H-1088.1 _______________________________________________
HOUSE BILL 1597
_______________________________________________
State of Washington 57th Legislature 2001 Regular Session
By Representatives Conway, Clements, Wood and B. Chandler
Read first time 01/30/2001. Referred to Committee on Commerce & Labor.
AN ACT Relating to the public accountancy act; amending RCW 18.04.015, 18.04.025, 18.04.035, 18.04.045, 18.04.055, 18.04.065, 18.04.105, 18.04.180, 18.04.183, 18.04.185, 18.04.195, 18.04.205, 18.04.215, 18.04.295, 18.04.305, 18.04.320, 18.04.335, 18.04.345, 18.04.350, 18.04.370, 18.04.380, 18.04.390, 18.04.405, and 18.04.420; adding a new section to chapter 18.04 RCW; and prescribing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 18.04.015 and 1992 c 103 s 1 are each amended to read as follows:
(1) It is the policy of this state and the purpose of this chapter:
(a) To promote the dependability of information which is 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; and
(b) To protect the public interest by requiring that:
(i) Persons who hold
themselves out ((to the public)) as ((certified public accountants
who offer to perform, or perform for clients, professional services, including
but not limited to 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, the preparation of tax returns, or the furnishing of advice on tax
matters, perform such services)) licensees or inactive certificate
holders conduct themselves in a competent, ethical, and professional
manner;
(ii) A public authority be established that is competent to prescribe and assess the qualifications of certified public accountants, including inactive certificate holders who are not licensed for the practice of public accounting;
(iii) Persons other
than ((certified public accountants)) licensees refrain from
using the words "audit," "review," and
"compilation" when designating a report customarily prepared by
someone knowledgeable in accounting; ((and))
(iv) A public authority be established to provide for consumer alerts and public protection information to be published regarding persons or firms who violate the provisions of this act or board rule and to provide general consumer protection information to the public; and
(v) The use of accounting titles likely to confuse the public be prohibited.
(2) The purpose of this act is to make revisions to chapter 234, Laws of 1983 and chapter 103, Laws of 1992 to: Fortify the public protection provisions of this act; establish one set of qualifications to be a licensee; provide an inactive status for individuals holding a certificate, but not holding a license as of June 30, 2001; revise the regulations of certified public accountants; make revisions in the ownership of certified public accounting firms; assure to the greatest extent possible that certified public accountants from Washington state are substantially equivalent with certified public accountants in other states and can therefore perform the duties of certified public accountants in as many states and countries as possible; assure certified public accountants from other states and countries have met qualifications that are substantially equivalent to the certified public accountant qualifications of this state; and clarify the authority of the board of accountancy with respect to the activities of persons holding licenses and inactive certificates under this chapter. It is not the intent of this act to in any way restrict or limit the activities of persons not holding licenses or inactive certificates under this chapter except as otherwise specifically restricted or limited by chapter 234, Laws of 1983 and chapter 103, Laws of 1992.
(3) A purpose of chapter 103, Laws of 1992, revising provisions of chapter 234, Laws of 1983, is to clarify the authority of the board of accountancy with respect to the activities of persons holding certificates under this chapter. Furthermore, it is not the intent of chapter 103, Laws of 1992 to in any way restrict or limit the activities of persons not holding certificates under this chapter except as otherwise specifically restricted or limited by chapter 234, Laws of 1983.
Sec. 2. RCW 18.04.025 and 1999 c 378 s 1 are each amended to read as follows:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Board" means the board of accountancy created by RCW 18.04.035.
(2) "Certified public accountant" or "CPA" means a person holding a certified public accountant certificate.
(3) "Certified public accountant-inactive," "inactive certificate holder," or "CPA-inactive" means the person held a valid certificate before July 1, 2001, or a valid license after July 1, 2001, and meets the requirements of inactive status, however, the person does not meet the current requirements for licensure and may not practice public accounting.
(4) "State" includes the states of the United States, the District of Columbia, Puerto Rico, Guam, and the United States Virgin Islands.
(((4))) (5)
"Reports on financial statements" means any reports or opinions
prepared by ((certified public accountants)) 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 commercial and noncommercial enterprises, whether public,
private, or governmental, conforms with generally accepted accounting
principles or other comprehensive bases of accounting.
(((5))) (6)
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, 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)))
(7) by persons or firms not required to be licensed under this chapter.
(((6))) (7)
"Firm" means ((a sole proprietorship, a corporation, or a
partnership. "Firm" also means a limited liability company formed))
an entity under this chapter ((25.15 RCW)).
(((7))) (8)
"CPE" means continuing professional education.
(((8))) (9)
"Certificate" means a certificate as a certified public accountant
issued under the provisions of this chapter((, or a corresponding
certificate issued by another state or foreign jurisdiction that is recognized
in accordance with the reciprocity provisions of RCW 18.04.180 and 18.04.183)).
(((9))) (10)
"Inactive" means the certificate is in an inactive status because a
person who held a valid certificate before July 1, 2001, or a person who held a
valid license after July 1, 2001, has not met the current requirements of
licensure and has been granted inactive certificate holder status through an
approval process established by the board.
(11)
"Licensee" means the holder of a ((valid)) license to
practice public accountancy or a permit for practice privileges issued
under this chapter.
(((10))) (12)
"License" means a license to practice public accountancy or a
permit for practice privileges issued to an individual under this
chapter, or a license issued to a firm under this chapter.
(((11))) (13)
"Manager" means a manager of a limited liability company licensed as
a firm under this chapter.
(14) "NASBA" means the national association of state boards of accountancy.
(15)
"Quality assurance review" means a process established by and
conducted at the direction of the board of study, appraisal, or review of one
or more aspects of the professional work of a ((person)) licensee
or licensed firm in the practice of public accountancy, by a person or
persons who hold ((certificates)) licenses and who are not
affiliated with the person or firm being reviewed.
(((12) "Quality
review")) (16) "Peer review" means a study,
appraisal, or review of one or more aspects of the ((professional)) attest
work of a ((person)) licensee or licensed firm in the
practice of public accountancy, by a person or persons who hold ((certificates))
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 subsection (((11)))
(15) of this section.
(((13))) (17)
"Review committee" means any person carrying out, administering or
overseeing a quality review authorized by the reviewee.
(((14))) (18)
"Rule" means any rule adopted by the board under authority of this
chapter.
(((15))) (19)
"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 ((is a certified public accountant)) holds a license
under this chapter and that the person or firm offers to perform any
professional services to the public as a ((certified public accountant))
licensee. "Holding out" shall not affect or limit ((a
person not required to hold a certificate under this chapter or)) a person
or firm not required to hold a license under this chapter from engaging in
practices identified in RCW 18.04.350(((6))).
Sec. 3. RCW 18.04.035 and 1992 c 103 s 3 are each amended to read as follows:
(1) There is created a
board of accountancy for the state of Washington to be known as the Washington
state board of accountancy. Effective June 30, 2001, the board shall
consist of ((seven)) nine members appointed by the governor.
Members of the board shall include ((four)) six persons who ((hold
valid certified public accountant certificates and have been in public practice
as certified public accountants)) have been licensed in this state
continuously for the previous ten years ((and two persons who have held a
valid certified public accountant's certificate in this state for at least ten
years)). ((The seventh)) Three members shall be ((the))
public members ((and shall be a person who is)) qualified to
judge whether the qualifications, activities, and professional practice of
those regulated under this chapter conform with standards to protect the public
interest, including one public member qualified to represent the interests
of clients of individuals and firms licensed under this chapter.
