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PAG LIN 1 1 Section 1. NEW SECTION. 542D.1 TITLE. 1 2 This chapter shall be known and may be cited as the "Iowa 1 3 Accountancy Act of 2001". 1 4 Sec. 2. NEW SECTION. 542D.2 LEGISLATIVE INTENT. 1 5 It is the policy of this state, and the purpose of this 1 6 chapter, to promote the reliability of information that is 1 7 used for guidance in financial transactions or for accounting 1 8 for or assessing the financial status or performance of 1 9 commercial, noncommercial, and governmental enterprises. The 1 10 reliance of the public in general and of the business 1 11 community in particular on sound financial reporting imposes 1 12 on persons engaged in such practice certain obligations both 1 13 to their clients and to the public. These obligations, which 1 14 this chapter is intended to enforce, include the obligation to 1 15 maintain independence in thought and action, to strive 1 16 continuously to improve one's professional skills, to observe 1 17 where applicable generally accepted accounting principles and 1 18 generally accepted auditing standards, to promote sound and 1 19 informative financial reporting, to hold the affairs of 1 20 clients in confidence, and to maintain high standards of 1 21 personal conduct in all matters affecting one's fitness to 1 22 practice public accountancy. The public interest requires 1 23 that persons professing special competence in accountancy or 1 24 offering assurance as to the reliability or fairness of 1 25 presentation of such information shall have demonstrated their 1 26 qualifications to do so, and that persons who have not 1 27 demonstrated and maintained such qualifications not be 1 28 permitted to represent themselves as having such special 1 29 competence or to offer such assurance; that the conduct of 1 30 persons licensed as having special competence in accountancy 1 31 be regulated in all aspects of their professional work; that a 1 32 public authority competent to prescribe and assess the 1 33 qualifications and to regulate the conduct of licensees be 1 34 established; and that the use of titles that have a capacity 1 35 or tendency to deceive the public as to the status or 2 1 competence of the persons using such titles be prohibited. 2 2 Sec. 3. NEW SECTION. 542D.3 DEFINITIONS. 2 3 As used in this chapter, unless the context otherwise 2 4 requires: 2 5 1. "Attest" or "attest service" means providing any of the 2 6 following services: 2 7 a. An audit or other engagement to be performed in 2 8 accordance with the statements on auditing standards. 2 9 b. A review of a financial statement to be performed in 2 10 accordance with the statements on standards for accounting and 2 11 review services. 2 12 c. An examination of prospective financial information to 2 13 be performed in accordance with the statements on standards 2 14 for attestation engagements. For purposes of this subsection, 2 15 the statements on standards for attestation engagements means 2 16 those standards adopted by the board, by rule, by reference to 2 17 the standards developed for general application by the 2 18 American institute of certified public accountants, or other 2 19 recognized national accountancy organization. 2 20 2. "Board" means the Iowa accountancy examining board 2 21 established under section 542D.4 or its predecessor under 2 22 prior law. 2 23 3. "Certificate" means a certificate as a certified public 2 24 accountant issued under section 542D.6 or 542D.19, or a 2 25 certificate issued under corresponding prior law. 2 26 4. "Certified public accountant" means a person licensed by 2 27 the board who holds a certificate issued under this chapter or 2 28 corresponding prior law. 2 29 5. "Certified public accounting firm" means a sole 2 30 proprietorship, a corporation, a partnership, a limited 2 31 liability company, or any other form of organization issued a 2 32 permit to practice as a firm of certified public accountants 2 33 under section 542D.7. 2 34 6. "Client" means a person or entity that agrees with a 2 35 licensee or licensee's employer to receive a professional 3 1 service. 3 2 7. "Commission" means a brokerage or other participation 3 3 fee. "Commission" does not include a contingent fee. 3 4 8. "Compilation" means a service performed in accordance 3 5 with statements on standards for accounting and review 3 6 services and presented in the form of financial statements, 3 7 which provides information that is the representation of 3 8 management without undertaking to express any assurance on the 3 9 statements. 3 10 9. "Contingent fee" means a fee established for the 3 11 performance of a service pursuant to an arrangement under 3 12 which a fee will not be charged unless a specified finding or 3 13 result is attained, or under which the amount of the fee is 3 14 otherwise dependent upon the finding or result of such 3 15 service. "Contingent fee" does not mean a fee fixed by a 3 16 court or other public authority, or a fee related to any tax 3 17 matter which is based upon the results of a judicial 3 18 proceeding or the findings of a governmental agency. 3 19 10. "License" means a certificate issued under section 3 20 542D.6 or 542D.19, a permit issued under section 542D.7, or a 3 21 license issued under section 542D.8; or a certificate, permit, 3 22 or license issued under corresponding prior law. 3 23 11. "Licensed public accountant" means a person licensed 3 24 by the board who does not hold a certificate as a certified 3 25 public accountant under this chapter, and who offers to 3 26 perform or performs for the public any of the following 3 27 services: 3 28 a. Records financial transactions in books of record. 3 29 b. Makes adjustments of financial transactions in books of 3 30 record. 3 31 c. Makes trial balances from books of record. 3 32 d. Prepares internal verification and analysis of books or 3 33 accounts of original entry. 3 34 e. Prepares financial statements, schedules, or reports. 3 35 f. Devises and installs systems or methods of bookkeeping, 4 1 internal controls of financial data, or the recording of 4 2 financial data. 4 3 g. Prepares compilations. 4 4 Nothing contained in this definition or elsewhere in this 4 5 chapter shall be construed to permit a licensed public 4 6 accountant to give an opinion attesting to the reliability of 4 7 any representation embracing financial information. 4 8 12. "Licensed public accounting firm" means a sole 4 9 proprietorship, a corporation, a partnership, a limited 4 10 liability company, or any other form of organization issued a 4 11 permit to practice as a firm of licensed public accountants 4 12 under section 542D.8. 4 13 13. "Licensee" means the holder of a license. 4 14 14. "Manager" means a manager of a limited liability 4 15 company. 4 16 15. "Member" means a member of a limited liability 4 17 company. 4 18 16. "Peer review" means a study, appraisal, or review of 4 19 one or more aspects of the professional work of a licensee or 4 20 firm that performs attest or compilation services, by a 4 21 licensed person or persons who are not affiliated with the 4 22 licensee or firm being reviewed. "Peer review" does not 4 23 include a peer review conducted pursuant to chapter 272C in 4 24 connection with a disciplinary investigation. 4 25 17. "Peer review records" means a file, report, or other 4 26 information relating to the professional competence of an 4 27 applicant in the possession of a peer review team, or 4 28 information concerning the peer review developed by a peer 4 29 review team in the possession of an applicant. 4 30 18. "Peer review team" means a person or organization 4 31 participating in the peer review function, but does not 4 32 include the board. 4 33 19. "Permit" means a permit to practice as either a 4 34 certified public accounting firm issued under section 542D.7 4 35 or licensed public accounting firm under section 542D.8 or 5 1 under corresponding provisions of prior law. 5 2 20. "Practice of public accounting" means the performance 5 3 or the offering to perform, by a person holding oneself out to 5 4 the public as a certified public accountant or a licensed 5 5 public accountant, one or more kinds of professional services 5 6 involving the use of accounting, attest, or auditing skills, 5 7 including the issuance of reports on financial statements, or 5 8 of one or more kinds of management advisory, financial 5 9 advisory, or consulting services, or the preparation of tax 5 10 returns or the furnishing of advice on tax matters. However, 5 11 with respect to licensed public accountants, the "practice of 5 12 public accounting" shall not include attest or auditing 5 13 services or the rendering of an opinion attesting to the 5 14 reliability of any representation embracing financial 5 15 information. 5 16 21. "Report", when used with reference to financial 5 17 statements, means a report, opinion, or other form of a 5 18 writing that states or implies assurance as to the reliability 5 19 of any financial statements and that includes or is 5 20 accompanied by a statement or implication that the person or 5 21 firm issuing the report has special knowledge or competence in 5 22 accounting or auditing. Such statement or implication of 5 23 special knowledge or competence may arise from use by the 5 24 issuer of the report of names or titles indicating that the 5 25 person or firm is an accountant or auditor, or from the 5 26 language of the report itself. "Report" includes any form of 5 27 language which disclaims an opinion when such form of language 5 28 is conventionally understood to imply a positive assurance as 5 29 to the reliability of the financial statements referred to or 5 30 special knowledge or competence on the part of the person or 5 31 firm issuing the language, and any other form of language that 5 32 is conventionally understood to imply such assurance or such 5 33 special knowledge or competence. 5 34 22. "State" means a state of the United States, the 5 35 District of Columbia, Puerto Rico, the United States Virgin 6 1 Islands, or Guam. 6 2 23. "Substantial equivalency" is a determination by the 6 3 board that the education, examination, and experience 6 4 requirements contained in the statutes and administrative 6 5 rules of another jurisdiction are comparable to, or exceed, 6 6 the education, examination, and experience requirements 6 7 contained in this chapter or that an individual licensee's 6 8 education, examination, and experience qualifications are 6 9 comparable to or exceed the education, examination, and 6 10 experience requirements contained in this chapter. 6 11 Sec. 4. NEW SECTION. 542D.4 IOWA ACCOUNTANCY EXAMINING 6 12 BOARD. 6 13 1. An Iowa accountancy examining board is created within 6 14 the professional licensing and regulation division of the 6 15 department of commerce to administer and enforce this chapter. 6 16 The board shall consist of eight members, appointed by the 6 17 governor and subject to senate confirmation, all of whom shall 6 18 be residents of this state. Five of the eight members shall 6 19 be holders of certificates issued under section 542D.6, one 6 20 member shall be the holder of a license issued under section 6 21 542D.8, and two shall not be certified public accountants or 6 22 licensed public accountants and shall represent the general 6 23 public. Not fewer than three of the holders of certificates 6 24 issued under section 542D.6 shall also be qualified to 6 25 supervise attest services as provided in section 542D.7. A 6 26 certified or licensed member of the board shall be actively 6 27 engaged in practice as a certified public accountant or as a 6 28 licensed public accountant and shall have been so engaged for 6 29 five years preceding appointment, the last two of which shall 6 30 have been in this state. Professional associations or 6 31 societies composed of certified public accountants or licensed 6 32 public accountants may recommend the names of potential board 6 33 members to the governor. However, the governor is not bound 6 34 by the recommendations. A board member is not required to be 6 35 a member of any professional association or society composed 7 1 of certified public accountants or licensed public 7 2 accountants. The term of each member of the board shall be 7 3 three years, as designated by the governor, and appointments 7 4 to the board are subject to the requirements of sections 7 5 69.16, 69.16A, and 69.19. Members of the board appointed and 7 6 serving pursuant to chapter 542C, Code 2001, on the effective 7 7 date of this Act shall serve out the terms for which they were 7 8 appointed. Vacancies occurring during a term shall be filled 7 9 by appointment by the governor for the unexpired term. Upon 7 10 the expiration of the member's term of office, a member shall 7 11 continue to serve until a successor shall have been appointed 7 12 and taken office. The public members of the board shall be 7 13 allowed to participate in administrative, clerical, or 7 14 ministerial functions incident to giving the examinations, but 7 15 shall not determine the content or determine the correctness 7 16 of the answers. The licensed public accountant member shall 7 17 not determine the content of the certified public accountant 7 18 examination or determine the correctness of the answers. Any 7 19 member of the board whose certificate under section 542D.6 or 7 20 license under section 542D.8 is revoked or suspended shall 7 21 automatically cease to be a member of the board, and the 7 22 governor may, after a hearing, remove any member of the board 7 23 for neglect of duty or other just cause. A person who has 7 24 served three successive complete terms shall not be eligible 7 25 for reappointment, but appointment to fill an unexpired term 7 26 shall not be considered a complete term for this purpose. 