House
Study
Bill
116
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
STATE
GOVERNMENT
BILL
BY
CHAIRPERSON
RIZER)
A
BILL
FOR
An
Act
relating
to
the
practice
of
public
accountants.
1
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
2
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Section
1.
Section
542.3,
subsection
27,
Code
2017,
is
1
amended
to
read
as
follows:
2
27.
“State”
means
a
state
of
the
United
States,
the
District
3
of
Columbia,
Puerto
Rico,
the
United
States
Virgin
Islands,
the
4
Commonwealth
of
the
Northern
Mariana
Islands,
or
Guam.
5
Sec.
2.
Section
542.6,
subsection
1,
paragraph
b,
Code
2017,
6
is
amended
to
read
as
follows:
7
b.
The
holder
of
a
certificate
issued
under
this
section
8
shall
only
provide
attest
services
in
a
certified
public
9
accounting
firm
that
is
issued
a
permit
under
section
542.7
,
10
or
through
a
certified
public
accounting
firm
with
a
practice
11
privilege
under
section
542.20
.
12
Sec.
3.
Section
542.7,
subsection
1,
paragraphs
a
and
c,
13
Code
2017,
are
amended
to
read
as
follows:
14
a.
A
firm
must
hold
a
permit
issued
under
this
section
if
15
the
firm
performs
attest
services
in
this
state
or
for
clients
16
having
a
home
office
in
this
state
or
has
an
office
in
this
17
state
and
uses
the
title
“CPAs”,
“CPA
firm”,
“certified
public
18
accountants”,
or
“certified
public
accounting
firm”.
19
c.
A
firm
that
holds
a
permit
issued
under
this
chapter
20
shall
designate
to
the
board
the
licensee
or
person
with
a
21
practice
privilege
under
section
542.20
nonlicensee
who
is
22
responsible
for
the
proper
licensure
of
the
firm
and
the
23
firm’s
compliance
with
all
applicable
laws
and
rules
of
this
24
state.
If
such
firm
has
one
or
more
offices
in
this
state,
the
25
firm
shall
designate
to
the
board
one
or
more
persons
who
are
26
licensed
under
this
chapter
who
are
responsible
for
the
proper
27
registration
of
each
Iowa
office
of
the
firm
and
each
office’s
28
compliance
with
all
applicable
laws
and
rules
of
this
state.
29
Sec.
4.
Section
542.8,
subsection
12,
paragraph
b,
30
subparagraph
(2),
Code
2017,
is
amended
to
read
as
follows:
31
(2)
All
nonlicensee
owners
are
of
good
moral
character
and
32
active
participants
in
the
firm
or
an
affiliated
entity.
33
Sec.
5.
Section
542.8,
subsection
12,
paragraphs
c
and
d,
34
Code
2017,
are
amended
to
read
as
follows:
35
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c.
An
individual
licensee
or
person
with
a
practice
1
privilege
under
section
542.20
who
is
responsible
for
2
compilation
services
and
signs
or
authorizes
someone
to
sign
3
the
accountant’s
report
on
the
financial
statements
on
behalf
4
of
the
firm
shall
meet
the
competency
requirements
set
out
in
5
nationally
recognized
professional
standards
for
such
services.
6
d.
An
individual
licensee
or
person
with
a
practice
7
privilege
under
section
542.20
who
signs
or
authorizes
someone
8
to
sign
the
accountant’s
report
on
the
financial
statements
on
9
behalf
of
the
firm
shall
meet
the
competency
requirements
set
10
out
in
nationally
recognized
professional
standards
for
such
11
services.
12
Sec.
6.
Section
542.20,
subsection
5,
Code
2017,
is
amended
13
to
read
as
follows:
14
5.
A
certified
public
accounting
firm
that
is
licensed
15
in
the
state
of
its
principal
place
of
business
and
is
not
16
required
to
hold
an
Iowa
firm
license
under
section
542.7
17
may
practice
in
this
state
without
a
firm
license
under
this
18
chapter
or
notice
to
the
board
if
the
firm’s
practice
in
this
19
state
is
performed
by
individuals
who
hold
a
license
under
this
20
chapter
or
who
practice
in
conformance
with
subsection
6
,
under
21
the
following
conditions:
22
a.
The
firm
shall
not
perform
attest
services,
other
than
23
review
services,
in
Iowa
or
for
a
client
having
a
home
office
24
in
Iowa.
25
b.
a.
The
firm
shall
not
have
an
office
in
Iowa
which
uses
26
the
title
“CPAs”,
“CPA
firm”,
“certified
public
accountants”,
27
or
“certified
public
accounting
firm”.
28
c.
The
firm
may
perform
compilation
or
review
services
only
29
if
it
complies
with
the
ownership
and
peer
review
requirements
30
of
section
542.7
.
31
d.
b.
The
firm
shall
not
make
any
representation
tending
to
32
falsely
indicate
that
the
firm
is
licensed
under
this
chapter
.
33
e.
c.
The
firm,
upon
a
client’s
or
prospective
client’s
34
request,
shall
provide
accurate
information
on
the
state
or
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H.F.
