Purpose: General Note: The transition period implemented by the revisions to chapter 18.04 RCW (the Public Accountancy Act) passed through the 2001 legislative session (E2SSB 5593) ended June 30, 2004. Effective July 1, 2004, all certificateholders must use the CPA-Inactive title. The rules address the required 'CPA-Inactive' title.
Additionally, the board revised language to:
|•||Ensure effective communication.|
|•||Ensure fairness in interpretation and application of the rules.|
|•||Promote efficiencies through minimizing gray areas.|
|•||Incorporate current policy into rule.|
|WAC section||The revision:|
|WAC 4-25-756||Clarifies the language regarding the provision of attest services to note that out-of-state sole practitioning CPAs holding valid practice privilege are not required to have a firm license.|
|WAC 4-25-782||Clarifies the language regarding the provision of attest services to note that out-of-state sole practitioning CPAs holding valid practice privilege are not required to have a firm license.|
|WAC 4-25-820||•||Revises language to align with the board's purpose as defined in RCW 18.04.015.|
|•||Moves the following from board policy to rule: (1) Notice of required participation in QAR is mailed in January, (2) participating firms must submit a quality assurance review status form and fees by April 30, and (3) late fees will be assessed.|
|•||Adds the reasons/justification that the board will consider when approving a late fee waiver request based on the board's history of approving waiver request.|
|•||Moves subsections (e) and (f) to a more logical placement.|
|•||Removes the reference to maintain certain information in confidence (may not be possible given the Public Disclosure Act).|
|•||Clarifies that the cost of preissuance review will be at the firm's expense.|
|•||Eliminates a vague limitation as to when the board may initiate an investigation and clarifies that the board may use investigators.|
|•||Multiple verbiage improvements.|
|•||Adds "or other comprehensive basis of accounting, if applicable" to subsection (2)(g)(i) Many compilations are not prepared on the basis of GAAP, but are tax basis, cash basis, or modified cash basis. Compliance with professional standards includes conformity with these less well defined bases of accounting.|
Citation of Existing Rules Affected by this Order: Amending WAC 4-25-756, 4-25-782, and 4-25-820.
Statutory Authority for Adoption: For WAC 4-25-756 is RCW 18.04.350(6); for WAC 4-25-782 is RCW 18.04.183; and for WAC 4-25-820 is RCW 18.04.055(9).
Adopted under notice filed as WSR 04-17-087 on August 16, 2004, and WSR 04-22-098 on November 2, 2004.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 3, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 3, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 3, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 3, Repealed 0.
Date Adopted: December 10, 2004.
Dana M. McInturff
AMENDATORY SECTION(Amending WSR 02-04-064, filed 1/31/02, effective 3/15/02)
WAC 4-25-756 I am licensed in another state -- How do I notify the board of my intent to enter the state in order to obtain practice privileges in the state of Washington? If you hold a valid license to practice public accountancy in another state, you may practice public accountancy in Washington state under a grant of practice privileges if:
(1) You are an individual;
(2) Your qualifications are found to be substantially equivalent to a Washington licensee because:
(a) Your education, examination, and experience are deemed by the board to be substantially equivalent to Washington's requirements for initial licensure; or
(b) Your original license was issued by a state the board has deemed to be substantially equivalent to Washington's requirements;
(3) Your principal place of business in not in Washington state; and
(4) You comply with the act and all board rules applicable to Washington state licensees and subject yourself to discipline for violation of the act or board rules.
(5) You notify the board of your intent to enter the state using the form(s) provided by the board.
You need to fully complete the form(s) and submit the form(s), all applicable fees, and all required documentation to the board's office.
Notification is not complete and cannot be processed until all fees, required documentation, required information, and other documentation deemed necessary by the board are received by the board. The board will mail its confirmation of the receipt of your notification to the last address you provided to the board.
Your notification will expire on June 30 of the third calendar year following the date you submit your notification.
