Senate Study Bill 1239 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON SMITH) A BILL FOR An Act relating to the auditor of state and including effective 1 date and applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2771XC (6) 88 ec/rn

S.F. _____ Section 1. Section 11.31, Code 2019, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 01. The auditor of state shall adopt rules 3 establishing divisions within the office of auditor of state. 4 For each division within the office of auditor of state that 5 is responsible for performing attest services as described in 6 section 542.3, the auditor of state shall appoint a certified 7 public accountant to serve as deputy auditor of that division. 8 Sec. 2. Section 542.7, subsection 4, Code 2019, is amended 9 to read as follows: 10 4. An applicant for initial issuance or renewal of a permit 11 to practice as a certified public accounting firm is required 12 to register each office of the firm within this state with the 13 board and to show that all attest and compilation services 14 rendered in this state are under the charge of a person holding 15 a valid certificate issued under section 542.6 or 542.19 , or 16 by another state if the holder has a practice privilege under 17 section 542.20 . However, the requirements of this subsection 18 shall not apply to the office of auditor of state if the 19 auditor of state otherwise complies with the requirements of 20 section 11.31 and this section. 21 Sec. 3. Section 542.7, subsection 10, Code 2019, is amended 22 to read as follows: 23 10. a. Peer review records are privileged and confidential, 24 and are not subject to discovery, subpoena, or other means 25 of legal compulsion. Peer review records are not admissible 26 in evidence in a judicial, administrative, or arbitration 27 proceeding. Unless the subject of a peer review timely objects 28 in writing to the administering entity of the peer review 29 program, the administering entity shall make available to the 30 board within thirty days of the issuance of the peer review 31 acceptance letter the final peer review report or such peer 32 review records as are designated by the peer review program in 33 which the administering entity participates. The subject of a 34 peer review may voluntarily submit the final peer review report 35 -1- LSB 2771XC (6) 88 ec/rn 1/ 4

S.F. _____ directly to the board. Information or documents discoverable 1 from sources other than a peer review team do not become 2 nondiscoverable from such other sources because they are made 3 available to or are in the possession of a peer review team. 4 Information or documents publicly available from the American 5 institute of certified public accountants relating to quality 6 or peer review are not privileged or confidential under this 7 subsection . A person or organization participating in the 8 peer review process shall not testify as to the findings, 9 recommendations, evaluations, or opinions of a peer review team 10 in a judicial, administrative, or arbitration proceeding. 11 b. However, notwithstanding any provision of this subsection 12 to the contrary, peer review records concerning the office of 13 auditor of state shall be considered a public record pursuant 14 to chapter 22. 15 Sec. 4. NEW SECTION . 542.7A Office of auditor of state. 16 1. The office of auditor of state shall qualify as a 17 certified public accounting firm subject to the requirements of 18 sections 11.31 and 542.7. 19 2. For purposes of section 542.7, the auditor of state shall 20 be deemed to be the owner of the office of auditor of state and 21 the office of auditor of state shall be deemed to comply with 22 the ownership requirements of section 542.7 if the auditor of 23 state is a certified public accountant or a majority of all 24 divisions of the office of auditor of state performing attest 25 services are headed by a deputy auditor who is a certified 26 public accountant. 27 3. The provisions of sections 542.9, 542.17, and 542.18 28 shall not apply to the office of auditor of state as a 29 certified public accounting firm under this chapter. 30 Sec. 5. EFFECTIVE DATE. This Act, being deemed of immediate 31 importance, takes effect upon enactment. 32 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 33 retroactively to January 1, 2019. 34 EXPLANATION 35 -2- LSB 2771XC (6) 88 ec/rn 2/ 4

S.F. _____ The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill concerns the office of auditor of state. 3 Code section 11.31, concerning state auditors, is amended 4 to provide that the auditor of state adopt rules establishing 5 divisions and to provide that for each division that is 6 responsible for performing attest services as described in Code 7 section 542.3, the auditor of state shall appoint a certified 8 public accountant to serve as deputy auditor of that division. 9 Code chapter 542, concerning public accountants, is amended. 10 New Code section 542.7A provides that the office of auditor 11 of state shall qualify as a certified public accounting firm 12 subject to the requirements of Code sections 11.31 and 542.7. 13 The bill provides that for purposes of applying for a permit 14 as a certified public accounting firm under Code section 15 542.7, the auditor of state shall be deemed the owner of the 16 office and the office of auditor of state shall be deemed to 17 comply with the ownership requirements of Code section 542.7 18 if the auditor of state is a certified public accountant or a 19 majority of all divisions of the office of auditor of state 20 performing attest services are headed by a deputy director who 21 is a certified public accountant. The bill provides that Code 22 section 542.9, concerning appointment of secretary of state 23 as an agent, and Code sections 542.17 and 542.18, concerning 24 client confidentiality, do not apply to the office of auditor 25 of state if the office of auditor of state is issued a permit as 26 a certified public accounting firm. 27 Code section 542.7, concerning firm permits to practice, 28 is amended. The bill provides that the requirements of an 29 applicant to register each office of the firm within the state 30 with the Iowa accountancy examining board and to show that all 31 attest and compilation services rendered in this state are 32 under the charge of a person holding a valid certificate do 33 not apply to the office of auditor of state. In addition, the 34 bill provides that peer review records concerning the office of 35 -3- LSB 2771XC (6) 88 ec/rn 3/ 4

S.F. _____ auditor of state shall be considered a public record pursuant 1 to Code chapter 22. 2 The bill takes effect upon enactment and applies 3 retroactively to January 1, 2019. 4 -4- LSB 2771XC (6) 88 ec/rn 4/ 4