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[Introduced][Amended][Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 163 Enrolled

             1     

CERTIFIED PUBLIC ACCOUNTANT

             2     
LICENSING ACT AMENDMENTS

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Curtis S. Bramble

             6     
House Sponsor: Ron Bigelow

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies provisions of the Certified Public Accountant Licensing Act related to
             11      exemptions from licensure to practice public accountancy in this state.
             12      Highlighted Provisions:
             13          This bill:
             14          .    modifies the licensure by endorsement provisions for a certified public accountant by
             15      limiting its application to only those persons seeking to obtain a license issued by the
             16      state;
             17          .    provides a mobility provision for licensed certified public accountants by creating an
             18      exemption from licensure for a person licensed as a certified public accountant by
             19      any other state, district, or territory of the United States whose principal place of
             20      business is not in Utah, and:
             21              .    who is licensed from a state which the National Association of State Boards of
             22      Accountancy National Qualification Appraisal Service has verified to be
             23      substantially equivalent to the CPA licensure requirements of the Uniform
             24      Accountancy Act; or
             25              .    is from a state not verified by the National Qualification Appraisal Service, but         
             26      the person is able to obtain that verification from the service and meet other         
             27      requirements as a condition for receiving the exemption;
             28          .    modifies certified public accountancy unlawful conduct and unprofessional conduct
             29      provisions;


             30          .    eliminates obsolete transition provisions for education and licensure and updates
             31      professional and technical definitions; and
             32          .    makes certain technical changes.
             33      Monies Appropriated in this Bill:
             34          None
             35      Other Special Clauses:
             36          None
             37      Utah Code Sections Affected:
             38      AMENDS:
             39          58-26a-102, as enacted by Laws of Utah 2000, Chapter 261
             40          58-26a-302, as enacted by Laws of Utah 2000, Chapter 261
             41          58-26a-304, as enacted by Laws of Utah 2000, Chapter 261
             42          58-26a-305, as enacted by Laws of Utah 2000, Chapter 261
             43          58-26a-501, as enacted by Laws of Utah 2000, Chapter 261
             44          58-26a-502, as enacted by Laws of Utah 2000, Chapter 261
             45     
             46      Be it enacted by the Legislature of the state of Utah:
             47          Section 1. Section 58-26a-102 is amended to read:
             48           58-26a-102. Definitions.
             49          In addition to the definitions in Section 58-1-102 , as used in this chapter:
             50          (1) "Accounting experience" means applying accounting and auditing skills and
             51      principles that are taught as a part of the professional education qualifying a person for licensure
             52      under this chapter and generally accepted by the profession, under the supervision of a licensed
             53      certified public accountant.
             54          (2) "AICPA" means the American Institute of Certified Public Accountants.
             55          (3) (a) "Attest and attestation engagement" means providing any or all of the following
             56      financial statement services:
             57          (i) an audit or other engagement to be performed in accordance with the Statements on


             58      Auditing Standards (SAS);
             59          (ii) a review of a financial statement to be performed in accordance with the Statements
             60      on Standards for Accounting and Review Services (SSARS);
             61          (iii) an examination of prospective financial information to be performed in accordance
             62      with the Statements on Standards for Attestation Engagements (SSAE); or
             63          (iv) an engagement to be performed in accordance with the standards of the PCAOB.
             64          (b) The standards specified in this definition shall be adopted by reference by the
             65      division under its rulemaking authority in accordance with Title 63, Chapter 46a, Utah
             66      Administrative Rulemaking Act, and shall be those developed for general application by
             67      recognized national accountancy organizations such as the AICPA and the PCAOB.
             68          [(2)] (4) "Board" means the Utah Board of Accountancy created in Section
             69      58-26a-201 .
             70          [(3)] (5) "Certified Public Accountant" or "CPA" means an individual currently licensed
             71      by this state or any other state, district, or territory of the United States of America to practice
             72      public accountancy or who has been granted a [certificate] license as a certified public
             73      accountant under prior law or this chapter.
             74          [(4)] (6) "Certified Public Accountant firm" or "CPA firm" means a qualified business
             75      entity holding a valid registration as a Certified Public Accountant firm under this chapter.
             76          [(5)] (7) "Client" means the person who retains a licensee for the performance of one or
             77      more of the services included in the definition of the practice of public accountancy. "Client"
             78      does not include a CPA's employer when the licensee works in a salaried or hourly rate position.
             79          [(6)] (8) "Compilation [of financial statements]" means [the presentation in the form of
             80      financial statements of information that is the representation of management or owners
             81      accompanied by a report stating the compilation has been performed in accordance with
             82      standards established by the American Institute of Certified Public Accountants] providing a
             83      service to be performed in accordance with Statements on Standards for Accounting and
             84      Review Services (SSARS) that is presenting in the form of financial statements, information that
             85      is the representation of management or owners, without undertaking to express any assurance