_____
states
of
licensure,
principal
place
of
business,
contact
1
information,
and
manner
in
which
licensure
status
can
be
2
verified.
3
f.
d.
The
firm
shall
comply
with
all
professional
4
standards,
laws,
and
rules
that
apply
to
licensees
performing
5
the
same
professional
services.
6
e.
The
firm
shall
comply
with
the
ownership
and
peer
review
7
requirements
of
section
542.7.
8
Sec.
7.
Section
542.20,
subsection
6,
paragraph
c,
Code
9
2017,
is
amended
to
read
as
follows:
10
c.
An
individual
who
provides
attest
services
,
other
than
11
review
services,
in
Iowa
or
for
a
client
having
a
home
office
12
in
Iowa
must
practice
through
a
certified
public
accounting
13
firm
that
is
licensed
under
section
542.7
,
or
through
a
14
certified
public
accounting
firm
that
is
validly
licensed
in
15
the
state
of
its
principal
place
of
business
and
complies
with
16
the
ownership
and
peer
review
requirements
of
section
542.7
.
17
Sec.
8.
Section
542.20,
subsection
6,
paragraph
h,
Code
18
2017,
is
amended
by
striking
the
paragraph.
19
EXPLANATION
20
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
21
the
explanation’s
substance
by
the
members
of
the
general
assembly.
22
This
bill
modifies
provisions
relating
to
the
practice
of
23
public
accountants.
24
The
bill
adds
the
Commonwealth
of
the
Northern
Mariana
25
Islands
to
the
definition
of
“state”
in
Code
section
542.3(27).
26
Code
section
542.6(1)(b)
provides
that
certified
public
27
accountants
(CPAs)
may
only
provide
attest
services
in
a
firm
28
that
is
issued
a
permit
under
Code
section
542.7.
The
bill
29
allows
CPAs
to
also
provide
attest
services
through
firms
with
30
practice
privileges
as
defined
in
Code
section
542.3(24).
31
Code
section
542.7(1)(a)
requires
a
firm
to
obtain
a
permit
32
if
it
performs
certain
attest
services
in
Iowa
or
if
it
has
an
33
office
in
Iowa
and
uses
certain
titles.
The
bill
removes
a
34
firm
performing
attest
services
in
Iowa
from
the
type
of
firms
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requiring
a
permit.
1
Code
section
542.7(1)(c)
requires
a
firm
issued
a
permit
to
2
designate
to
the
board
the
licensee
or
person
with
a
practice
3
privilege
who
is
responsible
for
the
firm’s
licensure
and
4
legal
compliance.
The
bill
replaces
“person
with
a
practice
5
privilege”
with
“nonlicensee”.
6
Code
section
542.8(12)(b)
lists
the
conditions
required
for
7
a
licensed
public
accounting
(LPA)
firm
to
have
a
nonlicensee
8
owner.
The
bill
requires
a
nonlicensee
owner
to
be
of
good
9
moral
character
in
addition
to
all
other
current
requirements.
10
Code
section
542.8(12)(c)
and
(d)
requires
a
licensee
or
11
person
with
a
practice
privilege
who
is
authorized
to
sign
an
12
accountant’s
report
on
financial
statements
on
behalf
of
an
LPA
13
firm
to
meet
certain
competency
requirements.
The
bill
removes
14
“financial
statements”
in
reference
to
a
report
requiring
these
15
additional
competency
requirements.
16
Code
section
542.20(5)
lists
the
conditions
required
for
a
17
CPA
firm
to
hold
practice
privileges
without
needing
to
obtain
18
a
firm
license.
The
bill
removes
the
condition
that
a
firm
19
cannot
perform
attest
services
in
Iowa,
and
the
condition
that
20
a
firm
may
perform
compilation
or
review
services
only
if
it
21
complies
with
the
Iowa
ownership
and
peer
review
requirements.
22
However,
the
bill
adds
as
a
separate
condition
that
a
firm
must
23
comply
with
the
Iowa
ownership
and
peer
review
requirements.
24
Code
section
542.20(6)
lists
the
conditions
required
for
a
25
person
to
hold
the
practice
privileges
of
a
CPA
without
needing
26
to
obtain
a
certificate.
Under
Code
section
542.20(6)(c),
27
a
person
who
provides
attest
services
in
Iowa
must
practice
28
through
an
Iowa-licensed
CPA
firm.
The
bill
broadens
the
types
29
of
attesting
services
applicable
in
such
condition,
and
allows
30
a
person
to
also
practice
through
a
CPA
firm
that
is
validly
31
licensed
in
the
state
of
its
principal
place
of
business
and
32
complies
with
the
Iowa
ownership
and
peer
review
requirements.
33
The
bill
also
removes
the
condition
that
a
person
who
provides
34
reviews
of
certain
financial
statements
must
provide
such
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services
through
a
CPA
firm
that
is
validly
licensed
in
the
1
state
of
its
principal
place
of
business
and
complies
with
the
2
Iowa
ownership
and
peer
review
requirements.
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