Chapter 238

2007 -- S 0787 SUBSTITUTE A

Enacted 07/03/07

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS -- PUBLIC ACCOUNTANCY

Introduced By: Senator Daniel P. Connors

Date Introduced: March 01, 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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LC02354/SUB A

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