             86      on the statements.
             87          [(7)] (9) "Experience" means:
             88          (a) accounting experience; or
             89          (b) professional experience[; or].
             90          [(c) qualifying experience.]
             91          [(8)] (10) "Licensee" means the holder of a current valid license issued under this
             92      chapter.
             93          (11) "NASBA" means the National Association of State Boards of Accountancy.
             94          (12) "PCAOB" means the Public Company Accounting Oversight Board.
             95          [(9)] (13) "Practice of public accounting" means the offer to perform or the
             96      performance by a person holding himself out as a certified public accountant of one or more
             97      kinds of services involving the use of auditing or accounting skills including the issuance of
             98      reports or opinions on financial statements, performing attestation engagements, the
             99      performance of one or more kinds of advisory or consulting services, or the preparation of tax
             100      returns or the furnishing of advice on tax matters for a client.
             101          [(10)] (14) "Peer review" means a study, appraisal, or review of one or more aspects of
             102      the professional work of a person or qualified business entity in the practice of public
             103      accountancy, by a licensee or any other qualified person in accordance with rules adopted
             104      pursuant to this chapter and who is not affiliated with the person or qualified business entity
             105      being reviewed.
             106          (15) "Principal place of business" means the office location designated by the licensee
             107      for purposes of substantial equivalency and licensure by endorsement.
             108          [(11)] (16) "Professional experience" means experience lawfully obtained while licensed
             109      as a certified public accountant in another jurisdiction, recognized by rule, in the practice of
             110      public accountancy performed for a client, which includes expression of assurance or opinion[,
             111      for at least 300 hours collectively in the following areas:].
             112          [(a) applying Generally Accepted Auditing Standards (GAAS) to the usual and
             113      customary financial transactions recorded in the accounting records;]


             114          [(b) preparing audit working papers in accordance with GAAS covering the
             115      examination of the accounts usually found in accounting records;]
             116          [(c) planning the audit scope in accordance with GAAS, including the audit program to
             117      be followed;]
             118          [(d) preparing written explanations and comments on the findings of the examination
             119      and on the content of the accounting records; and]
             120          [(e) preparing and analyzing financial statements in accordance with GAAS.]
             121          [(12)] (17) "Qualified business entity" means a sole proprietorship, corporation, limited
             122      liability company, or partnership engaged in the practice of public accountancy.
             123          [(13)] (18) "Qualified continuing professional education" means a formal program of
             124      education that contributes directly to the professional competence of a certified public
             125      accountant.
             126          [(14)] (19) "Qualifying examinations" means:
             127          (a) the AICPA Uniform CPA Examination;
             128          (b) the AICPA Examination of Professional Ethics for CPAs;
             129          (c) the Utah Laws and Rules Examination; and
             130          (d) any other examination approved by the board and adopted by the division by rule in
             131      accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             132          [(15) "Qualifying experience" means experience in the practice of public accountancy
             133      under the direction and supervision of a licensed certified public accountant performed for a
             134      client, which includes expression of assurance or opinion, for at least 300 hours collectively in
             135      the following areas:]
             136          [(a) applying Generally Accepted Auditing Standards (GAAS) to the usual and
             137      customary financial transactions recorded in the accounting records;]
             138          [(b) preparing audit working papers in accordance with GAAS covering the
             139      examination of the accounts usually found in accounting records;]
             140          [(c) planning the audit scope in accordance with GAAS, including the audit program to
             141      be followed;]


