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. 1-65 * * * * *