(2) The members of the
board ((of accountancy)) shall be appointed by the governor to a term of
three years. Vacancies occurring during a term shall be filled by appointment
for the unexpired term. Upon the expiration of a member's term of office, the
member shall continue to serve until a successor has been appointed and has
assumed office. The governor shall remove from the board any member whose ((certificate
or)) license to practice has been revoked or suspended and may, after
hearing, remove any member of the board for neglect of duty or other just
cause. No person who has served two successive complete terms is eligible for
reappointment. Appointment to fill an unexpired term is not considered a
complete term. In order to stagger their terms, of the two new appointments
made to the board upon June 11, 1992, the first appointed member shall serve a
term of two years initially.
Sec. 4. RCW 18.04.045 and 1992 c 103 s 4 are each amended to read as follows:
(1) The board shall annually elect a chair, a vice-chair, and a secretary from its members.
(2) A majority of the board constitutes a quorum for the transaction of business.
(3) The board shall have a seal which shall be judicially noticed.
(4) The board shall keep records of its proceedings, and of any proceeding in court arising from or founded upon this chapter. Copies of these records certified as correct under the seal of the board are admissible in evidence as tending to prove the content of the records.
(5) The governor shall
appoint an executive director of the board, who shall serve at the pleasure of
the governor. The executive director may employ such personnel as is appropriate
for carrying out the purposes of this chapter. The executive director shall
hold a valid Washington ((CPA certificate)) license. The
board may arrange for such volunteer assistance as it requires to perform its
duties. Individuals or committees assisting the board constitute volunteers
for purposes of chapter 4.92 RCW.
(6) The board shall file an annual report of its activities with the governor. The report shall include, but not be limited to, a statement of all receipts and disbursements. Upon request, the board shall mail a copy of each annual report to any member of the public.
(7) In making investigations concerning alleged violations of the provisions of this chapter and in all proceedings under RCW 18.04.295 or chapter 34.05 RCW, the board chair, or a member of the board, or a board designee acting in the chair's place, may administer oaths or affirmations to witnesses appearing before the board, subpoena witnesses and compel their attendance, take testimony, and require that documentary evidence be submitted.
(8) The board may review the publicly available professional work of licensees on a general and random basis, without any requirement of a formal complaint or suspicion of impropriety on the part of any particular licensee. If as a result of such review the board discovers reasonable grounds for a more specific investigation, the board may proceed under its investigative and disciplinary rules.
(9) The board shall provide for consumer alerts and public protection information to be published regarding persons or firms who violate the provisions of this act or board rule and shall provide general consumer protection information to the public.
(10) The board may enter into stipulated agreements and orders of assurance with persons who have violated the provisions of RCW 18.04.345 or certify the facts to the prosecuting attorney of the county in which such person resides for criminal prosecution.
(11) The board may order restitution as a condition of a stipulated agreement and order of assurance.
Sec. 5. RCW 18.04.055 and 1992 c 103 s 5 are each amended to read as follows:
The board may adopt and amend rules under chapter 34.05 RCW for the orderly conduct of its affairs. The board shall prescribe rules consistent with this chapter as necessary to implement this chapter. Included may be:
(1) Rules of procedure to govern the conduct of matters before the board;
(2) Rules of
professional conduct for all ((certificate and license holders)) licensees,
persons holding inactive certificates, and nonlicensee owners of licensed firms,
in order to establish and maintain high standards of competence and ethics ((of
certified public accountants)) including rules dealing with independence,
integrity, objectivity, and freedom from conflicts of interest;
(3) Rules specifying actions and circumstances deemed to constitute holding oneself out as a licensee in connection with the practice of public accountancy;
(4) Rules specifying the manner and circumstances of the use of the titles "certified public accountant-inactive" and "CPA-inactive," by holders of inactive certificates who do not also hold licenses under this chapter;
(5) Rules specifying
the educational requirements to take the certified public accountant
examination ((or for the issuance of the certificate or license of certified
public accountant));
(6) Rules designed to
ensure that ((certified public accountants')) licensees'
"reports on financial statements" meet the definitional requirements
for that term as specified in RCW 18.04.025;
(7) Requirements for ((continuing
professional education)) CPE to maintain or improve the professional
competence of ((certificate and license holders)) licensees as a
condition to maintaining their ((certificate or)) license ((to
practice)) under RCW 18.04.215;
(8) Rules governing ((sole
proprietors, partnerships, and corporations practicing public accounting)) firms
issuing or offering to issue reports on financial statements including, but
not limited to, rules concerning their style, name, title, and affiliation with
any other organization, and establishing reasonable practice and ethical
standards to protect the public interest;
(9) The board may by
rule implement a quality assurance review program as a means to monitor
licensees' quality of practice and compliance with professional standards. The
board may exempt from such program, licensees who undergo periodic ((quality))
peer reviews in programs of the American Institute of Certified Public
Accountants, ((National Association of State Boards of Accountancy)) NASBA,
or other programs recognized and approved by the board;
(10) The board may by
rule require firms to obtain professional liability insurance if in the board's
discretion such insurance provides additional and necessary protection for the
public; ((and))
(11) Rules specifying the experience requirements in order to qualify for a license;
(12) Rules specifying the requirements for inactive certificate holders to qualify for a license under this chapter which must include provisions for meeting CPE and experience requirements prior to application for licensure;
(13) Rules specifying the registration requirements, including ethics examination and fee requirements, for nonlicensee partners, shareholders, and managers of firms;
(14) Rules specifying the ethics CPE requirements for inactive certificate holders and owners of firms, including the process for reporting compliance with those requirements;
(15) Rules specifying the experience and CPE requirements for licensees and licensed firms offering or issuing reports on financial statements; and
(16) Any other rule which the board finds necessary or appropriate to implement this chapter.
Sec. 6. RCW 18.04.065 and 1992 c 103 s 6 are each amended to read as follows:
The board shall set its
fees at a level adequate to pay the costs of administering this chapter. ((Beginning
in the 1993-95 biennium,)) All fees for ((certified public
accountants')) licenses, ((certificates,)) renewals of licenses,
renewals of inactive certificates, reinstatements of lapsed licenses,
reinstatements of lapsed inactive certificates, and delinquent filings
received under the authority of this chapter shall be deposited in the
certified public accountants' account created by RCW 18.04.105. Appropriation
from such account shall be made only for the cost of administering the
provisions of this chapter.