             142          [(d) preparing written explanations and comments on the findings of the examination
             143      and on the content of the accounting records; and]
             144          [(e) preparing and analyzing financial statements in accordance with GAAS.]
             145          [(16)] (20) (a) "Report" means:
             146          (i) when used with reference to financial statements, an opinion, report or other form of
             147      language that:
             148          (A) states or implies assurance as to the reliability of any financial statements; or
             149          (B) implies that the person or firm issuing it has special knowledge or competence in
             150      accounting or auditing and specifically includes compilations and reviews; such an implication of
             151      special knowledge or competence may arise from use by the issuer of the report of names or
             152      titles indicating that the person or firm is a public accountant or auditor, or from the language of
             153      the report itself; or
             154          (ii) any disclaimer of opinion when it is conventionally understood to imply any positive
             155      assurance as to the reliability of the financial statements referred to or language suggesting
             156      special competence on the part of the person or firm issuing such language; and it includes any
             157      other form of language that is conventionally understood to imply such assurance or such
             158      special knowledge or competence.
             159          (b) "Report" does not include a financial statement prepared by an unlicensed person if:
             160          (i) that financial statement has a cover page which includes essentially the following
             161      language: "I (we) have prepared the accompanying financial statements of (name of entity) as of
             162      (time period) for the (period) then ended. This presentation is limited to preparing, in the form
             163      of financial statements, information that is the representation of management (owners). I (we)
             164      have not audited or reviewed the accompanying financial statements and accordingly do not
             165      express an opinion or any other form of assurance on them."; and
             166          (ii) the cover page and any related footnotes do not use the terms "compilation,"
             167      "review," "audit," "generally accepted auditing standards," "generally accepted accounting
             168      principles," or other similar terms.
             169          [(17)] (21) "Review of financial statements" means performing inquiry and analytical


             170      procedures which provide a reasonable basis for expressing limited assurance that there are no
             171      material modifications that should be made to the statements in order for them to be in
             172      conformity with generally accepted accounting principles or, if applicable, with another
             173      comprehensive basis of accounting; and, the issuance of a report on the financial statements
             174      stating that a review was performed in accordance with the standards established by the
             175      American Institute of Certified Public Accountants.
             176          [(18)] (22) (a) "Substantial equivalency" means [that the education, examination, and
             177      experience required by another jurisdiction are comparable to or exceed the education,
             178      examination, and experience requirements of this chapter, or that an individual's education,
             179      examination, and experience qualifications are comparable to or exceed the education,
             180      examination, and experience requirements of this chapter.] a determination by the division in
             181      collaboration with the board or its designee that:
             182          (i) the education, examination, and experience requirements set forth in the statutes and
             183      administrative rules of another jurisdiction are comparable to or exceed the education,
             184      examination, and experience requirements set forth in the Uniform Accountancy Act; or
             185          (ii) an individual CPA's education, examination, and experience qualifications are
             186      comparable to or exceed the education, examination, and experience requirements set forth in
             187      the Uniform Accountancy Act.
             188          (b) In ascertaining whether an individual's qualifications are substantially equivalent as
             189      used in this chapter, the division in collaboration with the board shall take into account the
             190      qualifications without regard to the sequence in which the education, examination, and
             191      experience requirements were attained.
             192          [(b) "Substantial equivalency" is determined by the board in accordance with rules made
             193      by the division in collaboration with the board.]
             194          (23) "Uniform Accountancy Act" means the model public accountancy legislation
             195      developed and promulgated by national accounting and regulatory associations that contains
             196      standardized definitions and regulations for the practice of public accounting as recognized by
             197      the division in collaboration with the board.


             198          [(19)] (24) "Unlawful conduct" is as defined in Sections 58-1-501 and 58-26a-501 .
             199          [(20)] (25) "Unprofessional conduct" is as defined in Sections 58-1-501 and
             200      58-26a-502 and as may be further defined by rule.
             201          [(21)] (26) "Year of experience" means 2,000 hours of cumulative experience.
             202          Section 2. Section 58-26a-302 is amended to read:
             203           58-26a-302. Qualifications for licensure and registration -- Licensure by
             204      endorsement -- Transitional provisions.
             205          (1) Each applicant for licensure under this chapter as a certified public accountant shall:
             206          (a) submit an application in a form prescribed by the division;
             207          (b) pay a fee determined by the department under Section 63-38-3.2 ;
             208          (c) show evidence of good moral character;
             209          (d) submit a certified transcript of credits from an accredited institution acceptable to
             210      the board showing:
             211          (i) successful completion of a total of 150 semester hours or 225 quarter hours of
             212      collegiate level education with a concentration in accounting, auditing, and business;
             213          (ii) a baccalaureate degree or its equivalent at a college or university approved by the
             214      board; and
             215          (iii) compliance with any other education requirements established by rule by the
             216      division in collaboration with the board in accordance with Title 63, Chapter 46a, Utah
             217      Administrative Rulemaking Act;
             218          (e) submit evidence of one year of accounting experience in a form prescribed by the
             219      division;
             220          (f) submit evidence of having successfully completed the qualifying examinations in
             221      accordance with Section 58-26a-306 ; and
             222          (g) submit to an interview by the board, if requested, for the purpose of examining the
             223      applicant's competence and qualifications for licensure.
             224          (2) (a) The division may issue a license under this chapter to a person who holds a
             225      license as a certified public accountant issued by any other jurisdiction of the United States of