7 27 2. The board shall elect annually from among its members a 7 28 chairperson and such other officers as the board may determine 7 29 to be appropriate. The board shall meet at such times and 7 30 places as may be fixed by the board. A majority of the board 7 31 members in office shall constitute a quorum at any meeting. 7 32 The board shall maintain a registry of the names and addresses 7 33 of all licensees and permittees under this chapter. 7 34 3. Members of the board are entitled to receive a per diem 7 35 as specified in section 7E.6 for each day spent on performance 8 1 of duties as members and shall be reimbursed for all actual 8 2 and necessary expenses incurred in the performance of duties 8 3 as members. 8 4 4. All moneys collected by the board from fees authorized 8 5 to be charged by this chapter shall be received and accounted 8 6 for by the board and shall be paid monthly to the treasurer of 8 7 state for deposit in the general fund of the state. Expenses 8 8 of administering this chapter shall be paid from 8 9 appropriations made by the general assembly, which expenses 8 10 may include, but shall not be limited to, the costs of 8 11 conducting investigations and of taking testimony and 8 12 procuring the attendance of witnesses before the board or its 8 13 committees; all legal proceedings taken under this chapter for 8 14 the enforcement of this chapter; and educational programs for 8 15 the benefit of the public and licensees and their employees. 8 16 5. A member of the board shall maintain the 8 17 confidentiality of information relating to the following: 8 18 a. Criminal history or prior misconduct of the applicant. 8 19 b. Information relating to the contents of the 8 20 examination. 8 21 c. Information relating to the examination results other 8 22 than final score except for information about the results of 8 23 the examination given to the person examined. 8 24 A member of the board who willfully communicates or seeks 8 25 to communicate such information in a manner which violates 8 26 confidentiality requirements, and any person who willfully 8 27 requests, obtains, or seeks to obtain such information, is 8 28 guilty of a simple misdemeanor. 8 29 6. The administrator of the professional licensing and 8 30 regulation division of the department of commerce shall 8 31 provide staffing assistance to the board for implementing this 8 32 chapter. 8 33 7. The board may join professional organizations and 8 34 associations to promote the improvement of the standards of 8 35 the practice of accountancy and for the protection and welfare 9 1 of the public. 9 2 8. The board shall have the power to take all action that 9 3 is necessary and proper to effectuate the purposes of this 9 4 chapter, including the power to sue and be sued in its 9 5 official name as an agency of this state. The board shall 9 6 also have the power to issue subpoenas to compel the 9 7 attendance of witnesses and the production of documents; to 9 8 administer oaths; to take testimony; to cooperate with the 9 9 appropriate authorities in other states in investigation and 9 10 enforcement concerning violations of this chapter and 9 11 comparable statutes of other states; and to receive evidence 9 12 concerning all matters within the scope of this chapter. In 9 13 case of disobedience of a subpoena, the board may invoke the 9 14 aid of any district court in requiring the attendance and 9 15 testimony of witnesses and the production of documentary 9 16 evidence. 9 17 9. The board shall adopt rules pursuant to chapter 17A 9 18 governing the administration and enforcement of this chapter 9 19 and the conduct of licensees and permittees. Rules adopted 9 20 shall include, but not be limited to, the following: 9 21 a. Rules governing the board's meetings and the conduct of 9 22 its business. 9 23 b. Rules of procedure governing the conduct of 9 24 investigations and hearings by the board. 9 25 c. Rules specifying the educational and experience 9 26 qualifications required for the issuance of a certificate 9 27 under section 542D.6 and the continuing professional education 9 28 required for renewal of a certificate under section 542D.6. 9 29 d. Rules specifying the educational and experience 9 30 qualifications required for the issuance of a license under 9 31 section 542D.8 and the continuing professional education 9 32 required for renewal of a license under section 542D.8. 9 33 e. Rules of professional conduct directed to control the 9 34 quality and probity of services provided by a licensee, and, 9 35 among other areas, pertaining to a licensee's independence, 10 1 integrity, and objectivity; competence and technical 10 2 standards; responsibilities to the public; and 10 3 responsibilities to a client. 10 4 f. Rules relating to the propriety of opinions on 10 5 financial statements by a certified public accountant who is 10 6 not independent. 10 7 g. Rules relating to actions discreditable to the practice 10 8 as a certified public accountant or licensed public 10 9 accountant. 10 10 h. Rules relating to professional confidences between a 10 11 certified public accountant or licensed public accountant and 10 12 a client. 10 13 i. Rules governing technical competence and the expression 10 14 of opinions on financial statements. 10 15 j. Rules governing the failure to disclose a material fact 10 16 known to the certified public accountant or licensed public 10 17 accountant. 10 18 k. Rules relating to a material misstatement known to the 10 19 certified public accountant or licensed public accountant. 10 20 l. Rules governing negligent conduct in an examination or 10 21 in making a report on an examination. 10 22 m. Rules governing failure to direct attention to any 10 23 material departure from generally accepted accounting 10 24 principles. 10 25 n. Rules governing the professional standards applicable 10 26 to a licensee. 10 27 o. Rules governing the manner and circumstances of use of 10 28 the titles "certified public accountant" and "CPA". 10 29 p. Rules governing the manner and circumstances of use of 10 30 the titles "accounting practitioner" and "AP", and "licensed 10 31 public accountant" and "LPA". 10 32 q. Rules regarding peer review that may be required to be 10 33 performed under this chapter. 10 34 r. Rules on substantial equivalency under section 542D.19. 10 35 s. Such other rules as the board deems necessary or 11 1 appropriate for administering this chapter, including, but not 11 2 limited to, rules establishing fees and rules of professional 11 3 conduct, pertaining to corporations or limited liability 11 4 companies practicing accounting, which the board deems 11 5 consistent with or required by the public welfare. The board 11 6 may adopt rules governing the style, name, and title of 11 7 corporations and limited liability companies and governing the 11 8 affiliation of corporations and limited liability companies 11 9 with other organizations. 11 10 Sec. 5. NEW SECTION. 542D.5 QUALIFICATIONS FOR A 11 11 CERTIFICATE AS A CERTIFIED PUBLIC ACCOUNTANT. 11 12 1. A certificate as a certified public accountant may be 11 13 granted to a person of good moral character who makes 11 14 application pursuant to section 542D.6 and who satisfies the 11 15 education, experience, and examination requirements of this 11 16 section and rules adopted pursuant to this section. 11 17 2. An applicant for a certificate who has been convicted 11 18 of forgery, embezzlement, obtaining money under false 11 19 pretenses, theft, extortion, conspiracy to defraud, or other 11 20 similar offense, or of any crime involving moral character or 11 21 honesty, in a court of competent jurisdiction in this state, 11 22 or another state, territory, or a district of the United 11 23 States, or in a foreign jurisdiction, may be denied a 11 24 certificate by the board on the grounds of the conviction. 11 25 For purposes of this subsection, "conviction" means a 11 26 conviction for an indictable offense and includes a guilty 11 27 plea, deferred judgment from the time of entry of the deferred 11 28 judgment until the time the defendant is discharged by the 11 29 court without entry of judgment, or other finding of guilt by 11 30 a court of competent jurisdiction. 11 31 3. An applicant for a certificate who has had a 11 32 professional license of any kind revoked in this or any other 11 33 jurisdiction may be denied a certificate by the board on the 11 34 grounds of the revocation. 11 35 4. A person who makes a false statement of material fact 12 1 on an application for a certificate, or who causes to be 12 2 submitted, or has been a party to preparing or submitting a 12 3 false application for a certificate, may be denied a 12 4 certificate by the board on the grounds of the false statement 12 5 or submission. A certificate holder found to have made such a 12 6 false statement or who has caused to be submitted, or was a 12 7 party to preparing or submitting any false application for a 12 8 certificate, may have the holder's certificate suspended or 12 9 revoked by the board on the grounds of the false statement or 12 10 submission. 12 11 5. A certified public accountant shall notify the board of 12 12 such accountant's conviction of an offense included in 12 13 subsection 2, within thirty days of such conviction. Failure 12 14 of the certified public accountant to notify the board of the 12 15 conviction within thirty days of the date of the conviction is 12 16 sufficient grounds for revocation of the certificate. 12 17 6. The board, when considering the denial or revocation of 12 18 a certificate pursuant to subsections 2 through 5, shall 12 19 consider the nature of the offense; any aggravating or 12 20 extenuating circumstances which are documented; the time 12 21 lapsed since the revocation, conduct, or conviction; the 12 22 rehabilitation, treatment, or restitution performed by the 12 23 applicant or certificate holder; and any other factors the 12 24 board deems relevant. Character references may be required, 12 25 but shall not be obtained from certified public accountants. 12 26 An applicant shall not be denied a certificate because of age, 12 27 citizenship, race, religion, marital status, or national 12 28 origin, although the application may require citizenship 12 29 information. 12 30 7. An applicant shall complete at least one hundred fifty 12 31 semester hours, or the trimester or quarter equivalent of one 12 32 hundred fifty semester hours, of college education, and 12 33 receive a baccalaureate or higher degree conferred by a 12 34 college or university recognized by the board, the total 12 35 educational program to include a concentration in accounting 13 1 or what the board determines to be substantially equivalent. 13 2 8. An applicant must pass an examination which shall be 13 3 offered at least twice per year and which shall test the 13 4 applicant's knowledge of the subjects of accounting and 13 5 auditing, and such other related subjects as the board may 13 6 specify by rule, including but not limited to business law and 13 7 taxation. The examination shall be held at a time determined 13 8 by the board and may be changed from time to time. The board 13 9 shall prescribe by rule the methods of applying for and 13 10 conducting the examination, including methods for grading and 13 11 determining a passing grade required of an applicant for a 13 12 certificate. However, the board, to the extent possible, 13 13 shall ensure the examination, grading of the examination, and 13 14 the passing grades are uniform with those applicable in all 13 15 other states. The board may make such use of all or any part 13 16 of a nationally recognized uniform certified public accountant 13 17 examination and advisory grading service, and may contract 13 18 with third parties to perform such administrative services 13 19 with respect to the examination as it deems appropriate to 13 20 perform the duties of the board with respect to examination. 13 21 Except as otherwise provided under this section, a person who 13 22 has partially passed the examination required by this 13 23 subsection by passing one or more subjects prior to December 13 24 31, 2000, has until December 31, 2003, to successfully 13 25 complete the examination process and qualify for a certificate 13 26 under the educational requirements in effect prior to December 13 27 31, 2000. 