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