AN
ACT Relating to uniform continuing professional education requirement and
licensing requirements for certified public accountants; and amending RCW
18.04.025, 18.04.105, 18.04.183, 18.04.185, 18.04.195, 18.04.205, 18.04.215,
and 18.04.345.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
18.04.025 and 1994 c 211 s 1401 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)
"State" includes the states of the United States, the District of
Columbia, Puerto Rico, Guam, and the United States Virgin Islands.
(4)
"Reports on financial statements" means any reports or opinions
prepared by certified public accountants, 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)
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)
by persons or firms not required to be licensed under this chapter.
(6)
"Firm" means a sole proprietorship, a corporation, or a partnership.
"Firm" also means a limited liability company formed under chapter
25.15 RCW.
(7)
"CPE" means continuing professional education.
(8)
"Certificate" means a certificate as a certified public accountant
issued under 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)
"Licensee" means the holder of a valid license issued under this
chapter.
(10)
"License" means a ((biennial)) license to practice public
accountancy issued to an individual or firm under this chapter.
(11)
"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 or firm in the practice of
public accountancy, by a person or persons who hold certificates and who are
not affiliated with the person or firm being reviewed.
(12)
"Quality review" means a study, appraisal, or review of one or more
aspects of the professional work of a person or firm in the practice of public
accountancy, by a person or persons who hold certificates 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) of this section.
(13)
"Review committee" means any person carrying out, administering or
overseeing a quality review authorized by the reviewee.
(14)
"Rule" means any rule adopted by the board under authority of this
chapter.
(15)
"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 and that the person or firm
offers to perform any professional services to the public as a certified public
accountant. "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.
2. RCW
18.04.105 and 1992 c 103 s 7 are each amended to read as follows:
(1)
The certificate of "certified public accountant" 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 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 responsibilities of a certified public
accountant 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 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 examination.
(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 and determining a passing grade required of an applicant for a
certificate. 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.
(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 ((on a biennial basis)) 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 ((eighty)) one hundred
twenty hours of continuing professional education during the last ((two-year))
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; ((and))
(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 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.
Sec.
3. RCW
18.04.183 and 1992 c 103 s 18 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 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, 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 ((twenty-four)) thirty-six months
prior to application completed an accumulation of ((eighty)) one
hundred twenty hours of continuing professional education as required under
RCW 18.04.105(8). The board shall provide for transition from existing to
new continuing professional education 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)
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)
The applicant has within the five years prior to applying for the certificate
and 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 standards of other states so as to
provide to the greatest extent possible, consistent national standards.
Sec.
4. RCW
18.04.185 and 1986 c 295 s 7 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 ((biennial)) 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 ((biennial)) license to practice.
Sec.
5. RCW
18.04.195 and 1994 c 211 s 1402 are each amended to read as follows:
(1)
A sole proprietorship engaged in this state in the practice of public
accounting shall license ((biennially)) 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 shall be a certified public accountant holding a license to practice
under RCW 18.04.215.
(c)
Each resident licensee in charge of an office of the sole proprietorship
engaged in this state in the practice of public accounting shall be a certified
public accountant holding a license to practice under RCW 18.04.215.
(2)
A partnership engaged in this state in the practice of public accounting shall
license ((biennially)) 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 a license to practice under RCW 18.04.215;
(c)
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 a license to
practice under RCW 18.04.215.
(3)
A corporation organized for the practice of public accounting and engaged in
this state in the practice of public accounting shall license ((biennially))
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 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 shall be a certified public accountant of
some state holding a license to practice;
(c)
At least one shareholder of the corporation shall be a certified public
accountant holding a license to practice under RCW 18.04.215;
(d)
Each resident licensee in charge of an office of the corporation in this state
and each shareholder or director personally engaged within this state in the
practice of public accounting shall be a certified public accountant holding a
license to practice under RCW 18.04.215;
(e)
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)
The corporation shall comply with any other rules pertaining to corporations practicing
public accounting in this state as the board may prescribe.
(4)
A limited liability company engaged in this state in the practice of public
accounting shall license ((biennially)) 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 of the limited liability company shall be a certified
public accountant holding a license to practice under RCW 18.04.215;
(c)
Each resident manager or member in charge of an office of the limited liability
company 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 a license to practice under RCW 18.04.215.
(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 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.
Sec.
6. RCW
18.04.205 and 1992 c 103 s 9 are each amended to read as follows:
(1)
Each office established or maintained in this state for the practice of public
accounting 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 ((biennially)) 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.
(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.
7. RCW
18.04.215 and 1992 c 103 s 10 are each amended to read as follows:
(1)
((Biennial)) Three-year licenses shall be issued by the board:
(a)
To holders of certificates as certified public accountants who have
demonstrated, 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, submit to the board satisfactory proof of having completed an
accumulation of ((eighty)) one hundred twenty hours of continuing
professional education during the ((twenty-four)) 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 RCW 18.04.205.
(2)
The board shall, by rule, provide for a system of certificate and license
renewal. Applicants for issuance or renewal of certificates or licenses 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)
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)
A certified public accountant shall submit to the board satisfactory proof of
having completed an accumulation of ((eighty)) one hundred twenty
hours of continuing education recognized and approved by the board during the
preceding ((two)) three years. Failure to furnish this evidence
as required shall make the certificate invalid and subject to reinstatement
procedures, unless the board determines the failure to have been due to
retirement, 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 upon condition that the applicant follow a particular program of
continuing professional education. In issuing rules and individual orders with
respect to continuing professional education 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 to applicants and instances of individual hardship.
(5)
Fees for issuance or renewal of certificates and licenses in this state shall
be determined by the board under 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.
8. RCW
18.04.345 and 1992 c 103 s 14 are each amended to read as follows:
(1)
No person may 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.
(2)
No person may hold himself or herself out to the public and assume or use the
designation "certified public accountant" or "CPA" or any
other title, designation, words, letters, abbreviation, sign, card, or ((devise
[device])) 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, 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 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 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 ((biennial)) license to practice under RCW 18.04.215 and
all of the person's offices in this state for the practice of public accounting
are maintained and licensed under RCW 18.04.205.
(6)
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)
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.