Sec. 7. RCW 18.04.105 and 2000 c 171 s 2 are each amended to read as follows:
(1) ((The
certificate of "certified public accountant")) A license to
practice public accounting shall be granted by the board to any person:
(a) Who is of good
character. Good character, for purposes of this section, means lack of a
history of dishonest or felonious acts. The board may refuse to grant a ((certificate))
license on the ground of failure to satisfy this requirement only if
there is a substantial connection between the lack of good character of the
applicant and the professional and ethical responsibilities of a ((certified
public accountant)) licensee and if the finding by the board of lack
of good character is supported by a preponderance of evidence. When an applicant
is found to be unqualified for a ((certificate)) license because
of a lack of good character, the board shall furnish the applicant a statement
containing the findings of the board and a notice of the applicant's right of
appeal;
(b) Who has met the educational standards established by rule as the board determines to be appropriate;
((The board may, in
its discretion, waive the educational requirements for any person if it is
satisfied through review of documentation of successful completion of an equivalency
examination that the person's educational qualifications are an acceptable
substitute for the requirements of (b) of this subsection; and))
(c) Who has passed ((a
written)) an examination;
(d) Who has had one year of experience which is gained:
(i) Within eight years prior to applying for a license, except persons holding a valid certificate on the effective date of this act and applying for a license within eighteen months of the effective date of this act may use experience gained prior to application without regard to the eight-year limitation;
(ii) Through the use of accounting, issuing reports on financial statements, management advisory, financial advisory, tax, tax advisory, or consulting skills;
(iii) While employed in government, industry, academia, or public practice; and
(iv) Meeting the competency requirements determined by the board to be appropriate and established by board rule; and
(e) Who has paid appropriate fees as established by rule by the board.
(2) The examination
described in subsection (1)(c) of this section ((shall be in writing, shall
be held twice a year, and)) shall test the applicant's knowledge of the
subjects of accounting and auditing, and other related fields the board may
specify by rule. The time for holding the examination is fixed by the board
and may be changed from time to time. The board shall prescribe by rule the
methods of applying for and taking the examination, including methods for
grading ((papers)) examinations and determining a passing grade
required of an applicant for a ((certificate)) license. The
board shall to the extent possible see to it that the grading of the
examination, and the passing grades, are uniform with those applicable to all
other states. The board may make use of all or a part of the uniform certified
public accountant examination and advisory grading service of the American
Institute of Certified Public Accountants and may contract with third parties
to perform administrative services with respect to the examination as the board
deems appropriate to assist it in performing its duties under this chapter. The
board shall establish by rule provisions for transitioning to a new examination
structure or to a new media for administering the examination.
(3) ((An applicant
is required to pass all sections of the examination provided for in subsection
(2) of this section in order to qualify for a certificate. If at a given
sitting of the examination an applicant passes two or more but not all
sections, then the applicant shall be given credit for those sections that he
or she passed, and need not take those sections again: PROVIDED, That:
(a) The applicant
took all sections of the examination at that sitting;
(b) The applicant
attained a minimum grade of fifty on each section not passed at that sitting;
(c) The applicant
passes the remaining sections of the examination within six consecutive
examinations given after the one at which the first sections were passed;
(d) At each
subsequent sitting at which the applicant seeks to pass additional sections,
the applicant takes all sections not yet passed; and
(e) In order to
receive credit for passing additional sections in a subsequent sitting, the
applicant attains a minimum grade of fifty on sections written but not passed
on the sitting.
(4) The board may
waive or defer any of the requirements of subsection (3) of this section for
candidates transferring conditional CPA exam credits from other states or for
qualifying reciprocity certification applicants who met the conditioning
requirements of the state or foreign jurisdiction issuing their original
certificate.
(5))) The board shall charge each applicant an
examination fee for the initial examination ((under subsection (1) of this
section,)) or for reexamination ((under subsection (3) of this section
for each subject in which the applicant is reexamined)). The applicable
fee shall be paid by the person at the time he or she applies for examination,
reexamination, or evaluation of educational qualifications. Fees for examination,
reexamination, or evaluation of educational qualifications shall be determined
by the board under chapter 18.04 RCW. There is established in the state
treasury an account to be known as the certified public accountants' account.
All fees received from candidates to take any or all sections of the certified
public accountant examination shall be used only for costs related to the
examination.
(((6) Persons who on
June 30, 1986, held certified public accountant certificates previously issued
under the laws of this state shall not be required to obtain additional
certificates under this chapter, but shall otherwise be subject to this
chapter. Certificates previously issued shall, for all purposes, be considered
certificates issued under this chapter and subject to its provisions.
(7) A certificate of
a "certified public accountant" under this chapter is issued every
three years with renewal subject to requirements of continuing professional
education and payment of fees, prescribed by the board.
(8) The board shall
adopt rules providing for continuing professional education for certified
public accountants. The rules shall:
(a) Provide that a
certified public accountant shall verify to the board that he or she has
completed at least an accumulation of one hundred twenty hours of continuing
professional education during the last three-year period to maintain the
certificate;
(b) Establish
continuing professional education requirements;
(c) Establish when
newly certificated public accountants shall verify that they have completed the
required continuing professional education;
(d) Provide that
failure to furnish verification of the completion of the continuing
professional education requirement shall make the certificate invalid and
subject to reinstatement, unless the board determines that the failure was due
to retirement, reasonable cause, or excusable neglect; and
(e) Provide for
transition from existing to new continuing professional education requirements.
(9) The board may
adopt by rule new CPE standards that differ from those in subsection (8) of
this section or RCW 18.04.215 if: (a) The new standards are consistent with
the continuing professional education standards of other states so as to
provide to the greatest extent possible, consistent national standards; and (b)
the new standards are at least as strict as the standards set forth in
subsection (8) of this section or RCW 18.04.215.))
(4) Persons who on June 30, 2001, held valid certificates previously issued under this chapter shall be deemed to hold inactive certificates, subject to renewal as inactive certificates, until they document to the board that they have met the experience requirements established in subsection (1) of this section, the CPE requirements established by board rule, and pay the license fee established by rule by the board. An individual who did not hold a valid certificate before July 1, 2001, shall not be eligible to obtain an inactive certificate, unless they are first licensed under this chapter.
(5) Persons deemed to hold inactive certificates under subsection (4) of this section shall comply with the prohibition against the practice of public accounting in subsection (6)(b) of this section and RCW 18.04.345 but shall not be required to display the term inactive as part of their title, as required by subsection (6)(b) of this section until renewal. Certificates renewed or issued to any person after June 30, 2001, shall be inactive certificates and the inactive certificate holders are subject to the requirements of subsection (6)(b) of this section.
(6) Persons holding an inactive certificate:
(a) Must use or attach the term inactive whenever using the title CPA or certified public accountant or referring to the certificate, and print the word inactive immediately following the title, whenever the title is printed on a business card, letterhead, or any other document, including documents published or transmitted through electronic media, in the same font and font size as the title; and
(b) Are prohibited from practicing public accounting.
Sec. 8. RCW 18.04.180 and 1992 c 103 s 8 are each amended to read as follows:
(1) The board
shall issue a ((certificate to a holder of a certificate issued by another
state, or shall issue a certificate and)) license to a holder of a ((certificate/))valid
license or certificate issued by another state that entitles the holder
to practice public accountancy, provided that:
(((1))) (a)
Such state makes similar provision to grant reciprocity to a holder of a ((certificate
or)) valid certificate ((and valid)) or license in
this state; ((and
(2))) (b) The applicant meets the ((continuing
professional education)) CPE requirements of RCW ((18.04.105(8)))
18.04.215(5); ((and
(3) If the
application is for a certificate only:
(a) The applicant
passed the examination required for issuance of his or her certificate with
grades that would have been passing grades at that time in this state; and
(b) The applicant:
Meets all current requirements in this state for issuance of a certificate at
the time application is made; or at the time of the issuance of the applicant's
certificate in the other state, met all the requirements then applicable in
this state; or
(4) If the
application is for a certificate and license:
(a))) (c) The applicant meets the good character
requirements of RCW 18.04.105(1)(a); and
(d) The
applicant passed the examination required for issuance of his or her
certificate or license with grades that would have been passing grades
at that time in this state((;)) and
(((b) The applicant:))
meets all current requirements in this state for issuance of a license
at the time application is made; or at the time of the issuance of the
applicant's license in the other state, met all the requirements then
applicable in this state; or has had five years of experience within the ten
years immediately preceding application in the practice of public accountancy
that meets the requirements prescribed by the board.
