Senate Bill No. 599
(By Senator Love)
____________
[Introduced February 21, 2000; referred to the Committee
on Government Organization.]
____________
A BILL to amend and reenact article nine, chapter thirty of the
code of West Virginia, one thousand nine hundred thirty-one,
as amended, relating to the adoption of the uniform
accountancy act; setting forth findings and a statement of
legislative purpose; defining certain terms; continuing the
state board of accountancy and providing for the membership,
powers and other terms relating thereto; establishing
qualifications for a certificate as a certified public
accountant; providing for the issuance and renewal of
certificates; requiring CPA firms and PA firms to hold permits
and setting forth certain requirements relating to the
issuance and renewal of such permits; providing for the renewal of registrations of public accountants issued under
prior law; appointing the secretary of state as agent for
applicants for certificates and permits; providing for
enforcement against holders of certificates, permits and
registrations; establishing procedures for investigations;
setting forth procedures for enforcement actions and hearings;
providing for reinstatement of persons or firms whose
certificates, permits or registrations have been suspended or
revoked; enumerating certain unlawful acts, providing for
injunctions against such acts and setting forth criminal
penalties; providing that the commission of a single act is
sufficient to justify a penalty; requiring that certain
communications be kept confidential; requiring the maintenance
of certain working papers and client records; permitting CPAs
from certain other states whose certification requirements are
substantially equivalent to those of this state to practice in
this state without certification; authorizing and setting
forth rules governing accounting corporations; authorizing the
use of commissions, referral fees and contingent fees in
certain situations; specifying inapplicability of article;
setting forth rules on construction and severability of provisions; and providing for termination of board of
accountancy.
Be it enacted by the Legislature of West Virginia:
That article nine, chapter thirty of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted to read as follows:
ARTICLE 9. ACCOUNTANTS.
§30-9-1. Findings and statement of purpose.
The Legislature hereby finds and declares that the public
interest requires that information that is used for guidance in
financial transactions or for assessing the financial status or
performance of commercial, noncommercial, and governmental
enterprises be reliable. The public interest further requires that
persons professing special competence in accountancy or offering
assurance as to the reliability or fairness of presentation of such
information shall have demonstrated their qualifications to do so,
and that persons who have not demonstrated and maintained such
qualifications not be permitted to represent themselves as having
such special competence or to offer such assurance; that the
conduct of persons licensed as having special competence in
accountancy be regulated in all aspects of their professional work; that the state board of accountancy is best suited to prescribe and
assess the qualifications and to regulate the conduct of licensees;
and that the use of titles that might mislead a reasonable person
as to the status or competence of the persons using such titles be
prohibited. This article is enacted to further these public
interests.
§30-9-2. Definitions.
As used in this article, the following words and terms shall
have the following meanings, unless the context clearly indicates
otherwise:
"Attest" means providing any of the following financial
statement services to be performed in accordance with the following
statements on standards developed by the American institute of
certified public accountants which the board by rule may adopt:
(1) Any audit or other similar engagement to be performed in
accordance with the statements on accounting standards (SAS); (2)
any review of a financial statement to be performed in accordance
with the statements on standards for accounting and review services
(SSARS); and (3) any examination of prospective financial
information to be performed in accordance with the statements on
standards for attestation engagements (SSAE). For purposes of this definition, "attest" does not include the use of language identical
to or substantially similar to that which is set forth in
subsection (c), section twenty-two of this article by a person or
firm not holding a valid certificate, permit or registration issued
under sections five, six or seven of this article.
"Board" means the state board of accountancy, known as the
"West Virginia Board of Accountancy," continued under the
provisions of this article and established under prior law.
"Certificate" means a certificate as a certified public
accountant issued by the board pursuant to this article or
corresponding provisions of prior law or a corresponding
certificate as a certified public accountant issued after
examination under the laws of any other state.
"Client" means a person or entity that agrees with a licensee
or licensee's employer to receive any professional service.
"Commission" means compensation, except a referral fee, for
recommending or referring any product or service to be supplied by
another person.
"Compilation" means providing a service to be performed in
accordance with the statements on standards for accounting and
review services (SSARS) developed by the American institute of certified public accountants that presents, in the form of a
financial statement, information that is the representation of
management without undertaking to express any assurance on the
statements: Provided, That this definition does not apply to the
use of the term "compilation" in subsection (c), section twenty-two
of this article.
"Contingent fee" means a fee established for the performance
of any service pursuant to an arrangement in which no fee will be
charged unless a specified finding or result is attained, or in
which the amount of the fee is otherwise dependent upon the finding
or result of such service. A fee fixed by a court, taxing
authority or other public authority is not a contingent fee.
"CPA" means a person holding a certificate.
"CPA firm" means a sole proprietorship, a corporation or
accounting corporation, a partnership or limited liability
partnership, a limited liability company or professional limited
liability company, or any other form of organization that has been
issued a permit under section six of this article.
"Financial statement" means a writing or other presentation,
including accompanying notes, which presents, in whole or in part,
historical or prospective financial position, results of operations or changes in financial position or any person, corporation,
partnership or other entity.
"License" means a certificate issued under section five of
this article, a permit issued under section six of this article or
a registration issued under section seven of this article, or a
certificate or registration issued under corresponding provisions
of prior law.
"Licensee" means the holder of a license.
"Manager" means a manager of a limited liability company.
"Member" means a member of a limited liability company.
"PA" means a person registered as a public accountant under
section seven of this article or corresponding provisions of prior
law.
"PA firm" means a sole proprietorship, a corporation or
accounting corporation, a partnership or limited liability
partnership, a limited liability company or professional limited
liability company, or any other form of organization that has been
issued a permit under section six of this article.
"Peer Review" means a study, appraisal, or review of one or
more aspects of the professional work of a CPA, a PA, a CPA firm or
a PA firm by a person or persons who hold certificates and who are not affiliated with the CPA, the PA, the CPA firm or the PA firm
being reviewed.
"Permit" means a permit to practice as a CPA firm or a PA firm
issued under section six of this article or corresponding
provisions of prior law or under corresponding provisions of the
laws of other states.
"Professional" means arising out of or related to the
specialized knowledge or skills associated with CPAs or PAs.
"Registered" or "registrant" refers to or means a person who
has received a registration as a public accountant pursuant to
section seven of this article or corresponding provisions of prior
law and who is not a CPA.
"Referral fee" means compensation for recommending or
referring any service of a licensee to any person.
"Report," when used with reference to financial statements,
means an opinion, report, or other form of language that states or
implies assurance as to the reliability of any financial statements
and that also includes or is accompanied by any statement or
implication that the person or firm issuing it has special
knowledge or competence in accounting or auditing. Such a
statement or implication of special knowledge or competence may arise from use by the issuer of the report of names or titles
indicating that the person or firm is an accountant or auditor, or
from the language of the report itself. The term "report" includes
any form of language which disclaims an opinion when such form of
language is conventionally understood to imply any positive
assurance as to the reliability of the financial statements
referred to or special competence on the part of the person or firm
issuing such language, and it includes any other form of language
that is conventionally understood to imply such assurance or such
special knowledge or competence.
"Respondent" means: (i) A licensee or an individual who has
acquired practice privileges under section nineteen of this
article; and (ii) against whom a complaint has been issued pursuant
to section eleven of this article.
"Rule" means any rule promulgated by the board pursuant to
section three of this article.
"State" means any state of the United States, the District of
Columbia, Puerto Rico, the U.S. Virgin Islands or Guam.
"Substantial equivalency," "the substantial equivalency
standard" or "substantially equivalent" mean or refer to a
determination by the board or its designee that the education, examination and experience requirements contained in the statutes
and administrative rules of another jurisdiction are comparable to
or exceed the education, examination and experience requirements
contained in the UAA, or that an individual CPA's education,
examination and experience qualifications are comparable to or
exceed the education, examination and experience requirements
contained in the UAA.
