1     
CERTIFIED PUBLIC ACCOUNTANT LICENSING ACT

2     
AMENDMENTS

3     
2017 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Curtis S. Bramble

6     
House Sponsor: Steve Eliason

7     

8     LONG TITLE
9     General Description:
10          This bill modifies provisions related to the Certified Public Accounting Licensing Act.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     provides continuing education requirements for a person licensed by endorsement;
15     and
16          ▸     makes technical changes.
17     Money Appropriated in this Bill:
18          None
19     Other Special Clauses:
20          None
21     Utah Code Sections Affected:
22     AMENDS:
23          58-26a-102, as last amended by Laws of Utah 2013, Chapter 278
24          58-26a-302, as last amended by Laws of Utah 2009, Chapter 183
25          58-26a-304, as last amended by Laws of Utah 2008, Chapter 265
26     

27     Be it enacted by the Legislature of the state of Utah:
28          Section 1. Section 58-26a-102 is amended to read:
29          58-26a-102. Definitions.

30          In addition to the definitions in Section 58-1-102, as used in this chapter:
31          (1) "Accounting experience" means applying accounting and auditing skills and
32     principles that are taught as a part of the professional education qualifying a person for
33     licensure under this chapter and generally accepted by the profession, under the supervision of
34     a licensed certified public accountant.
35          (2) "AICPA" means the American Institute of Certified Public Accountants.
36          (3) (a) "Attest and attestation engagement" means providing any or all of the following
37     financial statement services:
38          (i) an audit or other engagement to be performed in accordance with the Statements on
39     Auditing Standards (SAS);
40          (ii) a review of a financial statement to be performed in accordance with the Statements
41     on Standards for Accounting and Review Services (SSARS);
42          (iii) an examination of prospective financial information to be performed in accordance
43     with the Statements on Standards for Attestation Engagements (SSAE); [or]
44          (iv) an examination, review, or agreed upon procedures engagement to be performed in
45     accordance with the Statements on Standards for Attestation Engagements (SSAE), other than
46     an examination described in Subsection (3)(a)(iii); or
47          [(iv)] (v) an engagement to be performed in accordance with the standards of the
48     PCAOB.
49          (b) The standards specified in this definition shall be adopted by reference by the
50     division under its rulemaking authority in accordance with Title 63G, Chapter 3, Utah
51     Administrative Rulemaking Act, and shall be those developed for general application by
52     recognized national accountancy organizations such as the AICPA and the PCAOB.
53          (4) "Board" means the Utah Board of Accountancy created in Section 58-26a-201.
54          (5) "Certified Public Accountant" or "CPA" means an individual currently licensed by
55     this state or any other state, district, or territory of the United States of America to practice
56     public accountancy or who has been granted a license as a certified public accountant under
57     prior law or this chapter.

58          (6) "Certified Public Accountant firm" or "CPA firm" means a qualified business entity
59     holding a valid registration as a Certified Public Accountant firm under this chapter.
60          (7) "Client" means the person who retains a licensee for the performance of one or
61     more of the services included in the definition of the practice of public accountancy. "Client"
62     does not include a CPA's employer when the licensee works in a salaried or hourly rate
63     position.
64          (8) "Compilation" means providing a service to be performed in accordance with
65     Statements on Standards for Accounting and Review Services (SSARS) that is presenting, in
66     the form of financial statements, information that is the representation of management or
67     owners, without undertaking to express any assurance on the statements.
68          (9) "Experience" means:
69          (a) accounting experience; or
70          (b) professional experience.
71          (10) "Licensee" means the holder of a current valid license issued under this chapter.
72          (11) "NASBA" means the National Association of State Boards of Accountancy.
73          (12) "PCAOB" means the Public Company Accounting Oversight Board.
74          (13) "Practice of public accounting" means [the offer to perform or the performance by
75     a person holding himself out as a certified public accountant of], while holding oneself out as a
76     certified public accountant, offering to perform or performing one or more kinds of services
77     involving the use of auditing or accounting skills, including [the issuance of] issuing reports or
78     opinions on financial statements, performing attestation engagements, [the performance of]
79     performing one or more kinds of advisory or consulting services, [or the preparation of]
80     preparing tax returns, or [the furnishing of] furnishing advice on tax matters for a client.
81          (14) "Peer review" means a [study, appraisal, or review of one or more aspects of the
82     professional work of a person or qualified business entity in the practice of public accountancy,
83     by a licensee or any other qualified person in accordance with rules adopted pursuant to this
84     chapter and who is not affiliated with the person or qualified business entity being reviewed]
85     board approved study, appraisal, or review of one or more aspects of the attest and compilation

