It is enacted by the General Assembly as follows:

SECTION 1. Sections 5-3.1-1, 5-3.1-3, 5-3.1-4, 5-3.1-5, 5-3.1-7, 5-3.1-8, 5-3.1-9, 5-3.1-10, 5-3.1-13, 5-3.1-14, 5-3.1-16, 5-3.1-18, 5-3.1-19, 5-3.1-20, 5-3.1-21, 5-3.1-22 and 5-3.1-25 of the General Laws in Chapter 5-3.1 entitled "Public Accountancy" are hereby amended to read as follows:

5-3.1-1. Title. -- This chapter may be cited as the "Accountancy Act of 1995 2001".

5-3.1-3. Definitions. -- As used in this chapter, unless the context otherwise requires, the following terms are construed as follows:

(1) Authority.. - An authority to practice as a public accountant in this state granted by the public accountants advisory commission under former section 5-3-6, (P.L. 1962, chapter 228, Section 1, as amended by P.L. 1970, chapter 272, Section 1).

(2) Board. . - The board of accountancy, a public authority created by section 5-3.1-4.

(3) Certificate.. - A certificate as certified public accountant issued under this chapter or corresponding provisions of prior law, or a corresponding certificate as certified public accountant issued after examination under the law of any other state.

(4) Certified public accountant or CPA. . - A person holding a certificate issued under this chapter or corresponding provisions of prior law or under the accountancy act or similar law of any other state.

(5) Licensee.. - The holder of a certificate, authority or permit issued under this chapter or under the prior laws of this state.

(6) Permit.. - A permit to practice public accountancy issued under section 5-3.1-7, 5-3.1-8, or 5-3.1-9, or under corresponding provisions of prior law, or under corresponding provisions of the law of any other state.

(7) Practice of (or practicing) public accounting or accountancy. . - The performance of or the offering to perform, in an independent posture, for a client or potential client, one or more kinds of services involving the use of accounting or auditing skills, in connection with the issuance of reports on financial statements.

(8) Practice unit.. - A sole proprietorship, corporation, partnership or other entity engaged in the practice of public accounting in this state. For the purpose of this chapter, the office of the Auditor General is considered a practice unit.

(9) Principal residence.. - The state in which a person has the right to register to vote for, or the right to vote in, general elections and in which he or she qualifies to file a resident state income tax return.

(10) Public accountant or PA.. - A person holding an authority as a public accountant issued under the prior laws of this state.

(11) Quality Peer review.. - A study, appraisal, or review of one or more aspects of the professional work of a practice unit engaged in the practice of public accountancy in this state, by licensee(s) who are not affiliated with the practice unit being reviewed.

(12) Report.. - An opinion, report, or other form of language that states or implies assurance as to the reliability of financial statements and that also includes or is accompanied by a statement or implication that the person or practice unit issuing the financial statements has special knowledge or competence in accounting or auditing. A statement or implication of special knowledge or competence may arise from use by the issuer of the report of names or titles indicating that the issuer is an accountant or auditor, or from the language of the report itself. The term "report" includes any form of language which disclaims an opinion when that language is conventionally understood to imply any positive assurance as to the reliability of the financial statements referred to and/or any special competence on the part of the person or practice unit issuing that language; and it also includes any other form of language that is conventionally understood to imply that assurance and/or special knowledge or competence.

(13) State.. - The states of the United States, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. The term "this state" means the State of Rhode Island.

5-3.1-4. Board of accountancy -- (a) There is created a board of accountancy in and for the state of Rhode Island, to be known as the Rhode Island board of accountancy. The board consists of five (5) members. All members are appointed by the governor. Membership of the board consists of three (3) members who hold certificates and valid permits to practice as certified public accountants in this state and who are in public practice as certified public accountants in this state, and one member who holds an authority and a valid permit to practice as a public accountant in this state. All four (4) of those members shall have at least ten (10) years' experience in a full-time practice of public accountancy. The fifth member is from the public sector and shall have professional or practical experience in the use of accounting services and financial statements as to be qualified to evaluate whether the qualifications, activities, and professional practice of those persons and firms regulated under this chapter conform with the standards established to protect the public interest. The board member from the public sector is designated as the public's member to the board for the term of service appointed. Except as provided, the term of the members of the board shall be five (5) years. No member of the board is associated in the practice of accountancy, either individually or as a member of a firm, with any other member of the board. The members of the Rhode Island board of accountancy appointed and serving under prior law on July 1, 1995 shall serve out the terms for which they were originally appointed as members of the board created by this section. Vacancies occurring during any term are filled by appointment by the governor for the unexpired term. Upon the expiration of his or her term of office, a member continues to serve until his or her successor has been appointed and has assumed office. The governor shall remove from the board any member whose certificate, authority or permit has been revoked, suspended, or not renewed. No person who has served two (2) consecutive complete terms is eligible for reappointment. Serving the remainder of an unexpired term upon appointment by the governor to fill a vacancy on the board is not considered as serving a complete term.

(b) The board elects annually from among its members a chairperson and any other officers that it deems appropriate. The board meets at any times and places that are fixed by the board and in any event shall meet no less than four (4) times each year. Three (3) members of the board constitutes a quorum for the transaction of business. The board has a seal which is judicially noticed. The board shall retain or arrange for the retention of all applications and documents under oath that are filed with the board, and maintains a registry of the names and addresses or all licensees. The board keeps records of its proceedings, and in any proceeding in court, civil or criminal, arising out of or founded upon any provision of this chapter, copies of the records certified as correct under the seal of the board are admissible in evidence.

(c) Each member of the board receives compensation in the amount of thirty dollars ($30.00) for each day or portion of a day spent in the discharge of official duties as a member, to a maximum of seven hundred and fifty dollars ($750) per year, and is reimbursed for actual and necessary expenses incurred in the discharge of those duties.