13 28 9. The board may admit to the examination a candidate who 13 29 will complete the educational requirements for a baccalaureate 13 30 degree with a concentration in accounting or what the board 13 31 determines by rule to be substantially equivalent to a 13 32 concentration in accounting within one hundred twenty days 13 33 immediately following the date of the examination or who has 13 34 completed those requirements. However, the board shall not 13 35 report the results of the examination until the candidate has 14 1 met the educational requirements for a baccalaureate degree 14 2 and shall not issue the certificate until the candidate has 14 3 fully satisfied the requirements of subsection 7. 14 4 10. Applicants who fail the examination once shall be 14 5 allowed to take the examination again at a time determined by 14 6 the board. Applicants who fail the examination twice shall be 14 7 allowed to take the examination again at the discretion of the 14 8 board. The board may by rule prescribe the terms and 14 9 conditions under which a candidate who passes two or more 14 10 subjects of the examination conducted in this state or by the 14 11 licensing authority of another state may be reexamined in only 14 12 the failed subjects and receive credit for the passed 14 13 subjects. An applicant who has failed the examination may 14 14 request in writing information from the board concerning the 14 15 applicant's examination grade and subject areas or questions 14 16 which the applicant failed to answer correctly, except that if 14 17 the board administers a uniform, standardized examination, the 14 18 board shall only be required to provide the examination grade 14 19 and such other information concerning the applicant's 14 20 examination results which are available to the board. 14 21 11. The board, by rule, may establish an examination fee 14 22 to be charged each applicant by the board or by a third party 14 23 administering the examination. 14 24 12. An applicant for initial issuance of a certificate 14 25 must have no less than one year of experience. The experience 14 26 shall include providing any type of service or advice 14 27 involving the use of accounting, attest, compilation, 14 28 management advisory, financial advisory, tax, or consulting 14 29 skills, as verified by a licensee, meeting requirements 14 30 prescribed by the board by rule. The experience is acceptable 14 31 if it was gained through employment in government, industry, 14 32 academia, or public practice. 14 33 13. A person holding a certificate as a certified public 14 34 accountant issued by the state prior to July 1, 2002, is 14 35 deemed to have met the requirements of this section. 15 1 Sec. 6. NEW SECTION. 542D.6 ISSUANCE AND RENEWAL OF 15 2 CERTIFICATES – MAINTENANCE OF COMPETENCY. 15 3 1. a. The board shall issue a certificate to a person who 15 4 makes application on a form prescribed and furnished by the 15 5 board and who demonstrates either of the following: 15 6 (1) That the person's qualifications, including where 15 7 applicable the qualifications prescribed by section 542D.5, 15 8 satisfy the requirements of this section, or that the person 15 9 holds a certificate issued under prior law. 15 10 (2) That the person holds in good standing a certificate 15 11 or license to practice as a certified public accountant in 15 12 another state or equivalent designation from a foreign 15 13 country, and is eligible under the substantial equivalency or 15 14 other provisions of section 542D.19. 15 15 b. The holder of a certificate issued under this section 15 16 shall only provide attest services in a certified public 15 17 accounting firm that is issued a permit under section 542D.7. 15 18 2. A certificate shall be initially issued, and renewed, 15 19 for a period of not more than three years, but in any event 15 20 shall expire on a date specified by rule. A person who fails 15 21 to renew a certificate as a certified public accountant by the 15 22 expiration date shall be allowed to do so within thirty days 15 23 following its expiration, but the board may assess a 15 24 reasonable penalty. The board shall specify by rule the 15 25 conditions under which a lapsed certificate may be reinstated, 15 26 including the imposition of administrative penalties. 15 27 3. A certificate holder, for renewal of a certificate 15 28 under this section, shall participate in a program of learning 15 29 designed to maintain professional competency. Such program of 15 30 learning must comply with rules adopted by the board. The 15 31 board, by rule, may grant an exception to this requirement for 15 32 a certificate holder who does not perform or offer to perform 15 33 for the public one or more kinds of services involving the use 15 34 of accounting or auditing skills, including issuance of 15 35 reports on financial statements or the use of one or more 16 1 kinds of management advisory, financial advisory, or 16 2 consulting services, or the preparation of tax returns or the 16 3 furnishing of advice on tax matters. A certificate holder 16 4 entitled to an exception by rule of the board shall place the 16 5 word "inactive" adjacent to the holder's certified public 16 6 accountant title on any business card, letterhead, or other 16 7 document or device, with the exception of the certificate 16 8 holder's certified public accountant certificate, on which the 16 9 certificate holder's certified public accountant title 16 10 appears. 16 11 4. The board shall charge an application fee for initial 16 12 issuance or renewal of a certificate in an amount prescribed 16 13 by the board by rule. 16 14 5. An applicant for initial issuance or renewal of a 16 15 certificate shall list in the application all states in which 16 16 the applicant has applied for or holds a certificate, license, 16 17 or permit and list any past denial, revocation, or suspension 16 18 of a certificate, license, or permit. A holder of or 16 19 applicant for a certificate under this section shall notify 16 20 the board in writing, within thirty days after its occurrence, 16 21 of any issuance, denial, revocation, or suspension of a 16 22 certificate, license, or permit by another state. 16 23 6. The board, by rule, shall require as a condition for 16 24 renewal of a certificate under this section, by any 16 25 certificate holder who performs compilation services for the 16 26 public other than through a certified public accounting firm, 16 27 that such individual undergo, no more frequently than once 16 28 every three years, a peer review conducted in such manner as 16 29 the board shall by rule specify, and such review shall include 16 30 verification that such individual has met the competency 16 31 requirements set out in professional standards for such 16 32 services. 16 33 Sec. 7. NEW SECTION. 542D.7 FIRM PERMITS TO PRACTICE – 16 34 ATTEST EXPERIENCE AND PEER REVIEW. 16 35 1. The board shall issue or renew a permit to practice to 17 1 a certified public accounting firm that makes application and 17 2 demonstrates the qualifications set forth in this section, or 17 3 to a qualified certified public accounting firm originally 17 4 licensed in another state that establishes an office in this 17 5 state or otherwise provides services for clients in this state 17 6 on a regular or recurring basis. A certified public 17 7 accounting firm licensed and located in another state or 17 8 foreign jurisdiction shall be allowed to audit a business unit 17 9 located in Iowa without a permit to practice if the Iowa 17 10 business unit is part of a multistate company whose principal 17 11 offices are located outside of this state. A person or firm 17 12 holding a permit to practice issued by this state prior to 17 13 July 1, 2002, is deemed to have met the requirements of this 17 14 section. A firm must hold a permit issued under this section 17 15 in order to provide attest services or to use the title "CPAs" 17 16 or "CPA firm". 17 17 2. A permit shall be initially issued and renewed for a 17 18 period of not more than three years, but in any event shall 17 19 expire on a date specified by rule. An application for a 17 20 permit shall be made in such form, and in the case of an 17 21 application for renewal, between such dates as the board may 17 22 by rule specify. 17 23 3. a. An applicant for initial issuance or renewal of a 17 24 permit to practice as a firm must show that notwithstanding 17 25 any other provision of law, a simple majority of the ownership 17 26 of the firm, in terms of financial interests and voting rights 17 27 of all partners, officers, shareholders, members, and managers 17 28 belongs to holders of a certificate issued by a state, and 17 29 that such partners, officers, shareholders, members, and 17 30 managers, who perform professional services in this state or 17 31 for clients in this state, hold a certificate issued under 17 32 section 542D.6 or 542D.19. 17 33 b. A certified public accounting firm may include a 17 34 nonlicensee owner provided all of the following: 17 35 (1) Such firm designates a licensee who is responsible for 18 1 the proper registration of the firm, and identifies that 18 2 individual to the board. 18 3 (2) All nonlicensee owners are active participants in the 18 4 firm or an affiliated entity. 18 5 (3) Such firm complies with other requirements as 18 6 established by the board by rule. 18 7 c. A licensee who is responsible for supervising attest or 18 8 compilation services and signs or authorizes someone to sign 18 9 the accountant's report on the financial statements on behalf 18 10 of the firm, shall meet the experience or competency 18 11 requirements set out in nationally recognized professional 18 12 standards for such services. 18 13 d. A licensee who signs or authorizes someone to sign the 18 14 accountant's report on the financial statements on behalf of 18 15 the firm shall meet the experience or competency requirements 18 16 established in paragraph "c". 18 17 4. An applicant for initial issuance or renewal of a 18 18 permit to practice as a certified public accounting firm is 18 19 required to register each office of the firm within this state 18 20 with the board and to show that all attest and compilation 18 21 services rendered in this state are under the charge of a 18 22 person holding a valid certificate issued under section 542D.6 18 23 or 542D.19. 18 24 5. The board, by rule, shall establish and charge an 18 25 application fee for each application for initial issuance or 18 26 renewal of a permit. 18 27 6. An applicant for initial issuance or renewal of a 18 28 permit shall list in the application all states in which the 18 29 applicant has applied for or holds a permit as a certified 18 30 public accounting firm and list any past denial, revocation, 18 31 or suspension of a permit by another state. A holder of or 18 32 applicant for a permit shall notify the board in writing 18 33 within thirty days after an occurrence of any of the 18 34 following: 18 35 a. A change in the identity of a partner, officer, 19 1 shareholder, member, or manager who performs professional 19 2 services in this state or for clients in this state. 19 3 b. A change in the number or location of offices within 19 4 this state. 19 5 c. A change in the identity of a person in charge of such 19 6 offices. 19 7 d. The issuance, denial, revocation, or suspension of a 19 8 permit by another state. 19 9 7. A firm, after receiving or renewing a permit which is 19 10 not in compliance with this section as a result of a change in 19 11 firm ownership or personnel, shall take corrective action to 19 12 bring the firm back into compliance as quickly as possible or 19 13 apply to modify or amend the permit. The board may grant a 19 14 reasonable period of time for a firm to take such corrective 19 15 action. Failure to comply within a reasonable period as 19 16 deemed by the board shall result in the suspension or 19 17 revocation of the firm permit. 19 18 8. The board, by rule, shall require as a condition to 19 19 renewal of a permit to practice as a certified public 19 20 accounting firm, that an applicant undergo, no more frequently 19 21 than once every three years, a peer review conducted in such 19 22 manner as the board specifies. The review shall include a 19 23 verification that any individual in the firm who is 19 24 responsible for supervising attest and compilation services 19 25 and who signs or authorizes someone to sign the accountant's 19 26 report on a financial statement on behalf of the firm meets 19 27 the competency requirements set forth in the professional 19 28 standards for such services. 