PERMANENT RULES
Effective Date of Rule: Thirty-one days after filing.
Purpose: General Note: With this rule making, the board implemented the revisions to chapter 18.04 RCW passed through the 2008 legislative session (SSB 6604). SSB 6604 enhanced the mobility of certified public accountants (CPAs) and required the licensing of out-of-state firms providing audit or opinion-type services.
The board modified the rules to:
| | Include out-of-state individuals and firms and the employees of those persons. |
| | Remove references to practice privileges as it currently exists because notification and fees no longer apply. |
| | Remove references to the exclusion of out-of-state sole practitioning CPAs from the licensing requirements. |
| | Make ethics and prohibited practices found in board rules applicable to all persons including persons exercising practice privileges. |
| | Remove reference in the rules that "notices" will be mailed on January 1. This is an agency policy issue not a requirement of regulated persons. |
| | Clarify that the validation of license status or status as a CPA-Inactive certificateholder, or resident nonlicensee firm owner occurs at the time the license number is entered into the board's licensee database and available for public confirmation. |
| | Promote clarity. |
| | Ensure effective communication. |
| | Ensure fairness in interpretation and application of the rules. |
| | Promote efficiencies through minimizing gray areas. |
| WAC section: | The revision: |
| 4-25-400 | Clarifies that the board sets the qualifications to be a licensee of Washington state. The board does not set the qualifications to be a licensee in any other state. |
| 4-25-410 | For ease of reference and consistency, the board incorporated definitions appearing in RCW 18.04.025 into its rules. Subsection: (2) "Active individual participant" - changes reference from "natural person" to "individual" to coincide with definition in RCW 18.04.025 changed by SSB 6604. (4)(a) Clarifies that the CPA examination is the uniform examination used by all United States jurisdictions. (4)(b) Changes applicant for "CPA" license to an applicant for an "individual" license to distinguish from a "firm." (4)(b) Adds "initial" to distinguish from a renewal or reinstatement applicant. (4)(b) Removes reference to "practice privileges." SSB 6604 eliminated the requirement for out-of-state CPAs to notify the Washington state board of [accountancy] intent to practice. (4)(d) Adds practice privileges to applicants for reinstatement. (5) Replaces the definition of "attest services" for consistency with the definition of "attest" in RCW 18.04.025 as amended by SSB 6604. (6) Points the reader to the definition of "licensee" in this same section. (10) "Client" - clarifies that the definition is applicable to all licensees, certificate holders, and nonlicensee owners regulated by the board and entities affiliated with a licensed firm, being retained to perform "professional services." (11)(a) Points the reader to the definition of "licensee" in this same section and clarifies that the definition is applicable to all licensees, certificate holders, and nonlicensee owners of a licensed firm regulated by the board and persons affiliated with a licensed firm. (12) Adds the definition for "compilation" from SSB 6604 for consistency and ease of reference. (14) Changes "person" to "individual" to coincide with the definitions in SSB 6604. This provides clarification that a CPA is a living, human being rather than a nongovernmental organization or business entity. Clarifies that a CPA includes individuals exercising practice privileges as referenced in RCW 18.04.350(2). (15) Changes "person" to "individual" to coincide with the definitions in SSB 6604. |
| Formerly (16) "Entering the state" deleted. SSB 6604 eliminated the reference to entering the
state. This definition is no longer needed. (17) "Firm" - adds reference to Washington state law under which limited liability companies or partnerships, or professional service corporations are formed to provide an index to the reader. (20) Removes "firm" from the definition because the definition of "person" in SSB 6604 includes firms. (21) Adds the definition for "home office" from SSB 6604 for consistency and ease of reference. (22) "Inactive" - changes "person" to "individual" to coincide with the definitions in SSB 6604. This rule is applicable to living, human beings rather than nongovernmental organizations or business entities. (23) Adds the definition for "individual" from SSB 6604 for consistency and ease of reference. (24) "Independence" - changes "attest" to "professional" services. Professional services include compilations which are not considered "attest" services under the definition included in SSB 6604. Independence is required when professional standards require a report expressing assurance. (27) Changes "accountancy" to "accounting" to coincide with definition of the "practice of public accounting" in RCW 18.04.025. (28) Clarifies that "licensee" includes those out-of-state individuals and firms referenced in the Public Accountancy Act as amended by SSB 6604. |
|
| Formerly (29) "Natural person" deleted. SSB 6604 changed the definition of "natural
person" to "individual." See (23) above. (30) Clarifies that a "nonlicensee firm owner" is an individual. (33) Adds the definition for "person" from SSB 6604 for consistency and ease of reference. (35) "Practice privileges" - conforms the definition to RCW 18.04.350 as amended by SSB 6604. Adds the consent to the appointment of the issuing state board as agent for the service of process from RCW 18.02.350 (4)(d). (36) "Principal place of business" - replaces the definition with the definition in RCW 18.04.025 as amended by SSB 6604. (38) "Quality assurance review" - replaces attest work with "audit, compilation and review and other professional services for which a report expressing assurance is prescribed by professional standards" to reflect board rule, WAC 4-25-820 that includes compilation and other attestation standards. SSB 6604 removed compilation from the definition of attest. (41) "Reports on financial statements" - conforms the definition to the definition found in RCW 18.04.025 and as amended by SSB 6604. Expanded to include other attestation standards as established by board rule, WAC 4-25-820. (42) "Representing oneself" - conforms the definition to the board's current interpretation. (43) "Rules of professional conduct" - changes CPA and CPA firm to "licensee" as defined by the board. With this change this definition is applicable to those out-of-state individuals and firms exercising practice privileges. (45) "Sole proprietorship" - new definition to distinguish an individual from a firm. A proprietorship is a legal form of organization. (46) "State" - adds the Commonwealth of the Northern Mariana Islands to conform to the definition of "state" in RCW 18.04.025 as amended by SSB 6604. |
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| 4-25-520 | Removes the reference to individuals granted practice privileges. SSB 6604 eliminated the
requirement for out-of-state individuals to notify the board when practicing in Washington
state. Therefore, the board will no longer grant practice privileges or track such notification. Changes "rule files" to "rule-making files" to better describe this public record that the board maintains. |
| 4-25-521 | Adds the board's physical address for information purposes. Changes the board's e-mail address for information purposes. |
| 4-25-540 | (1) - (6) Adds "staff" to clarify that staff makes the initial decision and denial. The executive
director does not participate in the initial decision. (7) Conforms language to RCW 18.04.420. |
| 4-25-550 | Adds language to clarify that individuals and firms in Washington state must comply with this rule. Individuals and firms exercising practice privileges as reflected in SSB 6604 are not required to provide any notification of address changes to the board. |
| 4-25-551 | Adds language to clarify that individuals and firms exercising practice privileges as reflected in SSB 6604 are required to respond to board inquiry in addition to individuals and firms licensed in Washington state. |
| 4-25-610 | Chapter 18.04 RCW authorizes the board to prescribe rules of professional conduct for all
licensees, certificate holders, and nonlicensee owners of licensed firms, in order to establish
and maintain high standards of competence and ethics. Replaces CPA and CPA firm with "licensee." With this change, the definition is also applicable to those out-of-state individuals and firms exercising practice privileges to conform with the amendments to chapter 18.04 RCW by SSB 6604. Adds employees of regulated persons. This clarifies that a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner may not conduct themselves unprofessionally through their employees. |
| 4-25-620 | Chapter 18.04 RCW authorizes the board to prescribe rules of professional conduct for all
licensees, certificate holders, and nonlicensee owners of licensed firms, in order to establish
and maintain high standards of competence and ethics. Replaces CPA and CPA firm with "licensee." With this change, the definition is also applicable to those out-of-state individuals and firms exercising practice privileges to conform with the amendments to chapter 18.04 RCW by SSB 6604. Adds employees of regulated persons. This clarifies that a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner may not conduct themselves unprofessionally through their employees. |
| 4-25-622 | Replaces CPA and CPA firm with "licensee." With this change, the definition is also
applicable to those out-of-state individuals and firms exercising practice privileges to
conform with the amendments to chapter 18.04 RCW by SSB 6604. Adds CPA-Inactive certificateholders, nonlicensee firm owners, and employees. This clarifies that a licensee may not conduct themselves unprofessionally through their employees. Replaces "attest" with "professional services for which a report expressing assurance is prescribed by professional standards." SSB 6604 revised the definition of attest to exclude compilations. Independence is required for compilations if the report does not disclose a lack of independence. |
| 4-25-626 | Replaces CPA, CPA-Inactive certificateholder, firm owner, or licensed firm with "licensees
and/or their employees." The rule, in part, prohibits licensees and their employees from
receiving commissions, referral fees, and contingent fess [fees] when rendering "attest" or
"compilation" services. Only licensees are authorized to perform compilation, or other
professional services for which a report expressing assurance is prescribed by professional
standards. Commissions, referral fees, and contingent fees are permitted by all regulated persons when attest and compilation services are not provided and prescribed disclosure is made. Replaces "attest" with "compilation, or other professional services for which a report expressing assurance is prescribed by professional standards.["] SSB 6604 revised the definition of attest to exclude compilations. Removes redundant repetitive language. |
| 4-25-630 | Replaces CPA and CPA firm with "licensee." With this change, the definition is also
applicable to those out-of-state individuals and firms exercising practice privileges to
conform with the amendments to chapter 18.04 RCW by SSB 6604. Adds employees of regulated persons. This clarifies that a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner may not conduct themselves in an incompetent manner through their employees. Clarifies that the service provided is a professional service. |
| 4-25-631 | Replaces CPA and CPA firm with "licensee." With this change, the definition is also
applicable to those out-of-state individuals and firms exercising practice privileges to
conform with the amendments to chapter 18.04 RCW by SSB 6604. Specifically, includes individuals exercising practice privileges or firms exercising practice privileges through an individual. Adds employees of regulated persons. This clarifies that a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner may not disregard rules, regulations and professional standards through their employees. Corrects grammar. Adds documentation requirements for individuals and firms when professional services are governed by standards not listed in the rule. Removes the note that the standards may be inspected at the board's office. |
| 4-25-640 | Adds CPA-Inactive certificateholder, and nonlicensee firm owner. These regulated
individuals may provide those services described in RCW 18.04.350(10). When the
CPA-Inactive certificateholder and nonlicensee firm owner provide those services, they are
bound by the requirements concerning records and client confidential information. Adds "nonlicensee" to all references to firm owner to conform the rule to RCW 18.04.195. Other firm owners are included in the definition of licensee. Adds "compilation or other reporting services governed by professional standards" to "attest" to reflect board rule, WAC 4-25-820 that includes compilation and other attestation services. SSB 6604 eliminated "compilation" from the definition of attest. |
| 4-25-650 | Replaces CPA and CPA firm with "licensee." With this change, the definition is also
applicable to those out-of-state individuals and firms exercising practice privileges to
conform with the amendments to chapter 18.04 RCW by SSB 6604. Adds employees of regulated persons. This clarifies that a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner may not act in a discreditable manner through their employees. Numbers the list of discreditable acts for ease of reference. |
| 4-25-660 | Replaces CPA and CPA firm with "licensee." With this change, the definition is also
applicable to those out-of-state individuals and firms exercising practice privileges to
conform with the amendments to chapter 18.04 RCW by SSB 6604. Removes requirement for regulated community to post status statement on web site. The requirement is overly restrictive with the concept of mobility and no notice. |
| 4-25-670 | (1) Eliminates the requirement to use a form to report enforcement actions. (2) Verbiage change for clarity. (3) Adds clarifying language to avoid inconsistency with subsection (2). |
| 4-25-735 | Changes the agency's legacy practice of requiring signed forms. This change will
facilitate the agency's eventual move to online application. Changes the effective date of licensure as implied by current rule: Current agency guidance is that the license is not valid until the applicant receives a hard copy in the mail. However, once posted to the board database the license is effective. |
| 4-25-745 | Clarifies that the rule only applies to individuals as opposed to firms. Changes the agency's legacy practice of requiring signed forms. This change will facilitate the agency's eventual move to online application. Changes the effective date of licensure as implied by current rule: Current agency guidance is that the license is not valid until the applicant receives a hard copy in the mail. However, once posted to the board database the license is effective. |
| 4-25-746 | Renumbers for easy reference. Changes "accountancy" to "accounting" to coincide with definition of the "practice of public accounting" in RCW 18.04.025. Clarifies that the rule only applies to individuals as opposed to firm. Adds clarifying language specifying entitlements granted when an individual is granted a license. Changes the agency's legacy practice of requiring signed forms. This change will facilitate the agency's eventual move to online application. Changes the effective date of licensure as implied by current rule: Current agency guidance is that the license is not valid until the applicant receives a hard copy in the mail. However, once posted to the board database the license is effective. Remove references to the exclusion of out-of-state sole practitioning CPAs from the licensing requirements. |
| 4-25-747 New Section |
For ease of understanding and reference, this proposed rule summaries [summarizes] the practice privileges requirements of SSB 6604 amending RCW 18.04.350. |
| 4-25-750 | Removes reference to the exclusion of out-of-state sole practitioning CPAs from the firm
licensing requirements due to the amendment of RCW 18.04.350 by SSB 6604. SSB 6604 amended RCW 18.04.195 identifying which entities must obtain firm licenses including out-of-state firms exercising practice privileges. Rather than list the requirements in this rule, the board is proposing a new section, WAC 4-25-753, to summarize the firm licensing and practice privilege requirements for firms. Removes requirement that all owners must be natural persons to conform to RCW 18.04.195 as amended by SSB 6604. RCW 18.04.195, as amended by SSB 6604, requires a simple majority of the ownership of the licensed firm in terms of financial interests and voting rights of all owners[,] shall be held by persons who are licensees or holders of a valid license issued under the Public Accountancy Act or by another state. RCW 18.04.025, as amended by SSB 6604, defines "person" to include limited liability companies and corporations. This amendment will bring the board's rule into conformity with RCW 18.04.195 and allow professional limited liability companies or professional corporations to be registered owners of CPA firms provided the professional limited liability company or professional corporation is registered with the board as a CPA firm. Changes reference from "natural person" to "individual" to coincide with definition in RCW 18.04.025 changed by SSB 6604. Specifies who on behalf of the firm must apply for an initial firm license, renewal, or amendment. Changes the agency's legacy practice of requiring signed forms. This change facilitates the agency's eventual move to online application. Provides notice that forms are available from the board. Changes the effective date of licensure as implied by current rule: Current agency guidance is that the license is not valid until the applicant receives a hard copy in the mail. However, once posted to the board database the license is effective. Includes other minor housekeeping language amendments. |
| 4-25-752 | Adds "initially register" to distinguish the rule from renewal. Changes reference from "natural person" to "individual" to coincide with definition in RCW 18.04.025 changed by SSB 6604. Verbiage improvements for clarity. Changes the agency's legacy practice of requiring signed forms. This change facilitates the agency's eventual move to online registration. Changes the effective date of registration as implied by current rule: Current agency guidance is that the registration is not valid until the applicant receives a hard copy in the mail. However, once posted to the board database the registration is effective. |
| 4-25-753 New Section |
For ease of understanding and reference, this proposed rule summarizes the firm licensing and practice privilege requirements for firms of RCW 18.04.195, as amended by SSB 6604. |
| 4-25-756 Repeal |
SSB 6604 eliminated the reference to entering the state and the requirement for out-of-state CPAs to notify the Washington state board of [accountancy] intent to practice within Washington state. The rule is unnecessary. |
| 4-25-820 | Replaces attest with "audit, compilation and review and other attestation standards."