(d) All fees and monies derived under the provisions of this chapter are paid to and received by the general treasurer of the State of Rhode Island, who keeps the monies in a restricted receipt account. All monies in the restricted receipt account are used to reimburse the board for expenses incurred in the administration and enforcement of this chapter. The board treasurer is authorized and directed to draw orders upon the general treasurer for payment from the restricted receipt account upon receipt by the board treasurer of vouchers authenticated by the chairperson, vice chairperson, or secretary of the board.

(e) The board shall file an annual report of its activities with the governor and the General Assembly of this state. The report shall include, but not be limited to, a statement of all receipts and disbursements and a listing of all current licensees. The board shall mail a copy of that annual report, upon request, in writing to any licensee and to any member of the public.

(f) The board shall prescribe any rules and regulations not inconsistent with the provisions of this chapter that it deems consistent with, or required by, the public welfare and policy established in section 5-3.1-2. Those rules and regulations may include:

(1) Rules and regulations of procedure for governing the conduct of matters before the board;

(2) Rules and regulations of professional conduct for establishing and maintaining high standards of competence and integrity in the profession of public accounting;

(3) Rules and regulations governing educational and experience requirements for the issuance of certificates;

(4) Rules and regulations establishing requirements for continuing education to promote the professional competence of holders of permits, which the board may require those holders to meet as a condition of their continuing in the practice of public accounting;

(5) Rules and regulations governing practice units engaged in the practice of public accounting, including, but not limited to, rules and regulations concerning the style, name, title, and affiliation with any other organization, and establishing reasonable standards as to professional liability insurance;

(6) Rules and regulations for reviewing and monitoring professional performance and conducting quality peer reviews;

(7) Any other rules and regulations which the board deems necessary or appropriate in exercising its functions under this chapter.

(g) The promulgation of any rule, regulation, or amendment to it under subsection (f) or under any other provision of this chapter is in accordance with section 42-35-3.

(h) The board may employ any personnel and arrange for any assistance, legal or otherwise, that it requires for the performance of its duties. It may also establish one or more advisory committees as it deems necessary in the performance of its duties. The authority and term of that advisory committee may be permanent or temporary in nature as determined by the board.

(i) In addition to its rulemaking authority, the board has the power to take all action that is necessary and proper to effectuate the purposes of this chapter, including the power to:

(1) Sue and be sued in its official name as an agency of this state;

(2) Investigate all complaints and charges of unprofessional conduct, including, but not limited to, conduct specified under section 5-3.1-12, against any licensee or any applicant for a certificate or permit, and to hold hearings, in accordance with the provisions of section 5-3.1-14, to determine whether those complaints and charges are substantiated;

(3) Appoint one or more members of the board, legal counsel, and/or an independent investigator to act on behalf of the board in investigating the conduct of any licensee, or of any applicant for a certificate or permit, or in the alternative to appoint a probable cause committee to investigate that conduct on its behalf, the committee to be comprised of licensees in good standing, as the board determines; and

(4) Issue subpoenas, administer oaths, and summon and examine witnesses in connection with any investigation conducted under authority of this chapter. If a subpoena is disobeyed, the board may invoke the aid of any court of competent jurisdiction in this state to require the attendance and testimony of witnesses and the production of documentary evidence.

(j) The board and its members and agents are immune from personal liability for actions taken in good faith in the discharge of the board's responsibilities, and the State of Rhode Island indemnifies the board and those members and agents for, and holds them harmless from, any and all costs, damages, and reasonable attorneys' fees arising from or related in any way to claims or actions against them as to matters to which the immunity applies.

5-3.1-5. Certified public accountants -- (a) Upon application for a certificate and payment of the required fee, the board shall issue a certificate to any person who:

(1) Is of good moral character;

(2) Has a principal residence in Rhode Island as defined in section 5-3.1-3 or a primary place of employment in Rhode Island;

(3) Before applying for the examinations prescribed in subsection (a) (4), has received a baccalaureate degree from a college or university acceptable to the board, the total educational program of which includes an accounting concentration or its equivalent and courses in any related subjects that the board determines to be appropriate; provided, that after July 1, December 31, 1999, the education requirement for a certificate, which must be met before an applicant is eligible to apply for the examinations prescribed in subsection (a)(4), is at least one hundred fifty (150) semester hours of college education, including a baccalaureate or higher degree conferred by a college or university acceptable to the board, the total educational program of which includes an accounting concentration or equivalent as determined by board rule to be appropriate; provided, further that those candidates who have met all requirements for the examination prior to July 1, 1999, under the one-hundred twenty (120) semester hours of college education rule, are eligible to apply for the first examination scheduled to be administered after July 1, December 31, 1999, notwithstanding the fact that the candidates may not have completed one hundred fifty (150) semester hours of college education;

(4) Have passed written examinations in accounting and auditing and any related subjects that the board deems appropriate and specifies by rule;

(5) Have two (2) years public accounting experience, or one year's public accounting experience and one (1) year of experience in providing any type of service or advice involving the use of accounting, attest, management advisory, financial advisory, tax or consulting skills all of which was verified and supervised by a licensee, meeting requirements prescribed by the board by rule. This experience would be acceptable if it was gained through employment in government, industry, academia or public practice. After December 31, 1999, the person must also have completed one hundred fifty (150) hours or received a master's or doctorate degree in accounting, business administration, or other related curriculum from a college or university recognized by the board; and who has satisfactorily completed any number of semester hours in accounting, auditing, and other business courses that are prescribed by board rules and regulations; and

(6) If an out of state individual:

(i) Has passed all parts of the uniform certified public accountant examination in another jurisdiction, but has not received a certificate or similar certification in that jurisdiction;

(ii) Has established a principal residence in Rhode Island or a primary place of employment in Rhode Island preparatory to seeking a certificate from this state;

(iii) Has complied with the longer of:

(A) The experience requirement in the jurisdiction in which the uniform examination was taken; or

(B) The Rhode Island experience requirement;

(iv) Has complied with the educational requirements under subsection (a)(3); and

(v) Has satisfactorily complied with any other requirements that the board by rule or regulation reasonably determines to be appropriate.

