Bill Text: IN SB0396 | 2011 | Regular Session | Introduced
Bill Title: Peer review of accountants and accounting firms.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-01-11 - Senator Broden added as second author [SB0396 Detail]
Download: Indiana-2011-SB0396-Introduced.html
Citations Affected: IC 25-1-11-12; IC 25-2.1; IC 34-30-2-158;
IC 34-46-2-17.
Synopsis: Peer review of accountants and accounting firms. Changes
the phrase "quality review" to "peer review" for purposes of the laws
governing public accountancy beginning July 1, 2012. Permits a peer
review rating of fail to be used in disciplining a certified public
accountant or public accounting firm after June 30, 2012. Indicates that
a law requiring the state board of accountancy to initiate a complaint
with the office of the attorney general to discipline a licensee does not
prohibit the board from taking other actions permitted by law. Specifies
that certain client records must be returned to a client within 45 days
after a request for the records is made. Provides civil immunity to a
person engaged in a quality review or peer review or administering a
quality review or peer review program.
Effective: July 1, 2011.
January 11, 2011, read first time and referred to Committee on Commerce & Economic
Development.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
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A BILL FOR AN ACT to amend the Indiana Code concerning
professions and occupations.
(1) Permanently revoke a practitioner's license.
(2) Suspend a practitioner's license.
(3) Censure a practitioner.
(4) Issue a letter of reprimand.
(5) Place a practitioner on probation status and require the practitioner to:
(A) report regularly to the board upon the matters that are the basis of probation;
(B) limit practice to those areas prescribed by the board;
(C) continue or renew professional education approved by the board until a satisfactory degree of skill has been attained in
those areas that are the basis of the probation; or
(D) perform or refrain from performing any acts, including
community restitution or service without compensation, that
the board considers appropriate to the public interest or to the
rehabilitation or treatment of the practitioner; or
(E) if the practitioner is a licensee (as defined in
IC 25-2.1-1-8), satisfactorily complete a quality review
(before July 1, 2012) or peer review (after June 30, 2012)
specified by the board as a condition for termination of
probationary status.
(6) Assess a civil penalty against the practitioner for not more
than one thousand dollars ($1,000) for each violation listed in
sections 5 through 9 of this chapter except for a finding of
incompetency due to a physical or mental disability.
(7) Order a practitioner to pay consumer restitution to a person
who suffered damages as a result of the conduct or omission that
was the basis for the disciplinary sanctions under this chapter.
(b) When imposing a civil penalty under subsection (a)(6), the board
shall consider a practitioner's ability to pay the amount assessed. If the
practitioner fails to pay the civil penalty within the time specified by
the board, the board may suspend the practitioner's license without
additional proceedings. However, a suspension may not be imposed if
the sole basis for the suspension is the practitioner's inability to pay a
civil penalty.
(c) The board may withdraw or modify the probation under
subsection (a)(5) if the board finds after a hearing that the deficiency
that required disciplinary action has been remedied or that changed
circumstances warrant a modification of the order.
(1) an individual who; or
(2) a firm in the practice of accountancy that;
attests or issues compilation reports, by at least one (1) individual who holds a certificate from any state and possesses qualifications that meet the applicable substantial equivalency standards and who is independent of the individual or firm being reviewed. The term includes any part of a quality review conducted before July 1, 2012, that becomes part of a peer review conducted or peer review report issued after June 30, 2012.
(b) After June 30, 2012, any reference in any law, rule, or other document to "quality review" as that term was applied under this article before July 1, 2012, shall be treated as a reference to peer review.
(1) an individual who; or
(2) a firm in the practice of accountancy that;
attests or issues compilation reports, by at least one (1) individual who holds a certificate from any state and possesses qualifications that meet the applicable substantial equivalency standards and who is independent of the individual or firm being reviewed.
(b) This section expires July 1, 2012.
(1) The board's meetings and conduct of business.
(2) The procedure of investigations and hearings.
(3) The educational and experience qualifications required for the issuance of certificates under this article and the continuing professional education required for renewal of certificates under IC 25-2.1-4.
(4) Rules of professional conduct directed to controlling the quality and probity of the practice of accountancy by licensees, including independence, integrity, and objectivity, competence and technical standards, and responsibilities to the public and clients.
(5) The actions and circumstances that constitute professing to be a licensee in connection with the practice of accountancy.
(6) The manner and circumstances of use of the title "certified public accountant" and the abbreviation "CPA".
(7) Quality reviews (before July 1, 2012) or peer reviews (after June 30, 2012) that may be required to be performed under this article.
(8) Methods of applying for and conducting the examinations, including methods for grading examinations and determining a passing grade required of an applicant for a certificate. However,
the board shall to the extent possible provide that the
examination, grading of the examination, and the passing grades
are uniform with those applicable in other states.
(9) Substantial equivalency.
