PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 99-23-060.
Title of Rule: WAC 4-25-750 Firm license.
Purpose: To prescribe the procedures entities must follow to register and maintain offices established for the practice of public accounting in the state of Washington.
Statutory Authority for Adoption: RCW 18.04.055(8), 18.04.195, and 18.04.205.
Statute Being Implemented: RCW 18.04.055(8) and 18.04.205.
Summary: The rule requires that certified public accountants (CPAs) practice public accounting in a CPA firm, lists the forms of practice in which a CPA may practice public accountancy and defines the application requirements a CPA must follow to obtain a firm license.
Reasons Supporting Proposal: To promote clarity, ensure effective communication, to ensure fairness in interpretation of the rule, and to respond to stakeholder input regarding the rule.
Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Dana M. McInturff, CPA, 210 East Union, Suite A, Olympia, (360) 586-0163.
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: RCW 18.04.205(3) directs the board to prescribe the procedures to be followed to register and maintain offices established for the practice of public accounting in Washington state. RCW 18.04.195 requires CPA firms to obtain, and renew, licenses to practice public accounting.
Proposal Changes the Following Existing Rules: The amendments to the rule:
1. Clarify when a firm license is required.
2. Clarify and refine what circumstances trigger the need to notify the board.
3. Eliminate the 90-day grace period for obtaining an initial firm license.
4. Clarify the definition of a branch office and incorporate a portion of the board's previous declaratory ruling and policies into the rule.
5. Include the board's current practice/procedures for firm licensing and renewal.
6. Simplify the rule and make it easier to read.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed rule will not have more than minor economic impact on 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: Wyndham Garden Hotel -- SeaTac, 18118 Pacific Highway South, SeaTac, WA 98188, on April 28, 2000, at 9:30 a.m.
Assistance for Persons with Disabilities: Contact Cheryl Sexton by April 21, 2000, 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 April 26, 2000.
Date of Intended Adoption: April 28, 2000.
February 29, 2000
Dana M. McInturff, CPA
Executive Director
OTS-3847.2
AMENDATORY SECTION(Amending WSR 99-18-117, filed 9/1/99,
effective 1/1/00)
WAC 4-25-750
((Firm license.)) What are the CPA firm
licensing requirements?
(((1) A licensee may only practice
public accountancy in a CPA firm organized as:
(a) A proprietorship;
(b) A partnership;
(c) A professional corporation;
(d) A limited liability company;
(e) A limited liability partnership; or
(f) Some other form of legal entity authorized by statute for use by a CPA firm.
(2) A CPA firm shall apply to the board for a license to practice public accountancy within ninety days of formation. A CPA firm shall apply for renewal of its license no later than sixty days prior to expiration of the firm's current license. The board will not accept a firm license renewal application unless it is accompanied by all applicable renewal and late filing fees.
(3) An application for a firm license shall include the:
(a) Firm name;
(b) Addresses and telephone numbers of the main office and any branch offices of the firm;
(c) Name of the manager of each branch office;
(d) Owners' names and the states in which they hold CPA licenses;
(e) Names of corporate directors, limited liability company managers, and all firm officers; and
(f) Type of legal organization under which the firm operates (such as, general partnership or limited liability company).
(4) Firm licenses expire on June 30 of the third year after the board issues a firm's initial license and on June 30 of each third year after the initial license expires.
(5) A CPA firm shall file with the board a written notification of any of the following events within ninety days after its occurrence:
(a) Formation or dissolution of a CPA firm;
(b) Admission of an owner;
(c) Retirement or death of an owner;
(d) Any change in the name of the firm;
(e) Change in the management of any branch office;
(f) Opening, closing, or relocating of a branch office; and
(g) The occurrence of any event that would cause the firm to be in violation of the provisions of the act or these rules.
A change in the legal form of a firm constitutes a new firm. Accordingly the new firm shall within ninety days of the change file an application for a firm license and pay the applicable fee.)) A licensee may only practice public accountancy in a licensed CPA firm. An entity wishing to practice as a CPA firm must first obtain a CPA firm license from the board.
(1) How may a CPA firm be organized? A CPA firm may be organized as:
(a) A proprietorship;
(b) A partnership;
(c) A professional corporation (PC) or professional service corporation (PS);
(d) A limited liability company (LLC);
(e) A limited liability partnership (LLP); or
(f) Any other form of legal entity authorized by statute for use by a CPA firm.
Each proprietor, partner, shareholder or member who is either resident or practicing public accountancy in this state must hold a valid Washington state CPA license. A nonresident owner must be a licensee of at least one state.
A change in the legal form of a firm constitutes a new firm. Accordingly, the new entity must first obtain a CPA firm license from the board.
(2) What are the requirements for a branch office? A branch office is an office of a CPA firm which is physically separated from the main office. A branch office must be under the direct supervision of a resident licensee manager who is present a minimum of eighty percent of the time the branch office is open for business. A branch office operates under the CPA firm license of the main office.
(3) How do I apply for an initial CPA firm license? To apply for an initial CPA firm license you must use the application form provided by the board. You must submit the completed form, all applicable fees, and all required documentation to the board's office. When completing the application for a CPA firm license, you must include the following information:
• The firm name;
• Address and telephone number of the main office and any branch offices of the firm;
• Name of the managing licensee of the main office and the managing licensee of each branch office;
• Owners' names and the states in which they hold CPA licenses;
• Names of corporate directors, limited liability company managers, and all officers; and
• Type of legal organization under which the firm operates.
An application is not complete and cannot be processed until all fees, required information, and required documentation is received by the board. Upon completion of processing, a CPA firm license will be mailed to the main office at the last address provided to the board.
The initial CPA firm license will expire on June 30 of the third calendar year following initial licensure.
(4) How do I renew a CPA firm license? To renew a CPA firm license you must use the form provided by the board. In January of the year of expiration, a renewal form will be mailed to the main office at the last address provided to the board.
To renew a CPA firm license you must submit a properly completed renewal form, all applicable fees and all required documentation to the board by April 30th of the year of expiration. A renewal application is not complete and cannot be processed until all fees, required information, and required documentation is received by the board. Upon completion of processing, the CPA firm license will be mailed to the main office at the last address provided to the board.
The CPA firm license will expire on June 30 of the third calendar year following the date of renewal.
(5) When must I notify the board of changes in the CPA firm? A CPA firm must provide the board written notification of the following within ninety day of its occurrence:
(a) Formation or dissolution of a CPA firm;
(b) Admission or departure of an owner;
(c) Any change in the name of the firm;
(d) Change in the managing licensee of the main office or of any branch office;
(e) Opening, closing, or relocating of the main office or of any branch office; and
(f) The occurrence of any event that would cause the firm to be in violation of the provisions of the Public Accountancy Act (chapter 18.04 RCW) or these rules.
[Statutory Authority: RCW 18.04.055(8) and 18.04.205(3). 99-18-117, § 4-25-750, filed 9/1/99, effective 1/1/00. Statutory Authority: RCW 18.04.055(3), 18.04.205(3) and 18.04.195. 96-12-061, § 4-25-750, filed 5/31/96, effective 7/1/96. Statutory Authority: RCW 18.04.055. 93-22-089, § 4-25-750, filed 11/2/93, effective 12/3/93.]