86     services rendered by a licensee in the practice of public accounting, performed by a licensee
87     holding an active license in this or another state who is not affiliated with the licensee being
88     reviewed.
89          (15) "Principal place of business" means the office location designated by the licensee
90     for purposes of substantial equivalency and licensure by endorsement.
91          (16) "Professional experience" means experience lawfully obtained while licensed as a
92     certified public accountant in another [jurisdiction] state, recognized by rule, in the practice of
93     public accountancy performed for a client, which includes expression of assurance or opinion.
94          (17) "Qualified business entity" means a sole proprietorship, corporation, limited
95     liability company, or partnership engaged in the practice of public accountancy.
96          (18) "Qualified continuing professional education" means a formal program of
97     education that contributes directly to the professional competence of a certified public
98     accountant.
99          (19) "Qualifying examinations" means:
100          (a) the AICPA Uniform CPA Examination;
101          (b) the AICPA Examination of Professional Ethics for CPAs;
102          (c) the Utah Laws and Rules Examination; and
103          (d) any other examination approved by the board and adopted by the division by rule in
104     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
105          (20) (a) "Report," when used with reference to financial statements, means:
106          (i) [when used with reference to financial statements,] an opinion, report, or other form
107     of language that:
108          (A) states or implies assurance as to the reliability of [any financial statements] the
109     attested information or compiled financial statements; or
110          (B) implies that the person or firm issuing [it] the report has special knowledge or
111     competence in accounting or auditing and specifically includes compilations and reviews; such
112     an implication of special knowledge or competence may arise from use by the issuer of the
113     report of names or titles indicating that the person or firm is a public accountant or auditor, or

114     from the language of the report itself; or
115          (ii) any disclaimer of opinion when it is conventionally understood to imply any
116     positive assurance as to the reliability of the attested information or compiled financial
117     statements referred to or language suggesting special competence on the part of the person or
118     firm issuing such language; and [it] the report includes any other form of language that is
119     conventionally understood to imply such assurance or such special knowledge or competence.
120          (b) "Report" does not include a financial statement prepared by an unlicensed person if:
121          (i) that financial statement has a cover page which includes essentially the following
122     language: "I (we) have prepared the accompanying financial statements of (name of entity) as
123     of (time period) for the (period) then ended. This presentation is limited to preparing, in the
124     form of financial statements, information that is the representation of management (owners). I
125     (we) have not audited or reviewed the accompanying financial statements and accordingly do
126     not express an opinion or any other form of assurance on them."; and
127          (ii) the cover page and any related footnotes do not use the terms "compilation,"
128     "review," "audit," "generally accepted auditing standards," "generally accepted accounting
129     principles," or other similar terms.
130          (21) "Review of financial statements" means [performing inquiry and analytical
131     procedures which provide a reasonable basis for expressing limited assurance that there are no
132     material modifications that should be made to the statements in order for them to be in
133     conformity with generally accepted accounting principles or, if applicable, with another
134     comprehensive basis of accounting; and, the issuance of a report on the financial statements
135     stating that a review was performed in accordance with the standards established by the
136     American Institute of Certified Public Accountants] providing a service in accordance with the
137     Statements on Standards for Accounting and Review Services (SSARS) in which the
138     accountant obtains limited assurance as a basis for reporting whether the accountant is aware of
139     any material modifications that should be made to the financial statements for them to be in
140     accordance with the applicable financial reporting framework, primarily through the
141     performance of inquiry and analytical procedures.

