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Oklahoma House Bill 2340: a report by the OSPA legislative chairman.

On May 20, 1992, the Oklahoma legislature enacted H.B. 2340, which the Governor signed into law on May 22, 1992. As passed, H.B. 2340 was an entirely different bill than the bill originally sponsored by the Oklahoma Society of CPAs and introduced on February 3, 1992.

The first version of H.B. 2340, in the words of Jim Nolen, Executive Vice President of the Oklahoma Society of Public Accountants (OSPA), "would have flat-out put all the unlicensed accountants in Oklahoma out of business as well as ended the on-going licensing of PAs in perpetuity." Nolen and the OSPA Legislative Committee survived four months of serious negotiations with the Oklahoma Society of CPAs, who attempted at every instance to ram their version of the bill through the legislature, in complete disregard of commitments made to OSPA and the Board of Accountancy in numerous conferences to "fine-tune" the bill to protect the rights of PAs and the practice of unlicensed accountants.

At the OSPA annual convention in September 1992, Roger Berryman, a licensed PA and chairman of OSPA's Legislative Committee, delivered his report in the form of a hard-hitting message about H.B. 2340. Berryman (like Jim Nolen) was on the "front lines" of negotiation on H.B. 2340 with the Oklahoma Society of CPAs, the Board of Accountancy and the legislature from November 1991 until the bill, as amended, passed in May 1992. Berryman's Legislative Committee report to the Convention contains an important message to every NSPA affiliated state organization--namely, get active, take part or else you will be taken apart. Berryman's report follows:

Oklahoma HB 2340

by Roger Berryman Legislative Chairman Oklahoma Society of Public Accountants

The Oklahoma Legislature passed HB 2340 in May 1992. The final version is something the Oklahoma Society of Public Accountants can live with, but the original bill was a horrendous disaster for LPAs and unlicensed accountants. House Bill 2340 was touted by its sponsor, the Oklahoma Society of CPAs, as improving the quality of the accounting profession in Oklahoma. Let me analyze some sections of H.B. 2340 to find its real purpose.

1. The requirement of 150 hours to sit for the CPA exam. The legislature was told that this requirement was needed to improve the quality of the individuals entering the accounting profession. However, they didn't change the number of hours of accounting courses required; they didn't add any classes in management, finance, economics, etc. Without increasing the required hours in technical courses, the real reason for the 150 hours was two-fold. Number one--it was good for reciprocity for the "Big 6" firms, and number two--it limits the number of CPAs coming into the accounting profession.

2. No further licensing of PAs (Oklahoma is a perpetuity state for licensing PAs). You know what this is for--to limit the number of PAs and to diminish the competition for the CPAs.

3. The prohibition on unlicensed accountants to do compilation reports. How many of you who are unlicensed accountants can stay in practice if all you can do is tax returns? I can't! If all I'm doing is tax returns, I'll starve to death. I have to have my write-up work. I have to be able to do compilation reports.

4. The provision in the bill permitting multiple offices in the state without a principal being located in each office. Therefore, when the CPA walks in and offers to buy your practice and offers you a job, what choice do you have? You'll work for the CPAs for chicken feed while they pocket your fees from your clients.

5. Last but not least--quality review. Now, I'm not against quality review. It certainly, if properly handled, can improve the individual's quality of work being performed. However, in the original bill, if the highest work you performed as a licensee of the board was a compilation statement, then you had to submit a compilation for quality review. Does anyone know how much it costs for a quality review of a compilation statement? Have you seen any of the prices? Thirty-five hundred dollars, $5,000--and I have heard some prices as high as $7,000. How many of you can afford those prices?

What was the true purpose behind the quality review in the original bill? It was not to make you better at what you do. At the time the bill was written, we did not have a quality review program for PAs. The AICPA said the CPAs could not do quality reviews for PAs. The intent for bringing compilation statements under the quality review program (most PAs in Oklahoma don't do audits or reviews) was to provide an avenue for suspending the license of existing PAs because they don't meet board requirements.

We are all in the same boat--accounting students, PAs and unlicensed accountants. The intent of H.B. 2340 was to limit the number of CPAs coming into the profession, eliminate the future licensing of PAs and eliminate the unlicensed individual because we couldn't practice. What are you going to do with your practice when you can't do compilation reports? What are you going to do if a CPA walks into your office and offers you "X" number of dollars for your practice? I'll tell you what you're going to do--you're going to take whatever he or she offers because something is better than nothing.

The intent of H.B. 2340 as originally introduced was to limit the number of CPAs coming into the field of accounting, eliminate further licensing of PAs and make PAs a dying class, and eliminate the unlicensed accountants. Competition for CPAs would have been abolished through legislation.

I've heard a lot of PAs say, "They can't bother me with their legislation." Let me tell you, you were impacted hard with the original bill and the Oklahoma State Society of CPAs will be back next year and every year after that until they get what they want. Those are their words, not mine.

Now let's carry this just a bit further. We have small practicing CPA firms out there. Who is going to be doing their quality review? It will be done by the larger CPA firms. What's to stop them from not passing you on your quality review and you still have to pay that $3,500 cost each time? Bottom line on H.B. 2340, which was written by "Big 6" firms, was for "Big 6" firms to eliminate all firms smaller than "Big 6" licensed accounting firms in the state of Oklahoma.

Now, you can sit back and say "Roger, you don't know what you're talking about." Let me tell you, I do know what I'm talking about. We sat out there and we watched, we listened and we analyzed H.B. 2340 from front to back, all 46 pages of it I'm here to tell you that the objective of H.B. 2340 was to eliminate everyone except "Big 6" firms in the state of Oklahoma.

Folks, it's time to wake up. We almost died this year. If you don't get active now, you will die next year.
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Title Annotation:Washington Comment; Oklahoma Society of Public Accountants
Author:Sager, William H.
Publication:The National Public Accountant
Date:Mar 1, 1993
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