By: Armbrister, Moncrief S.B. No. 1358
Nelson
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of the practice of public accounting.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subsection (a), Section 901.002, Occupations
1-5 Code, is amended to read as follows:
1-6 (a) In this chapter:
1-7 (1) "Attest service" means:
1-8 (A) an audit or other engagement required by the
1-9 board to be performed in accordance with the auditing standards
1-10 adopted by the American Institute of Certified Public Accountants
1-11 or another national accountancy organization recognized by the
1-12 board;
1-13 (B) an engagement required by the board to be
1-14 performed in accordance with standards for accounting and review
1-15 services adopted by the American Institute of Certified Public
1-16 Accountants or another national accountancy organization recognized
1-17 by the board;
1-18 (C) an engagement required by the board to be
1-19 performed in accordance with standards for attestation engagements
1-20 adopted by the American Institute of Certified Public Accountants
1-21 or another national accountancy organization recognized by the
1-22 board; or
1-23 (D) any other assurance service required by the
1-24 board to be performed in accordance with professional standards
1-25 adopted by the American Institute of Certified Public Accountants
2-1 or another national accountancy organization recognized by the
2-2 board.
2-3 (2) "Board" means the Texas State Board of Public
2-4 Accountancy.
2-5 (3) [(2)] "Certificate" means a certificate issued to
2-6 a certified public accountant.
2-7 (4) [(3)] "Certified public accountant" means a person
2-8 who holds a certificate issued under this chapter.
2-9 (5) "Certified public accountancy firm" means a person
2-10 who holds a firm license.
2-11 (6) "Client" means a person who enters into an
2-12 agreement with a license holder or a license holder's employer to
2-13 receive a professional accounting service.
2-14 (7) [(4)] "Corporation" means a corporation authorized
2-15 by a statute applicable to this state or by an equivalent law of
2-16 another state or a foreign country, including a professional public
2-17 accounting corporation organized under The Texas Professional
2-18 Corporation Act (Article 1528e, Vernon's Texas Civil Statutes).
2-19 (8) [(5)] "Firm" means a sole proprietorship,
2-20 partnership, corporation, limited liability company, or other
2-21 business entity engaged in the practice of public accountancy.
2-22 (9) "Firm license" means a license issued under
2-23 Subchapter H.
2-24 (10) "License" means a license issued under Subchapter
2-25 I.
2-26 (11) "Peer review" means the study, appraisal, or
3-1 review of the professional accounting work of a public accountancy
3-2 firm that performs attest services by a certificate holder who is
3-3 not affiliated with the firm.
3-4 (12) "Professional accounting services" or
3-5 "professional accounting work" means services or work that requires
3-6 the specialized knowledge or skills associated with certified
3-7 public accountants, including:
3-8 (A) issuing reports on financial statements;
3-9 (B) providing management or financial advisory
3-10 or consulting services;
3-11 (C) preparing tax returns; and
3-12 (D) providing advice in tax matters.
3-13 (13) [(6) "Practice unit" means an office of a firm
3-14 that is required to be registered with the board to practice public
3-15 accountancy.]
3-16 [(7)] "Public accountant" means a person authorized to
3-17 practice public accountancy under the Public Accountancy Act of
3-18 1945 (Article 41a, Vernon's Texas Civil Statutes).
3-19 [(8) "Sole proprietorship" means an unincorporated
3-20 firm that is owned and controlled by one person engaged in the
3-21 practice of public accountancy.]
3-22 SECTION 2. Subchapter A, Chapter 901, Occupations Code, is
3-23 amended by adding Section 901.0021 to read as follows:
3-24 Sec. 901.0021. MEANING AND IMPLICATION OF REPORT. (a) In
3-25 this chapter, a reference to a report used with respect to a
3-26 financial statement means an opinion, report, or other document,
4-1 including an assurance prepared in accordance with standards for
4-2 accounting and review services adopted by the American Institute of
4-3 Certified Public Accountants or another national accountancy
4-4 organization recognized by the board, that:
4-5 (1) states or implies assurance as to the reliability
4-6 of the financial statement; and
4-7 (2) includes or is accompanied by a statement or
4-8 implication that the person issuing the opinion, report, or other
4-9 document has special knowledge or competence in accounting or
4-10 auditing.
4-11 (b) A statement or implication of assurance as to the
4-12 reliability of a financial statement or as to the special knowledge
4-13 or competence of the person issuing the opinion, report, or other
4-14 document includes any form of language that is conventionally
4-15 understood to constitute such a statement or implication.
4-16 (c) A statement or implication of special knowledge or
4-17 competence in accounting or auditing may arise from:
4-18 (1) the use by the issuer of the opinion, report, or
4-19 other document of a name or title indicating that the person is an
4-20 accountant or auditor; or
4-21 (2) the language of the opinion, report, or other
4-22 document itself.
4-23 SECTION 3. Subsections (a) and (c), Section 901.003,
4-24 Occupations Code, are amended to read as follows:
4-25 (a) In this chapter, "practice of public accountancy" means:
4-26 (1) the performance for a client by a person who is
5-1 certified, licensed, or registered under this chapter of a service
5-2 that involves the use of accounting, attesting, or auditing skills;
5-3 (2) the performance or offer of performance for a
5-4 client or potential client by a person who represents to the public
5-5 that the person is certified, licensed, or registered under this
5-6 chapter of a service that involves the use of accounting,
5-7 attesting, or auditing skills;
5-8 (3) the performance of activities of a person or
5-9 practice unit licensed under this chapter in:
5-10 (A) preparing or reporting on a financial
5-11 statement or report that is to be used by an investor, [unless the
5-12 report is prepared for internal use by] the management of an
5-13 organization, a third party, or a financial institution, unless the
5-14 report is prepared for internal use only; or
5-15 (B) preparing a tax return that is filed with a
5-16 taxing authority; or
5-17 (4) the supervision of an activity described by
5-18 Subdivision (3).
5-19 (c) For purposes of this section, a person represents to the
5-20 public that the person is certified, licensed, or registered under
5-21 this chapter if the person makes an oral or written representation
5-22 that the person is certified, licensed, or registered. A written
5-23 representation includes a representation communicated by office
5-24 sign, business card, letterhead, or advertisement. A
5-25 representation does not include:
5-26 (1) the display of an original certificate or
6-1 registration unless a license is also displayed;
6-2 (2) a representation made by a faculty member of an
6-3 educational institution solely in connection with the duties of the
6-4 person as a faculty member; or
6-5 (3) a representation in a book, article, or other
6-6 publication, or a representation made in connection with the
6-7 promotion of the publication, unless the representation includes an
6-8 offer to perform a service or to sell a product other than the
6-9 publication.
6-10 SECTION 4. Subsection (a), Section 901.004, Occupations
6-11 Code, is amended to read as follows:
6-12 (a) This chapter does not:
6-13 (1) restrict an official act of a person acting in the
6-14 person's capacity as:
6-15 (A) an officer of the state or of a county,
6-16 municipality, or other political subdivision, including a county
6-17 auditor;
6-18 (B) an officer of a federal department or
6-19 agency; or
6-20 (C) an assistant, deputy, or employee of a
6-21 person described by Paragraph (A) or (B);
6-22 (2) prohibit a person who is not a certified public
6-23 accountant or public accountant from serving as an employee of:
6-24 (A) a certified public accountant or public
6-25 accountant licensed by the board; or
6-26 (B) a firm composed of certified public
7-1 accountants or public accountants licensed by the board; [or]
7-2 (3) prohibit a person licensed by the federal
7-3 government as an enrolled agent from performing an act or using a
7-4 designation authorized by federal law;
7-5 (4) prohibit an attorney or firm of attorneys from
7-6 preparing or presenting records or documents customarily prepared
7-7 by an attorney or firm of attorneys in connection with the
7-8 attorney's or firm's professional work in the practice of law; or
7-9 (5) prohibit an employee, officer, or director of a
7-10 financial institution, as defined by Section 201.101, Finance Code,
7-11 from preparing or presenting records or documents when lawfully
7-12 acting within the scope of the activities of the institution.
7-13 SECTION 5. Sections 901.005 and 901.006, Occupations Code,
7-14 are amended to read as follows:
7-15 Sec. 901.005. FINDINGS; PUBLIC POLICY; PURPOSE. (a) The
7-16 practice of public accountancy is a learned profession that
7-17 requires specialized education and experience. That practice has
7-18 historically been defined to include a broad range of financial,
7-19 advisory, and attest services, including:
7-20 (1) issuing a report on a financial statement;
7-21 (2) preparing a tax return;
7-22 (3) providing advice in a tax matter;
7-23 (4) providing management or financial advisory or
7-24 consulting services;
7-25 (5) recommending the sale of a product if the
7-26 recommendation requires or implies accounting or auditing skill;
8-1 and
8-2 (6) providing litigation support services.