             226      America if the applicant for licensure by endorsement:
             227          [(a)] (i) submits an application in a form prescribed by the division;
             228          [(b)] (ii) pays a fee determined by the department under Section 63-38-3.2 ;
             229          [(c)] (iii) shows evidence of good moral character;
             230          [(d)] (iv) submits to an interview by the board, if requested, for the purpose of
             231      examining the applicant's competence and qualifications for licensure; and
             232          [(e) (i) (A)] (v) (A) (I) shows evidence of having passed the qualifying examinations;
             233      and
             234          [(B) (I)] (II) (Aa) meets the requirements for licensure which were applicable in this
             235      state at the time of the issuance of the applicant's license by the jurisdiction from which the
             236      original licensure by satisfactorily passing the AICPA Uniform CPA Examination was issued; or
             237          [(II)] (Bb) had [five] four years of professional experience after passing the AICPA
             238      Uniform CPA Examination upon which the original license was based, within the ten years
             239      immediately preceding the application for licensure by endorsement; or
             240          [(ii)] (B) shows evidence that the applicant's education, examination record, and
             241      experience are substantially equivalent to the requirements of Subsection (1), as provided by
             242      rule.
             243          (b) This Subsection (2) applies only to a person seeking to obtain a license issued by
             244      this state and does not apply to a person practicing as a certified public accountant in the state
             245      under Subsection 58-26a-305 (1).
             246          (3) (a) Each applicant for registration as a Certified Public Accountant firm shall:
             247          (i) submit an application in a form prescribed by the division;
             248          (ii) pay a fee determined by the department under Section 63-38-3.2 ;
             249          [(iii) have a CPA license under this chapter held by:]
             250          [(A) its proprietor, in the case of a sole proprietorship;]
             251          [(B) one of its general partners, managers, or members, in the case of a partnership or
             252      limited liability company;]
             253          [(C) one of its officers or shareholders, in the case of a corporation; or]


             254          [(D) one of its owners, in the case of any other type of qualified business entity;]
             255          [(iv) designate a CPA licensee who is responsible for on site supervision of operations
             256      of the CPA firm; and]
             257          (iii) have, notwithstanding any other provision of law, a simple majority of the
             258      ownership of the Certified Public Accountant firm, in terms of financial interests and voting
             259      rights of all partners, officers, shareholders, members, or managers, held by individuals who are
             260      certified public accountants, licensed under this chapter or another jurisdiction of the United
             261      States of America, and the partners, officers, shareholders, members, or managers, whose
             262      principal place of business is in this state, and who perform professional services in this state
             263      hold a valid license issued under Subsection 58-26a-301 (2) or the corresponding provisions of
             264      prior law; and
             265          [(v)] (iv) meet any other requirements established by rule by the division in
             266      collaboration with the board in accordance with Title 63, Chapter 46a, Utah Administrative
             267      Rulemaking Act[;].
             268          (b) Each separate location of a qualified business entity within the state seeking
             269      registration as a Certified Public Accountant firm shall register separately.
             270          (c) A Certified Public Accountant firm may include owners who are not licensed under
             271      this chapter as outlined in Subsection (3)(a)(iii), provided that:
             272          [(i) more than 50% of the ownership of the Certified Public Accountant firm, including
             273      financial interest and voting rights in the firm, is held by individuals who are Certified Public
             274      Accountants, licensed under this chapter or another jurisdiction of the United States; and]
             275          (i) the firm designates a licensee of this state who is responsible for the proper
             276      registration of the Certified Public Accountant firm and identifies that individual to the division;
             277      and
             278          (ii) all nonlicensed owners are active individual participants in the CPA firm.
             279          [(4) An individual shall have until July 1, 2004, to obtain three years of qualifying
             280      experience for licensure without being required to complete the education requirement if that
             281      individual:]


