Title of Rule and Other Identifying Information: WAC 4-30-020 What is the authority for and the purpose of the board's rules?, 4-30-048 Compliance is required with which rules, regulations and professional standards?, 4-30-090 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?, 4-30-110 What are the allowable legal forms of organization and ownership requirements for a CPA firm?, 4-30-112 Must a firm holding a license from another state apply and obtain a Washington state license to hold out and practice in Washington state?, 4-30-134 What are the CPE requirements for individuals?, and 4-30-142 What are the bases for the board to impose discipline?

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: 1. To amend six rules containing a reference to chapter 4-25 WAC that was decodified and recodified as chapter 4-30 WAC with the exception of three sections. The board intends to change the references to the accurate reference: TITLE 4 WAC.

     2. The board intends to amend WAC 4-30-048 to refer to the complete listing of seventeen standards.

     Reasons Supporting Proposal: 1. The board decodified most of chapter 4-25 WAC and recodifed [recodified] all but three sections to chapter 4-30 WAC effective December 19, 2010. Reference to a decodified chapter makes this portion of these rules ineffective.

     2. In November 2010 the board amended WAC 4-25-631 (recodified as WAC 4-30-048) by adding one item to a listing of standards. Elsewhere in the rule, reference is made to the listing of sixteen standards. The listing now includes seventeen standards. Subsequent references to the list should accurately reference the complete list.

     Additionally, the goal with all of its rule proposals is to:

•	Promote clarity.
•	Ensure effective communication.
•	Ensure fairness in interpretation and application of the rules.
•	Promote efficiencies through minimizing gray areas.

     Statutory Authority for Adoption: For WAC 4-30-020 is RCW 18.04.055; for WAC 4-30-048 is RCW 18.04.055(2); for WAC 4-30-090 is RCW 18.04.350 (2), (3), (4), (5); for WAC 4-30-110 is RCW 18.04.055(8), 18.04.195, 18.04.205; for WAC 4-30-112 is RCW 18.04.055(8), 18.04.195; for WAC 4-30-134 is RCW 18.04.055(7), 18.04.215(5); and for WAC 4-30-142 is RCW 18.04.055(16), 18.04.195 (11)(d), 18.04.295, 18.04.305, 18.04.350(2).

     Statute Being Implemented: Same as Statutory Authority.

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

     Name of Proponent: Washington state board of accountancy, governmental.

     Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Richard C. Sweeney, 711 Capitol Way South, Suite 400, Olympia, WA, (360) 586-0163.

     Agency Comments or Recommendations, if any, as to Statutory Language, Implementation, Enforcement, and Fiscal Matters: The amendments clarify language of the rules without changing their effect.

January 19, 2011

Richard C. Sweeney

Executive Director

OTS-3860.2

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-020   What ((is)) are 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 certificate holders, 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 [4-30])) Title 4 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. 10-24-009, recodified as § 4-30-020, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-400, filed 8/25/08, effective 9/25/08; 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-3877.1

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-048   Compliance is required with which rules, regulations and professional standards?   Licensees, including out-of-state individuals exercising 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 certificate holders, CPA firms, 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 from the requirements found in specific board rules, board rules prevail.

     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;

     (17) Any additional national or international standards recognized by the AICPA, PCAOB, SEC and/or GAO.

     If the professional services are governed by standards not included in subsections (1) through (((16))) (17) of this section, individuals and firms including persons exercising 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:

     (a) Maintain documentation of the justification for the departure from the standards listed in subsections (1) through (((16))) (17) of this section;

     (b) Determine and document what standards are applicable; and

     (c) Demonstrate compliance with the applicable standards.

[Statutory Authority: RCW 18.04.055(2). 10-24-009, amended and recodified as § 4-30-048, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-631, filed 8/25/08, effective 9/25/08; 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-3861.1

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-090   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 [4-30])) contained in Title 4 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 certificate holder 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 4-30-110):

     (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.

[Statutory Authority: RCW 18.04.350 (2), (3), (4), (5). 10-24-009, amended and recodified as § 4-30-090, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-747, filed 8/25/08, effective 9/25/08.]

