WSR 99-19-042

PROPOSED RULES

BOARD OF ACCOUNTANCY


[ Filed September 13, 1999, 10:57 a.m. ]

Continuance of WSR 99-13-071.

Preproposal statement of inquiry was filed as WSR 98-24-056.

Title of Rule: New section WAC 4-25-830 What are the CPE requirements?

Purpose: To continue hearing date--To clearly prescribe the board's continuing professional education requirements.

Statutory Authority for Adoption: RCW 18.04.055(7), 18.04.215(4), 18.04.105(8).

Statute Being Implemented: RCW 18.04.055(7), 18.04.105(8), 18.04.215(4).

Summary: The new section in compliance with RCW 18.04.105(8) provides that a certified public accountant shall verify to the board completion of an accumulation of at least 120 hours of continuing professional education (CPE) during the preceding three-year period to maintain or reinstate a license and/or certificate. The rules establish within the 120 hours:

A licensee is limited to a maximum of twenty-four hours in nontechnical subject areas.
All licensees and certificate holders are required to complete a four hour course in professional ethics with specific application to the practice of public accounting in Washington state.
A minimum of twenty hours of CPE each calendar year.
The rule also:

Establishes provisions for a reasonable cause exemption to the CPE requirements.
Provides direction to CPAs holding a certificate under the reasonable cause exemption and wanting to change status.
Requires CPAs applying for a Washington license and/or certificate by reciprocity to comply with the CPE requirements as outlined in this rule expect for the four hour ethics course.

Reasons Supporting Proposal: (1) Clearly outlines the board's CPE requirements.

(2) RCW 18.04.105 and 18.04.215 were amended by the 1999 legislature to require the board to issue certificate and licenses on a three-year basis and require CPAs to complete at least 120 hours of CPE during the last three-year period. The board's existing rule conflicts with the new statute. The proposed changes would conform the current rule to the new statute.

(3) Responds to stakeholder requests to eliminate the accounting/auditing subject area requirement.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Dana M. McInturff, CPA, 210 East Union, Suite A, Olympia, (360) 664-9194.

Name of Proponent: Board of Accountancy, governmental.

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

Explanation of Rule, its Purpose, and Anticipated Effects: Using the clear rule-writing technique that eliminates confusion, WAC 4-25-830 sets the continuing professional education (CPE) requirements for Washington CPAs. The goal of the new section is to promote clarity, ensure effective communication, ensure fairness in interpretation and application of the rule, and promote efficiencies through minimizing gray areas.

Proposal does not change existing rules. The board is proposing to replace WAC 4-25-810 with WAC 4-25-830. The new section changes the CPE requirement to 120 hours every three years to conform with revisions to RCW 18.04.105 and 18.04.215 by the 1999 legislature. Additionally, the new rule (1) requires a minimum of twenty hours of CPE every calendar year, (2) eliminates the accounting/auditing subject area requirement, (3) changes the ethics course requirement from a four hour course every four years to a four hour course every three years, and (4) clarifies the requests for exception to the CPE requirements due to reasonable cause (other than retirement or nonuse of the CPA title) must be in writing to the board.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The new section will have negligible economic impact on the accounting profession and business.

RCW 34.05.328 does not apply to this rule adoption. The Board of Accountancy is not one of the agencies required to submit to the requirements of RCW 34.05.328.

Hearing Location: Cavanaughs River Inn, Northridge Board Room, 700 North Division Street, Spokane, WA, on October 28, 1999, at 9:30 a.m.

Assistance for Persons with Disabilities: Contact Cheryl Sexton by October 21, 1999, TDD (800) 833-6384, or (360) 664-9194.

Submit Written Comments to: Dana M. McInturff, P.O. Box 9131, Olympia, WA 98507-9131, fax (360) 664-9190, by October 26, 1999.

Date of Intended Adoption: October 29, 1999.

September 10, 1999

Dana M. McInturff, CPA

Executive Director

OTS-3159.2


NEW SECTION
WAC 4-25-830
What are the CPE requirements?

(1) For CPE reporting periods beginning January 1, 2000, or later, the following CPE is required during the three calendar year period prior to renewal:


Category

Maximum CPE Allowed in Nontechnical Subject Areas Minimum CPE in Ethics Applicable to Practice in WA State

Total CPE

(a) A licensee.

24

4

120

(b) A certificateholder whose activities during the 3-year calendar period prior to renewal do not require a license to practice public accounting.

Exempt

4

120


(2) Subject area requirements:

(a) Licensees are limited to a maximum of 24 CPE credit hours in nontechnical subject areas during the CPE reporting period.

(b) If you are a certificateholder, you are exempt from the limitation of CPE credit hours in nontechnical subject areas.

(3) Ethics applicable to practice in WA state: During each CPE reporting period all licensees and certificateholders are required to complete a four-hour course on professional ethics with specific application to the practice of public accounting in Washington state.

(4) 20 hours a year minimum: For CPE reporting periods beginning after December 31, 1999, you must complete a minimum of 20 hours of CPE each calendar year.

(5) Reasonable cause exemption: In order to renew your license and/or certificate you must complete the required CPE unless you can demonstrate your failure to meet the CPE requirements was due to reasonable cause. The board may make exceptions to the CPE requirements for reasons of individual hardship including health, military service, foreign residence, or other reasonable cause. You must request such an exemption in writing to the board. The request should include justification for the exemption and your plan to correct your CPE deficiency.

If you are retired, or you are a certificateholder and did not make any public, professional, commercial, or occupational use of the title CPA during the prior three years, you are deemed to have met the reasonable cause exemption.

(6) Return to previous status: If you seek to change your status as a certificateholder exempted from the CPE requirements under the reasonable cause exemption to a:

(a) Licensee, you must satisfy the requirements of subsection (1)(a) of this section within the three-year period immediately preceding the date the application for change in status was received by the board; or

(b) Certificateholder, you must satisfy the requirements of subsection (1)(b) of this section within the three-year period immediately preceding the date the application for change in status was received by the board.

(7) Reinstatement of a lapsed, suspended, or revoked license and/or certificate: If you seek to reinstate a lapsed, suspended, or revoked license and certificate, you must satisfy the requirements of subsection (1)(a) of this section within the three-year period immediately preceding the date the application for reinstatement was received by the board. If you seek to reinstate a lapsed, suspended, or revoked certificate, you must satisfy the requirements of subsection (1)(b) of this section within the three-year period immediately preceding the date the application for reinstatement was received by the board.

(8) Reciprocity: If you are applying for an initial Washington state CPA license and/or certificate under the reciprocity provisions of RCW 18.04.180 or 18.04.183, you must satisfy the applicable requirements in subsection (1) of this section within the three-year period immediately preceding the date the application was received by the board. For purposes of an initial license and/or certificate, you do not need to satisfy the ethics requirements of subsection (3) of this section.

Thereafter, in order to renew your Washington state CPA license and/or certificate, you must comply with all the applicable renewal requirements in subsection (1) of this section, including the ethics requirements in subsection (3) of this section.

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Washington State Code Reviser's Office