HSB 695 (LSB 5451YC (4) 89)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON KAUFMANN)

A BILL FOR

An Act relating to the auditor of state and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  11.31A  Auditor of state —— divisions —— continuing education.
   1.  The auditor of state shall adopt rules establishing divisions within the office of auditor of state. For each division within the office of auditor of state that is responsible for performing attest services as described in section 542.3, the auditor of state shall appoint a deputy auditor of state, subject to confirmation by the senate, that is a certified public accountant to lead that division. Each deputy auditor of state shall do all of the following:
   a.  Perform attest services that would otherwise be performed by the auditor of state.
   b.  Review and supervise each assistant auditor within the division headed by the deputy auditor of state.
   2.  If the auditor of state is not a certified public accountant licensed pursuant to chapter 542, the auditor of state shall not sign an accountant’s report issued by the office of auditor of state, but shall defer to the appropriate deputy auditor of state who meets the experience or competency requirements set out in nationally recognized professional standards for such services.
   3.  The auditor of state shall complete such annual continuing education requirements as are required of a certified public accountant licensed pursuant to chapter 542.
   4.  The auditor of state shall comply with all applicable rules of professional conduct adopted by the Iowa accountancy examining board pursuant to section 542.4.
    Sec. 2.  Section 542.3, subsection 20, Code 2022, is amended to read as follows:
   20.  “Peer review records” means a file, report, or other information relating to the professional competence of an applicant in the possession of a peer review team, or information concerning the peer review developed by a peer review team in the possession of an applicant.  “Peer review records” includes peer review reports.
    Sec. 3.  Section 542.3, Code 2022, is amended by adding the following new subsection:
   NEW SUBSECTION.  20A.  “Peer review reports” means a study, appraisal, or review of one or more aspects of a certified public accounting firm’s compliance with applicable accounting, auditing, and other attestation standards adopted by generally recognized standard-setting bodies.
    Sec. 4.  Section 542.7, subsection 4, Code 2022, is amended to read as follows:
   4.  An applicant for initial issuance or renewal of a permit to practice as a certified public accounting firm is required to register each office of the firm within this state with the board and to show that all attest and compilation services rendered in this state are under the charge of a person holding a valid certificate issued under section 542.6 or 542.19, or by another state if the holder has a practice privilege under section 542.20.  However, the requirements of this subsection shall not apply to the office of auditor of state if the auditor of state otherwise complies with the requirements of section 11.31A and this section.
    Sec. 5.  Section 542.7, subsection 10, Code 2022, is amended to read as follows:
   10.  a.  Peer review records are privileged and confidential, and are not subject to discovery, subpoena, or other means of legal compulsion. Peer review records are not admissible in evidence in a judicial, administrative, or arbitration proceeding. Unless the subject of a peer review timely objects in writing to the administering entity of the peer review program, the administering entity shall make available to the board within thirty days of the issuance of the peer review acceptance letter the final peer review report or such peer review records as are designated by the peer review program in which the administering entity participates. The subject of a peer review may voluntarily submit the final peer review report directly to the board. Information or documents discoverable from sources other than a peer review team do not become nondiscoverable from such other sources because they are made available to or are in the possession of a peer review team. Information or documents publicly available from the American institute of certified public accountants relating to quality or peer review are not privileged or confidential under this subsection. A person or organization participating in the peer review process shall not testify as to the findings, recommendations, evaluations, or opinions of a peer review team in a judicial, administrative, or arbitration proceeding.
   b.  However, notwithstanding any provision of this subsection to the contrary, peer review reports concerning the office of auditor of state shall be considered a public record pursuant to chapter 22.
    Sec. 6.  NEW SECTION.  542.7A  Office of auditor of state.
   1.  The office of auditor of state shall qualify as a certified public accounting firm subject to the requirements of sections 11.31, 11.31A, and 542.7.
   2.  For purposes of section 542.7, the auditor of state shall be deemed to be the owner of the office of auditor of state and the office of auditor of state shall be deemed to comply with the ownership requirements of section 542.7 if the auditor of state is a certified public accountant or all divisions of the office of auditor of state performing attest services are led by a certified public accountant.
   3.  The provisions of sections 542.9, 542.17, and 542.18 shall not apply to the office of auditor of state as a certified public accounting firm under this chapter.
    Sec. 7.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 8.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to July 1, 2002.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill concerns the office of auditor of state.
   The bill requires that the auditor of state adopt rules establishing divisions and to provide that for each division that is responsible for performing attest services as described in Code section 542.3, the auditor of state shall appoint a certified public accountant to lead that division, who shall be subject to confirmation by the senate. The bill requires a deputy auditor of state who meets the experience or competency requirements set out in nationally recognized professional standards to sign an accountant’s report if the auditor of state is not a certified public accountant. The bill also requires the auditor of state to complete the continuing education requirements and comply with the applicable rules of professional conduct required for certified public accountants.
   Code chapter 542, concerning public accountants, is amended. The bill adds “peer review reports”, defined in the bill, to the definition of “peer review records”. By operation of law, peer review records are privileged, confidential, and not subject to discovery or other means of legal compulsion. New Code section 542.7A provides that the office of auditor of state shall qualify as a certified public accounting firm subject to the requirements of Code sections 11.31 and 542.7. The bill provides that for purposes of applying for a permit as a certified public accounting firm under Code section 542.7, the auditor of state shall be deemed the owner of the office and the office of auditor of state shall be deemed to comply with the ownership requirements of Code section 542.7 if the auditor of state is a certified public accountant or all divisions of the office of auditor of state performing attest services are led by a certified public accountant. The bill provides that Code section 542.9, concerning appointment of secretary of state as an agent, and Code sections 542.17 and 542.18, concerning client confidentiality, do not apply to the office of auditor of state if the office of auditor of state is issued a permit as a certified public accounting firm. 
   Code section 542.7, concerning firm permits to practice, is amended. The bill provides that the requirements of an applicant to register each office of the firm within the state with the Iowa accountancy examining board and to show that all attest and compilation services rendered in this state are under the charge of a person holding a valid certificate do not apply to the office of auditor of state. In addition, the bill provides that peer review records concerning the office of auditor of state shall be considered a public record pursuant to Code chapter 22.
   The bill takes effect upon enactment and applies retroactively to July 1, 2002.