Supplemental Notice to WSR 12-23-068.

     Preproposal statement of inquiry was filed as WSR 12-19-057.

     Title of Rule and Other Identifying Information:

WAC 4-30-134 What are the CPE requirements for individuals?

     Hearing Location(s): The Doubletree Hotel Seattle Airport, Cascade 12 Room, 18740 International Boulevard, SeaTac, WA, on July 22, 2013, at 9:00 a.m.

     Date of Intended Adoption: July 22, 2013.

     Submit Written Comments to: Richard C. Sweeney, Executive Director, P.O. Box 9131, Olympia, WA 98507-9131, e-mail info@cpaboard.wa.gov, fax (360) 664-9190, by July 15, 2013.

     Assistance for Persons with Disabilities: Contact Cheryl Sexton by July 15, 2013, TTY (800) 833-6388 or (800) 833-6385 (TeleBraille).

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: WAC 4-30-134: (1) To require at least sixty percent of the required ethics continuing professional education (CPE) course content, presentation time, and commentary to specifically include information on the Public Accountancy Act, the board's rules and policies, variances between Washington state law and the AICPA Code of Conduct, and case study scenarios demonstrating how to comply with the ethics requirements. The remaining forty percent of the course content, presentation time, and commentary may cover AICPA or other professionally based ethics. (2) To specify the process and associated penalties for license renewal applicants that self-report CPE deficiencies during renwal [renewal].

     Reasons Supporting Proposal: After considering comments and testimony at hearing on the rule-making proposal in January 2013, the board determined it is necessary to ensure that authors of the required four hours of board approved CPE in ethics and regulation present and discuss content that is specific to Washington state ethics as it pertain[s] to certified public accountants (CPAs) yet allow credentialed persons to obtain ethics CPE that is related to the individual's required workplace competencies. The board revised the proposal accordingly.

     The board by policy has set the requirements for CPAs who fail to timely complete the required CPE to renew their credential without lapse. The proposal moves the requirements from policy to rule.

     Other changes in the proposal are for clarity. The board is not proposing to change the basic CPE requirements.

     Statutory Authority for Adoption: RCW 18.04.055 (7), (14), 18.04.215(5).

     Statute Being Implemented: RCW 18.04.055 (7), (14), 18.04.215(5).

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

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

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

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

     A cost-benefit analysis is not required under RCW 34.05.328. The board of accountancy is not one of the agencies required to submit to the requirements of RCW 34.05.328 (5)(a).

May 20, 2013

Richard C. Sweeney

Executive Director

OTS-5135.3

AMENDATORY SECTION(Amending WSR 11-07-070, filed 3/22/11, effective 4/22/11)

WAC 4-30-134   What are the continuing professional education (CPE) requirements for individuals?   (1) ((The following CPE is required for)) Qualifying continuing professional education (CPE) must:

     (a) Contribute to the professional competency in the individual's area(s) of professional practice or relative to the individual's current work place job functions;

     (b) Maintain knowledge of current ethical and other regulatory requirements; and

     (c) Be completed by individuals during ((the three calendar year period prior to renewal:)) any board specified CPE reporting period. A CPE reporting period is a calendar year time period beginning in the calendar year a credential is first issued by this board and ending on December 31st of the subsequent third calendar year; for example, if your license was issued any time during calendar year one (2013), the CPE reporting period ends on December 31st of calendar year three (2015).

     (2) General CPE requirements for renewal of valid credentials:

     (a) ((An individual licensed to practice in this state)) A licensee 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))) (6) 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))) (6) of this section((; and)).

     (c) Individuals ((holding)) eligible to exercise 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))) (3) Exceptions to the general CPE requirements: CPE requirements for the initial CPE renewal period after conversion of a CPA-Inactive certificate to a Washington state license:

     (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))) (6) of this section prior to December 31st of the calendar year following the calendar year in which your license was initially issued.

     (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))) (6) 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))) (6) of this section.

     (((3))) (4) For the following circumstances, you must have completed the requirements of subsection (2)(a) of this section within the thirty-six-month period immediately preceding the date an application is submitted to the board; however, the 4 CPE hours in ethics meeting the requirements of subsection (6) of this section must be completed within the six-month period immediately preceding the date your application and the CPE documentation is submitted to the board:

     (a) You are applying to reactivate a license out of retirement; or

     (b) You are a CPA-Inactive certificate holder applying for a license; or

     (c) You want to return to your previously held status as a licensee; or

     (d) You are applying for reinstatement of a lapsed, suspended, or revoked license.

