the board felt that the peer reviewers may not be able to do a candid review if they felt they were part of a disciplinary role. However, current standards of accounting transparency require that the peer review reports be made public.

 

 

 

211

Chair Butler

Asks if there are other states requiring public disclosure of peer review reports.

 

 

 

213

Reves

Responds that there are some states with less restrictive or less open public records laws that do not disclose their peer review reports. There are also some states that do not perform peer reviews. Specific state information not provided.

 

 

 

245

Rep. Komp

Asks for definition of “sunshine law.”

 

 

 

247

Chair Butler

Defines the law as a law aimed at opening up government procedures, e.g., peer review, to the public.                     

 

 

 

299

Rep. Berger

Asks about “active/inactive” term referred to earlier. What is the percentage of active/inactive CPA’s? Also, what is the length of time a CPA can be away before being required to become recertified?

 

 

 

313

Reves

Responds that in OR there are 5600 active licensed CPA’s and 1500 inactive.  Reinstatement requirements depend on the length of time that a CPA is inactive. Provides details on relicensing requirements.

 

 

 

350

Rep. Berger

Asks about the “cease and desist” authority. What is the source of this authority?

 

 

 

366

Reves

Responds that “cease and desist” is the lowest level of sanction a board or an agency imposes against a member. It allows the board to take a more meaningful action against someone who has nothing to risk, e.g., an unlicensed accountant.

 

 

 

404

Rep. Berger

Follow-up question. Does this come out of an increased perception of a problem or is this language pre-emptive?

 

 

 

408

Reves

Responds that while it is not currently a serious problem, it gives the board a stronger sanction against potential violators of the board’s certification policies.

 

 

 

TAPE 26 SIDE A

019

Rep. Esquivel

Asks about accountancy board’s current authority to impose a significant fine or other civil penalties.

 

 

 

024

Reves

Responds that the board wants to have stronger authority to enforce sanctions by adding the  “cease and desist” language to the statute. 

 

 

 

041

Rep. Galizio

Asks for clarification of “about to engage in” terminology.

 

 

 

043

Reves

Responds that this language is taken from other state agencies that have similar enforcement situations. For example, the language would apply if the board learns of an individual’s intent to violate the regulations. Discusses an individual’s rights to an administrative hearing.

 

 

 

074

Rep. Boquist

Asks for specific example of a person “about to engage in.”

 

 

 

076

Reves

Responds that it happens frequently in advertisements for public accounting services in which a company advertises “certified CPA’s on staff.” The board then investigates whether the individuals are indeed licensed.

 

 

 

080

Chair Butler

Adds another example: when school boards advertise for a [project] bid,  bidders check the box on the form that they are a certified CPA in Oregon. This information needs to be verified before the contract is signed.

 

 

 

094

Rep. Olson

Clarifies that the administrative hearing is a lower level than a civil matter.

 

 

 

101

Alan Steiger

Reads from written testimony against confidentiality of peer review in House Bill 2195. Supports the amendment -1 that requires transparency of peer review reports.

 

 

 

220

Sandra Suran

Testifies against House Bill 2195 regarding confidentiality of peer review. She supports the need for greater transparency as stated in the amendment -1.

 

 

 

265

Suran

Gives historical overview of review programs from written testimony (Exhibit 7).

 

 

 

CLOSES PUBLIC HEARING FOR HB 2195

 

 

 

OPENS WORK SESSION FOR HB 2195

 

 

 

401

Rep. Berger

MOTION: MOVES THE ADOPTION OF THE HB 2195 -1 AMENDMENT.

 

 

 

420

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, GALIZIO, KOMP, OLSON, BUTLER.

 

430

Chair Butler

Asks for further discussion on House Bill 2195-1.

 

TAPE 25 SIDE B

005

Rep. Boquist

Supports the bill, but expresses concern about inserting a clause pertaining to a situation “about to happen”.

 

 

 

010

Chair Butler

Acknowledges comment.

 

012

Rep. Berger

Comments about inadequacies and problems in the accountancy arena, and extends consideration to witnesses who support transparency in their profession.

 

 

 

025

Chair Butler

MOTION: MOVES HB 2195-1 TO THE HOUSE WITH A DO-PASS RECOMMENDATION.

 

 

 

030

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, GALIZIO, KOMP, OLSON, BUTLER.

 

033

Chair Butler

Rep. Riley will carry the bill.

 

 

 

038

Chair Butler

Adjourns meeting at 2:30 p.m.

 

 

 

 

 

Tape Log Submitted by: Kristi Bowman, Committee Assistant

Reviewed by:Kim Taylor James, Committee Coordinator

 Exhibit Summary:

1. HB 2195, Staff Measure Summary, Warner, 1 pg., 02/01/05

2. Handout: Oregon Board of Accountancy Overview, Consumer and Business Services, 1 pg.,       02/01/05

3. Handout: House Bill 2195 Overview, House Committee on Business, Labor and Consumer       Affairs, 2 pp., 02/01/05

4. HB 2195, No Expenditure Impact Statement, Legislative Fiscal Office, 1 pg., 01/27/05

5. HB 2195, Proposed Amendment HB 2195-1, Warner, 1 pg., 01/28/05

6. HB 2195, Written Testimony, Alan Steiger, 3 pp., 02/01/05

7. HB 2195, Written Testimony, Sandra Suran, 2 pp., 02/01/05