8-3 (b) The attest service is part of the practice of public
8-4 accountancy. That service provides assurance to the public,
8-5 especially the public markets, that the management of commercial
8-6 entities has reasonably described the financial status of those
8-7 entities. That assurance contributes to the strength of the
8-8 economy and public markets of this state and to the soundness and
8-9 reliability of the financial system. The strength of the financial
8-10 system in this state is supported by the competence, integrity, and
8-11 expertise of the persons who attest to financial statements in this
8-12 state.
8-13 (c) Notwithstanding Subsection (b), the public relies on the
8-14 competence and integrity of certified public accountants in all of
8-15 its dealings with certified public accountants and not merely in
8-16 connection with their performance of the attest service.
8-17 (d) The terms "accountant" and "auditor," and derivations,
8-18 combinations, and abbreviations of those terms, have an implication
8-19 of competence in the profession of public accountancy on which the
8-20 public relies in personal, business, and public activities and
8-21 enterprises.
8-22 (e) [(b)] The policy of this state and the purpose of this
8-23 chapter are to provide that:
8-24 (1) the admission of persons to the practice of public
8-25 accountancy require education and experience commensurate with the
8-26 requirements of the profession;
9-1 (2) a person who represents that the person practices
9-2 public accountancy be qualified to do so;
9-3 (3) a person licensed as a certified public
9-4 accountant:
9-5 (A) [engaged in the practice of public
9-6 accountancy] maintain high standards of professional competence,
9-7 integrity, and learning; and
9-8 (B) demonstrate competence and integrity in all
9-9 dealings with the public that rely on or imply the special skills
9-10 of a certified public accountant and not merely in connection with
9-11 the performance of the attest service;
9-12 (4) areas of specialized practice require special
9-13 training; and
9-14 (5) the activities and competitive practices of
9-15 persons practicing public accountancy be regulated to be free of
9-16 commercial exploitation to provide the public with a high level of
9-17 professional competence at reasonable fees by independent,
9-18 qualified persons.
9-19 Sec. 901.006. APPLICATION OF SUNSET ACT. The Texas State
9-20 Board of Public Accountancy is subject to Chapter 325, Government
9-21 Code (Texas Sunset Act). Unless continued in existence as provided
9-22 by that chapter, the board is abolished and this chapter expires
9-23 September 1, 2005 [2003].
9-24 SECTION 6. Subsection (a), Section 901.051, Occupations
9-25 Code, is amended to read as follows:
9-26 (a) The Texas State Board of Public Accountancy consists of
10-1 15 members appointed by the governor with the advice and consent of
10-2 the senate as follows:
10-3 (1) 10 certified public accountant members, at least
10-4 eight of whom are, on the date of appointment:
10-5 (A) a sole practitioner; or
10-6 (B) an owner or employee of a certified public
10-7 accountancy firm [engaged in public practice]; and
10-8 (2) five public members who are not:
10-9 (A) licensed under this chapter; or
10-10 (B) financially involved in an organization
10-11 subject to board regulation.
10-12 SECTION 7. Sections 901.158 and 901.159, Occupations Code,
10-13 are amended to read as follows:
10-14 Sec. 901.158. RULES RESTRICTING [ADVERTISING OR] COMPETITIVE
10-15 PRACTICES [BIDDING]. The board in its rules of professional
10-16 conduct may regulate the [not restrict advertising or] competitive
10-17 practices of [bidding by] a license holder [except] as necessary to
10-18 ensure that the[:]
10-19 [(1) the license holder's communications, including
10-20 advertising and price information, are informative, free of
10-21 deception, and consistent with the professionalism expected and
10-22 deserved by the public from a person engaged in the practice of
10-23 public accountancy;]
10-24 [(2) the license holder's conduct is free from fraud,
10-25 undue influence, deception, intimidation, overreaching, and
10-26 harassment;]
11-1 [(3) the license holder does not engage in an
11-2 uninvited solicitation, by use of a means other than mass media
11-3 advertisement, to perform professional accounting services;]
11-4 [(4) a contract between a license holder and a state
11-5 agency, publicly owned utility, or political subdivision, including
11-6 a county, municipality, district, or authority, for the performance
11-7 of professional accounting services is not solicited or awarded on
11-8 the basis of competitive bids submitted in violation of law;]
11-9 [(5) a contract for the preparation of a financial
11-10 statement or an opinion on a financial statement includes
11-11 information necessary to protect the public if:]
11-12 [(A) the financial statement or opinion can be
11-13 used by or given to a person other than a party to the contract to
11-14 induce reliance on the statement or opinion; and]
11-15 [(B) the contract is entered into on the basis
11-16 of competitive bids; or]
11-17 [(6) a] license holder does not engage in a
11-18 competitive practice that:
11-19 (1) [(A)] impairs the independence or quality of a
11-20 service provided by a license holder;
11-21 (2) [(B)] impairs or restricts the public's
11-22 opportunity to obtain professional accounting services of high
11-23 quality at a reasonable price; or
11-24 (3) [(C)] unreasonably restricts competition among
11-25 license holders.
11-26 Sec. 901.159. PEER [QUALITY] REVIEW. (a) The board by rule
12-1 shall provide for a peer [quality] review program to review the
12-2 work product of a license holder or of the certified public
12-3 accountancy firm in which the license holder is a member [practice
12-4 unit], in lieu of the [a] license holder, to the extent necessary
12-5 to comply with any applicable standards adopted by generally
12-6 recognized bodies responsible for setting accounting standards.
12-7 Peer review must include a verification that each individual in a
12-8 certified public accountancy firm who is responsible for
12-9 supervising attest services and who signs or authorizes another
12-10 person to sign an accountant's reports on financial statements on
12-11 behalf of the firm meets the competency requirements of the
12-12 professional standards that apply to those services.
12-13 (b) The board by rule shall establish a fee in an amount not
12-14 to exceed $200 to be paid by a certified public accountancy firm
12-15 [practice unit], or by a license holder who is not a member of a
12-16 certified public accountancy firm [practice unit], for each peer
12-17 [quality] review required by the board under this section.
12-18 SECTION 8. Subsection (c), Section 901.160, Occupations
12-19 Code, is amended to read as follows:
12-20 (c) Except on written authorization as provided by
12-21 Subsection (b), the following information gathered or received by
12-22 the board is confidential and not subject to disclosure under
12-23 Chapter 552, Government Code:
12-24 (1) information regarding the qualifications of an
12-25 applicant or license holder to be certified [or registered] as a
12-26 certified public accountant; [and]
13-1 (2) information regarding the qualifications of an
13-2 applicant or firm license holder to be issued a firm license as a
13-3 certified public accountancy firm; and
13-4 (3) information regarding a disciplinary action under
13-5 Subchapter K against a license holder or an applicant to take the
13-6 uniform CPA examination, before a public hearing on the matter.
13-7 SECTION 9. Subsection (a), Section 901.161, Occupations
13-8 Code, is amended to read as follows:
13-9 (a) Any statement or record prepared or an opinion formed in
13-10 connection with a positive enforcement[, quality review,] or peer
13-11 review is privileged and is not:
13-12 (1) subject to discovery, subpoena, or other means of
13-13 legal compulsion for release to a person other than the board; or
13-14 (2) admissible as evidence in a judicial or
13-15 administrative proceeding other than a board hearing.
13-16 SECTION 10. Section 901.162, Occupations Code, is amended by
13-17 adding Subsection (c) to read as follows:
13-18 (c) The state shall hold each board member, employee or
13-19 agent of the board, and volunteer member of a constructive
13-20 enforcement committee of the board harmless from any cost, damage,
13-21 or attorney's fees arising from a claim or suit against that person
13-22 for an action taken by the person in good faith in the discharge of
13-23 the board's responsibilities.
13-24 SECTION 11. Subsection (a), Section 901.163, Occupations
13-25 Code, is amended to read as follows:
13-26 (a) The board shall develop and maintain a system for
14-1 tracking a complaint filed with the board against a person who
14-2 holds a license or firm license [registered under this chapter].
14-3 SECTION 12. Subchapter D, Chapter 901, Occupations Code, is
14-4 amended by adding Section 901.165 to read as follows:
14-5 Sec. 901.165. RULES FOR ATTEST SERVICES. (a) The board by
14-6 rule shall specify those services that constitute attest services.
