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It happened one night: members leave a mark in Sacramento. (Government Relations).


On Thursday night, May 30, something interesting happened in Sacramento--AB 1995 (Correa) failed on the Assembly floor.

The final vote was 23 yes, 31 no and 26 not voting. It wasn't even close.

Legislators weren't opposed to the author's stated purpose--to protect California shareholders from future Enrons. Instead, the legislation failed because legislators heard CaICPA members' message: "Meaningful reform must be legislated at the federal level."

That's the message Bakersfield CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000.  Patrick Paggi shared as he and hundreds of his CPA peers took to the halls of the Capitol just days before the Assembly's vote.

"I believe that our show of force made the legislators realize that the CPA profession is serious about what we do, and that the vast majority of CPAs are professional and of very high integrity," says Paggi.

CPAs Everywhere

Upon entering an elevator elevator, in machinery
elevator, in machinery, device for transporting people or goods from one level to another. The term is applied to the enclosed structures as well as the open platforms used to provide vertical transportation in buildings, large ships,
 at the Capitol, Sacramento CPA Guy Wang was reminded instantly why he was there: "I ran into a woman who said, 'Boy, I'm having a bad day, but you guys are having a bad year.' That's why I participated. We as CPAs have gone from being the most trusted professional to a laughing stock--all because of a few bad apples."

But no one is laughing in Sacramento. Our members' presence at the Capitol, combined with the thousands of letters opposing AB 1995 and other legislation that already had been sent, made an impression on the Legislature.

AB 1995 would have severely restricted the services that CPAs performing audits of publicly traded companies publicly traded company

A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market.
 could provide to their clients.

The measure would have put California out of step with every other state and increased confusion in the financial markets. It was not only unworkable and unenforceable Adj. 1. unenforceable - not enforceable; not capable of being brought about by compulsion; "an unenforceable law"; "unenforceable reforms"
enforceable - capable of being enforced
, but it could have been ruled unconstitutional unconstitutional adj. referring to a statute, governmental conduct, court decision or private contract (such as a covenant which purports to limit transfer of real property only to Caucasians) which violate one or more provisions of the U. S. Constitution. . Additionally, the SEC has historically determined that some non-audit services actually increase a firm's ability to dig deeper during an audit.

Restoring the Faith

CalCPA is committed to restoring America's faith in its financial markets and the CPA profession, but reforms must come at the national level and must comprehensively address the contributing factors to Enron. AB 1995 did not meet these criteria.

The CPA profession was able to persuade Assembly Member Correa to amend his bill to only apply to publicly traded companies. However, we were unsuccessful in persuading him to amend it further to match more closely the approach being considered by Congress, the SEC and the California Board of Accountancy.

AB 1995 was supported by the California Public Interest Research Group (CalPIRG), PIRGs were started by Ralph Nader This page is currently protected from editing until (UTC) or until disputes have been resolved. ; the Center for Public Interest Law, the trial lawyer group, including class action plaintiff attorney William Lerach William Shannon Lerach (Bill Lerach) (b. 1946, Ohio River Valley,[1] Midwestern United States) is an American lawyer who specialized in class action lawsuits. He has been a major financial donor to Democratic Party organizations at the state and national level. ; and another group, started by Nader, Consumers Union.

Far From Over

On June 4, the Bureau of National Affairs BNA (The Bureau of National Affairs, Inc.) is a Washington, D.C.-based publisher of news and information on legislation, regulations, and court decisions for professionals in business and government. It is the oldest wholly employee-owned company in the United States.  Inc., reported that Assembly Member Correa's staff anticipates reintroduction Noun 1. reintroduction - an act of renewed introduction
intro, introduction, presentation - formally making a person known to another or to the public
 of all or part of AB 1995 in the next few weeks.

Other legislation impacting the profession includes SB 1527 (Burton) which contains a short list of permitted services that could be performed for publicly traded companies by a CPA firm that also provides them with any audit or review services.

SB 1527 passed the Senate in mid-June by a 21--13 vote and has moved to the Assembly.

Still a Threat

While Correa's bill never left its house of origin, several bills have passed from one house to the other and could detrimentally det·ri·men·tal  
adj.
Causing damage or harm; injurious.



detri·men
 impact the profession and California businesses:

AB 2970 (Wayne)--Prohibits auditors from going to work for publicly traded companies for one year after they performed an audit.

AB 2873 (Frommer)--Sets stringent work paper retention and documentation requirements for all CPAs. The bill also establishes a rebuttable presumption A conclusion as to the existence or nonexistence of a fact that a judge or jury must draw when certain evidence has been introduced and admitted as true in a lawsuit but that can be contradicted by evidence to the contrary. , i.e., if the documentation standard is not met, the work was not performed, information was not obtained and pertinent conclusions were not reached.

SB 2023 (Figueroa)--Currently moves up the date for mandatory peer review from 2006 to 2004 and may be amended to increase the enforcement ability of the CBA See Capital Builder Account. .

AB 2834 (Midgen)--Requires CPAs to be on a state controller-approved list before performing school district audits.

For up-to-date information on these bills and how to contact your legislators, go to http://calcpa.iris1.com.

Ready to Respond

Threats to the CPA profession and California business continue and CPAs must be ready to respond. It is important that legislators hear from their constituents on issues of great importance to the profession. And you have shown that CPAs throughout California are willing to write to their legislators, attend CPA Day at the Capitol and talk about the real issues involved with Enron and the important services that CPAs provide.

"I was struck by the dedication and spirit of my CPA colleagues," says Loretta Doon an assistant executive director with the California Teachers Association The California Teachers Association (CTA), initially established in 1863 as the California Educational Society, is by far the largest teachers' union in the state of California. It is considered by many to be the most powerful union in California. . "The impact of our visits with legislators was tremendous. Grassroots lobbying works."

Bruce C. Allen is CalCPA's director of government relations.
COPYRIGHT 2002 California Society of Certified Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Article Details
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Title Annotation:accounting regulation bill defeated
Author:Allen, Bruce C.
Publication:California CPA
Article Type:Brief Article
Geographic Code:1U9CA
Date:Jul 1, 2002
Words:811
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