OTS-3862.1

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-110   What are the allowable legal forms of organization and ownership requirements for a CPA firm?   (1) Permitted forms of organization. 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 Washington state statute for use by a CPA firm.

     (2) What happens when a CPA firm alters its legal form? A mere change in the legal form of an existing firm constitutes a new firm for licensing purposes. Accordingly, the new entity must first obtain a CPA firm license from the board and then dissolve the former firm unless the owners desire to maintain more than one licensed firm. Affiliated entities using a restricted title or offering or performing restricted services are subject to board rules.

     (3) What are the ownership requirements for a CPA firm?

     (a) All owners of a licensed CPA firm are required to:

     (i) Fully comply with the provisions of chapter 18.04 RCW; and

     (ii) Be subject to discipline by the board for violations of chapter 18.04 RCW ((or 4-25 [4-30])) and this board's rules contained in Title 4 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 firm or actively engaged in its business.

     (c) At least one general partner of a partnership, one shareholder of a corporation, and one member of a limited liability company must be a licensee.

     (d) Each CPA proprietor, partner, shareholder or 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) A principal owner and any individual 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) A nonresident CPA owner must be licensed to practice public accountancy in at least one state.

     (g) A nonlicensee owner must:

     (i) Be 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 4-30-010; and

     (h) A resident nonlicensee firm owner must meet the requirements of WAC 4-30-116 and register with the board concurrent with submission of the firm license application, or submission of an amendment to the firm license status, to the board.

     (4) What are the requirements for the firm's main office and a branch office? 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 license of the main office.

[Statutory Authority: RCW 18.04.055(8), 18.04.195, 18.04.205. 10-24-009, amended and recodified § 4-30-110, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-750, filed 8/25/08, effective 9/25/08; 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-3863.1

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-112   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 4-30-090 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 [4-30])) contained in Title 4 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.

[Statutory Authority: RCW 18.04.055(8), 18.04.195. 10-24-009, amended and recodified as § 4-30-112, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-753, filed 8/25/08, effective 9/25/08.]

OTS-3864.1

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-134   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) An individual licensed to practice in this state must complete a total of 120 CPE hours, including 4 CPE credit hours in an approved Washington ethics and regulations course meeting the requirements of subsection (3) of this section. The total 120 CPE hours requirement is limited to no more than 24 CPE credit hours in nontechnical subject areas. All qualifying CPE hours must be taken after the date your initial CPA license was issued;

     (b) A CPA-Inactive certificate holder 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 certificate holder 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 individuals licensed in this state, individual CPA-Inactive certificate holders in this state, and resident nonlicensee firm owners are required to complete 4 CPE credit hours in approved ethics and regulations with specific application to the practice of public accounting in Washington state. 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 [4-30])) Title 4 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 4-30-026 How can I contact the board?

     (c) WAC 4-30-032 Do I need to notify the board if I change my address?

     (d) WAC 4-30-034 Must I respond to inquiries from the board?

     (e) WAC 4-30-040 through 4-30-048 Ethics and prohibited practices. The CPE must include detailed information on each rule and all related board policies.

     (f) WAC 4-30-103 Series -- Continuing competency. The CPE must include detailed information on each rule and all related board policies.

     (g) WAC 4-30-142 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 [4-30]))), this board's rules (Title 4 WAC) and the AICPA Code of Conduct.

     (j) Other topics or information as defined by board policy.

     (4) CPE requirements to renew a license or CPA-Inactive certificate out of retirement:

     (a) In order to renew a license out of retirement, 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 submitted to 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 is submitted to the board.

     (b) In order to renew a CPA-Inactive certificate out of retirement, 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 is submitted to the board.

