Our world is changing at a rapid pace. Just last week the President signed into Law the FINANCIAL SERVICES MODERNIZATION ACT, which allows banks, securities firms and insurance companies to merge and to sell each other's products. This legislation leveled the domestic playing field for U.S, financial companies and allows them to compete better in the evolving global financial market place. As Senator Phil Gramm said "the world changes... and the laws have to change with it." The amendments to the state accountancy statute that are contained in Assembly Bill 8600 are for the very same reason the Glass-Stegal Act was repealed. The laws that govern were written at a time when business was conducted vastly different than it is today.

One of the proposed amendments that I am here before you today to speak about is the issue of non-CPA ownership of a CPA Firm. The amendment would allow for up to 49% ownership of CPA Firms by non-CPA's provided that the non-CPA's owners actively participate in the Firm. This proposed change, like many of the other proposed changes, seems to respond to a changing market place that demands a broad range of services from CPA's well beyond what is reflected in the current regulations.

At present, CPA's in public practice are expected to render all their services through the vehicle of a CPA firm. This is based on the theory that, while only audit/attest services require licensure, all public services rendered by a CPA are subject to state regulatory jurisdiction. Reality does not always conform to this model, as all of the large international, as well as, many of the local and regional accounting firms have already set up separate entities to offer consulting and other specialized services the market place demands. Many of us are unhappy with this situation since competitors in nonattest firms are not subject to the same regulatory environment as we are. Consequently, we feel that we are being held to a higher standard than our competitors.

The debate about whether CPA's should offer all these other services in an old one, which has largely been resolved by market reality. CPA' s offer a wide range of services, and the scope continues to widen because the public wants one-stop shopping. Additionally, over the last few years, companies such as American Express, Century Business, and H&R Block have successively come into our market place and purchased the nonattest assets of CPA Firms. These large financial services firms are entering our market place since market research tells them that the business public wants one multi-disciplined firm to provide them with all the services they seek in their business and personal lives.

The Assembly bill contains, as has been perennially characteristic of our profession, provisions that protect the public interest. These provisions insure that we who use the CPA title adhere to an appropriate level of professionalism. As such, any licensed CPA Firm, with CPA and Non-CPA owners would continue to be required to undergo a peer review every three years and all attest services will be supervised by a CPA who will be required to adhere to all professional standards governing such engagements.

In closing, I respectfully request that you pass this provision, as well as all other provisions in the proposed amendment, since it will permit fair competition with non-CPA Firms-, allow us to meet our client's demands for expanded services in this ever-changing business environment; and allow us to attract and retain competent professionals.