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S.B. 226 Enrolled
AN ACT RELATING TO OCCUPATIONAL AND PROFESSIONAL LICENSING,
CORPORATIONS, AND PARTNERSHIPS; RECODIFYING THE CERTIFIED PUBLIC
ACCOUNTANT LICENSING ACT; AMENDING PROVISIONS RELATING TO
PROFESSIONAL CORPORATIONS, LIMITED LIABILITY COMPANIES, AND LIMITED
PARTNERSHIPS TO INTERFACE WITH PROFESSIONAL LICENSING PROVISIONS;
MAKING TECHNICAL CHANGES; AND PROVIDING A COORDINATION CLAUSE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
16-11-7, as enacted by Chapter 20, Laws of Utah 1963
16-11-8, as enacted by Chapter 20, Laws of Utah 1963
16-11-13, as last amended by Chapter 6, Laws of Utah 1992, Third Special Session
16-11-14, as last amended by Chapter 277, Laws of Utah 1992
48-1-48, as enacted by Chapter 61, Laws of Utah 1994
48-2b-105, as enacted by Chapter 258, Laws of Utah 1991
ENACTS:
58-26a-101, Utah Code Annotated 1953
58-26a-102, Utah Code Annotated 1953
58-26a-201, Utah Code Annotated 1953
58-26a-301, Utah Code Annotated 1953
58-26a-302, Utah Code Annotated 1953
58-26a-303, Utah Code Annotated 1953
58-26a-304, Utah Code Annotated 1953
58-26a-305, Utah Code Annotated 1953
58-26a-306, Utah Code Annotated 1953
58-26a-307, Utah Code Annotated 1953
58-26a-401, Utah Code Annotated 1953
58-26a-501, Utah Code Annotated 1953
58-26a-502, Utah Code Annotated 1953
58-26a-601, Utah Code Annotated 1953
58-26a-602, Utah Code Annotated 1953
REPEALS:
58-26-1, as repealed and reenacted by Chapter 242, Laws of Utah 1990
58-26-2, as last amended by Chapter 297, Laws of Utah 1993
58-26-3, as last amended by Chapter 297, Laws of Utah 1993
58-26-4, as last amended by Chapter 10, Laws of Utah 1997
58-26-5, as last amended by Chapter 313, Laws of Utah 1994
58-26-6, as last amended by Chapter 313, Laws of Utah 1994
58-26-7, as last amended by Chapter 297, Laws of Utah 1993
58-26-8, as last amended by Chapter 313, Laws of Utah 1994
58-26-9, as last amended by Chapter 297, Laws of Utah 1993
58-26-10, as repealed and reenacted by Chapter 242, Laws of Utah 1990
58-26-11, as last amended by Chapter 313, Laws of Utah 1994
58-26-12, as repealed and reenacted by Chapter 242, Laws of Utah 1990
58-26-13, as last amended by Chapter 297, Laws of Utah 1993
58-26-14, as last amended by Chapter 313, Laws of Utah 1994
58-26-15, as repealed and reenacted by Chapter 297, Laws of Utah 1993
58-26-18, as repealed and reenacted by Chapter 242, Laws of Utah 1990
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 16-11-7 is amended to read:
16-11-7. Issuance of shares of capital stock -- Restrictions.
(1) A professional corporation may issue the shares of its capital stock and a shareholder may
voluntarily transfer shares of capital stock in a professional corporation only to:
(a) persons who are duly licensed to render the same specific professional services as those
for which the corporation was organized[
(b) persons other than those meeting the requirements of Subsection (1)(a) to the extent and
in the proportions allowed by the applicable licensing act for the profession for which the corporation
is organized.
(2) Any shares issued in violation of this section are void.
Section 2. Section 16-11-8 is amended to read:
16-11-8. Requirement to be an officer, director, or shareholder.
(1) No person may be an officer, director, or shareholder of a professional corporation [
(a) an individual duly licensed to render the same specific professional services as those for
which the corporation was organized; [
(b) qualified to be an officer, director, or shareholder under the applicable licensing act for
the profession for which the corporation is organized.
(2) Notwithstanding the provisions of Subsection (1), a nonlicensed person may serve as
secretary or treasurer.
Section 3. Section 16-11-13 is amended to read:
16-11-13. Purchase or redemption of shares of disqualified shareholder.