"UAA" means the uniform accountancy act, third edition,
revised (November 1999), jointly published by the American
institute of certified public accountants and the national
association of state boards of accountancy.
As used in this article, the singular and plural and the
masculine and feminine are interchangeable unless the context
clearly indicates otherwise.
§30-9-3. Board of accountancy; appointment, terms, qualifications,
removal and compensation of members; funds; rules.
(a) The state board of accountancy, known as the "West
Virginia board of accountancy," is hereby continued. The board
consists of five members appointed by the governor with the advice
and consent of the Senate for terms of three years. Any vacancy on
the board occurring during a three-year term shall be filled by appointment of the governor for the remainder of the unexpired
term. No member may serve more than two consecutive full terms,
and any member having served two full terms may not be appointed or
reappointed for one year after completion of his second full term.
As the terms of office of members respectively expire, the governor
shall appoint, to fill the vacancies so occasioned, members whose
terms shall be for three years from the day on which that of their
immediate predecessors expired. Every member of the board shall
hold a certificate: Provided, That the governor shall appoint as
a member no more than one noncertificated, licensed registrant
under prior law. At the time of any appointment at least four
members of the board shall hold a certificate and a current
license.
(b) The governor shall remove from the board any member who
fails to attend, without just cause, three regularly scheduled
board meetings. Any member of the board shall immediately and
automatically forfeit his membership if he (i) has his certificate
or registration suspended or revoked by the board or (ii) is
convicted of a felony under the laws of any state or the United
States.
(c) The board shall pay each member one hundred dollars for each day or portion thereof spent in the discharge of his official
duties and shall reimburse each member for his actual and necessary
expenses incurred in the discharge of his official duties.
(d) All fees and other moneys received by the board pursuant
to the provisions of this article shall be kept by the board in a
separate fund and expended solely for the purposes of this article.
The board shall retain its funds from year to year, and no part of
this special fund shall revert to the general revenue fund. The
compensation provided by this article and all expenses incurred
under this article shall be paid from this special fund. No
compensation or expense incurred under this article is a charge
against the general revenue fund.
(e) The board shall have the power to take all actions
necessary and proper to effectuate the purposes of this article,
including the power to sue and be sued in its official name as an
agency of this state. The board shall also have the power to issue
subpoenas to compel the attendance of witnesses and the production
of documents; to administer oaths; to take testimony and receive
evidence concerning all matters within the scope of this article;
and to cooperate with the appropriate authorities in other states
in the investigation and enforcement of violations of this article or comparable acts of other states. In case of disobedience of a
subpoena, the board may invoke the aid of any court in requiring
the attendance and testimony of witnesses and the production of
documentary evidence. The board, its members and its agents shall
be immune from personal liability for actions taken in good faith
in the discharge of the board's responsibilities, and the state
shall hold the board, its members, and its agents harmless from all
costs, damages, and attorneys' fees arising from claims and suits
against them with respect to matters to which such immunity
applies.
(f) The board shall make and enforce all necessary rules, not
inconsistent with this article, governing its administration and
enforcement of this article and the conduct of licensees, including
but not limited to the following areas:
(1) Rules governing the board's meetings and the conduct of
its business;
(2) Rules of procedure governing the conduct of investigations
and hearings by the board;
(3) Rules regarding the amount and collection of fees for
examinations administered under section four of this article and
the issuance and renewal of certificates, permits and registrations;
(4) Rules specifying the educational and experience
qualifications required for the issuance of certificates under
section five of this article and the continuing professional
education required for renewal of certificates under that section;
(5) Rules of professional conduct directed to controlling the
quality and probity of services by licensees, including their
independence, integrity, and objectivity; their competence; the
technical standards applicable to them; and their responsibilities
to the public and to their clients;
(6) Rules governing the professional standards applicable to
licensees;
(7) Rules governing the manner and circumstances of use of the
titles "certified public accountant," "CPA," "public accountant"
and "PA";
(8) Rules regarding peer review that the board may choose to
require under section five of this article, and rules regarding
peer review that the board may require pursuant to section six of
this article, subsection (b), section nine of this article or
subsection (c), section twelve of this article;
(9) Rules on substantial equivalency to implement section nineteen of this article;
(10) Rules relating to accounting corporations to implement
section twenty of this article;
(11) Rules governing the use of commissions, referral fees and
contingent fees; and
(12) Such other rules as the board may deem necessary or
appropriate for implementing the provisions and the purposes of
this article.
No rule promulgated by the board shall be effective unless
promulgated pursuant to article three, chapter twenty-nine-a of
this code: Provided, That all rules promulgated by the board under
prior law shall remain in full force and effect unless modified or
repealed in accordance with this section.
§30-9-4. Qualifications for a certificate as a certified public
accountant.
(a) The certificate of "certified public accountant" shall be
granted to persons of good moral character who meet the education,
experience and examination requirements of this section and rules
adopted thereunder and who make application therefor pursuant to
section five of this article.
(b) Good moral character for purposes of this section means lack of a history of dishonest or felonious acts. The board may
refuse to grant a certificate on the ground of failure to satisfy
this requirement only if there is a substantial connection between
the lack of good moral character of the applicant and the
professional responsibilities of a licensee and if the finding by
the board of lack of good moral character is supported by clear and
convincing evidence. When an applicant is found to be unqualified
for a certificate because of a lack of moral good character, the
board shall furnish the applicant with a statement containing the
findings of the board, a complete record of the evidence upon which
the findings were based, and a notice of the applicant's right of
appeal.
(c) The education requirement for a certificate, which must be
met before an applicant is eligible to apply for the examination
prescribed in subsection (d) of this section, shall be as follows:
(1) For applicants making their initial application for the
examination prior to the fifteenth day of February, two thousand,
a baccalaureate degree or its equivalent conferred by a college or
university acceptable to the board, with an accounting
concentration or equivalent as the board may determine by rule to
be appropriate; or
(2) For applicants making their initial application for the
examination on or after the fifteenth day of February, two
thousand, at least one hundred fifty semester hours of college
education including a baccalaureate or higher degree conferred by
a college or university acceptable to the board, the total
educational program to include an accounting concentration or
equivalent as the board may determine by rule to be appropriate.
(d) The examination required to be passed as a condition for
the granting of a certificate shall be held at least twice a year,
and shall test the applicant's knowledge of the subjects of
accounting, auditing and such other related subjects as the board
may specify by rule, including but not limited to business law and
taxation. The time for holding such examination shall be
determined by the board and may be changed from time to time. The
board shall prescribe by rule: (1) For the retention of credit for
the satisfactory completion of a portion of such examination in
future examinations; and (2) the methods of applying for and
conducting the examination, including methods for grading and
determining a passing grade required of an applicant for a
certificate: Provided, That the board shall by rule to the extent
possible ensure that the examination itself, the grading of the examination, and the grade required to pass the examination are
uniform with those applicable in all other states. The board may by
rule make such use of all or any part of the uniform certified
public accountant examination and advisory grading service of the
American institute of certified public accountants and may contract
with third parties to perform such administrative services with
respect to the examination as it deems appropriate to assist it in
performing its duties hereunder.
(e) The board may charge, or provide for a third party
administering the examination to charge, each applicant a fee in an
amount prescribed by the board by rule.
(f) An applicant for initial issuance of a certificate under
this section shall show that the applicant has had one year of
experience. This experience shall include providing any type of
service or advice involving the use of accounting, attest,
compilation, management advisory, financial advisory, tax or
consulting skills all of which was verified by a licensee, meeting
requirements prescribed by the board by rule. Experience gained
through employment in government, industry, academia or public
practice shall be deemed to satisfy the requirements of this
subsection.
(g) Persons who, on the effective date of this article, hold
certificates theretofore issued by the board are not required to
pass the examination provided for in this section, but are
otherwise subject to all the provisions of this article, and such
certificates theretofore issued shall, for all purposes, be
considered certificates issued under this article and subject to
the provisions hereof: Provided, That persons holding certificates
issued prior to the effective date of this article must renew such
certificates pursuant to section five of this article.