14-7 (b) Attest services are required to be performed in
14-8 accordance with professional standards. The board may adopt by
14-9 reference the standards developed for general application by the
14-10 American Institute of Certified Public Accountants or another
14-11 nationally recognized accountancy organization.
14-12 SECTION 13. Subsection (c), Section 901.253, Occupations
14-13 Code, is amended to read as follows:
14-14 (c) The board may obtain criminal history record information
14-15 maintained by a law enforcement agency, including the Department of
14-16 Public Safety and the Federal Bureau of Investigation
14-17 identification division, to investigate the qualifications of an
14-18 individual who applies to take the uniform CPA examination or to be
14-19 certified or issued a firm license [registered] under this chapter.
14-20 SECTION 14. Section 901.254, Occupations Code, is amended to
14-21 read as follows:
14-22 Sec. 901.254. EDUCATION REQUIREMENTS. [(a)] To be eligible
14-23 to take the uniform CPA examination, an applicant must:
14-24 (1) hold a baccalaureate or graduate degree, or its
14-25 equivalent as determined by board rule, conferred by a
14-26 board-recognized institution of higher education; and
15-1 (2) complete at least[:]
15-2 [(A)] 150 semester hours or quarter-hour
15-3 equivalents in board-recognized courses, including an accounting
15-4 concentration or equivalent courses as determined by board rule[;]
15-5 [(B) 30 semester hours or quarter-hour
15-6 equivalents in board-recognized accounting courses, as defined by
15-7 board rule, including at least 20 semester hours or quarter-hour
15-8 equivalents in core accounting courses, as defined by board rule;
15-9 and]
15-10 [(C) 20 semester hours or quarter-hour
15-11 equivalents in board-recognized college or university
15-12 accounting-related courses in other areas of business
15-13 administration].
15-14 SECTION 15. Subsection (a), Section 901.256, Occupations
15-15 Code, is amended to read as follows:
15-16 (a) To be eligible to receive a certificate, a person must
15-17 complete:
15-18 (1) at least two years of work experience under the
15-19 supervision of a certified public accountant; or
15-20 (2) at least one year of work experience acceptable to
15-21 the board, including experience providing a service or advice
15-22 involving accounting, attest services, management or financial
15-23 advisory or consulting services, tax services, or other services
15-24 the board considers appropriate for an [under the supervision of a
15-25 certified public] accountant, if the person:
15-26 (A) has completed at least 150 semester hours of
16-1 college credits; or
16-2 (B) holds a graduate degree.
16-3 SECTION 16. Subsection (a), Section 901.259, Occupations
16-4 Code, is amended to read as follows:
16-5 (a) The board shall issue a certificate to a person who
16-6 holds a certificate or license issued by another state if the
16-7 person:
16-8 (1) satisfies at least one of the following:
16-9 (A) holds a certificate or license as a
16-10 certified public accountant from a state that the National
16-11 Association of State Boards of Accountancy's National Qualification
16-12 Appraisal Service has verified as having education, examination,
16-13 and experience requirements for certification or licensure that are
16-14 comparable to or exceed the requirements for licensure as a
16-15 certified public accountant of The American Institute of Certified
16-16 Public Accountants/National Association of State Boards of
16-17 Accountancy Uniform Accountancy Act and the board determines that
16-18 the licensure requirements of that Act are comparable to or exceed
16-19 the licensure requirements of this chapter;
16-20 (B) obtains from the National Association of
16-21 State Boards of Accountancy's National Qualification Appraisal
16-22 Service verification that the individual's education, examination,
16-23 and experience qualifications are comparable to or exceed the
16-24 requirements for licensure as a certified public accountant of The
16-25 American Institute of Certified Public Accountants/National
16-26 Association of State Boards of Accountancy Uniform Accountancy Act
17-1 and the board determines that the licensure requirements of that
17-2 Act are comparable to or exceed the licensure requirements of this
17-3 chapter;
17-4 (C) [has passed the uniform CPA examination with
17-5 grades that were passing grades in this state on the date the
17-6 person took the examination;]
17-7 [(2) satisfies at least one of the following:]
17-8 [(A)] meets the requirements for issuance of a
17-9 certificate in this state other than the requirement providing the
17-10 grades necessary to pass the uniform CPA examination;
17-11 (D) [(B)] met the requirements in effect for
17-12 issuance of a certificate in this state on the date the person was
17-13 issued a certificate by the other state; or
17-14 (E) [(C)] has completed at least four years of
17-15 experience practicing public accountancy, if the experience:
17-16 (i) occurred after the person passed the
17-17 uniform CPA examination and within the 10 years preceding the date
17-18 of application; and
17-19 (ii) satisfies requirements established by
17-20 board rule; and
17-21 (2) [(3)] has met the continuing professional
17-22 education requirements that apply to a license holder under this
17-23 chapter for the three-year period preceding the date of
17-24 application.
17-25 SECTION 17. Subchapter F, Chapter 901, Occupations Code, is
17-26 amended by adding Section 901.260 to read as follows:
18-1 Sec. 901.260. CERTIFICATE BASED ON FOREIGN CREDENTIALS.
18-2 (a) The board may issue a certificate to an applicant who holds a
18-3 substantially equivalent foreign credential if:
18-4 (1) the foreign jurisdiction that granted the
18-5 credential has an analogous provision allowing a person who holds a
18-6 certificate issued by this state to obtain that foreign
18-7 jurisdiction's comparable credential;
18-8 (2) the foreign credential:
18-9 (A) entitles the holder to issue reports on
18-10 financial statements;
18-11 (B) was issued by a foreign jurisdiction that
18-12 regulates the practice of public accountancy on the basis of
18-13 education, examination, and experience requirements established by
18-14 the jurisdiction; and
18-15 (C) has not expired or been revoked, suspended,
18-16 limited, or probated; and
18-17 (3) the applicant:
18-18 (A) received the credential based on education
18-19 and examination requirements that are comparable to or exceed those
18-20 in effect in this state on the date that the foreign credential was
18-21 granted;
18-22 (B) satisfied one of the following:
18-23 (i) completed an experience requirement in
18-24 the jurisdiction that granted the foreign credential that is
18-25 comparable to or exceeds the experience requirements established
18-26 under this chapter;
19-1 (ii) completed at least four years of
19-2 professional accounting experience in this state; or
19-3 (iii) within the 10 years preceding the
19-4 date of the application, has met equivalent requirements prescribed
19-5 by board rule;
19-6 (C) passed a uniform qualifying examination
19-7 acceptable to the board covering national standards; and
19-8 (D) passed an examination acceptable to the
19-9 board covering the laws, rules, and code of ethical conduct in
19-10 effect in this state.
19-11 (b) An applicant for a certificate under Subsection
19-12 (a) must list in the application each jurisdiction, foreign and
19-13 domestic, in which the applicant has applied for or holds a
19-14 credential to practice public accountancy. Each holder of a
19-15 certificate issued under Subsection (a) shall notify the board in
19-16 writing of the issuance, denial, revocation, suspension,
19-17 limitation, or probation of a credential or the commencement of a
19-18 disciplinary or enforcement action by any jurisdiction not later
19-19 than the 30th day after the effective date of that action.
19-20 (c) The board's determination of whether a foreign
19-21 credential is substantially equivalent to a certificate issued
19-22 under this chapter is not subject to judicial review.
19-23 SECTION 18. Section 901.301, Occupations Code, is amended to
19-24 read as follows:
19-25 Sec. 901.301. ADMINISTRATION; BOARD RULES. (a) The board
19-26 shall conduct or contract with another person to conduct [each]
20-1 uniform CPA examinations [examination] administered under this
20-2 chapter.
20-3 (b) The board by rule may establish the:
20-4 (1) manner in which a person may apply for the
20-5 examination;
20-6 (2) time, date, and place for the examination;
20-7 (3) manner in which the examination is conducted; and
20-8 (4) [method used to grade the examination;]
20-9 [(5) criteria used to determine a passing score on the
20-10 examination; and]
20-11 [(6)] manner in which a person's examination score is
20-12 reported to the person.
20-13 SECTION 19. Subsection (a), Section 901.304, Occupations
20-14 Code, is amended to read as follows:
20-15 (a) For each examination or reexamination, the board by rule
20-16 shall apportion an amount of the total examination fee among the
20-17 parts of the examination that an applicant is eligible to take on a
20-18 particular examination date. For each examination or
20-19 reexamination, the board shall collect a [The total examination]
20-20 fee set by board rule [may] not to exceed the cost of administering
20-21 the examination [$250].
