The bill also contains an amendment sought by Michigan insurance companies. The amendment responded to a concern about a formal Statement of Position issued by the American Institute of Certified Public Accountants which would require public accountants to express their opinions in conformity with a new basis of accounting. Any other bases, including those provided under Michigan's Insurance Code or by order of the Insurance Commissioner, would be exceptions to the required basis of accounting. The amendment provides that an insurer may request that an audit report contain an opinion as to whether the financial information conforms to the statutory accounting principles prescribed by the Insurance Code or orders or rules promulgated under that act. Alternatively, the letter of engagement may provide for a separate opinion available for general distribution.

Arguments:

For: Michigan law has not kept up with changes in the accounting profession. In particular, the ban on contingency fees and commissions has been dropped by the American Association of Certified Public Accountants in response to an action by the Federal Trade Commission which charged that the ban constituted a restraint of trade. Also, there has been a trend toward non-CPA ownership of public accounting firms. The bill addresses these issues byconforming the language with National Association of State Boards of Accounting and Michigan Board of Accountancy recommendations.

The bill removes obsolete language which restricts utilization of computerized examination instruments and clarifies procedures for recognition of interstate and international applicant credentials. These changes will permit the department to utilize the most current technology in its testing program and improve administrative efficiency in the licensing program.

Against: Some would like to see higher educational requirements for public accounting, which are not part of this bill. These provisions were dropped from the bill in the last session in response to opposition from the Administration.

Fiscal Information: Discontinuation of the publication and distribution of an annual director of licensees and firms will save the department nearly $6,000 in printing, $2,000 in mailing costs and ongoing staff costs related to the annual compilation. The department is already saving $7,500 in annual travel costs related to the accountancy administrative committee, which was abolished by Executive Order 96-2. The bill would conform the statutory language to the executive order.

Administrative Rules Impact: Rules prohibiting contingency fees and commissions will need to be rescinded if the legislation is enacted.