§30-9-5. Issuance and renewal of certificates; maintenance of
competency; fees; issuance of certificates to holders
of foreign designations.
(a) The board shall grant or renew certificates to persons who
make application and demonstrate: (1) That their qualifications,
including where applicable the qualifications prescribed by section
four of this article, are in accordance with this section; or (2)
that their qualifications are substantially equivalent to the CPA
certification requirements of the UAA. The holder of a certificate
issued under this section may only provide attest services in a CPA
firm or a PA firm that holds a permit issued under section six of
this article.
(b) Certificates shall be initially issued and renewed for
one-year periods but in any event shall expire on the thirtieth day
of June following issuance or renewal. Applications for such
certificates shall be made in such form, and in the case of
applications for renewal, between such dates, as the board shall by
rule specify, and the board shall grant or deny any such
application filed in proper form within such time period as the
board shall specify by rule. In any case where the applicant seeks
the opportunity to show that issuance or renewal of a certificate
was mistakenly denied, or where the board is not able to determine
whether it should be granted or denied, the board may issue to the
applicant a provisional certificate, which shall expire ninety days
after its issuance or when the board determines whether or not to
issue or renew the certificate for which application was made,
whichever shall first occur.
(c) With regard to applicants who do not qualify for
reciprocity under the substantial equivalency, the board shall
issue a certificate to a holder of a valid certificate as a CPA
issued by another state upon a showing that:
(1) The applicant passed the examination required for issuance
of the applicant's certificate with grades that would have been passing grades at the time in this state;
(2) Within the ten-year period immediately preceding the
application and after passing the examination upon which the
applicant's certificate in such other state was based, the
applicant (A) has had four years of experience outside of this
state of the type described in subsection (f), section four of this
article or (B) meets equivalent requirements prescribed by the
board by rule; and
(3) If the applicant's certificate was issued more than four
years prior to the application for issuance of an initial
certificate under this subsection, that the applicant has fulfilled
the continuing professional education requirements that would have
been applicable under subsection (f) of this section had the
applicant held a certificate in this state under this article or
prior law.
(d) A holder of a valid certificate as a CPA from another
state who intends to establish his or her principal place of
business in this state shall request the issuance of a certificate
from this state prior to establishing such principal place of
business. The board shall issue a certificate to such an applicant
if the applicant obtains from a national qualification appraisal service which the board may designate by rule a verification that
the applicant's qualifications are substantially equivalent to the
CPA certification requirements of the UAA.
(e) The board may determine by rule that an application under
subsections (c) or (d) of this section may be made through the
qualification appraisal service of the national association of
state boards of accountancy.
(f) For renewal of a certificate under this section each
licensee shall participate in a program of learning designed to
maintain professional competency which the board may by rule
require. This licensure requirement is subject to the following
exceptions and limitations:
(1) The board may by rule create an exception to the
requirements of this subsection for certificate holders and
registrants who do not perform or offer to perform for the public
or any entity other than their employers: (i) One or more kinds of
services involving the use of accounting or auditing skills,
including issuance of reports on financial statements; (ii) one or
more kinds of management advisory, financial advisory or consulting
services; or (iii) the preparation of tax returns or the furnishing
of advice on tax matters. A certificate holder or registrant granted such an exception by the board must place the word
"inactive" adjacent to his or her CPA or PA title on any business
card, letterhead or any other similar document or device, with the
exception of the licensee's CPA certificate or PA registration on
which the CPA or PA title appears.
(2) Any certificate holder or registrant: (i) Who, as of the
effective date of this article, has not been subject to continuing
professional education requirements because he has not been
performing or offering to perform any of the services described in
subdivision (1) of this subsection; and (ii) who subsequently
elects to perform or offer to perform any such services during a
subsequent license renewal period, must comply with such continuing
professional education requirements as the board may adopt by rule
for such certificate holders or registrants. Any rule adopted by
the board to impose continuing professional education requirements
on a certificate holder or registrant described in this subdivision
(2) must phase in such requirements over a period of three or more
successive license renewal periods commencing with the first full
license renewal period following the adoption of the rule.
(g) The board shall charge a fee for each application for
initial issuance or renewal of a certificate under this section in such amounts as the board may prescribe by rule: Provided, That
any renewal fee applicable to certificate holder or registrant
described in subdivision (2), subsection (f) of this section shall
be phased in with reference to the schedule adopted in the rule
authorized by subdivision (2), subsection (f) of this section.
(h) Applicants for initial issuance or renewal of certificates
under this section shall list in their applications all states in
which they have applied for or hold certificates or licenses and
any past denial, revocation or suspension of a certificate or
license. Each holder of or applicant for a certificate under this
section shall notify the board in writing, within thirty days after
its occurrence, of any issuance, denial, revocation, or suspension
of a certificate or license by another state.
(i) The board shall issue a certificate to a holder of a
substantially equivalent foreign designation if:
(1) The foreign authority which granted the designation makes
similar provision to allow a person who holds a valid certificate
issued by this state to obtain such foreign authority's comparable
designation;
(2) The foreign designation:
(A) Was duly issued by a foreign authority that regulates the practice of public accountancy and the foreign designation has not
expired or been revoked or suspended;
(B) Entitles the holder to issue reports upon financial
statements; and
(C) Was issued upon the basis of educational, examination, and
experience requirements established by the foreign authority or by
law; and
(3) The applicant:
(A) Received the designation based on educational and
examination standards substantially equivalent to those in effect
at the time in this state;
(B) Within the ten-year period immediately preceding the
application: (i) Completed an experience requirement, substantially
equivalent to the requirement set out in subsection (f), section
four of this article in the jurisdiction which granted the foreign
designation; (ii) completed four years of professional experience
in this state; or (iii) meets such equivalent requirements as the
board may prescribe by rule; and
(C) Passed a uniform qualifying examination in national
standards and an examination on the laws, regulations and code of
ethical conduct in effect in this state acceptable to the board.
(j) An applicant under subsection (i) of this section shall in
the application list all jurisdictions, foreign and domestic, in
which the applicant has applied for or holds a designation or
certificate to practice public accountancy. Each holder of a
certificate issued under subsection (i) of this section shall
notify the board in writing, within thirty days after its
occurrence, of any issuance, denial, revocation or suspension of a
designation or certificate or commencement of a disciplinary or
enforcement action by any jurisdiction.
(k) In addition to the other certificate renewal requirements
of this section, the board may by rule require, as a condition for
renewal of a certificate under this section, that any certificate
holder who performs compilation services for the public other than
through a CPA firm or a PA firm undergo a peer review conducted
with such frequency and in such manner as the board may specify in
such rule.
§30-9-6. Firm permits to practice; attest and compilation
competency; peer review.
(a) The board shall grant or renew permits to practice as a
CPA firm or a PA firm to entities that make application and
demonstrate their qualifications therefor in accordance with this section or to CPA firms originally licensed in another state that
establish an office in this state. A CPA firm must hold a permit
issued under this section in order to provide attest services or to
use the titles "CPAs" or "CPA firm." A PA firm must hold a permit
issued under this section in order to provide attest services or to
use the titles "PAs" or "PA firm."
(b) Permits shall be initially issued and renewed for periods
of not more than one year but in any event shall expire on the
thirtieth day of June following issuance or renewal. Applications
for permits shall be made in such form, and in the case of
applications for renewal, between such dates as the board may by
rule specify, and the board shall grant or deny any such
application filed in proper form within such time period as the
board shall specify by rule. In any case where the applicant seeks
the opportunity to show that issuance or renewal of a permit was
mistakenly denied or where the board is not able to determine
whether it should be granted or denied, the board may issue to the
applicant a provisional permit, which shall expire ninety days
after its issuance or when the board determines whether or not to
issue or renew the permit for which application was made, whichever
shall first occur.