SSB 6604 removed compilation from the definition of attest. The board's quality assurance
review program includes monitoring licensees' compliance with compilation standards. RCW 18.04.195 requires out of-state firms qualified for practice privileges that perform compilations and other professional services when professional standards require a report expressing assurance to meet the board's QAR program requirements. However, RCW 18.04.350(2), as amended by SSB 6604, eliminates notification. Therefore, out-of-state firms qualified for practice privileges that perform compilations and other professional services when professional standards require a report expressing assurance are exempt from QAR registration requirements. Note: If the firm does not comply in their home state, the board may take disciplinary action against the firm's right to exercise practice privilege. Clarifies that the registration requirement for participation in the QAR program is applicable only to those licensed firms with an office in this state. Removes reference that "notice" will be mailed on January 1. This is an agency policy issue not a requirement of regulated persons. Numbers bulleted list for easy reference. |
| 4-25-830 | Clarifies that the rule is applicable to individuals as opposed to firms. (1)(a) and (3) Replaces "CPA" with "individual licensed to practice in this state." The board's definition of "CPA" includes those individuals exercising practice privileges. This replacement clarifies that those individuals exercising practice privileges are not required to comply with the CPE requirements. (3) Removes dated implementation language that is no longer necessary. (8) Changes CPA "waiver" to "extension." This verbiage change more accurately reflects board practice. The board does not waive continuing education requirements but allows additional time to complete the requirements. This conforms to RCW 18.04.215(7) that authorizes the board to renew a certificate or license upon condition that the applicant follow a particular program of CPE. (8) Adds "resident" to nonlicensee firm owners to clarify and conform with statute, RCW 18.04.195 and board rule, WAC 4-25-790. Changes the agency's legacy practice of requiring signed forms. This change will facilitate the agency's eventual move to online business. Provides notice that a form is available. |
| 4-25-910 | Adds to the listing of authorizing sections: RCW 18.04.350, as amended by SSB 6604,
that authorizes the board to impose discipline against out-of-state individuals and firms
right to exercise practice privileges in Washington state. (1) and (2) Removes all references to notification or renewal of practice privileges. SSB 6604 eliminated the notification requirement. (1), (2), (4), and (5) - adds "resident" to nonlicensee firm owners to clarify and conform with statute and board rule. RCW 18.04.195(12) and board rule, WAC 4-25-750, require "resident" nonlicensee firm owners to register with the board. Therefore, the board may take disciplinary action against a "resident" nonlicensee firm owner for prohibited acts. (5), (6), (8), (14) - replaces CPA and CPA firm with "licensee." With this change, the rule is also applicable to those out-of-state individuals and firms exercising practice privileges to conform with the amendments to chapter 18.04 RCW by SSB 6604. (4) Verbiage improvements for clarity. (5) Adds references to specific sections of chapter 18.04 RCW for clarify [clarity], indexing and easy reference. (5)(i) Adds CPA-Inactive certificateholders to the listing of regulated individuals to whom the board will apply the subsection. (6), (8), (9), (13), and (15) - points the reader to the definition of "licensee" as defined by board rule, WAC 4-25-410, for clarity and easy reference. (6) and (9) - Adds employees of regulated persons. This clarifies that a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner may not act in a discreditable manner through their employees. (7) Adds sanctions imposed by nongovernmental professionally related standard-setting bodies as an example of grounds for discipline as authorized by RCW 18.04.195 (13)(b). Nongovernmental professionally related standard-setting bodies include the American Institute of CPAs (AICPA), the Washington Society of CPAs (WSCPA), and others recognized by the board. (9) Adds the listing of regulated persons to whom the board will apply this subsection for clarity. (9) Incorporates disciplinary authority from RCW 18.04.350, as amended by SSB 6604 that authorizes the board to impose discipline against out-of-state individuals and firms exercising practice privileges and RCW 18.04.195. (11) Makes concealing another's violation of the Public Accountancy Act or board rules a separate subsection. (15) Includes persons exercising practice privileges as authorized by RCW 18.04.195 and 18.04.350 as amended by SSB 6604. (15) Eliminates the reference to use a form to report enforcement actions to conform with board rule, WAC 4-25-670. (15) Adds the reference to "timely" notification of sanctions imposed by others to conform with board rule, WAC 4-25-670. (16)(c) Adds failure to notify the board of discipline entered by nongovernmental professionally related standard-setting bodies as grounds for discipline to bring the rule into compliance with RCW 18.04.195 (10) (b). Nongovernmental professionally related standard-setting bodies include the American Institute of CPAs (AICPA), the Washington Society of CPAs (WSCPA), and others recognized by the board. |
Citation of Existing Rules Affected by this Order: Repealing WAC 4-25-756; and amending WAC 4-25-400 What is the authority for and the purpose of the board's rules?, 4-25-410 Definitions, 4-25-520 What public records does the board maintain?, 4-25-521 How can the board be contacted?, 4-25-540 What rules govern the proceedings before the board?, 4-25-550 Do I need to notify the board if I change my address?, 4-25-551 Must I respond to inquiries from the board?, 4-25-610 Which rules govern the conduct of CPAs, CPA-Inactive certificateholders, CPA firms, and firm owners?, 4-25-620 What are the requirements concerning integrity and objectivity?, 4-25-622 When must a CPA or CPA firm be independent?, 4-25-626 What restrictions govern commissions, referral, and contingent fees?, 4-25-630 What are the requirements concerning competence?, 4-25-631 With which rules, regulations and professional standards must a CPA, CPA-Inactive certificateholder, CPA firm, and firm owner comply?, 4-25-640 What are the requirements concerning records and clients confidential information?, 4-25-650 What acts are considered discreditable?, 4-25-660 What are the limitations on advertising and other forms of solicitation?, 4-25-670 What enforcement actions must be reported to the board?, 4-25-735 How does a CPA-Inactive certificateholder apply for licensure?, 4-25-745 How do I apply for an initial CPA license?, 4-25-746 How do I apply for a Washington state CPA license if I hold a valid CPA license in another state?, 4-25-750 What are the CPA firm licensing requirements?, 4-25-752 How do I register to be a resident nonlicensee owner of a licensed firm and with which rules must a nonlicensee firm owner comply? 4-25-820 What are the requirements for participating in quality assurance review (QAR)?, 4-25-830 What are the CPE requirements? and 4-25-910 What are the bases for the board to impose discipline?; and new sections WAC 4-25-747 Must an individual holding a license from another state apply and obtain a Washington state license to hold out and practice in Washington state? and 4-25-753 Must a firm holding a license from another state apply and obtain a Washington state license to hold out and practice in Washington state?
Statutory Authority for Adoption: For WAC 4-25-400 is RCW 18.04.055; for WAC 4-25-410 is RCW 18.04.055, 18.04.025; for WAC 4-25-520 is RCW 18.04.055, 42.56.070; for WAC 4-25-521 is RCW 18.04.055, 42.56.040; for WAC 4-25-540 is RCW 18.04.055(1), 34.05.220, and 34.05.482; for WAC 4-25-550 and 4-25-551 is RCW 18.04.055(16); for WAC 4-25-610, 4-25-620, 4-25-622, 4-25-626, 4-25-630, 4-25-631, 4-25-650, and 4-25-660 is RCW 18.04.055(2); for WAC 4-25-640 is RCW 18.04.055(2), 18.04.390 (4)(b), 18.04.405(1); for WAC 4-25-670 is RCW 18.04.195 (13)(b), 18.04.215 (9)(b); for WAC 4-25-735 is RCW 18.04.055(12), 18.04.105(4); for WAC 4-25-745 is RCW 18.04.055, 18.04.105(1), 18.04.215(1); for WAC 4-25-746 is RCW 18.04.180, 18.04.215(6); for WAC 4-25-747 is RCW 18.04.350 (2), (3), (4), (5); for WAC 4-25-750 is RCW 18.04.055(8), 18.04.195, 18.04.205; for WAC 4-25-752 is RCW 18.04.055(13), 18.04.195 (11) and (12); for WAC 4-25-753 is RCW 18.04.055(8), 18.04.195; for WAC 4-25-756 is RCW 18.04.055, 18.04.350(2); for WAC 4-25-820 is RCW 18.04.055(9); for WAC 4-25-830 is RCW 18.04.055(7), 18.04.215(5); and for WAC 4-25-910 is RCW 18.04.055(16), 18.04.195 (11)(d), 18.04.295, 18.04.305, 18.04.350(2).
Adopted under notice filed as WSR 08-12-081 on June 3, 2008.
Changes Other than Editing from Proposed to Adopted Version:
| WAC sections: | Title: |
| 4-25-410 | (35) Conforms the language to RCW 18.04.350 as amended by SSB 6604. (36) Replaced the definition of "Principal place of business" with the definition in RCW 18.04.025 as amended by SSB 6604. (38) Edits; replaced "attestation work" with "professional services for which a report expressing assurance is prescribed by professional standards" for clarity. |
| 4-25-540 | (3) Removed "rights or" RCW 18.04.350 grants the "right" to practice privilege. Notification is not required; therefore, there is no application to deny. |
| 4-25-622 | (2) Replaced "attestation" with "for which a report expressing assurance is prescribed by professional standards" for clarity. |
| 4-25-626 | (1)(a) and (3)(a) Replaced "attestation services" with "professional services for which a report
expressing assurance is prescribed by professional standards" for clarity. (1)(b) and (3)(b) Replaced "attestation report" with "information for which a report expressing assurance is prescribed by professional standards" for clarity. |
| 4-25-660 | Removed requirement for regulated community to include status statement on web site. The requirement affects every CPA needing to include disclaimers for Washington. The requirement is overly restrictive with the concept of no notice. |
| 4-25-747 | Replaced "nonresident" with more accurate "out-of-state" and to conform legislative intent. (3) Removed redundant subsection. (4) Included the definition of attest for clarity. |
| 4-25-750 | Edit to fix reviser's note relettering (5)(g) to (5)(f). |
| 4-25-753 | (1)(c) Included the definition of attest for clarity and ease of reference. (3)(f) Replaced "audit or examination" with reference to subsection (1)(c) for clarity. (3)(g) Replaced "nonresident" with more accurate "out-of-state" and to conform legislative intent. |
| 4-25-820 | Edits only. |
| 4-25-910 | Replaced "persons exercising" with the more accurate "the right to exercise." (6)(c) The board does not believe this occurrence to be "prima facia" evidence of dishonesty, fraud, or negligence. Moved to separate subsection as an example of grounds for discipline. (9)(b) Did not adopt revised language; needs more study. Replaced "nonresident" with more accurate "out-of-state" and to conform legislative intent. (16)(c) Added failure to notify the board of discipline entered by nongovernmental professionally related standard-setting bodies as grounds for discipline to bring the rule into compliance with RCW 18.04.195 (10)(b). Nongovernmental professionally related standard-setting bodies include the American Institute of CPAs (AICPA), the Washington Society of CPAs (WSCPA), and others recognized by the board. |
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 2, Amended 25, Repealed 1.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 2, Amended 25, Repealed 1.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 2, Amended 25, Repealed 1.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 2, Amended 25, Repealed 1.
Date Adopted: July 18, 2008.
Richard C. Sweeney
Executive Director
OTS-1614.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-400
What is the authority for and the purpose
of the board's rules?
The Public Accountancy Act (act),
chapter 18.04 RCW, establishes the board as the licensing and
disciplinary agency for certified public accountants (CPA),
CPA-Inactive certificateholders, CPA firms, and owners of CPA
firms. The act authorizes the board to promulgate rules to
carry out the purpose of the act, which include:
Protecting the public interest;
Enhancing the reliability of information used for guidance in financial transactions or for accounting for or assessing financial status or performance;
Establishing one set of qualifications to be a licensee of this state;
Assuring that CPAs practicing in Washington have substantially equivalent qualifications to those practicing in other states;
Regulating ownership of CPA firms;
Publishing consumer alerts and public protection information regarding persons and firms who violate the act or board rules; and
Providing general consumer protection information to the public.
The board's rules, contained in chapter 4-25 WAC, encompass these subjects:
Definitions;
Administration of the board;
Ethics and prohibited practices;
Entry and renewal requirements;
Continuing competency; and
Regulation and enforcement.
[Statutory Authority: RCW 18.04.055. 05-01-137, § 4-25-400, filed 12/16/04, effective 1/31/05; 01-22-036, § 4-25-400, filed 10/30/01, effective 12/1/01; 00-11-067, § 4-25-400, filed 5/15/00, effective 6/30/00; 93-12-063, § 4-25-400, filed 5/27/93, effective 7/1/93.]
OTS-1615.3
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-410
Definitions.
For purposes of these rules
the following terms have the meanings indicated unless a
different meaning is otherwise clearly provided in these
rules:
(1) "Act" means the Public Accountancy Act codified as chapter 18.04 RCW.
(2) "Active individual participant" means ((a natural
person)) an individual whose primary occupation is at the firm
or affiliated entity's business. An individual whose primary
source of income from the business entity is provided as a
result of passive investment is not an active individual
participant.
(3) "Affiliated entity" means any entity, entities or persons that directly or indirectly through one or more relationships influences or controls, is influenced or controlled by, or is under common influence or control with other entities or persons. This definition includes, but is not limited to, parents, subsidiaries, investors or investees, coinvestors, dual employment or management in joint ventures or brother-sister entities.
(4) "Applicant" means an individual who has applied:
(a) To take the national uniform CPA ((exam))
examination;
(b) For ((a CPA)) an initial individual license, ((a
CPA)) an initial firm license, or initial registration as a
resident nonlicensee owner((, or practice privileges));
(c) To renew ((a CPA)) an individual license, a
CPA-Inactive certificate, a CPA firm license, or registration
as a resident nonlicensee firm owner;
(d) To reinstate ((a CPA)) an individual license, a
CPA-Inactive certificate, ((or)) registration as a resident
nonlicensee firm owner, or practice privileges.
(5) "Attest ((services))" ((are services performed by a
licensee in accordance with:
(a) Statements on Auditing Standards and related Auditing Interpretations issued by the American Institute of Certified Public Accountants (AICPA);
(b) Statements on Standards for Accounting and Review Services and related Accounting and Review Services Interpretations issued by the AICPA;
(c) Statements on Standards for Attestation Engagements and related Attestation Engagements Interpretations issued by the AICPA; or
(d) Auditing standards issued by the Public Company Accounting Oversight Board (PCAOB))) means providing the following financial statement services:
(a) Any audit or other engagement to be performed in accordance with the statements on auditing standards;
(b) Any review of a financial statement to be provided in accordance with the statements on standards for accounting and review services;
(c) Any examination of prospective financial information to be performed in accordance with the statements on standards for attestation engagements; and
(d) Any engagement to be performed in accordance with the public company accounting oversight board auditing standards.