             282          [(a) was approved to take the qualifying examinations prior to July 1, 1994, under prior
             283      law without completion of the education requirement; and]
             284          [(b) (i) passed the AICPA Uniform CPA Examination prior to July 1, 1994; or]
             285          [(ii) received conditional credits on the AICPA Uniform CPA Examination prior to July
             286      1, 1994, and subsequently passed all parts of the AICPA Uniform CPA Examination within six
             287      immediately successive examination administrations.]
             288          Section 3. Section 58-26a-304 is amended to read:
             289           58-26a-304. Continuing education.
             290          (1) As a condition precedent for a license renewal, each licensee shall, during each
             291      two-year licensure cycle or other cycle defined by rule, complete 80 hours of qualified
             292      continuing professional education in accordance with standards defined by rule.
             293          (2) If a renewal cycle is extended or shortened under Section 58-26a-303 , the
             294      continuing education hours required for license renewal under this section shall be increased or
             295      decreased proportionally.
             296          (3) (a) A licensee may request a waiver of the requirements of Subsection (1) for a
             297      period not exceeding three years by:
             298          (i) submitting an application for waiver in a form approved by the division; and
             299          (ii) demonstrating that the licensee will be engaged in activities or be subject to
             300      circumstances which prevent the licensee from meeting the requirements of Subsection (1)
             301      during the period of the waiver.
             302          (b) An application for waiver shall be granted upon a showing of good cause.
             303          (c) A licensee who is granted a waiver under this section shall complete 30 hours of
             304      continuing professional education within the six months immediately following the expiration of
             305      the waiver [than] that includes at least 16 hours of continuing professional education focusing
             306      on auditing and accounting.
             307          Section 4. Section 58-26a-305 is amended to read:
             308           58-26a-305. Exemptions from licensure.
             309          (1) In addition to the exemptions from licensure in Section 58-1-307 , the following may


             310      engage in acts included within the definition of the practice of public accountancy, subject to the
             311      stated circumstances and limitations, without being licensed under this chapter:
             312          [(1)] (a) a person licensed by any other state, district, or territory of the United States
             313      [or any foreign country] as a certified public accountant or its equivalent under any other title
             314      while [temporarily] practicing in this state if:
             315          [(a) the practice is incidental to that person's regular practice outside of this state; and]
             316          [(b) if that person's temporary practice within this state is in conformity with this
             317      chapter and rules established under this chapter;]
             318          (i) the person's principal place of business is not in this state; and
             319          (A) the person's license as a certified public accountant is from any state which the
             320      National Association of State Boards of Accountancy (NASBA) National Qualification
             321      Appraisal Service has verified to be substantially equivalent to the CPA licensure requirements
             322      of the Uniform Accountancy Act; or
             323          (B) the person's license as a certified public accountant is from a state which the
             324      NASBA National Qualification Appraisal Service has not verified to be substantially equivalent
             325      to the CPA licensure requirements of the Uniform Accountancy Act and the person obtains
             326      from the NASBA National Qualification Appraisal Service verification that the person's CPA
             327      qualifications are substantially equivalent to the CPA licensure requirements of the Uniform
             328      Accountancy Act and Subsection 58-26a-302 (1)(d)(i); and
             329          (ii) the person consents, as a condition of the grant of this privilege:
             330          (A) to personal and subject matter jurisdiction and disciplinary authority of the division;
             331          (B) to comply with this chapter and the rules made under this chapter;
             332          (C) that in the event the license from the state of the person's principal place of business
             333      becomes invalid, the person shall cease offering or rendering professional services in this state
             334      both individually and on behalf of the firm; and
             335          (D) to the appointment of the state board which issued the person's license as the
             336      person's agent upon whom process may be served in an action or proceeding brought by the
             337      division against the licensee;