(1) The articles of incorporation may provide for the purchase or redemption of the shares
of any shareholder upon the [
or the same may be provided in the bylaws or by private agreement. In the absence of such a
provision in the articles of incorporation, the bylaws, or by private agreement, the professional
corporation shall purchase the shares of [
is not qualified to own shares in [
(2) The price for [
value as of the date of [
(3) If the corporation [
required by Subsection (1), any disqualified shareholder or personal representative of a disqualified
shareholder may bring an action in the district court of the county in which the principal office or
place of practice of the professional corporation is located for the enforcement of this [
section. The court shall have power to award the plaintiff the reasonable fair value of his shares, or
within its jurisdiction, may order the liquidation of the corporation. Further, if the plaintiff is
successful in [
(4) The professional corporation shall repurchase [
without regard to restrictions upon the repurchase of shares provided by Title 16, Chapter 10a, Utah
Revised Business Corporation Act.
Section 4. Section 16-11-14 is amended to read:
16-11-14. Annual certificate -- Filing -- Contents -- Filing fee.
During the month of the anniversary date of incorporation, each professional corporation shall
file with the division an annual report as specified by Section 16-10a-1607 , giving the names and
residence addresses of all shareholders of the professional corporation as of its anniversary date of
incorporation next preceding, and certifying that all of [
render the same specific professional services as those for which the corporation was organized or
otherwise qualify to be shareholders pursuant to the applicable licensing act for the profession for
which the corporation was organized.
Section 5. Section 48-1-48 is amended to read:
48-1-48. Limited liability partnerships providing professional services.
(1) A limited liability partnership organized under Sections 48-1-41 through 48-1-48 to
render professional services may render only one specific type of professional service, and services
ancillary to that type of professional service, and may not engage in any business other than rendering
the professional service that it was organized to render and services ancillary to those services.
(2) A limited liability partnership organized to render professional services:
(a) may include partners and employees authorized under the laws of the jurisdiction where
they reside to provide similar services; [
(b) may include partners who are not licensed or registered by the state to render those
professional services to the extent allowed by the applicable licensing act relating to those
professional services; and
[
who are licensed or registered by the state to render those professional services.
(3) A limited liability partnership organized to render professional services shall have the
powers provided a limited liability partnership under this chapter.
Section 6. Section 48-2b-105 is amended to read:
48-2b-105. Powers.
(1) Each limited liability company organized and existing under this chapter may:
(a) sue or be sued, or institute or defend any action, arbitration, or proceeding, whether
judicial, administrative, or otherwise, in its own name;
(b) purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, or otherwise
deal in or with real or personal property or an interest in real or personal property, wherever situated;
(c) sell, convey, mortgage, pledge, create a security interest in, lease, exchange or transfer,
or otherwise dispose of all or any part of its property or assets;
(d) lend money to and otherwise assist its employees and managers;
(e) purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ,
sell, mortgage, lend, pledge, otherwise dispose of, or otherwise use or deal in or with:
(i) shares or other interests in or obligations of other foreign or domestic limited liability
companies, domestic or foreign corporations, associations, general or limited partnerships, or
individuals; or
(ii) direct or indirect obligations of the United States or any other government, state,
territory, governmental district, or municipality or of any instrumentality of them;
(f) make contracts or guarantees or incur liabilities, borrow money at such rates of interest
as the limited liability company may determine, issue its notes, bonds, or other obligations, or secure
any of its obligations by mortgage or pledge of all or any part of its property, franchises, and income;
(g) lend money for any lawful purpose, invest or reinvest its funds, or take and hold real or
personal property as security for the payment of funds so loaned or invested;
(h) conduct its business and maintain offices and exercise the powers granted by this chapter
within or without this state, in any state, territory, district, or possession of the United States or in
any foreign country;
(i) elect or appoint managers and agents of the limited liability company, define their duties,
and fix their compensation;
(j) make and alter an operating agreement, not inconsistent with its articles of organization
or with the laws of this state, for the administration and regulation of its affairs;
(k) make donations for the public welfare or for charitable, scientific, religious, or educational
purposes;
(l) indemnify a member or manager or any other person to the same extent that a partnership
may indemnify any of the partners, managers, employees, or agents of the partnership against
expenses actually and reasonably incurred by the member or manager in connection with the defense
of an action, suit, or proceeding, whether civil or criminal, in which the member or manager is made
a party;
(m) cease its activities and surrender its certificate of organization;
(n) have and exercise all powers necessary or convenient to effect any or all of the purposes
for which the company is organized;
(o) transact any lawful business which the members or the managers find to be in aid of
governmental policy;
(p) pay pensions and establish pension plans, profit-sharing plans, and other incentive plans
for any or all of its managers and employees;
(q) be a promoter, incorporator, general partner, limited partner, member, associate, or
manager of any corporation, partnership, limited partnership, limited liability company, joint venture,
trust, or other enterprise; and
(r) render professional services, if each member of a limited liability company who renders
professional services in Utah is licensed or registered to render those professional services pursuant
to applicable Utah law.