19 29 Such rules shall include reasonable provision for 19 30 compliance by an applicant showing that the applicant, within 19 31 the preceding three years, has undergone a peer review that is 19 32 a satisfactory equivalent to the peer review required under 19 33 this subsection. An applicant's completion of a peer review 19 34 program endorsed or supported by the American institute of 19 35 certified public accountants, or other substantially similar 20 1 review as determined by the board, satisfies the requirements 20 2 of this subsection. 20 3 9. An applicant for a permit to practice as a certified 20 4 public accounting firm, at the time of renewal, may request in 20 5 writing upon forms provided by the board, a waiver from the 20 6 requirements of subsection 8. The board may grant a waiver 20 7 upon a showing satisfactory to the board of any of the 20 8 following: 20 9 a. The applicant does not engage in, and does not intend 20 10 to engage in during the following year, financial reporting 20 11 areas of practice, including but not limited to financial 20 12 audits, compilations, and reviews. An applicant granted a 20 13 waiver pursuant to this paragraph shall immediately notify the 20 14 board if the applicant engages in such practice, and shall be 20 15 subject to peer review. 20 16 b. Reasons of health. 20 17 c. Military service. 20 18 d. Instances of hardship. 20 19 e. Other good cause as determined by the board. 20 20 10. Peer review records are privileged and confidential, 20 21 and are not subject to discovery, subpoena, or other means of 20 22 legal compulsion. Peer review records are not admissible in 20 23 evidence in a judicial, administrative, or arbitration 20 24 proceeding. Information or documents discoverable from 20 25 sources other than a peer review team do not become 20 26 nondiscoverable from such other sources because they are made 20 27 available to or are in the possession of a peer review team. 20 28 Information or documents publicly available from the American 20 29 institute of certified public accountants relating to quality 20 30 or peer review are not privileged or confidential under this 20 31 subsection. A person or organization participating in the 20 32 peer review process shall not testify as to the findings, 20 33 recommendations, evaluations, or opinions of a peer review 20 34 team in a judicial, administrative, or arbitration proceeding. 20 35 11. A person is not liable as a result of an act, 21 1 omission, or decision made in connection with the person's 21 2 service on a peer review team, unless the act, omission, or 21 3 decision is made with actual malice. A person is not liable 21 4 as a result of providing information to a peer review team, or 21 5 for disclosure of privileged matters to a peer review team. 21 6 12. The costs of the peer review shall be paid by the 21 7 applicant. 21 8 Sec. 8. NEW SECTION. 542D.8 QUALIFICATIONS FOR AND 21 9 ISSUANCE OF A LICENSE AS A LICENSED PUBLIC ACCOUNTANT – 21 10 RENEWAL OF LICENSE – FIRM REGISTRATION – PEER REVIEW. 21 11 1. The license of a licensed public accountant shall be 21 12 granted by the board to any person who meets one of the 21 13 following requirements: 21 14 a. The applicant holds a license as an accounting 21 15 practitioner issued under the laws of this state in full force 21 16 and effect on the effective date of this Act and has completed 21 17 additional educational requirements as prescribed by the 21 18 board. 21 19 b. The applicant has satisfactorily completed the 21 20 examination prescribed in subsection 2 after having met one of 21 21 the following: 21 22 (1) The applicant has had two or more years' actual 21 23 experience in practice as an accountant as an employee of a 21 24 certified public accountant, an accounting practitioner, or a 21 25 licensed public accountant. 21 26 (2) The applicant submits evidence satisfactory to the 21 27 board that the applicant is a graduate of a four-year college 21 28 or university accredited by the north central accreditation 21 29 association or other regional accreditation association having 21 30 equivalent standards, with a major in accounting, or that the 21 31 applicant is a graduate in accountancy from a business or 21 32 correspondence school accredited by the accrediting commission 21 33 for business schools or the accrediting commission of the 21 34 national home study council. 21 35 (3) The applicant submits evidence of at least five years 22 1 of continuous experience engaged in performing any of the 22 2 services delineated in section 542D.1, subsection 11, on a 22 3 full-time basis. 22 4 2. An examination shall be conducted by the board as often 22 5 as deemed necessary, but not less than two times per year. 22 6 3. The examination shall be designed and given in a manner 22 7 as to fairly test the applicant's knowledge of accounting. 22 8 The examination shall not include questions relating to the 22 9 subject of auditing. 22 10 4. The board, in its discretion, may use all or any part 22 11 of a standard or uniform examination and advisory grading 22 12 service that is provided or furnished by a national accounting 22 13 organization or society to assist the board in the performance 22 14 of its duties under this chapter. The identity of the person 22 15 taking the examination shall be concealed until after the 22 16 examination papers have been graded. 22 17 5. If an applicant has partially passed an examination 22 18 given in another state determined by the board to be 22 19 substantially equivalent to the examination required by this 22 20 state and meets eligibility requirements that the board finds 22 21 to be substantially equivalent to those prescribed by this 22 22 state, the results of the other state's examination shall be 22 23 accepted as though given in this state. 22 24 6. An applicant who successfully passes all subjects in 22 25 which examined shall be issued a license as a licensed public 22 26 accountant by the board. The cost of the license shall be 22 27 based upon the administrative costs of the board and the costs 22 28 of issuing the license. 22 29 7. An applicant who fails the examination once shall be 22 30 allowed to take the examination at the next scheduled time. 22 31 Thereafter, the applicant shall be allowed to take the 22 32 examination at the discretion of the board. An applicant who 22 33 passes a portion of the examination shall have the right to be 22 34 reexamined in the remaining subjects at a future examination, 22 35 and if the applicant passes the remaining subjects, the 23 1 applicant shall be considered to have passed the entire 23 2 examination. An applicant who fails the examination may 23 3 request in writing information from the board concerning the 23 4 applicant's examination grade and subject areas or questions 23 5 which the applicant failed to answer correctly, except that if 23 6 the board administers a uniform, standardized examination, the 23 7 board shall only be required to provide the examination grade 23 8 and such other information concerning the applicant's 23 9 examination results which is available to the board. 23 10 8. An applicant for initial issuance of a license must 23 11 have no less than one year of experience. The experience 23 12 shall include providing any type of service or advice 23 13 involving the use of accounting, compilation, management 23 14 advisory, financial advisory, tax, or consulting skills, as 23 15 verified by a licensee, meeting requirements prescribed by the 23 16 board by rule. The experience is acceptable if gained through 23 17 employment in government, industry, academia, or public 23 18 practice. 23 19 9. a. The licensed public accountant license shall expire 23 20 in multiyear intervals as determined by the board. The board 23 21 shall notify a person licensed under this chapter of the date 23 22 of expiration of the license and the amount of the fee 23 23 required for its renewal. The notice shall be mailed at least 23 24 one month in advance of the expiration date. A person who 23 25 fails to renew a license as a licensed public accountant by 23 26 the expiration date shall be allowed to do so within thirty 23 27 days following its expiration, but the board may assess a 23 28 reasonable penalty. 23 29 b. A licensee, for renewal of a license under this 23 30 section, shall participate in a program of learning designed 23 31 to maintain professional competency. Such program of learning 23 32 must comply with rules adopted by the board. The board, by 23 33 rule, may grant an exception to this requirement for a 23 34 licensee who does not perform or offer to perform for the 23 35 public one or more kinds of services involving the use of 24 1 accounting or auditing skills, including issuance of reports 24 2 on financial statements or the use of one or more kinds of 24 3 management advisory, financial advisory, or consulting 24 4 services, or the preparation of tax returns or the furnishing 24 5 of advice on tax matters. A licensee entitled to an exception 24 6 by rule of the board shall place the word "inactive" adjacent 24 7 to the licensee's licensed public accountant title on any 24 8 business card, letterhead, or other document or device, with 24 9 the exception of the licensee's licensed public accountant 24 10 license, on which the licensee's licensed public accountant 24 11 title appears. 24 12 10. The board, in its discretion, may waive an examination 24 13 and issue a license as a licensed public accountant to an 24 14 applicant for one of the following: 24 15 a. The applicant holds a license as a licensed public 24 16 accountant, an accounting practitioner, or similar title 24 17 issued, after examination, by a state which extends by 24 18 substantial equivalency privileges to a licensed public 24 19 accountant of this state, and who, at the time of issuance of 24 20 the registration, possessed the basic qualifications set forth 24 21 in subsection 1. 24 22 b. The applicant has passed the examination required under 24 23 the laws of another state and possesses the basic 24 24 qualifications set forth in subsection 1 at the time the 24 25 applicant applied for registration in this state. 24 26 11. A person applying for a license as a licensed public 24 27 accountant shall pay a fee as determined by the board based 24 28 upon the costs of issuing such licenses. 24 29 12. The board shall issue or renew a permit to practice as 24 30 a licensed public accounting firm to a person that makes 24 31 application and demonstrates the qualification set forth in 24 32 this section or to a licensed public accounting firm 24 33 originally registered in another state that provides evidence 24 34 that the qualifications met in the other state are 24 35 substantially equivalent to those required by this section. A 25 1 firm must hold a permit issued under this section in order to 25 2 use the title "LPA" or "Licensed Public Accountants" in a firm 25 3 name. 25 4 a. An applicant for initial issuance or renewal of a 25 5 permit to practice as a firm under this section must show that 25 6 notwithstanding any other provision of law, a simple majority 25 7 of the ownership of the firm, in terms of financial interests 25 8 and voting rights of all partners, officers, shareholders, 25 9 members, and managers belongs to the holders of a certificate 25 10 or license issued by a state, and that such partners, 25 11 officers, shareholders, members, and managers, who perform 25 12 professional services in this state or for clients in this 25 13 state, hold a certificate issued under section 542D.6 or a 25 14 license issued under section 542D.8. 25 15 b. A licensed public accounting firm may include a 25 16 nonlicensee owner provided all of the following occur: 25 17 (1) Such firm designates a licensee who is responsible for 25 18 the proper registration of the firm, and identifies that 25 19 individual to the board. 25 20 (2) All nonlicensee owners are active participants in the 25 21 firm or an affiliated entity. 25 22 (3) Such firm complies with other requirements as 25 23 established by the board by rule. 25 24 c. An individual licensee who is responsible for 25 25 compilation services and signs or authorizes someone to sign 25 26 the accountant's report on the financial statements on behalf 25 27 of the firm shall meet the competency requirements set out in 25 28 nationally recognized professional standards for such 25 29 services. 25 30 d. An individual licensee who signs or authorizes someone 25 31 to sign the accountant's report on the financial statements on 25 32 behalf of the firm shall meet the competency requirements set 25 33 out in nationally recognized professional standards for such 25 34 services. 25 35 13. An applicant for initial issuance or renewal of a 26 1 permit to practice as a licensed public accounting firm is 26 2 required to register each office of the firm within this state 26 3 with the board and to show that all compilation services 26 4 rendered in this state are under the charge of a person 26 5 holding a valid certificate issued under section 542D.6 or 26 6 542D.19, or a license issued under section 542D.8. 26 7 14. The board, by rule, shall establish and charge an 26 8 application fee for each application for initial issuance or 26 9 renewal of a permit. 