Chapter
225
2007 -- H 5708 SUBSTITUTE A
Enacted 07/03/07
A N A C T
RELATING TO
BUSINESSES AND PROFESSIONS - PUBLIC ACCOUNTANCY
Introduced By: Representatives Kennedy, and Slater
Date Introduced: February
28, 2007
It is
enacted by the General Assembly as follows:
SECTION
1. Sections 5-3.1-3, 5-3.1-5 and 5-3.1-7 of the General Laws in Chapter 5-3.1
entitled
"Public Accountancy" are hereby amended to read as follows:
5-3.1-3.
Definitions. -- As used in this chapter, unless the context requires
otherwise, the
following
terms are construed as follows:
(1) "Attest" means providing the following financial statement
services:
(i) Any audit or other engagement to be performed in accordance with the
Statements on
Auditing
Standards (SAS) as adopted by the American Institute of Certified Public
Accountants;
(ii) Any review of a financial statement to be performed in accordance with the
Statement
on Standards for Accounting and Review Services (SSARS) as adopted by the
American
Institute of Certified Public Accountants;
(iii) Any examination of prospective financial information to be performed in
accordance
with the
Statements on Standards for Attestation Engagements (SSAE) as adopted by the
American
Institute of Certified Public Accountants;
(iv) Any services considered attest by the American Institute of Certified
Public
Accountants;
(v) Any services that will provide assurance on financial information and will
be
performed
in accordance with appropriate professional standards;
(vi) The statements on standards specified in this definition shall be adopted
by reference
by the
board pursuant to rulemaking and shall be those standards developed by the
American
Institute
of Certified Public Accountants.
(2) "Authority" means 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).
(3) "Board" means the board of accountancy, a public authority
created by section 5-3.1-
4.
(4) "Certificate" means 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.
(5) "Certified public accountant" or "CPA" means 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.
(6) "Compilation" means providing a service to be performed in
accordance with the
Statement
on Standards for Accounting and Review Services (SSARS) as adopted by the
American
Institute of Certified Public Accountants that is presenting in the form of
financial
statements,
information that is the representation of management without undertaking to
express
any
assurance on the statements.
(7) "Entity" includes a general partnership, limited liability
company, limited liability
partnership,
a corporation, a sole proprietor, a trust and joint venture.
(8) "Good moral character" for purposes of this section, means lack
of a history of
dishonest
or felonious acts.
(9) "Licensee" means the holder of a certificate, authority or permit
issued under this
chapter
or under the prior laws of this state.
(10) "Majority" refers to a sixty-seven percent (67%) ownership in
terms of financial
interests
and voting rights.
(11) "Peer review" means 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
a
licensee or licensees who are not affiliated with the practice unit being
reviewed.
(12) "Permit" means 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.
(13) "Practice of (or practicing) public accounting or accountancy"
means 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.
(14) "Practice unit" means 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.
(15) "Principal residence" means 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.
(16) "Public accountant" or "PA" means a person holding an
authority as a public
accountant
issued under the prior laws of this state.
(17) "Report" means 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.
(18) "State" means 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.
(19) "Substantial equivalency" means a determination by the board of
accountancy that
the
education, examination and experience requirements contained in the statutes
and
administrative
rules of another state or jurisdiction are comparable to or exceed the
education,
examination
and experience requirements included in this chapter. or that an
individual CPA's
education,
examination and experience qualifications are comparable to or exceed the
education,
examination
and experience requirements contained in this chapter. In ascertaining
substantial
equivalency
as used in this chapter the board shall take into account the qualifications
without
regard
to the sequence in which experience, education or examination requirements were
attained.
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) [As amended by P.L. 2001, ch. 249, section 1.]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, the education requirement for a
certificate, shall be
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, that a candidate who has not met the one hundred fifty
(150) hour
education
requirement may sit for an examination if the candidate has, at the time of the
examination,
completed not less than one hundred twenty (120) semester hours of education,
provided
that such candidate who successfully passes the examination will not be
eligible to
receive
a certificate until the applicant completes the one hundred fifty (150) hour
education
requirement
and the experience requirement;
(3) [As amended by P.L. 2001, ch. 336, section 1.]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 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 December 31, 1999, notwithstanding the fact that the
candidates
may not have completed one hundred fifty (150) semester hours of college
education;
(4) Has passed written examinations in accounting and auditing and any
related subjects
that the
board deems appropriate and specifies by rule;
(5) [As amended by P.L. 2001, ch. 249, section 1.]Have one year public
accounting
experience
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
(5) [As amended by P.L. 2001, ch. 336, section 1.]Has one 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 have
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 subdivision (3) of
this
subsection;
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 subdivision (a)(3) of this
section. 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 subdivisions (a)(2) and (a)(6) of
this section.
(c) The examinations described in subdivision (a)(4) of this section 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 an a written examination
in any one or more of
the
subjects referred to in subdivision (a)(4) of this section 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 subdivision (a)(4) of this section 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 subdivision (a)(4) of this section shall have met the
educational
requirement
of subdivision (a)(3) or (a)(5) of this section in effect on the date of the
examination
by which
the candidate successfully completes the examination under subdivision (a)(4)
of this
section.
