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AN ACT
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relating to the regulation of the practice of public accountancy by |
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certain out-of-state license holders. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 901.002(a)(4) and (5), Occupations |
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Code, are amended to read as follows: |
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(4) "Certified public accountant" means a person who |
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holds a certificate issued under this chapter or who practices in |
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this state under Section 901.462. |
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(5) "Certified public accountancy firm" means a person |
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who holds a firm license or a firm that practices in this state |
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under Section 901.461. |
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SECTION 2. Section 901.251(a), Occupations Code, is amended |
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to read as follows: |
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(a) A person who is an individual may not engage in the |
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practice of public accountancy unless the person holds a |
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certificate issued under this chapter or practices in this state |
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under a privilege under Section 901.462. |
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SECTION 3. Section 901.351, Occupations Code, is amended by |
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amending Subsections (a) and (b) and adding Subsection (a-1) to |
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read as follows: |
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(a) A firm may not provide attest services or use the title |
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"CPA's," "CPA Firm," "Certified Public Accountants," "Certified |
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Public Accounting Firm," or "Auditing Firm" or a variation of one of |
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those titles unless the firm holds a firm license issued under this |
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subchapter or practices in this state under a privilege under |
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Section 901.461. |
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(a-1) A firm is required to hold a firm license under this |
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subchapter if the firm: |
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(1) establishes or maintains an office in this state; |
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or |
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(2) performs for an entity with its principal office |
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in this state: |
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(A) a financial statement audit or other |
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engagement that is to be performed in accordance with the |
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Statements on Auditing Standards; |
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(B) an examination of prospective financial |
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information that is to be performed in accordance with the |
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Statements on Standards for Attestation Engagements; or |
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(C) an engagement that is to be performed in |
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accordance with auditing standards of the Public Company Accounting |
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Oversight Board or its successor. |
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(b) The board shall grant or renew a firm license to |
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practice as a certified public accountancy firm to: |
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(1) a firm that applies and demonstrates the necessary |
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qualifications in accordance with this subchapter; or |
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(2) a firm originally licensed as a certified public |
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accountancy firm in another state that: |
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(A) is required to hold a firm license under |
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Subsection (a-1) [establishes an office in this state]; and |
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(B) demonstrates the necessary qualifications in |
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accordance with this subchapter. |
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SECTION 4. Sections 901.354(b), (f), and (g), Occupations |
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Code, are amended to read as follows: |
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(b) A certified public accountancy firm may include |
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individuals as owners who are not license holders if: |
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(1) the firm designates to the board as responsible |
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for the firm's license and the supervision of the firm: |
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(A) a license holder who resides in this state; |
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or |
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(B) if the firm is required under Section |
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901.351(a-1)(2) to hold a firm license, an individual practicing |
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under a privilege under Section 901.462 [to be responsible for the
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firm's firm license and the supervision of the firm]; |
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(2) each owner who is not a license holder and who is a |
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resident of this state as determined by board rule: |
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(A) is actively involved in the firm or an |
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affiliated entity; |
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(B) is of good moral character as demonstrated by |
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a lack of history of dishonest or felonious acts; |
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(C) holds a baccalaureate or graduate degree |
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conferred by a college or university acceptable to the board or |
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equivalent education as determined by the board; |
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(D) maintains any professional designation held |
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by the individual in good standing with the appropriate |
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organization or regulatory body that is identified or used in an |
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advertisement, letterhead, business card, or other firm-related |
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communication; |
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(E) has passed an examination on the rules of |
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professional conduct as determined by board rule; |
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(F) complies with the rules of professional |
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conduct as determined by board rule; and |
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(G) maintains professional continuing education |
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applicable to license holders as required by board rule; and |
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(3) the firm and the owners who are not license holders |
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comply with board disciplinary actions and other requirements the |
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board may impose by rule. |
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(f) An applicant for issuance or renewal of a firm license |
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under this section must register each office of the firm in this |
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state and show that all attest services performed in this state and |
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each office in this state are under the supervision of a person who |
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holds a certificate issued under this chapter or by another state. |
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(g) An application for a firm license under this chapter |
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must be made on an affidavit of the owner, an officer, or the |
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general partner of the firm, as applicable, stating: |
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(1) the name of the firm; |
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(2) the firm's post office address in this state if the |
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firm has an office in this state; |
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(3) the address of the firm's principal office; |
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(4) the address of each office of the firm in this |
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state if the firm has an office in this state; |
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(5) the name of the resident manager of each office of |
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the firm in this state; and |
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(6) the name, residence, and post office address of: |
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(A) each partner, member, shareholder, or other |
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owner; and |
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(B) if the firm is a partnership, each |
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shareholder of a partner that is a professional corporation. |
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SECTION 5. Section 901.401(b), Occupations Code, is amended |
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to read as follows: |
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(b) Each office in this state of a certified public |
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accountancy firm or a firm of public accountants must hold a license |
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issued under this chapter. |
