Bill Text: IA HF246 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act relating to the regulation of certified public accountants and certified public accounting firms. (Formerly HSB 72)

Sponsorship: Committee Bill

Status: (Introduced - Dead) 2015-03-24 - Withdrawn. H.J. 683. [HF246 Detail]

Download: Iowa-2015-HF246-Introduced.html

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House File 246 - Introduced




                                 HOUSE FILE       
                                 BY  COMMITTEE ON STATE
                                     GOVERNMENT

                                 (SUCCESSOR TO HSB 72)

                                 (COMPANION TO SF 198
                                     BY COMMITTEE ON STATE
                                     GOVERNMENT)

                                      A BILL FOR

  1 An Act relating to the regulation of certified public
  2    accountants and certified public accounting firms.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    TLSB 1720HV (1) 86
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PAG LIN



  1  1    Section 1.  Section 80A.2, Code 2015, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  10.  A certified public accountant
  1  4 authorized to practice pursuant to chapter 542, while
  1  5 performing duties as a certified public accountant.
  1  6    Sec. 2.  Section 542.3, subsection 26, Code 2015, is amended
  1  7 to read as follows:
  1  8    26.  "Report", when used with reference to financial
  1  9 statements any attest or compilation services, means a report,
  1 10 opinion, or other form of a writing that states or implies
  1 11 assurance as to the reliability of any the attested information
  1 12 or compiled financial statements and that includes or is
  1 13 accompanied by a statement or implication that the person or
  1 14 firm issuing the report has special knowledge or competence
  1 15 in accounting or auditing. Such statement or implication
  1 16 of special knowledge or competence may arise from use by
  1 17 the issuer of the report of names or titles indicating that
  1 18 the person or firm is an accountant or auditor, or from the
  1 19 language of the report itself. "Report" includes any form
  1 20 of language which disclaims an opinion when such form of
  1 21 language is conventionally understood to imply a positive
  1 22 assurance as to the reliability of the attested information or
  1 23 compiled financial statements referred to or special knowledge
  1 24 or competence on the part of the person or firm issuing the
  1 25 language, and any other form of language that is conventionally
  1 26 understood to imply such assurance or such special knowledge
  1 27 or competence.
  1 28    Sec. 3.  Section 542.7, subsection 3, Code 2015, is amended
  1 29 by adding the following new paragraph:
  1 30    NEW PARAGRAPH.  0c.  (1)  Notwithstanding chapter 496C or
  1 31 any other provision of law to the contrary, a certified public
  1 32 accounting firm organized as a professional corporation under
  1 33 chapter 496C may have nonlicensee owners provided that the firm
  1 34 complies with the requirements of this section.
  1 35    (2)  Notwithstanding chapter 489, article 11, or any other
  2  1 provision of law to the contrary, a certified public accounting
  2  2 firm organized as a professional limited liability company
  2  3 under chapter 489, article 11, may have nonlicensee members
  2  4 provided that the professional limited liability company
  2  5 complies with the requirements of this section.
  2  6    Sec. 4.  Section 542.7, subsection 3, paragraphs c and d,
  2  7 Code 2015, are amended to read as follows:
  2  8    c.  A licensee or person with a practice privilege under
  2  9 section 542.20 who is responsible for supervising attest
  2 10 or compilation services and signs or authorizes someone to
  2 11 sign the accountant's report on the financial statements on
  2 12 behalf of the firm shall meet the experience or competency
  2 13 requirements set out in nationally recognized professional
  2 14 standards for such services.
  2 15    d.  A licensee or person with a practice privilege under
  2 16 section 542.20 who signs or authorizes someone to sign the
  2 17 accountant's report on the financial statements on behalf of
  2 18 the firm shall meet the experience or competency requirements
  2 19 established in paragraph "c".
  2 20    Sec. 5.  Section 542.7, subsection 6, paragraph a, Code 2015,
  2 21 is amended by striking the paragraph.
  2 22    Sec. 6.  Section 542.7, subsection 8, paragraph a, Code 2015,
  2 23 is amended to read as follows:
  2 24    a.  The board, by rule, shall require as a condition
  2 25 of renewal of a permit to practice as a certified public
  2 26 accounting firm, that an applicant undergo, no more frequently
  2 27 than once every three years, a peer review conducted in such
  2 28 manner as the board specifies. The review shall include a
  2 29 verification that any individual in the firm who is responsible
  2 30 for supervising attest and compilation services and who signs
  2 31 or authorizes someone to sign the accountant's report on a
  2 32 financial statement on behalf of the firm meets the competency
  2 33 requirements set forth in the professional standards for such
  2 34 services.
