Architects, accountants worry that ‘red tape reduction’ initiative goes too far

As Montana Gov. Greg Gianforte campaigned for the top administrative position in the state, he did so largely on his business bonafides, a tech entrepreneur who grew a nearly $1 billion business out of his home and into a tech hub.

He parlayed that business experience and acumen into politics, where he said both innovation and economic growth in the Big Sky State was being hampered by a torrent of laws, rules and regulations from local, state and federal authorities. Vowing to tune up the state’s economic engine, he pledge a reduction of cumbersome laws and regulation through a program his administration has dubbed “red-tape reduction.”

As he took office, he asked for advice from different parts of the state and multiple industries: What rules and regulations are hindering economic development? As his administration has compiled those, administrative departments like Commerce and Labor and Industry have set about revising rules and supporting legislation.

But not all of those efforts have been supported by the same people the Gianforte administration is trying to help. At least two longstanding professional groups, architects and accountants, have sounded the concern about proposed rule changes they say put the profession and possibly the public at risk.

These changes, now proposed in rules, have both groups concerned that they’ll be harmed, not helped. Repeated requests to the Gianforte administration about this story went unanswered. And multiple requests to the Montana Department of Labor and Industry were also unanswered.

THE MONTANA Society of Certified Public Accountants, or CPAs, said it’s been generally supportive of the administration’s efforts to reduce the number of policies and “red tape.” Allen Lloyd, chief executive for the society, said often government adds more policies while forgetting to update and eliminate old, outmoded ones.

He speaks positively about the cooperation between the state’s Department of Labor and Industry working with the Department of Revenue to clarify and clean up the administrative strata of laws that seem to accumulate with every successive administrative, calling it “revolutionary.”

However, what appears to be a slight tweak to the language could wind up upending the license of every Montana accountant or any accountant who wants to practice in the state. And accountants, just like almost every other specialized profession, are in high demand in the Treasure State and beyond.

Lloyd worries that the simple change could also end the state’s reciprocity for licensure, a huge issue for accountants.

As it stands now, states and national organizations have worked hard to streamline requirements for accountants, specifying how much education and practical experience a certified public accountant must have to be licensed. Lloyd explained that because the states have the same standards, they’re comfortable recognizing the professional credits from other states, including licensure, which is required to practice as a CPA in Montana.

However, a new rule would put Montana out of sync with other states. And Lloyd worries that if Montana chooses its own set of rules, then other states would not recognize accountants from Montana, and other accountants who may have clients here would be hindered. In other words, it may make Montana a stand-alone pariah.

Currently, states require those who want to sit for a CPA license to have 2,000 hours of experience in accounting in the past two years before taking the rigorous test. The rule change would require a person to have two years of accounting experience prior to taking the test.

Lloyd said the change sounds nuanced or even minor, but gave examples of the trouble it could cause. For example, would working occasionally on accounting items during the course of two years count? Could a person claim that experience if they had a couple hours during the course of two years? Conversely, a person working full-time could accumulate 2,000 hours and have more experience in the course of one year.

Lloyd characterized the administration and Lt. Gov. Kristen Juras, who has worked on the project personally, as helpful and responsive, but his organization remains concerned because even though they’ve raised questions, nothing has changed in drafts of the rule changes.

Lloyd also said there’s a misunderstanding about what makes a certified public accountant different than other people who work with spreadsheets or taxes. Other people who are not licensed as a CPA can prepare taxes or even perform accounting tasks, such as bookkeeping. But only a certified public account can perform audits and produce audited financial statements, an important and necessary tool for independent analysis. Those audits are used by banks, financial institutions and governments to vouchsafe that accounting and bookkeeping are accurate.

“Our members want to protect the integrity of the license,” Lloyd said.

If Montana were to lose its reciprocity and portability – two features of its current CPA licenses, it would cause “a nightmare situation.” For example, firms from North Dakota, Wyoming or Idaho may do work for residents living near the border, and vice-versa. But if Montana deviates from the commonly accepted rules, both Montana and other states could wind up being incompatible.