(b) The board, in its discretion, may accept the educational credits of any person who is a candidate for a certificate if it is satisfied, by appropriate means of evaluation, that the credits are an acceptable substitute for the credit requirements of subsection (a)(3). The board, in its discretion, may waive the residency or primary place of employment requirements relating to the issuance of a certificate as stated in subsections (a)(2) and (a)(6).

(c) The examinations described in subsection (a)(4) are held by the board and shall take place as often as the board determines to be desirable, but in any event not less frequently than once each year. The board shall prescribe by rule the procedures to be followed in applying for and conducting the examinations and the methods to be used in grading the examinations and determining a passing grade. The board may make this use of any or all parts of the uniform certified public accountant examination and advisory grading service provided by the American Institute of Certified Public Accountants, and may contract with third parties to perform any administrative services with respect to the examinations that the board deems appropriate to assist it in performing its duties under this section.

(d) The board may, by rule or regulation, provide for the granting of credit to a candidate for the satisfactory completion by the candidate of a written examination in any one or more of the subjects referred to in subsection (a)(4) which is given by the licensing authority in any other state. Any rules and regulations shall include the requirement that any examination approved as a basis for the granting of credit is, in the judgment of the board at the time of the granting of the credit, at least as thorough as the most recent examination given by the board in the subject or subjects tested. The board may also, by rule or regulation, prescribe terms and conditions under which a candidate who passes the examination in one or more of the subjects referred to in subsection (a)(4) may be reexamined in the remaining subjects, with credit given for the subjects previously passed. It also may provide by rule or regulation for a reasonable waiting period for a candidate's reexamination in a subject previously failed. Subject to the preceding and to any other rules and regulations that the board may adopt governing reexaminations, a candidate is entitled to any number of reexaminations. Except as the board may provide by a rule or regulation in order to prevent what it determines to be undue hardship to candidates, a candidate granted credit for satisfactory examination in any one or more of the subjects referred to in subsection (a)(4) shall have met the educational requirement of subsection (a)(3) or (a)(5) in effect on the date of the examination by which the candidate successfully completes the examination under subsection (a)(4).

(e) The board shall charge each candidate for a certificate a fee for the initial examination under subsection (a), for reexamination under subsection (d) for each subject in which the candidate is reexamined, and for evaluation of a candidate's educational qualifications under subsection (b). The applicable fee is paid by the candidate at the time of application for the examination, reexamination, or evaluation. Fees for examination, reexamination, and evaluation of educational qualifications are determined by the board and prescribed in the rules and regulations issued by the board. The liability of the board to a candidate taking an examination or reexamination is limited to the amount of the fee received for the examination.

(f) Persons who on July 1, 1995, hold a certificate issued under the laws of this state prior to that date are not required to obtain an additional certificate under this chapter, but are subject to all the provisions of this chapter; the certificate previously issued is, for all purposes, considered a certificate issued under this chapter and subject to the provisions of this chapter. Reinstatement power is vested in the board as to those certificates suspended or revoked prior to July 1, 1995, and the holder of those certificates may have them reissued upon application for reissuance in accordance with section 5-3.1-15. Persons holding certificates on July 1, 1995, who are estopped from obtaining a permit under government employment restrictions may apply for a permit under section 5-3.1-7 within one year following termination of that employment, and upon obtaining the permit may engage in the practice of public accounting in this state as a certified public accountant subject to the provisions of this chapter.

(g) (1) The board shall, upon application for a certificate and payment of a fee to be determined by the board and promulgated by rule or regulation, issue a certificate to a holder of a certificate issued by another state, provided that:

(i) The applicant meets all current requirements in this state at the time application is made; and

(ii) At the time of the issuance of the applicant's certificate in the other state, the applicant met all requirements then applicable in this state unless reciprocity is allowed under the substantial equivalency standard in section 5-3.1-7.

(2) If the holder of a certificate issued by another state meets all current requirements in this state except the educational or experience requirements of this state as prescribed in this section, or passed the examination under different credit provisions then applicable in this state, the board shall issue a certificate to the applicant upon application for the certificate and upon payment of the required fee, provided that:

(i) The applicant has five (5) years of experience in the practice of public accountancy within the ten (10) years immediately prior to the application; or

(ii) The applicant has five (5) years of experience in the practice of public accountancy over a longer or earlier period and has completed fifteen (15) current semester hours of accounting, auditing, and any other related subject that the board specifies by rule, at an accredited institution, and has one year of current experience in the practice of public accountancy.

(h) An applicant for issuance of a certificate under this section shall list in the application all other states in which the applicant has applied for or holds a certificate. Each applicant for or holder of a certificate issued under this section shall, within thirty (30) days of the occurrence of that event, notify the board, in writing, of the issuance, denial, revocation, or suspension of a certificate by any other state, or of the commencement of a disciplinary or enforcement action against the applicant or holder by any other state.

5-3.1-7. Permits for public accountants and certified public accountants -- (a) Annual permits to engage in the practice of public accounting in this state are issued by the board, upon application for the permit and payment of the required fee, to certified public accountants qualified under section 5-3.1-5 or eligible under the substantial equivalency standard set out in section 5-3.1-7(g), and to public accountants qualified under section 5-3.1-6. All of those permits expire on the last day of June of each year unless the permit is renewed in accordance with subsection (c). Permits may be renewed for a period of one year.

(b) A certified public accountant who holds a permit issued by another state and who desires to practice in this state shall apply for a permit in this state. if that person does not qualify for reciprocity under the substantial equivalency standard set out in subsection (g) below. Upon the date of filing the completed application with the board, the applicant is deemed qualified to practice and may practice public accounting in this state pending board review of the application, provided that the applicant meets all other applicable requirements under this chapter. Submission of the application constitutes the appointment of the secretary of state as an agent for the applicant for service of process in any action or proceeding arising out of any transaction or operation connected with or incidental to the practice of public accounting in this state by the applicant.