(6) "Audit," "review," and "compilation" are terms
reserved for use by licensees ((and individuals granted
practice privileges under the act)), as defined in subsection
(28) of this section.
(7) "Board" means the board of accountancy created by RCW 18.04.035.
(8) "Certificate" means a certificate as a CPA-Inactive issued in the state of Washington prior to July 1, 2001, as authorized by the act, unless otherwise defined in rule.
(9) "Certificateholder" means the holder of a valid CPA-Inactive certificate where the individual is not a licensee and is prohibited from practicing public accounting.
(10) "Client" means the person or entity that retains a
((CPA firm, a CPA, the CPA's firm, or a firm owner,))
licensee, as defined in subsection (28) of this section, a
CPA-Inactive certificateholder, a nonlicensee firm owner of a
licensed firm, or an entity affiliated ((entity, or the owner
of an affiliated entity)) with a licensed firm to perform
professional services through other than an employer/employee
relationship.
(11) "Commissions and referral fees" are compensation arrangements where:
(a) The primary contractual relationship for the product
or service is not between the client and ((the CPA firm, the
CPA, the CPA's firm, or a firm owner)) licensee, as defined in
subsection (28) of this section, CPA-Inactive
certificateholder, nonlicensee firm owner of a licensed firm,
or a person affiliated with a licensed firm;
(b) ((The CPA firm, the CPA, the CPA's firm, or a firm
owner is)) Such persons are not primarily responsible to the
client for the performance or reliability of the product or
service;
(c) ((The CPA firm, the CPA, the CPA's firm, or a firm
owner)) Such persons add((s)) no significant value to the
product or service; or
(d) A third party instead of the client pays the ((CPA
firm, the CPA, the CPA's firm, or a firm owner)) persons for
the products or services.
(12) "Compilation" means providing a service to be performed in accordance with statements on standards for accounting and review services that is presenting in the form of financial statements, information that is the representation of management (owners) without undertaking to express any assurance on the statements.
(13) "Contingent fees" are fees established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of such service.
(((13))) (14) "CPA" or "certified public accountant"
means ((a natural person)) an individual holding a ((CPA))
license to practice public accounting under chapter 18.04 RCW
or recognized by the board in the state of Washington,
including ((a person granted)) an individual exercising
practice privileges pursuant to RCW 18.04.350(2).
(((14))) (15) "CPA-Inactive" means ((a natural person))
an individual holding a CPA-Inactive certificate recognized in
the state of Washington. An individual holding a CPA-Inactive
certificate is prohibited from practicing public accounting
and may only use the CPA-Inactive title if they are not
offering accounting, tax, tax consulting, management advisory,
or similar services to the public.
(((15))) (16) "CPE" means continuing professional
education.
(((16) "Entering the state" means an individual is
practicing public accounting in the state of Washington and
that individual spends more than ten percent of his or her
total work hours on activities conducted within the state of
Washington, maintains an office or workstation in the state of
Washington or advertises to provide his or her services within
the state of Washington.))
(17) "Firm" means a sole proprietorship, a corporation, or a partnership. "Firm" also means a limited liability company or partnership formed under chapters 25.15 and 18.100 RCW and a professional service corporation formed under chapters 23B.02 and 18.100 RCW.
(18) "Generally accepted accounting principles" (GAAP) is an accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. It includes not only broad guidelines of general application, but also detailed practices and procedures. Those conventions, rules, and procedures provide a standard by which to measure financial presentations.
(19) "Generally accepted auditing standards" (GAAS) are guidelines and procedures, promulgated by the AICPA, for conducting individual audits of historical financial statements.
(20) "Holding out" means any representation to the public
by the use of restricted titles as set forth in RCW 18.04.345
by a person ((or firm)) that the person ((or firm)) holds a
license or practice privileges under the act and that the
person ((or firm)) offers to perform any professional services
to the public ((as a licensee)). "Holding out" shall not
affect or limit a person ((or firm)) not required to hold a
license under the act from engaging in practices identified in
RCW 18.04.350.
(21) "Home office" is the location specified by the client as the address to which a service is directed.
(22) "Inactive" means the ((person)) individual held a
valid certificate on June 30, 2001, has not met the current
requirements of licensure and has been granted CPA-Inactive
certificateholder status through the renewal process
established by the board. A CPA-Inactive may not practice
public accounting nor may the individual use the CPA-Inactive
title if they are offering accounting, tax, tax consulting,
management advisory, or similar services to the public.
(((22))) (23) "Individual" means a living, human being.
(24) "Independence" means an absence of relationships
that impair a licensee's impartiality and objectivity in
rendering ((attest)) professional services for which a report
expressing assurance is prescribed by professional standards.
(((23))) (25) "Interactive self-study program" means a
CPE program that provides feedback throughout the course.
(((24))) (26) "IRS" means Internal Revenue Service.
(((25))) (27) "License" means a license to practice
public ((accountancy)) accounting issued to an individual or a
firm under the act or the act of another state.
(((26))) (28) "Licensee" means an individual or firm
holding a valid license to practice public ((accountancy))
accounting issued under the act, including out-of-state
individuals qualifying for practice privileges in this state
under RCW 18.04.350(2) and out-of-state firms permitted to
offer or render certain professional services in this state
under the conditions prescribed in RCW 18.04.195 (1)(b).
(((27))) (29) "Manager" means a manager of a limited
liability company licensed as a firm under the act.
(((28))) (30) "NASBA" means the National Association of
State Boards of Accountancy.
(((29) "Natural person" means a living, human being.
(30))) (31) "Nonlicensee firm owner" means ((a CPA)) an
individual, not licensed in any state to practice public
accounting, who holds an ownership interest in a firm ((owner
who is not licensed in any state)) permitted to practice
public ((accountancy)) accounting in this state.
(((31))) (32) "PCAOB" means Public Company Accounting
Oversight Board.
(((32))) (33) "Peer review" means a study, appraisal, or
review of one or more aspects of the attest or compilation
work of a licensee or licensed firm in the practice of public
((accountancy)) accounting, by a person or persons who hold
licenses and who are not affiliated with the person or firm
being reviewed, including a peer review, or any internal
review or inspection intended to comply with quality control
policies and procedures, but not including the "quality
assurance review" under ((RCW 18.04.025(14))) subsection (38)
of this section.
(((33))) (34) "Person" means any individual,
nongovernmental organization, or business entity regardless of
legal form, including a sole proprietorship, firm,
partnership, corporation, limited liability company,
association, or not-for-profit organization, and including the
sole proprietor, partners, members, and, as applied to
corporations, the officers.
(35) "Practice privileges" ((means an individual)) are
the rights granted by chapter 18.04 RCW to a person who:
(()) (a) Has a principal place of business outside of
Washington state;
(()) (b) Is licensed to practice public accounting in
another substantially equivalent state;
(( Has notified the board of intent to enter the state;
)) (c) Meets the statutory criteria for ((a grant)) the
exercise of privileges as set forth in RCW 18.04.350(2) for
individuals or RCW 18.04.195 (1)(b) for firms;
(d) Exercises the right to practice public accounting in this state individually or on behalf of a firm;
(()) (e) Is subject to ((discipline in the state of
Washington)) the personal and subject matter jurisdiction and
disciplinary authority of the board in this state; ((and
)) (f) Must comply with the act and all board rules applicable to Washington state licensees to retain the privilege; and
(g) Consents to the appointment of the issuing state board of another state as agent for the service of process in any action or proceeding by this state's board against the certificateholder or licensee.
(((34))) (36) "Principal place of business" means ((a
single fixed)) the office location designated by the
((individual from which the individual directs, controls, and
coordinates the majority of his or her business activities))
licensee for purposes of substantial equivalency and
reciprocity.
(((35))) (37) "Public practice" or the "practice of
public accounting" means performing or offering to perform by
a person or firm holding itself out to the public as a
licensee, or as an individual holding practice privileges, for
a client or potential client, one or more kinds of services
involving the use of accounting or auditing skills, including
the issuance of "audit reports," "review reports," or
"compilation reports" on financial statements, or one or more
kinds of management advisory, or consulting services, or the
preparation of tax returns, or the furnishing of advice on tax
matters. The "practice of public accounting" shall not
include practices that are permitted under the provisions of
RCW 18.04.350(6) by persons or firms not required to be
licensed under the act.
(((36))) (38) "Quality assurance review or QAR" is the
process, established by and conducted at the direction of the
board, ((of)) to study, ((appraisal)) appraise, or review
((of)) one or more aspects of the ((attest work)) audit,
compilation, review, and other professional services for which
a report expressing assurance is prescribed by professional
standards of a licensee or licensed firm in the practice of
public ((accountancy)) accounting, by a person or persons who
hold licenses and who are not affiliated with the person or
firm being reviewed.
(((37))) (39) "Reciprocity" means board recognition of
licenses, permits, certificates or other public accounting
credentials of another jurisdiction that the board will rely
upon in full or partial satisfaction of licensing
requirements.
(((38))) (40) "Referral fees" see definition of
"commissions and referral fees" in subsection (11) of this
section.
(((39))) (41) "Reports on financial statements" means any
reports or opinions prepared by licensees, based on services
performed in accordance with generally accepted auditing
standards, standards for attestation engagements, or standards
for accounting and review services, as to whether the
presentation of information used for guidance in financial
transactions or for accounting for or assessing the status or
performance of an entity, whether public, private, or
governmental, conforms with generally accepted accounting
principles or an "other comprehensive bases of accounting," or
the presentation and disclosure requirements of other
professional standards. "Reports on financial statements"
does not include services referenced in RCW 18.04.350(((6)))
(10) provided by persons not holding a license under the act.
(((40))) (42) "Representing oneself" ((for the purposes
of RCW 18.04.295(2) and WAC 4-25-910(3),)) means having a
license, practice privilege, certificate or registration that
entitles the holder to use the title "CPA," "CPA-Inactive," or
be a nonlicensee firm owner.
(((41))) (43) "Rules of professional conduct" means rules
adopted by the board to govern the conduct of ((CPAs and CPA
firms)) licensees, as defined in subsection (28) of this
section, while representing themselves to others as ((CPAs))
licensees. These rules also govern the conduct of
CPA-Inactive certificateholders, nonlicensee firm owners, and
persons ((granted)) exercising practice privileges pursuant to
RCW 18.04.350(2).
(((42))) (44) "SEC" means the Securities and Exchange
Commission.
(((43))) (45) "Sole proprietorship" means a legal form of
organization owned by one person meeting the requirements of
RCW 18.04.195.
(46) "State" includes the states and territories of the United States, including the District of Columbia, Puerto Rico, Guam, and the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands at such time as the board determines that the Commonwealth of the Northern Mariana Islands is issuing licenses under the substantially equivalent standards of RCW 18.04.350 (2)(a).
(((44))) (47) "Statements on auditing standards (SAS)"
are interpretations of the generally accepted auditing
standards and are issued by the Auditing Standards Board of
the AICPA. Licensees are required to adhere to these
standards in the performance of audits of financial
statements.
(((45))) (48) "Statements on standards for accounting and
review services (SSARS)" are standards, promulgated by the
AICPA, to give guidance to licensees who are associated with
the financial statements of nonpublic companies and issue
compilation or review reports.
(((46))) (49) "Statements on standards for attestation
engagements (SSAE)" are guidelines, promulgated by the AICPA,
for use by licensees in attesting to assertions involving
matters other than historical financial statements and for
which no other standards exist.
[Statutory Authority: RCW 18.04.055. 05-01-137, § 4-25-410, filed 12/16/04, effective 1/31/05; 03-24-033, § 4-25-410, filed 11/25/03, effective 12/31/03. Statutory Authority: RCW 18.04.055(16). 02-04-064, § 4-25-410, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055(11). 01-11-124, § 4-25-410, filed 5/22/01, effective 6/30/01; 98-12-020, § 4-25-410, filed 5/27/98, effective 6/27/98; 94-23-071, § 4-25-410, filed 11/15/94, effective 12/16/94.]
OTS-1616.1
AMENDATORY SECTION(Amending WSR 02-04-064, filed 1/31/02,
effective 3/15/02)
WAC 4-25-520
What public records does the board
maintain?
The board maintains the following public records:
(1) A data base of licensees((,)) and certificateholders
((and individuals granted practice privileges));
(2) A data base of CPA examination candidates;
(3) A data base of registered resident nonlicensee firm owners;
(4) Board orders;
(5) Board meeting minutes;
(6) Board policies;
(7) Board ((rules)) rule-making files; and
(8) Documents dealing with the regulatory, supervisory, and enforcement responsibilities of the board.
In order to obtain a list of individuals under the provisions of RCW 42.17.260(9), educational and professional organizations must use the form provided by the board and apply for and receive recognition by the board. Fees for lists must be paid in advance.
[Statutory Authority: RCW 18.04.055 and 42.17.260. 02-04-064, § 4-25-520, filed 1/31/02, effective 3/15/02; 01-11-125, § 4-25-520, filed 5/22/01, effective 6/30/01; 98-12-021, § 4-25-520, filed 5/27/98, effective 6/27/98. Statutory Authority: Chapter 42.17 RCW. 93-14-050, § 4-25-520, filed 6/29/93, effective 7/30/93.]
OTS-1617.1
AMENDATORY SECTION(Amending WSR 01-11-126, filed 5/22/01,
effective 6/30/01)
WAC 4-25-521
How can I contact the board?
The board's
administrative office, executive director and staff are
located in Olympia, Washington. You may utilize the following
numbers or addresses to contact the board:
711 South Capitol Way, Suite 400, Olympia, WA 98501 (physical address);
P.O. Box 9131, Olympia, Washington 98507-9131 (mailing address);
360/753-2586 (telephone);
360/664-9190 (fax);
800/833-6388 (TT service);
800/833-6385 (Telebraille services);
((webmaster@cpaboard.wa.gov)) customerservice@cpaboard.wa.gov (e-mail address); and
www.cpaboard.wa.gov (web site address).
[Statutory Authority: RCW 18.04.055 and 42.17.250. 01-11-126, § 4-25-521, filed 5/22/01, effective 6/30/01. Statutory Authority: RCW 18.04.055(1). 94-02-068, § 4-25-521, filed 1/4/94, effective 2/4/94.]
OTS-1618.3
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-540
What rules govern the proceedings before
the board?
Except where they are inconsistent with the rules
in this chapter and subject to additional rules that the board
may adopt from time to time, practice and procedure in and
before the board are governed by the uniform procedural rules
codified in the Washington Administrative Code, chapter 10-08 WAC.