  2 35    Sec. 7.  Section 542.7, subsection 9, paragraph a, Code 2015,
  3  1 is amended to read as follows:
  3  2    a.  The applicant does not engage in, and does not intend to
  3  3 engage in during the following year, financial reporting areas
  3  4 of practice, including but not limited to financial audits,
  3  5 compilations, and reviews. An applicant granted a waiver
  3  6 pursuant to this paragraph shall immediately notify the board
  3  7 if the applicant engages in such practice, and shall be subject
  3  8 to peer review.
  3  9    Sec. 8.  Section 542.13, subsections 8 and 11, Code 2015, are
  3 10 amended to read as follows:
  3 11    8.  A nonlicensee shall not use language in any statement
  3 12 relating to the financial affairs of a person or entity which
  3 13 is conventionally used by licensees in reports on financial
  3 14 statements or any attest service. The board shall develop and
  3 15 issue language which nonlicensees may use in connection with
  3 16 such financial information.
  3 17    11.  This section does not apply to a person or firm holding
  3 18 a certification, designation, degree, or license granted in a
  3 19 foreign country entitling the holder to engage in the practice
  3 20 of public accountancy or its equivalent in such country, whose
  3 21 activities in this state are limited to providing professional
  3 22 services to a person or firm who is a resident of, government
  3 23 of, or business entity of the country in which the person holds
  3 24 such entitlement, who does not perform attest or compilation
  3 25 services, and who does not issue reports with respect to the
  3 26 financial statements information of any other person, firm, or
  3 27 governmental unit in this state, and who does not use in this
  3 28 state any title or designation other than the one under which
  3 29 the person practices in such country, followed by a translation
  3 30 of such title or designation into the English language, if it
  3 31 is in a different language, and by the name of such country.
  3 32    Sec. 9.  Section 542.17, unnumbered paragraph 1, Code 2015,
  3 33 is amended to read as follows:
  3 34    A licensee shall not voluntarily disclose information
  3 35 communicated to the licensee by a client relating to and
  4  1 in connection with services rendered to the client by the
  4  2 licensee, except with the permission of the client, or an
  4  3 heir, successor, or personal representative of the client.
  4  4 Such information is deemed to be confidential. However, this
  4  5 section shall not be construed as prohibiting the disclosure of
  4  6 information required to be disclosed by the standards of the
  4  7 public accounting profession in reporting on the examination of
  4  8 financial statements or in the performance of an attest service
  4  9  or as prohibiting disclosures in a court proceeding, in an
  4 10 investigation or proceeding under this chapter or chapter 272C,
  4 11 in an ethical investigation conducted by a private professional
  4 12 organization, in the course of a peer review, to another person
  4 13 active in the licensee's firm performing services for that
  4 14 client on a need=to=know basis, to persons associated with the
  4 15 investigative entity who need this information for the sole
  4 16 purpose of assuring quality control, or as otherwise required
  4 17 by law.
  4 18                           EXPLANATION
  4 19 The inclusion of this explanation does not constitute agreement with
  4 20 the explanation's substance by the members of the general assembly.
  4 21    This bill relates to the regulation of accountants in
  4 22 the state.  The bill exempts a certified public accountant
  4 23 authorized to practice in the state from the requirements
  4 24 listed under the private investigative agencies and security
  4 25 agents Code chapter.
  4 26    The bill amends the definition of report to include
  4 27 references to attested information.  In the Code provision
  4 28 addressing permits for accounting firms that perform attest
  4 29 services, the bill makes conforming changes.  The bill replaces
  4 30 a reference to "financial statement" with "information" in a
  4 31 Code provision providing that the unlawful acts section of
  4 32 Code chapter 542 does not apply to certain  holders of licenses
  4 33 granted by foreign countries.
  4 34    The bill eliminates a Code provision requiring a holder
  4 35 or applicant of a certified public accounting firm permit,
  5  1 which is required for accounting firms that perform attest
  5  2 services in the state, to notify the Iowa accountancy examining
  5  3 board within 30 days of a change in the identity of a partner,
  5  4 officer, shareholder, member, or manager who performs
  5  5 professional services in Iowa.  Current Code allows certified
  5  6 public accounting firms to include nonlicensee owners with some
  5  7 requirements.  The bill allows certified public accounting
  5  8 firms organized as professional corporations or professional
  5  9 limited liability companies to include a nonlicensee owner
  5 10 as long as the firm meets the current requirements and rules
  5 11 established by the Iowa accountancy examining board.
       LSB 1720HV (1) 86
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