(c) Applications for renewal of a permit under this section are submitted to the board by February 15 of each year and are accompanied by evidence that the applicant has satisfied the continuing professional education requirements promulgated by board regulation. That evidence shall be in a form that the board requires. Failure to furnish that evidence constitutes grounds for refusal to renew the permit unless the board in its discretion determines that the failure was due to reasonable cause or excusable neglect.

(d) Applications for renewal of a permit under this section also identify any practice unit with which the applicant is affiliated. In the event the practice unit fails to comply with section 5-3.1-9 or 5-3.1-10 the board may refuse to renew the applicant's individual permit if the board determines that the applicant was personally and substantially responsible for the failure of the practice unit to meet the requirements of sections 5-3.1-9 and 5-3.1-10.

(e) All applicants for a permit under this section shall list in the application all other states in which the applicant has applied for or holds a permit to practice. Each applicant for or holder of a permit issued under this section or any individual who has entered the state under the provisions of substantial equivalency shall, within thirty (30) days of the occurrence of the event, notify the board in writing:

(1) Of the issuance, denial, revocation, or suspension of a any certificate, license, degree, or permit by any other state; and or

(2) Of the commencement of a any disciplinary or enforcement action against the applicant, or holder or individual by any other state.

(f) Fees for the issuance and renewal of permits under this section are established from time to time by the board. The required fee is paid by the applicant at the time the application is filed with the board.

5-3.1-8. Permits for accountants licensed by foreign countries -- (a) An annual limited permit to engage in the practice of public accounting in this state may be issued by the board, upon application for the permit and payment of the required fee, to any person who is the holder of a certificate, license, or degree from a foreign country constituting a recognized qualification for the practice of public accounting in that country, provided that:

(1) The board determines that the requirements for obtaining the certificate, license, or degree are substantially equivalent to those prescribed under this chapter for obtaining a certificate in this state;

(2) The certificate, license or degree at the time of application is then in full force and effect; and

(3) The applicant meets all other requirements under this section. In the event the board determines that the requirements for obtaining the certificate, license, or degree are not substantially equivalent to those prescribed in this chapter for obtaining a certificate in this state, the board may require, as a condition to granting a permit under this section, that the applicant pass the written examinations required of candidates for a certificate under subsection (a)(4) of section 5-3.1-5. Any permit issued under this section is issued in the name of the applicant followed by the recognized accounting designation by which he or she is known in the country where licensed, translated into the English language, followed by the name of the country. Annual limited permits to engage in the practice of public accounting qualify the holder to practice public accounting in this state solely as to matters concerning residents, governments, and corporations or other business entities, including the divisions, subsidiaries, or any affiliates of the business entity, of the foreign country in which the holder is licensed to practice public accounting. A person who is issued a permit under this section, when engaging in the practice of public accounting in this state, uses only the title under which he or she is generally known in his or her own country, translated into the English language and indicates after the title the name of the country from which he or she received his or her certificate, license, or degree.

(b) All annual limited permits issued under this section expire on the last day of June of each year and may be renewed for a period of one year in accordance with subsection (c). Submission of the application for original issuance or renewal of an annual limited permit constitutes the appointment of the secretary of state as an agent for the applicant for service of process in any action or proceeding arising out of any transaction or operation connected with or incidental to the practice of public accounting in this state by the applicant.

(c) Applications for renewal of an annual limited permit are submitted to the board by February 15 of each year and are accompanied by evidence of satisfaction of the continuing professional education requirements promulgated by board regulation. The evidence is in any form that the board requires. Failure to furnish the evidence constitutes grounds for refusal to renew the permit unless the board in its discretion determines that the failure was due to reasonable cause or excusable neglect. Notwithstanding the preceding, the board, in its discretion, may waive the above continuing education requirements if:

(1) The licensing authority of the foreign country in which the holder of the annual limited permit is licensed has established requirements for continuing education for practitioners or public accounting;

(2) The applicant has filed with the board an affidavit stating that he or she is in compliance with those continuing education requirements at the time of the application for renewal; and

(3) The board determines that the continuing education requirements are substantially equivalent to those promulgated by the board under this chapter.

(d) An application for a permit under this section shall list all other jurisdictions in which the applicant has applied for or holds a certificate, license, or degree to practice public accountancy or a permit to practice. Each applicant for or holder of a permit under this section shall, within thirty (30) days of the occurrence of the event, notify the board in writing:

(1) Of the issuance, denial, revocation, or suspension of the certificate, license, degree, or permit; or

(2) Of the commencement of any disciplinary or enforcement action against the applicant or holder by any jurisdiction.

(e) An applicant under this section shall also list in the application the address of every office established or maintained in this state for the limited practice of public accounting. All of those offices shall be under the direct supervision of an accountant licensed either by this state or by a foreign country who holds an annual limited permit to practice issued under this section, and shall be designated by the name and title of the accountant. The If applicable, such title is translated into the English language and followed by the name of the foreign country where the accountant is licensed. All applicants for or holders of a permit under this section shall notify the board in writing, within thirty (30) days of the occurrence of the event:

(1) Of any change in the number or location of offices within this state required to be listed in the application; and

(2) Of any change in the identities of the persons supervising those offices.

(f) The board shall charge a fee to each person who makes application for original issuance or renewal of a permit under this section. The fee is paid in U.S. currency at the time the application is made. Fees charged under this section are shall be established by the board.