For certain types of decisions, the board has adopted an appeal process authorized by RCW 34.05.482 through 34.05.494 which is called a brief adjudicative proceeding. Decisions to which this appeal process will be applied are:
(1) Staff denials of initial individual license applications, renewals, or applications for reinstatement;
(2) Staff denials of CPA-Inactive certificate renewals or applications for reinstatement;
(3) Staff denials of practice privilege reinstatements;
(4) Staff denials of initial resident nonlicensee firm owner registration applications, renewals, or applications or requests for reinstatement;
(5) Staff denials of initial firm license applications, renewals, and amendments;
(6) Staff denials of exam applications; and
(7) A proposed suspension as a result of a determination
((whether a licensee, CPA-Inactive certificateholder, or
registered nonlicensee firm owner has been certified)) by a
lending agency ((and reported for)) of nonpayment or default
on a federally or state-guaranteed student loan or service
conditional scholarship.
To appeal a decision you must submit your request for a brief adjudicative proceeding, in writing, to the board within thirty days after the decision by board staff is posted in the U.S. mail. The presiding officer for the brief adjudicative proceedings is the executive director, or designee. After consulting with a board member, the executive director, or designee, renders a decision either upholding or overturning the decision by board staff. This decision, called an order, is mailed to you.
If you are dissatisfied with the order in the brief adjudicative proceeding, you may appeal to the board's vice-chair, or designee. This appeal process is called an administrative review. Your appeal must be received by the board, orally or in writing, within twenty-one days after the brief adjudicative proceedings order is posted in the U.S. mail. The vice-chair, or designee, considers your appeal and either upholds or overturns the brief adjudicative proceeding order. The vice-chair's, or designee's, decision, also called an order, is mailed to you.
[Statutory Authority: RCW 18.04.055(1), 34.05.222 [34.05.220], and 34.05.482. 05-01-137, § 4-25-540, filed 12/16/04, effective 1/31/05. Statutory Authority: RCW 18.04.055(1), 34.05.220, and 34.05.482. 02-04-064, § 4-25-540, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055(1) and 34.05.482. 00-11-070, § 4-25-540, filed 5/15/00, effective 6/30/00; 98-12-022, § 4-25-540, filed 5/27/98, effective 6/27/98. Statutory Authority: RCW 18.04.055. 93-12-074, § 4-25-540, filed 5/27/93, effective 7/1/93.]
OTS-1619.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-550
Do I need to notify the board if I change
my address?
Yes. All ((CPAs)) individuals licensed in this
state, CPA-Inactive certificateholders, CPA firms licensed
((with the board)) in this state, individuals registered with
the board as resident nonlicensee firm owners, and applicants
must notify the board in writing within thirty days of any
change of address. Firms licensed in this state must notify
the board of any opening, closing, or relocation of the main
office or a branch office in this state.
[Statutory Authority: RCW 18.04.055(16). 05-01-137, § 4-25-550, filed 12/16/04, effective 1/31/05; 01-22-036, § 4-25-550, filed 10/30/01, effective 12/1/01. Statutory Authority: RCW 18.04.055. 98-12-023, § 4-25-550, filed 5/27/98, effective 6/27/98; 93-12-073, § 4-25-550, filed 5/27/93, effective 7/1/93.]
OTS-1620.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-551
Must I respond to inquiries from the board?
Yes. All ((CPAs)) licensees, including out-of-state
individuals qualifying for practice privileges in this state
under RCW 18.04.350(2) and out-of-state firms permitted to
offer or render certain professional services in this state
under the condition prescribed in RCW 18.04.195 (1)(b),
CPA-Inactive certificateholders, ((CPA firms licensed with the
board, individuals registered with the board as resident))
nonlicensee firm owners, and applicants must respond, in
writing, to board communications requesting a response. Your
response must be made within twenty days of the date the
board's communication is posted in the U.S. mail. Communications from the board to you are directed to the last
address you furnished the board.
[Statutory Authority: RCW 18.04.055(16). 05-01-137, § 4-25-551, filed 12/16/04, effective 1/31/05; 01-22-036, § 4-25-551, filed 10/30/01, effective 12/1/01. Statutory Authority: RCW 18.04.055. 98-12-047, § 4-25-551, filed 5/29/98, effective 6/29/98; 93-12-072, § 4-25-551, filed 5/27/93, effective 7/1/93.]
OTS-1621.2
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-610
Which rules govern the conduct of CPAs,
CPA-Inactive certificateholders, CPA firms, and firm owners?
The rules that govern the conduct of CPAs, CPA-Inactive
certificateholders, CPA firms, and firm owners are as follows:
(1) Professional judgment - In carrying out their
responsibilities, a person representing oneself as a ((CPA))
licensee, CPA-Inactive certificateholder, or nonlicensee firm
owner, and/or using the CPA or CPA-Inactive title, ((CPA
firms, and firm owners)) and employees of such persons must
exercise professional judgment in all their activities.
(2) The public interest - A person representing oneself
as a ((CPA)) licensee, CPA-Inactive certificateholder, or
nonlicensee firm owner, and/or using the CPA or CPA-Inactive
title, ((CPA firms, and firm owners)) and employees of such
persons must accept the obligation to act in a way that will
serve the public interest, honor the public trust, and
demonstrate commitment to professionalism.
(3) Integrity - To maintain and broaden public confidence
a person representing oneself as a ((CPA)) licensee,
CPA-Inactive certificateholder, or nonlicensee firm owner,
and/or using the CPA or CPA-Inactive title, ((CPA firms, and
firm owners)) and employees of such persons must perform all
professional responsibilities with the highest sense of
honesty.
(4) Objectivity - Objectivity is to be maintained by a
person representing oneself as a ((CPA)) licensee,
CPA-Inactive certificateholder, or nonlicensee firm owner,
and/or using the CPA or CPA-Inactive title, ((CPA firms, and
firm owners)) and employees of such persons. Specifically,
((a)) such persons ((representing oneself as a CPA,
CPA-Inactive, or using the CPA or CPA-Inactive title, CPA
firms, and firm owners)) must:
(a) Avoid rendering professional services where actual or perceived conflicts of interest exist;
(b) Be independent in fact and appearance when providing attestation services.
(5) Due care - A person representing oneself as a ((CPA))
licensee, CPA-Inactive certificateholder, or nonlicensee firm
owner, and/or using the CPA or CPA-Inactive title, ((CPA
firms, and firm owners)) and employees of such persons must
comply with federal and state laws and the profession's
technical and ethical standards, maintain competence and
strive to improve the quality of services, and discharge
professional responsibility to the best of the person's or the
firm's ability.
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-610, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-610, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.40.055 [18.04.055]. 93-22-046, § 4-25-610, filed 10/28/93, effective 11/28/93.]
OTS-1622.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-620
What are the requirements concerning
integrity and objectivity?
When offering or performing
services, ((CPAs)) licensees, CPA-Inactive certificateholders,
((CPA firms, and firm owners)) nonlicensee firm owners, and
employees of such persons must:
Remain honest and objective;
Not misrepresent facts;
Not subordinate their judgment to others; and
Remain free of conflicts of interest unless such conflicts are specifically permitted by board rule or professional standards listed in WAC 4-25-631.
If the language of the professional standards listed in WAC 4-25-631 differ from or conflict with specific board rules, board rules prevail.
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-620, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-620, filed 1/31/02, effective 3/15/02; 98-12-048, § 4-25-620, filed 5/29/98, effective 6/29/98. Statutory Authority: RCW 18.40.055 [18.04.055]. 93-22-046, § 4-25-620, filed 10/28/93, effective 11/28/93.]
OTS-1623.3
AMENDATORY SECTION(Amending WSR 03-24-034, filed 11/25/03,
effective 12/31/03)
WAC 4-25-622
When ((must a CPA or CPA firm be
independent)) is independence required?
When performing
((attest)) professional services((, CPAs and CPA firms are
responsible for maintaining)) for which a report expressing
assurance is prescribed by professional standards, licensees,
as defined in WAC 4-25-410, CPA-Inactive certificateholders,
nonlicensee firm owners, and employees of such persons must
evaluate and maintain their independence so that ((attest))
opinions, reports, conclusions, and judgments will be
impartial and viewed as impartial by parties expected to rely
on ((the attest)) any report expressing assurance by such
persons. ((CPAs and CPA firms)) Such persons are required:
(()) (1) To comply with all applicable independence
rules, regulations, and the AICPA code of conduct as
referenced in and required by WAC 4-25-631; and
(()) (2) To decline ((attest)) engagements ((where the
CPA or CPA firm has)) for which a report expressing assurance
is prescribed by professional standards when such persons have
a relationship that could lead a reasonable and foreseeable
user to conclude that ((the CPA or CPA firm is)) such persons
are not independent.
Independence is not required when performing a
compilation engagement provided the ((CPA's)) report discloses
a lack of independence.
[Statutory Authority: RCW 18.04.055(2). 03-24-034, § 4-25-622, filed 11/25/03, effective 12/31/03; 98-12-049, § 4-25-622, filed 5/29/98, effective 6/29/98. Statutory Authority: RCW 18.40.055 [18.04.055]. 93-22-046, § 4-25-622, filed 10/28/93, effective 11/28/93.]
OTS-1624.2
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-626
What restrictions govern commissions,
referral, and contingent fees?
For the purposes of this
section, the term "licensed firm" includes any affiliated
entity(ies) and the term "firm owner" includes the owner(s) of
any affiliated entity(ies).
(1) ((A CPA, CPA-Inactive certificateholder, a firm
owner, or a licensed firm)) Licensees and/or their employees
must not for a commission recommend or refer to a client any
product or service, or for a commission recommend or refer any
product or service to be supplied by a client, or receive a
commission, when ((the CPA, CPA-Inactive certificateholder,
the CPA's or CPA-Inactive certificateholder's firm, the
owner's firm, or the firm)) such persons perform((s attest
services)) compilation, or other professional services for
which a report expressing assurance is prescribed by
professional standards for that client. This prohibition
applies:
(a) During the period in which ((the CPA, CPA-Inactive
certificateholder, the CPA's or CPA-Inactive
certificateholder's firm, the owner's firm, or the firm is))
such persons are engaged to perform ((the attest))
professional services for which a report expressing assurance
is prescribed by professional standards; and
(b) During the period covered by any ((historical
financial statements involved in the attest services))
information for which a report expressing assurance is
prescribed by professional standards and a report was issued
by such persons.
(2) ((A CPA, CPA-Inactive certificateholder, licensed
firm, or firm owner who is not prohibited by this section from
performing services for or receiving a commission and who is
paid or expects to be paid a commission must disclose,
consistent with the requirements set forth in subsection (7)
of this section, that fact to any person or entity to whom the
CPA, CPA-Inactive certificateholder, the CPA's or CPA-Inactive
certificateholder's firm, the firm owner, the owner's firm, or
the licensed firm recommends or refers a product or service to
which the commission relates.
(3) A CPA, CPA-Inactive certificateholder, firm owner, or licensed firm accepting a referral fee for recommending or referring any services to any person or entity or who pays a referral fee to obtain a client must disclose, consistent with the requirements set forth in subsection (7) of this section, such acceptance or payment to the client.
(4) A CPA, CPA-Inactive certificateholder, firm owner, or licensed firm)) Licensees and/or their employees must also not:
(a) Perform for a contingent fee any professional
services for, or receive such a fee from a client for whom
((the CPA, CPA-Inactive certificateholder, the CPA's or
CPA-Inactive certificateholder's firm, the firm owner, the
owner's firm, or the licensed firm performs attest services))
such persons perform compilation, or other professional
services for which a report expressing assurance is prescribed
by professional standards; or
(b) Prepare an original or amended tax return or claim for a tax refund for a contingent fee for any client.
(((5))) (3) The prohibition ((in subsection (4)(a) of
this section)) against contingent fees applies:
(a) During the period in which ((the CPA, CPA-Inactive
certificateholder, the CPA's or CPA-Inactive
certificateholder's firm, the owner's firm, or the licensed
firm is)) such persons are engaged to perform ((the attest))
professional services for which a report expressing assurance
is prescribed by professional standards; and
(b) During the period covered by any ((historical
financial statements involved in the attest services))
information for which a report expressing assurance is
prescribed by professional standards and a report was issued
by such persons.
(((6))) (4) Fees are not considered contingent if fixed
by courts or other public authorities, or, in tax matters, if
determined based on the results of judicial proceedings or the
findings of governmental agencies. Fees may vary depending,
for example, on the complexity of services rendered.
(((7) All CPAs, CPA-Inactive certificateholders, firm
owners, and licensed firms who accept commission, referral and
contingent fee arrangements must)) (5) Any person subject to
board rules who is not prohibited by this section from
performing services for, or receiving a commission, referral
or contingent fee and who are paid or expect to be paid
accordingly must disclose that fact to any person or entity to
whom such persons recommend or refer a product or service to
which the commission, referral or contingent fee relates in
the manner prescribed below:
(a) Disclose the arrangement in writing and in advance of client acceptance;
(b) Disclose the method of calculating the fee or amount of fee;
(c) Specify the ((CPA's)) licensee's, CPA-Inactive
certificateholder's, or nonlicensee firm owner's role as the
client's advisor; and
(d) Obtain the client's consent to the fee arrangement in writing.
(((8))) (6) Nothing in this rule shall be interpreted to
preclude ((a CPA)) licensees, as defined in WAC 4-25-410,
CPA-Inactive certificateholders, or nonlicensee firm owners((,
or licensed firm)) from purchasing, selling, or merging all or
a portion of a ((CPA practice)) licensed firm or affiliated
entity or to require disclosure to clients of terms or
payments made or received pursuant to the purchase, sale, or
merger.
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-626, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-626, filed 1/31/02, effective 3/15/02; 01-03-012, § 4-25-626, filed 1/5/01, effective 2/5/01; 98-12-055, § 4-25-626, filed 5/29/98, effective 6/29/98.]
OTS-1625.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-630
What are the requirements concerning
competence?
((CPAs)) Licensees, CPA-Inactive
certificateholders, ((CPA firms, and)) nonlicensee firm
owners, and employees of such persons must not undertake to
perform any professional service ((as a CPA, CPA-Inactive
certificateholder, CPA firm, or as a firm owner)) unless
((they)) such persons can reasonably expect to complete the
service with professional competence.
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-630, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-630, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.40.055 [18.04.055]. 93-22-046, § 4-25-630, filed 10/28/93, effective 11/28/93.]
OTS-1626.2
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-631
Compliance is required with which rules,
regulations and professional standards ((must a CPA,
CPA-Inactive certificateholder, CPA firm, and firm owner
comply))?
((CPAs)) Licensees, including out-of-state
individuals qualifying for practice privileges in this state
under RCW 18.04.350(2) and out-of-state firms permitted to
offer or render certain professional services in this state
under the conditions prescribed in RCW 18.04.195 (1)(b),
CPA-Inactive certificateholders, CPA firms, ((and))
nonlicensee firm owners, and employees of such persons must
comply with rules, regulations, and professional standards
promulgated by the appropriate bodies for each service
undertaken. However, if the requirements found in the
professional standards listed in this section differ((s)) from
the requirements found in specific board rules, board rules
prevail.