(c) An applicant for initial issuance or renewal of a permit
to practice under this section shall be required to show that:
(1) Notwithstanding any other provision of law, sixty percent
of the ownership of the firm, in terms of financial interests and
voting rights of all partners, officers, shareholders, members or
managers, belongs to holders of certificates issued or renewed
under section five of this article or corresponding provisions of
prior law (in the case of a CPA firm) or holders of registrations
under section seven of this article or corresponding provisions of
prior law (in the case of a PA firm);
(2) Any partner, officer, shareholder, member or manager whose
principal place of business is in this state and who performs
professional services in this state holds a certificate issued or
renewed under section five of this article or corresponding
provisions of prior law or is registered under section seven of
this article or corresponding provisions of prior law;
(3) Any holder of a certificate or registration who is
responsible for supervising attest or compilation services and
signs or authorizes someone to sign a report on financial
statements on behalf of the firm shall meet the competency
requirements set forth in the professional standards for such services which the board shall adopt by rule; and
(4) Any holder of a certificate or registration who signs or
authorizes someone to sign a report on financial statements on
behalf of the firm shall meet the competency requirements set forth
in subdivision (3) of this subsection.
(d) Any CPA firm or PA firm may include nonlicensee owners
provided that:
(1) The firm designates a licensee of this state to be
responsible for the proper registration of the firm and identifies
that individual to the board;
(2) All nonlicensee owners are active participants in the CPA
firm or PA firm or affiliated entities;
(3) The firm's ownership, including nonlicensee owners,
complies with all applicable rules promulgated by the board; and
(4) The firm complies with such other requirements as the
board may impose by rule.
(e) An applicant for initial issuance or renewal of a permit
to practice under this section shall be required to register each
office of the firm within this state with the board and to show
that all attest and compilation services rendered in this state are
under the charge of a person holding a valid certificate issued under section five of this article or corresponding provisions of
prior law or the law of another state or a valid registration
issued under section seven of this article or corresponding
provisions of prior law.
(f) The board shall charge a fee for each application for
initial issuance or renewal of a permit under this section in an
amount which the board shall prescribe by rule.
(g) An applicant for initial issuance or renewal of a permit
under this section shall list in its application all states in
which it has applied for or holds a permit as a CPA firm or a PA
firm and any past denial, revocation or suspension of a permit by
any other state. Each holder of or applicant for a permit under
this section shall notify the board in writing, within thirty days
after its occurrence, of any change in the identities of partners,
officers, shareholders, members or managers whose principal place
of business is in this state, any change in the number or location
of offices within this state, any change in the identity of the
persons in charge of such offices, and any issuance, denial,
revocation, or suspension of a permit by any other state.
(h) Firms which cease to comply with the provisions of the
section due to changes in firm ownership or personnel shall take corrective action to bring the firm back into compliance as quickly
as possible. The board shall define by rule a reasonable period of
time for noncompliant firms to take such corrective action and may
grant noncompliant firms such a reasonable period to take such
corrective action. Failure to bring the firm back into compliance
within the period defined by the board will result in the
suspension or revocation of the firm's permit.
(i) The Board shall by rule require as a condition to renewal
of permits under this section that applicants undergo, on either a
uniform or random basis but in no event more frequently than once
every three years, peer reviews conducted in such manner as the
board shall specify by rule. Such peer reviews shall include a
verification that the individuals in the firm who are responsible
for supervising attest and compilation services or signing or
authorizing someone to sign reports on financial statements on
behalf of the firm meet the experience or competency requirements
set forth in the professional standards for such services which the
board shall adopt by rule. Any such rule requiring peer review:
(1) Shall be promulgated reasonably in advance of the time
when it first becomes effective; and
(2) Shall permit an applicant to comply by showing that it has, within the preceding three years, undergone a peer review
program that is:
(A) A satisfactory equivalent to peer review generally
required pursuant to this subsection and which is subject to
oversight by an oversight body which the board has established or
sanctioned by rule, which body shall periodically report to the
board on the effectiveness of the review program under its charge
and provide to the board a satisfactory listing of the firms that
have participated in the oversight body's peer review program; and
(B) Operated and the documents of which are maintained in a
manner designed to preserve confidentiality, such that neither the
board nor any third party (other than the oversight body) shall
have access to documents furnished or generated in the course of
the review.
§30-9-7. Public accountants and firms of public accountants.
(a) Persons who on the effective date of this article hold
registrations as public accountants issued under prior law shall be
entitled to have their registrations renewed upon fulfillment of
the same continuing professional education requirements, on the
same renewal schedule and subject to the same restrictions and the
payment of the same fees required for the renewal of certificates under section five of this article. Any registration not so
renewed shall expire on the thirtieth day of June following the
effective date of this article. Public accountants holding valid
registrations pursuant to this section or prior law shall be
entitled to perform attest services in a CPA firm or PA firm that
holds a permit issued or renewed pursuant to section six of this
article. Public accountants holding valid registrations pursuant
to this section or prior law shall be entitled to perform
compilation services: (i) In a CPA firm or PA firm that holds a
permit issued or renewed pursuant to section six of this article;
or (ii) in accordance with the individual peer review requirements,
if any, which the board may require by rule pursuant to subsection
(k), section five of this article. A public accountant holding a
valid registration pursuant to this section or prior law shall be
entitled to use the titles "public accountant" and "PA," but no
other title.
(b) Firms of public accountants shall be entitled to receive
permits to be issued and renewed pursuant to the procedures and
requirements established for the issuance and renewal of permits
set forth in section six of this article.
§30-9-8. Appointment of secretary of state as agent.
The filing of an application by a person or a firm not a
resident of this state for a certificate under section five of this
article or a permit under section six of this article shall
constitute the applicant's appointment of the secretary of state as
the applicant's agent upon whom process may be served in any action
or proceeding against the applicant arising out of any transaction
or operation connected with or incidental to services performed by
the applicant while a licensee within this state.
§30-9-9. Enforcement against holders of certificates, permits, and
registrations.
(a) After notice and hearing pursuant to section eleven of
this article, the board may revoke any certificate, permit, or
registration issued under section five, six or seven of this
article or corresponding provisions of prior law; revoke or limit
practice privileges acquired pursuant to section nineteen of this
article; suspend any such certificate, permit, or registration or
refuse to renew any such certificate, permit, or registration for
a period of not more than five years; reprimand, censure, or limit
the scope of practice of any licensee; impose an administrative
fine not exceeding one thousand dollars; or place any licensee on
probation, all with or without terms, conditions, and limitations, for any one or more of the following reasons:
(1) Fraud or deceit in obtaining a certificate, permit or
registration;
(2) Cancellation, revocation, suspension or refusal to renew
a license or practice rights for disciplinary reasons in any other
state for any cause;
(3) Failure, on the part of a holder of a certificate, permit
or registration under section five, six or seven of this article,
to maintain compliance with the requirements for issuance or
renewal of such certificate, permit or registration or to report
changes to the board under subsection (h) or (j), section five, or
subsection (g), section six of this article;
(4) Revocation or suspension of the right to practice before
any state or federal agency;
(5) Dishonesty, fraud, or gross negligence in the performance
of services as a licensee or in the filing or failure to file the
licensee's own income tax returns;
(6) Violation of any provision of this article or any rule
promulgated by the board under this article, including the
violation of any professional standards adopted by the board by
rule;
(7) Violation of any rule of professional conduct adopted by
the board by rule;
(8) Conviction of a felony, or of any crime an element of
which is dishonesty or fraud, under the laws of the United States,
of this state, or of any other state if the acts involved would
have constituted a crime under the laws of this state;
(9) Performance of any fraudulent act while holding a
certificate or registration issued under this article or prior
land;
(10) Any conduct reflecting adversely upon the licensee's
fitness to perform services while a licensee; or
(11) Making any false or misleading statement or verification
in support of an application for a certificate, registration or
permit filed by another person or firm.
(b) In lieu of or in addition to any remedy specifically
provided in subsection (a) of this section, the board may require
of a licensee to submit to peer review conducted in such fashion as
the board may specify or to satisfactorily complete such continuing
professional education programs as the board may specify or both.