(2) The board may accept NASBA's designation of the individual applicant's state as substantially equivalent to national standards, or the NASBA's designation of the applicant as substantially equivalent to national standards as meeting the requirement of subsection (1)(d) of this section.
(3) A licensee who has been granted a license under the reciprocity provisions of this section shall notify the board if the license or certificate issued in the other jurisdiction has lapsed or if the status of the license or certificate issued in the other jurisdiction becomes otherwise invalid.
Sec. 9. RCW 18.04.183 and 1999 c 378 s 3 are each amended to read as follows:
The board shall grant a
((certificate or)) license as a certified public accountant to a holder
of a permit, license, or certificate issued by a foreign country's board,
agency, or institute, provided that:
(1) The foreign country
where the foreign permit, license, or certificate was issued is a party to an
agreement on trade with the United States that encourages the mutual
recognition of licensing and certification requirements for the provision of
covered services by the parties under the trade agreement; ((and))
(2) Such foreign
country's board, agency, or institute makes similar provision to allow a person
who holds a valid ((certificate)) license issued by this state to
obtain such foreign country's comparable permit, license, or certificate; ((and))
(3) The foreign permit, license, or certificate:
(a) Was duly issued by such foreign country's board, agency, or institute that regulates the practice of public accountancy; and
(b) Is in good standing at the time of the application; and
(c) Was issued upon the
basis of educational, examination, experience, and ethical requirements
substantially equivalent currently or at the time of issuance of the foreign
permit, license, or certificate to those in this state; ((and))
(4) The applicant has
within the thirty-six months prior to application completed an accumulation of
one hundred twenty hours of ((continuing professional education)) CPE
as required under RCW ((18.04.105(8))) 18.04.215(5). The board
shall provide for transition from existing to new ((continuing professional
education)) CPE requirements; ((and))
(5) ((If the
application is for a certificate:
(a))) The applicant's foreign permit, license, or
certificate was the type of permit, license, or certificate requiring the most
stringent qualifications if, in the foreign country, more than one type of
permit, license, or certificate is issued. This state's board shall decide
which are the most stringent qualifications; ((and
(b))) (6) The applicant has passed a written
examination or its equivalent, approved by the board, that tests knowledge in
the areas of United States accounting principles, auditing standards,
commercial law, income tax law, and Washington state rules of professional
ethics; ((or
(6) If the
application is for a certificate and license:
(a) The requirements
of subsections (1) through (5) of this section are satisfied;)) and
(((b))) (7)
The applicant has within the ((five)) eight years prior to
applying for ((the certificate and)) a license under this
section, demonstrated, in accordance with the rules issued by the board, one
year of public accounting experience, within the foreign country where the
foreign permit, license, or certificate was issued, equivalent to the
experience required under RCW 18.04.215(1)(a) or such other experience or
employment which the board in its discretion regards as substantially
equivalent.
The board may adopt by
rule new CPE standards that differ from those in subsection (4) of this section
or RCW 18.04.215 if the new standards are consistent with the ((continuing
professional education)) CPE standards of other states so as to
provide to the greatest extent possible, consistent national standards.
A licensee who has been granted a license under the reciprocity provisions of this section shall notify the board if the permit, license, or certificate issued in the other jurisdiction has lapsed or if the status of the permit, license, or certificate issued in the other jurisdiction becomes otherwise invalid.
Sec. 10. RCW 18.04.185 and 1999 c 378 s 4 are each amended to read as follows:
(((1) Application
for certification as certified public accountants by persons who are not
residents of this state constitutes appointment of the secretary of state as an
agent for service of process in any action or proceeding against the applicants
arising from any transaction, activity, or operation connected with or
incidental to the practice of public accounting in this state by nonresident
holders of certified public accountant certificates.
(2))) Application for a license to practice public
accounting in this state by a certified public accountant or CPA firm who holds
a license or permit to practice issued by another state constitutes the
appointment of the secretary of state as an agent for service of process in any
action or proceeding against the applicant arising from any transaction or operation
connected with or incidental to the practice of public accounting in this state
by the holder of the license to practice.
Sec. 11. RCW 18.04.195 and 1999 c 378 s 5 are each amended to read as follows:
(1) A sole proprietorship
engaged in this state ((in the practice of public accounting)) and
offering to issue or issuing reports on financial statements or using the title
CPA or certified public accountant shall license, as a firm, every
three years with the board ((as a firm)).
(a) ((The principal
purpose and business of the firm shall be to furnish services to the public
which are consistent with this chapter and the rules of the board.
(b))) The ((person)) sole proprietor
shall ((be a certified public accountant holding)) hold a license
to practice under RCW 18.04.215((.));
(((c))) (b)
Each resident licensee in charge of an office ((of the sole proprietorship
engaged in this state in the practice of public accounting)) located in
this state shall ((be a certified public accountant holding)) hold
a license to practice under RCW 18.04.215; and
(c) The firm must meet competency requirements established by rule by the board.
(2) A partnership
engaged in this state ((in the practice of public accounting)) and
offering to issue or issuing reports on financial statements or using the title
CPA or certified public accountant shall license as a firm every
three years with the board ((as a partnership of certified public
accountants)), and shall meet the following requirements:
(a) ((The principal
purpose and business of the partnership shall be to furnish services to the
public which are consistent with this chapter and the rules of the board;
(b))) At least one general partner of the
partnership shall ((be a certified public accountant holding)) hold
a license to practice under RCW 18.04.215;
(((c))) (b)
Each resident licensee in charge of an office ((of the partnership)) in
this state and each resident partner ((personally engaged within this state
in the practice of public accounting)) shall ((be a certified public
accountant holding)) hold a license to practice under RCW 18.04.215;
(c) A simple majority of the ownership of the firm in terms of financial interests and voting rights of all partners or owners shall be held by natural persons who are licensees or holders of a valid license or certificate issued by another state that entitles the holder to practice public accountancy; and
(d) The firm must meet competency requirements established by rule by the board.
