1-1 By: Harris S.B. No. 309 1-2 (In the Senate - Filed January 24, 1995; January 25, 1995, 1-3 read first time and referred to Committee on Economic Development; 1-4 April 6, 1995, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 6, Nays 2; April 6, 1995, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 309 By: Harris 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to certain acts of public accountants. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Title 4, Civil Practice and Remedies Code, is 1-13 amended by adding Chapter 91 to read as follows: 1-14 Chapter 91. PUBLIC ACCOUNTANTS 1-15 Sec. 91.001. DEFINITIONS. In this chapter: 1-16 (1) "Accountant" means a person or firm holding a 1-17 certificate or registration issued by the Texas State Board of 1-18 Public Accountancy. 1-19 (2) "Claimant" means a party, including a plaintiff, 1-20 counterclaimant, cross-claimant, or third-party claimant, seeking 1-21 recovery of damages from an accountant. 1-22 (3) "Client" means the party directly engaging an 1-23 accountant to provide public accountancy services, including 1-24 examining, compiling, reviewing, certifying, auditing, providing an 1-25 opinion about, or otherwise reporting on a financial statement or 1-26 other information. 1-27 Sec. 91.002. LIABILITY LIMITED. Except as provided by 1-28 Section 91.003, an accountant is not liable to the claimant for 1-29 negligence with respect to an act or omission in connection with 1-30 the provision of public accountancy services including examining, 1-31 compiling, reviewing, certifying, auditing, providing an opinion 1-32 about, or otherwise reporting on a financial statement or other 1-33 information. 1-34 Sec. 91.003. EXCEPTIONS. Section 91.002 does not apply: 1-35 (1) where the claimant is the client; or 1-36 (2) where the accountant: 1-37 (A) was aware at the time the services of the 1-38 accountant were engaged, or agreed with the client after the time 1-39 of the engagement, that a financial statement or other information 1-40 would be made available to the claimant for use in connection with 1-41 a specified transaction and the claimant was specifically 1-42 identified to the accountant; 1-43 (B) communicated directly with the claimant 1-44 concerning the financial statement or other information; and 1-45 (C) was aware that the claimant intended to rely 1-46 on the financial statement or other information in connection with 1-47 the specified transaction and communicated that awareness by words 1-48 or conduct; or 1-49 (3) to acts or omissions by an accountant involving 1-50 fraud. 1-51 SECTION 2. This Act takes effect September 1, 1995, and 1-52 applies only to a suit that is commenced on or after that date. A 1-53 suit that is commenced before the effective date of this Act is 1-54 governed by the law in effect immediately before the effective date 1-55 of this Act, and that law is continued in effect for that purpose. 1-56 SECTION 3. The importance of this legislation and the 1-57 crowded condition of the calendars in both houses create an 1-58 emergency and an imperative public necessity that the 1-59 constitutional rule requiring bills to be read on three several 1-60 days in each house be suspended, and this rule is hereby suspended. 1-61 * * * * *