The Los Angeles Times claims that recent actions by the California State Board of Accountancy “underscore the political clout of the accounting profession,” which the newspaper says has contributed about $500,000 to campaign funds that support Schwarzenegger’s political agenda.

The newspaper claims that the board of accountancy, apparently with Schwarzenegger’s blessings, is pushing for state legislation that would liberalize out-of-state accountants’ ability to practice and offer tax shelters in California. It also says that Schwarzenegger had tried to fill an opening on the board with a an attorney who has represented some Big Four firms, and that the personnel change was only blocked after a state legislator complained that it represented a potential conflict of interests.

Separately, the nonprofit Foundation for Taxpayer and Consumer Rights (FTCR) has for the past year been calling on the governor to return more than $53,000 in campaign contributions from PricewaterhouseCoopers because that Big Four firm was the auditor of insurance giant AIG, whose stock price stumbled after an accounting scandal was unveiled last year. The stock value drop caused the California’s Public Employees Retirement System to reportedly lose $400 million from its AIG stock holdings.

In its prosecution of AIG, the New York State Attorney General’s office claimed the company manipulated its books to deceive regulators and the investing public for more than seven years and that its top management engaged in numerous fraudulent transactions that exaggerated the strength of the company's underwriting business.

“As the AIG fraud wreaks disaster on Californians’ pension and 401K plans, the governor’s conflict could not be more evident,” FTCR Executive Director Douglas Heller said during the height of his group’s attack on Schwarzenegger over this matter. The group, which publishes the weblog http://ArnoldWatch.org, also called on the governor to return $123,000 in campaign contributions from AIG.

Schwarzenegger’s office stifled attacks on its board of accountancy appointment by asking Marcus McDaniel, an attorney in the international law firm Latham & Watkins, to step down after serving only one month on the board. The office, which has not named a new replacement for the board vacancy, has been quoted as saying that McDaniel’s appointment and its potential for a conflict had “slipped through the cracks."

The 15-member state board of accountancy remains under attack for its support of liberalizing legislation regarding out-of-state accountants. Julianne D'Angelo Fellmeth, administrative director of the Center for Public Interest Law in San Diego, told the Los Angeles Times that the board “has become a wholly owned subsidiary of the accounting profession. It has voted to weaken auditing regulations that the board itself adopted only three years ago in the wake of Enron. This is a board that does not understand its public protection role."

Ronald Blanc, Board of Accountancy president, denies the charges. "I believe that we are very conscious of consumer protection," he said in the same newspaper report. "We vet these things carefully. Some groups might not agree, but I don't see consumer interests are diluted or compromised at all."

Tom Marino , Jul-4-2006  Write On, Art! It's about time a State Board of Accountancy made it easier for accountants to practice under its aegis, instead of placing yet more stifling obstacles in the path of professionals. I see no danger to consumers because a State Board encourages practitioners to practice instead of being indifferent or even obstructive, as some misguided or politically motivated malcontents are apparently advocating. Thomas A. Marino, CPA, San Diego, California

Art Berkowitz , Jun-23-2006  LA Times doesn't know the difference between news and editorial I was very disturbed by the story written in the LA Times, not by its content, but by its location. This was clearly an editorial as it was filled with opinions with few facts to back up its position. The author and the newspaper also made almost no effort to present both sides of the story. Yet, it was presented on the front page of the state and local section as a news story. The LA Times, along with the New York Times and several other large media concerns, seem to have totally lost all sense of journalistic integrity. Whether the purpose of this "hit" piece was to discredit the governor and accountants just happened to be "innocent fodder" we will probably never know. But to make a blanket statement that the purpose of the bill to make it easier for accountants to practice across state lines is to promote tax shelters is a gross misstatement that borders on an outright lie. I suggest that the restrictions being placed on accountants’ rights to service their multi-state and international clients will result in great harm to the public. It may also be a violation of the law on restraint of trade. If this trend continues, the only accountants that will be able to service such clients will be the Big 4 and other large CPA firms that can afford to meet the time constraints and fees necessary to be licensed in all 50 states. Someone please tell me how reducing consumers choices results in protection of the public. Art Berkowitz, CPA California