(2) A limited liability company organized to render professional services under this chapter
may render only one specific type of professional services, and services ancillary to them, and may
not engage in any business other than rendering the professional services which it was organized to
render, and services ancillary to them.
(3) A limited liability company organized to render professional services:
(a) may include members, managers, and employees authorized under the laws of the
jurisdiction where they reside to provide similar services;
(b) may include members who are not licensed or registered by the state to render those
professional services to the extent allowed by the applicable licensing act relating to those
professional services;
[
managers, and employees who are licensed or registered by [
professional services; and
[
Section 7. Section 58-26a-101 is enacted to read:
58-26a-101. Title.
This chapter is known as the "Certified Public Accountant Licensing Act."
Section 8. Section 58-26a-102 is enacted to read:
58-26a-102. Definitions.
In addition to the definitions in Section 58-1-102 , as used in this chapter:
(1) "Accounting experience" means applying accounting and auditing skills and principles that
are taught as a part of the professional education qualifying a person for licensure under this chapter
and generally accepted by the profession, under the supervision of a licensed certified public
accountant.
(2) "Board" means the Utah Board of Accountancy created in Section 58-26a-201 .
(3) "Certified Public Accountant" or "CPA" means an individual currently licensed by this
state or any other state to practice public accountancy or who has been granted a certificate as a
certified public accountant under prior law or this chapter.
(4) "Certified Public Accountant firm" or "CPA firm" means a qualified business entity
holding a valid registration as a Certified Public Accountant firm under this chapter.
(5) "Client" means the person who retains a licensee for the performance of one or more of
the services included in the definition of the practice of public accountancy. "Client" does not include
a CPA's employer when the licensee works in a salaried or hourly rate position.
(6) "Compilation of financial statements" means the presentation in the form of financial
statements of information that is the representation of management or owners accompanied by a
report stating the compilation has been performed in accordance with standards established by the
American Institute of Certified Public Accountants.
(7) "Experience" means:
(a) accounting experience;
(b) professional experience; or
(c) qualifying experience.
(8) "Licensee" means the holder of a current valid license issued under this chapter.
(9) "Practice of public accounting" means the offer to perform or the performance by a
person holding himself out as a certified public accountant of one or more kinds of services involving
the use of auditing or accounting skills including the issuance of reports or opinions on financial
statements, performing attestation engagements, the performance of one or more kinds of advisory
or consulting services, or the preparation of tax returns or the furnishing of advice on tax matters for
a client.
(10) "Peer review" means a study, appraisal, or review of one or more aspects of the
professional work of a person or qualified business entity in the practice of public accountancy, by
a licensee or any other qualified person in accordance with rules adopted pursuant to this chapter and
who is not affiliated with the person or qualified business entity being reviewed.
(11) "Professional experience" means experience lawfully obtained while licensed as a
certified public accountant in another jurisdiction, recognized by rule, in the practice of public
accountancy performed for a client, which includes expression of assurance or opinion, for at least
300 hours collectively in the following areas:
(a) applying Generally Accepted Auditing Standards (GAAS) to the usual and customary
financial transactions recorded in the accounting records;
(b) preparing audit working papers in accordance with GAAS covering the examination of
the accounts usually found in accounting records;
(c) planning the audit scope in accordance with GAAS, including the audit program to be
followed;
(d) preparing written explanations and comments on the findings of the examination and on
the content of the accounting records; and
(e) preparing and analyzing financial statements in accordance with GAAS.
(12) "Qualified business entity" means a sole proprietorship, corporation, limited liability
company, or partnership engaged in the practice of public accountancy.
(13) "Qualified continuing professional education" means a formal program of education that
contributes directly to the professional competence of a certified public accountant.