(10) Administration of the accountant investigative fund
established by IC 25-2.1-8-4.
(b) The rules adopted under subsection (a) must:
(1) be adopted reasonably in advance of the time when a quality review (before July 1, 2012) or peer review (after June 30, 2012) first becomes effective;
(2) include reasonable provision for compliance by an applicant showing that the applicant has in the preceding three (3) years undergone a quality review (before July 1, 2012) or peer review (after June 30, 2012) that is a satisfactory equivalent to the quality review (before July 1, 2012) or peer review (after June 30, 2012) required under this section;
(3) require, with respect to quality reviews (before July 1, 2012) or peer reviews (after June 30, 2012) under subdivision (2), that the quality review (before July 1, 2012) or peer review (after June 30, 2012) be subject to review by an oversight body established or sanctioned by the board that shall:
(A) comply with IC 25-2.1-9-4; and
(B) periodically report to the board on the effectiveness of the review program and provide to the board a listing of firms that have participated in a quality review (before July 1, 2012) or peer review (after June 30, 2012) program; and
(4) subject to section 9 of this chapter and IC 25-2.1-9-4, require, with respect to quality reviews (before July 1, 2012) or peer reviews (after June 30, 2012) under subdivision (2), that:
(A) the proceedings, records, and work papers of a review committee are privileged and are not subject to discovery, subpoena, or other means of legal process or introduction into evidence in a civil action, arbitration, administrative proceeding, or Indiana board of accountancy proceeding; and
(B) a member of the review committee or individual who was
involved in the quality review (before July 1, 2012) or peer
review (after June 30, 2012) process is not permitted or
required to testify in a civil action, arbitration, administrative
proceeding, or Indiana board of accountancy proceeding to
matters:
(i) produced, presented, disclosed or discussed during, or in
connection with, the quality review (before July 1, 2012) or
peer review (after June 30, 2012) process; or
(ii) that involve findings, recommendations, evaluations,
opinions, or other actions of the committee or a committee
member.
(b) Any:
(1) materials prepared in connection with a particular engagement merely because they happen to subsequently be presented or considered as part of the quality review (before July 1, 2012) or peer review (after June 30, 3012) process; or
(2) dispute between review committees and individuals or firms subject to a quality review (before July 1, 2012) or peer review (after June 30, 2012) arising from the performance of the quality review (before July 1, 2012) or peer review (after June 30, 2012);
are not privileged.
(1) A violation of IC 25-1-11-5, including:
(A) a peer review rating of fail; or
(B) an act or omission that is the basis of a peer review rating of fail;
on any peer review report issued under this article after June 30, 2012.
(2) Revocation or suspension of the right to practice before a state or federal agency.
(3) Dishonesty, fraud, or gross negligence in the practice of accountancy or in the filing of or failure to file the licensee's own income tax returns.
(4) Any conduct reflecting adversely on the licensee's fitness to engage in the practice of accountancy.
(5) Failure to complete continuing education requirements satisfactorily.
(6) Failure to furnish evidence, when required, of satisfactory completion of continuing education requirements.
(b) A holder of a CPA certificate issued under this article is subject to disciplinary action in this state if the CPA certificate holder:
(1) offers or renders services or uses the CPA title in another state; and
(2) commits an act in that other state for which the CPA certificate holder would be subject to discipline in the other state if the CPA certificate holder were licensed in the other state.
The board shall investigate a complaint made by a board of accountancy or the equivalent of a board of accountancy in another state.
(1) To undergo a quality review
(2)
(1) the board shall direct that a complaint be issued under IC 25-1-7, if the subject of the investigation is a licensee; and
(2) the board shall take appropriate action under IC 25-1-7-14, if the subject of the investigation is not a licensee.
(b) Subsection (a) does not prohibit the board from taking an action permitted under IC 25-2.1-8-2 or IC 25-1, including an action under the following:
(1) IC 25-1-4-5 (conditional license and other actions related to continuing education or lapsed license).
(2) IC 25-1-6-4 (refusal to issue a license or placement on
probationary status).
(b) (c) If the board does not proceed under subsection (a) or (b), the
board shall close the matter and may release the information only with
the consent of the individual or firm that was under investigation.
(b) The following definitions apply throughout this section:
(1) "Administering entity" refers to the oversight body established or sanctioned by the board to conduct a peer review program.
(2) "Director" refers to the director of the division of consumer protection in the office of the attorney general.
(3) "Oversight committee" refers to a committee of licensees who are not board members that is designated by the board to receive a report.
(4) "Report" refers to a peer review report described in subsection (a), including any description of the deficiencies on which the peer review rating of fail is based.
(c) The board shall provide the director with the name and contact information for the administering entity.