             338          (b) through December 31, 2012, a person licensed by any other state, district, or
             339      territory of the United States as a certified public accountant or its equivalent under another title
             340      while practicing in this state if:
             341          (i) the person does not qualify for a practice privilege under Subsection (1)(a);
             342          (ii) the practice is incidental to the person's regular practice outside of this state; and
             343          (iii) the person's temporary practice within the state is in conformity with this chapter
             344      and the rules established under this chapter;
             345          [(2)] (c) an officer, member, partner, or employee of any entity or organization who
             346      signs any statement or report in reference to the financial affairs of the entity or organization
             347      with a designation of that person's position within the entity or organization;
             348          [(3)] (d) a public official or employee while performing his official duties;
             349          [(4)] (e) a person using accounting or auditing skills, including the preparation of tax
             350      returns, management advisory services, and the preparation of financial statements without the
             351      issuance of reports; or
             352          [(5)] (f) an employee of a CPA firm registered under this chapter or an assistant to a
             353      person licensed under this chapter, working under the supervision of a licensee, if:
             354          [(a)] (i) neither the employee or assistant nor the licensed employer or registered CPA
             355      firm represents that the unlicensed person is a certified public accountant; and
             356          [(b)] (ii) no accounting or financial statements are issued over the unlicensed person's
             357      name[; and].
             358          [(6) a person licensed as a public accountant for a period of not less than 20 years as of
             359      July 1, 1981, if that person's license was current as of April 23, 1990.]
             360          (2) (a) Notwithstanding any other provision of law, a person who qualifies under
             361      Subsection (1)(a) has all the privileges of a licensee of this state and may engage in acts included
             362      within the definition of the practice of public accountancy, whether in person or by mail,
             363      telephone, or electronic means, based on a practice privilege in this state, and no notice, fee, or
             364      other submission shall be provided by that person.
             365          (b) The division may revoke, suspend, or restrict an exemption granted under


             366      Subsection (1)(a) or (b), or place on probation or issue a public or private reprimand to a
             367      person exempted under those subsections for the reasons set forth in Subsection 58-1-401 (2).
             368          Section 5. Section 58-26a-501 is amended to read:
             369           58-26a-501. Unlawful conduct.
             370          "Unlawful conduct" includes:
             371          (1) using "certified public accountant," "public accountant," "CPA," or any other title,
             372      designation, words, letters, abbreviation, sign, card, or device tending to indicate that the person
             373      is a certified public accountant, unless that person [has]:
             374          (a) has a current license as a certified public accountant issued under this chapter; or
             375          [(b) (i) a current license or certificate as a certified public accountant issued by any
             376      jurisdiction of the United States; and]
             377          [(ii) (A) the use in this state is incidental to primary services being lawfully performed
             378      outside of this state; or]
             379          [(B) the division has entered into a reciprocal agreement with that jurisdiction to
             380      recognize the license issued by that jurisdiction;]
             381          (b) qualifies for a practice privilege as provided for in Subsection 58-26a-305 (1);
             382          (2) a firm assuming or using "certified public accountant," "CPA," or any other title,
             383      designation, words, letters, abbreviation, sign, card, or device tending to indicate that the firm is
             384      composed of certified public accountants unless each office of the firm in this state:
             385          (a) is registered with the division; and
             386          (b) meets the requirements of Subsections 58-26a-302 (3)(a)(iii)[, (iv),] and [(v)] (iv);
             387          (3) signing or affixing to any accounting or financial statement the person's name or any
             388      trade or assumed name used in that person's profession or business, with any wording indicating
             389      that the person is an auditor, or with any wording indicating that the person has expert
             390      knowledge in accounting or auditing, unless that person is licensed under this chapter and all of
             391      the person's offices in this state for the practice of public accountancy are maintained and
             392      registered as provided in this chapter; and
             393          (4) except as provided in Section 58-26a-305 , engaging in the following conduct if not


             394      licensed under this chapter to practice public accountancy:
             395          (a) issuing a report on financial statements of any other person, firm, organization, or
             396      governmental unit; or
             397          (b) issuing a report using any form of language substantially similar to conventional
             398      language used by licensees respecting:
             399          (i) a review of financial statements; or
             400          (ii) a compilation of financial statements.
             401          Section 6. Section 58-26a-502 is amended to read:
             402           58-26a-502. Unprofessional conduct.
             403          (1) "Unprofessional conduct" includes:
             404          (a) undertaking an engagement when the licensee knows or should know that the
             405      licensee could not reasonably expect to complete it with professional competence;
             406          (b) making unauthorized disclosures of confidential information obtained in the practice
             407      of public accountancy;
             408          (c) engaging in any business or activity that creates a conflict of interest with a
             409      licensee's practice in the profession when the licensee knows or should know that it is a conflict
             410      of interest and the licensee does not fully disclose the conflict of interest in writing to all
             411      affected parties;
             412          (d) failing to meet the requirements for continuing professional education or peer
             413      review required under this chapter; or
             414          (e) issuing a report on financial statements of a client, other than a report in which a
             415      lack of independence is disclosed, or performing an attest engagement subject to the attestation
             416      standards of the American Institute of Certified Public Accountants when the licensee is not
             417      independent, in fact and appearance, to the client[; or].
             418          [(f) receiving compensation, including a commission, for referring or selling services or
             419      products of others to a client during the period:]
             420          [(i) that the licensee or CPA firm is engaged by the client for purposes of:]
             421          [(A) an audit or review of a financial statement;]