((Such appropriate)) Authoritative bodies include, but
are not limited to, the Securities and Exchange Commission
(SEC); the Public Company Accounting Oversight Board (PCAOB);
the Financial Accounting Standards Board (FASB); the
Governmental Accounting Standards Board (GASB); the Cost
Accounting Standards Board (CASB); the Federal Accounting
Standards Advisory Board (FASAB); the U.S. Governmental
Accountability Office (GAO); the Federal Office of Management
and Budget (OMB); the Internal Revenue Service (IRS); the
American Institute of Certified Public Accountants (AICPA),
and federal, state, and local audit, regulatory and tax
agencies.
Such standards include:
(1) Statements on Auditing Standards and related Auditing Interpretations issued by the AICPA;
(2) Statements on Standards for Accounting and Review Services and related Accounting and Review Services Interpretations issued by the AICPA;
(3) Statements on Governmental Accounting and Financial Reporting Standards issued by GASB;
(4) Statements on Standards for Attestation Engagements and related Attestation Engagements Interpretations issued by AICPA;
(5) Statements of Financial Accounting Standards and Interpretations, and Staff Positions issued by FASB, together with those Accounting Research Bulletins and Accounting Principles Board Opinions which are not superseded by action of the FASB;
(6) Statement on Standards for Consulting Services issued by the AICPA;
(7) Statements on Quality Control Standards issued by the AICPA;
(8) Statements on Standards for Tax Services and Interpretation of Statements on Standards for Tax Services issued by the AICPA;
(9) Statements on Responsibilities in Personal Financial Planning Practice issued by the AICPA;
(10) Statements on Standards for Litigation Services issued by the AICPA;
(11) Professional Code of Conduct issued by the AICPA including interpretations and ethics rulings;
(12) Governmental Auditing Standards issued by the U.S. Governmental Accountability Office;
(13) AICPA Industry Audit and Accounting Guides;
(14) SEC Rules, Concept Releases, Interpretative Releases, and Policy Statements;
(15) Standards issued by the PCAOB; and
(16) IRS Circular 230.
If the professional services are governed by standards
not included in subsections (1) through (16) of this section,
((you)) individuals and firms including persons qualifying for
practice privileges under RCW 18.04.350(2) who offer or render
professional services in this state or for clients located in
this state and the firms rendering professional services in
this state or for clients located in this state through such
qualifying individuals must:
(( Justify)) (a) Maintain documentation of the
justification for the departure from the standards listed in
subsections (1) through (16) of this section;
(()) (b) Determine and document what standards are
applicable; and
(( Comply)) (c) Demonstrate compliance with the
applicable standards.
((Copies of the above standards may be inspected at the
board's office.))
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-631, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-631, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055 (2) and (6). 00-11-071, § 4-25-631, filed 5/15/00, effective 6/30/00. Statutory Authority: RCW 18.04.055(6). 98-12-050, § 4-25-631, filed 5/29/98, effective 6/29/98. Statutory Authority: RCW 18.40.055 [18.04.055]. 93-22-046, § 4-25-631, filed 10/28/93, effective 11/28/93.]
OTS-1627.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-640
What are the requirements concerning
records and clients confidential information?
(1) Client:
The term "client" as used throughout this section includes
former and current clients. For purposes of this section, a
client relationship has been formed when confidential
information has been disclosed by a prospective client in an
initial interview to obtain or provide professional services.
(2) Property of the licensee, CPA-Inactive
certificateholder, and/or nonlicensee firm owner: In the
absence of an express agreement between ((the)) a licensee,
CPA-Inactive certificateholder, and/or nonlicensee firm owner
and the client to the contrary, all statements, records,
schedules, working papers, and memoranda made by a licensee
incident to or in the course of professional service to
clients, except reports submitted by a licensee, are the
property of the licensee.
(3) Sale or transfer of client records: No statement, record, schedule, working paper, or memorandum, including electronic records, may be sold, transferred, or bequeathed without the consent of the client or his or her personal representative or assignee, to anyone other than one or more surviving partners, shareholders, or new partners or new shareholders of the licensee, partnership, limited liability company, or corporation, or any combined or merged partnership, limited liability company, or corporation, or successor in interest.
(4) Confidential client communication or information:
((A)) Licensees, CPA-Inactive certificateholders, nonlicensee
firm owners, or employees of ((a licensee)) such persons must
not without the consent of the client or the heirs, successors
or personal representatives of the client disclose any
confidential communication or information pertaining to the
client obtained in the course of performing professional
services.
This rule does not:
(a) Affect in any way ((a licensee's, CPA-Inactive
certificateholder's, firm owner's, or employee of a
licensee's)) the obligation of those persons to comply with a
lawfully issued subpoena or summons;
(b) Prohibit disclosures in the course of a quality review of a licensee's attest, compilation, or other reporting services governed by professional standards;
(c) Preclude ((a licensee, CPA-Inactive
certificateholder, firm owner, or employee of a licensee))
those persons from responding to any inquiry made by the board
or any investigative or disciplinary body established by
local, state, or federal law or ((formally)) recognized by the
board((. However, a licensee, CPA-Inactive certificateholder,
firm owner, or employee of a licensee must not disclose or use
to their own advantage any confidential client information
that comes to their attention in carrying out their official
responsibilities)) as a professional association; or
(d) Preclude a review of client information in
conjunction with a prospective purchase, sale, or merger of
all or part of ((a CPA's)) the professional practice of public
accounting of any such persons.
(5) Client records: Licensees, CPA-Inactive
certificateholders, ((and)) nonlicensee firm owners, and
employees of such persons must furnish to their client or
heirs, successors or personal representatives, upon request
and reasonable notice:
(a) A copy of ((the licensee's, CPA-Inactive
certificateholder's or firm owner's)) records, schedules, and
electronic documents of those persons, to the extent that such
records and schedules would ordinarily constitute part of the
client's records and are not otherwise available to the
client; and
(b) Any accounting or other records belonging to, or
obtained from or on behalf of, the client, that the licensee,
CPA-Inactive certificateholder, or nonlicensee firm owner, or
employees of such persons removed from the client's premises
or received for the client's account, including electronic
documents; but ((the licensee, CPA-Inactive certificateholder,
or firm owner)) such persons may make and retain copies of
such documents of the client when they form the basis for
((work done by the licensee, CPA-Inactive certificateholder,
or firm owner)) the professional services offered or rendered
by those persons.
(c) Licensees, CPA-Inactive certificateholders, ((and))
nonlicensee firm owners, and/or employees of such persons must
not refuse to return client records, including electronic
documents, pending client payment of outstanding fees.
(6) Audit and review record retention requirements: For
a period of seven years after a licensee concludes an audit or
review ((the licensee)) such persons must retain the following
records and documents, including electronic records unless
hard copies of such exist:
(a) Records forming the basis of the audit or review;
(b) Records documenting audit or review procedures applied;
(c) Records documenting evidence obtained including financial data, analyses, conclusions, and opinions related to the audit or review engagement; and
(d) Records documenting conclusions reached by the licensee in the audit or review engagement.
[Statutory Authority: RCW 18.04.055(2), 18.04.390 (4)(b) and 18.04.405(1). 05-01-137, § 4-25-640, filed 12/16/04, effective 1/31/05; 03-24-033, § 4-25-640, filed 11/25/03, effective 12/31/03. Statutory Authority: RCW 18.04.055(2). 02-22-082, § 4-25-640, filed 11/5/02, effective 12/31/02. Statutory Authority: RCW 18.40.055 [18.04.055]. 93-22-046, § 4-25-640, filed 10/28/93, effective 11/28/93.]
OTS-1628.2
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-650
What acts are considered discreditable?
((CPAs)) Licensees, CPA-Inactive certificateholders, ((CPA
firms, and)) nonlicensee firm owners, and employees of such
persons must not:
(()) (1) Commit, or allow others to commit in their
name, any act that reflects adversely on their fitness to
represent themselves as a CPA, CPA-Inactive certificateholder,
CPA firm, or a firm owner;
(()) (2) Seek to obtain clients by the use of coercion,
intimidation or harassing conduct; or
(()) (3) Permit others to carry out on their behalf,
either with or without compensation, acts which violate the
rules of conduct.
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-650, filed 12/16/04, effective 1/31/05; 01-22-036, § 4-25-650, filed 10/30/01, effective 12/1/01. Statutory Authority: RCW 18.04.055. 93-22-090, § 4-25-650, filed 11/2/93, effective 12/3/93.]
OTS-1629.3
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-660
What are the limitations on advertising and
other forms of solicitation?
(((1) CPAs)) Licensees,
CPA-Inactive certificateholders, ((CPA firms, and))
nonlicensee firm owners, and employees of such persons must
not make false, fraudulent, misleading, deceptive or unfair
statements or claims regarding their services. Examples of
such statements or claims include, but are not limited to,
statements or claims which:
(((a))) (1) Contain a misrepresentation of fact;
(((b))) (2) Fail to make full disclosure of relevant
facts;
(((c))) (3) Imply your professional services are of an
exceptional quality, which is not supported by verifiable
facts;
(((d))) (4) Create false expectations of favorable
results;
(((e))) (5) Imply educational or professional
attainments, specialty designations, or licensing recognition
not supported in fact; or
(((f))) (6) Represent that professional services will be
performed for a stated fee when this is not the case, or do
not disclose variables that may reasonably be expected to
affect the fees that will be charged.
(((2) If you are a licensee using the CPA title to
perform or solicit services via a web site, you must either
include a statement on the web site that you hold a current
Washington state license or provide a name and contact
information for an individual in your organization who will
respond to inquiries regarding individual license information
within seven business days. The required information must be
clearly visible and prominently displayed.
(3) If you are a CPA-Inactive certificateholder using the CPA-Inactive title to perform or solicit services via a web site you must clearly, visibly, and prominently display the following on the web site:
(a) That you hold a current Washington state CPA-Inactive certificate;
(b) That you do not hold a license to practice public accounting; and
(c) That Washington state law does not allow a CPA-Inactive certificateholder to offer or provide accounting, auditing, attest, reports on financial statements, tax preparation or advisory, management advisory, consulting or similar services to the public in association with the use of the title "CPA," "Certified Public Accountant," "CPA-Inactive," or "Certified Public Accountant-Inactive."
(4) If you are a resident nonlicensee owner of a firm licensed by the board and you perform or solicit services in association with the firm via a web site, you must clearly, visibly, and prominently display a statement that you are a nonlicensee owner registered with the Washington state board of accountancy or provide a name and contact information for an individual in your organization who will respond to inquiries regarding registration information within seven business days.))
[Statutory Authority: RCW 18.04.055(2). 05-01-137, § 4-25-660, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-660, filed 1/31/02, effective 3/15/02; 00-11-072, § 4-25-660, filed 5/15/00, effective 6/30/00. Statutory Authority: RCW 18.04.055. 93-22-090, § 4-25-660, filed 11/2/93, effective 12/3/93.]
OTS-1630.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-670
What enforcement actions must be reported
to the board?
(1) A licensee, CPA-Inactive certificateholder,
or nonlicensee firm owner must notify the board, ((on a form
and)) in the manner prescribed by the board ((policy)), within
thirty days of the issuance of:
(a) A sanction, order, suspension, revocation, or modification of a license, certificate, permit or practice rights by the SEC, PCAOB, IRS, or another state board of accountancy for any cause other than failure to pay a professional license fee by the due date or failure to meet the continuing professional education requirements of another state board of accountancy; or
(b) Charges filed by the SEC, IRS, PCAOB, another state board of accountancy, or a federal or state taxing, insurance or securities regulatory body that the licensee, CPA-Inactive certificateholder, or nonlicensee firm owner committed a prohibited act that would be a violation of board ethical or technical standards.
(2) ((Sole practitioners)) Individual licensees and sole
proprietors are to report action pursuant to subsection (1) of
this section taken against the ((sole practitioner, the sole
practitioner's)) individual's ((CPA license, the CPA firm, or
the CPA firm)) license and/or the license of the sole
proprietorship.
(3) Licensed CPA firms with more than one licensed owner are not required to report on action taken against owners, principals, partners, or employees.
(4) If you hold a license or CPA-Inactive certificate
issued through the foreign reciprocity provisions of the act,
you must notify the board of any investigations undertaken, or
sanctions imposed, by a foreign credentialing body against
your foreign credential within thirty days of ((your))
receiving notice that an investigation has begun or a sanction
was imposed.
[Statutory Authority: RCW 18.04.195 (10)(b) and 18.04.215 (9)(b). 05-01-137, § 4-25-670, filed 12/16/04, effective 1/31/05; 03-24-033, § 4-25-670, filed 11/25/03, effective 12/31/03.]
OTS-1631.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-735
How does a CPA-Inactive certificateholder
apply for licensure?
CPA-Inactive certificateholders are
((natural persons)) individuals who held a valid certificate
on June 30, 2001, but did not hold a valid Washington state
license to practice public accounting on that date. Individuals who did not hold a valid certificate on June 30,
2001 and licensees are not eligible for CPA-Inactive
certificateholder status.
(1) If you are a CPA-Inactive certificateholder you:
(a) May not "practice public accounting" as that term is defined in WAC 4-25-410;
(b) Must meet the CPE requirements of WAC 4-25-830(1) and supporting documentation requirements of WAC 4-25-833;
(c) Must comply with the act and board rules;
(d) Must meet the renewal requirements of WAC 4-25-790; and
(e) Must use the title CPA-Inactive and print or display the word "Inactive" immediately following the initials CPA or certified public accountant whenever the initials CPA or certified public accountant is printed on a business card, letterhead, or other document including documents published or transmitted through electronic media, in exactly the same font and font size as the initials CPA or certified public accountant.
(2) If you are a CPA-Inactive certificateholder, to qualify for licensure you must:
(a) Meet the experience requirements of WAC 4-25-730 or have had an approved experience affidavit on file with the board on or before June 30, 2001; and
(b) Meet the CPE requirements of WAC 4-25-830(5).
(3) ((To apply for a license you must use the form(s)
provided by the board. An application is not complete and
cannot be processed until all fees, required documentation,
required information, and other documentation deemed necessary
by the board are received by the board.)) To apply for a
license, you must submit to the board a certification that you
meet the requirements of subsection (2) of this section and:
(a) ((A complete application form(s) including your
certification, under the penalty of perjury, that you have:
(i))) Have not held out in public practice during the time in which you were a CPA-Inactive certificateholder; and
(((ii) Met the CPE requirements in WAC 4-25-830(5); and))
(b) Other required documentation((, required)) or
information((, and other documentation)) deemed necessary by
the board.
Board forms are available on the board's web site or upon request for your use.
(4) ((Upon approval of)) An initial application is not
complete and cannot be processed until all fees, required
information, required documentation, or other documentation or
information the board may deem necessary is received by the
board. When your application is approved, your license will
be mailed to ((the last address you provided to the board))
your address of record.