26 10 15. An applicant for initial issuance or renewal of a 26 11 permit shall list in the application all states in which the 26 12 applicant has applied for or holds a permit as a certified 26 13 public accountant or a licensed public accounting firm and 26 14 list any past denial, revocation, or suspension of a permit by 26 15 another state. A holder of or applicant for a permit shall 26 16 notify the board in writing within thirty days after an 26 17 occurrence of any of the following: 26 18 a. A change in the identity of a partner, officer, 26 19 shareholder, member, or manager who performs professional 26 20 services in this state or for clients in this state. 26 21 b. A change in the number or location of offices within 26 22 this state. 26 23 c. A change in the identity of a person in charge of such 26 24 offices. 26 25 d. The issuance, denial, revocation, or suspension of a 26 26 permit by another state. 26 27 16. A firm, after receiving or renewing a permit which is 26 28 not in compliance with this section as a result of a change in 26 29 firm ownership or personnel, shall take corrective action to 26 30 bring the firm back into compliance as quickly as possible or 26 31 apply to modify or amend the permit. The board may grant a 26 32 reasonable period of time for a firm to take such corrective 26 33 action. Failure to comply within a reasonable period as 26 34 deemed by the board shall result in the suspension or 26 35 revocation of the firm permit. 27 1 17. The board, by rule, shall require as a condition to 27 2 renewal of a permit to practice as a licensed public 27 3 accounting firm, that an applicant undergo, no more frequently 27 4 than once every three years, a peer review conducted in such 27 5 manner as the board specifies. The review shall include 27 6 verification that any individual in the firm who is 27 7 responsible for supervising compilation services and who signs 27 8 or authorizes someone to sign the accountant's report on a 27 9 financial statement on behalf of the firm meets the competency 27 10 requirements set forth in the professional standards for such 27 11 services. Such rules shall include reasonable provision for 27 12 compliance by an applicant showing that the applicant, within 27 13 the preceding three years, has undergone a peer review that is 27 14 a satisfactory equivalent to the peer review required under 27 15 this subsection. An applicant's completion of a peer review 27 16 program endorsed or supported by the national society of 27 17 accountants, or other substantially similar review as 27 18 determined by the board, satisfies the requirements of this 27 19 subsection. 27 20 18. An applicant for a permit to practice as a licensed 27 21 public accounting firm, at the time of renewal, may request in 27 22 writing upon forms provided by the board, a waiver from the 27 23 requirements of subsection 17. The board may grant a waiver 27 24 upon a showing satisfactory to the board of any of the 27 25 following: 27 26 a. The applicant does not engage in, and does not intend 27 27 to engage in during the following year, financial reporting 27 28 areas of practice, including but not limited to compilations. 27 29 An applicant granted a waiver pursuant to this paragraph shall 27 30 immediately notify the board if the applicant engages in such 27 31 practice, and shall be subject to peer review. 27 32 b. Reasons of health. 27 33 c. Military service. 27 34 d. Instances of hardship. 27 35 e. Other good cause as determined by the board. 28 1 19. Peer review records are privileged and confidential, 28 2 and are not subject to discovery, subpoena, or other means of 28 3 legal compulsion. Peer review records are not admissible in 28 4 evidence in a judicial, administrative, or arbitration 28 5 proceeding. Information or documents discoverable from 28 6 sources other than a peer review team do not become 28 7 nondiscoverable from such other sources because they are made 28 8 available to or are in the possession of a peer review team. 28 9 Information or documents publicly available from the national 28 10 society of accountants relating to quality or peer review are 28 11 not privileged or confidential under this subsection. A 28 12 person or organization participating in the peer review 28 13 process shall not testify as to the findings, recommendations, 28 14 evaluations, or opinions of a peer review team in a judicial, 28 15 administrative, or arbitration proceeding. 28 16 20. A person is not liable as a result of an act, 28 17 omission, or decision made in connection with the person's 28 18 service in a peer review team, unless the act, omission, or 28 19 decision is made with actual malice. A person is not liable 28 20 as a result of providing information to a peer review team, or 28 21 for disclosure of privileged matters to a peer review team. 28 22 21. The costs of the peer review shall be paid by the 28 23 applicant. 28 24 Sec. 9. NEW SECTION. 542D.9 APPOINTMENT OF SECRETARY OF 28 25 STATE AS AGENT. 28 26 Application for a certificate under section 542D.6, a 28 27 license under section 542D.8, a permit to practice under 28 28 section 542D.7, or a certificate under section 542D.19 by a 28 29 person or a firm not a resident of this state constitutes 28 30 appointment of the secretary of state as the applicant's agent 28 31 upon whom process may be served in any action or proceeding 28 32 against the applicant arising out of a transaction or 28 33 operation connected with or incidental to services performed 28 34 by the applicant while a licensee within this state. 28 35 Sec. 10. NEW SECTION. 542D.10 ENFORCEMENT AGAINST A 29 1 HOLDER OF A CERTIFICATE, PERMIT, OR LICENSE. 29 2 1. After notice and hearing pursuant to section 542D.11, 29 3 the board may revoke, suspend for a period of time not to 29 4 exceed two years, or refuse to renew a license; reprimand, 29 5 censure, or limit the scope of practice of any licensee; 29 6 impose an administrative penalty not to exceed one thousand 29 7 dollars per violation; or place any licensee on probation; all 29 8 with or without terms, conditions, and in combinations of 29 9 remedies, for any one or more of the following reasons: 29 10 a. Fraud or deceit in obtaining a license, which may also 29 11 result in permanent revocation of the license. 29 12 b. Dishonesty, fraud, or gross negligence in the practice 29 13 of public accounting. 29 14 c. Engaging in any activity prohibited under section 29 15 542D.13 or permitting persons under the licensee's supervision 29 16 to do so. 29 17 d. Violation of a rule of professional conduct adopted by 29 18 the board under the authority granted by this chapter. 29 19 e. Conviction of a felony under the laws of any state of 29 20 the United States. 29 21 f. Conviction of any crime, any element of which is 29 22 dishonesty or fraud as provided in section 542D.5, subsection 29 23 2, under the laws of any state of the United States. 29 24 g. Cancellation, revocation, suspension, or refusal to 29 25 renew the authority to practice as a certified public 29 26 accountant, licensed public accountant, or accounting 29 27 practitioner, or the acceptance of the voluntary surrender of 29 28 a license to practice as a certified public accountant, 29 29 licensed public accountant, or accounting practitioner to 29 30 conclude a pending disciplinary action, by any other state or 29 31 foreign authority for any cause other than failure to pay 29 32 appropriate fees in the other jurisdiction. 29 33 h. Suspension or revocation of the right to practice 29 34 before any state or federal agency. 29 35 i. Conduct discreditable to the public accounting 30 1 profession. 30 2 j. Violation of section 272C.10. 30 3 2. Multiple violations arising from the same factual 30 4 circumstances or from different factual circumstances 30 5 containing a common error shall be considered as a single 30 6 violation for the purpose of imposition of an administrative 30 7 penalty. 30 8 3. In lieu of or in addition to any remedy specifically 30 9 provided in subsection 1, the board may require a licensee to 30 10 satisfy a peer review or desk review process on such terms as 30 11 the board may specify, satisfactorily complete a continuing 30 12 education program, or such additional remedies as the board 30 13 may specify by rule. 30 14 Sec. 11. NEW SECTION. 542D.11 INVESTIGATIONS AND 30 15 HEARINGS. 30 16 1. The board may initiate proceedings under this chapter 30 17 upon written complaint or on its own motion pursuant to other 30 18 information received by the board suggesting violations of 30 19 this chapter or board rules. The board may conduct an 30 20 investigation as needed to determine whether probable cause 30 21 exists to initiate such proceedings. In aid of such 30 22 investigation, the board may issue subpoenas to compel 30 23 witnesses to testify or persons to produce evidence consistent 30 24 with the provisions of section 272C.6, subsection 3. The 30 25 board may also review the publicly available public accounting 30 26 work product of licensees on a general or random basis to 30 27 determine whether reasonable grounds exist to initiate 30 28 proceedings under this chapter or to conduct a more specific 30 29 investigation. 30 30 2. A written notice stating the nature of the charge or 30 31 charges against the accused and the time and place of the 30 32 hearing before the board on the charges shall be served on the 30 33 accused not less than thirty days prior to the date of hearing 30 34 either personally or by mailing a copy by restricted certified 30 35 mail to the last known address of the accused. 31 1 3. At any hearing the accused may appear in person or by 31 2 counsel, produce evidence and witnesses on behalf of the 31 3 accused, cross-examine witnesses, and examine evidence which 31 4 is produced against the accused. A firm may appear by a 31 5 partner, officer, director, shareholder, member, or manager. 31 6 4. The board may issue subpoenas in any proceeding to 31 7 compel witnesses to testify and to produce documentary 31 8 evidence on behalf of the board and shall issue such subpoenas 31 9 upon the application of the accused, pursuant to section 31 10 17A.13, subsection 1, and section 272C.6, subsection 3. 31 11 5. Evidence supporting the board's charges may be 31 12 presented at any hearing by an assistant attorney general. 31 13 6. The decision of the board shall be by a majority vote 31 14 of a quorum of the board. Licensee discipline shall only be 31 15 imposed upon the majority vote of the members of the board not 31 16 disqualified pursuant to section 17A.17, subsection 8, or 31 17 other applicable law. 31 18 7. Judicial review may be sought in accordance with 31 19 chapter 17A. 31 20 Sec. 12. NEW SECTION. 542D.12 REINSTATEMENT. 31 21 1. In any case in which the board has suspended, revoked, 31 22 or restricted a license, refused to renew a license, or 31 23 accepted the voluntary surrender of a license to conclude a 31 24 pending disciplinary investigation or action, the board may, 31 25 upon written application, modify or terminate the suspension, 31 26 reissue the license, or modify or remove the restriction, with 31 27 or without terms and conditions. 31 28 2. The board is vested with discretionary authority to 31 29 specify by rule the manner in which such applications shall be 31 30 made, the times within which they shall be made, the 31 31 circumstances in which a hearing will be held, and the grounds 31 32 upon which such applications will be decided. The rules shall 31 33 provide at a minimum that the burden is on the licensee to 31 34 produce evidence that the basis for revocation, suspension, 31 35 restriction, refusal to renew, or voluntarily surrender no 32 1 longer exists and that it will be in the public interest for 32 2 the board to grant the application on such terms and 32 3 conditions as the board deems desirable. 32 4 Sec. 13. NEW SECTION. 542D.13 UNLAWFUL ACTS. 32 5 1. Only a certified public accountant may issue a report 32 6 on financial statements of a person, firm, organization, or 32 7 governmental unit, or offer to render or render any attest 32 8 service. Only a certified public accountant or licensed 32 9 public accountant may render compilation services. This 32 10 restriction does not prohibit such acts by a public official 32 11 or public employee in the performance of that person's duties; 32 12 or prohibit the performance by any nonlicensee of other 32 13 services involving the use of accounting skills, including the 32 14 preparation of tax returns, management advisory services, and 32 15 the preparation of financial statements without the issuance 32 16 of reports on such financial statements. A nonlicensee may 32 17 prepare financial statements and issue nonattest transmittals 32 18 or information on such statements or transmittals which do not 32 19 purport to be in compliance with the statements on standards 32 20 for accounting and review services. 