5-3.1-9. Permits for practice units -- (a) An annual permit to engage in the practice of public accounting in this state is as a practice unit shall be issued by the board, upon application for it therefore and payment of the required fee, to any partnership composed of certified public accountants and/or public accountants which satisfies the following requirements: to an entity that demonstrates its qualifications in accordance with this chapter or to certified public accounting firms originally licensed in another state that establish an office in this state. A practice unit must hold a permit issued under this section in order to provide attest and compilation services as defined or to use the title "CPAs" or "CPA firm." An applicant entity for initial issuance or renewal of a permit to practice under this section shall be required to register each office of the firm within this state with the board and to show that all attest and compilation services as defined in this chapter rendered in this state are under the charge of a person holding a valid certificate issued under this chapter, or the corresponding provision of prior law or some other state.

(1) The principal purpose and business of the partnership must be to furnish public accounting services to the public not inconsistent with this chapter and the rules and regulations of the board;

(2) Each partner must hold:

(i) A certificate and a permit from some state; or

(ii) An authority as a public accountant and a permit to practice in this state under section 5-3.1-7; A majority of the ownership of the entity, in terms of financial interests and voting rights of all partners, shareholders or members, belongs to holders of a certificate who shall hold a certificate and a permit from some state, and such partners, shareholders or members, whose principal place of business is in this state and who perform professional services in this state hold a valid permit issued under this chapter or are public accountants registered under section 5-3.1-7 of this chapter. Although firms may include nonlicensee owners, the firm and its ownership and all parties must comply with rules promulgated by the board. For firms of public accountants, a majority of the ownership of the firm, in terms of financial interests and voting rights, must belong to holders of permits under section 5-3.1-7 of this chapter, and provided further that any such entity as defined by this subsection may include nonlicensee owners provided that:

(3) At least one partner, shareholder or member must be a certified public accountant or a public accountant holding a certificate or authority under this chapter and a permit to practice in this state under section 5-3.1-7;

(4) Every manager of every office of the partnership located in this state and each partner of the partnership personally engaged within this state as a member of the partnership must be a certified public accountant or a public accountant holding a certificate or authority under this chapter and a permit to practice under section 5-3.1-7. No manager of an office of the partnership may serve in that capacity at more than one office of the partnership located in this state; and

(5) The address of every office of the partnership entity located in this state must be listed in the application for the permit.

(b) An annual permit to engage in the practice of public accounting in this state shall be issued by the board, upon application for the permit and payment of the required fee, to any corporation whose shareholders consist of certified public accountants and/or public accountants, provided that the corporation meets the following requirements:

(c) An annual permit to engage in the practice of public accounting in this state is issued by the board, upon application for it and payment of the required fee, to any sole proprietorship owned by a certified public accountant or public accountant which satisfies the following requirements: For a sole proprietorship:

(1) The principal purpose and business of the sole proprietorship must be to furnish public accounting services to the public not inconsistent with this chapter and the rules and regulations of the board;

(2) The sole proprietor must be a certified public accountant or a public accountant holding a certificate or authority under this chapter and a permit to practice in this state under section 5-3.1-7;

(3) Every manager of every office of the sole proprietorship located in this state must be a certified public accountant or a public accountant holding a certificate or authority under this chapter and a permit to practice in this state under section 5-3.1-7. No manager of an office of the sole proprietorship may serve in that capacity at more than one office of the sole proprietorship located in this state; and

(4) The address of every office of the sole proprietorship located in this state must be listed in the application for the permit.

(d) Application for a permit under this section must be made upon the affidavit of the partner, shareholder, member or sole proprietor or of a partner or shareholder who holds a permit to practice in this state under section 5-3.1-7 as a certified public accountant or a public accountant. All applications for a permit under this section must include, in addition to any other information required by this chapter or by rule or regulation of the board to be stated in the application, a list of all other states in which the applicant entity has applied for or holds a permit. Upon receipt of the application, the board shall determine whether the applicant entity is eligible for a permit. In the event the board determines the applicant entity to be ineligible for a permit under this section, that determination shall be stated in writing and delivered to the applicant at the address that is stated in the application.

(e) All applicants for or holders of a permit under this section shall notify the board in writing, within thirty (30) days of the occurrence of the event:

(1) Of any change in the identities of the partners, officers, directors, or shareholders who are personally engaged in this state in the practice of public accounting;

(2) Of any change in the number or location of offices within this state required to be listed in the application pursuant to this section;

(3) Of any change in the identities of the persons supervising the offices; and

(4) Of any issuance, denial, revocation, or suspension of a permit by any other state. The board may prescribe fees which are to be paid by the applicants or holders upon the notification.

(f) All permits issued by the board under this section expire on the last day of June of each year unless the permit is renewed in accordance with the provisions of this section. Permits may be renewed for a period of one year, and expire on the last day of June in the year following the year in which they are renewed unless they are again renewed by their holders. All applications for renewal of permits under this section are submitted to the board by February 15 of each year. All applicants for permit renewal shall satisfy the quality review requirements prescribed in section 5-3.1-10.

(g) Fees to be paid upon application for initial issuance or renewal of a permit under this section are established from time to time by the board. Fees are paid at the time the application is filed with the board.

(h) An annual permit to engage in the practice of public accounting in this state is issued by the board, upon application for it and payment of the required fee, to the office of the auditor general provided the office is in compliance with section 5-3.1-10.

5-3.1-10. Quality reviews - Peer reviews. -- (a) The board requires, as a condition to the renewal of permits for practice units under section 5-3.1-9, that applicants undergo quality peer reviews conducted no more frequently than one every three (3) years in any manner and with any satisfactory result that the board specifies.; provided, that the requirement: Such review shall include verification that the individuals in the firm who are responsible for supervising attest and compilation services and sign or authorizes someone to sign the accountant's report on the financial statements on behalf of the firm meet competency requirements set out in the professional standards for such services. Any requirements established by the board regarding power reviews shall:

(1) Is Be promulgated reasonably in advance of the time when it must first be met; and

(2) Provides Provide for compliance by an applicant upon the showing that it has undergone a satisfactory quality peer review performed for other purposes, such as those performed by the American Institute of Certified Public Accountants in connection with its quality and peer review programs, which was substantially equivalent to the review required under this subsection, and that this review was completed within the three (3) years immediately preceding the renewal period.