142          (22) (a) "Substantial equivalency" means a determination by the division in
143     collaboration with the board or [its] the board's designee that:
144          (i) the education, examination, and experience requirements set forth in the statutes and
145     administrative rules of another [jurisdiction] state are comparable to or exceed the education,
146     examination, and experience requirements set forth in the Uniform Accountancy Act; or
147          (ii) an individual CPA's education, examination, and experience qualifications are
148     comparable to or exceed the education, examination, and experience requirements set forth in
149     the Uniform Accountancy Act.
150          (b) In ascertaining whether an individual's qualifications are substantially equivalent as
151     used in this chapter, the division in collaboration with the board shall take into account the
152     qualifications without regard to the sequence in which the education, examination, and
153     experience requirements were attained.
154          (23) "Uniform Accountancy Act" means the model public accountancy legislation
155     developed and promulgated by national accounting and regulatory associations that contains
156     standardized definitions and regulations for the practice of public accounting as recognized by
157     the division in collaboration with the board.
158          (24) "Unlawful conduct" is as defined in Sections 58-1-501 and 58-26a-501.
159          (25) "Unprofessional conduct" is as defined in Sections 58-1-501 and 58-26a-502 and
160     as may be further defined by rule.
161          (26) "Year of experience" means 2,000 hours of [cumulative] experience[.]:
162          (a) generally accepted by the profession; and
163          (b) under the supervision of a licensed certified public accountant.
164          Section 2. Section 58-26a-302 is amended to read:
165          58-26a-302. Qualifications for licensure and registration -- Licensure by
166     endorsement.
167          (1) Each applicant for licensure under this chapter as a certified public accountant
168     shall:
169          (a) submit an application in a form prescribed by the division;

170          (b) pay a fee determined by the department under Section 63J-1-504;
171          (c) show evidence of good moral character;
172          (d) submit a certified transcript of credits from an accredited institution acceptable to
173     the board showing:
174          (i) successful completion of a total of 150 semester hours or 225 quarter hours of
175     collegiate level education with a concentration in accounting, auditing, and business;
176          (ii) a baccalaureate degree or its equivalent at a college or university approved by the
177     board; and
178          (iii) compliance with any other education requirements established by rule by the
179     division in collaboration with the board in accordance with Title 63G, Chapter 3, Utah
180     Administrative Rulemaking Act;
181          (e) submit evidence of one year of accounting experience in a form prescribed by the
182     division;
183          (f) submit evidence of having successfully completed the qualifying examinations in
184     accordance with Section 58-26a-306; and
185          (g) submit to an interview by the board, if requested, for the purpose of examining the
186     applicant's competence and qualifications for licensure.
187          (2) (a) The division may issue a license under this chapter to a person who holds a
188     license as a certified public accountant issued by any other [jurisdiction] state of the United
189     States of America if the applicant for licensure by endorsement:
190          (i) submits an application in a form prescribed by the division;
191          (ii) pays a fee determined by the department under Section 63J-1-504;
192          (iii) shows evidence of good moral character;
193          (iv) submits to an interview by the board, if requested, for the purpose of examining
194     the applicant's competence and qualifications for licensure; and
195          (v) (A) (I) shows evidence of having passed the qualifying examinations; and
196          (II) (Aa) meets the requirements for licensure which were applicable in this state at the
197     time of the issuance of the applicant's license by the [jurisdiction] state from which the original