32 21 2. A licensee performing attest or compilation services 32 22 must provide those services consistent with professional 32 23 standards. 32 24 3. A person not holding a certificate shall not use or 32 25 assume the title "certified public accountant" or the 32 26 abbreviation "CPA" or any other title, designation, words, 32 27 letters, abbreviation, sign, card, or device tending to 32 28 indicate that such person is a certified public accountant. 32 29 4. A firm shall not provide attest services or assume or 32 30 use the title "certified public accountants" or the 32 31 abbreviation "CPAs" or any other title, designation, words, 32 32 letters, abbreviation, sign, card, or device tending to 32 33 indicate that such firm is a certified public accounting firm 32 34 unless the firm holds a permit issued under section 542D.7 and 32 35 ownership of the firm satisfies the requirements of this 33 1 chapter and rules adopted by the board. 33 2 5. A person shall not assume or use the title "licensed 33 3 public accountant" or the abbreviation "LPA" or any other 33 4 title, designation, words, letters, abbreviation, sign, card, 33 5 or device tending to indicate that such person is a licensed 33 6 public accountant unless that person holds a license issued 33 7 under section 542D.8. 33 8 6. A firm not holding a permit issued under section 542D.8 33 9 shall not provide compilation services or assume or use the 33 10 title "licensed public accountant", the abbreviation "LPA", or 33 11 any other title, designation, words, letters, abbreviation, 33 12 sign, card, or device tending to indicate that such firm is 33 13 composed of licensed public accountants. 33 14 7. A person or firm not holding a certificate, permit, or 33 15 license issued under section 542D.6, 542D.7, 542D.8, or 33 16 542D.19 shall not assume or use the title "certified 33 17 accountant", "chartered accountant", "enrolled accountant", 33 18 "licensed accountant", "registered accountant", "accredited 33 19 accountant", or any other title or designation likely to be 33 20 confused with the title "certified public accountant" or 33 21 "licensed public accountant", or use any of the abbreviations 33 22 "CA", "LA", "RA", "AA", or similar abbreviation likely to be 33 23 confused with the abbreviation "CPA" or "LPA". The title 33 24 "enrolled agent" or "EA" may be used by individuals so 33 25 designated by the Internal Revenue Service. Nothing in this 33 26 section shall restrict truthful advertising of a bona fide 33 27 credential or title which in context is not deceptive or 33 28 misleading to the public. 33 29 8. A nonlicensee shall not use language in any statement 33 30 relating to the financial affairs of a person or entity which 33 31 is conventionally used by licensees in reports on financial 33 32 statements. The board shall develop and issue language which 33 33 nonlicensees may use in connection with such financial 33 34 information. 33 35 9. A person or firm not holding a certificate, permit, or 34 1 license issued under section 542D.6, 542D.7, 542D.8, or 34 2 542D.19 shall not assume or use any title or designation that 34 3 includes the word "accountant", "auditor", or "accounting", in 34 4 connection with any other language that implies that such 34 5 person or firm holds such a certificate, permit, or license or 34 6 has special competence as an accountant or auditor. However, 34 7 this subsection does not prohibit an officer, partner, member, 34 8 manager, or employee of a firm or organization from affixing 34 9 that person's own signature to a statement in reference to the 34 10 financial affairs of such firm or organization with wording 34 11 which designates the position, title, or office that the 34 12 person holds, or prohibit any act of a public official or 34 13 employee in the performance of such person's duties. This 34 14 subsection does not prohibit the use of the title or 34 15 designation "accountant" by persons other than those holding a 34 16 certificate or license under this chapter. 34 17 10. A person holding a certificate or license or firm 34 18 holding a permit under this chapter shall not use a 34 19 professional or firm name or designation that is misleading 34 20 about the legal form of the firm, or about the persons who are 34 21 partners, officers, members, managers, or shareholders of the 34 22 firm, or about any other matter. However, the name of one or 34 23 more former partners, members, managers, or shareholders may 34 24 be included in the name of a firm or its successor. 34 25 11. This section does not apply to a person or firm 34 26 holding a certification, designation, degree, or license 34 27 granted in a foreign country entitling the holder to engage in 34 28 the practice of public accountancy or its equivalent in such 34 29 country, whose activities in this state are limited to 34 30 providing professional services to a person or firm who is a 34 31 resident of, government of, or business entity of the country 34 32 in which the person holds such entitlement, who does not 34 33 perform attest or compilation services, and who does not issue 34 34 reports with respect to the financial statements of any other 34 35 person, firm, or governmental unit in this state, and who does 35 1 not use in this state any title or designation other than the 35 2 one under which the person practices in such country, followed 35 3 by a translation of such title or designation into the English 35 4 language, if it is in a different language, and by the name of 35 5 such country. 35 6 12. A holder of a certificate issued under section 542D.6 35 7 or 542D.19 shall not perform attest services in a firm that 35 8 does not hold a permit issued under section 542D.7. 35 9 13. An individual licensee shall not issue a report in 35 10 standard form upon a compilation of financial information 35 11 through any form of business that does not hold a permit 35 12 issued under section 542D.7 unless the report discloses the 35 13 name of the business through which the individual is issuing 35 14 the report and the individual licensee does all of the 35 15 following: 35 16 a. Signs the compilation report identifying the individual 35 17 as a certified public accountant or licensed public 35 18 accountant. 35 19 b. Meets competency requirements provided in applicable 35 20 standards. 35 21 c. Undergoes, no less frequently than once every three 35 22 years, a peer review conducted in a manner as specified by the 35 23 board. The review shall include verification that such 35 24 individual has met the competency requirements set out in 35 25 professional standards for such services. 35 26 14. This section does not prohibit a practicing attorney 35 27 from preparing or presenting records or documents customarily 35 28 prepared by an attorney in connection with the attorney's 35 29 professional work in the practice of law. 35 30 15. a. A licensee shall not for a commission recommend or 35 31 refer a client to any product or service, or for a commission 35 32 recommend or refer another person to any product or service to 35 33 be supplied by a client, or receive a commission, when the 35 34 licensee also performs for that client any of the following: 35 35 (1) An audit or review of a financial statement. 36 1 (2) A compilation of a financial statement when the 36 2 licensee expects, or reasonably might expect, that a third 36 3 party will use the financial statement and the licensee's 36 4 compilation report does not disclose a lack of independence. 36 5 (3) An examination of prospective financial information. 36 6 The prohibitions under this paragraph "a" apply during the 36 7 period in which the licensee is engaged to perform any of the 36 8 services identified in subparagraphs (1) through (3), and the 36 9 period covered by any historical financial statements involved 36 10 in such services. 36 11 b. A licensee who is not prohibited by this section from 36 12 performing services for or receiving a commission and who is 36 13 paid or expects to be paid a commission shall disclose that 36 14 fact to any person or entity to whom the licensee recommends 36 15 or refers a product or service to which the commission 36 16 relates. 36 17 c. A licensee who accepts a referral fee for recommending 36 18 a service of a licensee or referring a licensee to any person 36 19 or entity or who pays a referral fee to obtain a client shall 36 20 disclose such acceptance or payment to the client. 36 21 16. a. A licensee shall not do any of the following: 36 22 (1) Perform professional services for a contingent fee, or 36 23 receive such fee from a client for whom the licensee or the 36 24 licensee's firm performs any of the following: 36 25 (a) An audit or review of a financial statement. 36 26 (b) A compilation of a financial statement when the 36 27 licensee expects, or reasonably might expect, that a third 36 28 party will use the financial statement and the licensee's 36 29 compilation report does not disclose a lack of independence. 36 30 (c) An examination of prospective financial information. 36 31 (2) Prepare for a client an original or amended tax return 36 32 or claim for a tax refund for a contingent fee. 36 33 b. Paragraph "a" applies during the period in which the 36 34 licensee is engaged to perform any of the listed services and 36 35 the period covered by any historical financial statements 37 1 involved in such listed services. 37 2 c. For purposes of this subsection, a contingent fee is a 37 3 fee established for the performance of a service pursuant to 37 4 an arrangement in which a fee will not be charged unless a 37 5 specified finding or result is attained, or in which the 37 6 amount of the fee is otherwise dependent upon the finding or 37 7 result of such service. A fee shall not be considered as 37 8 being a contingent fee if fixed by a court or other public 37 9 authority, or, in a tax matter, if determined based on the 37 10 results of a judicial proceeding or the findings of a 37 11 governmental agency. A licensee's fee may vary depending on 37 12 the complexity of the services rendered. 37 13 d. Nothing contained in this chapter shall be construed to 37 14 authorize any person engaged in the practice as a certified 37 15 public accountant or licensed public accountant or any member 37 16 of such firm to engage in the practice of law individually or 37 17 within entities licensed under this chapter. 37 18 Sec. 14. NEW SECTION. 542D.14 INJUNCTION AGAINST 37 19 UNLAWFUL ACTS, CIVIL PENALTIES, AND CONSENT AGREEMENTS. 37 20 1. If, as a result of an investigation under section 37 21 542D.11 or otherwise, the board believes that a person or firm 37 22 has engaged, or is about to engage, in an act or practice 37 23 which constitutes or will constitute a violation of section 37 24 542D.13, the board may make application to the district court 37 25 for an order enjoining such act or practice. Upon a showing 37 26 by the board that such person or firm has engaged, or is about 37 27 to engage, in any such act or practice, an injunction, 37 28 restraining order, or other order as may be appropriate shall 37 29 be granted by the court. 37 30 2. In addition to a criminal penalty provided for in 37 31 section 542D.15, the board may issue an order to require 37 32 compliance with section 542D.13 and may impose a civil penalty 37 33 not to exceed one thousand dollars for each offense upon a 37 34 person who is not a licensee under this chapter and who 37 35 engages in conduct prohibited by section 542D.13. Each day of 38 1 a continued violation constitutes a separate offense. 38 2 3. The board, in determining the amount of a civil penalty 38 3 to be imposed, may consider any of the following: 38 4 a. Whether the amount imposed will be a substantial 38 5 economic deterrent to the violation. 38 6 b. The circumstances leading to the violation. 38 7 c. The severity of the violation and the risk of harm to 38 8 the public. 38 9 d. The economic benefits gained by the violator as a 38 10 result of noncompliance. 38 11 e. The interest of the public. 38 12 4. The board, before issuing an order under this section, 38 13 shall provide the person written notice and the opportunity to 38 14 request a hearing. The hearing must be requested within 38 15 thirty days after receipt of the notice and shall be conducted 38 16 in the same manner as provided for disciplinary proceedings 38 17 involving a licensee under this chapter. 38 18 5. The board, in connection with a proceeding under this 38 19 section, may issue subpoenas to compel the attendance and 38 20 testimony of witnesses and the disclosure of evidence, and may 38 21 request the attorney general to bring an action to enforce the 38 22 subpoena. 38 23 6. A person aggrieved by the imposition of a civil penalty 38 24 under this section may seek judicial review pursuant to 38 25 section 17A.19. 