20-22 SECTION 20. Section 901.305, Occupations Code, is amended to
20-23 read as follows:
20-24 Sec. 901.305. FREQUENCY OF EXAMINATION. A [The board shall
20-25 administer a] uniform CPA examination shall be administered under
20-26 this chapter as often as necessary but at least once each year.
21-1 SECTION 21. Subsection (a), Section 901.306, Occupations
21-2 Code, is amended to read as follows:
21-3 (a) The board may use or require the use of all or part of
21-4 the uniform CPA examination and any related service available from:
21-5 (1) the American Institute of Certified Public
21-6 Accountants; or
21-7 (2) the National Association of State Boards of
21-8 Accountancy[, if doing so would result in a greater degree of
21-9 reciprocity with the examination results of other states].
21-10 SECTION 22. Section 901.307, Occupations Code, is amended to
21-11 read as follows:
21-12 Sec. 901.307. GRADING EXAMINATION [MINIMUM PASSING GRADE].
21-13 (a) The board by rule shall:
21-14 (1) adopt a method for grading the examination; and
21-15 (2) establish the criteria for passing [A person must
21-16 attain a grade of at least 75 percent on each subject of the
21-17 examination to pass] the examination.
21-18 (b) Rules adopted under this section must, to the extent
21-19 possible, be uniform with those of other states.
21-20 SECTION 23. Subchapter H, Chapter 901, Occupations Code, is
21-21 amended to read as follows:
21-22 SUBCHAPTER H. FIRM LICENSE [REGISTRATION] REQUIREMENTS
21-23 Sec. 901.351. FIRM LICENSE REQUIRED. (a) A firm may not
21-24 provide attest services or use the title "CPA's," "CPA Firm,"
21-25 "Certified Public Accountants," "Certified Public Accounting Firm,"
21-26 or "Auditing Firm" or a variation of one of those titles unless the
22-1 firm holds a firm license issued under this subchapter.
22-2 (b) The board shall grant or renew a firm license to
22-3 practice as a certified public accountancy firm to:
22-4 (1) a firm that applies and demonstrates the necessary
22-5 qualifications in accordance with this subchapter; or
22-6 (2) a firm originally licensed as a certified public
22-7 accountancy firm in another state that:
22-8 (A) establishes an office in this state; and
22-9 (B) demonstrates the necessary qualifications in
22-10 accordance with this subchapter.
22-11 (c) A firm license issued under Subsection (b)(2) is
22-12 automatically revoked and may not be renewed if the firm does not
22-13 maintain a license as a certified public accountancy firm in the
22-14 other state.
22-15 (d) A firm license must be renewed annually.
22-16 (e) The board by rule shall specify:
22-17 (1) the form of the application for a firm license;
22-18 (2) the fee for an original or renewal firm license,
22-19 which may be based on the number of owners, members, partners,
22-20 shareholders, or employee license holders in this state, not to
22-21 exceed $25 for each of those persons; and
22-22 (3) the requirements for renewal of a firm license.
22-23 [REGISTRATION REQUIRED. A certified public accountant, a public
22-24 accountant, a firm of certified public accountants or public
22-25 accountants, and each office of that firm in this state, including
22-26 a practice unit, and a person described by Section 901.355 and each
23-1 office of that person in this state may not engage in the practice
23-2 of public accountancy unless the person is registered with the
23-3 board.]
23-4 Sec. 901.352. APPLICATION FOR FIRM LICENSE OR REGISTRATION.
23-5 (a) An applicant for a firm license or registration must provide
23-6 the board with satisfactory evidence of eligibility for a firm
23-7 license or registration.
23-8 (b) The board may examine an application and may refuse to
23-9 issue a firm license or register an applicant who does not meet the
23-10 standards imposed under this chapter.
23-11 Sec. 901.353. RESIDENT MANAGER. (a) An office established
23-12 or maintained in this state [for the practice of public accountancy
23-13 in this state] by a firm of certified public accountants, a firm of
23-14 public accountants, or a person described by Section 901.355 must
23-15 be under the direct supervision of a resident manager who:
23-16 (1) is an owner, member, partner, shareholder, or
23-17 employee of the firm or person that occupies the office; and
23-18 (2) is licensed under this chapter.
23-19 (b) A resident manager may serve in that capacity in only
23-20 one office at a time except as authorized by board rule. The board
23-21 by rule may [shall] establish a registration procedure under which
23-22 a person may serve as resident manager of more than one office at a
23-23 time.
23-24 Sec. 901.354. FIRM LICENSE [REGISTRATION] INFORMATION AND
23-25 ELIGIBILITY. (a) An applicant for initial issuance or renewal of
23-26 a firm license must show that a majority of the ownership of the
24-1 firm, in terms of financial interests and voting rights, belongs to
24-2 persons who hold certificates issued under this chapter or are
24-3 licensed in another state. A firm and its owners shall comply with
24-4 board rules regardless of whether the firm includes owners who are
24-5 not license holders.
24-6 (b) A certified public accountancy firm may include
24-7 individuals as owners who are not license holders if:
24-8 (1) the firm designates to the board a license holder
24-9 who resides in this state to be responsible for the firm's firm
24-10 license and the supervision of the firm;
24-11 (2) each owner who is not a license holder and who is
24-12 a resident of this state as determined by board rule:
24-13 (A) is actively involved in the firm or an
24-14 affiliated entity;
24-15 (B) is of good moral character as demonstrated
24-16 by a lack of history of dishonest or felonious acts;
24-17 (C) holds a baccalaureate or graduate degree
24-18 conferred by a college or university acceptable to the board or
24-19 equivalent education as determined by the board;
24-20 (D) maintains any professional designation held
24-21 by the individual in good standing with the appropriate
24-22 organization or regulatory body that is identified or used in an
24-23 advertisement, letterhead, business card, or other firm-related
24-24 communication;
24-25 (E) has passed an examination on the rules of
24-26 professional conduct as determined by board rule;
25-1 (F) complies with the rules of professional
25-2 conduct as determined by board rule; and
25-3 (G) maintains professional continuing education
25-4 applicable to license holders as required by board rule; and
25-5 (3) the firm and the owners who are not license
25-6 holders comply with board disciplinary actions and other
25-7 requirements the board may impose by rule.
25-8 (c) The board by rule may adopt a system to investigate the
25-9 background of individual owners who are not license holders under
25-10 this chapter.
25-11 (d) The board may obtain criminal history record information
25-12 maintained by the Department of Public Safety, the Federal Bureau
25-13 of Investigation identification division, and other law enforcement
25-14 agencies to investigate the qualifications of an individual who is
25-15 not a license holder under this chapter.
25-16 (e) The board may require an individual who is not a license
25-17 holder under this chapter to submit a complete set of fingerprints.
25-18 If the individual does not provide the complete set of fingerprints
25-19 on request, the board may refuse to allow that individual to become
25-20 an owner of a certified public accountancy firm and may cancel or
25-21 refuse to issue or renew a firm license to the firm.
25-22 (f) An applicant for issuance or renewal of a firm license
25-23 under this section must register each office of the firm and show
25-24 that all attest services performed in this state and each office in
25-25 this state are under the supervision of a person who holds a
25-26 certificate issued under this chapter or by another state.
26-1 (g) An application for a firm license [registration] under
26-2 this chapter must be made on an affidavit of the owner, an officer,
26-3 or the general partner of the firm, as applicable, stating:
26-4 (1) the name of the firm;
26-5 (2) the firm's post office address in this state;
26-6 (3) the address of the firm's principal office;
26-7 (4) [if the firm is a partnership or corporation,] the
26-8 address of each office of the firm in this state;
26-9 (5) the name of the resident manager of each office of
26-10 the firm in this state; and
26-11 (6) [if the firm is a partnership,] the name,
26-12 residence, and post office address of:
26-13 (A) each partner, member, shareholder, or other
26-14 owner; and
26-15 (B) if the firm is a partnership, each
26-16 shareholder of a partner that is a professional corporation.
26-17 (h) [(b)] A sole proprietorship is eligible for a firm
26-18 license [registration] if the sole proprietor and each resident
26-19 manager of an office of the sole proprietorship in this state are
26-20 certified public accountants in good standing.
