Senate Study Bill 1033 - IntroducedA Bill ForAn Act 1relating to the practice of public accountants.
2BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1   Section 1.  Section 542.3, subsection 27, Code 2017, is
2amended to read as follows:
   327.  “State” means a state of the United States, the District
4of Columbia, Puerto Rico, the United States Virgin Islands, the
5Commonwealth of the Northern Mariana Islands,
or Guam.
6   Sec. 2.  Section 542.6, subsection 1, paragraph b, Code 2017,
7is amended to read as follows:
   8b.  The holder of a certificate issued under this section
9shall only provide attest services in a certified public
10accounting firm that is issued a permit under section 542.7,
11or through a certified public accounting firm with a practice
12privilege under section 542.20
.
13   Sec. 3.  Section 542.7, subsection 1, paragraphs a and c,
14Code 2017, are amended to read as follows:
   15a.  A firm must hold a permit issued under this section if
16the firm performs attest services in this state or for clients
17having a home office in this state or
has an office in this
18state and uses the title “CPAs”, “CPA firm”, “certified public
19accountants”, or “certified public accounting firm”.
   20c.  A firm that holds a permit issued under this chapter
21shall designate to the board the licensee or person with a
22practice privilege under section 542.20
 nonlicensee who is
23responsible for the proper licensure of the firm and the
24firm’s compliance with all applicable laws and rules of this
25state. If such firm has one or more offices in this state, the
26firm shall designate to the board one or more persons who are
27licensed under this chapter who are responsible for the proper
28registration of each Iowa office of the firm and each office’s
29compliance with all applicable laws and rules of this state.
30   Sec. 4.  Section 542.8, subsection 12, paragraph b,
31subparagraph (2), Code 2017, is amended to read as follows:
   32(2)  All nonlicensee owners are of good moral character and
33 active participants in the firm or an affiliated entity.
34   Sec. 5.  Section 542.8, subsection 12, paragraphs c and d,
35Code 2017, are amended to read as follows:
-1-   1c.  An individual licensee or person with a practice
2privilege under section 542.20 who is responsible for
3compilation services and signs or authorizes someone to sign
4the accountant’s report on the financial statements on behalf
5of the firm shall meet the competency requirements set out in
6nationally recognized professional standards for such services.
   7d.  An individual licensee or person with a practice
8privilege under section 542.20 who signs or authorizes someone
9to sign the accountant’s report on the financial statements on
10behalf of the firm shall meet the competency requirements set
11out in nationally recognized professional standards for such
12services.
13   Sec. 6.  Section 542.20, subsection 5, Code 2017, is amended
14to read as follows:
   155.  A certified public accounting firm that is licensed
16in the state of its principal place of business and is not
17required to hold an Iowa firm license under section 542.7
18may practice in this state without a firm license under this
19chapter or notice to the board if the firm’s practice in this
20state is performed by individuals who hold a license under this
21chapter or who practice in conformance with subsection 6, under
22the following conditions:
   23a.  The firm shall not perform attest services, other than
24review services, in Iowa or for a client having a home office
25in Iowa.
   26b.    a.  The firm shall not have an office in Iowa which uses
27the title “CPAs”, “CPA firm”, “certified public accountants”,
28or “certified public accounting firm”.
   29c.  The firm may perform compilation or review services only
30if it complies with the ownership and peer review requirements
31of section 542.7.
   32d.    b.  The firm shall not make any representation tending to
33falsely indicate that the firm is licensed under this chapter.
   34e.    c.  The firm, upon a client’s or prospective client’s
35request, shall provide accurate information on the state or
-2-1states of licensure, principal place of business, contact
2information, and manner in which licensure status can be
3verified.
   4f.    d.  The firm shall comply with all professional
5standards, laws, and rules that apply to licensees performing
6the same professional services.
   7e.  The firm shall comply with the ownership and peer review
8requirements of section 542.7.
9   Sec. 7.  Section 542.20, subsection 6, paragraph c, Code
102017, is amended to read as follows:
   11c.  An individual who provides attest services, other than
12review services,
in Iowa or for a client having a home office
13in Iowa must practice through a certified public accounting
14firm that is licensed under section 542.7, or through a
15certified public accounting firm that is validly licensed in
16the state of its principal place of business and complies with
17the ownership and peer review requirements of section 542.7
.
18   Sec. 8.  Section 542.20, subsection 6, paragraph h, Code
192017, is amended by striking the paragraph.
20EXPLANATION
21The inclusion of this explanation does not constitute agreement with
22the explanation’s substance by the members of the general assembly.
   23This bill modifies provisions relating to the practice of
24public accountants.
   25The bill adds the Commonwealth of the Northern Mariana
26Islands to the definition of “state” in Code section 542.3(27).
   27Code section 542.6(1)(b) provides that certified public
28accountants (CPAs) may only provide attest services in a firm
29that is issued a permit under Code section 542.7. The bill
30allows CPAs to also provide attest services through firms with
31practice privileges as defined in Code section 542.3(24).
   32Code section 542.7(1)(a) requires a firm to obtain a permit
33if it performs certain attest services in Iowa or if it has an
34office in Iowa and uses certain titles. The bill removes a
35firm performing attest services in Iowa from the type of firms
-3-1requiring a permit.
   2Code section 542.7(1)(c) requires a firm issued a permit to
3designate to the board the licensee or person with a practice
4privilege who is responsible for the firm’s licensure and
5legal compliance. The bill replaces “person with a practice
6privilege” with “nonlicensee”.
   7Code section 542.8(12)(b) lists the conditions required for
8a licensed public accounting (LPA) firm to have a nonlicensee
9owner. The bill requires a nonlicensee owner to be of good
10moral character in addition to all other current requirements.
   11Code section 542.8(12)(c) and (d) requires a licensee or
12person with a practice privilege who is authorized to sign an
13accountant’s report on financial statements on behalf of an LPA
14firm to meet certain competency requirements. The bill removes
15“financial statements” in reference to a report requiring these
16additional competency requirements.
   17Code section 542.20(5) lists the conditions required for a
18CPA firm to hold practice privileges without needing to obtain
19a firm license. The bill removes the condition that a firm
20cannot perform attest services in Iowa, and the condition that
21a firm may perform compilation or review services only if it
22complies with the Iowa ownership and peer review requirements.
23However, the bill adds as a separate condition that a firm must
24comply with the Iowa ownership and peer review requirements.
   25Code section 542.20(6) lists the conditions required for a
26person to hold the practice privileges of a CPA without needing
27to obtain a certificate. Under Code section 542.20(6)(c),
28a person who provides attest services in Iowa must practice
29through an Iowa-licensed CPA firm. The bill broadens the types
30of attesting services applicable in such condition, and allows
31a person to also practice through a CPA firm that is validly
32licensed in the state of its principal place of business and
33complies with the Iowa ownership and peer review requirements.
34The bill also removes the condition that a person who provides
35reviews of certain financial statements must provide such
-4-1services through a CPA firm that is validly licensed in the
2state of its principal place of business and complies with the
3Iowa ownership and peer review requirements.
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