(c) In any proceeding in which a remedy provided by subsection
(a) or (b) of this section is imposed, the board may also require the respondent to pay the costs of the proceeding.
§30-9-10. Enforcement procedures; investigations.
(a) The board may, upon receipt of a complaint or other
information suggesting violations of this article or of the rules
of the board, conduct investigations to determine whether there is
probable cause to institute proceedings under sections eleven,
fourteen or fifteen of this article against any person or firm for
such violation, but an investigation under this section shall not
be a prerequisite to such proceedings in the event that a
determination of probable cause can be made without investigation.
In aid of such investigations, the board or the chairperson thereof
may issue subpoenas to compel witnesses to testify or to produce
evidence or both.
(b) The board may designate a member, or any other person of
appropriate competence, to serve as investigating officer to
conduct an investigation. Upon completion of an investigation, the
investigating officer shall file a report with the board. The
board either shall find probable cause or lack of probable cause
upon the basis of the report or shall return the report to the
investigating officer for further investigation. Unless there has
been a determination of probable cause, the report of the investigating officer, the complaint, if any, the testimony and
documents submitted in support of the complaint or gathered in the
investigation, and the fact of pendency of the investigation shall
be treated as confidential information and shall not be disclosed
to any person except law-enforcement authorities and, to the extent
the board considers necessary in order to conduct the
investigation, the subject of the investigation, persons whose
complaints are being investigated, and witnesses questioned in the
course of the investigation.
(c) Upon a finding of probable cause, if the subject of the
investigation is a licensee or an individual who has acquired
practice privileges pursuant to section nineteen of this article,
the board shall direct that a complaint be issued under section
eleven of this article, and if the subject of the investigation is
not a licensee, the board shall take appropriate action under
section fourteen or fifteen of this article. Upon a finding of no
probable cause, the board shall close the matter and shall
thereafter release information relating thereto only with the
consent of the person or firm under investigation.
(d) The board may review the publicly available professional
work of licensees or individuals who have acquired practice privileges pursuant to section nineteen of this article on a
general and random basis, without any requirement of a formal
complaint or suspicion of impropriety. If the board discovers
reasonable grounds for a more specific investigation as a result of
the review, the board may proceed to conduct an investigation
pursuant to this section.
§30-9-11. Enforcement procedures; hearings by the board.
(a) In any case where probable cause with respect to a
violation by a licensee or an individual who has acquired practice
privileges pursuant to section nineteen of this article has been
determined by the board, whether following an investigation under
section ten of this article, or upon receipt of a written complaint
furnishing grounds for a determination of such probable cause, or
upon receipt of notice of a decision by the board of accountancy of
another state furnishing such grounds, the board shall issue a
complaint setting forth appropriate charges and set a date for
hearing before the board on such charges. Not less than thirty
days prior to the date of the hearing, the board shall serve a copy
of the complaint and notice of the time and place of the hearing
upon the licensee or individual who has acquired practice
privileges pursuant to section nineteen of this article, together with a copy of the board's rules governing proceedings under this
section, either by personal delivery or by mailing a copy thereof
by registered mail to the licensee at the licensee's address last
known to the board or, in the case of an individual who acquired
practice privileges pursuant to section nineteen of this article,
to the address last known to the board or pursuant to paragraph
(D), subdivision (4), subsection (a), section nineteen of this
article.
(b) A respondent shall have the right, reasonably in advance
of the hearing, to examine and copy the report of investigation, if
any, and any documentary or testimonial evidence and summaries of
anticipated evidence in the board's possession relating to the
subject matter of the complaint. The board's rules governing
proceedings under this section shall specify the manner in which
such right may be exercised.
(c) In a hearing under this section the respondent may appear
in person (or, in the case of a firm, through a partner, officer,
director, shareholder, member or manager) or by counsel or both,
may examine witnesses and evidence presented in support of the
complaint, and may present evidence and witnesses on the
respondent's behalf. The respondent shall be entitled, on application to the board, to the issuance of subpoenas to compel
the attendance of witnesses and the production of documentary
evidence.
(d) The evidence supporting the complaint shall be presented
by the investigating officer, by a board member designated for that
purpose, or by counsel. A board member who presents the evidence
or who has conducted the investigation of the matter under section
ten of this article shall not participate in the board's decision
of the matter.
(e) In a hearing under this section the board shall be advised
by counsel, who shall not be the same counsel who presents or
assists in presenting the evidence supporting the complaint under
subsection (d) of this section.
(f) In a hearing under this section neither the board nor the
participants shall be bound by technical rules of evidence.
(g) The board shall cause a stenographic or electronic record
of any hearing held under this section to be made and filed with
the board. A transcript of the stenographic or electronic record
shall not be prepared unless review is sought under subsection (j)
of this section or the board determines that there is other good
cause to prepare a transcript.
(h) In a hearing under this section a recorded vote of a
majority of all members of the board then in office (excluding
members disqualified by reason of subsection (d) of this section)
shall be required to sustain any charge or to impose any penalty
with respect thereto.
(i) If, after service of a complaint and notice of hearing as
provided in subsection (a) of this section, the respondent fails to
appear at the hearing, the board may proceed to hear evidence
against the respondent and may enter such order as it considers
warranted by the evidence, which order shall be final unless the
respondent petitions for review thereof under subsection (j) of
this section: Provided, That within thirty days from the date of
any such order, upon a showing of good cause for the respondent's
failure to appear and defend, the board may set aside the order and
schedule a new hearing on the complaint to be conducted in
accordance with this section.
(j) Any respondent adversely affected by any order of the
board entered after a hearing under this section may obtain
judicial review thereof in accordance with section four, article
five, chapter twenty-nine-a of this code, and may appeal any ruling
resulting from such judicial review in accordance with article five, chapter twenty-nine-a of this code.
(k) In any case where the board renders a decision imposing
discipline against a respondent under this section and section nine
of this article, the board shall examine its records to determine
whether the respondent holds a certificate or a permit in any other
state, and if so, the board shall notify the board of accountancy
of such other state of its decision, by mail, within forty-five
days of rendering the decision. The board may also furnish
information relating to proceedings resulting in disciplinary
action to other public authorities and to private professional
organizations having a disciplinary interest in the respondent.
Where a petition for review has been filed pursuant to subsection
(j) of this section, the notification and furnishing of information
provided for in this subsection shall await the resolution of such
review and, if resolution is in favor of the respondent, no such
notification or furnishing of information shall be made.
§30-9-12. Reinstatement.
(a) In any case where the board has suspended or revoked a
certificate or a permit or registration, revoked or limited
practice privileges acquired pursuant to section nineteen of this
article or refused to renew a certificate, permit, or registration, the board may, upon application in writing by the person or firm
affected and for good cause shown, modify the suspension or reissue
the certificate, permit, or registration or reinstate or remove the
limitations imposed upon practice privileges acquired pursuant to
section nineteen of this article.
(b) The board shall by rule specify the manner in which such
applications shall be made, the times within which they shall be
made, and the circumstances in which hearings will be held thereon.
(c) The board may require, as a condition to the reissuance or
the termination of a suspension of a certificate, permit or
registration or the reinstatement or removal of limitations on
practice privileges acquired pursuant to section nineteen of this
article, an applicant to show successful completion of specified
continuing professional education or a peer review conducted in
such fashion as the board may specify or both.
§30-9-13. Unlawful acts.
(a) No person not holding a valid certificate or registration
issued pursuant to sections five or seven of this article may issue
a report on financial statements of any other person, firm,
organization, or governmental unit or otherwise render or offer to
render any attest or compilation service. This subsection does not prohibit: (1) Any act of a public official or public employee in
the performance of that person's duties as such; or (2) the
performance by any person of other services involving the use of
accounting skills, including the preparation of tax returns,
management advisory services, and the preparation of financial
statements without the issuance of reports thereon. Nonlicensees
may prepare financial statements and issue nonattest transmittals
of information thereon which do not purport to have been performed
in accordance with the statements on standards for accounting and
review services (SSARS) developed by the American institute of
certified public accountants.