(b) The proceedings, records, and work papers of a quality peer review committee appointed by the board for the purpose of conducting quality peer reviews under this subsection are privileged and are not subject to discovery, subpoena, or other means of legal process or introduction into evidence in any civil action, arbitration, administrative proceeding, or state accountancy board proceeding. No member of the quality peer review committee or other person involved in the quality peer review process is permitted or required to testify in the civil action, arbitration, administrative proceeding, or state accountancy board proceeding as to any matters produced, presented, disclosed, or discussed during or in connection with the quality peer review process, or as to any findings, recommendations, evaluations, opinions, or other actions of the committees or any members of the committees; provided, that information, documents, or records that are publicly available are not to be construed as immune from discovery or use in civil actions, arbitration proceedings, administrative proceedings, or state accountancy board proceedings merely because they were presented or considered in connection with the quality peer review process. The privilege created by this statute also does not apply to materials prepared in connection with a particular engagement merely because they are subsequently presented or considered as part of the quality peer review process; nor does it apply to disputes between review committees and practice units subject to a quality peer review arising from the performance of the review. The privilege similarly does not apply, notwithstanding any provision in this section to the contrary, as to the board or its members, who, so long as they are acting in their official capacities, have access to any and all records, reports, work papers and other documents and materials which may at any time have been in the possession of or prepared by a quality peer review committee during the performance of its duties.

5-3.1-13. Revocation or suspension of practice unit permit -- After notice and hearing as provided in section 5-3.1-14, the board may revoke or suspend the permit of any practice unit issued under section 5-3.1-9 if at any time the practice unit fails to meet all the qualifications prescribed under section 5-3.1-9. After notice and hearing as provided in section 5-3.1-14, the board may revoke or suspend the permit of a practice unit issued under section 5-3.1-9, and may censure in writing, limit the scope of practice, impose an administrative fine upon, not to exceed $1,000, or place on probation, all with or without terms, conditions, or limitations, the holder of the permit, for any cause enumerated in section 5-3.1-12 and for any of the following additional causes:

(1) With respect to any type or partnership and corporate practice units, the revocation or suspension of the certificate or authority of, or the revocation, suspension, or refusal by the board to renew the permit of, any partner, or shareholder or member of the partnership or corporate practice units; and

(2) Cancellation, revocation, suspension, or refusal to renew the permit of the practice unit, or of any partner, or shareholder or member or of the sole proprietor, to practice public accounting in any other state by that state for any cause other than failure to pay a fee or to meet the requirements of continuing education in that other state.

5-3.1-14. Initiation of proceedings -- Hearings before board -- Appeals -- Notice to other states -- (a) The board may initiate proceedings under this chapter against a licensee either on its own motion, on the complaint of any person, upon the finding of probable cause by a probable cause committee appointed by the board pursuant to section 5-3.1-4, or upon receiving notification from another state board of accountancy of its decision to:

(1) Revoke, suspend, or refuse to renew the practice privileges granted in that state to the licensee, or

(2) Censure in writing, limit the scope of practice, impose an administrative fine upon, or place on probation the licensee.

(b) A written notice stating the nature of the charge or charges against the licensee and the time and place of the hearing before the board on the charges shall be served on the licensee not less than twenty (20) days prior to the date of the hearing either personally or by mailing a copy of the notice by certified mail, return receipt requested, to the address of the licensee last known to the board.

(c) If, after being served with the notice of hearing as provided for in this section, the licensee fails to appear at the hearing and to defend against the charges stated, the board may proceed to hear evidence against the licensee and may enter an order that is justified by the evidence. That order is final unless the licensee petitions for a review of it as provided in this chapter; provided, that within thirty (30) days from the date of any order, upon a showing of good cause for failing to appear and defend, the board may reopen the proceedings and may permit the licensee to submit evidence in his, her, or its behalf.

(d) (1) At any hearing under this section, the licensee may:

(i) Appear in person or be represented by counsel;

(ii) Produce evidence and witnesses on his, her, or its behalf;

(iii) Cross examine witnesses; and

(iv) Examine any evidence that is produced.

(2) A partnership may be represented before the board by counsel or by any partner. A corporation may be represented before the board by counsel or by any shareholder or member of the corporation. A sole proprietorship may be represented before the board by counsel or by the sole proprietor. The licensee is entitled, on written application to the board, to the issuance of subpoenas to compel the attendance of witnesses on the licensee's behalf.

(e) The board or any member may issue subpoenas to compel the attendance of witnesses and the production of documents, and may administer oaths, take testimony, hear proofs, and receive exhibits in evidence in connection with or upon hearing under this chapter. In case of disobedience to a subpoena, the board may petition the superior court to require the attendance and testimony of witnesses and the production of documentary evidence.

(f) The board is not bound by strict rules of procedure or by the laws of evidence in the conduct of its proceedings, but any determination of the board shall be based upon sufficient legal evidence to sustain the determination.

(g) A stenographic record of all hearings under this section shall be kept and a transcript filed with the board.

(h) At all hearings, the attorney general of this state, or any other legal counsel that is employed, shall appear and represent the board.

(i) The decision of the board is made by vote in accordance with rules and regulations established under section 5-3.1-4.

(j) Any appeal from the decision of the board, by a person or persons adversely affected by the decision, is governed by section 42-35-15.

(k) On rendering a decision to: (1) revoke or suspend a certificate issued under the laws of this state, (2) revoke or suspend an authority as a public accountant issued under the prior laws of this state, (3) revoke, suspend, or refuse to renew a permit issued under the laws of this state, or (4) censure in writing, limit the scope of practice of, impose an administrative fine upon, or place on probation a licensee, the board shall examine its records to determine whether the licensee holds a certificate or a permit to practice in any other state. If the board determines that the licensee in fact holds a certificate or permit, the board shall immediately notify the board of accountancy of the other state by mail of its decision under this section, and shall include in the notice an indication as to whether or not the licensee has appealed that decision.