38 26 7. If a person fails to pay a civil penalty within thirty 38 27 days after entry of an order imposing the civil penalty, or if 38 28 the order is stayed pending an appeal, within ten days after 38 29 the court enters a final judgment in favor of the board, the 38 30 board shall notify the attorney general. The attorney general 38 31 may commence an action to recover the amount of the penalty, 38 32 including reasonable attorney fees and costs. 38 33 8. An action to enforce an order under this section may be 38 34 joined with an action for an injunction. 38 35 9. The board, in its discretion and in lieu of prosecuting 39 1 a first offense under this section, may enter into a consent 39 2 agreement with a violator, or with a person guilty of aiding 39 3 or abetting a violator, which acknowledges the violation and 39 4 the violator's agreement to refrain from any further 39 5 violations. 39 6 Sec. 15. NEW SECTION. 542D.15 CRIMINAL PENALTIES. 39 7 1. A person who violates a provision of section 542D.13 is 39 8 guilty of a serious misdemeanor. 39 9 2. If the board has reason to believe that a person has 39 10 committed a violation subject to subsection 1, the board may 39 11 certify the facts to the attorney general of this state, or to 39 12 the county attorney of the county where the person maintains a 39 13 business office, who, in the attorney general's or county 39 14 attorney's discretion, may initiate an appropriate criminal 39 15 proceeding. 39 16 3. If, after an investigation under section 542D.11 or 39 17 otherwise, the board has reason to believe that a person or 39 18 firm has knowingly engaged in an act or practice that 39 19 constitutes a violation subject to subsection 1, the board may 39 20 submit its information to the attorney general of any state, 39 21 or other appropriate law enforcement official, who, in such 39 22 official's discretion, may initiate an appropriate criminal 39 23 proceeding. 39 24 Sec. 16. NEW SECTION. 542D.16 SINGLE ACT EVIDENCE OF 39 25 PRACTICE. 39 26 In an action brought under section 542D.14 or 542D.15, 39 27 evidence of the commission of a single act prohibited by this 39 28 chapter is sufficient to justify a penalty, injunction, 39 29 restraining order, or conviction, without evidence of a 39 30 general course of conduct. 39 31 Sec. 17. NEW SECTION. 542D.17 CONFIDENTIAL 39 32 COMMUNICATIONS. 39 33 A licensee shall not voluntarily disclose information 39 34 communicated to the licensee by a client relating to and in 39 35 connection with services rendered to the client by the 40 1 licensee, except with the permission of the client, or an 40 2 heir, successor, or personal representative of the client. 40 3 Such information is deemed to be confidential. However, this 40 4 section shall not be construed as prohibiting the disclosure 40 5 of information required to be disclosed by the standards of 40 6 the public accounting profession in reporting on the 40 7 examination of financial statements or as prohibiting 40 8 disclosures in a court proceeding, in an investigation or 40 9 proceeding under this chapter or chapter 272C, in an ethical 40 10 investigation conducted by a private professional 40 11 organization, in the course of a peer review, to another 40 12 person active in the licensee's firm performing services for 40 13 that client on a need-to-know basis, to persons associated 40 14 with the investigative entity who need this information for 40 15 the sole purpose of assuring quality control, or as otherwise 40 16 required by law. 40 17 This section does not preclude a licensee from filing a 40 18 complaint with, or responding to an inquiry made by, the 40 19 board, a taxing authority or law enforcement authority of this 40 20 state, or a licensing or similar authority of another state or 40 21 the United States. 40 22 Sec. 18. NEW SECTION. 542D.18 LICENSEES' WORKING PAPERS 40 23 – CLIENTS' RECORDS. 40 24 1. Subject to section 542D.17, all statements, records, 40 25 schedules, working papers, and memoranda made by a licensee or 40 26 a partner, shareholder, officer, director, member, manager, or 40 27 employee of a licensee, incident to, or in the course of, 40 28 rendering services to a client, except reports submitted by 40 29 the licensee to the client and except for records that are 40 30 part of the client's records, are the property of the licensee 40 31 in the absence of an express agreement between the licensee 40 32 and the client to the contrary. Such statement, record, 40 33 schedule, working paper, or memorandum shall not be sold, 40 34 transferred, or bequeathed, without the consent of the client 40 35 or the client's personal representative or assignee, to anyone 41 1 other than a surviving partner, stockholder, or member of the 41 2 licensee, or any combined or merged firm or successor in 41 3 interest to the licensee. This section shall not be construed 41 4 as prohibiting a temporary transfer of working papers or other 41 5 material necessary in the course of carrying out peer reviews 41 6 or as otherwise interfering with the disclosure of information 41 7 pursuant to section 542D.17. 41 8 2. A licensee shall furnish to a client or former client, 41 9 upon request and reasonable notice, the following: 41 10 a. A copy of the licensee's working papers, to the extent 41 11 that such working papers include records that would ordinarily 41 12 constitute part of the client's records and are not otherwise 41 13 available to the client. 41 14 b. Accounting or other records belonging to, or obtained 41 15 from or on behalf of, the client that the licensee removed 41 16 from the client's premises or received for the client's 41 17 account. The licensee may make and retain copies of such 41 18 documents of the client when they form the basis for work done 41 19 by the licensee. 41 20 3. This chapter does not require a licensee to keep any 41 21 working papers beyond the period prescribed in any other 41 22 applicable statute. 41 23 Sec. 19. NEW SECTION. 542D.19 SUBSTANTIAL EQUIVALENCY. 41 24 1. An individual whose principal place of business is not 41 25 in this state shall be granted a certificate to practice as a 41 26 certified public accountant in this state if the board 41 27 determines that the individual holds in good standing a valid 41 28 certificate or license to practice as a certified public 41 29 accountant in the state in which the individual's principal 41 30 place of business is located, and that the individual 41 31 satisfies one of the following conditions: 41 32 a. The other state's licensing standards are substantially 41 33 equivalent to those required by this chapter. 41 34 b. The applicant's individual qualifications are 41 35 substantially equivalent to those required by section 542D.5. 42 1 c. The applicant satisfies all of the following: 42 2 (1) The applicant passed the examination required for 42 3 issuance of the applicant's certificate or license with grades 42 4 that would have been passing grades at the time in this state; 42 5 (2) The applicant has at least four years of experience 42 6 within the ten years immediately preceding the application 42 7 which occurred after passing the examination upon which the 42 8 applicant's certificate or license was based and which in the 42 9 board's opinion is substantially equivalent to that required 42 10 by section 542D.5, subsection 12; and, 42 11 (3) If the applicant's certificate or license was issued 42 12 more than four years prior to the filing of the application in 42 13 this state, the applicant has fulfilled the continuing 42 14 professional education requirements described in section 42 15 542D.6, subsection 3. 42 16 2. An individual who holds in good standing a valid 42 17 certificate or license to practice as a certified public 42 18 accountant in another state and who desires to establish the 42 19 holder's principal place of business in this state shall 42 20 request the issuance of a certificate from the board prior to 42 21 establishing such principal place of business. The board 42 22 shall issue a certificate to an individual who satisfies one 42 23 or more of the conditions described in subsection 1. 42 24 3. The board shall issue a certificate to a holder of a 42 25 substantially equivalent foreign designation, upon 42 26 satisfaction of all of the following: 42 27 a. The foreign authority which issued the designation 42 28 allows a person who holds a valid certificate issued by this 42 29 state to obtain such foreign authority's comparable 42 30 designation. 42 31 b. The foreign designation satisfies all of the following: 42 32 (1) The designation was issued by a foreign authority that 42 33 regulates the practice of public accountancy and the foreign 42 34 designation has not expired or been revoked or suspended. 42 35 (2) The designation entitles the holder to issue reports 43 1 on financial statements. 43 2 (3) The designation was issued upon the basis of 43 3 education, examination, and experience requirements 43 4 established by the foreign authority or by law. 43 5 c. The applicant satisfies all of the following: 43 6 (1) The designation was issued based on education and 43 7 examination standards substantially equivalent to those in 43 8 effect in this state at the time the foreign designation was 43 9 granted. 43 10 (2) The applicant satisfies an experience requirement, 43 11 substantially equivalent to the requirement set out in section 43 12 542D.5, subsection 12, in the jurisdiction which issued the 43 13 foreign designation or has completed four years of 43 14 professional experience in this state; or meets equivalent 43 15 requirements prescribed by the board by rule, within the ten 43 16 years immediately preceding the application. 43 17 (3) The applicant has passed qualifying examinations in 43 18 national standards and the laws, rules, and code of ethical 43 19 conduct in effect in this state. 43 20 (4) The applicant shall list in the application all 43 21 jurisdictions, foreign and domestic, in which the applicant 43 22 has applied for or holds a designation to practice public 43 23 accountancy. A holder of a certificate issued under this 43 24 section shall notify the board in writing, within thirty days 43 25 after its occurrence, of any issuance, denial, revocation, or 43 26 suspension of a designation or commencement of a disciplinary 43 27 or enforcement action by any jurisdiction. 43 28 4. An applicant under this section shall comply with all 43 29 applicable provisions of section 542D.5, subsections 1 through 43 30 6, and section 542D.6. 43 31 5. The board shall adopt rules to implement this section 43 32 which will expedite the application process to the extent 43 33 reasonably possible. 43 34 Sec. 20. Section 15E.208, subsection 5, paragraph d, 43 35 subparagraph (4), Code 2001, is amended to read as follows: 44 1 (4) The manner of oversight required by the department or 44 2 the auditor of state. The articles must provide that the 44 3 corporation shall submit a report to the governor, the general 44 4 assembly, and the department. The report shall provide a 44 5 description of the corporation's activities and a summary of 44 6 its finances, including financial awards. The report shall be 44 7 submitted not later than January 10 of each year. The 44 8 articles shall provide that an audit of the corporation must 44 9 be conducted each year for the preceding year by a certified 44 10 public accountant licensed pursuant to chapter542C542D. The 44 11 auditor of state may audit the books and accounts of the 44 12 corporation at any time. The results of the annual audit and 44 13 any audit for the current year conducted by the auditor of 44 14 state shall be included as part of the report. 44 15 Sec. 21. Section 99D.20, Code 2001, is amended to read as 44 16 follows: 44 17 99D.20 AUDIT OF LICENSEE OPERATIONS. 44 18 Within ninety days after the end of each race meet, the 44 19 licensee shall transmit to the commission an audit of the 44 20 financial transactions and condition of the licensee's 44 21 operations conducted under this chapter. Additionally, within 44 22 ninety days after the end of the licensee's fiscal year, the 44 23 licensee shall transmit to the commission an audit of the 44 24 financial transactions and condition of the licensee's total 44 25 operations. All audits shall be conducted by certified public 44 26 accountants registered in the state of Iowa under chapter542C44 27 542D. 44 28 Sec. 22. Section 99F.13, Code 2001, is amended to read as 44 29 follows: 44 30 99F.13 ANNUAL AUDIT OF LICENSEE OPERATIONS. 44 31 Within ninety days after the end of the licensee's fiscal 44 32 year, the licensee shall transmit to the commission an audit 44 33 of the financial transactions and condition of the licensee's 44 34 total operations. All audits shall be conducted by certified 44 35 public accountants registered or licensed in the state of Iowa 45 1 under chapter542C542D. 45 2 Sec. 23. Section 203.16, subsection 7, Code 2001, is 45 3 amended to read as follows: 45 4 7. Where released at the request of the Iowaboard of45 5 accountancy examining board for licensee review and discipline 45 6 in accordance with chapters 272C and542C542D and subject to 45 7 the confidentiality requirements of section 272C.6. 