“Sure you can say you want to reduce the barriers to entry to entice folks to become a CPA,” Lloyd said. “But conceptually, if you reduce the requirement, you’re creating a new, different class.”

He said that most people view accountants as the people who get busy around April 15 with taxes, but the licensure is essential for a different reason.

“This is what we know as attestation,” he said. “That’s where they sign off that the numbers are verified and correct. It’s created to ensure that the financial information for investors and banks are correct.”

ARCHITECT ADAM Talbert who practices in Great Falls said the problem is even more dangerous.

A proposal by the administration would not require building plans to be certified by an architect. If Montana moved toward such a system, it would become the first and only state to take such a drastic measure.

Like accountants, other people who are licensed may work on building plans, but plans submitted to local and state departments must be signed by a licensed architect. Talbert said there’s a good reason for that: There are dozens and dozens of rules and building code requirements, including essential provisions like fire exits and safe design in case of a fire.

“It’s the public we’re trying to protect,” said Krista Smith, the executive secretary of the Great Falls Society of Architects. “This is a huge public safety issue.”

Talbert, who grew up in Georgia and went to college in Florida, said that architects are licensed because building codes and even construction techniques are radically different from state to state. For example, in the South, homes doesn’t need as much consideration for heating, but may need protection against hurricanes.

He said the changes will open the door to unlimited competition, which the administration may see as a good thing. However, he said that may have some unintended results. For example, if a roof doesn’t have the proper engineering and design, a windstorm may rip it off. And if an architect knows nothing about snow loads, the roof could cave in.

And even an office building may not have the proper hallways, stairs and emergency exits in case of a fire. In those cases, without licensure, no one may ultimately be responsible for proper design. In some states, it’s legal to place pipes on the outside walls of a building. Do that in Montana, Talbert said, and pipes would freeze and burst.

Currently, most architects have to have the equivalent of a master’s, work in the industry for four years and have passed six or seven parts of a licensing exam to prove competency.

“Licensure in a state takes into consider the specific conditions of that state,” Talbert said. “If this goes through, anyone could show up tomorrow and start designing stuff. How can anyone be held accountable? How would you sue someone who doesn’t have a license?”

Smith said that plans are often available through the internet, or even people with drafting experience may design something using architectural software. She recounted a recent story of a person who didn’t want to pay an architect for a large home, but it’s taken more than two years to complete because of faulty design plans and the structure has cost more than twice the estimate.

“Just because you can find house plans doesn’t mean they’re OK,” Smith said. “It’s not just the drawings. It’s how it’s designed and how the different components come together and are engineered.”

She said that part of the Gianforte administration’s logic may be to save on administrative costs. Each professional department has its own board and that takes some money, which is often funded by licensing fees. If those boards were to consolidate or be administered centrally, it may save government money but wind up costing citizens more.

“You can’t just put all professions into one group,” Smith said. “I have to give (the Gianforte administration) compliments, they’re trying to clean up the language, and they’re putting teeth into enforcement, so there is an upside.”

But, she questions whether a single agency running multiple boards, if that happens, would be able to do an adequate job of oversight. Currently, the state’s architectural licensing is overseen by a mix of professionals from the industry and the public – as is most every other professional oversight board in the state.

Talbert agreed: The problem will eventually trickle down to the taxpayers, which may have to foot the bill for more lawsuits if residents sue the city or county for improper oversight of building codes. Or consumers could see an increase in monthly insurance rates if buildings are substandard.

Unlike accountants, Talbert said he and other have tried to sound the alarm about licensure, but the Gianforte administration seems unwilling to make the change.

“They just say to submit comments in writing. They’ll never talk about them,” Talbert said. “You might as well be talking to a wall.”

Darrell Ehrlick is the editor-in-chief of the Daily Montanan, a nonprofit newsroom. To read the article as originally published, click here.