     (5) CPE requirements for a CPA-Inactive certificate holder 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 ((is)) submitted to 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 is submitted to 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 is submitted to 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 is submitted to 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, after you were licensed as a CPA and within the thirty-six month period immediately preceding the date your application is submitted to 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 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 by the end of the CPE reporting period. 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). 10-24-009, amended and recodified as § 4-30-134, filed 11/18/10, effective 12/19/10. Statutory Authority: RCW 18.04.055(7) and 18.04.215. 09-17-044, § 4-25-830, filed 8/11/09, effective 9/11/09. Statutory Authority: RCW 18.04.055(7), 18.04.215(5). 08-18-016, § 4-25-830, filed 8/25/08, effective 9/25/08; 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-3865.1

AMENDATORY SECTION(Amending WSR 10-24-009, filed 11/18/10, effective 12/19/10)

WAC 4-30-142   What are the bases for the board to impose discipline?   RCW 18.04.055, 18.04.295, 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 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, 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, 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.

     (3) Cheating on the CPA exam.

     (4) Making a false or misleading statement in support of another person's application or request to:

     (a) Take the national uniform CPA examination;

     (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 in this state;

     (d) Reinstate revoked or suspended practice privileges of an individual or firm licensed in another state.

     (5) Dishonesty, fraud, or negligence while representing oneself as a licensee, CPA-Inactive certificate holder, 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;

     (d) Engaging in acts of fiscal dishonesty;

     (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;

     (f) Unlawfully selling unregistered securities;

     (g) Unlawfully acting as an unregistered securities salesperson or broker-dealer;

     (h) Discharging a trustee's duties in a negligent manner or breaching one's fiduciary duties; or

     (i) Withdrawing or liquidating, as fees earned, funds received by a licensee, CPA-Inactive certificate holder, 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 licensee, as defined in WAC 4-30-010, CPA-Inactive certificate holder, a nonlicensee firm owner, or the employees of such persons has engaged in dishonesty, fraud, or negligence while representing oneself as a licensee, as defined in WAC 4-30-010, CPA-Inactive certificate holder, a nonlicensee firm owner, or an employee of such persons:

     (a) An order of a court of competent jurisdiction finding that the person or persons committed an act of negligence, fraud, or dishonesty or other act reflecting adversely on the person's fitness to represent himself, herself, or itself as a licensee, as defined in WAC 4-30-010, CPA-Inactive certificate holder, or a nonlicensee firm owner;

     (b) An order of a federal, state, local or foreign jurisdiction regulatory body, or a PCAOB, finding that the licensee, as defined in WAC 4-30-010, CPA-Inactive certificate holder, or nonlicensee firm owner, or employee of such persons committed an act of negligence, fraud, or dishonesty or other act reflecting adversely on the person's fitness to represent himself, herself, or itself as a licensee, as defined in WAC 4-30-010, a CPA-Inactive certificate holder, or a nonlicensee firm owner;

     (c) Cancellation, revocation, suspension, or refusal to renew the right to practice as a licensee, certificate holder, 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 certificate holder, 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.

     (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 licensee, as defined in WAC 4-30-010, CPA-Inactive certificate holder, or nonlicensee firm owner and the loan terms are not more favorable than loans extended to other persons of similar credit worthiness.

     (10) A violation of the Public Accountancy Act or failure to comply with a board rule contained in ((chapter 4-25 [4-30])) Title 4 WAC, by a licensee, defined in WAC 4-30-010, CPA-Inactive certificate holder, 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.

     (11) Violation of one or more of the rules of professional conduct included in ((chapter 4-25 [4-30])) Title 4 WAC.

     (12) Concealing another's violation of the Public Accountancy Act or board rules.

     (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.

     (14) Failure to comply with an order of the board.

     (15) Adjudication of a licensee, as defined by WAC 4-30-010, CPA-Inactive certificate holder, or a nonlicensee firm owner as mentally incompetent is prima facie evidence that the person lacks the professional competence required by the rules of professional conduct.

     (16) Failure of a licensee, as defined by WAC 4-30-010, CPA-Inactive certificate holder, 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, in the manner prescribed by the board, of any of the 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;

     (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 certificate holder, 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 certificate holder, or nonlicensee firm owner.

[Statutory Authority: RCW 18.04.055(16), 18.04.195 (11)(d), 18.04.295, 18.04.305, 18.04.350(2). 10-24-009, amended and recodified as § 4-30-142, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-910, filed 8/25/08, effective 9/25/08. 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.]

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