(3) A corporation ((organized
for the practice of public accounting and)) engaged in this state ((in
the practice of public accounting)) and offering to issue or issuing
reports on financial statements or using the title CPA or certified public
accountant shall license as a firm every three years with the board
((as a corporation of certified public accountants)) and shall meet the
following requirements:
(a) ((The principal
purpose and business of the corporation shall be to furnish services to the
public which are consistent with this chapter and the rules of the board; and
(b) Each shareholder
of the corporation shall be a certified public accountant of some state holding
a license to practice and shall be))
A simple majority of the ownership of the firm in terms of financial
interests and voting rights of all shareholders or owners shall be held by
natural persons who are licensees or holders of a valid license or certificate
issued by another state that entitles the holder to practice public accountancy
and is principally employed by the corporation or actively engaged in its
business. ((No other person may have any interest in the stock of the
corporation.)) The principal officer of the corporation and any officer or
director having authority over ((the practice of public accounting by the
corporation)) issuing reports on financial statements shall ((be
a certified public accountant of some state holding)) hold a license
((to practice));
(((c))) (b)
At least one shareholder of the corporation shall ((be a certified public
accountant holding)) hold a license ((to practice)) under RCW
18.04.215;
(((d))) (c)
Each resident licensee in charge of an office ((of the corporation)) located
in this state and each resident shareholder or director ((personally
engaged within this state in the practice of public accounting)) shall ((be
a certified public accountant holding)) hold a license ((to
practice)) under RCW 18.04.215;
(((e))) (d)
A written agreement shall bind the corporation or its shareholders to purchase
any shares offered for sale by, or not under the ownership or effective control
of, a qualified shareholder, and bind any holder not a qualified shareholder to
sell the shares to the corporation or its qualified shareholders. The
agreement shall be noted on each certificate of corporate stock. The
corporation may purchase any amount of its stock for this purpose,
notwithstanding any impairment of capital, as long as one share remains
outstanding; ((and
(f))) (e) The corporation shall comply with
any other rules pertaining to corporations practicing public accounting in this
state as the board may prescribe; and
(f) The firm must meet competency requirements established by rule by the board.
(4) A limited liability
company engaged in this state ((in the practice of public accounting)) and
offering to issue or issuing reports on financial statements or using the title
CPA or certified public accountant shall license as a firm every
three years with the board ((as a limited liability company of certified
public accountants)), and shall meet the following requirements:
(a) ((The principal
purpose and business of the limited liability company shall be to furnish
services to the public which are consistent with this chapter and the rules of
the board;
(b))) At least one ((manager)) member
of the limited liability company shall ((be a certified public accountant
holding)) hold a license ((to practice)) under RCW 18.04.215;
(((c))) (b)
Each resident manager or member in charge of an office ((of the limited
liability company)) located in this state and each resident manager
or member ((personally engaged within this state in the practice of public
accounting)) shall ((be a certified public accountant holding)) hold
a license ((to practice)) under RCW 18.04.215;
(c) A simple majority of the ownership of the firm in terms of financial interests and voting rights of all owners shall be held by natural persons who are licensees or holders of a valid license or certificate issued by another state that entitles the holder to practice public accountancy; and
(d) The firm must meet competency requirements established by rule by the board.
(5) Application for a
license as a firm shall be made upon the affidavit of the proprietor or person
designated as managing partner or shareholder for Washington. This person
shall ((be a certified public accountant holding)) hold a license
((to practice)) under RCW 18.04.215. The board shall determine in each
case whether the applicant is eligible for a license. A partnership or
corporation which is licensed to practice under RCW 18.04.215 may use the
designation "certified public accountants" or "CPAs" in
connection with its partnership or corporate name. The board shall be given
notification within ninety days after the admission or withdrawal of a partner
or shareholder engaged in this state in the practice of public accounting from
any partnership or corporation so licensed.
(6) Fees for the license as a firm and for notification of the board of the admission or withdrawal of a partner or shareholder shall be determined by the board. Fees shall be paid by the firm at the time the license application form or notice of admission or withdrawal of a partner or shareholder is filed with the board.
(7) Nonlicensee owners of firms are:
(a) Required to fully comply with the provisions of this chapter and board rules;
(b) Required to be a natural person and an active individual participant in the firm as defined by board rule; and
(c) Subject to discipline by the board for violation of this chapter.
(8) Resident nonlicensee owners of firms are required to meet:
(a) The ethics examination, registration, and fee requirements as established by the board rules; and
(b) The ethics CPE requirements established by the board rules.
Sec. 12. RCW 18.04.205 and 1999 c 378 s 6 are each amended to read as follows:
(1) Each office
established or maintained in this state for the ((practice of public
accounting)) purpose of offering to perform or issuing reports on
financial statements in this state ((by a certified public accountant,
or a partnership or corporation of certified public accountants)), shall
register with the board under this chapter every three years.
(2) Each office shall
be under the direct supervision of a resident licensee holding a license under
RCW 18.04.215 ((who may be a sole proprietor, partner, principal
shareholder, or a staff employee)).
(3) The board shall by
rule prescribe the procedure to be followed to register and maintain offices
established in this state for the ((practice of public accounting)) purpose
of offering to perform or issuing reports on financial statements.
(4) Fees for the registration of offices shall be determined by the board. Fees shall be paid by the applicant at the time the registration form is filed with the board.
Sec. 13. RCW 18.04.215 and 1999 c 378 s 7 are each amended to read as follows:
(1) Three-year licenses shall be issued by the board:
(a) To holders of inactive
certificates ((as certified public accountants)) who have demonstrated they
meet the experience requirements of RCW 18.04.105, ((in accordance with
rules issued by the board, one year of public accounting experience, or such
other experience or employment which the board in its discretion regards as
substantially equivalent)) and who, if their certificate was issued more
than forty-eight months prior to application ((under this section)) for
a license, submit to the board satisfactory proof of having completed an
accumulation of one hundred twenty hours of ((continuing professional
education)) CPE during the thirty-six months preceding the
application;
(b) To firms under RCW
18.04.195, ((if all offices of the firm in this state are maintained and
registered as required under)) meeting the requirements of RCW
18.04.205.
(2) The board shall, by
rule, provide for a system of inactive certificate and license renewal and
reinstatement and for a system for licensees to transition to inactive
certificate holder status and for inactive certificate holders to be reinstated
as licensees. Applicants for ((issuance or)) renewal ((of
certificates or licenses)) or reinstatement shall, at the time of
filing their applications, list with the board all states and foreign
jurisdictions in which they hold or have applied for certificates, permits or
licenses to practice.
(3) An inactive certificate is renewed every three years with renewal subject to the requirements of ethics CPE and the payment of fees, prescribed by the board. Failure to renew the inactive certificate shall cause the inactive certificate to lapse and be subject to reinstatement. Persons holding a lapsed inactive certificate are prohibited from using the title "CPA," "certified public accountant," "CPA-inactive," or "certified public accountant-inactive" and prohibited from practicing public accountancy. The board shall adopt rules providing for fees and procedures for issuance, renewal, and reinstatement of inactive certificates.
(4) A license is issued every three years with renewal subject to requirements of CPE and payment of fees, prescribed by the board. Failure to renew the license shall cause the license to lapse and become subject to reinstatement. Persons holding a lapsed license are prohibited from using the title "CPA" or "certified public accountant," and prohibited from practicing public accountancy. The board shall adopt rules providing for fees and procedures for issuance, renewal, and reinstatement of license.
(5) The board shall adopt rules providing for CPE for licensees. The rules shall:
(a) Provide that a licensee shall verify to the board that he or she has completed at least an accumulation of one hundred twenty hours of CPE during the last three-year period to maintain the license;
(b) Establish CPE requirements; and
(c) Establish when new licensees shall verify that they have completed the required CPE.
(6) A certified public accountant who holds a permit or license issued by another state, and applies for a license in this state, may practice in this state from the date of filing a completed application with the board, until the board has acted upon the application provided the application is made prior to holding out as a certified public accountant in this state and no sanctions or investigations, deemed by the board to be pertinent to public accountancy, by other jurisdictions or agencies are in process.
