Senate Bill No. 30
(By Senators Love, Ross and Boley)
____________
[Introduced February 14, 2001; referred to the Committee on the
Judiciary.]
____________
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 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 section 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. 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 the 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 the language,
and it includes any other form of language that is conventionally
understood to imply such assurance or the special knowledge or
competence.
"Respondent" means: (1) A licensee or an individual who has
acquired practice privileges under section nineteen of this
article; and (2) 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 or her membership if he: (1) Has his or
her certificate or registration suspended or revoked by the board;
or (2) 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 or her official duties and shall reimburse each member for his or her
actual and necessary expenses incurred in the discharge of his or
her 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 has 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 also has 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 are 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) Any other rules as the board considers necessary or
appropriate for implementing the provisions and the purposes of
this article.
No rule promulgated by the board may 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
one, 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
one, 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 any 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 the 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 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 the administrative services with respect
to the examination as it considers 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 is considered 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 the
certificates theretofore issued are, for all purposes, considered
certificates issued under this article and subject to the
provisions of this article: Provided, That persons holding
certificates issued prior to the effective date of this article
must renew the 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
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 application
filed in proper form within the time period the board specifies 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 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 the principal place of
business. The board shall issue a certificate to 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
subsection (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 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 or she 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 the continuing
professional education requirements as the board adopts by rule for
the 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 the 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
amounts the board prescribes 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 the 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 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 a frequency and in a 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 expire on the thirtieth
day of June following issuance or renewal. Applications for
permits shall be made in a form, and in the case of applications
for renewal, between dates the board specifies by rule, and the
board shall grant or deny any application filed in proper form
within the time period as the board specifies 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 expires
ninety days after its issuance or when the board determines whether
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 the
services which the board adopts 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 any 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 the 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 corrective action and may grant noncompliant firms a reasonable period to take 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 a manner specified by
the board by rule. 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 the services which the board shall adopt
by rule. Any rule requiring peer review:
(1) Must be promulgated reasonably in advance of the time when
it first becomes effective; and
(2) Must 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, that neither the board
nor any third party (other than the oversight body) may 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 are
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 expires 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 are 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 are 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 is entitled to use the titles
"public accountant" and "PA," but no other title.
(b) Firms of public accountants are 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 constitutes
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 certificate, permit or registration or refuse
to renew any 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 the 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 a manner
specified by the board or to satisfactorily complete continuing
professional education programs specified by the board or to submit
to peer review and complete professional education programs.
(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 section eleven,
fourteen or fifteen of this article against any person or firm for
violation, but an investigation under this section is not a
prerequisite to those proceedings if a determination of probable
cause can be made without investigation. In aid of these
investigations, the board or the chairperson thereof may issue
subpoenas to compel witnesses to testify or to produce evidence or
both testify and produce evidence.
(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 must find probable cause or lack of probable cause
upon the basis of the report or 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 may 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 may 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 grounds, the board shall issue a complaint
setting forth appropriate charges and set a date for hearing before
the board on the 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 has 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
the 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 in
person and by counsel, may examine witnesses and evidence presented
in support of the complaint, and may present evidence and witnesses
on the respondent's behalf. The respondent is 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 may 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 may 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 are 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
may 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)
is 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 an order as it considers
warranted by the evidence, which order is final unless the
respondent petitions for review thereof under subsection (j) of
this section: Provided, That within thirty days from the date of
any 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 the 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 the 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 review and, if resolution
is in favor of the respondent, no notification or furnishing of
information may 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 applications are made, the times within which they must 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 the
manner specified by the board or both continuing professional
education or peer review.
§30-9-13. Unlawful acts.
(a) Any person not holding a valid certificate or registration
issued pursuant to section 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 may
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) Any person not holding a valid certificate may 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 the person is a certified public
accountant.
(d) No firm may 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 the 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) Any person not holding a valid registration may 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 the person is a public accountant.
(f) No firm may 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 the 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) Any person or firm not holding a valid certificate, permit
or registration issued under section five, six or seven of this
article may 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) Any person not holding a valid certificate or registration
issued pursuant to section five or seven of this article may 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. Any
person or firm not holding a valid certificate, permit or
registration issued under section five, six or seven of this
article may 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) Any person not holding a valid certificate or registration
issued pursuant to section five or seven of this article may 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 the standards or principles or to imply
complete or partial conformity with the standards or principles.
(j) Any person not holding a valid certificate or registration
issued pursuant to section five or seven of this article may use
the words "audit," "audit report," "independent audit," "examine,"
"examination," "opinion" or "review" in a report on a financial
statement.
(k) Any person not holding a valid certificate or registration
issued pursuant to section five or seven of this article may 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) Any person or firm not holding a valid certificate, permit or registration issued under section five, six or seven of this
article may 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 the 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 the 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.
(m) Any person or firm not holding a valid certificate, permit
or registration issued under section five, six or seven of this
article may 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. Any person or
firm holding a valid certificate, permit or registration issued under section five, six or seven of this article may 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 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 that
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 that
country, followed by a translation of the title or designation into the English language, if it is in a different language, and by the
name of the 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 may 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 may perform any compilation
of a financial statement other than through a CPA firm or a PA firm
unless the 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 prohibits 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) (1) 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 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 these acts
or practices, and upon a showing that the person or firm has
engaged or is about to engage in those acts or practices, an
injunction, restraining order or other order as may be appropriate
may be granted by the court without bond. The display or uttering
by a person of any printed, engraved or written instrument, bearing
the name of the person in conjunction with any of the claims,
titles, words or phrases listed in section thirteen of this article
are, for purposes of this section, prima facie evidence that the
person has engaged in those 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 is 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 section eleven, fourteen or
fifteen of this article, evidence of the commission of a single act
prohibited by this article is 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 a client, a licensee may 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. This information is considered confidential:
Provided, That nothing herein may 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 section 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 the persons are
active in the firm and performing services for the 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,
are 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 does 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 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
may 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 of this article.
(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 the 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 the 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 the documents of the
client when they form the basis for work done by the licensee.
(c) Nothing herein requires 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 has 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, these
individuals must 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 has 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
the individual obtains from a national qualification appraisal
service which the board may designate by rule a verification that
the individual's qualifications are substantially equivalent to the
CPA certification requirements of the UAA. However, these individuals must 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 these 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 is 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 must 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 section 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 section 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 section
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 section 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 person or persons making the application. When the secretary
of state receives this notification from the board, he or she must
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 section five
or seven of this article or corresponding provisions of prior law.
(g) The corporate name of an accounting corporation must
contain the last name or names of one or more of its shareholders
who hold a certificate or a registration under section 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 the corporation is a corporation, other than the
words "accounting corporation" or the abbreviation "A.C.," is
specifically prohibited.
(h) Nothing in this section prohibits the employment of a
person who holds a certificate or a registration under section 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 section 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
must 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 does
not 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 does not 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 does not either limit or expand the
scope of practice of public accounting, and does not 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 must 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 must state the method of calculation of the fee,
including the percentage or percentages which 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 prevents 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 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 section thirteen and other provisions
of this article do not preclude a person or firm not holding a
valid certificate, permit or registration issued under section
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 prohibits 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 are not affected thereby.
§30-9-24. Termination date.
The board shall terminate on the first day of July, two
thousand four, 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 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.