(14) "Qualifying examinations" means:
(a) the AICPA Uniform CPA Examination;
(b) the AICPA Examination of Professional Ethics for CPAs;
(c) the Utah Laws and Rules Examination; and
(d) any other examination approved by the board and adopted by the division by rule in
accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
(15) "Qualifying experience" means experience in the practice of public accountancy under
the direction and supervision of a licensed certified public accountant performed for a client, which
includes expression of assurance or opinion, for at least 300 hours collectively in the following areas:
(a) applying Generally Accepted Auditing Standards (GAAS) to the usual and customary
financial transactions recorded in the accounting records;
(b) preparing audit working papers in accordance with GAAS covering the examination of
the accounts usually found in accounting records;
(c) planning the audit scope in accordance with GAAS, including the audit program to be
followed;
(d) preparing written explanations and comments on the findings of the examination and on
the content of the accounting records; and
(e) preparing and analyzing financial statements in accordance with GAAS.
(16) (a) "Report" means:
(i) when used with reference to financial statements, an opinion, report or other form of
language that:
(A) states or implies assurance as to the reliability of any financial statements; or
(B) implies that the person or firm issuing it has special knowledge or competence in
accounting or auditing and specifically includes compilations and reviews; such an implication of
special knowledge or competence may arise from use by the issuer of the report of names or titles
indicating that the person or firm is a public accountant or auditor, or from the language of the report
itself; or
(ii) any disclaimer of opinion when it is conventionally understood to imply any positive
assurance as to the reliability of the financial statements referred to or language suggesting special
competence on the part of the person or firm issuing such language; and it includes any other form
of language that is conventionally understood to imply such assurance or such special knowledge or
competence.
(b) "Report" does not include a financial statement prepared by an unlicensed person if:
(i) that financial statement has a cover page which includes essentially the following language:
"I (we) have prepared the accompanying financial statements of (name of entity) as of (time period)
for the (period) then ended. This presentation is limited to preparing, in the form of financial
statements, information that is the representation of management (owners). I (we) have not audited
or reviewed the accompanying financial statements and accordingly do not express an opinion or any
other form of assurance on them."; and
(ii) the cover page and any related footnotes do not use the terms "compilation," "review,"
"audit," "generally accepted auditing standards," "generally accepted accounting principles," or other
similar terms.
(17) "Review of financial statements" means performing inquiry and analytical procedures
which provide a reasonable basis for expressing limited assurance that there are no material
modifications that should be made to the statements in order for them to be in conformity with
generally accepted accounting principles or, if applicable, with another comprehensive basis of
accounting; and, the issuance of a report on the financial statements stating that a review was
performed in accordance with the standards established by the American Institute of Certified Public
Accountants.
(18) (a) "Substantial equivalency" means that the education, examination, and experience
required by another jurisdiction are comparable to or exceed the education, examination, and
experience requirements of this chapter, or that an individual's education, examination, and experience
qualifications are comparable to or exceed the education, examination, and experience requirements
of this chapter.
(b) "Substantial equivalency" is determined by the board in accordance with rules made by
the division in collaboration with the board.
(19) "Unlawful conduct" is as defined in Sections 58-1-501 and 58-26a-501 .
(20) "Unprofessional conduct" is as defined in Sections 58-1-501 and 58-26a-502 and as may
be further defined by rule.
(21) "Year of experience" means 2,000 hours of cumulative experience.
Section 9. Section 58-26a-201 is enacted to read:
58-26a-201. Board.
(1) There is created the Utah Board of Accountancy consisting of four licensed certified
public accountants and one member of the general public.
(2) The board shall be appointed and shall serve in accordance with Section 58-1-201 .
(3) The duties and responsibilities of the board shall be in accordance with Sections 58-1-202
and 58-1-203 . In addition, the board shall designate one of its members on a permanent or rotating
basis to:
(a) assist the division in reviewing complaints concerning the unlawful or unprofessional
conduct of a licensee; and
(b) advise the division in its investigation of these complaints.
(4) A board member who has, under Subsection (3), reviewed a complaint or advised in its
investigation may be disqualified from participating with the board when the board serves as a
presiding officer of an administrative proceeding concerning the complaint.
Section 10. Section 58-26a-301 is enacted to read:
58-26a-301. Licensure or registration required -- License and registration
classifications.
(1) (a) A license is required for an individual to engage in the practice of public accounting,
except as specifically provided in Section 58-26a-305 or 58-1-307 .
