DALLAS (AP) — Texas' accounting board and two other regulatory agencies will no longer be allowed to keep the tens of thousands of dollars in fines they collect annually if the Legislature acts on a recommendation from an oversight panel that likens the policy to a "speed trap."
A report approved Wednesday by Texas' Sunset Advisory Commission says the boards that oversee accountants, engineers and architects should be required to put the money from administrative penalties into the general revenue fund, the same policy followed by most of the state's regulatory agencies, instead of keeping it for their own use.
The report, which will become law if enacted during the 2013 legislative session, could mean the end of a decade-old practice that has long raised questions of fairness, particularly among accountants.
"I see this as a major improvement because it would steer (the board) back to trying to be objective," said Marcia Van Norman, a Round Rock CPA who appeared before the commission in November and described how she spent months fighting a charge that proved to be groundless.
The recommendation follows an Associated Press report in 2011 that detailed how the accounting board had quietly stockpiled millions of dollars — at one point, accumulating nearly $7 million — since it and the two other boards became self-directed, semi-independent agencies under a pilot program that went into effect in 2002.
The program, commonly known as SDSI, allows the boards to operate outside the legislative appropriations process. Instead, they pay annual subsidies to the state and keep the money they collect in fines and licensing fees. The autonomy is supposed to increase efficiency, allowing the agencies to hire personnel and acquire other resources without legislative approval.
The Sunset Commission, charged with identifying waste and inefficiency in state government agencies, says SDSI is working as intended and should be continued. However, it also contends that the program doesn't provide enough safeguards to ensure oversight and prevent abuse.
Over the last five fiscal years, the accounting board has collected $646,364 in administrative penalties, more than the other two agencies combined, according to data compiled by the commission. In the last three years, the amount has risen annually from $88,525 to $182,192.
Because the three boards receive less legislative oversight than other state agencies, turning that money over to the general revenue fund "is especially important to avoid the appearance of using penalties to self-support operations or increase fund balances," the report states.
The report also says the Legislature should consider "pausing" further decisions allowing agencies to operate under SDSI until the commission can do a broader assessment of the program. Six other agencies have gained SDSI status since the program was initiated, but they weren't evaluated by the commission and aren't subject to the report's recommendations.
The Texas Association of Certified Public Accountants welcomed the report. The professional organization has long claimed that the accounting board and its executive director, William Treacy, have sought to build the agency's fund balance by seeking unfair and heavy-handed penalties.
"What has happened is this little agency has spun off into its own orbit with no legislative oversight," said Wilfred Navarro, an Austin attorney who works with the group, comprised mostly of CPAs who practice by themselves or in small firms.
Treacy, a nationally known proponent of SDSI, declined an interview request. Through a spokesman, he said it would be inappropriate for him to comment on an issue that's going to be heard by the Legislature.
Treacy's formal response to the commission did not take a side on the issue. However, it pointed out that the board initiated a rule last December allocating money collected from administrative penalties into a fund for scholarships for disadvantaged students who need a fifth year of college to complete their accounting studies.
In 2011, Treacy told the AP that the board's ability to build a significant bank balance was important because it allowed the agency to investigate Enron and other major scandals involving accountants in Texas.
"The mere existence of our funding, which is public information, sent the message to those we investigated that we had the ability to carry out our responsibility," he wrote in an email at the time.