             422          [(B) a compilation of a financial statement when the licensee or his firm expects, or
             423      reasonably might expect, that a third party will use the financial statement and the compilation
             424      report and the report does not describe a lack of independence; or]
             425          [(C) an examination of prospective financial information; or]
             426          [(ii) covered by any historical financial statements involved with any of the services
             427      listed in Subsection (1)(f)(i).]
             428          [(2) (a) Notwithstanding the provisions of Subsection (1)(f), a licensee or CPA firm that
             429      is not prohibited by Subsection (1)(f) from receiving other compensation, including a
             430      commission, may receive or agree to receive that other compensation for referral or sale of
             431      services or products of others to another person if:]
             432          [(i) he discloses in writing the nature, source, and amount of all other compensation
             433      prior to making the referral or sale by the licensee or CPA firm; and]
             434          [(ii) the receipt of the compensation complies with all of the other requirements of this
             435      section.]
             436          [(b) Subsection (1)(f) does not apply to payments received from the sale of an
             437      accounting practice or to retirement payments to persons formerly engaged in the practice of
             438      public accountancy.]
             439          (2) (a) A licensee may not, for a commission, recommend or refer to a client a product
             440      or service, or for a commission recommend or refer a product or service to be supplied by a
             441      client, or receive a commission, when the licensee also performs for that client:
             442          (i) an audit or review of a financial statement;
             443          (ii) a compilation of a financial statement when the licensee expects, or reasonably
             444      might expect, that a third party will use the financial statement and the licensee's compilation
             445      report does not disclose a lack of independence; or
             446          (iii) an examination of prospective financial information.
             447          (b) The prohibition under Subsection (2)(a) applies during:
             448          (i) the period in which the licensee is engaged to perform any of the services listed in
             449      Subsection (2)(a); and


             450          (ii) the period covered by any historical financial statements involved in any such listed
             451      services.
             452          (c) A licensee who is not prohibited under Subsection (2)(a) from performing services
             453      or receiving a commission and who is paid or expects to be paid a commission shall disclose
             454      that fact to any person or entity to whom the licensee recommends or refers a product or
             455      service to which the commission relates.
             456          (d) A licensee who accepts a referral fee for recommending or referring a service of a
             457      licensee to a person or entity or who pays a referral fee to obtain a client shall disclose the
             458      acceptance or payment to the client.
             459          (3) (a) A licensee may not:
             460          (i) perform for a contingent fee a professional service for, or receive a contingent fee
             461      from a client for whom the licensee or the licensee's firm performs:
             462          (A) an audit or review of a financial statement;
             463          (B) a compilation of a financial statement when the licensee expects, or reasonably
             464      might expect, that a third party will use the financial statement and the licensee's compilation
             465      report does not disclose a lack of independence; or
             466          (C) an examination of prospective financial information; or
             467          (ii) prepare an original or amended tax return or claim for a tax refund for a contingent
             468      fee for a client.
             469          (b) The prohibition in Subsection (3)(a) applies during:
             470          (i) the period in which the licensee is engaged to perform any of the services listed in
             471      Subsection (3)(a); and
             472          (ii) the period covered by any historical financial statements involved in the listed
             473      services.
             474          (c) Except as stated in Subsections (3)(d) and (e), a contingent fee is a fee established
             475      for the performance of a service pursuant to an arrangement in which no fee will be charged
             476      unless a specified finding or result is attained, or in which the amount of the fee is otherwise
             477      dependent upon the finding or result of the service.


             478          (d) Solely for the purposes of this Subsection (3), fees are not regarded as being
             479      contingent if fixed by courts or other public authorities, or in tax matters, if determined based
             480      on the results of judicial proceedings or the findings of a governmental agency.
             481          (e) A licensee's fee may vary depending, for example, on the complexity of service
             482      rendered.


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