(b) Registration with the division is required for a qualified business entity to engage in the
practice of public accounting, except as specifically provided in Section 58-26a-305 or 58-1-307 .
(2) (a) The division shall issue to an individual who qualifies under this chapter a license in
the classification of Certified Public Accountant.
(b) The division shall issue to a qualified business entity which qualifies under this chapter
a registration in the classification of Certified Public Accountant Firm.
Section 11. Section 58-26a-302 is enacted to read:
58-26a-302. Qualifications for licensure and registration -- Licensure by endorsement
-- Transitional provisions.
(1) Each applicant for licensure under this chapter as a certified public accountant shall:
(a) submit an application in a form prescribed by the division;
(b) pay a fee determined by the department under Section 63-38-3.2 ;
(c) show evidence of good moral character;
(d) submit a certified transcript of credits from an accredited institution acceptable to the
board showing:
(i) successful completion of a total of 150 semester hours or 225 quarter hours of collegiate
level education with a concentration in accounting, auditing, and business;
(ii) a baccalaureate degree or its equivalent at a college or university approved by the board;
and
(iii) compliance with any other education requirements established by rule by the division in
collaboration with the board in accordance with Title 63, Chapter 46a, Utah Administrative
Rulemaking Act;
(e) submit evidence of one year of accounting experience in a form prescribed by the division;
(f) submit evidence of having successfully completed the qualifying examinations in
accordance with Section 58-26a-306 ; and
(g) submit to an interview by the board, if requested, for the purpose of examining the
applicant's competence and qualifications for licensure.
(2) The division may issue a license under this chapter to a person who holds a license as a
certified public accountant issued by any other jurisdiction of the United States if the applicant for
licensure by endorsement:
(a) submits an application in a form prescribed by the division;
(b) pays a fee determined by the department under Section 63-38-3.2 ;
(c) shows evidence of good moral character;
(d) submits to an interview by the board, if requested, for the purpose of examining the
applicant's competence and qualifications for licensure; and
(e) (i) (A) shows evidence of having passed the qualifying examinations; and
(B) (I) meets the requirements for licensure which were applicable in this state at the time
of the issuance of the applicant's license by the jurisdiction from which the original licensure by
satisfactorily passing the AICPA Uniform CPA Examination was issued; or
(II) had five years of professional experience after passing the AICPA Uniform CPA
Examination upon which the original license was based, within the ten years immediately preceding
the application for licensure by endorsement; or
(ii) shows evidence that the applicant's education, examination record, and experience are
substantially equivalent to the requirements of Subsection (1), as provided by rule.
(3) (a) Each applicant for registration as a Certified Public Accountant firm shall:
(i) submit an application in a form prescribed by the division;
(ii) pay a fee determined by the department under Section 63-38-3.2 ;
(iii) have a CPA license under this chapter held by:
(A) its proprietor, in the case of a sole proprietorship;
(B) one of its general partners, managers, or members, in the case of a partnership or limited
liability company;
(C) one of its officers or shareholders, in the case of a corporation; or
(D) one of its owners, in the case of any other type of qualified business entity;
(iv) designate a CPA licensee who is responsible for on site supervision of operations of the
CPA firm; and
(v) meet any other requirements established by rule by the division in collaboration with the
board in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
(b) Each separate location of a qualified business entity within the state seeking registration
as a Certified Public Accountant firm shall register separately.
(c) A Certified Public Accountant firm may include owners who are not licensed under this
chapter provided that:
(i) more than 50% of the ownership of the Certified Public Accountant firm, including
financial interest and voting rights in the firm, is held by individuals who are Certified Public
Accountants, licensed under this chapter or another jurisdiction of the United States; and
(ii) all nonlicensed owners are active individual participants in the CPA firm.
(4) An individual shall have until July 1, 2004, to obtain three years of qualifying experience
for licensure without being required to complete the education requirement if that individual:
(a) was approved to take the qualifying examinations prior to July 1, 1994, under prior law
without completion of the education requirement; and
(b) (i) passed the AICPA Uniform CPA Examination prior to July 1, 1994; or
(ii) received conditional credits on the AICPA Uniform CPA Examination prior to July 1,
1994, and subsequently passed all parts of the AICPA Uniform CPA Examination within six
immediately successive examination administrations.
Section 12. Section 58-26a-303 is enacted to read:
58-26a-303. Term of license and registration -- Expiration -- Renewal.
