House
Study
Bill
72
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
STATE
GOVERNMENT
BILL
BY
CHAIRPERSON
VANDER
LINDEN)
A
BILL
FOR
An
Act
relating
to
the
regulation
of
certified
public
1
accountants
and
certified
public
accounting
firms.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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_____
Section
1.
Section
80A.2,
Code
2015,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
10.
A
certified
public
accountant
3
authorized
to
practice
pursuant
to
chapter
542,
while
4
performing
duties
as
a
certified
public
accountant.
5
Sec.
2.
Section
542.3,
subsection
26,
Code
2015,
is
amended
6
to
read
as
follows:
7
26.
“Report”
,
when
used
with
reference
to
financial
8
statements
any
attest
or
compilation
services
,
means
a
report,
9
opinion,
or
other
form
of
a
writing
that
states
or
implies
10
assurance
as
to
the
reliability
of
any
the
attested
information
11
or
compiled
financial
statements
and
that
includes
or
is
12
accompanied
by
a
statement
or
implication
that
the
person
or
13
firm
issuing
the
report
has
special
knowledge
or
competence
14
in
accounting
or
auditing.
Such
statement
or
implication
15
of
special
knowledge
or
competence
may
arise
from
use
by
16
the
issuer
of
the
report
of
names
or
titles
indicating
that
17
the
person
or
firm
is
an
accountant
or
auditor,
or
from
the
18
language
of
the
report
itself.
“Report”
includes
any
form
19
of
language
which
disclaims
an
opinion
when
such
form
of
20
language
is
conventionally
understood
to
imply
a
positive
21
assurance
as
to
the
reliability
of
the
attested
information
or
22
compiled
financial
statements
referred
to
or
special
knowledge
23
or
competence
on
the
part
of
the
person
or
firm
issuing
the
24
language,
and
any
other
form
of
language
that
is
conventionally
25
understood
to
imply
such
assurance
or
such
special
knowledge
26
or
competence.
27
Sec.
3.
Section
542.7,
subsection
3,
Code
2015,
is
amended
28
by
adding
the
following
new
paragraph:
29
NEW
PARAGRAPH
.
0c.
(1)
Notwithstanding
chapter
496C
or
30
any
other
provision
of
law
to
the
contrary,
a
certified
public
31
accounting
firm
organized
as
a
professional
corporation
under
32
chapter
496C
may
have
nonlicensee
owners
provided
that
the
firm
33
complies
with
the
requirements
of
this
section.
34
(2)
Notwithstanding
chapter
489,
article
11,
or
any
other
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_____
provision
of
law
to
the
contrary,
a
certified
public
accounting
1
firm
organized
as
a
professional
limited
liability
company
2
under
chapter
489,
article
11,
may
have
nonlicensee
members
3
provided
that
the
professional
limited
liability
company
4
complies
with
the
requirements
of
this
section.
5
Sec.
4.
Section
542.7,
subsection
3,
paragraphs
c
and
d,
6
Code
2015,
are
amended
to
read
as
follows:
7
c.
A
licensee
or
person
with
a
practice
privilege
under
8
section
542.20
who
is
responsible
for
supervising
attest
9
or
compilation
services
and
signs
or
authorizes
someone
to
10
sign
the
accountant’s
report
on
the
financial
statements
on
11
behalf
of
the
firm
shall
meet
the
experience
or
competency
12
requirements
set
out
in
nationally
recognized
professional
13
standards
for
such
services.
14
d.
A
licensee
or
person
with
a
practice
privilege
under
15
section
542.20
who
signs
or
authorizes
someone
to
sign
the
16
accountant’s
report
on
the
financial
statements
on
behalf
of
17
the
firm
shall
meet
the
experience
or
competency
requirements
18
established
in
paragraph
“c”
.
19
Sec.
5.
Section
542.7,
subsection
6,
paragraph
a,
Code
2015,
20
is
amended
by
striking
the
paragraph.
21
Sec.
6.
Section
542.7,
subsection
8,
paragraph
a,
Code
2015,
22
is
amended
to
read
as
follows:
23
a.
The
board,
by
rule,
shall
require
as
a
condition
24
of
renewal
of
a
permit
to
practice
as
a
certified
public
25
accounting
firm,
that
an
applicant
undergo,
no
more
frequently
26
than
once
every
three
years,
a
peer
review
conducted
in
such
27
manner
as
the
board
specifies.
The
review
shall
include
a
28
verification
that
any
individual
in
the
firm
who
is
responsible
29
for
supervising
attest
and
compilation
services
and
who
signs
30
or
authorizes
someone
to
sign
the
accountant’s
report
on
a
31
financial
statement
on
behalf
of
the
firm
meets
the
competency
32
requirements
set
forth
in
the
professional
standards
for
such
33
services.
34
Sec.
7.
Section
542.7,
subsection
9,
paragraph
a,
Code
2015,
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is
amended
to
read
as
follows:
1
a.
The
applicant
does
not
engage
in,
and
does
not
intend
to
2
engage
in
during
the
following
year,
financial
reporting
areas
3
of
practice,
including
but
not
limited
to
financial
audits,
4
compilations,
and
reviews.
