State Board Report

March 2009

The recession has sent many governors scurrying for ways to trim their state budgets – with the accountancy boards, along with other licensing boards, coming under scrutiny. Board members, executive directors, NASBA and professional associations have had to take action throughout the country to make legislators aware of the work being performed by the accountancy boards.

In Connecticut, Governor M. Jodi Rell said her third plan to decrease the state’s budget deficit, announced on February 18, would cut from state agencies and tap into the state’s Rainy Day Fund, while avoiding layoffs and tax increases. Her original budget for FY 2010‐2011 called for sweeping the Board of Accountancy into the Department of Consumer Protection. The projected savings for FY 2010 would be $211,543 and for FY2011 $122,485 according to the Governor’s estimates. Currently the Board has an executive director, legal counsel and three other staff members. The Governor’s proposal would remove two positions, fold the legal counsel and the remaining staff into the Department of Consumer Protection, and cede much of the licensing, enforcement, and regulatory authority of the Board to the Commissioner of Consumer Protection..

In 2007 the Connecticut Board of Accountancy marked 100 years as a state board. During 2007‐2008 it renewed 4,662 CPA licenses, 2,519 CPA certificate registrations and 1,536 firm permits. The Board also issued 526 initial certificates, 626 initial CPA licenses, registered 136 CPA certificates and issued 124 new firm permits. Only four years ago it became an independent agency.

Connecticut State Board of Accountancy Chairman Thomas F. Reynolds on February 10 testified at the Appropriations Sub‐Committee hearing on General Government Agencies in the Governor’s Proposed Budget and reminded them that for years the Board of Accountancy had been under the Department of Consumer Protection and had been taken out from that umbrella organization when the state realized such positioning was “inappropriate and ineffective.” The revenues collected by the Board were approximately $2,500,000 this year, with an operating cost of about $425,000, he noted. Chairman Reynolds explained to the legislators that much of the Board’s work relates to the technical details of accountancy, which place it in a unique position that cannot be bundled with other occupations’ licensing boards.

A legislator asked Chairman Reynolds what other efficiencies the Board might find should it be allowed to continue in its independent status. He responded that an automation project is underway, which is budgeted for $109,000 and in the long‐run will lead to efficiencies. He pointed out that many hedge funds are based in Connecticut and this would be the wrong time to cut back on the state’s regulation of accountants.

NASBA Director of International and Government Relations Linda Biek also spoke before the hearing in support of the Board’s continuing independence, as did Connecticut Society of CPAs Executive Director Arthur J. Renner. It will probably be months before there is a decision on the Board’s fate, Chairman Reynolds estimated, as the hearing was just the beginning of the Appropriations Committee’s deliberations.

In Ohio a budget bill has been introduced that would also consolidate the Accountancy Board of Ohio’s backroom functions with those of other boards. Executive Director Ronald Rotaru said, to avoid cutbacks, he has not filled two positions that became vacant at the Board and has instead redistributed the work to the remaining staff members. He estimates that the Ohio Accountancy Board has held more disciplinary hearings per capita than any other state board in the country. Letters and testimony in support of the Board’s independence are being submitted by NASBA, as well as the Board and local stakeholders.

Washington Governor Christine Gregoire had recommended that the Washington State Board of Accountancy become part of the Department of Licensing, rather than continuing to be a stand‐alone agency. NASBA wrote to the Governor in support of the Board’s independence (see President’s Memo sbr 2/09), as did the Washington Society of Certified Public Accountants. No decision has yet been made on the Board’s status.

On February 12, New Hampshire Governor John Lynch announced in his budget address: “I am proposing that all licensing boards and commissions be consolidated by subject matter within four major departments – health and human services, safety, environmental services and the secretary of state. From there, commissioners will work with the boards to strengthen their operations, and we will implement a plan to achieve full consolidation of the State’s licensing functions by 2012.” The New Hampshire Board of Accountancy’s Executive Director Louise O. Romeo commented that the Governor’s announcement was “shocking” to the Accountancy Board, as it has been “one of the most successful Boards in our State.”

Participants in NASBA’s March 2009 28th Annual Conference for Executive Directors and State Board Staff will be sharing information on how budget cuts are impacting their operations. To enable representation from all states, NASBA is providing scholarships for executive directors and legal counsel from those states that do not have funding that would enable them to attend.

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