(5) Your CPE reporting period and your renewal cycle will remain the same.
(6) You may not use the title "CPA" or "Certified Public
Accountant" until ((you receive notice from the board that
your license has been granted. With the exception of
out-of-state sole practitioning CPAs holding valid practice
privileges in Washington state under WAC 4-25-756, attest
services may only be offered or provided in a CPA firm
licensed by the board and meeting the requirements of WAC 4-25-750)) the date the approval of your license is posted in
the board's licensee data base and, therefore, made publicly
available for confirmation.
[Statutory Authority: RCW 18.04.055(12) and 18.04.105(4). 05-01-137, § 4-25-735, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-735, filed 1/31/02, effective 3/15/02.]
OTS-1632.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-745
How do I apply for an initial individual
CPA license?
(1) To qualify to apply for an initial license
you must meet the:
(((1))) (a) Good character requirements of RCW 18.04.105
(1)(a);
(((2))) (b) Education requirements of WAC 4-25-710;
(((3))) (c) Examination requirements of WAC 4-25-720;
(((4))) (d) Experience requirements of WAC 4-25-730; and
(((5))) (e) If more than four years have lapsed since you
passed the examination, you must meet the CPE requirements of
WAC 4-25-830 (1)(a) within the thirty-six month period
immediately preceding submission of your license application
and must include four CPE hours in ethics meeting the
requirements of WAC 4-25-830(3) which must be completed within
the six month period immediately preceding submission of your
license application.
(2) To apply for an initial license you must ((use the
application form(s) provided by the board. You must fully
complete the form(s) and submit the form(s), all applicable
fees, and all required documentation to the board's office))
fully provide the information above.
((An initial)) Board form(s) are available on the board's
web site or upon request for your use.
(3) Processing of your application ((is not complete
and)) cannot ((be processed)) begin until all ((fees,)) the
required information, applicable fees, and required
documentation or other documentation or information the board
may deem necessary is received by the board. When the
processing of your application is complete, your license will
be mailed to ((the last address you provided to)) your address
of record with the board.
(4) Your initial license will expire on June 30 of the third calendar year following initial licensure.
(5) You may not use the title CPA until ((you receive
notice from the board that your Washington state CPA license
has been approved. With the exception of out-of-state sole
practitioning CPAs holding valid practice privileges in
Washington state under WAC 4-25-756, attest services may only
be offered or provided in a CPA firm licensed by the board and
meeting the requirements of WAC 4-25-750)) the date the
approval of your license is posted in the board's licensee
data base and, therefore, made publicly available for
confirmation.
[Statutory Authority: RCW 18.04.055, 18.04.105(1), and 18.04.215(1). 05-01-137, § 4-25-745, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-745, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055, 18.04.105 and 18.04.215. 99-18-115, § 4-25-745, filed 9/1/99, effective 1/1/00.]
OTS-1633.2
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-746
How do I apply for a Washington state CPA
license if I hold a valid CPA license in another state?
Pursuant to RCW 18.04.180 and 18.04.215(6) the board may issue
((a)) an individual license through interstate reciprocity if
you hold a CPA license to practice public accounting issued by
another state provided your state of licensure makes similar
provisions for granting reciprocity to holders of a valid
certificate or license in this state.
(1) To qualify to apply for ((a)) an individual
Washington state ((CPA)) license entitling you to use the
title CPA and/or offer or render compilation, or other
professional services for which a report expressing assurance
is prescribed by professional standards in Washington state
under the interstate reciprocity provisions you must:
(((1))) (a) Meet the good character requirements of RCW 18.04.105 (1)(a);
(((2))) (b) Meet the CPE requirements in WAC 4-25-830;
and
(((3))) (c) You must have:
(((a))) (i) Passed the examination required for issuance
of your certificate or license in the other state with grades
that would have been passing grades at that time in this state
and:
(((i))) (ii) Met all current requirements for licensure
at the time you apply; or
(((ii))) (iii) Met, at the time of the issuance of your
license in the other state, all the requirements applicable at
that time to obtain a license in this state; or
(((iii))) (iv) Had five years of experience in the
practice of public ((accountancy)) accounting within the ten
years immediately preceding your filing an application for
licensure in this state; or
(((iv))) (v) Had three years of experience in the
practice of public ((accountancy)) accounting within the five
years immediately preceding your filing an application for
licensure in this state; or
(((b))) (2) The board may accept NASBA's designation of
the applicant as substantially equivalent to national
standards as meeting the requirements of (((a))) subsection
(1)(c) of this ((subsection)) section.
(3) To apply for a ((Washington state CPA)) license under
the ((interstate)) reciprocity provisions you must ((use the
application form(s) provided by)) submit to the board's office
information that you are qualified for reciprocity as outlined
in subsections (1) and (2) of this section, including a
certification that you:
(a) Have not held out in public practice during any time prior to submitting your application unless expressly permitted by board rule then existing; and
(b) Have met the CPE requirements in WAC 4-25-830. ((You
must fully complete the form(s) and submit the form(s), all
applicable fees, and all required documentation to the board's
office.))
Board form(s) are available on the board's web site or upon request for your use.
(4) An initial application is not complete and cannot be
processed until all fees, required information, required
documentation, or other documentation or information the board
may deem necessary is received by the board. ((When the
processing))
(5) At date of approval of your application ((is
complete, notification)), it will be posted in the board's
licensee data base and, therefore, made publicly available for
confirmation.
(6) Your license will be mailed to the ((last)) address
((you provided to)) of record with the board provided at the
time of your application, or subsequently changed by formal
notice to the board.
((Your Washington state CPA license will expire on June
30 of the third calendar year following initial licensure.))
(7) Provided no sanctions or investigations by other jurisdictions are in process and you have met the requirements for applying for licensure through interstate reciprocity, upon filing a completed application with the board, you may use the CPA title in Washington state.
((With the exception of out-of-state sole practitioning
CPAs holding valid practice privileges in Washington state
under WAC 4-25-756, attest services may only be offered or
provided in a CPA firm licensed by the board and meeting the
requirements of WAC 4-25-750.
If you are granted a license under these reciprocity provisions,)) (8) Your initial license will expire on June 30 of the third calendar year following initial licensure.
(9) You must notify the board within thirty days if your license or certificate issued by the other jurisdiction has lapsed or otherwise become invalid.
[Statutory Authority: RCW 18.04.180 and 18.04.215(6). 05-01-137, § 4-25-746, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-746, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055, 18.04.180 and 18.04.215(3). 99-18-116, § 4-25-746, filed 9/1/99, effective 1/1/00.]
OTS-1634.2
NEW SECTION
WAC 4-25-747
Must an out-of-state individual holding a
license from another state apply and obtain a Washington state
license to hold out and practice in Washington state?
No.
Out-of-state individuals holding valid licenses to practice
public accounting issued by a substantially equivalent state,
may hold out and practice within Washington state and/or
provide public accounting services in person, by mail,
telephone, or electronic means to clients residing in
Washington state without notice or payment of a fee.
As a condition of this privilege, the out-of-state individual is deemed to have consented to:
(1) The personal and subject matter jurisdiction and disciplinary authority of this state's board;
(2) Comply with the Public Accountancy Act of this state, chapter 18.04 RCW, and this board's rules, chapter 4-25 WAC;
(3) The appointment of the state board which issued the certificate or license as their agent upon whom process may be served in any action or proceeding by this state's board against the certificateholder or licensee;
(4) Render the following services for a client with a home office in this state only through a firm that has obtained a license from this state (RCW 18.04.195, 18.04.205 and WAC 4-25-750):
(a) Any audit or other engagement to be performed in accordance with the statements on auditing standards;
(b) Any examination of prospective financial information to be performed in accordance with the statements on standards for attestation engagements; and
(c) Any engagement to be performed in accordance with the public company accounting oversight board auditing standards.
(5) Not render any professional services in this state unless the out-of-state individual is licensed to render such services in the state of licensure upon which the privilege is contingent;
(6) Cease offering or performing professional services in this state, individually and/or on behalf of a firm, if the license from the state of the out-of-state individual's principal place of business is no longer valid; and
(7) Cease offering or performing specific professional services in this state, individually and/or on behalf of a firm, if the license from the state of the out-of-state individual's principal place of business is restricted from offering or performing such specific professional services.
[]
OTS-1635.2
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-750
What are the CPA firm licensing
requirements?
((With the exception of out-of-state sole
practitioning CPAs holding valid practice privileges in
Washington state under WAC 4-25-756, attest services may only
be offered or performed in a CPA firm licensed by the board
and meeting the requirements of this section. An entity
wishing to use "CPA(s)" or "certified public accountant(s)" in
the firm name must first obtain a license from the board.))
(1) How may a CPA firm be organized? A CPA firm may be
organized as:
(a) A proprietorship;
(b) A partnership;
(c) A professional corporation (PC) or professional service corporation (PS);
(d) A limited liability company (LLC);
(e) A limited liability partnership (LLP); or
(f) Any other form of legal entity authorized by statute for use by a CPA firm.
(2) What happens when a CPA firm alters its legal form? A change in the legal form of a firm constitutes a new firm. Accordingly, the new entity must first obtain a CPA firm license from the board.
(3) What are the ownership requirements for a CPA firm?
(a) All owners of a licensed CPA firm are required to:
(i) ((Be natural persons;
(ii))) Fully comply with the provisions of chapter 18.04 RCW; and
(((iii))) (ii) Be subject to discipline by the board for
violations of chapter 18.04 RCW or 4-25 WAC;
(b) A simple majority of the ownership of the licensed firm in terms of financial interests and voting rights of all partners, owners, or shareholders must be:
(i) Licensees in this state or holders of a valid license to practice public accountancy issued by another state;
(ii) Entitled to practice public accounting in Washington state; and
(iii) Principally employed by the corporation or actively engaged in its business.
(c) At least one general partner of a partnership, one
shareholder of a corporation, and one ((manager)) member of a
limited liability company must be a licensee.
(d) Each CPA proprietor, partner, shareholder or
((manager)) member who is either a resident or is entering the
state and practicing public accountancy in this state must
hold a valid Washington state license or practice privileges.
(e) The principal partner of the partnership and any partner having authority over issuing reports on financial statements must be a licensee under the act or holder of a valid license to practice public accountancy issued by another state and must be entitled to practice public accounting in this state.
(f) The principal officer of the corporation and any officer or director having authority over issuing reports on financial statements must be a licensee under the act or holder of a valid license to practice public accountancy issued by another state and must be entitled to practice public accountancy in this state.
(g) The ((principal manager or)) managing member of a
limited liability company and any member having authority over
issuing reports on financial statements must be a licensee
under the act or holder of a valid license to practice public
accountancy issued by another state and must be entitled to
practice public accountancy in this state.
(h) A nonresident CPA owner must be licensed to practice public accountancy in at least one state.
(i) A nonlicensee owner must:
(i) Be ((a natural person)) an individual;
(ii) Meet the good character requirements of RCW 18.04.105 (1)(a);
(iii) Comply with the act and board rules; and
(iv) Be an active individual participant in the licensed firm or affiliated entities as these terms are defined in WAC 4-25-410; and
(j) A resident nonlicensee firm owner must meet the requirements of WAC 4-25-752 and register with the board concurrent with submission of the firm license, or submission of an amendment to the firm license, to the board.
(4) What are the requirements for the firm's main office
and a branch office? ((The)) A firm's main office located in
this state must be under the direct supervision of a resident
licensee.
A branch office is an office of a licensed CPA firm which
is physically separated from the main office. A branch office
operates under the ((CPA firm)) license of the main office.
(5) How ((do I)) does a firm apply for an initial ((CPA))
firm license? To apply for an initial ((CPA)) firm license
((you must use the application form(s) provided by the board
and)) an owner, or designee, must submit or, in the case of an
out-of-state firm required to be licensed under RCW 18.04.195
(1)(a), an individual qualified for practice privileges in
this state under RCW 18.04.350(2) who has been authorized by
the applicant firm to make the application must submit the
((completed form(s))) following information, all applicable
fees, ((all required documentation including the following))
and such other information the board deems necessary to the
board's office:
(a) The firm name;
(b) Address and telephone number of the main office and any branch offices of the firm;
(c) Name of the managing licensee of the main office located and maintained in this state;
(d) Resident licensee owners' names ((and the states in
which they hold CPA licenses));
(e) Name(s) of all nonlicensee owners((;
(f) Complete registration form(s), including the appropriate fee, for each resident nonlicensee owner)); and
(((g))) (f) Type of legal organization under which the
firm operates.
Board form(s) are available from the board's web site or upon request for your use.
An initial application is not complete and cannot be
processed until all fees, required information described in
subsection (5) of this section, ((and required)) or other
documentation or information the board may deem necessary is
received by the board. ((Upon completion of processing, a CPA
firm license will be mailed to the main office at the last
address provided to the board.)) On the date the application
is approved, the firm's license will be included in the
board's licensee data base and, therefore, made publicly
available for confirmation. Confirmation of the approval of
the firm's license will be mailed to the address of record
with the board provided at the time of the application, or
subsequently changed by formal notice to the board.
The initial CPA firm license will expire on June 30 of the third calendar year following initial licensure.
(6) How do I renew a CPA firm license? To renew a CPA
firm license ((you must use the form(s) provided by the board.
In January of the year of expiration, a renewal form(s) will
be mailed to the main office at the last address provided to
the board. You must submit a properly completed renewal
form(s), all applicable fees and all required documentation to
the board by April 30th of the year of expiration. Failure to
file a complete renewal form for a firm license by April 30 of
the year of expiration will result in late fees. The board
may waive, reduce, or extend the due date of renewal and/or
late fees based on individual hardship including, but not
limited to, financial hardship, critical illness, or active
military deployment)) an owner or designee or, in the case of
an out-of-state firm required to be licensed under RCW 18.04.195 (1)(a), an individual qualified for practice
privileges in this state under RCW 18.04.350(2) who has been
authorized by the applicant firm to make the application, must
submit the information described in subsection (5) of this
section that is current at the date the renewal application is
submitted to the board. A renewal application is not complete
and cannot be processed until all fees, required information,
and required documentation ((is)), and other documentation
deemed necessary by the board are received by the board. ((Upon completion of processing, the CPA firm license will be
mailed to the main office at the last address provided to the
board.))
Board form(s) are available from the board's web site or upon request for your use. Failure to file a complete application for renewal of a firm license by April 30 of the year of expiration will result in late fees. The board may waive, reduce, or extend the due date of renewal and/or late fees based on reasonable cause including, but not limited to, financial hardship, critical illness, or active military deployment.
On the date the renewal application is approved, the firm's license will be included in the board's licensee data base and, therefore, made publicly available for confirmation. Confirmation of the validity of the renewed firm's license status will be mailed to the address of record with the board provided at the time of the application, or subsequently changed by formal notice to the board.