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SECTION 6. Section 901.405(f), Occupations Code, is amended |
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to read as follows: |
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(f) A person who was licensed in this state, moved to |
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another state, and is currently licensed and has been in practice in |
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the other state for the two years preceding the date of application |
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may obtain a new license without reexamination. A [The] person |
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described by this subsection whose license has been revoked under |
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Section 901.502(3) or (4) may obtain a new license under this |
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subsection. A person described by this subsection must pay to the |
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board a fee that is equal to two times the normally required renewal |
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fee for the license and is not subject to additional fees under |
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Section 901.408. |
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SECTION 7. Section 901.408(a), Occupations Code, is amended |
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to read as follows: |
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(a) A person, other than a person described by Section |
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901.405(f), who fails to pay the license renewal fee or the |
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additional fee imposed under Section 901.407, as applicable, and |
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any late fee before the first anniversary of the due date of the |
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renewal fee or additional fee may renew the person's license only by |
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submitting to the board an application for renewal accompanied by |
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payment of: |
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(1) all accrued fees, including late fees; and |
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(2) the direct administrative costs incurred by the |
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board in renewing the person's license. |
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SECTION 8. The heading to Subchapter J, Chapter 901, |
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Occupations Code, is amended to read as follows: |
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SUBCHAPTER J. PRACTICE OF PUBLIC ACCOUNTANCY [BY LICENSE HOLDER] |
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SECTION 9. Section 901.451(b), Occupations Code, is amended |
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to read as follows: |
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(b) A person may not provide attest services or assume or |
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use the title "certified public accountants," the abbreviation |
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"CPAs," or any other title, designation, word, letter, |
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abbreviation, sign, card, or device tending to indicate that the |
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person is a certified public accountancy firm unless: |
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(1) the person holds a firm license issued under this |
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chapter or practices in this state under a privilege under Section |
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901.461; |
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(2) ownership of the person complies with the |
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requirements of this chapter and rules adopted by the board; and |
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(3) the person complies with board rules authorizing |
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the practice. |
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SECTION 10. Section 901.453(b), Occupations Code, is |
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amended to read as follows: |
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(b) A person may hold the person out to the public as an |
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"accountant," "auditor," or any combination of those terms or |
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assert that the person has expertise in accounting or auditing only |
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if: |
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(1) the person holds a license issued under this |
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chapter[;] and |
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[(2)] each of the person's offices in this state for |
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the practice of public accounting is maintained and practices under |
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a firm license as required under Subchapter H; or |
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(2) the person practices under a privilege under |
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Section 901.461 or 901.462. |
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SECTION 11. Section 901.454(a), Occupations Code, is |
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amended to read as follows: |
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(a) A person who is an accountant of another state may use |
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the title under which the accountant is generally known in the state |
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from which the accountant received a certificate, license, or |
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degree[, followed by the name of that state,] if: |
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(1) the person holds a license issued under this |
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chapter or practices in this state under a privilege under Section |
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901.461 or 901.462; and |
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(2) any [each] of the person's offices established or |
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maintained in this state for the practice of public accountancy are |
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licensed [is maintained and practices under a firm license as
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required] under this chapter [Subchapter H]. |
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SECTION 12. Section 901.455, Occupations Code, is amended |
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by adding Subsection (e) to read as follows: |
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(e) A firm that practices under Section 901.461 must use the |
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firm name that it uses in the state in which it is licensed and has |
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its principal place of business. |
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SECTION 13. Sections 901.456(a), (b), and (f), Occupations |
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Code, are amended to read as follows: |
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(a) Only a license holder or a person who practices under a |
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privilege under Section 901.461 or 901.462 may issue a report on a |
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financial statement of another person or otherwise perform or offer |
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to perform an attest service. |
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(b) A person who is not a license holder and who does not |
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practice under a privilege under Section 901.461 or 901.462: |
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(1) may not use language in any statement related to |
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the financial affairs of a person that is conventionally used by |
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license holders in reports on financial statements; |
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(2) may prepare financial statements; and |
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(3) may issue nonattest transmittals or information |
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regarding nonattest transmittals if the transmittals or |
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information do not purport to be in compliance with standards for |
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accounting and review services adopted by the American Institute of |
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Certified Public Accountants or another national accountancy |
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organization recognized by the board. |
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(f) A license holder or an individual who practices under a |
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privilege under Section 901.462 who performs attest services must |
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provide those services in accordance with standards adopted by the |
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American Institute of Certified Public Accountants or another |
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national accountancy organization recognized by the board. |
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SECTION 14. Section 901.460(b), Occupations Code, is |
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amended to read as follows: |
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(b) An individual who is a [A] license holder or practices |
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under a privilege under Section 901.462 [who is an individual] and |
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who is responsible for supervising attest services or signs or |
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authorizes another person to sign an accountant's reports on |
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financial statements on behalf of a certified public accountancy |
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firm must meet the competency requirements of the professional |
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standards that apply to those services. |
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SECTION 15. Subchapter J, Chapter 901, Occupations Code, is |
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amended by adding Sections 901.461 and 901.462 to read as follows: |
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Sec. 901.461. PRACTICE BY CERTAIN OUT-OF-STATE FIRMS. (a) |
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A certified public accountancy firm that is licensed and has its |