198     licensure by satisfactorily passing the AICPA Uniform CPA Examination was issued; or
199          (Bb) had four years of professional experience after passing the AICPA Uniform CPA
200     Examination upon which the original license was based, within the 10 years immediately
201     preceding the application for licensure by endorsement; or
202          (B) shows evidence that the applicant's education, examination record, and experience
203     are substantially equivalent to the requirements of Subsection (1), as provided by rule.
204          (b) This Subsection (2) applies only to a person seeking to obtain a license issued by
205     this state and does not apply to a person practicing as a certified public accountant in the state
206     under Subsection 58-26a-305(1).
207          (3) (a) Each applicant for registration as a Certified Public Accountant firm shall:
208          (i) submit an application in a form prescribed by the division;
209          (ii) pay a fee determined by the department under Section 63J-1-504;
210          (iii) have, notwithstanding any other provision of law, a simple majority of the
211     ownership of the Certified Public Accountant firm, in terms of financial interests and voting
212     rights of all partners, officers, shareholders, members, or managers, held by individuals who
213     are certified public accountants, licensed under this chapter or another [jurisdiction] state of the
214     United States of America, and the partners, officers, shareholders, members, or managers,
215     whose principal place of business is in this state, and who perform professional services in this
216     state hold a valid license issued under Subsection 58-26a-301(2) or the corresponding
217     provisions of prior law; and
218          (iv) meet any other requirements established by rule by the division in collaboration
219     with the board in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
220          (b) Each separate location of a qualified business entity within the state seeking
221     registration as a Certified Public Accountant firm shall register separately.
222          (c) A Certified Public Accountant firm may include owners who are not licensed under
223     this chapter as outlined in Subsection (3)(a)(iii), provided that:
224          (i) the firm designates a licensee of this state who is responsible for the proper
225     registration of the Certified Public Accountant firm and identifies that individual to the

226     division; and
227          (ii) all nonlicensed owners are active individual participants in the CPA firm.
228          Section 3. Section 58-26a-304 is amended to read:
229          58-26a-304. Continuing education.
230          (1) [As] Except as provided in Subsections (2) through (4), as a condition precedent for
231     a license renewal, each licensee shall, during each two-year licensure cycle or other cycle
232     defined by rule, complete 80 hours of qualified continuing professional education in
233     accordance with standards defined by rule.
234          (2) A person practicing as a certified public accountant in the state under Subsection
235     58-26a-302(2) and who is seeking a license renewal in this state shall be determined to have
236     met the continuing professional education requirement of this section by:
237          (a) meeting the continuing professional education requirements for license renewal in
238     the state in which the licensee's principal place of business is located;
239          (b) demonstrating compliance with the requirements of Subsection (2)(a) by signing a
240     statement to that effect on the renewal application of this state;
241          (c) complying with all continuing professional education requirements described in
242     Subsection (1) if the state where the person's principal place of business is located has no
243     continuing professional education requirements for license renewal;
244          (d) completing at least one hour of continuing professional education that covers:
245          (i) this chapter; and
246          (ii) Utah Administrative Code, R156-26a, Utah Certified Public Accountant Licensing
247     Act Rule; and
248          (e) completing at least three hours of ethics education that cover one or more of the
249     following areas:
250          (i) the AICPA Code of Professional Conduct;
251          (ii) case-based instruction focusing on real-life situational learning;
252          (iii) ethical dilemmas faced by accounting professionals; or
253          (iv) business ethics.

254          [(2)] (3) If a renewal cycle is extended or shortened under Section 58-26a-303, the
255     continuing education hours required for license renewal under this section shall be increased or
256     decreased proportionally.
257          [(3)] (4) (a) A licensee may request a waiver of the requirements of Subsection (1) for
258     a period not exceeding three years by:
259          (i) submitting an application for waiver in a form approved by the division; and
260          (ii) demonstrating that the licensee will be engaged in activities or be subject to
261     circumstances which prevent the licensee from meeting the requirements of Subsection (1)
262     during the period of the waiver.
263          (b) An application for waiver shall be granted upon a showing of good cause.
264          (c) A licensee who is granted a waiver under this section shall complete 30 hours of
265     continuing professional education within the six months immediately following the expiration
266     of the waiver that includes at least 16 hours of continuing professional education focusing on
267     auditing and accounting.