Provided no sanctions or investigations by other jurisdictions are in process and you have met the requirements for practice privileges, upon filing your notification with the board, you may use the CPA title in Washington state.
You must notify the board within thirty days if your license or certificate issued by another jurisdiction has lapsed or otherwise becomes invalid.
Unless you are a sole practitioner)) With the exception
of out-of-state sole practitioning CPAs holding valid practice
privileges in Washington state under WAC 4-25-756, you may
only offer to provide attest services in a (( licensed)) CPA
firm licensed by the board and meeting the requirements of WAC 4-25-750.
[Statutory Authority: RCW 18.04.350(2). 02-04-064, § 4-25-756, filed 1/31/02, effective 3/15/02.]
AMENDATORY SECTION(Amending WSR 01-22-036, filed 10/30/01, effective 12/1/01)
WAC 4-25-782 How do I apply for an initial Washington state license through foreign reciprocity? Pursuant to RCW 18.04.183 the board may issue a license through foreign reciprocity provided you meet the requirements for application through foreign reciprocity established by the act, WAC 4-25-781 and 4-25-830(7).
To apply for an initial Washington state CPA license, you must use the foreign reciprocity application form(s) provided by the board.
You need to fully complete the form(s), and submit the form(s), all applicable fees, required information, required documentation, or other documentation deemed necessary by the board to the board's office.
An application is not complete and cannot be processed until all fees, required information, required documentation, or other documentation deemed necessary by the board are received by the board. When the processing of your application is complete, your license will be mailed to the last address you provided to the board.
Your Washington state CPA license will expire on June 30 of the third calendar year following initial licensure.
You may not use the title CPA until you have received
notice from the board that your Washington state license has
been approved. With the exception of out-of-state sole
practitioning CPAs holding valid practice privileges in
Washington state under WAC 4-25-756, attest services may only
be offered or performed in a CPA firm licensed by the
Washington state)) board (( of accountancy)) and meeting the
requirements of WAC 4-25-750.
[Statutory Authority: RCW 18.04.183. 01-22-036, § 4-25-782, filed 10/30/01, effective 12/1/01. Statutory Authority: RCW 18.04.055 and 18.04.183. 00-11-076, § 4-25-782, filed 5/15/00, effective 6/30/00.]
AMENDATORY SECTION(Amending WSR 02-04-064, filed 1/31/02, effective 3/15/02)
WAC 4-25-820 What are the requirements for participating in quality assurance review (QAR)? (1) Purpose. The Washington state board of accountancy is charged with protection of the public interest and ensuring the integrity of financial information as it relates to the licensure of ((
certified public accountants ())CPAs(( ))) and CPA firms. The purpose of the QAR program is to monitor licensees'
compliance with attest standards.
(2) Structure and implementation.
(a) The board will annually appoint a quality assurance review committee to perform the following functions:
(i) Review of financial statements and the reports of licensees thereon to assess their compliance with applicable professional standards;
(ii) Improvement of reporting practices of licensees through education and rehabilitative measures;
(iii) Referral of cases requiring further investigation
to the board ((
or its designee)); and
(iv) Such other functions as the board may assign to the committee.
(b) Once every three years the board ((
may request from))
will require each licensed firm(( , and such)) to participate
in the board's quality assurance review program.
Participating firms will be notified by the board in January
of the reporting requirement, and participating firms will be
required to submit a quality assurance review status form,
along with the appropriate fee, by the following April 30th.
Failure to submit a complete quality assurance review status
form postmarked by the April 30th due date, will result in the
assessment of late fees. The board may waive late fees based
on individual hardship including, but not limited to,
financial hardship, critical illness, or active military
(c) Each participating firm shall submit, for each of its offices, a compilation report, a review report, and an audit report. A firm shall select these reports from all reports prepared during the twelve months preceding the date of board request or, if no reports have been issued within the last twelve months, from all reports during the preceding three years.
