H.F. 246 Section 1. Section 80A.2, Code 2015, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 10. A certified public accountant 3 authorized to practice pursuant to chapter 542, while 4 performing duties as a certified public accountant. 5 Sec. 2. Section 542.3, subsection 26, Code 2015, is amended 6 to read as follows: 7 26. “Report” , when used with reference to financial 8 statements any attest or compilation services , means a report, 9 opinion, or other form of a writing that states or implies 10 assurance as to the reliability of any the attested information 11 or compiled financial statements and that includes or is 12 accompanied by a statement or implication that the person or 13 firm issuing the report has special knowledge or competence 14 in accounting or auditing. Such statement or implication 15 of special knowledge or competence may arise from use by 16 the issuer of the report of names or titles indicating that 17 the person or firm is an accountant or auditor, or from the 18 language of the report itself. “Report” includes any form 19 of language which disclaims an opinion when such form of 20 language is conventionally understood to imply a positive 21 assurance as to the reliability of the attested information or 22 compiled financial statements referred to or special knowledge 23 or competence on the part of the person or firm issuing the 24 language, and any other form of language that is conventionally 25 understood to imply such assurance or such special knowledge 26 or competence. 27 Sec. 3. Section 542.7, subsection 3, Code 2015, is amended 28 by adding the following new paragraph: 29 NEW PARAGRAPH . 0c. (1) Notwithstanding chapter 496C or 30 any other provision of law to the contrary, a certified public 31 accounting firm organized as a professional corporation under 32 chapter 496C may have nonlicensee owners provided that the firm 33 complies with the requirements of this section. 34 (2) Notwithstanding chapter 489, article 11, or any other 35 -1- LSB 1720HV (1) 86 ad/rj 1/ 5

H.F. 246 provision of law to the contrary, a certified public accounting 1 firm organized as a professional limited liability company 2 under chapter 489, article 11, may have nonlicensee members 3 provided that the professional limited liability company 4 complies with the requirements of this section. 5 Sec. 4. Section 542.7, subsection 3, paragraphs c and d, 6 Code 2015, are amended to read as follows: 7 c. A licensee or person with a practice privilege under 8 section 542.20 who is responsible for supervising attest 9 or compilation services and signs or authorizes someone to 10 sign the accountant’s report on the financial statements on 11 behalf of the firm shall meet the experience or competency 12 requirements set out in nationally recognized professional 13 standards for such services. 14 d. A licensee or person with a practice privilege under 15 section 542.20 who signs or authorizes someone to sign the 16 accountant’s report on the financial statements on behalf of 17 the firm shall meet the experience or competency requirements 18 established in paragraph “c” . 19 Sec. 5. Section 542.7, subsection 6, paragraph a, Code 2015, 20 is amended by striking the paragraph. 21 Sec. 6. Section 542.7, subsection 8, paragraph a, Code 2015, 22 is amended to read as follows: 23 a. The board, by rule, shall require as a condition 24 of renewal of a permit to practice as a certified public 25 accounting firm, that an applicant undergo, no more frequently 26 than once every three years, a peer review conducted in such 27 manner as the board specifies. The review shall include a 28 verification that any individual in the firm who is responsible 29 for supervising attest and compilation services and who signs 30 or authorizes someone to sign the accountant’s report on a 31 financial statement on behalf of the firm meets the competency 32 requirements set forth in the professional standards for such 33 services. 34 Sec. 7. Section 542.7, subsection 9, paragraph a, Code 2015, 35 -2- LSB 1720HV (1) 86 ad/rj 2/ 5

H.F. 246 is amended to read as follows: 1 a. The applicant does not engage in, and does not intend to 2 engage in during the following year, financial reporting areas 3 of practice, including but not limited to financial audits, 4 compilations, and reviews. An applicant granted a waiver 5 pursuant to this paragraph shall immediately notify the board 6 if the applicant engages in such practice, and shall be subject 7 to peer review. 8 Sec. 8. Section 542.13, subsections 8 and 11, Code 2015, are 9 amended to read as follows: 10 8. A nonlicensee shall not use language in any statement 11 relating to the financial affairs of a person or entity which 12 is conventionally used by licensees in reports on financial 13 statements or any attest service . The board shall develop and 14 issue language which nonlicensees may use in connection with 15 such financial information. 16 11. This section does not apply to a person or firm holding 17 a certification, designation, degree, or license granted in a 18 foreign country entitling the holder to engage in the practice 19 of public accountancy or its equivalent in such country, whose 20 activities in this state are limited to providing professional 21 services to a person or firm who is a resident of, government 22 of, or business entity of the country in which the person holds 23 such entitlement, who does not perform attest or compilation 24 services, and who does not issue reports with respect to the 25 financial statements information of any other person, firm, or 26 governmental unit in this state, and who does not use in this 27 state any title or designation other than the one under which 28 the person practices in such country, followed by a translation 29 of such title or designation into the English language, if it 30 is in a different language, and by the name of such country. 31 Sec. 9. Section 542.17, unnumbered paragraph 1, Code 2015, 32 is amended to read as follows: 33 A licensee shall not voluntarily disclose information 34 communicated to the licensee by a client relating to and 35 -3- LSB 1720HV (1) 86 ad/rj 3/ 5

H.F. 246 in connection with services rendered to the client by the 1 licensee, except with the permission of the client, or an 2 heir, successor, or personal representative of the client. 3 Such information is deemed to be confidential. However, this 4 section shall not be construed as prohibiting the disclosure of 5 information required to be disclosed by the standards of the 6 public accounting profession in reporting on the examination of 7 financial statements or in the performance of an attest service 8 or as prohibiting disclosures in a court proceeding, in an 9 investigation or proceeding under this chapter or chapter 272C , 10 in an ethical investigation conducted by a private professional 11 organization, in the course of a peer review, to another person 12 active in the licensee’s firm performing services for that 13 client on a need-to-know basis, to persons associated with the 14 investigative entity who need this information for the sole 15 purpose of assuring quality control, or as otherwise required 16 by law. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to the regulation of accountants in 21 the state. The bill exempts a certified public accountant 22 authorized to practice in the state from the requirements 23 listed under the private investigative agencies and security 24 agents Code chapter. 25 The bill amends the definition of report to include 26 references to attested information. In the Code provision 27 addressing permits for accounting firms that perform attest 28 services, the bill makes conforming changes. The bill replaces 29 a reference to “financial statement” with “information” in a 30 Code provision providing that the unlawful acts section of 31 Code chapter 542 does not apply to certain holders of licenses 32 granted by foreign countries. 33 The bill eliminates a Code provision requiring a holder 34 or applicant of a certified public accounting firm permit, 35 -4- LSB 1720HV (1) 86 ad/rj 4/ 5

H.F. 246 which is required for accounting firms that perform attest 1 services in the state, to notify the Iowa accountancy examining 2 board within 30 days of a change in the identity of a partner, 3 officer, shareholder, member, or manager who performs 4 professional services in Iowa. Current Code allows certified 5 public accounting firms to include nonlicensee owners with some 6 requirements. The bill allows certified public accounting 7 firms organized as professional corporations or professional 8 limited liability companies to include a nonlicensee owner 9 as long as the firm meets the current requirements and rules 10 established by the Iowa accountancy examining board. 11 -5- LSB 1720HV (1) 86 ad/rj 5/ 5