26-21 (i) [(c) A partnership is eligible for registration as a
26-22 partnership that includes a certified public accountant if:]
26-23 [(1) at least one general partner is a certified
26-24 public accountant or corporation of certified public accountants
26-25 licensed in this state in good standing;]
26-26 [(2) each partner engaged in the practice of public
27-1 accountancy in this state is a certified public accountant or
27-2 corporation of certified public accountants licensed in this state
27-3 in good standing;]
27-4 [(3) each partner not engaged in the practice of
27-5 public accountancy in this state is a certified public accountant
27-6 or corporation of certified public accountants licensed in another
27-7 state in good standing; and]
27-8 [(4) each resident manager of an office of the
27-9 partnership in this state is a certified public accountant licensed
27-10 in this state in good standing.]
27-11 [(d) A partnership is eligible for registration as a
27-12 partnership that includes a public accountant if:]
27-13 [(1) at least one general partner is a certified
27-14 public accountant, public accountant, or corporation of certified
27-15 public accountants or public accountants licensed in this state in
27-16 good standing;]
27-17 [(2) each partner engaged in the practice of public
27-18 accountancy in this state is a certified public accountant, public
27-19 accountant, or corporation of certified public accountants or
27-20 public accountants licensed in this state in good standing;]
27-21 [(3) each partner not engaged in the practice of
27-22 public accountancy in this state is a certified public accountant,
27-23 public accountant, or corporation of certified public accountants
27-24 or public accountants licensed in another state in good standing;
27-25 and]
27-26 [(4) each resident manager of an office of the
28-1 partnership in this state is a certified public accountant or
28-2 public accountant licensed in this state in good standing.]
28-3 [(e) A corporation is eligible for registration as a
28-4 corporation engaged in the practice of public accountancy if the
28-5 corporation meets the requirements applicable to partnerships under
28-6 this chapter.]
28-7 [(f)] The board shall determine whether an applicant is
28-8 eligible for a firm license [registration] under this section. The
28-9 board by rule shall define "good standing" for purposes of this
28-10 section.
28-11 (j) [(g)] A certified public accountancy firm [sole
28-12 proprietorship] shall notify the board not later than the 31st day
28-13 after the date on which information in the affidavit is changed,
28-14 including information regarding the admission or withdrawal of an
28-15 owner or [a] resident manager[. A partnership shall notify the
28-16 board within one month after the date on which information in the
28-17 affidavit is changed, including information regarding the admission
28-18 or withdrawal of a partner].
28-19 (k) A certified public accountancy firm that is no longer in
28-20 compliance with this section because of a change in firm ownership
28-21 or personnel that occurs after the firm receives or renews a firm
28-22 license shall report that fact to the board not later than the 30th
28-23 day after the date the firm ceases to be in compliance and shall
28-24 take corrective action to bring the firm into compliance. Failure
28-25 to bring the firm into compliance within a reasonable time as
28-26 determined by board rule is grounds for the suspension or
29-1 revocation of the firm's firm license.
29-2 Sec. 901.355. REGISTRATION FOR CERTAIN [OUT-OF-STATE OR]
29-3 FOREIGN APPLICANTS. (a) The [A certified public accountant of
29-4 another state or the] holder of a certificate, license, or degree
29-5 authorizing the person to practice public accountancy in a foreign
29-6 country may register with the board as [a certified public
29-7 accountant of the other state or as] the holder of a certificate,
29-8 license, or degree issued by the foreign country, if the board
29-9 determines that the standards under which the applicant was
29-10 certified or otherwise authorized to practice public accountancy
29-11 were at least as high as the standards of this state at the time
29-12 that authority was granted.
29-13 (b) To register with the board under this section, the
29-14 person must pay:
29-15 (1) the fee for issuance of a license as provided by
29-16 Section 901.154; and
29-17 (2) a processing fee in an amount set by the board not
29-18 to exceed $250.
29-19 (c) A person registered under this section may renew the
29-20 registration in the manner provided for renewal of a license under
29-21 Subchapter I.
29-22 (d) A person's registration under this section is
29-23 automatically revoked and may not be renewed if the person does not
29-24 maintain the authority to practice public accountancy in the other
29-25 [state or] country. The board shall adopt rules to ensure that the
29-26 person maintains that authority.
30-1 Sec. 901.356. TEMPORARY PRACTICE PERMIT FOR CERTAIN
30-2 OUT-OF-STATE [OR FOREIGN] APPLICANTS. A certified public
30-3 accountancy firm [accountant] of another state that does not hold a
30-4 firm license issued under this chapter[, a partnership or
30-5 professional corporation composed entirely of certified public
30-6 accountants of another state, or the holder of a certificate,
30-7 license, or degree authorizing the person to practice public
30-8 accountancy in a foreign country] may temporarily practice in this
30-9 state on professional business incident to the firm's [person's]
30-10 regular practice outside this state if the firm [person]:
30-11 (1) submits an application for a permit accompanied by
30-12 a fee in an amount not to exceed $100, as provided by board rule;
30-13 and
30-14 (2) conducts the temporary practice according to the
30-15 laws of this state and the board's rules of professional conduct.
30-16 SECTION 24. Section 901.401, Occupations Code, is amended to
30-17 read as follows:
30-18 Sec. 901.401. LICENSE REQUIRED. (a) An individual who
30-19 holds a certificate issued under this chapter must also hold [A
30-20 person may not practice public accountancy unless the person holds]
30-21 a license issued under this chapter.
30-22 (b) Each office of a certified public accountancy firm or a
30-23 firm of [certified] public accountants [or public accountants] must
30-24 hold a license issued under this chapter [to engage in the practice
30-25 of public accountancy].
30-26 SECTION 25. Subsection (a), Section 901.402, Occupations
31-1 Code, is amended to read as follows:
31-2 (a) On payment of the required fees, the board shall issue a
31-3 license to an applicant who:
31-4 (1) holds a certificate issued under this chapter; or
31-5 (2) holds a firm license issued [is registered with
31-6 the board] under this chapter.
31-7 SECTION 26. Section 901.403, Occupations Code, is amended to
31-8 read as follows:
31-9 Sec. 901.403. APPLICATION FOR AND RENEWAL OF LICENSE
31-10 [RENEWAL REQUIRED]. [(a)] The board shall specify:
31-11 (1) the form of the application for a license;
31-12 (2) the term of a license; and
31-13 (3) the requirements for [provide for the] renewal of
31-14 a license. [A person licensed under this chapter must pay to the
31-15 board a biennial license fee. On payment of the required fee, the
31-16 board shall renew the person's license for a period of two years.]
31-17 [(b) A license expires on December 31 of the applicable year
31-18 or on another date as set by the board under Subsection (c). The
31-19 board shall provide that half of the licenses issued by the board
31-20 expire in each even-numbered year and that the other half expire in
31-21 each odd-numbered year. The board shall prorate the license fee
31-22 for a person whose license term is for less than two years as a
31-23 result of the board's providing for half of the licenses to expire
31-24 in consecutive years.]
31-25 [(c) The board by rule may adopt a system under which
31-26 licenses expire on a date other than December 31. For the biennium
32-1 in which the license expiration date is changed, license fees shall
32-2 be prorated on a monthly basis so that each license holder pays
32-3 only that portion of the fee that is allocable to the number of
32-4 months during which the license is valid. On renewal of the
32-5 license on the new expiration date, the total license renewal fee
32-6 is payable.]
32-7 SECTION 27. Subsections (a) and (c), Section 901.411,
32-8 Occupations Code, are amended to read as follows:
32-9 (a) A license holder who is an individual shall participate
32-10 in a program of continuing professional education designed to
32-11 maintain professional competency. The program must comply with
32-12 rules adopted by the board [complete at least 120 hours of
32-13 continuing professional education in each three-year period, 20
32-14 hours of which must be completed in each one-year period].
32-15 (c) The board by rule shall provide for the [biennial]
32-16 reporting of continuing professional education by a license holder
32-17 to coincide with the person's license renewal date.