If reports issued by all offices of a firm are reviewed and issued in a controlled, centralized process, only one of each of the reports specified above need be submitted by the firm as a whole.
(c))) (d) The board may exempt from the requirement of
(( (b))) (c) of this subsection any firm which has participated
in a board-approved peer review program within the three years
immediately preceding the date of board request. Firms
requesting exemption must submit a copy of an unmodified
report, letter of comments, response to letter of comments, if
applicable, and letter of acceptance from the reviewing
organization. Firms that receive modified peer review reports
may request exemption, but must submit copies of such reports
and related correspondence, at the discretion of the board,
for consideration on an individual basis.
(d))) (e) Any documents submitted in accordance with
(( (b))) (c) of this subsection may have the name of the
client, the client's address, and other identifying factors
omitted, provided that the omission does not render the type
or nature of the (( enterprise)) entity undeterminable. Dates
may not be omitted.
(e) The committee may solicit and review financial
statements and related reports of licensees from clients,
public agencies, banks, and other users of financial
In gathering information about the attest work of
licensees, the committee may make use of investigators, either
paid or unpaid, who are not themselves members of the
(g) The identities of the sources of financial statements
and reports received by the board or the committee from other
than the licensees who issued the reports shall be preserved
in confidence.)) Reports submitted to the committee pursuant
(b))) (c) of this subsection and comments of reviewers,
the committee and the board on such reports or workpapers
relating thereto, shall also be preserved in confidence except
to the extent that they are communicated by the board to the
licensees who issued the reports or disclosure is required
under administrative procedure rules or by direction of a
court of law.
(h))) (g) The committee's review of financial
statements and reports of the licensees thereon shall be
directed toward the following:
(i) Presentation of financial statements in conformity with generally accepted accounting principles or other comprehensive basis of accounting, if applicable;
(ii) Compliance by licensees with generally accepted auditing standards;
(iii) Compliance by licensees with other professional standards; and
(iv) Compliance by licensees with the rules of the board and other regulations relating to the practice of public accounting.
(i))) (h) If the board determines that a report
referred to the board by the committee is substandard or
seriously questionable with respect to applicable professional
standards, the board may take one or more of the following
(i) Send the licensee ((
firm)) a letter of comment
detailing the perceived deficiencies and require the licensee
to develop quality control procedures to ensure that similar
occurrences will not occur in the future;
(ii) Require any ((
individual)) licensee who had
responsibility for issuance of a report, or who substantially
participated in preparation of the report and/or related
workpapers, to successfully complete specific courses or types
of continuing education as specified by the board;
(iii) Require that the ((
office)) licensee responsible
for a substandard report submit all or specified categories of
its reports to a preissuance review in a manner and for a
duration prescribed by the board. The cost of the preissuance
review will be at the firm's expense;
(iv) Require the ((
office or the)) licensee (( firm))
responsible for a substandard report to submit to a peer
review conducted in accordance with standards acceptable to
the board. The cost of the peer review will be at the
(( firm's)) licensee's expense;
(v) Require the licensee ((
firm)) responsible for
substandard work to submit to on-site field review or other
investigative procedures of work product and practices by
board representatives in order to assess the degree or
pervasiveness of substandard work. The board may assess the
costs of such field review or procedures to the (( firm))
licensee if the results of such investigative efforts
substantiate the existence of substandard work product;
(vi) Initiate an investigation pursuant to RCW 18.04.295,
18.04.305, and/or 18.04.320 ((
if it appears that the
professional conduct reflected in a substandard report is so
serious as to warrant consideration of possible disciplinary
(i) The board may solicit and review financial statements and related reports of licensees from clients, public agencies, banks, and other users of financial statements. In gathering information about the attest work of licensees, the board may make use of investigators.
[Statutory Authority: RCW 18.04.055(9). 02-04-064, § 4-25-820, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055. 94-02-071, § 4-25-820, filed 1/4/94, effective 2/4/94.]