     (5) For the following circumstances, you must have completed the 4 CPE hours in ethics meeting the requirements of subsection (6) of this section within the six-month period immediately preceding the date your application and the CPE documentation is submitted to the board:

     (a) You are applying to reactivate a CPA-Inactive certificate out of retirement; or

     (b) You are applying to reinstate a lapsed, suspended, or revoked CPA-Inactive certificate, or registration as a resident nonlicensee firm owner.

     (6) CPE in ethics and regulation((s applicable to practice in Washington state)):

     (a) During each CPE reporting period after initial licensing all individuals licensed in this state, ((individual CPA-Inactive certificate holders in this state, and)) including nonresident and individuals from foreign countries who received initial Washington state licenses by reciprocity, CPA-Inactive certificate holders, and individuals initially recognized as resident nonlicensee firm owners, are required to complete 4 qualifying 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,))

     (b) The content of the course must be specific to the laws and rules applicable to the regulatory framework in Washington state including the administrative requirements for an individual's initial and continued use of restricted titles in this state.

     (c) All CPE ((sponsor or instructor)) authors must submit ((documentation associated with the ethics and regulations CPE)) course materials for this course to the executive director of the board for approval ((and the sponsor or instructor must obtain written approval from the board)) prior to delivery of the content for credit.

     (d) The ethics and regulations ((CPE)) course materials must cover all of the following topics, and ((the ethics and regulations CPE)) instructors of approved courses must substantially address these topics in their presentations:

     (((a) Chapter 18.04 RCW and TITLE 4 WAC. The CPE must include)) (i) General level information on the AICPA Code of Conduct.

     (ii) General level information on the Public Accountancy Act, the board's rules, policies, including recent or pending changes therein, and the rule-making process.

     (((b))) (iii) Emphasis must be placed on variances or key differences between Washington state law (chapter 18.04 RCW), this board's rules (TITLE 4 WAC), and the AICPA Code of Conduct.

     (iv) Detailed information on the following:

     (A) WAC 4-30-026 How can I contact the board?

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

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

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

     (((f))) (E) WAC ((4-30-103)) 4-30-130 Series -- Continuing competency((. The CPE must include detailed information on each rule and all)), including related board policies, if any.

     (((g))) (F) 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), this board's rules (TITLE 4 WAC) and the AICPA Code of Conduct.

     (j))) (G) 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 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))) (e) The course must also include case study scenarios demonstrating how to comply with the relevant provisions of the AICPA Code of Conduct and the board's statutory or regulatory framework when faced with ethical situations that might occur when offering or performing a specific type of professional service in the practice of public accounting or as a professionally regulated person not in the practice of public accounting.

     (f) At least sixty percent of the course material content, presentation time, and commentary must include general level information on the Public Accountancy Act, the board's rules and policies, including recent or pending changes thereto, variances of key differences between Washington state law (chapter 18.04 RCW), the board's rules (TITLE 4 WAC), and the AICPA Code of Conduct, and scenarios demonstrating the different compliance outcomes that might result because the board's rules prevail when the board's rules vary from the AICPA Code of Professional Conduct and/or related official AICPA interpretations.

     (7) CPE extension requests:

     (a) 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)) December 31st of the calendar year preceding the calendar year of your renewal unless you can demonstrate your failure to meet the CPE requirements was due to reasonable cause.

     (b) 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)) December 31st of the calendar year preceding the calendar year of your renewal. The request must include justification for the request and identify the specific CPE you plan to obtain to correct your CPE deficiency.

     (c) A form useful for this purpose is available from the board's web site or will be provided to you upon request.

     (8) Self-reported deficiencies:

     (a) If you fail to file a timely request for extension but you self-report a CPE deficiency to the board during the renewal period January 1st through June 30th of the renewal year, you will be permitted to continue to use the restricted title during the renewal period provided you:

     (i) Submit to the board, in writing, the specific CPE plan to obtain to correct the CPE deficiency on or before June 30th of the renewal period;

     (ii) Timely complete the CPE sufficient to correct the deficiency;

     (iii) Timely submit certificates of completion for the subject CPE taken to the board; and

     (iv) Pay the fee for reinstatement of a lapsed credential on or before June 30th of the renewal year.

     (b) CPE deficiencies taken by June 30th of the renewal year under this subsection will be carried back to the reporting period ending on December 31st of the preceding calendar year and be subject to CPE audit in the next renewal period to ensure that inadvertent double counting does not occur.

[Statutory Authority: RCW 18.04.055(7), 18.04.215(5). 11-07-070, § 4-30-134, filed 3/22/11, effective 4/22/11; 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.]