(l) The board may, in its discretion, order any licensee against whom proceedings have been initiated under section 5-3.1-12 or 5-3.1-13 to reimburse the board for any fees, expenses, and costs incurred by the board in connection with those proceedings, including attorneys' fees. Those fees shall be paid within thirty (30) days from the date they are assessed and may be reviewed in accordance with section 42-35-15.

5-3.1-16. Acts declared unlawful -- (a) Except as permitted by the board pursuant to section 5-3.1-18(b), no person shall hold himself or herself out to the public as a certified public accountant or assume or use the designation "certified public accountant" or "CPA" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the person is a certified public accountant or CPA, unless that person has been issued a permit to practice under section 5-3.1-7.

(b) No partnership, corporation or sole proprietorship entity shall hold itself out to the public as being engaged in the practice of certified public accounting, provide attest or compilation services or assume or use the designation "certified public accountants" or "CPAs" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the practice unit is composed of certified public accountants or CPAs, unless:

(1) The practice unit holds a permit to practice under section 5-3.1-9;

(2) Ownership of the firm is in accord with this act and rules promulgated by the board Every partner, shareholder, officer, director, and every manager of every office of the practice unit is the holder of a certificate from some state; and

(c) Except as subsequently provided, no No person shall hold himself or herself out to the public as a public accountant, or assume or use the designation "public accountant" of "PA" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the person is a public accountant or PA, unless that person holds an authority as a public accountant and a permit to practice in this state issued under section 5-3.1-7. This subsection does not apply to those persons qualified under subsection (a) to hold themselves out to the public as certified public accountants and to use the designation "certified public accountant" or "CPA".

(d) No partnership, corporation, or sole proprietorship entity shall hold itself out to the public as being engaged in the practice of public accounting, provide attest or compilation services or assume or use the designation "public accountants" or "PAs" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the practice unit is composed of public accountants or PAs, unless the practice unit holds a permit to practice under section 5-3.1-9.

(e) No person, partnership, corporation, or sole proprietorship shall hold himself, herself, or itself out to the public as, or assume or use alone, or in connection with his, her, or its name, or any other name, or entity not holding a valid permit, shall assume or use the title or designation "certified accountant", "chartered accountant", "enrolled accountant", "licensed accountant", "registered accountant", "accredited accountant", or any other title or designation likely to be confused with "certified public accountant" or "public accountant", and shall not assume any of the abbreviations "CA", "EA", "RA", "LA", "AA", or similar abbreviation likely to be confused with "CPA" or "PA"; provided, that anyone who holds a permit to practice under section 5-3.1-7 may hold himself or herself out to the public as an "accountant" or "auditor". The title "Enrolled Agent" or the abbreviation "EA" may only be used by those individuals so designated by the Internal Revenue Service. In addition, the board may at its discretion allow titles or abbreviations to be used which do not mislead the public and for which appropriate certification or accreditation by a national organization can be demonstrated.

(f) No person or entity shall prepare or attempt to prepare, or sign, affix, or associate his or her their name or any trade name used by him or her in his or her their business or profession or practice unit to any of the following enumerated reports or any report in any manner having the appearance or import of any of the following enumerated attest or compilation reports, unless he or she the individual holds a permit to practice under section 5-3.1-7 or 5-3.1-8, and unless his or her the practice unit holds a permit to practice under section 5-3.1-9:.

(1) A report expressing or disclaiming an opinion on a financial statement based on an audit or examination of that statement;

(h) No person, partnership, corporation, or sole proprietorship or entity not holding a permit to practice under this chapter shall hold himself, herself, or itself out to the public as an "accountant" or "auditor", whether or not the term is accompanied by any other description or designation, on any sign, card, or letterhead, or in any advertisement or directory.

(i) No person holding a permit shall assume or use the designation "certified public accountant" or "CPA" or "public accountant" or "PA" in conjunction with names of other persons so as to indicate or imply that there is a practice unit comprised of those persons which is engaged in the practice of public accounting, or in conjunction with the designation "and Company" or "and Co." or a similar designation, if, in this case, there is in fact no bona fide partnership, corporation, or sole proprietorship holding a permit under section 5-3.1-9. or use a professional or firm name or designation that is misleading about the legal form of the firm, or the persons who are partners, officers, members, managers or shareholders of the firm, or about any other matter, provided, however, that names of one or more former partners, members, managers or shareholders may be included in the name of a firm or its successor.

(j) No person, partnership, corporation, or sole proprietorship or entity shall hold himself, herself, or itself out to the public as being qualified for the practice of public accounting unless the person, partnership, corporation, or sole proprietorship or entity holds a permit to practice under this chapter.

(k) The provisions of subsections (a), (c), and (e) do not prohibit any accountant licensed by a foreign country who holds an annual limited permit to engage in the practice of public accounting under section 5-3.1-8 from using the accounting designation by which he or she is known in his or her own country, translated into the English language, followed by the name of the country from which his or her certificate, license, or degree was issued, as required by section 5-3.1-8.

(l) No licensee, in connection with the practice of public accounting, may accept a payment, including a commission, for the recommendation or referral of products or services of others to a client, or for the recommendation or referral of products or services to be supplied by a client.

(m) Any person, partnership, corporation, or sole proprietorship or practice unit that is found to have violated any provision of this section by a court of competent jurisdiction is liable to the board for reasonable attorneys' fees in connection with the proceeding in which the finding was made.

5-3.1-18. Exceptions -- Acts not prohibited -- (a) Nothing contained in this chapter shall be construed as prohibiting any person not a certified public accountant or public accountant from serving as an employee of or an assistant to a licensee; provided, that the employee or assistant does not issue any accounting or financial statement or report over his or her name.

