By:  Sibley, Carona                                    S.B. No. 275

              Haywood

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to certain acts of public accountants.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Title 4, Civil Practice and Remedies Code, is

 1-4     amended by adding Chapter 91 to read as follows:

 1-5                CHAPTER 91.  LIABILITY OF PUBLIC ACCOUNTANTS

 1-6           Sec. 91.001.  DEFINITIONS.  In this chapter:

 1-7                 (1)  "Accountant" means a person or firm holding a

 1-8     certificate or registration issued by the Texas State Board of

 1-9     Public Accountancy.

1-10                 (2)  "Accounting services" means reporting on an

1-11     examination of historical or prospective financial statements or

1-12     issuing a review or compilation report or issuing other reports

1-13     covered by generally accepted auditing standards.

1-14                 (3)  "Claimant" means a party, individual, or entity,

1-15     including a plaintiff, counterclaimant, cross-claimant, or

1-16     third-party claimant, seeking recovery of damages from an

1-17     accountant.

1-18                 (4)  "Client" means the party, individual, or entity

1-19     who engages an accountant to provide certain public accounting

1-20     services covered by this chapter.

1-21                 (5)  "Specified transaction" means a particular

1-22     transaction between a client and a claimant.  This definition is

1-23     not intended to require that the accountant be aware of detailed

 2-1     transaction terms at the time the accountant's services were

 2-2     engaged or as agreed with the client after the time of the

 2-3     engagement.

 2-4           Sec. 91.002.  LIABILITY LIMITED.  Except as provided by

 2-5     Section 91.003, an accountant is not liable for negligence to a

 2-6     claimant for an act or omission in connection with the provision of

 2-7     accounting services.

 2-8           Sec. 91.003.  EXCEPTIONS.  Section 91.002 does not apply if:

 2-9                 (1)  the claimant is the client; or

2-10                 (2)  the accountant:

2-11                       (A)  was aware at the time the services of the

2-12     accountant were engaged, or agreed after the time of the

2-13     engagement, that the financial statement or other information would

2-14     be made available to the claimant or a similarly situated claimant;

2-15     and

2-16                       (B)  had actual knowledge that the claimant, or a

2-17     similarly situated claimant, would use the financial statement or

2-18     information in connection with a specified transaction; or

2-19                 (3)  the act or omission of the accountant involves

2-20     fraud or gross negligence.

2-21           Sec. 91.004.  WAIVER.  An accountant may, in writing, waive

2-22     the provisions of this chapter.

2-23           SECTION 2.  This Act takes effect September 1, 1997, and

2-24     applies only to a suit that is commenced on or after that date.  A

2-25     suit that is commenced before the effective date of this Act is

 3-1     governed by the law in effect immediately before the effective date

 3-2     of this Act, and that law is continued in effect for that purpose.

 3-3           SECTION 3.  The importance of this legislation and the

 3-4     crowded condition of the calendars in both houses create an

 3-5     emergency and an imperative public necessity that the

 3-6     constitutional rule requiring bills to be read on three several

 3-7     days in each house be suspended, and this rule is hereby suspended.