WSR 98-01-229

PROPOSED RULES

BOARD OF ACCOUNTANCY

[Filed December 24, 1997, 12:00 p.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 97-22-077.

Title of Rule: WAC 4-25-620 Integrity and objectivity.

Purpose: To amend rule to clarify that, where conflicts exist between a board rule and a professional standard, board rule prevails.

Statutory Authority for Adoption: RCW 18.04.055(2).

Statute Being Implemented: RCW 18.04.055(2).

Summary: The rule requires Washington certified public accountants (CPAs) to remain free of conflicts of interest unless such conflicts are permitted by board rule or professional standards.

Reasons Supporting Proposal: The existing rule requires Washington certified public accountants to be free of conflicts of interest unless such conflicts are specifically permitted by board rule or professional standards. Board rules and professional standards conflict in some areas such as compensation. Amendment to the rule will clarify that, where conflicts exist between a board rule and a professional standard, board rule prevails. The goal of the amendment is to: Promote clarity, ensure effective communication, ensure fairness in interpretation and application of the rule, promote efficiencies through minimizing gray areas, and address the need to protect the public through regulation of the practice of public accountancy and enhancing the reliability of information.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Dana M. McInturff, CPA, 210 East Union, Suite A, Olympia, (360) 664-9194.

Name of Proponent: Board of Accountancy, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: WAC 4-25-620 requires Washington certified public accountants (CPAs) to be free of conflicts of interest. This requirement is a rule of professional conduct necessary to establish and maintain high standards of ethics of certified public accountants (CPAs) to protect the public interest.

Proposal Changes the Following Existing Rules: Clarifies that, where conflicts exist between a board rule and a professional standard, board rule prevails.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed rule will not have more than minor economic impact on business.

RCW 34.05.328 does not apply to this rule adoption. The Board of Accountancy is not one of the agencies required to submit to the requirements of RCW 34.05.328.

Hearing Location: Bank of California Building, 900 4th Avenue, 24th Floor, Attorney General Training Center, Seattle, WA, on Thursday, January 29, 1998, at 9:30 a.m.

Assistance for Persons with Disabilities: Contact Cheryl Sexton by January 26, 1998, TDD (800) 833-6384, or (360) 664-9194.

Submit Written Comments to: Dana M. McInturff, P.O. Box 9131, Olympia, WA 98507-9131, FAX (360) 664-9190, by January 28, 1998.

Date of Intended Adoption: January 29, 1998.

December 23, 1997

Dana M. McInturff, CPA

Executive Director

AMENDATORY SECTION (Amending WSR 93-22-046, filed 10/28/93, effective 11/28/93)

WAC 4-25-620 ((Integrity and objectivity.)) When must I comply with the rules of conduct requiring integrity and objectivity? ((In the performance of professional services a person using the CPA title shall be honest, objective, free of conflicts of interest unless such conflicts are specifically permitted by board rule or professional standards, and shall not misrepresent facts or subordinate his or her judgment to others.)) If you use the title CPA when performing professional services you must remain honest and objective. You must not misrepresent facts or subordinate your judgment to others.

Also, you must remain free of conflicts of interest unless such conflicts are specifically permitted by board rule or professional standards. If professional standards differ from board rule, board rule prevails.

[Statutory Authority: RCW 18.40.055. 93-22-046, 4-25-620, filed 10/28/93, effective 11/28/93.]

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