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primary place of business in another state and is not required to |
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hold a firm license under Section 901.351(a-1) may practice in this |
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state without a firm license or notice to the board if the firm's |
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practice in this state is performed by an individual who holds a |
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license under this chapter or who practices under a privilege under |
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Section 901.462. |
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(b) A firm described by Subsection (a) may exercise all the |
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practice privileges of a firm license holder, except that the firm: |
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(1) may not perform the services described by Section |
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901.351(a-1); and |
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(2) may perform the services described by Sections |
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901.002(a)(1)(B) and (D) for an entity with its home office in this |
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state only if: |
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(A) the firm meets the requirements of Sections |
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901.354(a) and (b); |
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(B) the firm complies with the board's peer |
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review program under Section 901.159; and |
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(C) the services are performed by an individual |
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who holds a license under this chapter or practices under a |
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privilege under Section 901.462. |
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(c) A firm practicing under a privilege under this section, |
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as a condition of the privilege of practicing without a firm |
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license: |
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(1) is subject to the personal and subject matter |
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jurisdiction and disciplinary authority of the board; |
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(2) must comply with this chapter and board rules; and |
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(3) is considered to have appointed the regulatory |
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agency of the state that issued the firm's license as the firm's |
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agent on whom process may be served in any action or proceeding by |
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the board against the firm. |
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(d) A firm practicing under a privilege under this section |
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shall promptly cease offering or rendering professional services in |
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this state if the firm's license to practice as a certified public |
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accountancy firm in the state in which the firm's primary place of |
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business is no longer valid. |
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Sec. 901.462. PRACTICE BY OUT-OF-STATE PRACTITIONER WITH |
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SUBSTANTIALLY EQUIVALENT QUALIFICATIONS. (a) An individual who |
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holds a certificate or license as a certified public accountant |
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issued by another state and whose principal place of business is not |
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in this state may exercise all the privileges of certificate and |
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license holders of this state without obtaining a certificate or |
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license under this chapter if: |
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(1) the National Association of State Boards of |
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Accountancy's National Qualification Appraisal Service has |
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verified that the other state has education, examination, and |
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experience requirements for certification or licensure that are |
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comparable to or exceed the requirements for licensure as a |
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certified public accountant of The American Institute of Certified |
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Public Accountants/National Association of State Boards of |
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Accountancy Uniform Accountancy Act and the board determines that |
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the licensure requirements of that Act are comparable to or exceed |
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the licensure requirements of this chapter; or |
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(2) the individual obtains from the National |
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Association of State Boards of Accountancy's National |
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Qualification Appraisal Service verification that the individual's |
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education, examination, and experience qualifications are |
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comparable to or exceed the requirements for licensure as a |
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certified public accountant of The American Institute of Certified |
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Public Accountants/National Association of State Boards of |
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Accountancy Uniform Accountancy Act and the board determines that |
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the licensure requirements of that Act are comparable to or exceed |
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the licensure requirements of this chapter. |
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(b) An individual who meets the requirements of Subsection |
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(a)(1) or (2) and who offers or renders professional services in |
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person or by mail, telephone, or electronic means may practice |
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public accountancy in this state without notice to the board. |
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(c) An individual practicing under the privilege under this |
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section, as a condition of the privilege of practicing without a |
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certificate or license: |
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(1) is subject to the personal and subject matter |
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jurisdiction and disciplinary authority of the board; |
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(2) must comply with this chapter and the board's |
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rules; and |
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(3) is considered to have appointed the regulatory |
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agency of the state that issued the individual's certificate or |
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license as the agent on whom process may be served in any action or |
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proceeding by the board against the individual. |
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(d) An individual who practices under a privilege under this |
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section shall promptly cease offering or rendering professional |
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services in this state if the individual's certificate or license |
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in the state of the individual's principal place of business is no |
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longer valid. |
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(e) An individual practicing under this section must |
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practice through a firm that holds a license under this chapter if, |
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for an entity with its principal office in this state, the |
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individual performs: |
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(1) a financial statement audit or other engagement |
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that is to be performed in accordance with the Statements on |
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Auditing Standards; |
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(2) an examination of prospective financial |
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information that is to be performed in accordance with the |
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Statements on Standards for Attestation Engagements; or |
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(3) an engagement that is to be performed in |
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accordance with auditing standards of the Public Company Accounting |
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Oversight Board or its successor. |
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SECTION 16. Sections 901.356 and 901.412, Occupations Code, |
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are repealed. |
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SECTION 17. This Act takes effect September 1, 2007. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2144 was passed by the House on April |
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25, 2007, by the following vote: Yeas 141, Nays 0, 1 present, not |
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voting; and that the House concurred in Senate amendments to H.B. |
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No. 2144 on May 21, 2007, by the following vote: Yeas 141, Nays 0, |
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3 present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2144 was passed by the Senate, with |
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amendments, on May 17, 2007, by the following vote: Yeas 31, Nays |
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0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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__________________ |
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Governor |