(1) The division shall issue each license and registration under this chapter in accordance with
a two-year renewal cycle established by rule. The division may by rule extend or shorten a renewal
cycle by as much as one year to stagger the renewal cycles it administers.
(2) At the time of renewal a licensee shall show satisfactory evidence of each of the following
renewal requirements:
(a) completion of qualified continuing education as required under Section 58-26a-304 ; and
(b) successful completion of a peer review meeting the requirements established by rule by
the division in collaboration with the board.
(3) Each license or registration automatically expires on the date shown on the license or
registration unless it is renewed in accordance with Section 58-1-308 .
Section 13. Section 58-26a-304 is enacted to read:
58-26a-304. Continuing education.
(1) As a condition precedent for a license renewal, each licensee shall, during each two-year
licensure cycle or other cycle defined by rule, complete 80 hours of qualified continuing professional
education in accordance with standards defined by rule.
(2) If a renewal cycle is extended or shortened under Section 58-26a-303 , the continuing
education hours required for license renewal under this section shall be increased or decreased
proportionally.
(3) (a) A licensee may request a waiver of the requirements of Subsection (1) for a period
not exceeding three years by:
(i) submitting an application for waiver in a form approved by the division; and
(ii) demonstrating that the licensee will be engaged in activities or be subject to circumstances
which prevent the licensee from meeting the requirements of Subsection (1) during the period of the
waiver.
(b) An application for waiver shall be granted upon a showing of good cause.
(c) A licensee who is granted a waiver under this section shall complete 30 hours of
continuing professional education within the six months immediately following the expiration of the
waiver than includes at least 16 hours of continuing professional education focusing on auditing.
Section 14. Section 58-26a-305 is enacted to read:
58-26a-305. Exemptions from licensure.
In addition to the exemptions from licensure in Section 58-1-307 , the following may engage
in acts included within the definition of the practice of public accountancy, subject to the stated
circumstances and limitations, without being licensed under this chapter:
(1) a person licensed by any other state, district, or territory of the United States or any
foreign country as a certified public accountant or its equivalent under any other title while
temporarily practicing in this state if:
(a) the practice is incidental to that person's regular practice outside of this state; and
(b) if that person's temporary practice within this state is in conformity with this chapter and
rules established under this chapter;
(2) an officer, member, partner, or employee of any entity or organization who signs any
statement or report in reference to the financial affairs of the entity or organization with a designation
of that person's position within the entity or organization;
(3) a public official or employee while performing his official duties;
(4) a person using accounting or auditing skills, including the preparation of tax returns,
management advisory services, and the preparation of financial statements without the issuance of
reports;
(5) an employee of a CPA firm registered under this chapter or an assistant to a person
licensed under this chapter, working under the supervision of a licensee, if:
(a) neither the employee or assistant nor the licensed employer or registered CPA firm
represents that the unlicensed person is a certified public accountant; and
(b) no accounting or financial statements are issued over the unlicensed person's name; and
(6) a person licensed as a public accountant for a period of not less than 20 years as of July
1, 1981, if that person's license was current as of April 23, 1990.
Section 15. Section 58-26a-306 is enacted to read:
58-26a-306. Examination requirements.
(1) Before taking the qualifying examinations, an applicant shall:
(a) submit an application in a form approved by the division;
(b) pay a fee determined by the department under Section 63-38-3.2 ;
(c) demonstrate completion of the education requirement in Subsection 58-26a-302 (1)(d);
and
(d) be approved by the board to take the qualifying examinations.
(2) (a) A person must sit for all parts of the AICPA Uniform CPA Examination upon that
person's first sitting, and all subsequent sittings, for the examination, unless that person has currently
valid conditional credits under Subsection (2)(b).
(b) An examinee who successfully passes two or more parts and receives a score of at least
50% in each part not passed, on the AICPA Uniform CPA Examination, shall receive conditional
credits for those parts passed which may be applied to subsequent examinations. At any of the next
six examinations, the examinee is required to take only those parts of the examination for which the
examinee has not received conditional credits and shall receive additional conditional credits for any
other parts passed. If conditional credits in all remaining parts are not received within six successive
examinations after the original conditional credits were received, all credits terminate and a new
application for the entire examination must be submitted. Passing the ethics section of the
examination does not qualify as a part of the examination which will qualify the examinee for
conditional credit.