32-18 SECTION 28. Subchapter I, Chapter 901, Occupations Code, is
32-19 amended by adding Section 901.412 to read as follows:
32-20 Sec. 901.412. REGISTRATION OF OUT-OF-STATE PRACTITIONER WITH
32-21 SUBSTANTIALLY EQUIVALENT QUALIFICATIONS. (a) An individual who
32-22 holds a certificate or license as a certified public accountant
32-23 issued by another state and whose principal place of business is
32-24 not in this state may exercise all the privileges of certificate
32-25 and license holders of this state without obtaining a certificate
32-26 or license under this chapter if:
33-1 (1) the National Association of State Boards of
33-2 Accountancy's National Qualification Appraisal Service has verified
33-3 that the other state has education, examination, and experience
33-4 requirements for certification or licensure that are comparable to
33-5 or exceed the requirements for licensure as a certified public
33-6 accountant of The American Institute of Certified Public
33-7 Accountants/National Association of State Boards of Accountancy
33-8 Uniform Accountancy Act and the board determines that the licensure
33-9 requirements of that Act are comparable to or exceed the licensure
33-10 requirements of this chapter; or
33-11 (2) the individual obtains from the National
33-12 Association of State Boards of Accountancy's National Qualification
33-13 Appraisal Service verification that the individual's education,
33-14 examination, and experience qualifications are comparable to or
33-15 exceed the requirements for licensure as a certified public
33-16 accountant of The American Institute of Certified Public
33-17 Accountants/National Association of State Boards of Accountancy
33-18 Uniform Accountancy Act and the board determines that the licensure
33-19 requirements of that Act are comparable to or exceed the licensure
33-20 requirements of this chapter.
33-21 (b) An individual who meets the requirements of Subsection
33-22 (a)(1) or (2) must register with the board to practice public
33-23 accountancy in this state. To register with the board, the
33-24 individual must:
33-25 (1) in the manner prescribed by board rule, notify the
33-26 board of the person's intent to practice; and
34-1 (2) pay a processing fee in an amount set by the board
34-2 not to exceed $250.
34-3 (c) An individual who registers under this section:
34-4 (1) is subject to the personal and subject matter
34-5 jurisdiction and disciplinary authority of the board and the courts
34-6 of this state;
34-7 (2) must comply with this chapter and the board's
34-8 rules; and
34-9 (3) is considered to have appointed the regulatory
34-10 agency of the state that issued the individual's certificate or
34-11 license as the individual's agent on whom process may be served in
34-12 any action or proceeding by the board against the individual.
34-13 (d) An individual's practice privileges under this section
34-14 are automatically revoked if the individual does not maintain the
34-15 authority to practice public accountancy in the other state.
34-16 SECTION 29. Sections 901.451, 901.452, 901.453, and 901.454,
34-17 Occupations Code, are amended to read as follows:
34-18 Sec. 901.451. USE OF TITLE OR ABBREVIATION FOR "CERTIFIED
34-19 PUBLIC ACCOUNTANT." (a) A person may not assume or use the title
34-20 or designation "certified public accountant," the abbreviation
34-21 "CPA," or any other title, designation, word, letter, abbreviation,
34-22 sign, card, or device tending to indicate that the person is a
34-23 certified public accountant unless the person holds a certificate
34-24 under this chapter[, or a firm composed of certified public
34-25 accountants, unless:]
34-26 [(1) the person is certified or registered, as
35-1 appropriate, and licensed under this chapter; and]
35-2 [(2) each of the person's offices in this state for
35-3 the practice of public accounting is maintained and registered as
35-4 required under Subchapter H].
35-5 (b) A person may not provide attest services or assume or
35-6 use the title "certified public accountants," the abbreviation
35-7 "CPAs," or any other title, designation, word, letter,
35-8 abbreviation, sign, card, or device tending to indicate that the
35-9 person is a certified public accountancy firm unless:
35-10 (1) the person holds a firm license issued under this
35-11 chapter;
35-12 (2) ownership of the person complies with the
35-13 requirements of this chapter and rules adopted by the board; and
35-14 (3) the person complies with board rules authorizing
35-15 the practice.
35-16 (c) The title or designation "certified public accountant"
35-17 and the abbreviation "CPA" may not be used in connection with an
35-18 office that is required to be under the supervision of a resident
35-19 manager under Section 901.353 unless the resident manager holds a
35-20 certificate and a license issued under this chapter.
35-21 Sec. 901.452. USE OF TITLE OR ABBREVIATION FOR "PUBLIC
35-22 ACCOUNTANT." A person may not assume or use the title or
35-23 designation "public accountant" or any other title, designation,
35-24 word, letter, abbreviation, sign, card, or device tending to
35-25 indicate that the person is a public accountant, or a firm composed
35-26 of public accountants, unless:
36-1 (1) the person is certified [or registered, as
36-2 appropriate,] and licensed under this chapter; and
36-3 (2) each of the person's offices in this state for the
36-4 practice of public accounting is maintained and practices under a
36-5 firm license [registered] as required under Subchapter H.
36-6 Sec. 901.453. USE OF OTHER TITLES OR ABBREVIATIONS.
36-7 (a) Except as provided by Subsection (b), a person may not assume
36-8 or use:
36-9 (1) a title or designation likely to be confused with
36-10 "certified public accountant" or "public accountant," including
36-11 "certified accountant," "chartered accountant," "enrolled
36-12 accountant," [or] "licensed accountant," "registered accountant,"
36-13 or "accredited accountant"; or
36-14 (2) an abbreviation likely to be confused with "CPA,"
36-15 including "CA," "PA," "EA," "RA," "LA," or "AA." [or "LA."]
36-16 (b) A person may hold the person out to the public as an
36-17 "accountant," "auditor," or any combination of those terms or
36-18 assert that the person has expertise in accounting or auditing only
36-19 if:
36-20 (1) the person holds a license issued under this
36-21 chapter; and
36-22 (2) each of the person's offices in this state for the
36-23 practice of public accounting is maintained and practices under a
36-24 firm license [registered] as required under Subchapter H.
36-25 Sec. 901.454. TITLE USED BY CERTAIN OUT-OF-STATE OR FOREIGN
36-26 ACCOUNTANTS. (a) A person who is an accountant of another state
37-1 [or foreign country] may use the title under which the accountant
37-2 is generally known in the state [or country] from which the
37-3 accountant received a certificate, license, or degree, followed by
37-4 the name of that state [or country], if:
37-5 (1) the person [is registered and] holds a license
37-6 issued under this chapter; and
37-7 (2) each of the person's offices in this state for the
37-8 practice of public accountancy is maintained and practices under a
37-9 firm license [registered] as required under Subchapter H.
37-10 (b) A person who holds a certification, degree, license, or
37-11 other credential granted in a foreign jurisdiction that entitles
37-12 the person to engage in the practice of public accountancy or its
37-13 equivalent in that jurisdiction may use in this state any title or
37-14 designation under which the person practices in the foreign
37-15 jurisdiction, followed by a translation of the title or designation
37-16 into English if it is in a different language and by the name of
37-17 that jurisdiction, if:
37-18 (1) the person's activities in this state are limited
37-19 to the provision of professional accounting services to persons who
37-20 are residents, governments, or business entities of that foreign
37-21 jurisdiction; and
37-22 (2) the person does not perform attest services or
37-23 issue reports on the financial statements of any other person in
37-24 this state.
37-25 (c) A person registered under Section 901.355 shall
37-26 [represent to the public that the person is a certified public
38-1 accountant of the state that issued the certificate or] use the
38-2 title held in the country from which the person received a
38-3 certificate, license, or degree, and shall indicate the name of the
38-4 [state or] country.
38-5 SECTION 30. Subsection (c), Section 901.455, Occupations
38-6 Code, is amended to read as follows:
38-7 (c) A corporation that is [registered and] licensed under
38-8 this chapter may practice public accountancy under a corporate name
38-9 indicating that it is engaged in that practice.
38-10 SECTION 31. Sections 901.456 and 901.457, Occupations Code,
38-11 are amended to read as follows:
38-12 Sec. 901.456. REPORTS ON FINANCIAL STATEMENTS; USE OF NAME
38-13 OR SIGNATURE ON CERTAIN DOCUMENTS. (a) Only a license holder may
38-14 issue a report on a financial statement of another person or
38-15 otherwise perform or offer to perform an attest service.
38-16 (b) A person who is not a license holder:
38-17 (1) may not use language in any statement related to
38-18 the financial affairs of a person that is conventionally used by
38-19 license holders in reports on financial statements;
38-20 (2) may prepare financial statements; and
38-21 (3) may issue nonattest transmittals or information
38-22 regarding nonattest transmittals if the transmittals or information
38-23 do not purport to be in compliance with standards for accounting
38-24 and review services adopted by the American Institute of Certified
38-25 Public Accountants or another national accountancy organization
38-26 recognized by the board.