(b) No licensee performing attest or compilation services
shall provide those services in a manner other than pursuant to the
statements on standards relating to those services which the board
may adopt by rule.
(c) No person not holding a valid certificate shall use or
assume the title "certified public accountant," the abbreviation
"CPA," or any other title, designation, word, combination of
letters, abbreviation, sign, card, or device that may lead a
reasonable person to believe that such person is a certified public
accountant.
(d) No firm shall provide attest services or assume or use the
title "certified public accountants," the abbreviation "CPAs," or
any other title, designation, word, combination of letters,
abbreviation, sign, card, or device that may lead a reasonable
person to believe that such firm is a CPA firm unless: (1) The
firm holds a valid permit issued under section six of this article;
and (2) ownership of the firm is in accord with this article and
rules promulgated by the board.
(e) No person not holding a valid registration shall assume or
use the title "public accountant," the abbreviation "PA," or any
other title, designation, word, combination of letters,
abbreviation, sign, card, or device that may lead a reasonable
person to believe that such person is a public accountant.
(f) No firm shall provide attest services or assume or use the
title "public accountants," the abbreviation "PAs," or any other
title, designation, word, combination of letters, abbreviation,
sign, card, or device that may lead a reasonable person to believe
that such firm is a PA firm unless: (1) The firm holds a valid
permit issued under section six of this article; and (2) ownership
of the firm is in accord with this article and rules promulgated by
the board.
(g) No person or firm not holding a valid certificate, permit
or registration issued under sections five, six or seven of this
article shall assume or use the titles "certified accountant,"
"chartered accountant," "enrolled accountant," "licensed
accountant," "registered accountant," "auditor," "independent
auditor" or any other title or designation that a reasonable person
may confuse with the titles "certified public accountant" or
"public accountant," or assume or use the abbreviations "CA," "LA,"
"RA," or similar abbreviation that a reasonable person may confuse
with the abbreviations "CPA" or "PA." The title "Enrolled Agent"
and the abbreviation "EA" may only be used by individuals so
designated by the Internal Revenue Service.
(h) No person not holding a valid certificate or registration
issued pursuant to sections five or seven of this article shall
claim to hold one; nor may he or she make any other claim of
licensure or approval related to the preparation of financial
statements or issuance of reports thereon which is false or
misleading. No person or firm not holding a valid certificate,
permit or registration issued under sections five, six or seven of
this article shall use language in any statement relating to the
financial affairs of a person or entity which is conventionally used by licensees in reports on financial statements.
(i) No person not holding a valid certificate or registration
issued pursuant to sections five or seven of this article shall
claim to have used "generally accepted accounting principles,"
"generally accepted accounting standards," "public accountancy
standards," "public accountancy principles," "generally accepted
auditing principles" or "generally accepted auditing standards" in
connection with his or her preparation of any financial statement;
nor may he or she use any of these terms in describing any complete
or partial variation from such standards or principles or to imply
complete or partial conformity with such standards or principles.
(j) No person not holding a valid certificate or registration
issued pursuant to sections five or seven of this article shall use
the words "audit," "audit report," "independent audit," "examine,"
"examination," "opinion" or "review" in a report on a financial
statement.
(k) No person not holding a valid certificate or registration
issued pursuant to sections five or seven of this article shall
state or imply that he or she is tested, competent, qualified or
proficient in financial standards established by: (1) The American
institute of certified public accountants or any agency thereof; (2) the governmental accounting standards board or any agency
thereof; (3) the securities and exchange commission or any agency
thereof; (4) the financial accounting standards board; or (5) any
successor entity to an entity named in this subsection.
(l) No person or firm not holding a valid certificate, permit
or registration issued under sections five, six or seven of this
article shall assume or use any title that includes the words
"accountant," "auditor," or "accounting" in connection with any
other language (including the language of a report) that implies
that such person or firm holds a valid certificate, permit, or
registration or has special competence in accounting or auditing:
Provided, That this subsection does not prohibit any officer,
partner, member, manager or employee of any firm or organization
from affixing that person's own signature to any statement in
reference to the financial affairs of such firm or organization
with any wording designating the position, title, or office that
the person holds therein, nor does this subsection prohibit any act
of a public official or employee in the performance of the person's
duties as such.
(m) No person or firm not holding a valid certificate, permit
or registration issued under sections five, six or seven of this article shall use a professional or firm name or designation that
is deceptive or misleading about the legal form of the firm, or
about the persons who are partners, officers, members, managers or
shareholders of the firm, or about any other matter. No person or
firm holding a valid certificate, permit or registration issued
under sections five, six or seven of this article shall use a
professional or firm name or designation that contains a name or
term other than past or present partners, officers, members,
managers or shareholders of the firm or of a predecessor firm
engaged in the practice of accounting.
(n) None of the preceding subsections of this section shall
apply to a person or firm:
(1) Who holds a certification, designation, degree, or license
granted in a foreign country entitling the holder thereof to engage
in the practice of public accountancy or its equivalent in such
country;
(2) Whose activities in this state are limited to the
provision of professional services to persons or firms who are
residents, governments, or business entities of the country in
which the person holds such entitlement;
(3) Who performs no attest or compilation services and issues no reports with respect to the financial statements of any other
persons, firms, or governmental units in this state; and
(4) Who does not use in this state any title or designation
other than the one under which the person practices in such
country, followed by a translation of such title or designation
into the English language, if it is in a different language, and by
the name of such country.
(o) No holder of a certificate issued under section five of
this article or corresponding provisions of prior law or a
registration issued under section seven of this article or
corresponding provisions of prior law shall perform attest services
in any firm that does not hold a valid permit issued under section
six of this article.
(p) No holder of a certificate issued under section five of
this article or corresponding provisions of prior law or a
registration issued under section seven of this article or
corresponding provisions of prior law shall perform any compilation
of a financial statement other than through a CPA firm or a PA firm
unless such individual: (1) Signs the compilation report as a CPA
or a PA, as applicable; (2) meets the competency requirements
provided in applicable standards; and (3) complies with any requirement for individual peer review that the board may require
by rule pursuant to subsection (k), section five of this article.
(q) Nothing herein shall prohibit a practicing attorney or
firm of attorneys from preparing or presenting records or documents
customarily prepared by an attorney or firm of attorneys in
connection with the attorney's professional work in the practice of
law.
(r) No licensee may, for a commission or referral fee,
recommend or refer to a client any product or service or refer any
product or service to be supplied by a client, or perform for a
contingent fee any professional services for or receive referral
fees, commissions or contingent fees from a client for whom the
licensee or any firm with which the licensee works or associates or
any firm in which the licensee owns an interest performs for that
client:
(A) An audit or review of a financial statement;
(B) A compilation of a financial statement when the licensee
expects, or reasonably might expect, that a third party will use
the financial statement and the licensee's compilation report does
not disclose a lack of independence; or
(C) An examination of prospective financial information.
(2) The prohibition in subdivision (1) of this subsection
applies only during the period in which the licensee is engaged to
perform any of the services listed therein and the period covered
by any historical financial statements involved in any such listed
services.
(s) No licensee may for a contingent fee: (1) Prepare an
original or amended tax return or claim for a tax refund; or (2)
serve as an expert witness.
§30-9-14. Injunctions against unlawful acts.
Whenever, as a result of an investigation under section ten of
this article or otherwise, the board or any other interested person
believes that any person or firm has engaged, or is about to
engage, in any acts or practices which constitute or will
constitute a violation of section thirteen of this article, the
board or any other interested person may make application to any
court of competent jurisdiction for an order enjoining such acts or
practices, and upon a showing that such person or firm has engaged
or is about to engage in any such acts or practices, an injunction,
restraining order, or such other order as may be appropriate may be
granted by such court without bond. The display or uttering by a
person of any printed, engraved or written instrument, bearing the name of such person in conjunction with any of the claims, titles,
words or phrases listed in section thirteen of this article shall,
for purposes of this section, be prima facie evidence that such
person has engaged in such acts.