(((4))) (7)
A ((certified public accountant)) licensee shall submit to the
board satisfactory proof of having completed an accumulation of one hundred
twenty hours of ((continuing education)) CPE recognized and
approved by the board during the preceding three years. Failure to furnish this
evidence as required shall make the ((certificate invalid)) license
lapse and subject to reinstatement procedures, unless the board determines
the failure to have been due to retirement((,)) or reasonable
cause((, or excusable neglect)).
The board in its
discretion may renew a ((certificate or)) license despite failure to
furnish evidence of compliance with requirements of ((continuing
professional education)) CPE upon condition that the applicant
follow a particular program of ((continuing professional education)) CPE.
In issuing rules and individual orders with respect to ((continuing
professional education)) CPE requirements, the board, among other
considerations, may rely upon guidelines and pronouncements of recognized
educational and professional associations, may prescribe course content,
duration, and organization, and may take into account the accessibility of ((continuing
education)) CPE to ((applicants)) licensees and
instances of individual hardship.
(((5))) (8)
Fees for ((issuance or)) renewal or reinstatement of inactive
certificates and issuance, renewal, or reinstatement of inactive
certificates and licenses in this state shall be determined by the board
under this chapter ((18.04 RCW)). Fees shall be paid by the
applicant at the time the application form is filed with the board. The board,
by rule, may provide for proration of fees for ((certificates and))
licenses issued between normal renewal dates.
Sec. 14. RCW 18.04.295 and 2000 c 171 s 1 are each amended to read as follows:
The board ((of
accountancy)) shall have the power to: Revoke, suspend, or refuse
to renew ((a)) or reinstate an inactive certificate or a
license((, and may)); impose a fine in an amount not to exceed ((one))
ten thousand dollars plus the board's investigative and legal costs in
bringing charges against a certified public accountant, ((or)) an
inactive certificate holder, a licensee, a firm, or a nonlicensee holding an
ownership interest in a firm; may impose full restitution to injured parties;
may impose conditions precedent to renewal of ((the)) an inactive
certificate or a license ((of any certified public accountant));
or may prohibit a nonlicensee from holding an ownership interest in a firm,
for any of the following causes:
(1) Fraud or deceit in
obtaining a ((certificate as a certified public accountant, or in obtaining
a)) license, or in any filings with the board;
(2) Dishonesty, fraud,
or negligence while representing oneself as a ((CPA)) nonlicensee
owner holding an ownership interest in a firm, a licensee, or as an inactive
certificate holder;
(3) A violation of any provision of this chapter;
(4) A violation of a rule of professional conduct promulgated by the board under the authority granted by this chapter;
(5) Conviction of a crime or an act constituting a crime under:
(a) The laws of this state;
(b) The laws of another state, and which, if committed within this state, would have constituted a crime under the laws of this state; or
(c) Federal law;
(6) Cancellation,
revocation, suspension, or refusal to renew the authority to practice as a
certified public accountant by any other state for any cause other than failure
to pay a fee or to meet the requirements of ((continuing education)) CPE
in the other state;
(7) Suspension or revocation of the right to practice matters relating to public accounting before any state or federal agency;
For purposes of subsections (6) and (7) of this section, a certified copy of such revocation, suspension, or refusal to renew shall be prima facie evidence;
(8) Failure to maintain compliance with the requirements for issuance, renewal, or reinstatement of the inactive certificate or license, or to report changes to the board;
(9) Failure to cooperate with the board by:
(a) Failure to furnish any papers or documents requested or ordered by the board;
(b) Failure to furnish in writing a full and complete explanation covering the matter contained in the complaint filed with the board or the inquiry of the board;
(c) Failure to respond to subpoenas issued by the board, whether or not the recipient of the subpoena is the accused in the proceeding;
(10) Failure by a nonlicensee owner of a firm to comply with the requirements of this chapter or board rule; and
(11) Failure to comply with an order of the board.
Sec. 15. RCW 18.04.305 and 1992 c 103 s 12 are each amended to read as follows:
The board ((of
accountancy)) may revoke, suspend, or refuse to renew the license issued to
a firm if at any time the firm does not meet the requirements of this chapter
for licensing, or for any of the causes enumerated in RCW 18.04.295, or for any
of the following additional causes:
(1) The revocation or
suspension of the ((certificate as a certified public accountant)) sole-practitioner's
license or the revocation or suspension or refusal to renew the ((certificate
or)) license of any partner, manager, or shareholder; ((or))
(2) The revocation,
suspension, or refusal to renew the license ((or permit)) of the firm,
or any partner, manager, or shareholder thereof, to practice public
accounting in any other state or foreign jurisdiction for any cause other than
failure to pay a fee or to meet the CPE requirements of ((continuing
professional education in)) the other state or foreign jurisdiction; or
(3) Failure by a nonlicensee owner of a firm to comply with the requirements of this chapter or board rule.
Sec. 16. RCW 18.04.320 and 1986 c 295 s 13 are each amended to read as follows:
In the case of the
refusal, revocation, or suspension of ((a)) an inactive
certificate or a license by the board under the provisions of this chapter,
such proceedings and any appeal therefrom shall be taken in accordance with the
administrative procedure act, chapter 34.05 RCW.
Sec. 17. RCW 18.04.335 and 1997 c 58 s 812 are each amended to read as follows:
(1) Upon application in writing and after hearing pursuant to notice, the board may:
(a) Modify the
suspension of, or reissue ((a)) an inactive certificate or a
license to, an individual whose inactive certificate or license
has been revoked or suspended; or
(b) Modify the suspension of, or reissue a license to a firm whose license has been revoked, suspended, or which the board has refused to renew.
(2) In the case of
suspension for failure to comply with a support order under chapter 74.20A RCW
((or a residential or visitation order under chapter 26.09 RCW)), if the
person has continued to meet all other requirements for reinstatement during
the suspension, reissuance of ((a)) an inactive certificate or a
license shall be automatic upon the board's receipt of a release issued by the
department of social and health services stating that the individual is in
compliance with the order.
Sec. 18. RCW 18.04.345 and 1999 c 378 s 8 are each amended to read as follows:
(1) No person may
assume or use the designation "certified public accountant-inactive"
or "CPA-inactive" or any other title, designation, words,
letters, abbreviation, sign, card, or device tending to indicate that the
person is a certified public accountant-inactive or CPA-inactive
unless the person holds ((a valid)) an inactive certificate ((as
a certified public accountant)). Persons holding an inactive
certificate must place the word inactive immediately following the designation
"certified public accountant" or "CPA." Persons holding an
inactive certificate may not practice public accounting.
(2) No person may hold
himself or herself out to the public ((and)) or assume or use the
designation "certified public accountant" or "CPA" or any
other title, designation, words, letters, abbreviation, sign, card, or device
tending to indicate that the person is a certified public accountant or CPA
unless the person holds a ((valid certificate as a certified public
accountant and holds a valid)) license ((to practice)) under RCW
18.04.215.
(3) No firm may hold
itself out to the public as offering to issue or issuing reports on
financial statements, or assume or use the designation "certified
public accountant" or "CPA" or any other title, designation,
words, letters, abbreviation, sign, card, or device tending to indicate that
the firm is composed of certified public accountants or CPAs, unless the firm
is licensed under RCW 18.04.195((, holds a valid license to practice under
RCW 18.04.215,)) and all offices of the firm in this state ((for the
practice of public accounting)) are maintained and registered under RCW
18.04.205.