39-1 (c) The following safe harbor language may be used by a
39-2 person who is not a license holder without violating Subsection
39-3 (b): "(I/We) have prepared the accompanying balance sheet of
39-4 (client's name) as of (date) and the related statements of income,
39-5 retained earnings, and cash flow changes in financial position for
39-6 the (period then ended). These financial statements, which are the
39-7 representation of management and which are presented to be used for
39-8 federal income tax purposes, (are/are not) in agreement with the
39-9 company's financial records. Management has elected to omit
39-10 substantially all informative disclosures with respect to these
39-11 financial statements. If the omitted disclosures were included in
39-12 the above financial statements, they might influence the user's
39-13 conclusion concerning the company's financial position, results of
39-14 operations, and/or changes in financial position. (I/We) do not
39-15 express any form of assurance with respect to these financial
39-16 statements."
39-17 (d) Unless a person is in compliance with this chapter, the
39-18 person may not sign on or affix to an accounting or financial
39-19 statement, or an opinion on, report on, or certificate to an
39-20 accounting or financial statement, the person's name or a trade or
39-21 assumed name used by the person in the person's profession or
39-22 business with any wording indicating that the person:
39-23 (1) is an accountant or auditor; or
39-24 (2) has expert knowledge in accounting or auditing.
39-25 (e) [(b)] This section does not prohibit:
39-26 (1) a partner, officer, employee, or principal of an
40-1 organization from signing a statement or report regarding the
40-2 financial affairs of the organization with wording that designates
40-3 the position, office, or title held by the person in the
40-4 organization; [or]
40-5 (2) any act of a public official or public employee in
40-6 the performance of the person's duties as a public official or
40-7 public employee; or
40-8 (3) the performance by a person who is not a license
40-9 holder of a service that is not an attest service and that involves
40-10 the use of bookkeeping skills, including:
40-11 (A) the preparation of tax returns;
40-12 (B) management advisory services; or
40-13 (C) the preparation of financial statements
40-14 without the issuance of reports.
40-15 (f) A license holder who performs attest services must
40-16 provide those services in accordance with standards adopted by the
40-17 American Institute of Certified Public Accountants or another
40-18 national accountancy organization recognized by the board.
40-19 Sec. 901.457. ACCOUNTANT-CLIENT PRIVILEGE. (a) A license
40-20 holder or a partner, member, officer, shareholder, or employee of a
40-21 license holder may not voluntarily disclose information
40-22 communicated to the license holder or a partner, member,
40-23 shareholder, or employee of the license holder by a client in
40-24 connection with services provided to the client by the license
40-25 holder or a partner, member, shareholder, or employee of the
40-26 license holder [in the practice of public accountancy], except with
41-1 the permission of the client or the client's representative.
41-2 (b) This section does not prohibit a license holder from
41-3 disclosing information that is required to be disclosed:
41-4 (1) by the professional standards for reporting on the
41-5 examination of a financial statement;
41-6 (2) under [in] a summons under the provisions of the
41-7 Internal Revenue Code of 1986 and its subsequent amendments, the
41-8 Securities Act of 1933 (15 U.S.C. Section 77a et seq.) and its
41-9 subsequent amendments, or the Securities Exchange Act of 1934 (15
41-10 U.S.C. Section 78a et seq.) and its subsequent amendments or under
41-11 a court order if the summons or order:
41-12 (A) is addressed to the license holder;
41-13 (B) mentions the client by name; and
41-14 (C) requests specific information concerning the
41-15 client [court proceeding];
41-16 (3) in an investigation or proceeding conducted by the
41-17 board;
41-18 (4) in an ethical investigation conducted by a
41-19 professional organization of certified public accountants; or
41-20 (5) in the course of a peer [quality] review under
41-21 Section 901.159.
41-22 SECTION 32. Subsections (a) and (b), Section 901.458,
41-23 Occupations Code, are amended to read as follows:
41-24 (a) In this section, "direct labor cost" means:
41-25 (1) the total compensation paid to a person who
41-26 performs services; and
42-1 (2) the employer payroll expenses related to that
42-2 compensation, including workers' compensation insurance premiums,
42-3 social security contributions, costs of participating in retirement
42-4 plans, group insurance costs, and unemployment taxes.
42-5 (b) A person creates a presumption of loss of independence
42-6 if the person:
42-7 (1) holds a certificate or firm license issued under
42-8 this chapter [or is registered under this chapter]; and
42-9 (2) performs or offers to perform an attest [a]
42-10 service [involving auditing skills] for compensation that is less
42-11 than the direct labor cost reasonably expected to be incurred in
42-12 performing the service.
42-13 SECTION 33. Subchapter J, Chapter 901, Occupations Code, is
42-14 amended by adding Section 901.460 to read as follows:
42-15 Sec. 901.460. PERFORMING ATTEST SERVICES. (a) A
42-16 certificate holder may perform attest services only in a certified
42-17 public accountancy firm.
42-18 (b) A license holder who is an individual and who is
42-19 responsible for supervising attest services or signs or authorizes
42-20 another person to sign an accountant's reports on financial
42-21 statements on behalf of a certified public accountancy firm must
42-22 meet the competency requirements of the professional standards that
42-23 apply to those services.
42-24 SECTION 34. Sections 901.501, 901.502, and 901.504,
42-25 Occupations Code, are amended to read as follows:
42-26 Sec. 901.501. DISCIPLINARY POWERS OF BOARD. (a) On a
43-1 determination that a ground for discipline exists under Section
43-2 901.502, after notice and hearing as provided by Section 901.509,
43-3 the board may:
43-4 (1) revoke a certificate, firm license, or practice
43-5 privilege [or registration] issued under this chapter;
43-6 (2) suspend under any terms a certificate, firm
43-7 license, practice privilege [registration], or license issued under
43-8 this chapter for a period not to exceed five years;
43-9 (3) refuse to renew a license;
43-10 (4) place a license holder on probation;
43-11 (5) reprimand a license holder;
43-12 (6) limit the scope of a license holder's practice;
43-13 (7) require a license holder to complete a peer review
43-14 program conducted in the manner prescribed by the board;
43-15 (8) require a license holder to complete a continuing
43-16 education program specified by the board;
43-17 (9) impose on a license holder the direct
43-18 administrative costs incurred by the board in taking action under
43-19 Subdivisions (1) through (8) [(6)]; or
43-20 (10) [(8)] impose an administrative penalty under
43-21 Subchapter L.
43-22 (b) If a person's [an individual's] license suspension is
43-23 probated, the board may require the person [individual] to:
43-24 (1) report regularly to the board on matters that are
43-25 the basis of the probation;
43-26 (2) limit practice to the areas prescribed by the
44-1 board; or
44-2 (3) continue or renew professional education until the
44-3 license holder attains a degree of skill satisfactory to the board
44-4 in those areas that are the basis of the probation.
44-5 Sec. 901.502. GROUNDS FOR DISCIPLINARY ACTION. The board
44-6 may discipline a person under Section 901.501 for:
44-7 (1) fraud or deceit in obtaining a certificate, firm
44-8 license [registration], or license under this chapter;
44-9 (2) fraud, dishonesty, or gross negligence in the
44-10 performance of services as a license holder [practice of public
44-11 accountancy], including:
44-12 (A) knowingly participating in the preparation
44-13 of a false or misleading financial statement or tax return; or
44-14 (B) failing to file the license holder's own
44-15 income tax return;
44-16 (3) the failure of a person who is certified or
44-17 required to hold a firm license [registered] under this chapter to
44-18 obtain a license not later than the third anniversary of the date
44-19 on which the person was certified or required to obtain a firm
44-20 license [registered];
44-21 (4) the failure of a person who is licensed under this
44-22 chapter to renew the license not later than the third anniversary
44-23 of the date on which the person most recently obtained or renewed
44-24 the license;
44-25 (5) a violation of Subchapter J[, other than Section
44-26 901.457 or 901.459];
45-1 (6) a violation of a rule of professional conduct
45-2 adopted by the board;
45-3 (7) a revocation or suspension of the certificate or
45-4 firm license [registration] or a revocation, suspension, or refusal
45-5 to renew the license of the person's partner, member, or
45-6 shareholder;
45-7 (8) a revocation, cancellation, placement on
45-8 probation, limitation on the scope of practice, or suspension by
45-9 another state, or a refusal of renewal by another state, of the
45-10 authority issued by that state to the person, or to the person's
45-11 partner, member, or shareholder, to engage in the practice of
45-12 public accountancy for a reason other than the failure to pay the
45-13 appropriate authorization [registration] fee;
45-14 (9) a revocation or suspension of, or a voluntary
45-15 consent decree concerning, the right of the person, or of the
45-16 person's partner, member, or shareholder, to practice before a
45-17 state or federal agency for a reason the board determines warrants
45-18 its action;
45-19 (10) a final conviction of or the imposition of
45-20 deferred adjudication for an offense under the laws of any state or
45-21 the United States that:
45-22 (A) is a felony; or
45-23 (B) includes fraud or dishonesty as an element
45-24 of the offense; [or]
45-25 (11) conduct indicating lack of fitness to serve the
45-26 public as a professional accountant; or
46-1 (12) a violation by a license holder or an owner of a
46-2 certified public accountancy firm who is not a license holder of:
46-3 (A) this chapter;
46-4 (B) professional standards adopted by the board;
46-5 or
46-6 (C) a rule or order adopted by the board.
