H.F. _____ Section 1. NEW SECTION . 11.31A Auditor of state —— 1 divisions —— continuing education. 2 1. The auditor of state shall adopt rules establishing 3 divisions within the office of auditor of state. For each 4 division within the office of auditor of state that is 5 responsible for performing attest services as described in 6 section 542.3, the auditor of state shall appoint a deputy 7 auditor of state, subject to confirmation by the senate, that 8 is a certified public accountant to lead that division. Each 9 deputy auditor of state shall do all of the following: 10 a. Perform attest services that would otherwise be performed 11 by the auditor of state. 12 b. Review and supervise each assistant auditor within the 13 division headed by the deputy auditor of state. 14 2. If the auditor of state is not a certified public 15 accountant licensed pursuant to chapter 542, the auditor of 16 state shall not sign an accountant’s report issued by the 17 office of auditor of state, but shall defer to the appropriate 18 deputy auditor of state who meets the experience or competency 19 requirements set out in nationally recognized professional 20 standards for such services. 21 3. The auditor of state shall complete such annual 22 continuing education requirements as are required of a 23 certified public accountant licensed pursuant to chapter 542. 24 4. The auditor of state shall comply with all applicable 25 rules of professional conduct adopted by the Iowa accountancy 26 examining board pursuant to section 542.4. 27 Sec. 2. Section 542.3, subsection 20, Code 2022, is amended 28 to read as follows: 29 20. “Peer review records” means a file, report, or other 30 information relating to the professional competence of 31 an applicant in the possession of a peer review team, or 32 information concerning the peer review developed by a peer 33 review team in the possession of an applicant. “Peer review 34 records” includes peer review reports. 35 -1- LSB 5451YC (4) 89 ss/rn 1/ 5

H.F. _____ Sec. 3. Section 542.3, Code 2022, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 20A. “Peer review reports” means a study, 3 appraisal, or review of one or more aspects of a certified 4 public accounting firm’s compliance with applicable accounting, 5 auditing, and other attestation standards adopted by generally 6 recognized standard-setting bodies. 7 Sec. 4. Section 542.7, subsection 4, Code 2022, is amended 8 to read as follows: 9 4. An applicant for initial issuance or renewal of a permit 10 to practice as a certified public accounting firm is required 11 to register each office of the firm within this state with the 12 board and to show that all attest and compilation services 13 rendered in this state are under the charge of a person holding 14 a valid certificate issued under section 542.6 or 542.19 , or 15 by another state if the holder has a practice privilege under 16 section 542.20 . However, the requirements of this subsection 17 shall not apply to the office of auditor of state if the 18 auditor of state otherwise complies with the requirements of 19 section 11.31A and this section. 20 Sec. 5. Section 542.7, subsection 10, Code 2022, is amended 21 to read as follows: 22 10. a. Peer review records are privileged and confidential, 23 and are not subject to discovery, subpoena, or other means 24 of legal compulsion. Peer review records are not admissible 25 in evidence in a judicial, administrative, or arbitration 26 proceeding. Unless the subject of a peer review timely objects 27 in writing to the administering entity of the peer review 28 program, the administering entity shall make available to the 29 board within thirty days of the issuance of the peer review 30 acceptance letter the final peer review report or such peer 31 review records as are designated by the peer review program in 32 which the administering entity participates. The subject of a 33 peer review may voluntarily submit the final peer review report 34 directly to the board. Information or documents discoverable 35 -2- LSB 5451YC (4) 89 ss/rn 2/ 5

H.F. _____ from sources other than a peer review team do not become 1 nondiscoverable from such other sources because they are made 2 available to or are in the possession of a peer review team. 3 Information or documents publicly available from the American 4 institute of certified public accountants relating to quality 5 or peer review are not privileged or confidential under this 6 subsection . A person or organization participating in the 7 peer review process shall not testify as to the findings, 8 recommendations, evaluations, or opinions of a peer review team 9 in a judicial, administrative, or arbitration proceeding. 10 b. However, notwithstanding any provision of this subsection 11 to the contrary, peer review reports concerning the office of 12 auditor of state shall be considered a public record pursuant 13 to chapter 22. 14 Sec. 6. NEW SECTION . 542.7A Office of auditor of state. 15 1. The office of auditor of state shall qualify as a 16 certified public accounting firm subject to the requirements of 17 sections 11.31, 11.31A, and 542.7. 18 2. For purposes of section 542.7, the auditor of state shall 19 be deemed to be the owner of the office of auditor of state and 20 the office of auditor of state shall be deemed to comply with 21 the ownership requirements of section 542.7 if the auditor of 22 state is a certified public accountant or all divisions of the 23 office of auditor of state performing attest services are led 24 by a certified public accountant. 25 3. The provisions of sections 542.9, 542.17, and 542.18 26 shall not apply to the office of auditor of state as a 27 certified public accounting firm under this chapter. 28 Sec. 7. EFFECTIVE DATE. This Act, being deemed of immediate 29 importance, takes effect upon enactment. 30 Sec. 8. RETROACTIVE APPLICABILITY. This Act applies 31 retroactively to July 1, 2002. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -3- LSB 5451YC (4) 89 ss/rn 3/ 5

H.F. _____ This bill concerns the office of auditor of state. 1 The bill requires that the auditor of state adopt rules 2 establishing divisions and to provide that for each division 3 that is responsible for performing attest services as described 4 in Code section 542.3, the auditor of state shall appoint a 5 certified public accountant to lead that division, who shall 6 be subject to confirmation by the senate. The bill requires a 7 deputy auditor of state who meets the experience or competency 8 requirements set out in nationally recognized professional 9 standards to sign an accountant’s report if the auditor of 10 state is not a certified public accountant. The bill also 11 requires the auditor of state to complete the continuing 12 education requirements and comply with the applicable rules of 13 professional conduct required for certified public accountants. 14 Code chapter 542, concerning public accountants, is amended. 15 The bill adds “peer review reports”, defined in the bill, to 16 the definition of “peer review records”. By operation of 17 law, peer review records are privileged, confidential, and 18 not subject to discovery or other means of legal compulsion. 19 New Code section 542.7A provides that the office of auditor 20 of state shall qualify as a certified public accounting firm 21 subject to the requirements of Code sections 11.31 and 542.7. 22 The bill provides that for purposes of applying for a permit as 23 a certified public accounting firm under Code section 542.7, 24 the auditor of state shall be deemed the owner of the office 25 and the office of auditor of state shall be deemed to comply 26 with the ownership requirements of Code section 542.7 if the 27 auditor of state is a certified public accountant or all 28 divisions of the office of auditor of state performing attest 29 services are led by a certified public accountant. The bill 30 provides that Code section 542.9, concerning appointment of 31 secretary of state as an agent, and Code sections 542.17 and 32 542.18, concerning client confidentiality, do not apply to the 33 office of auditor of state if the office of auditor of state is 34 issued a permit as a certified public accounting firm. 35 -4- LSB 5451YC (4) 89 ss/rn 4/ 5

H.F. _____ Code section 542.7, concerning firm permits to practice, 1 is amended. The bill provides that the requirements of an 2 applicant to register each office of the firm within the state 3 with the Iowa accountancy examining board and to show that all 4 attest and compilation services rendered in this state are 5 under the charge of a person holding a valid certificate do 6 not apply to the office of auditor of state. In addition, the 7 bill provides that peer review records concerning the office of 8 auditor of state shall be considered a public record pursuant 9 to Code chapter 22. 10 The bill takes effect upon enactment and applies 11 retroactively to July 1, 2002. 12 -5- LSB 5451YC (4) 89 ss/rn 5/ 5