(4) No person,
partnership, or corporation offering accounting services to the public
may hold himself, herself, or itself out to the public, or assume or use along,
or in connection with his, hers, or its name, or any other name the title or
designation "certified accountant," "chartered accountant,"
"licensed accountant," "licensed public accountant," "public
accountant," or any other title or designation likely to be confused with
"certified public accountant" or any of the abbreviations
"CA," "LA," "LPA," or "PA," or similar
abbreviations likely to be confused with "CPA." ((However,
nothing in this chapter prohibits use of the title "accountant" by
any person regardless of whether the person has been granted a certificate or
holds a license under this chapter.))
(5) No firm may operate under an alias, a firm name, title, or "DBA" that differs from the firm name that is registered with the board.
(6) No person
may sign, affix, or associate his or her name or any trade or assumed name used
by the person in his or her business to any report designated as an
"audit," "review," or "compilation," unless the
person holds a license to practice under RCW 18.04.215 and a firm license
under RCW 18.04.195, and all of the person's offices in this state ((for
the practice of public accounting are maintained and)) are licensed
under RCW 18.04.205.
(((6))) (7)
No person may sign, affix, or associate a firm name to any report designated as
an "audit," "review," or "compilation," unless
the firm is licensed under RCW 18.04.195 and 18.04.215, and all of its offices
in this state ((for the practice of public accounting)) are maintained
and registered under RCW 18.04.205.
(((7))) (8)
No person, partnership, or corporation not holding a license to practice under
RCW 18.04.215 may hold himself, herself, or itself out to the public as an
"auditor" with or without any other description or designation by use
of such word on any sign, card, letterhead, or in any advertisement or
directory.
(((8) No person may
assume or use the designation "certified public accountant" or
"CPA" in conjunction with names indicating or implying that there is
a partnership or corporation, if there is in fact no bona fide partnership or
corporation registered under RCW 18.04.195.
(9) No person,
partnership, or corporation holding a license under RCW 18.04.215 may hold
himself, herself, or itself out to the public in conjunction with the designation
"and Associates" or "and Assoc." unless he or she has in
fact a partner or employee who holds a license under RCW 18.04.215.))
Sec. 19. RCW 18.04.350 and 1992 c 103 s 15 are each amended to read as follows:
(1) Nothing in this
chapter prohibits any person not ((a certified public accountant)) holding
a license from serving as an employee of a firm licensed, ((or as
assistant to, a certified public accountant or partnership composed of
certified public accountants or corporation of certified public accountants
holding a valid license)) under RCW 18.04.215. However, the employee or
assistant shall not issue any accounting or financial statement over his or her
name.
(2) Nothing in this chapter prohibits a nonresident certified public accountant holding a valid certificate or license to practice public accountancy registered in another state, or any accountant of a foreign country holding a valid certificate, degree, or license which permits him or her to practice therein from temporarily practicing in this state on professional business incident to his or her regular practice provided he or she does not advertise to provide services in this state and he or she does not maintain an office location in this state.
(3) Nothing in this chapter prohibits a nonresident certified public accountant, with education, examination, and experience deemed by the board to be substantially equivalent to this state's requirements and holding a valid certificate or license to practice in another state from obtaining a three-year permit for practice privileges from the board. The permit for practice privileges allows a nonresident certified public accountant who does not have a principal place of business in this state to provide services on a regular basis, advertise to provide services, and maintain an office in this state. The board shall establish by rule the requirements for obtaining a three-year permit for practice privileges, which must include a fee comparable to the fee for a license to practice public accountancy. The certified public accountant issued a permit for practice privileges shall abide by this chapter and the rules under this chapter. Out-of-state certified public accountants holding a valid permit for practice privileges are subject to discipline for violation of this chapter. However, they are exempt from the CPE requirements of this chapter provided they have met the CPE requirements of the state in which they hold a valid certificate or license. The board may accept NASBA's designation of the individual applicant's state as substantially equivalent to national standards, or the NASBA's designation of the applicant as substantially equivalent to national standards as meeting the requirement for a certified public accountant to be substantially equivalent to this state's requirements.
(4) Nothing in
this chapter prohibits ((a certified public accountant, a partnership, or
corporation of certified public accountants)) an inactive certificate
holder, a licensee, a licensed firm, or any of their employees from disclosing
any data in confidence to other certified public accountants, quality assurance
or peer review teams, partnerships, or corporations of public accountants or to
the board or any of its employees engaged in conducting ((quality,))
quality assurance((,)) or peer reviews, or any one of their employees in
connection with quality or peer reviews of that accountant's accounting and
auditing practice conducted under the auspices of recognized professional
associations.
(((4))) (5)
Nothing in this chapter prohibits ((a certified public accountant, a
partnership, or corporation of certified public accountants)) an
inactive certificate holder, a licensee, a licensed firm, or any of their
employees from disclosing any data in confidence to any employee, representative,
officer, or committee member of a recognized professional association, or to
the board ((of accountancy)), or any of its employees or committees in
connection with a professional investigation held under the auspices of
recognized professional associations or the board ((of accountancy)).
(((5))) (6)
Nothing in this chapter prohibits any officer, employee, partner, or principal
of any organization:
(a) From affixing his or her signature to any statement or report in reference to the affairs of the organization with any wording designating the position, title, or office which he or she holds in the organization; or
(b) From describing himself or herself by the position, title, or office he or she holds in such organization.
(((6))) (7)
Nothing in this chapter prohibits any person, or partnership or corporation
composed of persons not holding a license under RCW 18.04.215 from offering or
rendering to the public bookkeeping, accounting, tax services, the devising and
installing of financial information systems, management advisory, or consulting
services, the preparation of tax returns, or the furnishing of advice on tax
matters, the preparation of financial statements, written statements describing
how such financial statements were prepared, or similar services, provided that
persons, partnerships, or corporations not holding a license under RCW
18.04.215 who offer or render these services do not designate any written
statement as an "audit report," "review report," or
"compilation report," do not issue any written statement which
purports to express or disclaim an opinion on financial statements which have
been audited, and do not issue any written statement which expresses assurance
on financial statements which have been reviewed.
(((7))) (8)
Nothing in this chapter prohibits any act of or the use of any words by a
public official or a public employee in the performance of his or her duties.
(((8))) (9)
Nothing contained in this chapter prohibits any person who holds only a valid
((certified public accountant certificate)) inactive certificate
from assuming or using the designation "certified public accountant-inactive"
or "CPA-inactive" or any other title, designation, words,
letters, sign, card, or device tending to indicate the person is ((a certified
public accountant)) an inactive certificate holder, provided, that
such person shall not hold himself or herself out to the public as engaged in
the practice of public accounting ((unless that person holds a valid license
in addition to the certificate under RCW 18.04.215)), or engage in the
practice of public accounting.
(10) Nothing in this chapter prohibits the use of the title "accountant" by any person regardless of whether the person has been granted an inactive certificate or holds a license under this chapter. Nothing in this chapter prohibits the use of the title "enrolled agent" or the designation "EA" by any person regardless of whether the person has been granted a certificate or holds a license under this chapter if the person is properly authorized at the time of use to use the title or designation by the United States department of the treasury. The board may by rule allow the use of other titles by any person regardless of whether the person has been granted a certificate or holds a license under this chapter if the person using the titles or designations is authorized at the time of use by the accreditation council for accountancy and taxation, inc. to use the title or designation.