(b) Nothing contained in this chapter is construed as prohibiting any person who is the holder of a certificate or permit issued by this state or any other state which has not been revoked or suspended by the board or board of accountancy of the other state from assuming or using the designation "certified public accountant" or "CPA" or any other title, designation, words, letters, sign, card, or device tending to indicate that the person is a certified public accountant; provided, that the provisions of this subsection are not construed to authorize the use of those designations in connection with the practice of public accounting in this state unless the person using the designations holds a permit to practice issued by the board.

(c) Nothing contained in this chapter or in any other law of this state is construed as prohibiting a licensee or any employee of a licensee from disclosing any information in confidence to other licensees engaged in conducting peer reviews, or any of their employees or agents, in connection with peer reviews which are conducted under the auspices of a recognized professional association or under this chapter.

(d) Nothing contained in this chapter or in any other law of this state is construed as prohibiting a licensee or any employee of a licensee from disclosing any information in confidence to any employee, representative, officer, or committee member of a recognized professional association or to the board or any of its employees or committees in connection with a professional ethics investigation held under the auspices of the professional association or the board.

(e) The provisions of subsections (f), (g), and (h) of section 5-3.1-16 do not prohibit any officer, employee, partner, or principal of any organization entity from affixing his or her signature to any statement or report in reference to the affairs of that organization entity with any wording designating the position, title, or office which he or she holds in that organization entity, or from describing himself or herself by the position, title, or office which he or she holds in the organization entity; nor do those provisions prohibit any act of a public official or a public employee in the performance of his or her duties as a public official or public employee.

(f) Nothing contained in this chapter is construed as prohibiting any person, partnership, corporation, or sole proprietorship or entity not holding a permit under this chapter from offering or rendering to the public bookkeeping services, including devising and installing systems, recording and presentation of financial information or data, preparing financial statements or similar services, preparation of tax returns, or the furnishing of advice on tax matters; provided, that no person, partnership, corporation, or sole proprietorship or entity shall perform a report on any attest or compilation services : (1) Audit or examine a financial statement and issue a report expressing or disclaiming an opinion on that statement, (2) Review a financial statement and issue a report expressing limited assurance on that statement, or (3) Compile a financial statement and issue a compilation report on that statement; nor shall any person, partnership, corporation, or sole proprietorship or entity attempt to prepare or prepare a report in any manner having the appearance or import of any attest or compilation report enumerated in this subsection so as to mislead the public.

5-3.1-19. Injunction against unlawful acts -- Whenever, in the judgment of the board, any person, partnership, corporation, or sole proprietorship or entity has engaged, or is about to engage, in any acts or practices which constitute, or will constitute, a violation of this chapter, the board may make application to the superior court for an order enjoining those acts or practices. Upon a showing by the board that the person, partnership, corporation, or sole proprietorship or entity has engaged, or is about to engage, in any of those acts or practices, an injunction, restraining order, or any other order that may be appropriate shall be granted by the court without bond. In any instance of the granting of an injunction or order by the superior court under this section, the court shall award the board reasonable attorneys' fees.

5-3.1-20. Penalty for violations -- (a) Any person, partnership, corporation, or sole proprietorship or entity that violates any provision of this chapter is guilty of a misdemeanor, and upon conviction, is subject to:

(1) In the case of an individual, a fine of not more than one thousand dollars ($1,000) or imprisonment for not more than one year, or both, or

(2) In the case of a partnership or corporation, an entity a fine of not more than five thousand dollars ($5,000).

(b) Whenever the board has reason to believe that any person or organization entity is liable to punishment under this section, it may certify the facts to the attorney general of this state who may, in his or her discretion, cause appropriate proceedings to be brought.

5-3.1-21. Use of card, sign, or advertisement as evidence -- Single act sufficient evidence -- The display or presentation of a card, sign, advertisement, or other printed, engraved, or written instrument or device bearing a person's or organization's entity's name in conjunction with the words "certified public accountant(s)" or "public accountant(s)", or any abbreviation of those words, except as permitted by this chapter, is prima facie evidence in any action brought under section 5-3.1-19 or 5-3.1-20 that the person or organization entity whose name is displayed caused or procured the display or presentation of that card, sign, advertisement, or other printed, engraved, or written instrument or device and that the person or organization entity is holding himself, herself, or itself out to the public as a certified public accountant or public accountant, or as a practice unit composed of certified public accountants and/or public accountants. In that action, evidence of the commission of a single act prohibited by this chapter is sufficient to justify an injunction or a conviction need not be established for that purpose.

5-3.1-22. Ownership of accountant's working papers -- All statements, records, schedules, working papers, memoranda, and any other data, including, but not limited to, a data bank, which are retained by a practice unit incident to or in the course of professional services rendered to clients, except reports submitted by the practice unit to a client, are and remain the property of that practice unit in the absence of an express agreement to the contrary between the practice unit and the client. No statement, record, schedule, working paper, memorandum, or other data shall be sold, transferred, or bequeathed, without the written consent of the client or his, her, or its personal representative or assignee, to anyone or any organization entity other than, in the case of a partnership or corporation, one or more of its surviving partners, shareholders, new partners, or new shareholders, or any organization resulting from the combination or merger of the practice unit, or any other successor in interest to the practice unit.

5-3.1-25. Repeal provisions -- Effect of prior laws, rules, and regulations -- All other acts or parts of acts in conflict with this chapter are repealed; provided, that nothing contained in this chapter invalidates or affects any action taken under any law in effect prior to July 1, 1995 January 1, 2000; nor does it invalidate or affect any proceeding instituted under that law before July 1, 1995 January 1, 2000; nor does it invalidate the rules and regulations promulgated by the Rhode Island board of accountancy under the prior law, the rules and regulations (to the extent they are not inconsistent with the provisions of this chapter) to remain in full force and effect until new rules and regulations are promulgated by the board.

SECTION 2. This act shall take effect on September 1, 2001.