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