46-7 Sec. 901.504. LICENSE REVOCATION BASED ON VIOLATION OF
46-8 CHAPTER. After notice and hearing as provided by Section 901.509,
46-9 the board:
46-10 (1) may revoke a license that was issued or renewed in
46-11 violation of this chapter or a rule adopted under this chapter; and
46-12 (2) shall revoke the firm [registration and] license
46-13 of a sole proprietorship, partnership, [or] corporation, limited
46-14 liability company, or other business entity that does not meet each
46-15 qualification for a firm license [registration] prescribed by this
46-16 chapter.
46-17 SECTION 35. Subsections (a) and (d), Section 901.505,
46-18 Occupations Code, are amended to read as follows:
46-19 (a) On conviction of a person of an offense under the laws
46-20 of any state or the United States that is a felony or that includes
46-21 fraud or dishonesty as an element of the offense, after notice and
46-22 hearing as provided by Section 901.509, the board may:
46-23 (1) suspend a certificate or firm license
46-24 [registration] issued under this chapter; or
46-25 (2) suspend or refuse to renew a license issued under
46-26 this chapter.
47-1 (d) If the conviction is reversed, set aside, or modified so
47-2 that the underlying offense is not a felony or an offense that
47-3 includes fraud or dishonesty as an element of the offense, the
47-4 board shall reinstate the certificate, firm license [registration],
47-5 or license suspended under this section. A reinstatement under
47-6 this subsection does not limit the board's right to take other
47-7 disciplinary action authorized by this subchapter.
47-8 SECTION 36. Sections 901.506 and 901.507, Occupations Code,
47-9 are amended to read as follows:
47-10 Sec. 901.506. VOLUNTARY SURRENDER OF CERTIFICATE OR FIRM
47-11 LICENSE [REGISTRATION]. (a) Subject to board approval, a person
47-12 [an individual] who holds a certificate or firm license
47-13 [registration] issued under this chapter may resign and surrender
47-14 the certificate or firm license [registration] to the board at any
47-15 time and for any reason.
47-16 (b) A person [An individual] who resigns and surrenders a
47-17 certificate or firm license [registration] may not apply for
47-18 reinstatement of the certificate or firm license [registration].
47-19 The person [individual] may be issued a new certificate or firm
47-20 license [registration] on completion of all requirements for the
47-21 issuance of an original certificate or firm license [registration].
47-22 The board may not issue a certificate to an individual who
47-23 previously resigned a certificate unless:
47-24 (1) after the date of resignation, the individual
47-25 completes the examination requirement for a new certificate; or
47-26 (2) on application, the board waives the examination
48-1 requirement.
48-2 (c) A person [An individual] who applies for a new
48-3 certificate or firm license [registration] must, if applicable,
48-4 disclose in the application the fact that the person [individual]
48-5 previously resigned and surrendered a certificate or firm license
48-6 [registration] during the course of a disciplinary investigation or
48-7 proceeding conducted by the board. The board shall consider that
48-8 fact in determining whether to issue a new certificate or firm
48-9 license [registration] to the person [individual].
48-10 Sec. 901.507. REINSTATEMENT. On receipt of a written
48-11 application, and after notice and hearing, the board may:
48-12 (1) issue a new certificate to an individual whose
48-13 certificate was revoked;
48-14 (2) issue a new firm license to [reregister] a person
48-15 whose firm license [registration] was revoked;
48-16 (3) reinstate a suspended license or modify the terms
48-17 of the suspension;
48-18 (4) approve a previously denied application to take
48-19 the uniform CPA examination; or
48-20 (5) reinstate an individual's previously voided
48-21 uniform CPA examination grades.
48-22 SECTION 37. Subchapter K, Chapter 901, Occupations Code, is
48-23 amended by adding Section 901.511 to read as follows:
48-24 Sec. 901.511. DISCIPLINARY ACTION FOR ACT COMMITTED IN
48-25 ANOTHER STATE. (a) A license holder of this state who offers to
48-26 perform or performs professional accounting services or who uses
49-1 the license holder's title as a certified public accountant in
49-2 another state or jurisdiction is subject to disciplinary action in
49-3 this state for an act committed in the other state or jurisdiction
49-4 for which the license holder would be subject to discipline as a
49-5 license holder of the other state or jurisdiction.
49-6 (b) The board shall investigate any complaint made by the
49-7 regulatory agency of another state or jurisdiction concerning a
49-8 license holder of this state.
49-9 SECTION 38. Subsection (b), Section 901.601, Occupations
49-10 Code, is amended to read as follows:
49-11 (b) An action under Subsection (a)(1) must be brought in
49-12 district court in:
49-13 (1) Travis County, if the person is licensed under
49-14 this chapter or is not a resident of this state; or
49-15 (2) the county in which the person resides, if the
49-16 person is a resident of this state but is not licensed under this
49-17 chapter.
49-18 SECTION 39. Subsection (c), Section 901.602, Occupations
49-19 Code, is amended to read as follows:
49-20 (c) A complaint filed under this section must be filed in a
49-21 district court in:
49-22 (1) Travis County, if the complaint is filed against a
49-23 person who is [registered or] licensed under this chapter or is not
49-24 a resident of this state; or
49-25 (2) the county in which the person resides, if the
49-26 complaint is filed against a person who is a resident of this state
50-1 but is not [registered or] licensed under this chapter.
50-2 SECTION 40. Subchapter M, Chapter 901, Occupations Code, is
50-3 amended by adding Sections 901.603, 901.604, and 901.605 to read as
50-4 follows:
50-5 Sec. 901.603. INTERVENTION IN ACTION. Subject to approval
50-6 by the board, a license holder or a professional organization of
50-7 certified public accountants may intervene in an action by the
50-8 board or may bring an action in the name of the license holder or
50-9 professional organization to enforce any provision of this chapter
50-10 against a person who does not hold a license or firm license.
50-11 Sec. 901.604. SINGLE ACT AS EVIDENCE OF PRACTICE. In an
50-12 action brought under this chapter, evidence of a single act
50-13 prohibited by this chapter is sufficient to justify a penalty,
50-14 injunction, restraining order, or conviction without evidence of a
50-15 general course of conduct.
50-16 Sec. 901.605. APPOINTMENT OF SECRETARY OF STATE AS AGENT. A
50-17 person who is not a resident of this state and who applies for a
50-18 certificate or firm license is considered to have appointed the
50-19 secretary of state as the applicant's agent for service of process
50-20 in any action or proceeding against the applicant arising out of
50-21 any transaction connected with or incidental to professional
50-22 accounting services performed by the applicant while the applicant
50-23 holds a certificate or firm license.
50-24 SECTION 41. (a) This Act takes effect September 1, 2001.
50-25 (b) A person who is registered under Subchapter H, Chapter
50-26 901, Occupations Code, on the effective date of this Act is
51-1 considered to hold a firm license under that subchapter as amended
51-2 by this Act and is not required to obtain a firm license under that
51-3 subchapter until the date the registration expires.
51-4 (c) The Texas State Board of Public Accountancy shall adopt
51-5 rules under Subsection (a), Section 901.304, and Section 901.307,
51-6 Occupations Code, as amended by this Act, not later than January 1,
51-7 2002.
51-8 (d) Subsection (a), Section 901.304, and Section 901.307,
51-9 Occupations Code, as amended by this Act, apply only to an
51-10 examination given on or after the date the Texas State Board of
51-11 Public Accountancy adopts rules under those sections as required by
51-12 this Act. An examination given before the date the board adopts
51-13 rules under those sections is governed by the law in effect when
51-14 the examination was given, and the former law is continued in
51-15 effect for that purpose.
51-16 (e) The change in law made by this Act applies only to an
51-17 offense committed on or after the effective date of this Act. For
51-18 purposes of this subsection, an offense is committed before the
51-19 effective date of this Act if any element of the offense occurs
51-20 before that date.
51-21 (f) An offense committed before the effective date of this
51-22 Act is governed by the law in effect when the offense was
51-23 committed, and the former law is continued in effect for that
51-24 purpose.