Section 16. Section 58-26a-307 is enacted to read:
58-26a-307. CPA emeritus status -- Renewal of license.
(1) A person currently licensed as a certified public accountant may, on any renewal date of
that license, apply for and obtain a transfer of that license to a status of CPA emeritus registration if:
(a) (i) the licensee is at least 60 years of age as of the date of renewal;
(ii) the licensee is disabled; or
(iii) the board finds other good cause for believing that the licensee will not return to the
practice of public accountancy;
(b) the licensee makes an application for transfer of status and registration and pays a
registration fee determined by the department under Section 63-38-3.2 ;
(c) the licensee, on application for transfer, certifies that he will not engage in the practice
of public accountancy while in the status of CPA emeritus registration; and
(d) the licensee is in good standing as a CPA and not subject to any order of revocation,
suspension, or probation.
(2) Each CPA emeritus registration shall be issued in accordance with a two-year renewal
cycle established by rule.
(3) CPA emeritus registrants may not engage in the practice of public accountancy.
(4) CPA emeritus registrants are not required to fulfill the continuing professional education
or peer review provisions of this chapter.
(5) Each CPA emeritus registrant is responsible for renewing his registration, according to
procedures that the division establishes by rule in collaboration with the board in accordance with
Section 58-1-308 .
(6) A CPA emeritus registrant may reinstate his CPA license by:
(a) submitting an application in a form prescribed by the division;
(b) paying a fee determined by the department under Section 63-38-3.2 ; and
(c) showing evidence of having completed the continuing professional education requirement
established by rule.
Section 17. Section 58-26a-401 is enacted to read:
58-26a-401. Grounds for denial of license -- Disciplinary proceedings.
Grounds for refusing to issue a license to an applicant, for refusing to renew the license of a
licensee, for revoking, suspending, restricting, or placing on probation the license of a licensee, for
issuing a public or private reprimand to a licensee, and for issuing a cease and desist order shall be
in accordance with Section 58-1-401 .
Section 18. Section 58-26a-501 is enacted to read:
58-26a-501. Unlawful conduct.
"Unlawful conduct" includes:
(1) using "certified public accountant," "public accountant," "CPA," or any other title,
designation, words, letters, abbreviation, sign, card, or device tending to indicate that the person is
a certified public accountant, unless that person has:
(a) a current license as a certified public accountant issued under this chapter; or
(b) (i) a current license or certificate as a certified public accountant issued by any jurisdiction
of the United States; and
(ii) (A) the use in this state is incidental to primary services being lawfully performed outside
of this state; or
(B) the division has entered into a reciprocal agreement with that jurisdiction to recognize
the license issued by that jurisdiction;
(2) a firm assuming or using "certified public accountant," "CPA," or any other title,
designation, words, letters, abbreviation, sign, card, or device tending to indicate that the firm is
composed of certified public accountants unless each office of the firm in this state:
(a) is registered with the division; and
(b) meets the requirements of Subsections 58-26a-302 (3)(a)(iii), (iv), and (v);
(3) signing or affixing to any accounting or financial statement the person's name or any trade
or assumed name used in that person's profession or business, with any wording indicating that the
person is an auditor, or with any wording indicating that the person has expert knowledge in
accounting or auditing, unless that person is licensed under this chapter and all of the person's offices
in this state for the practice of public accountancy are maintained and registered as provided in this
chapter; and
(4) except as provided in Section 58-26a-305 , engaging in the following conduct if not
licensed under this chapter to practice public accountancy:
(a) issuing a report on financial statements of any other person, firm, organization, or
governmental unit; or
(b) issuing a report using any form of language substantially similar to conventional language
used by licensees respecting:
(i) a review of financial statements; or
(ii) a compilation of financial statements.
Section 19. Section 58-26a-502 is enacted to read:
58-26a-502. Unprofessional conduct.