The CPA firm license will expire on June 30 of the third calendar year following the date of renewal.
(7) When and how must ((I)) the firm notify the board of
changes in the ((CPA)) licensed firm? ((A CPA)) An individual
authorized by the firm must provide the board written
notification ((of the following)) and other documentation
deemed necessary by the board within ninety days of ((its))
any or all of the following occurrences:
(a) Dissolution of ((a CPA)) the firm;
(b) The occurrence of any event that would cause the firm to be in violation of RCW 18.04.195 or this rule; or
(c) An event that requires an amendment to a firm license.
(8) What events require a firm amendment? ((A CPA)) An
individual authorized by the firm must provide written
notification to the board, by submitting ((a firm amendment
form)) the following information and the appropriate amendment
fee, within ninety days of the following ((events'
occurrence)):
(a) Admission or departure of an owner;
(b) Any change in the name of the firm; or
(c) Change in the resident managing licensee of the main office in this state.
(9) How long do I have to correct noncompliance with
licensure requirements due to a change in ownership or an
owner's credentials? ((A CPA)) An individual authorized by
the firm must notify the board within ninety days of any
change in ownership or lapse of an owner's license,
certificate, registration or practice privilege that has
caused the firm's license to be out of compliance with
licensure requirements and must correct the noncompliance
within ninety days of the lapse, unless the board grants a
longer time period due to ((individual hardship)) reasonable
cause including, but not limited to, financial hardship,
critical illness, or active military deployment.
[Statutory Authority: RCW 18.04.055(8), 18.04.195 and 18.04.205. 05-01-137, § 4-25-750, filed 12/16/04, effective 1/31/05; 03-24-033, § 4-25-750, filed 11/25/03, effective 12/31/03; 02-04-064, § 4-25-750, filed 1/31/02, effective 3/15/02; 00-11-074, § 4-25-750, filed 5/15/00, effective 6/30/00. Statutory Authority: RCW 18.04.055(8) and 18.04.205(3). 99-18-117, § 4-25-750, filed 9/1/99, effective 1/1/00. Statutory Authority: RCW 18.04.055(3), 18.04.205(3) and 18.04.195. 96-12-061, § 4-25-750, filed 5/31/96, effective 7/1/96. Statutory Authority: RCW 18.04.055. 93-22-089, § 4-25-750, filed 11/2/93, effective 12/3/93.]
OTS-1636.1
AMENDATORY SECTION(Amending WSR 02-04-064, filed 1/31/02,
effective 3/15/02)
WAC 4-25-752
How do I initially register to be a
resident nonlicensee owner of a licensed firm and with which
rules must a nonlicensee firm owner comply?
To qualify as a
nonlicensee owner of a licensed ((CPA)) firm, you must:
(1) Be ((a natural person)) an individual;
(2) Meet the good character requirements of RCW 18.04.105 (1)(a);
(3) Comply with the act and board rules;
(4) Be an active individual participant in the licensed firm or affiliated entities as these terms are defined in WAC 4-25-410; and
(5) If you are a resident of Washington state, you must:
(a) File a complete registration with the board; and
(b) Demonstrate a passing grade of ninety percent or better on the AICPA professional ethics examination.
((To register as a resident nonlicensee firm owner, you
must use the form(s) provided by the board. You need to fully
complete the form(s) and submit the form(s), all applicable
fees, and all required documentation to the board's office.))
You must submit your registration concurrent with or prior to
submission of the firm license application or firm license
amendment, pursuant to WAC 4-25-750.
An initial registration is not complete and cannot be
processed until all fees, required documentation, required
information, and other ((documentation)) information deemed
necessary by the board are received by the board. ((When the
processing of your registration is complete, your registration
will be mailed to the last address you provided to the
board.))
If you are a Washington state resident, you may not hold ownership interest in a CPA firm licensed in Washington state until you receive written notice from the board of your Washington state registration number. On the date the registration is approved, your registration number will be included in the board's licensee data base and, therefore, made publicly available for confirmation. Confirmation of the approval of your initial registration will be mailed to the address of record with the board provided at the time of the application, or subsequently changed by formal notice to the board.
Your initial registration will expire on June 30 of the third calendar year following initial issuance of the registration.
((You must submit your registration concurrent with or
prior to submission of the firm license application or firm
license amendment, pursuant to WAC 4-25-750. If you are a
Washington state resident, you may not hold ownership interest
in a CPA firm licensed in Washington state until you receive
written notice from the board of your Washington state
registration number.))
All nonlicensee firm owners are subject to discipline for violation of the act or board rules.
[Statutory Authority: RCW 18.04.055(13) and 18.04.195(8). 02-04-064, § 4-25-752, filed 1/31/02, effective 3/15/02.]
OTS-1637.2
NEW SECTION
WAC 4-25-753
Must a firm holding a license from another
state apply and obtain a Washington state license to hold out
and practice in Washington state?
(1) A firm license must be
obtained from the board if any of the following criteria
apply:
(a) The firm has an office in this state and performs attest or compilation services for clients in this state;
(b) The firm has an office in this state and, by any means, represents the firm to the public that the firm is a firm of certified public accountants; or
(c) The firm is licensed in another state and performs the following services for clients with a home office in this state:
(i) Any audit or other engagement to be performed in accordance with the statements on auditing standards;
(ii) Any examination of prospective financial information to be performed in accordance with the statements on standards for attestation engagements; and
(iii) Any engagement to be performed in accordance with the public company accounting oversight board auditing standards.
(2) A firm license is not required to perform other professional services in this state, including compilation, review and other services for which reporting requirements are provided in professional standards, if the firm complies with the following:
(a) The firm performs such services through individuals with practice privileges under RCW 18.04.350(2) and WAC 4-25-747 or reciprocal license under RCW 18.04.180 and 18.04.183 and board rules;
(b) The firm is licensed to perform such services in the state in which the individuals with practice privileges have their principal place of business; and
(c) The firm meets the board's quality assurance program requirements, when applicable.
(3) As a condition of this privilege, the nonresident firm is deemed to have consented to:
(a) The personal and subject matter jurisdiction and disciplinary authority of this state's board;
(b) Comply with the Public Accountancy Act of this state, chapter 18.04 RCW, and this board's rules, chapter 4-25 WAC;
(c) Cease offering or rendering professional services in this state through a specific individual or individuals if the license(s) of the individual(s) through whom the services are offered or rendered becomes invalid;
(d) Cease offering or rendering specific professional services in this state through an individual or individuals if the license(s) from the state(s) of the principal place of business of such individual(s) is restricted from offering or performing such specific professional services;
(e) The appointment of the state board which issued the firm license as their agent upon whom process may be served in any action or proceeding by this state's board against firm licensee;
(f) Not render those services described in subsection (1)(c) of this section for a client with a home office in this state unless the firm that has obtained a license from this state (RCW 18.04.195 and 18.04.295) and this section; and
(g) Not render any professional services in this state through out-of-state individual(s) who are not licensed to render such services by the state(s) in which the principal place of business of such individual(s) is (are) located.
[]
OTS-1638.2
AMENDATORY SECTION(Amending WSR 07-14-036, filed 6/26/07,
effective 7/27/07)
WAC 4-25-820
What are the requirements for participating
in quality assurance review (QAR)?
(1) Purpose. The
Washington state board of accountancy is charged with
protection of the public interest and ensuring the
dependability of information used for guidance in financial
transactions or for accounting for or assessing the status or
performance of commercial and noncommercial enterprises,
whether public, private or governmental. The purpose of the
QAR program is to monitor licensees' compliance with
((attest)) audit, compilation, review, and other attestation
standards.
(2) Out-of-state firms otherwise qualified for practice privileges under RCW 18.04.195 (1)(b) are responsible for compliance with this section. These firms are exempt from the registration requirements set forth in this section.
(3) Structure and implementation.
(a) The board will annually appoint a quality assurance review committee to perform the following functions:
(i) Review of financial statements and the reports of licensees thereon to assess their compliance with applicable professional standards;
(ii) Review of licensees' reports and information covered by those reports for conformity with applicable professional standards;
(iii) Improvement of reporting practices of licensees through education and rehabilitative measures; and
(iv) Such other functions as the board may assign to the committee.
(b) Once every three years the board ((will)) requires
((each)) a licensed firm with an office in this state to
participate in the board's quality assurance review program. ((Participating firms will be notified by the board in January
of the reporting requirement, and)) Participating firms will
be required to submit a quality assurance review status form,
along with the appropriate fee, by the following April 30th. Failure to submit a complete quality assurance review status
form postmarked by the April 30th due date, will result in the
assessment of late fees. The board may waive late fees based
on individual hardship including, but not limited to,
financial hardship, critical illness, or active military
deployment.
(c) Each participating firm shall submit, for each of its offices, one licensee report and the information covered by that report, for each of the following types of service or any other service the board determines:
(()) (i) Compilation report on historical financial
statements;
(()) (ii) Review report on historical financial
statements;
(()) (iii) Audit report on historical financial
statements;
(()) (iv) Agreed-upon procedures;
(()) (v) Forecasts;
(()) (vi) Internal controls;
(()) (vii) Performance audits; and
(()) (viii) Projections.
(d) A participating firm shall select these reports from all reports prepared during the twelve months preceding the date of board request or, if no reports have been issued within the last twelve months, from all reports during the preceding three years.
(e) If reports issued by all offices of a firm are reviewed and issued in a controlled, centralized process, only one each of the type of licensee reports, including the information covered by the reports, specified above need be submitted by the firm as a whole.
(((d))) (f) The board may exempt from the requirement of
(c) of this subsection any firm that has participated in a
board-approved peer review program within the three years
immediately preceding the date of board request.
(((e))) (g) Firms requesting exemption must submit a copy
of an unmodified report, letter of comments, response to
letter of comments, if applicable, and letter of acceptance
from the reviewing organization. Firms that receive modified
peer review reports may request exemption, but must submit
copies of such reports and related correspondence, at the
discretion of the board, for consideration on an individual
basis.
(((f))) (h) Any documents submitted in accordance with
(c) of this subsection may have the name of the client, the
client's address, and other identifying factors omitted,
provided that the omission does not render the type or nature
of the entity undeterminable. Dates may not be omitted.
(((g))) (i) Reports submitted to the committee pursuant
to (c) of this subsection and comments of reviewers, the
committee and the board on such reports or workpapers relating
thereto, shall also be preserved in confidence except to the
extent that they are communicated by the board to the
licensees who issued the reports or disclosure is required
under administrative procedure rules or by direction of a
court of law.
(((h))) (j) The committee's review of the licensee
reports and other information covered by those reports shall
be directed toward the following:
(i) Presentation of the financial statements covered by the licensee reports and/or other information covered by those reports in conformity with applicable professional standards for presentation and disclosure;
(ii) Compliance by licensees with applicable reporting standards; and
(iii) Compliance by licensees with the rules of the board and other regulations relating to the practice of public accounting.
(((i))) (4) If the board determines that a report and/or
other information covered by the report referred to the board
by the committee is substandard or seriously questionable with
respect to applicable professional standards, the board may
take one or more of the following actions:
(((i))) (a) Send the licensee a letter of comment
detailing the perceived deficiencies and require the licensee
to develop quality control procedures to ensure that similar
occurrences will not occur in the future;
(((ii))) (b) Require any licensee who had responsibility
for issuance of a report, or who substantially participated in
preparation of the report and/or related workpapers, to
successfully complete specific courses or types of continuing
education as specified by the board;
(((iii))) (c) Require that the licensee responsible for a
substandard report submit all or specified categories of its
reports to a preissuance review in a manner and for a duration
prescribed by the board. The cost of the preissuance review
will be at the firm's expense;
(((iv))) (d) Require the licensee responsible for a
substandard report to submit to a peer review conducted in
accordance with standards acceptable to the board. The cost
of the peer review will be at the licensee's expense;
(((v))) (e) Require the licensee responsible for
substandard work to submit to on-site field review or other
investigative procedures of work product and practices by
board representatives in order to assess the degree or
pervasiveness of substandard work. The board may assess the
costs of such field review or procedures to the licensee if
the results of such investigative efforts substantiate the
existence of substandard work product;
(((vi))) (f) Initiate an investigation pursuant to RCW 18.04.295, 18.04.305, and/or 18.04.320.
(((j))) (5) The board may solicit and review licensee
reports and/or other information covered by the reports from
clients, public agencies, banks, and other users of such
information.
[Statutory Authority: RCW 18.04.055(9). 07-14-036, § 4-25-820, filed 6/26/07, effective 7/27/07; 05-01-135, § 4-25-820, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-820, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055. 94-02-071, § 4-25-820, filed 1/4/94, effective 2/4/94.]
OTS-1639.1
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-830
What are the CPE requirements for
individuals?
(1) The following CPE is required for
individuals during the three calendar year period prior to
renewal:
(a) ((CPAs)) An individual licensed to practice in this
state must complete 120 CPE credit hours which is limited to
24 CPE credit hours in nontechnical subject areas and must
include 4 CPE credit hours in ethics meeting the requirements
of subsection (3) of this section;
(b) A CPA-Inactive certificateholder or a resident nonlicensee firm owner must complete 4 CPE credit hours in ethics meeting the requirements of subsection (3) of this section; and
(c) Individuals holding practice privileges are exempt from the CPE requirements of this section.
(2) CPE requirements for renewal of a license that was issued less than three years before the end of a CPA-Inactive certificate renewal cycle: When you convert your status from a CPA-Inactive certificateholder to a licensee, your CPE reporting period (the three calendar year period prior to renewal) and renewal cycle will remain the same. The CPE requirements for renewal are as follows:
(a) If your license was issued during the first calendar year of your CPE reporting period, you must have completed 80 CPE credit hours which is limited to 16 CPE credit hours in nontechnical subject areas and must include 4 CPE credit hours in ethics meeting the requirements of subsection (3) of this section.
(b) If your license was issued during the second calendar year of your CPE reporting period, you must have completed 40 CPE credit hours which is limited to 8 CPE credit hours in nontechnical subject areas and must include 4 CPE credit hours in ethics meeting the requirements of subsection (3) of this section.
(c) If your license was issued during the third calendar year of your CPE reporting period, you must have completed 4 CPE credit hours in ethics meeting the requirements of subsection (3) of this section.
(3) Ethics and regulations applicable to practice in
Washington state: During each CPE reporting period all
((CPAs)) individuals licensed in this state, individual
CPA-Inactive certificateholders in this state, and resident
nonlicensee firm owners are required to complete four CPE
credit hours in ((professional)) approved ethics and
regulations with specific application to the practice of
public accounting in Washington state((; however, for CPE
reporting periods beginning January 1, 2006, and later, during
each CPE reporting period all CPAs, CPA-Inactive
certificateholders, and resident nonlicensee firm owners are
required to complete four hours in board approved ethics and
regulations CPE)). In order to be approved by the board, the
CPE sponsor or instructor must submit documentation associated
with the ethics and regulations CPE to the board for approval
and the sponsor or instructor must obtain written approval
from the board. The ethics and regulations CPE must cover all
of the following topics, and the ethics and regulations CPE
must substantially address these topics:
(a) Chapter 18.04 RCW and chapter 4-25 WAC. The CPE must include general level information on the Public Accountancy Act, the board's rules, policies, and the rule-making process.