(e) The board shall charge each candidate for a certificate a fee for the
initial
examination
under subsection (a) of this section, for reexamination under subsection (d) of
this
section
for each subject in which the candidate is reexamined, and for evaluation of a
candidate's
educational
qualifications under subsection (b) of this section. The applicable fee shall
be paid by
the
candidate at the time of application for the examination, reexamination, or
evaluation. Fees
for
examination, reexamination, and evaluation of educational qualifications shall
be 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) four (4) years of experience in
the practice of public
accountancy of the type described in subdivision (a)(5) or
meets comparable requirements
prescribed
by the board by rule 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.
(i) The board may refuse to grant a certificate on the grounds of failure to
satisfy the
good
moral character requirement only if there is a substantial connection between
the lack of
good
moral character of the applicant and the professional responsibilities of a
licensee and if the
finding
by the board of lack of good moral character is supported by clear and
convincing
evidence.
When an applicant is found to be unqualified for a certificate because of lack
of good
moral
character, the board shall furnish the applicant a statement containing the
findings of the
board, a
complete record of the evidence upon which the determination was based, and a
notice of
the
applicant's right of appeal.
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 shall be
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 subsection (g) of this section, 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) of this section. 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) of this section.
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 shall be submitted
to the
board by
February 15 of each year and shall be 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 shall 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 any certificate,
license, degree,
or
permit by any other state; or
(2) Of the commencement of any disciplinary or enforcement action against the
applicant,
holder or individual by any other state.
(f) Fees for the issuance and renewal of permits under this section shall be
established
from
time to time by the board. The required fee shall be paid by the applicant at
the time the
application
is filed with the board.
(g) (1) Substantial equivalency. – (1) An individual whose
principal place of business or
principal
residence is not in this state having a valid certificate or license as a
certified public
accountant
from any state whose licensure requirements are determined to be substantially
equivalent
with the conditions of this section shall have all the privileges of
certificate holders
and
licensees of this state without the need to obtain a certificate or permit from
this state under
this
section as long as the conditions of this section are met. The individual
shall notify the board,
in
writing, of his or her intent to enter the state under this provision. The individual must have one
year or
more of experience. and state so on the written notice to the board.
This experience shall
include
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
is
acceptable if it was gained through employment in government, industry,
academia or public
practice.
Notwithstanding any other provision of law, an individual who offers or
renders
professional
services, whether in person, by mail, telephone or electronic means, under this
section
shall be granted practice privileges in this state and no notice or other
submission shall be
provided
by any such individual. Such an individual shall be subject to the requirements
in
subdivision
(g)(3). If this individual is
responsible for supervising attest services and signs or
authorizes
another licensee to sign the accountant's report on the financial statements on
behalf of
the
firm, this individual shall meet the experience requirements set out in the
professional
standards
for such services. If this individual is responsible for signing or authorizing
another
licensee
to sign the accountant's report on the financial statements on behalf of the
firm, this
individual
shall meet the experience requirements set out in the professional standards
for such
services.
The board may use the NASBA National Qualification Appraisal Service to
determine
which
other states have substantial equivalence with this chapter.
(2)
An individual whose principal place of business is not in this state and who
holds a
valid
certificate or license as a certified public accountant from any state which
the NASBA
National
Qualification Appraisal Service has not verified to be in substantial
equivalence with the
CPA
licensure requirements if the AICPA/NASBA Uniform Accountancy Act shall be
presumed
to
have qualifications substantially equivalent to this state's requirements and
shall have all the
privileges
of certificate holders and licenses of this state without the need to obtain a
certificate or
permit
under this section if such individual obtains from the NASBA National
Qualification
Appraisal
Service verification that such individual's CPA qualifications are
substantially
equivalent
to the CPA licensure requirements of the AICPA/NASBA Uniform Accountancy Act.
Any
individual who passed the Uniform CPA Examination and holds a valid license
issued by
any
other state prior to January 1, 2012 may be exempt from the education
requirement in
subdivision
5-3.1-5(a)(3) for purposes of this section.
(2) (3) Any individual licensee of another state
exercising the privilege afforded under
this
section and the CPA firm which employs that licensee hereby simultaneously
consents, as a
condition
of the granting of this privilege:
(i)
To the personal and subject matter jurisdiction and disciplinary authority
of the board;
(ii)
To comply with this chapter and the board's rules;
(iii)
That in the event the certificate or license from the state of the individual's
principal
place
of business is no longer valid, the individual will cease offering or rendering
professional
services
in this state individually and on behalf of a CPA firm; and
(iii)
(iv) To the appointment of the board which issued their license as their
agent upon
whom
process may be served in any action or proceeding by this board against the
licensee;.
(iv)
To be subject to disciplinary action in this state for an act committed in this
state.
(3)
(4) A licensee of this state offering or rendering services or using
their CPA title in
another
state shall be subject to disciplinary action in this state for an act
committed in another
state
for which the licensee would be subject to discipline for an act committed in
the other state.
SECTION
2. This act shall take effect upon passage.
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LC02178/SUB A/2
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