HBA-DMH H.B. 2755 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2755 By: Uher Licensing & Administrative Procedures 3/30/2001 Introduced BACKGROUND AND PURPOSE The public accounting profession is a key component of business and commerce in Texas. Because of changes in the profession brought about by technology, the globalization of business and the demand for a wide array of services being sought by the public, modernization of accounting regulation is necessary. New concepts must be embraced to regulate the profession across state and federal boundaries, to allow the assimilation of diverse financial disciplines into a single organization, to recognize new national competency standard for attest services and to concentrate regulation in those areas where public trust is highest. House Bill 2755 modernizes accounting regulation by simplifying yet strengthening the practice of certified public accountants (CPA) across state lines, allowing financial professionals of other disciplines to partner with CPAs in one organization, strengthening required competency standards for attest services, and focusing regulation of those attest services while maintaining the CPA's requirement to offer competence, integrity, and objectivity in all services offered to the public. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas State Board of Public Accountancy in SECTION 6 (Section 901.158, Occupations Code), SECTION 11 (Section 901.165, Occupations Code), SECTION 14 (Section 901.254, Occupations Code), SECTION 17 (Section 901.260, Occupations Code), SECTION 19 (Section 901.304, Occupations Code), SECTION 22 (Section 901.307, Occupations Code), SECTION 24 (Sections 901.351 and 901.354, Occupations Code), SECTION 31 (Section 901.456, Occupations Code) and SECTION 42 of this bill. ANALYSIS House Bill 2755 amends the Occupations Code to establish provisions for the regulation of assurance and attest services in the scope of the Public Accountancy Act (Act). The bill authorizes the Texas State Board of Public Accountancy (board) to contract with another person to conduct the uniform Certified Public Accountant (CPA) examination (Sec. 901.301). The bill modifies the fees the board is required to collect for each CPA examination (Sec. 901.304). The bill deletes the provision providing that a person must attain a grade of at least 75 percent on each subject of the examination to pass the examination, and requires the board by rule to determine the grade a person must attain to pass the examination (Sec. 901.307). The bill requires the board to adopt rules for examination or reexamination fees and grading not later than January 1, 2002 (SECTION 42). The bill requires the board by rule to provide for the reporting, rather than biennial reporting, of continuing professional education relating to a license holder. The bill requires an individual license holder to participate in a program of continuing professional education designed to maintain professional competency that complies with board rule (Sec. 901.411). The bill modifies the circumstances for which the board is required to issue a certificate or license to a person who holds a certificate or license in another state, modifies practice privileges of an out-of-state certificate or license holder, and provides for the appointment of the secretary of state as the non resident certificate or permit holder's agent (Secs. 901.259, 901.412, and 901.605). The bill provides that an applicant for the uniform CPA examination must have completed specified semester hours including an accounting concentration as determined by board rule (Sec. 901.254). The bill authorizes the board to issue a certificate to an applicant who holds a substantially equivalent foreign credential if certain conditions and requirements are met (Sec. 901.260). The bill requires the board to investigate any complaint made by the regulatory agency of another state or jurisdiction concerning a license holder and sets forth provisions for disciplinary actions for acts committed in another state (Sec. 901.511). The bill authorizes the board to adopt by rule a system to investigate the background of an individual owner of a CPA firm who is not a license holder under the Act (Sec. 901.354). The bill modifies permit information and eligibility requirements for ownership of a partnership and sole proprietor firm (Sec. 901.354). The bill deletes specific requirements for license renewal and requires the board to specify: _the form of the application for a license; _the term of a license; and _the requirements for renewal of a license (Sec. 901.403) The bill clarifies the use of titles by certain certificate and license holders (Secs. 901.452-901.454). The bill establishes issuing requirements for a report on a financial statement and requires the board to prescribe by rule safe harbor language that a person who is not a license holder may use without committing a financial statement reporting violation (Sec. 901.456). The bill modifies the boards authority to take disciplinary action (Secs. 901.501 and 901.502). The bill removes the prohibitions limiting the rule adopting powers of the board relating to advertising or competitive bidding by a license holder and authorizes the board to establish rules for regulating competitive practices (Sec. 901.158). The bill redesignates the quality review program as the peer review program and sets forth provisions regarding verification (Sec. 901.159). The bill specifies that specified actions of an attorney or firm of attorneys or a representative of a federally insured depository institution are not restricted under the Act (Sec. 901.004). The bill expands to each board member and employee, volunteer, or agent of the board immunity from personal liability for an action made in good faith (Sec. 901.162). The bill sets forth provisions regarding intervention in an action by the board and evidence to justify a penalty (Secs. 901.603 and 901.604). The bill repeals law relating to the practice of public accountancy, an application for registration, and a temporary practice permit for certain out-of-state or foreign applicants ( SECTION 41). EFFECTIVE DATE September 1, 2001.