(b) WAC 4-25-521 How can I contact the board?
(c) WAC 4-25-550 Do I need to notify the board if I change my address?
(d) WAC 4-25-551 Must I respond to inquiries from the board?
(e) WAC 4-25-600 Series -- Ethics and prohibited practices. The CPE must include detailed information on each rule and all related board policies.
(f) WAC 4-25-800 Series -- Continuing competency. The CPE must include detailed information on each rule and all related board policies.
(g) WAC 4-25-910 What are the bases for the board to impose discipline?
(h) AICPA Code of Conduct: The CPE must include general level information on the AICPA Code of Conduct.
(i) Variances or key differences between Washington state law (chapter 18.04 RCW and chapter 4-25 WAC) and the AICPA Code of Conduct.
(j) Other topics or information as defined by board policy.
(4) CPE requirements to renew a retired license or CPA-Inactive certificate:
(a) In order to renew ((your)) a retired license you must
meet the CPE requirements of subsection (1)(a) of this section
within the thirty-six month period immediately preceding the
date the renewal application is received by the board;
however, the four CPE hours in ethics meeting the requirements
of subsection (3) of this section must be completed within the
six-month period immediately preceding the date your renewal
application was received by the board.
(b) In order to renew ((your)) a retired CPA-Inactive
certificate, you must meet the CPE requirements of subsection
(1)(b) of this section within the six-month period immediately
preceding the date your renewal application was received by
the board.
(5) CPE requirements for a CPA-Inactive certificateholder to either qualify to apply for a license or return to their previously held status as a licensee: If you hold a valid CPA-Inactive certificate and you wish to apply for a license or you want to return to your previously held status as a licensee, you must meet the CPE requirements of subsection (1)(a) of this section within the thirty-six month period immediately preceding the date your application is received by the board.
(6) Reinstatement of a lapsed, suspended, or revoked license, certificate, or registration as resident nonlicensee firm owner:
(a) If you seek to reinstate a lapsed, suspended, or revoked license, you must satisfy the requirements of subsection (1)(a) of this section within the thirty-six month period immediately preceding the date the application for reinstatement was received by the board; however, the four CPE hours in ethics meeting the requirements of subsection (3) of this section must be completed within the six-month period immediately preceding the date your application for reinstatement was received by the board.
(b) If you seek to reinstate a lapsed, suspended, or revoked CPA-Inactive certificate, or registration as a resident nonlicensee firm owner, you must satisfy the requirements of subsection (1)(b) of this section within the six-month period immediately preceding the date your application for reinstatement was received by the board.
(7) Reciprocity: If you are applying for an initial Washington state CPA license under the reciprocity provisions of the act, you must satisfy the requirements in subsection (1)(a) of this section within the thirty-six month period immediately preceding the date your application was received by the board. For purposes of initial licensure, you do not need to satisfy the ethics requirements of subsection (1)(a) of this section. Thereafter, in order to renew your Washington state license, you must comply with all the renewal requirements in subsection (1)(a) of this section.
(8) CPE ((waiver)) extension request: In order to renew
your license, CPA-Inactive certificate, or registration as a
resident nonlicensee firm owner you must complete the required
CPE by the end of the CPE reporting period preceding your
renewal unless you can demonstrate your failure to meet the
CPE requirements was due to reasonable cause. The board may
provide limited extensions to the CPE requirements for reasons
of individual hardship including, but not limited to,
financial hardship, critical illness, or active military
deployment. You must request such an extension in writing
((on the form(s) provided by the board)). The request must
include justification for the request and identify the
specific CPE you plan to obtain to correct your CPE
deficiency.
A form useful for this purpose is available from the board's web site or will be provided to you upon request.
[Statutory Authority: RCW 18.04.055(7), 18.04.215(5). 05-01-137, § 4-25-830, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-830, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055(7), 18.04.104(8), 18.04.215(4). 00-11-077, § 4-25-830, filed 5/15/00, effective 6/30/00. Statutory Authority: RCW 18.04.055(7), 18.04.215(4) and 18.04.105(8). 99-23-045, § 4-25-830, filed 11/15/99, effective 1/1/00.]
OTS-1640.3
AMENDATORY SECTION(Amending WSR 05-01-137, filed 12/16/04,
effective 1/31/05)
WAC 4-25-910
What are the bases for the board to impose
discipline?
RCW 18.04.055, 18.04.295, ((and)) 18.04.305, and
18.04.350 authorize the board to revoke, suspend, refuse to
issue, renew, or reinstate an individual or firm license,
CPA-Inactive certificate, the right to exercise practice
privileges in this state, or registration as a resident
nonlicensee firm owner; impose a fine not to exceed thirty
thousand dollars; recover investigative and legal costs;
impose full restitution to injured parties; impose remedial
sanctions; impose conditions precedent to renew; or prohibit a
resident nonlicensee from holding an ownership interest in a
firm licensed ((firm)) in this state for the specific acts
listed below.
The following are specific examples of prohibited acts
that constitute grounds for discipline under RCW 18.04.295
((and)), 18.04.305, and 18.04.350. The board does not intend
this listing to be all inclusive.
(1) Fraud or deceit in applying for the CPA examination,
obtaining a license, registering as a resident nonlicensee
firm owner, ((submitting notification of practice
privileges,)) or in any filings with the board.
(2) Fraud or deceit in renewing or requesting
reinstatement of a license, CPA-Inactive certificate,
registration as a resident nonlicensee firm owner((, or
practices privileges)).
(3) Cheating on the CPA exam.
(4) Making a false or misleading statement in support of
another(('s)) person's application or request to:
(a) Take the national uniform CPA examination((,
application for));
(b) Obtain a license((,)) or registration required by the
act or board;
(c) Reinstate or modify the terms of a revoked or
suspended license, certificate, or registration as a resident
nonlicensee firm owner((, submission of notification of)) in
this state;
(d) Reinstate revoked or suspended practice privileges((,
renewal, or reinstatement)) of an individual or firm licensed
in another state.
(5) Dishonesty, fraud, or negligence while representing
oneself as a ((CPA)) licensee, CPA-Inactive certificateholder,
((CPA firm,)) or a resident nonlicensee firm owner including
but not limited to:
(a) Practicing public accounting in Washington state prior to obtaining a license required by RCW 18.04.215 or 18.04.195;
(b) Offering or rendering public accounting services in this state by an out-of-state individual or firm not qualified for practice privileges under RCW 18.04.195 or 18.04.350(2);
(c) Making misleading, deceptive, or untrue representations;
(((c))) (d) Engaging in acts of fiscal dishonesty;
(((d))) (e) Purposefully, knowingly, or negligently
failing to file a report or record, or filing a false report
or record, required by local, state, or federal law;
(((e))) (f) Unlawfully selling unregistered securities;
(((f))) (g) Unlawfully acting as an unregistered
securities salesperson or broker-dealer;
(((g))) (h) Discharging a trustee's duties in a negligent
manner or breaching one's fiduciary duties; or
(((h))) (i) Withdrawing or liquidating, as fees earned,
funds received by a ((CPA)) licensee, ((CPA firm))
CPA-Inactive certificateholder, or a resident nonlicensee firm
owner from a client as a deposit or retainer when the client
contests the amount of fees earned, until such time as the
dispute is resolved.
(6) The following shall be prima facie evidence that a
((CPA)) licensee, as defined in WAC 4-25-410, CPA-Inactive
certificateholder, ((CPA firm, or)) a nonlicensee firm owner,
or the employees of such persons has engaged in dishonesty,
fraud, or negligence while representing oneself as a ((CPA))
licensee, as defined in WAC 4-25-410, CPA-Inactive
certificateholder, ((CPA firm, or)) a nonlicensee firm owner,
or an employee of such persons:
(a) An order of a court of competent jurisdiction finding
that the ((CPA, CPA-Inactive certificateholder, CPA firm, or
the nonlicensee firm owner to have)) person or persons
committed an act of negligence, fraud, or dishonesty or other
act reflecting adversely on ((a CPA's, CPA-Inactive
certificateholder's, CPA firm's, or nonlicensee firm owner's))
the person's fitness to represent himself ((or)), herself, or
itself as a ((CPA)) licensee, as defined in WAC 4-25-410,
CPA-Inactive certificateholder(('s, CPA firm)), or a
nonlicensee firm owner;
(b) An order of a federal, state, local or foreign
jurisdiction regulatory body, or ((the)) a PCAOB, finding that
the ((CPA)) licensee, as defined in WAC 4-25-410, CPA-Inactive
certificateholder, ((CPA firm,)) or nonlicensee firm owner
((to have)), or employee of such persons committed an act of
negligence, fraud, or dishonesty or other act reflecting
adversely on ((a CPA's, CPA-Inactive certificateholder's, the
nonlicensee firm owner's, or CPA firm's)) the person's fitness
to represent himself, herself, or itself as a ((CPA))
licensee, as defined in WAC 4-25-410, a CPA-Inactive
certificateholder, or a nonlicensee firm owner((, or a CPA
firm));
(c) Cancellation, revocation, suspension, or refusal to
renew the right to practice as a ((CPA)) licensee,
((CPA-Inactive)) certificateholder, or a nonlicensee firm
owner by any other state for any cause other than failure to
pay a fee or to meet the requirements of continuing education
in the other state; or
(d) Suspension or revocation of the right to practice before any state agency, federal agency, or the PCAOB.
(7) Sanctions and orders entered by a nongovernmental professionally related standard-setting body for violation of ethical or technical standards in the practice of public accounting by a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner;
(8) Any state or federal criminal conviction or commission of any act constituting a crime under the laws of this state, or of another state, or of the United States.
(((8))) (9) A conflict of interest such as:
(a) Self dealing as a trustee, including, but not limited to:
(i) Investing trust funds in entities controlled by or related to the trustee;
(ii) Borrowing from trust funds, with or without disclosure; and
(iii) Employing persons related to the trustee or entities in which the trust has a beneficial interest to provide services to the trust (unless specifically authorized by the trust creation document).
(b) Borrowing funds from a client unless the client is in
the business of making loans of the type obtained by the
((CPA)) licensee, as defined in WAC 4-25-410, CPA-Inactive
certificateholder, ((CPA firm,)) or nonlicensee firm owner and
the loan terms are not more favorable than loans extended to
other persons of similar credit worthiness.
(((9))) (10) A violation of the Public Accountancy Act or
failure to comply with a board rule contained in chapter 4-25 WAC, by a licensee, defined in WAC 4-25-410, CPA-Inactive
certificateholder, or employees of such persons of this state
or a licensee of another substantially equivalent state
qualified for practice privileges, including but not limited
to:
(a) An out-of-state individual exercising the practice privileges authorized by RCW 18.04.350(2) when not qualified;
(b) Submission of an application for firm license on behalf of a firm licensed in another state and required to obtain a license under RCW 18.04.195 (1)(a)(iii) by an out-of-state individual not qualified under RCW 18.04.350(2) or authorized by the firm to make such application;
(c) Failure of an out-of-state individual exercising the practice privileges authorized under RCW 18.04.350(2) to cease offering or performing professional services in this state, individually or on behalf of a firm, when the license from the state of the out-of-state individual's principal place of business is no longer valid;
(d) Failure of an out-of-state individual exercising the practice privileges authorized under RCW 18.04.350(2) to cease offering or performing specific professional services in this state, individually or on behalf of a firm, when the license from the state of the out-of-state individual's principal place of business has been restricted from performing those specific services;
(e) Failure of a firm not licensed in this state to cease offering or performing professional services in this state through one or more out-of-state individuals whose license from the state of those individuals' principal place(s) of business is (are) no longer valid or is (are) otherwise restricted from performing the specific engagement services;
(f) Failure of a licensed firm to comply with the ownership requirements of RCW 18.04.195 within a reasonable time period, as determined by the board;
(g) Failure of a firm licensed in this state or another state to comply with the board's quality assurance program requirements, when applicable.
(((10))) (11) Violation of one or more of the rules of
professional conduct included in chapter 4-25 WAC ((or)).
(12) Concealing another's violation of the Public Accountancy Act or board rules.
(((11))) (13) Failure to cooperate with the board by
failing to:
(a) Furnish any papers or documents requested or ordered to produce by the board;
(b) Furnish in writing a full and complete explanation related to a complaint as requested by the board;
(c) Respond to an inquiry of the board;
(d) Respond to subpoenas issued by the board, whether or not the recipient of the subpoena is the accused in the proceeding.
(((12))) (14) Failure to comply with an order of the
board.
(((13) A CPA's, CPA-Inactive certificateholder's, or
nonlicensee firm owner's)) (15) Adjudication of a licensee, as
defined by WAC 4-25-410, CPA-Inactive certificateholder, or a
nonlicensee firm owner as mentally incompetent is prima facie
evidence that the ((CPA, CPA-Inactive certificateholder, or
nonlicensee firm owner)) person lacks the professional
competence required by the rules of professional conduct.
(((14))) (16) Failure of a licensee, as defined by WAC 4-25-410, CPA-Inactive certificateholder, ((or)) nonlicensee
firm owner, or out-of-state person exercising practice
privileges authorized by RCW 18.04.195 and 18.04.350 to timely
notify the board, ((on a form and)) in the manner prescribed
by the board ((policy, within thirty days)), of any of the
((issuance of)) following:
(a) A sanction, order, suspension, revocation, or
modification of a license, certificate, permit or practice
rights by the SEC, PCAOB, IRS, or another state board of
accountancy for any cause other than failure to pay a
professional license fee by the due date or failure to meet
the continuing professional education requirements of another
state board of accountancy; ((or))
(b) Charges filed by the SEC, IRS, PCAOB, another state board of accountancy, or a federal or state taxing, insurance or securities regulatory body that the licensee, CPA-Inactive certificateholder, or nonlicensee firm owner committed a prohibited act that would be a violation of board ethical or technical standards;
(c) Sanctions or orders entered against such persons by a nongovernmental professionally related standard-setting body for violation of ethical or technical standards in the practice of public accounting by a licensee, CPA-Inactive certificateholder, or nonlicensee firm owner.
[Statutory Authority: RCW 18.04.055(16), 18.04.295, and 18.04.305. 05-01-137, § 4-25-910, filed 12/16/04, effective 1/31/05; 03-24-033, § 4-25-910, filed 11/25/03, effective 12/31/03. Statutory Authority: RCW 18.04.055(11), 18.04.295, and 18.04.305. 02-04-064, § 4-25-910, filed 1/31/02, effective 3/15/02; 00-11-078, § 4-25-910, filed 5/15/00, effective 6/30/00. Statutory Authority: RCW 18.04.055 and 18.04.295. 94-23-070, § 4-25-910, filed 11/15/94, effective 12/16/94.]