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.