An
applicant
granted
a
waiver
5
pursuant
to
this
paragraph
shall
immediately
notify
the
board
6
if
the
applicant
engages
in
such
practice,
and
shall
be
subject
7
to
peer
review.
8
Sec.
8.
Section
542.13,
subsections
8
and
11,
Code
2015,
are
9
amended
to
read
as
follows:
10
8.
A
nonlicensee
shall
not
use
language
in
any
statement
11
relating
to
the
financial
affairs
of
a
person
or
entity
which
12
is
conventionally
used
by
licensees
in
reports
on
financial
13
statements
or
any
attest
service
.
The
board
shall
develop
and
14
issue
language
which
nonlicensees
may
use
in
connection
with
15
such
financial
information.
16
11.
This
section
does
not
apply
to
a
person
or
firm
holding
17
a
certification,
designation,
degree,
or
license
granted
in
a
18
foreign
country
entitling
the
holder
to
engage
in
the
practice
19
of
public
accountancy
or
its
equivalent
in
such
country,
whose
20
activities
in
this
state
are
limited
to
providing
professional
21
services
to
a
person
or
firm
who
is
a
resident
of,
government
22
of,
or
business
entity
of
the
country
in
which
the
person
holds
23
such
entitlement,
who
does
not
perform
attest
or
compilation
24
services,
and
who
does
not
issue
reports
with
respect
to
the
25
financial
statements
information
of
any
other
person,
firm,
or
26
governmental
unit
in
this
state,
and
who
does
not
use
in
this
27
state
any
title
or
designation
other
than
the
one
under
which
28
the
person
practices
in
such
country,
followed
by
a
translation
29
of
such
title
or
designation
into
the
English
language,
if
it
30
is
in
a
different
language,
and
by
the
name
of
such
country.
31
Sec.
9.
Section
542.17,
unnumbered
paragraph
1,
Code
2015,
32
is
amended
to
read
as
follows:
33
A
licensee
shall
not
voluntarily
disclose
information
34
communicated
to
the
licensee
by
a
client
relating
to
and
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in
connection
with
services
rendered
to
the
client
by
the
1
licensee,
except
with
the
permission
of
the
client,
or
an
2
heir,
successor,
or
personal
representative
of
the
client.
3
Such
information
is
deemed
to
be
confidential.
However,
this
4
section
shall
not
be
construed
as
prohibiting
the
disclosure
of
5
information
required
to
be
disclosed
by
the
standards
of
the
6
public
accounting
profession
in
reporting
on
the
examination
of
7
financial
statements
or
in
the
performance
of
an
attest
service
8
or
as
prohibiting
disclosures
in
a
court
proceeding,
in
an
9
investigation
or
proceeding
under
this
chapter
or
chapter
272C
,
10
in
an
ethical
investigation
conducted
by
a
private
professional
11
organization,
in
the
course
of
a
peer
review,
to
another
person
12
active
in
the
licensee’s
firm
performing
services
for
that
13
client
on
a
need-to-know
basis,
to
persons
associated
with
the
14
investigative
entity
who
need
this
information
for
the
sole
15
purpose
of
assuring
quality
control,
or
as
otherwise
required
16
by
law.
17
EXPLANATION
18
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
19
the
explanation’s
substance
by
the
members
of
the
general
assembly.
20
This
bill
relates
to
the
regulation
of
accountants
in
21
the
state.
The
bill
exempts
a
certified
public
accountant
22
authorized
to
practice
in
the
state
from
the
requirements
23
listed
under
the
private
investigative
agencies
and
security
24
agents
Code
chapter.
25
The
bill
amends
the
definition
of
report
to
include
26
references
to
attested
information.
In
the
Code
provision
27
addressing
permits
for
accounting
firms
that
perform
attest
28
services,
the
bill
makes
conforming
changes.
The
bill
replaces
29
a
reference
to
“financial
statement”
with
“information”
in
a
30
Code
provision
providing
that
the
unlawful
acts
section
of
31
Code
chapter
542
does
not
apply
to
certain
holders
of
licenses
32
granted
by
foreign
countries.
33
The
bill
eliminates
a
Code
provision
requiring
a
holder
34
or
applicant
of
a
certified
public
accounting
firm
permit,
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which
is
required
for
accounting
firms
that
perform
attest
1
services
in
the
state,
to
notify
the
Iowa
accountancy
examining
2
board
within
30
days
of
a
change
in
the
identity
of
a
partner,
3
officer,
shareholder,
member,
or
manager
who
performs
4
professional
services
in
Iowa.
Current
Code
allows
certified
5
public
accounting
firms
to
include
nonlicensee
owners
with
some
6
requirements.
The
bill
allows
certified
public
accounting
7
firms
organized
as
professional
corporations
or
professional
8
limited
liability
companies
to
include
a
nonlicensee
owner
9
as
long
as
the
firm
meets
the
current
requirements
and
rules
10
established
by
the
Iowa
accountancy
examining
board.
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