§30-9-15. Criminal penalties.
(a) Whenever, by reason of an investigation under section ten
of this article or otherwise, the board has reason to believe that
any person or firm has knowingly engaged in acts or practices that
constitute a violation of section thirteen of this article, the
board may bring its information to the attention of the attorney
general or other appropriate law-enforcement officer of any state
who may cause appropriate criminal proceedings to be brought
thereon.
(b) Any person or firm who knowingly violates any provision of
section thirteen of this article shall be guilty of a misdemeanor
and, upon conviction thereof, shall be fined not more than one
thousand dollars, or imprisoned in the county or regional jail not
more than one year, or both fined and imprisoned.
§30-9-16. Single act evidence of practice.
In any action brought under sections eleven, fourteen or
fifteen of this article, evidence of the commission of a single act prohibited by this article shall be sufficient to justify a
penalty, injunction, restraining order, or conviction,
respectively, without evidence of a general course of conduct.
§30-9-17. Confidential communications.
Except by permission of the client for whom a licensee
performs services or the heirs, successors, or personal
representatives of such a client, a licensee shall not voluntarily
disclose information communicated to the licensee by the client
relating to and in connection with services rendered to the client
by the licensee. Such information shall be considered
confidential: Provided, That nothing herein shall be construed as
prohibiting the disclosure of information required to be disclosed
by the standards of the public accounting profession in reporting
on the examination of financial statements or as prohibiting
disclosures in court proceedings, in investigations or proceedings
under sections ten or eleven of this article, in ethical
investigations conducted by private professional organizations, in
the course of peer reviews, to other persons on a need-to-know
basis when such persons are active in the firm and performing
services for such client, or to persons in the firm who need the
information for the sole purpose of assuring quality control within the firm.
§30-9-18. Licensees' working papers; clients' records.
(a) Subject to the provisions of section seventeen of this
article, all statements, records, schedules, working papers, and
memoranda made by a licensee or a partner, shareholder, officer,
director, member, manager or employee of a licensee incident to, or
in the course of, rendering services to a client while a licensee,
shall be and remain the property of the licensee in the absence of
an express agreement between the licensee and the client to the
contrary: Provided, That this subsection shall not apply: (i) To
reports submitted by the licensee to the client; or (ii) to
statements, records, schedules, working papers and memoranda
provided by the client to the licensee or to a partner,
shareholder, officer, director, member, manager or employee of a
licensee. No such statement, record, schedule, working paper, or
memorandum shall be sold, transferred, or bequeathed, without the
consent of the client or the client's personal representative or
assignee, to anyone other than one or more surviving partners,
stockholders, members or new partners, new stockholders, or new
members of the licensee, or any combined or merged firm or
successor in interest to the licensee. Nothing in this subsection should be construed as prohibiting any temporary transfer of
workpapers or other material necessary in the course of carrying
out peer reviews or as otherwise interfering with the disclosure of
information pursuant to section seventeen.
(b) In addition to any statements, records, schedules, working
papers, memoranda or reports required to be furnished or returned
to the client in accordance with subsection (a) of this section, a
licensee shall furnish to a client or former client, upon request
made within a reasonable time after original issuance of the
document in question:
(1) A copy of the tax return of the client;
(2) A copy of any report or other document issued by the
licensee to or for such client and not formally withdrawn or
disavowed by the licensee prior to the request;
(3) A copy of the licensee's working papers, to the extent
that such working papers include records that would ordinarily
constitute part of the client's records and are not otherwise
available to the client; and
(4) Any accounting or other records belonging to, or obtained
from or on behalf of, the client that the licensee removed from the
client's premises or received for the client's account: Provided, That a licensee may make and retain copies of such documents of the
client when they form the basis for work done by the licensee.
(c) Nothing herein shall require a licensee to keep any
workpaper beyond the period prescribed in any other applicable
statute.
§30-9-19. Substantial equivalency.
(a)(1) An individual whose principal place of business is not
in this state and who holds a valid certificate or license as a CPA
from any state: (i) Which the board determines by rule to have CPA
certification requirements that are substantially equivalent to the
CPA certification requirements of the UAA; and (ii) which extends
similar privileges to holders of certificates issued pursuant to
section five of this article shall have all the rights and
privileges of a certificate holder of this state without the need
to obtain a certificate under section five of this article.
However, such individuals shall provide written notification to the
board of their intent to enter the state under this provision.
(2) An individual whose principal place of business is not in
this state and who holds a valid certificate or license as a CPA
from any state: (i) Which the board has not determined by rule to
have CPA certification requirements that are substantially equivalent to the CPA certification requirements of the UAA; and
(ii) which extends similar privileges to holders of certificates
issued pursuant to section five of this article shall have all the
rights and privileges of a certificate holder of this state without
the need to obtain a certificate under section five of this article
if such individual obtains from a national qualification appraisal
service which the board may designate by rule a verification that
such individual's qualifications are substantially equivalent to
the CPA certification requirements of the UAA. However, such
individuals shall provide written notification to the board of
their intent to enter the state under this provision.
(3) The board may designate by rule the national qualification
appraisal service of the national association of state boards of
accountancy for use in subdivisions (1) and (2) of this subsection.
(4) Any individual granted the rights and privileges of a
certificate holder under this subsection hereby consents, as a
condition to the receipt of such rights and privileges:
(A) To the personal and subject matter jurisdiction of the
board concerning all matters within the scope of this article;
(B) To comply with the provisions of this article and all
applicable rules promulgated thereunder;
(C) To the appointment of the secretary of state as his or her
agent upon whom process may be served in any action or proceeding
against the individual arising out of any transaction or operation
connected with or incidental to services performed by the
individual within this state; and
(D) To the appointment of the state board of accountancy of
the state in which he or she is licensed or certified as a CPA as
his or her agent upon which process may be served in an action or
proceeding by the board against the individual.
(b) A certificate holder of this state offering or rendering
services or using his or her CPA title in another state shall be
subject to disciplinary action in this state for an act committed
in another state for which the certificate holder would be subject
to discipline if the act were committed in this state.
Notwithstanding subsection (a) of section ten of this article, the
board shall be required to investigate any complaint made by the
board of accountancy of another state.
§30-9-20. Accounting corporations.
(a) One or more persons who hold a certificate or registration
issued or renewed under sections five or seven of this article or
corresponding provisions of prior law may organize and become a shareholder or shareholders of an accounting corporation domiciled
within this state. An accounting corporation must be issued a
certificate of authorization by the board. An accounting
corporation may include persons who are duly licensed or otherwise
legally authorized to provide compatible professional services:
Provided, That: (1) All persons in direct control or having
personal supervision of the practice and all personnel who act in
behalf of the accounting corporation in the practice of public
accounting hold a certificate or registration issued or renewed
under sections five or seven of this article or corresponding
provisions of prior law; (2) at least sixty percent of the
financial interest in the accounting corporation and at least sixty
percent of the voting rights of all partners, officers and
shareholders in the accounting corporation are held by persons who
hold a certificate or registration issued or renewed under sections
five or seven of this article or corresponding provisions of prior
law; and (3) all persons who have an ownership interest in the
accounting corporation and who do not hold a certificate or
registration issued or renewed under sections five or seven of this
article or corresponding provisions of prior law are active
participants in the accounting corporation or affiliated entities.
(b) An accounting corporation may render public accounting
services only through officers, employees and agents who are
themselves certificated or registered within this state. The terms
"employee" or "agent," as used in this section, do not include
secretaries, clerks, typists or other individuals who are not
usually and ordinarily considered by custom and practice to be
rendering accounting services for which a certificate or
registration is required.
(c) This section does not modify the law as it relates to the
relationship between a person furnishing accounting services and
his or her client, nor does it modify the law as it relates to
liability arising out of such a professional service relationship.
Except for permitting an accounting corporation, this section is
not intended to modify any legal requirement or court rule relating
to ethical standards of conduct required of persons providing
public accounting services.