(1) "Unprofessional conduct" includes:
(a) undertaking an engagement when the licensee knows or should know that the licensee
could not reasonably expect to complete it with professional competence;
(b) making unauthorized disclosures of confidential information obtained in the practice of
public accountancy;
(c) engaging in any business or activity that creates a conflict of interest with a licensee's
practice in the profession when the licensee knows or should know that it is a conflict of interest and
the licensee does not fully disclose the conflict of interest in writing to all affected parties;
(d) failing to meet the requirements for continuing professional education or peer review
required under this chapter;
(e) issuing a report on financial statements of a client, other than a report in which a lack of
independence is disclosed, or performing an attest engagement subject to the attestation standards
of the American Institute of Certified Public Accountants when the licensee is not independent, in fact
and appearance, to the client; or
(f) receiving compensation, including a commission, for referring or selling services or
products of others to a client during the period:
(i) that the licensee or CPA firm is engaged by the client for purposes of:
(A) an audit or review of a financial statement;
(B) a compilation of a financial statement when the licensee or his firm expects, or reasonably
might expect, that a third party will use the financial statement and the compilation report and the
report does not describe a lack of independence; or
(C) an examination of prospective financial information; or
(ii) covered by any historical financial statements involved with any of the services listed in
Subsection (1)(f)(i).
(2) (a) Notwithstanding the provisions of Subsection (1)(f), a licensee or CPA firm that is
not prohibited by Subsection (1)(f) from receiving other compensation, including a commission, may
receive or agree to receive that other compensation for referral or sale of services or products of
others to another person if:
(i) he discloses in writing the nature, source, and amount of all other compensation prior to
making the referral or sale by the licensee or CPA firm; and
(ii) the receipt of the compensation complies with all of the other requirements of this section.
(b) Subsection (1)(f) does not apply to payments received from the sale of an accounting
practice or to retirement payments to persons formerly engaged in the practice of public accountancy.
Section 20. Section 58-26a-601 is enacted to read:
58-26a-601. Ownership of statements, records, schedules, working papers, and
memoranda made by licensee.
(1) All statements, records, schedules, working papers, and memoranda made by a licensee
under this chapter, incident to or in the course of professional service to a client, are the property of
the licensee, in the absence of any express agreement between the licensee and the client to the
contrary.
(2) A licensee may not sell, trade, or bequeath statements, records, schedules, working
papers, or memoranda without the consent of the client or the client's personal representative or
assignee to anyone other than another licensee or one or more surviving partners or shareholders or
new partners or shareholders of the licensee or any combined or merged CPA firm or
successors-in-interest to the CPA firm.
Section 21. Section 58-26a-602 is enacted to read:
58-26a-602. Privity.
A licensee, a CPA firm registered under this chapter, and any employee, partner, member,
officer, or shareholder of a licensee or CPA firm are not liable to persons with whom they are not in
privity of contract for civil damages resulting from acts, omissions, decisions, or other conduct in
connection with professional services performed by that person, except for:
(1) acts, omissions, decisions, or conduct that constitute fraud or intentional
misrepresentations; or
(2) other acts, omissions, decisions, or conduct, if the person performing the professional
services:
(a) knew that a primary intent of the client was for the professional services to benefit or
influence the particular person seeking to establish liability; and
(b) identified in writing to the client that the professional services performed on behalf of the
client were intended to be relied upon by the particular person seeking to establish liability.
Section 22. Repealer.
This act repeals:
Section 58-26-1, Short title.
Section 58-26-2, Definitions.
Section 58-26-3, Utah Board of Accountancy.
Section 58-26-4, Requirements for licensure.
Section 58-26-5, Requirements for examination -- Conditioning on the examination.
Section 58-26-6, Licensure by endorsement.
Section 58-26-7, Conditions for issuance and renewal of licenses -- Quality review --
Continuing professional education.
Section 58-26-8, Reinstatement of license or certificate suspended for failure to renew
or nonpayment of fees.
Section 58-26-9, Exemptions from licensure.
Section 58-26-10, Exemption from educational and examination requirements.
Section 58-26-11, CPA emeritus status and registration.
Section 58-26-12, Privity.
Section 58-26-13, Certificates or licenses held on April 23, 1990 -- Expiration of
certificates.
Section 58-26-14, Registration and requirements for firms.
Section 58-26-15, Grounds for denial of license -- Disciplinary proceedings.
Section 58-26-18, Ownership of statements, records, schedules, working papers, and
memoranda made by licensee.
Section 23. Coordination clause.
If this bill and S.B. 107, Professional Corporation Act Amendments, both pass, it is the intent
of the Legislature that Section 16-11-8 read as provided in S.B. 107 with the following amendments:
(1) on page 1, line 16, of S.B. 107 delete "if" and insert "unless";
(2) on page 1, line 16, of S.B. 107 bracket "not" and insert "; or (ii) qualified to be an officer,
director, or shareholder under the applicable licensing act for the profession for which the corporation
is organized.".
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