45 8 Sec. 24. Section 203C.24, subsection 7, Code 2001, is 45 9 amended to read as follows: 45 10 7. Where released at the request of the Iowaboard of45 11 accountancy examining board for licensee review and discipline 45 12 in accordance with chapters 272C and542C542D and subject to 45 13 the confidentiality requirements of section 272C.6. 45 14 Sec. 25. Section 272C.1, subsection 6, paragraph c, Code 45 15 2001, is amended to read as follows: 45 16 c. The Iowa accountancy examining board, created pursuant 45 17 to chapter542C542D. 45 18 Sec. 26. Section 272C.3, subsection 2, paragraph a, Code 45 19 2001, is amended to read as follows: 45 20 a. Revoke a license, or suspend a license either until 45 21 further order of the board or for a specified period, upon any 45 22 of the grounds specified in section 147.55, 148.6, 148B.7, 45 23 152.10, 153.34, 154A.24, 169.13, 542B.21,542C.21542D.10, 45 24 543B.29, 544A.13, 544B.15, or 602.3203 or chapter 151, 155, 45 25 507B or 522, as applicable, or upon any other grounds 45 26 specifically provided for in this chapter for revocation of 45 27 the license of a licensee subject to the jurisdiction of that 45 28 board, or upon failure of the licensee to comply with a 45 29 decision of the board imposing licensee discipline; 45 30 Sec. 27. Section 272C.4, subsection 6, Code 2001, is 45 31 amended to read as follows: 45 32 6. Define by rule acts or omissions which are grounds for 45 33 revocation or suspension of a license under section 147.55, 45 34 148.6, 148B.7, 152.10, 153.34, 154A.24, 169.13, 455B.191, 45 35 542B.21,542C.21542D.10, 543B.29, 544A.13, 544B.15, or 46 1 602.3203 or chapter 151, 155, 507B or 522, as applicable, and 46 2 to define by rule acts or omissions which constitute 46 3 negligence, careless acts or omissions within the meaning of 46 4 section 272C.3, subsection 2, paragraph "b", which licensees 46 5 are required to report to the board pursuant to section 46 6 272C.9, subsection 2; 46 7 Sec. 28. Section 272C.5, subsection 2, paragraph c, Code 46 8 2001, is amended to read as follows: 46 9 c. Shall state whether the procedures are an alternative 46 10 to or an addition to the procedures stated in sections 147.58 46 11 through 147.71, 148.6 through 148.9, 152.10 and 152.11, 153.23 46 12 through 153.30, 153.33, and 154A.23, 542B.22,542C.23542D.11, 46 13 543B.35, 543B.36, 544B.16. 46 14 Sec. 29. Section 272C.6, subsection 6, unnumbered 46 15 paragraph 1, Code 2001, is amended to read as follows: 46 16 A board created pursuant to chapter 147, 154A, 155, 169, 46 17 542B,542C542D, 543B, 543D, 544A, or 544B may charge a fee 46 18 not to exceed seventy-five dollars for conducting a 46 19 disciplinary hearing pursuant to this chapter which results in 46 20 disciplinary action taken against the licensee by the board, 46 21 and in addition to the fee, may recover from a licensee the 46 22 costs for the following procedures and associated personnel: 46 23 Sec. 30. Section 272C.9, subsection 2, Code 2001, is 46 24 amended to read as follows: 46 25 2. A licensee has a continuing duty to report to the 46 26 licensing board by whom the person is licensed those acts or 46 27 omissions specified by rule of the board pursuant to section 46 28 272C.4, subsection 6, when committed by another person 46 29 licensed by the same licensing board. This subsection does 46 30 not apply to licensees under chapter542C542D when the 46 31 observations are a result of participation in programs of 46 32 practice review, peer review and quality review conducted by 46 33 professional organizations of certified public accountants, 46 34 for educational purposes and approved by the accountancy 46 35 examining board. 47 1 Sec. 31. Section 502.102, subsection 11, paragraph c, 47 2 subparagraphs (3) and (4), Code 2001, are amended to read as 47 3 follows: 47 4 (3) An attorney licensed to practice law in this state, a 47 5 certified public accountant licensed pursuant to chapter542C47 6 542D, a professional engineer licensed pursuant to chapter 47 7 542B, or a certified teacher, if the person's performance of 47 8 these services is solely incidental to the practice of the 47 9 person's profession. 47 10 (4) An attorney licensed to practice law in this state or 47 11 a certified public accountant licensed pursuant to chapter 47 12542C542D who does not do any of the following: 47 13 Sec. 32. Section 522.1, subsection 2, Code 2001, is 47 14 amended to read as follows: 47 15 2. A certified public accountant licensed pursuant to 47 16 chapter542C542D. 47 17 Sec. 33. Section 546.10, subsection 1, paragraph b, Code 47 18 2001, is amended to read as follows: 47 19 b. The Iowa accountancy examining board created pursuant 47 20 to chapter542C542D. 47 21 Sec. 34. Section 546.10, subsection 5, Code 2001, is 47 22 amended to read as follows: 47 23 5. Fees collected under chapters 542B,542C542D, 543B, 47 24 543D, 544A, and 544B shall be paid to the treasurer of state 47 25 and credited to the general fund of the state. All expenses 47 26 required in the discharge of the duties and responsibilities 47 27 imposed upon the professional licensing division of the 47 28 department of commerce, the administrator, and the licensing 47 29 boards by the laws of this state shall be paid from moneys 47 30 appropriated by the general assembly for those purposes. All 47 31 fees deposited into the general fund of the state, as provided 47 32 in this subsection, shall be subject to the requirements of 47 33 section 8.60. 47 34 Sec. 35. Section 669.14, subsection 11, unnumbered 47 35 paragraph 1, Code 2001, is amended to read as follows: 48 1 Any claim for financial loss based upon an act or omission 48 2 in financial regulation, including but not limited to 48 3 examinations, inspections, audits, or other financial 48 4 oversight responsibilities, pursuant to chapters 87, 203, 48 5 203A, 203C, 203D, 421B, 486, 487, and 490 through 553, 48 6 excluding chapters 540A, 542B,542C542D, 543B, 543C, 543D, 48 7 544A, and 544B. 48 8 Sec. 36. Chapter 542C, Code 2001, is repealed, effective 48 9 July 1, 2002. However, this Act shall not be construed to 48 10 invalidate or affect any action taken or any proceeding 48 11 instituted under any law in effect prior to the effective date 48 12 of this Act. 48 13 Sec. 37. CONSTRUCTION. This Act shall be construed to 48 14 fully recognize a certificate, license, or permit issued 48 15 pursuant to chapter 542C prior to July 1, 2002, as though 48 16 issued under this Act. 48 17 Sec. 38. EFFECTIVE DATE. This Act takes effect July 1, 48 18 2002. 48 19 EXPLANATION 48 20 This bill creates a new Code chapter 542D, which 48 21 establishes certification, permitting, and licensure 48 22 requirements for accounting professionals in this state. The 48 23 bill repeals existing requirements contained in current Code 48 24 chapter 542C. The bill is based on model legislation 48 25 developed jointly by the American institute of certified 48 26 public accountants and the national association of state 48 27 boards of accountancy. 48 28 New Code section 542D.1 sets forth the title of the new 48 29 Code chapter as the "Iowa Accountancy Act of 2001". 48 30 New Code section 542D.2 sets forth a statement of 48 31 legislative intent which is to promote the reliability of 48 32 information that is used for guidance in financial 48 33 transactions or for accounting for or assessing the financial 48 34 status or performance of commercial, noncommercial, and 48 35 governmental enterprises. 49 1 New Code section 542D.3 establishes the definitions of 49 2 terms used in the Code chapter. 49 3 New Code section 542D.4 establishes the accountancy 49 4 examining board in a manner similar to current Code chapter 49 5 542C. 49 6 New Code section 542D.5 sets forth the qualifications 49 7 required to be met to be issued a certificate as a certified 49 8 public accountant. The Code section requires that an 49 9 applicant be of good moral character and meet established 49 10 education, experience, and examination requirements. 49 11 New Code section 542D.6 establishes the process of 49 12 application for an initial certificate as a certified public 49 13 accountant, as well as for renewal and reciprocal issuance of 49 14 certificates. This section requires that a licensee shall 49 15 participate in a program of professional education designed to 49 16 ensure continuing competence. 49 17 New Code section 542D.7 provides for the issuance of 49 18 permits to practice as a certified public accounting firm or 49 19 licensed public accounting firm upon submission of an 49 20 application and demonstration of the requirements established 49 21 in the new Code section. A person or firm holding a permit to 49 22 practice issued by this state prior to July 1, 2002, is 49 23 decreed to have met the requirements of this section. 49 24 New Code section 542D.8 sets forth the qualifications to be 49 25 met in order to be issued a license as a licensed public 49 26 accountant. This Code section establishes the process of 49 27 application for the initial license, as well as license 49 28 renewal. The Code section provides that a person holding a 49 29 license as an accounting practitioner issued by this state 49 30 prior to July 1, 2002, is deemed to have met the requirements 49 31 of the Code section. 49 32 New Code section 542D.9 establishes that an application for 49 33 a certificate, permit, or license to practice by a person or a 49 34 firm not a resident of the state constitutes appointment of 49 35 the secretary of state as the applicant's agent upon whom 50 1 process may be served in any action or proceeding against the 50 2 applicant arising out of any transaction or operation 50 3 connected with or incidental to services performed by the 50 4 applicant within this state. 50 5 New Code section 542D.10 provides for enforcement of the 50 6 Code chapter. The Code section identifies those acts of an 50 7 individual that may result in revocation, suspension, or other 50 8 limitation of the individual's certificate, permit, license, 50 9 or privileges under the Code chapter. The Code section also 50 10 provides for an administrative penalty not to exceed $1,000. 50 11 New Code section 542D.11 provides for the investigations 50 12 and hearings procedures associated with complaints and 50 13 violations under the new Code section. 50 14 New Code section 542D.12 provides for the reinstatement of 50 15 a license which has been suspended, revoked, or restricted. 50 16 New Code section 542D.13 provides for the use of titles and 50 17 the scope of services that a licensee, firm, or nonlicensee 50 18 may perform under the new Code chapter. This Code section 50 19 also provides for the regulation of commission-based services 50 20 and contingent fee services. Prohibited acts are delineated. 50 21 New Code section 542D.14 grants authority to the 50 22 accountancy examining board to obtain injunctive relief from a 50 23 court if the board finds that any person or firm has engaged, 50 24 or is about to engage, in any acts or practices which will 50 25 constitute a violation of the new Code chapter. The new Code 50 26 section also provides for the levying of civil penalties and 50 27 the issuance of consent orders. 50 28 New Code section 542D.15 establishes a criminal penalty for 50 29 a violation of new Code section 542D.13, relating to unlawful 50 30 acts. A person who commits such violation is guilty of a 50 31 serious misdemeanor. 50 32 New Code section 542D.16 provides that in any action 50 33 brought to enforce the chapter, evidence of the commission of 50 34 a single prohibited act is sufficient to justify a penalty, 50 35 injunction, restraining order, or conviction, without evidence 51 1 of a general course of conduct. 51 2 New Code section 542D.17 defines the confidentiality of 51 3 client communications to accountants. The new Code section 51 4 establishes certain instances where such communications may be 51 5 disclosed. 51 6 New Code section 542D.18 provides for the retention and 51 7 management of client records. 51 8 New Code section 542D.19 provides for reciprocity and 51 9 discipline for certificate and license holders and permitted 51 10 firms from states whose accountancy statutes are substantially 51 11 equivalent to the requirements of this new Code chapter. 51 12 Sections 20 through 35 of the bill make conforming changes 51 13 relating to the repeal of Code chapter 542C and the creation 51 14 of Code chapter 542D in this bill. 51 15 Section 36 of the bill provides for the repeal of existing 51 16 Code chapter 542C, relating to the regulation of public 51 17 accountancy, which was originally enacted in 1974. 51 18 Section 37 of the bill provides for the bill's 51 19 construction. 51 20 Section 38 of the bill provides that the bill takes effect 51 21 on July 1, 2002. 51 22 LSB 2203HC 79 51 23 rn/cls/14
Text: HSB00089 Text: HSB00091 Text: HSB00000 - HSB00099 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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