Accountants, consumer groups clash over accounting credentials

Assemblyman Roger Niello, R-Sacramento, is an accountant by training. He said he would like to bring CPAs in California in line with an increasingly national set of rules that govern the profession. Niello is carrying a bill, AB 2473, that he said will standardize training for accountants and make it easier for them to work in different states—and that consumers will benefit.

“The CPA mobility bill is frankly a national movement supported by the accountancy board itself, as well as the CPA profession,” Niello said. “It’s a recognition of the reality of the global economy.”

But the bill is being opposed by a coalition of consumer and labor groups, led by the Center for Public Interest Law (CPIL). Housed in the University of San Diego School of Law, the CPIL has lobbied state professional boards for nearly three decades. Often, as is the case with AB 2473, they oppose changes sought by professional groups.

“The accountancy bill is a reintroduction of several concepts that the accounting profession has wanted to enact for a long time,” said Julianna D’Angelo Fellmeth. She claimed that the American Society of CPAs and other professional groups want the bill as a means or reducing oversight and making it harder for new accountants to enter the field.

Fellmeth particularly objects to a provision calling for all CPAs to have 150 credit units of college credit, the equivalent of an undergraduates and a master’s degree. As the bill is written, there is no requirement that these hours be in accounting, business or another relevant field.

“They can be in underwater basket weaving,” Fellmeth said.

She’s lobbying to reduce the requirement to 120 hours, or the equivalent of a bachelor’s degree. But David Swartz, a member of the California Board of Accountancy, said the requirement is designed to bring California in line with rules agreed on by 36 other states.
“Personally, I’m okay with just an undergrad degree,” Swartz said. “But we’re trying to get a national standard. If California has 120 hours and most other states have 150, out accountants aren’t going to be able to active in other states.”

Swartz said there is no evidence that the in those states that the requirement is keeping would-be minority accountants from being able to practice, as Fellmeth has alleged. He also noted that his board—which includes seven CPAs and eight “public”

 members—unanimously voted to endorse AB 2473.

The other main bone of contention is a clause that would call for California to recognize licenses given in other states. It would do away with most of the fees and reporting requirements that out-of-state accountants have to deal with to work in California. This merely recognizes the reality that much of the accounting work in the state is done by the “Big Four” national accounting firms, he said.

Fellmeth notes that the “Big Four” used to be the “Big Eight,” and before that was the “Big 12.” Financial scandals caused by a lack of oversight caused several of these subtractions, most spectacularly the venerable Arthur Anderson LLP, which went down in the Enron debacle. As soon as it can be shown that oversight standards in other states are as high as in California, the CPIL has stated, they would be approve of a national standards.

Niello said that the bill does not call for the state to give up it’s oversight of accountants—it just streamlines and simplifies matters. He said the opposition largely consists of labor groups, including those representing nurses and machinists, who have been led to believe “that unsuspecting consumers might be taken advantage of by CPAs who are licensed by some one other than the California board.”