1-1           By:  Sibley, Carona, Haywood                     S.B. No. 275

 1-2           (In the Senate - Filed January 23, 1997; January 27, 1997,

 1-3     read first time and referred to Committee on Economic Development;

 1-4     March 4, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 9, Nays 0; March 4, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 275                   By:  Sibley

 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.  LIABILITY OF 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)  "Accounting services" means reporting on an

1-20     examination of historical or prospective financial statements or

1-21     issuing a review or compilation report or issuing other reports

1-22     covered by generally accepted auditing standards.

1-23                 (3)  "Claimant" means a party, individual, or entity,

1-24     including a plaintiff, counterclaimant, cross-claimant, or

1-25     third-party claimant, seeking recovery of damages from an

1-26     accountant.

1-27                 (4)  "Client" means the party, individual, or entity

1-28     who engages an accountant to provide certain public accounting

1-29     services covered by this chapter.

1-30                 (5)  "Specified transaction" means a particular

1-31     transaction between a client and a claimant.  This definition is

1-32     not intended to require that the accountant be aware of detailed

1-33     transaction terms at the time the accountant's services were

1-34     engaged or as agreed with the client after the time of the

1-35     engagement.

1-36           Sec. 91.002.  LIABILITY LIMITED.  Except as provided by

1-37     Section 91.003, an accountant is not liable for negligence to a

1-38     claimant for an act or omission in connection with the provision of

1-39     accounting services.

1-40           Sec. 91.003.  EXCEPTIONS.  Section 91.002 does not apply if:

1-41                 (1)  the claimant is the client; or

1-42                 (2)  the accountant:

1-43                       (A)  was aware at the time the services of the

1-44     accountant were engaged, or agreed after the time of the

1-45     engagement, that the financial statement or other information would

1-46     be made available to the claimant or a similarly situated claimant;

1-47     and

1-48                       (B)  had actual knowledge that the claimant, or a

1-49     similarly situated claimant, would use the financial statement or

1-50     information in connection with a specified transaction; or

1-51                 (3)  the act or omission of the accountant involves

1-52     fraud or gross negligence.

1-53           Sec. 91.004.  WAIVER.  An accountant may, in writing, waive

1-54     the provisions of this chapter.

1-55           SECTION 2.  This Act takes effect September 1, 1997, and

1-56     applies only to a suit that is commenced on or after that date.  A

1-57     suit that is commenced before the effective date of this Act is

1-58     governed by the law in effect immediately before the effective date

1-59     of this Act, and that law is continued in effect for that purpose.

1-60           SECTION 3.  The importance of this legislation and the

1-61     crowded condition of the calendars in both houses create an

1-62     emergency and an imperative public necessity that the

1-63     constitutional rule requiring bills to be read on three several

1-64     days in each house be suspended, and this rule is hereby suspended.

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