(d) Not more than thirty (30) days after the issuance of a report, the administering entity shall make the report available to the oversight committee. The oversight committee may forward the report to the director. Receipt of the report shall be treated under IC 25-1-7-4, IC 25-1-7-5, and IC 25-1-7-6 as a complaint submitted by the board. If, after conducting an investigation, the director believes that a licensee should be subjected to disciplinary sanctions by the board, the director shall report the director's determination to the attorney general. Upon receiving the director's report, the attorney general may prosecute the matter, on behalf of the state of Indiana, before the board. IC 25-1-7-7(b) does not apply to a determination related to a complaint filed under this section.
(e) The administering entity and the peer review committee issuing a report shall cooperate with an investigation under IC 25-1-7 of a complaint filed under this section and with any resulting proceeding, including compliance with any request for access to or production of the proceedings, records, and work papers of the review committee by the director, the office of the
attorney general, or a party to any proceeding initiated as a result
of the filing of a complaint under this section. However, all
complaints and information pertaining to a complaint are
confidential until the attorney general files notice with the board
of the attorney general's intent to prosecute a licensee under
IC 25-1-7-7. Any meeting of the board, the oversight committee, or
a designee of the board or oversight committee that is required in
an investigation conducted before the attorney general files notice
of intent to prosecute shall be conducted as an executive session
under IC 5-14-1.5-6.1.
(1) entity administering a quality review program before July 1, 2012, or a peer review program after June 30, 2012;
(2) officer, member, or employee of an entity administering a quality review program before July 1, 2012, or a peer review program after June 30, 2012;
(3) employee or member of a quality review committee before July 1, 2012, or a peer review committee after June 30, 2012; and
(4) entity in which or for which a member of a quality review committee (before July 1, 2012) or peer review committee (after June 30, 2012) is a sole proprietor, a partner, a shareholder, a member, or an employee;
is immune from civil liability that would otherwise arise from communications, supervision, findings, recommendations, evaluations, reports, opinions, or other actions taken or omissions occurring in good faith in the course and scope of the duties of a quality review administering entity (before July 1, 2012) or peer review administering entity (after June 30, 2012) or a quality review committee (before July 1, 2012) or peer review committee (after June 30, 2012) that arise under this article, including the rules adopted by the board. The immunity granted under this section includes immunity for an act or omission related to any part of a quality review conducted under this article before July 1, 2012, that becomes part of a peer review conducted or peer review report issued after June 30, 2012.
continuing professional education, and the board may make the
reinstatement of a certificate or permit conditional on satisfactory
completion of a quality review (before July 1, 2012) or peer review
(after June 30, 2012) specified by the board.
(1) in rendering an opinion on the presentation of financial statements;
(2) in ethical investigations conducted by private professional organizations;
(3) in the course of quality reviews (before July 1, 2012) or peer reviews (after June 30, 2012) or an investigation or proceeding related to a quality review (before July 1, 2012) or peer review (after June 30, 2012); or
(4) in making disclosure where the financial statements or the professional services of an accountant are contested.
(1) "Client provided records" means accounting or other records belonging to the client that were provided to the licensee by or on behalf of the client.
(2) "Client records prepared by the licensee" means accounting or other records (for example, tax returns, general ledgers, subsidiary journals, and supporting schedules such as detailed employee payroll records and depreciation schedules) that the licensee was engaged to prepare for the client.
(3) "Supporting records" means information not reflected in the client's books and records that are otherwise not available to the client with the result that the client's financial information is incomplete.
(4) "Working papers" include, but are not limited to, audit programs, analytical review schedules, and statistical sampling results, analyses, and schedules prepared by the client at the request of the licensee.
(b) All statements, records, schedules, working papers, and memoranda made by a licensee or a partner, a member, a shareholder,
an officer, a director, or an employee of a licensee, including
information prepared by the client for the work and services rendered
to a client in the practice of accountancy, except the reports submitted
by the licensee to the client and records that are part of the client's
records, must remain the property of the licensee except in an express
agreement between the licensee and the client to the contrary.
(c) Upon a client's request, a licensee is required to provide the
following to the client:
(1) Client provided records in the licensee's custody or
control.
(2) Client records prepared by the licensee. However, client
records prepared by the licensee may be withheld if the
preparation of the records is not complete or there are fees
due the licensee for the engagement to prepare those records.
(3) Supporting records related to a completed and issued
work product of a licensee. However, supporting records
prepared by the licensee may be withheld if there are fees due
to the licensee for the specific work product.
(d) A licensee may make and retain a copy of any records
returned to a client. Records may be provided in any format usable
to the client. To the extent practicable, records shall be returned to
a client not more than forty-five (45) days after a request is
received.
(b) A licensee is not required to keep any work paper beyond the period prescribed in any applicable statute.
(Concerning proceedings, records, and work papers of a quality review committee that conducts a quality review of an accounting firm before July 1, 2012, or a peer review committee that conducts a peer review of an accounting firm after June 30, 2012).