(d) When not inconsistent with this section, the organization
and procedures of accounting corporations shall conform to the
requirements of article one, chapter thirty-one of this code.
(e) The board may require that those persons subject to this
article must obtain prior board authorization before beginning to act as an accounting corporation and may require by rule a fee for
each application for authorization to form an accounting
corporation. The board may adopt rules: (1) To set reasonable
standards for granting or refusing authorization to act as an
accounting corporation; (2) to require appropriate information
therefor from an accounting corporation applicant; and (3) to
notify the secretary of state that certain persons have been given
authorization by the board to act as an accounting corporation.
(f) Upon determination that a corporation meets the
requirements of this section, the board shall notify the secretary
of state that a certification of authorization has been issued to
the persons or persons making the application. When the secretary
of state receives this notification from the board, he or she shall
attach the authorization to the corporation application and, upon
compliance with the applicable provisions of chapter thirty-one of
this code, the secretary of state may issue to the incorporators a
certificate of incorporation for the accounting corporation, which
then may engage in the practice of public accounting through
persons holding a certificate or a registration under sections five
or seven of this article or corresponding provisions of prior law.
(g) The corporate name of an accounting corporation shall contain the last name or names of one or more of its shareholders
who hold a certificate or a registration under sections five or
seven of this article or corresponding provisions of prior law:
Provided, That if the rules of the board so permit, the corporate
name may contain or include the name or names of former
shareholders or of persons who were associated with a predecessor
partnership or other organization. The corporate name shall also
contain the words "accounting corporation," or the abbreviation
"A.C." The use of the word "company," "corporation" or
"incorporated," or any other words or abbreviations in the name of
an accounting corporation organized under this article which
indicate that such corporation is a corporation, other than the
words "accounting corporation" or the abbreviation "A.C.," is
specifically prohibited.
(h) Nothing in this section shall be construed to prohibit the
employment of a person who holds a certificate or a registration
under sections five or seven of this article or corresponding
provisions of prior law to practice public accounting as an
employee of a corporation other than an accounting corporation, or
to have an ownership interest in a corporation other than an
accounting corporation. A corporation other than an accounting corporation may use a nondeceptive trade name including words such
as, by way of illustration, "computer services," "financial
services," or "general business services," but may not use the
designation "accounting corporation" or the abbreviation "A.C.,"
may not represent that the corporation is engaged in the practice
of public accounting, and may not engage in or offer to engage in
any act prohibited under section thirteen of this article:
Provided, That a corporation other than an accounting corporation
may represent that named persons who hold a certificate or a
registration under sections five or seven of this article or
corresponding provisions of prior law are employees or members of
the corporation.
(i) Any corporation holding a certificate under this article
shall notify the board, in writing, within thirty days after its
occurrence, of: (1) Any change in the identities of its partners,
officers, shareholders, members, managers whose principal place of
business is in this state, or licensed persons in control or having
supervision of the practice of public accounting; or (2) any change
in the number or location of offices within this state.
(j) The provisions of this section are not applicable to
article thirteen, chapter thirty-one-b of this code related to professional limited liability companies and the rules promulgated
thereunder.
(k) A license issued under the provisions of this article may
not be construed to permit a licensee to perform a service or sell
a product when the activity requires a separate license under
federal law or other provision of this code and the licensee does
not hold the separate license. The provisions of this article may
not be construed to permit a person, by reason of licensure under
the provisions of this article or by employment by or ownership in
an accounting firm, to practice law, to appraise real estate, to
act as a real estate broker or salesperson, or to act as a
stockbroker or insurance agent, broker or solicitor, when the
person is not separately licensed to engage in that activity.
(l) Notwithstanding the provisions of subsection (k) of this
section, an accounting corporation may perform a service or sell a
product which is not a traditional accounting service and which
requires a separate license under federal law or other provision of
this code, when an owner of an equity interest in the accounting
corporation holds a valid license as required for the activity, and
supervises and is responsible for the licensed activity, to the
extent permitted by applicable law relating to licensure of the separate activity.
§30-9-21. Commissions, referral fees and contingent fees.
(a) To the extent permitted by reasonable rules of the board,
a licensee may for a contingent fee represent a client before a
taxing authority within the scope of practice of public accounting:
Provided, That this provision may not be construed either to limit
or to expand the scope of practice of public accounting, and may
not be construed to permit the unauthorized practice of law.
(b) All agreements or arrangements in which a licensee is to
be paid a commission, referral fee or contingent fee shall be in
writing, shall state the method by which the fee is to be
determined, shall be signed by both the licensee and the client,
and shall be delivered to the client before the performance of any
services or the delivery of any product to which the commission,
referral fee or contingent fee relates. A contingent fee
arrangement shall state the method of calculation of the fee,
including the percentage or percentages which shall accrue to the
licensee in the event of all foreseeable outcomes, the expenses to
be deducted from any recovery, collection or other amount on which
the fee may be based, and whether the expenses are to be deducted
before or after the contingent fee is calculated.
(c) The board shall propose rules for legislative approval in
accordance with chapter twenty-nine-a of this code that establish
a procedure to assure that all commissions, referral fees and
contingent fees charged by and paid to licensees are reasonable.
§30-9-22. Inapplicability of article.
(a) Nothing contained in this article may be construed to
prevent any person from describing himself or herself as an
"accountant" or a "bookkeeper" or from stating that he or she
practices accountancy or bookkeeping; nor, subject to certification
and registration requirements herein imposed, may this article be
construed to prevent any person from performing services involving
the use of accounting skills, rendering tax services, management
advisory or consulting services, or in the keeping of books of
account and related accounting records, or from preparing,
compiling, assembling or drafting financial statements without the
issuance of a report thereon.
(b) The prohibitions of this section thirteen and the other
provisions of this article may not be construed to preclude a
person or firm not holding a valid certificate, permit or
registration issued under sections five, six or seven of this
article from using the following or substantially similar language: "I (We) have compiled the accompanying (financial statements) of
(name of entity) as of (time period) for the (period) then ended.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management
(owners). I (We) have not audited or reviewed the accompanying
financial statements and, accordingly, do not express an opinion or
any other form of assurance on them. Management has elected to
omit substantially all (or certain) required disclosures (and the
statement of changes in financial position). If omitted
disclosures were included in the financial statements, they might
influence the user's conclusions about the (entity's) financial
position, results of operations and changes in financial position.
Accordingly, these financial statements are not designed for those
who are not informed about these matters."
(c) Nothing contained in this article may be construed to
prohibit an employee from furnishing services to his or her
employer.
§30-9-23. Construction; severability.
If any provision of this article or the application thereof to
any person or entity or in any circumstances is held invalid, the
remainder of the article and the application of such provision to others or in other circumstances shall not be affected thereby.
§30-9-24. Termination date.
The board shall terminate on the first day of July, two
thousand three, pursuant to the provisions of article ten, chapter
four of this code.
NOTE: The purpose of this bill is to adopt the revised third
edition of the Uniform Accountancy Act, published jointly by the
American Institute of Certified Public Accountants and the National
Association of State Boards of Accountancy (the "UAA"). This bill
would rewrite or recodify most of the provisions of the accountancy
statute currently found in W.Va. Code §§30-9-1, et seq.
The chief innovation of this bill is the "substantial
equivalency" standard, which would permit CPAs certified in other
states to qualify to practice in West Virginia without becoming
certified in this state if the certification requirements of those
states were deemed to be "substantially equivalent" to West
Virginia's certification requirements and if those states extend
similar privileges to West Virginia CPAs. Other important changes
include the requirement that "attest services" (a term which would
not include compilations) be performed only by CPAs or
"grandfathered" public accountants under West Virginia law, and
then only within the context of a CPA firm or PA firm holding under
a permit under West Virginia law. The bill contains numerous other
changes to the current law.
This bill would rewrite current §§30-9-1, et seq.; therefore,
strike-throughs and underscoring have been omitted.