Sec. 20. RCW 18.04.370 and 1983 c 234 s 19 are each amended to read as follows:
Any person who violates any provision of this chapter, shall be guilty of a crime, as follows:
(1) Any person who violates any provision of this chapter is guilty of a misdemeanor, and upon conviction thereof, shall be subject to a fine of not more than one thousand dollars, or to imprisonment for not more than six months, or to both such fine and imprisonment.
(2) Notwithstanding subsection (1) of this section, any person who uses a professional title intended to deceive the public, in violation of RCW 18.04.345, having previously entered into a stipulated agreement and order of assurance with the board, is guilty of a felony, and upon conviction thereof, is subject to a fine of not more than ten thousand dollars, or to imprisonment for not more than two years, or to both such fine and imprisonment.
(3) With the exception of first time violations of RCW 18.04.345, subject to subsection (4) of this section whenever the board has reason to believe that any person is violating the provisions of this chapter it shall certify the facts to the prosecuting attorney of the county in which such person resides or may be apprehended and the prosecuting attorney shall cause appropriate proceedings to be brought against such person.
(4) The board may elect to enter into a stipulated agreement and orders of assurance with persons in violation of RCW 18.04.345 who have not previously been found to have violated the provisions of this chapter.
(5) Nothing herein contained shall be held to in any way affect the power of the courts to grant injunctive or other relief as above provided.
Sec. 21. RCW 18.04.380 and 1986 c 295 s 17 are each amended to read as follows:
The display
or presentation by a person of a card, sign, advertisement, or other printed,
engraved or written instrument or device, bearing a person's name in
conjunction with the words "certified public accountant," "certified
public accountant-inactive" or any abbreviation thereof, or
"licensed public accountant" or any abbreviation thereof, or
"public accountant" or any abbreviation thereof, shall be prima facie
evidence in any action brought under this chapter that the person whose name is
so displayed, caused or procured the display or presentation of the card, sign,
advertisement, or other printed, engraved, or written instrument or device, and
that the person is holding himself or herself out to be a licensee, a
certified public accountant ((or)), a public accountant holding a
license to practice, or a person holding an inactive certificate under
this chapter. In any such action, evidence of the commission of a single act
prohibited by this chapter is sufficient to justify an injunction or a
conviction without evidence of a general course of conduct.
Sec. 22. RCW 18.04.390 and 1992 c 103 s 16 are each amended to read as follows:
(1) In the absence of
an express agreement between the ((certified public accountant)) licensee
or firm and the client to the contrary, all statements, records, schedules,
working papers, and memoranda made by a ((certified public accountant)) licensee
or firm incident to or in the course of professional service to clients,
except reports submitted by a ((certified public accountant to a client))
licensee or firm, are the property of the ((certified public
accountant)) licensee or firm.
(2) No statement,
record, schedule, working paper, or memorandum 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 ((accountant))
licensee, partnership, or corporation, or any combined or merged
partnership or corporation, or successor in interest.
(3) A licensee shall furnish to the board or to his or her client or former client, upon request and reasonable notice:
(a) A copy of the licensee's working papers or electronic documents, to the extent that such working papers or electronic documents include records that 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 removed from the client's premises or received for the client's account; the licensee may make and retain copies of such documents of the client when they form the basis for work done by him or her.
(4) Nothing in this section shall require a licensee to keep any work paper or electronic document beyond the period prescribed in any other applicable statute.
Sec. 23. RCW 18.04.405 and 1992 c 103 s 17 are each amended to read as follows:
(1) A ((certified
public accountant, a partnership or corporation of certified public accountants))
licensee, inactive certificate holder, or firm, or any of their
employees shall not disclose any confidential information obtained in the
course of a professional transaction except with the consent of the client or
former client or as disclosure may be required by law, legal process, the
standards of the profession, or as disclosure of confidential information is
permitted by RCW 18.04.350 (3) and (((4))) (5), 18.04.295(8),
18.04.390, and this section in connection with ((quality,)) quality
assurance, or peer reviews, investigations, and any proceeding under chapter
34.05 RCW.
(2) This section shall not be construed as limiting the authority of this state or of the United States or an agency of this state, the board, or of the United States to subpoena and use such confidential information obtained by a licensee or inactive certificate holder, or any of their employees in the course of a professional transaction in connection with any investigation, public hearing, or other proceeding, nor shall this section be construed as prohibiting a licensee or inactive certified public accountant whose professional competence has been challenged in a court of law or before an administrative agency from disclosing confidential information as a part of a defense to the court action or administrative proceeding.
(3) The proceedings,
records, and work papers of a review committee shall be privileged and shall
not be subject to discovery, subpoena, or other means of legal process or
introduction into evidence in any civil action, arbitration, administrative proceeding,
or ((state accountancy)) board proceeding and no member of the review
committee or person who was involved in the ((quality)) peer
review process shall be permitted or required to testify in any such civil
action, arbitration, administrative proceeding, or ((state accountancy))
board proceeding as to any matter produced, presented, disclosed, or discussed
during or in connection with the ((quality)) peer review process,
or as to any findings, recommendations, evaluations, opinions, or other actions
of such committees, or any members thereof. Information, documents, or records
that are publicly available are not to be construed as immune from discovery or
use in any civil action, arbitration, administrative proceeding, or ((state
accountancy)) board proceeding merely because they were presented or
considered in connection with the quality assurance or peer review
process.
Sec. 24. RCW 18.04.420 and 1996 c 293 s 2 are each amended to read as follows:
The board shall suspend the license or the inactive certificate of any person who has been certified by a lending agency and reported to the board for nonpayment or default on a federally or state-guaranteed educational loan or service-conditional scholarship. Prior to the suspension, the agency must provide the person an opportunity for a brief adjudicative proceeding under RCW 34.05.485 through 34.05.494 and issue a finding of nonpayment or default on a federally or state-guaranteed educational loan or service-conditional scholarship. The person's license or inactive certificate shall not be reissued until the person provides the board a written release issued by the lending agency stating that the person is making payments on the loan in accordance with a repayment agreement approved by the lending agency. If the person has continued to meet all other requirements for licensure or certification during the suspension, reinstatement shall be automatic upon receipt of the notice and payment of any reinstatement fee the board may impose.
NEW SECTION. Sec. 25. A new section is added to chapter 18.04 RCW to read as follows:
Licensees, firms, owners, and inactive certificate holders must notify the board of any current or pending actions that would be the basis for disciplinary action of the board, including:
(1) An order of a court of competent jurisdiction finding the CPA to have committed an act of negligence, fraud, or dishonesty, or other act reflecting adversely on a CPA's fitness to represent himself or herself as a CPA;
(2) An order of a federal, state, local, or foreign jurisdiction regulatory body finding the CPA to have committed an act of negligence, fraud, or dishonesty, or other act reflecting adversely on a CPA's fitness to represent himself or herself as a CPA;
(3) Cancellation, revocation, suspension, or refusal to renew the right to practice as a CPA 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;
(4) Suspension or revocation of the right to practice before any state or federal agency;
(5) Conviction of a crime or an act constituting a crime under: Federal law; the laws of Washington state; or the laws of another state, and which, if committed within this state, would have constituted a crime under the laws of this state; or
(6) Adjudication as mentally incompetent.
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