LRB-3129/1
MDK:jld:km
2001 - 2002 LEGISLATURE
May 10, 2001 - Introduced by Senators Burke, Darling, S. Fitzgerald, George,
Hansen, Huelsman, M. Meyer, Risser and Rosenzweig, cosponsored by
Representatives Vrakas, Albers, Duff, Gundrum, Hahn, Huber, Huebsch,
Hundertmark, Kedzie, Kestell, Kreibich, La Fave, Lassa, Leibham, Olsen,
Plale, Riley, Ryba, Seratti, Staskunas, Stone, Turner, Urban, Walker and
Wasserman. Referred to Committee on Universities, Housing, and
Government Operations.
SB177,2,6
1An Act to repeal 440.08 (2) (a) 2., 442.03 (2), 442.03 (3), 442.04 (3), 442.04 (4)
2(b), 442.06, 442.07 (2), 442.11 (3), 442.11 (4), 442.11 (6) and 442.14;
to
3renumber and amend 442.001, 442.02 (7), 442.02 (8), 442.02 (9), 442.02 (10)
4and 442.03 (1);
to amend 39.75 (7) (d), 39.80 (5) (c), 45.353 (3), 64.12 (4), 64.34
5(2), 66.0609 (3), 100.03 (1) (bm), 100.03 (1) (ym) 2., 100.06 (1g) (c), 115.817 (5)
6(b) 1., 120.14 (3), 120.18 (1) (gm), 127.01 (1r), 127.01 (25m) (b), 127.06 (1) (e),
7127.06 (1m) (e), 148.19 (2), 180.0701 (4) (c), 180.0826 (2), 180.1903 (1), 181.0850
8(2), 181.1620 (2) (intro.), 185.363 (2), 186.094 (2), 186.15 (1), 187.31 (2), 187.41
9(2), 198.167, 214.76 (2) and (4), 215.523 (2), 217.08 (2), 221.0616 (2), 440.05
10(intro.), 440.08 (2) (a) (intro.), 442.01 (2), 442.01 (3), 442.02 (title), 442.02 (1m)
11(intro.), 442.02 (1m) (a), 442.02 (1m) (b), 442.02 (5m), 442.02 (6), 442.04 (4) (bm),
12442.04 (4) (c), 442.04 (5), 442.07 (title), 442.07 (1), 442.07 (3), 442.10 (1), 442.10
13(2), 442.11 (1), 442.11 (2), 442.11 (7), 442.11 (8), 442.11 (9), 442.11 (10), 442.11
14(12), 442.11 (13), 442.12 (intro.), 442.12 (3), 442.13, 447.34 (2), 560.16 (6) (a) 3.,
1893.66 (title) and 893.66 (1);
to repeal and recreate 442.08; and
to create
2180.1903 (1m), 442.001 (1), 442.001 (2), 442.001 (4), 442.001 (5), 442.02 (1m)
3(dm), 442.025, 442.083 and 442.087 of the statutes;
relating to: licensure of
4certified public accountants and accounting firms, attest and compilation
5services, peer review of accounting firms, eliminating certificates of authority
6for public accountants, and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Under current law, the accounting examining board (board) regulates the
practice of accounting by certified public accountants and public accountants. With
certain exceptions, a person may not practice as a certified public accountant unless
he or she is granted a certificate as a certified public accountant by the board and a
license by the department of regulation and licensing (DORL). Also, with certain
exceptions, a person may not practice as a public accountant unless he or she is
granted a certificate of authority as a public accountant by the board and a license
by DORL. Only a person who applied before December 1, 1935, is eligible for a
certificate of authority as a public accountant. According to DORL, the last
certificate of authority as a public accountant expired in 1985.
This bill eliminates the certificate of authority as a public accountant. The bill
also changes references under current law to a "public accountant" so that they refer
instead to a "certified public accountant."
Also under current law, various requirements apply to corporations,
partnerships, and other entities that provide accounting services. For example, a
person may not practice as a certified public accountant as an officer, member, or
employee of a corporation unless the person is granted a certificate as certified public
accountant by the board and the corporation is granted a license by DORL that must
be renewed every two years. In addition, a partnership may not use the designation,
"certified public accountants," in its name unless the partnership registers its name
with the board.
This bill changes the requirements that apply to corporations, partnerships,
and other entities so that they apply instead to "firms," which are defined as
proprietorships, partnerships, limited liability partnerships, corporations, service
corporations, or limited liability companies. In addition, under the bill, a firm that
applies for a license must identify each office of the firm that is located in the state
and, if any person with an ownership interest in the firm does not hold a certificate
as a certified public accountant, the firm must designate an individual who holds
such a certificate as the individual responsible for the firm's compliance with state
law regarding accounting. Also, a firm that applies for a license must demonstrate
each of the following: 1) that more than 50% of the ownership interest of the firm is
held by persons who hold certificates or licenses to practice as a certified public
accountant issued under the laws of any state or foreign country; 2) that each person
who holds an ownership interest in the firm, and who does not hold a certificate or
license to practice as a certified public accountant, is an individual who actively
participates in the firm or an affiliated entity; and 3) that all attest and compilation
services provided by the firm in this state are under the charge of a person issued a
certificate as a certified public accountant by the board.
With respect to the third requirement described above, the bill defines "attest
services" as audits, reviews, and examinations performed in accordance with the
statements on auditing standards, statements on accounting and review services, or
statements on standards for attestation engagements, that are issued by the
American Institute of Certified Public Accountants (Institute). The bill defines
"compilation service" as a service that: 1) is performed in accordance with the
statements on standards for accounting and review services issued by the Institute;
2) consists of presenting, in the form of financial statements, information that is the
representation of the management of the business that has requested the service;
and 3) is provided without expressing any assurance on the financial statements.
The bill requires a firm that applies to renew its license to provide the same
information and make the same demonstrations that are required for initial issuance
of the license. In addition, after January 1, 2005, DORL may not renew a firm's
license unless the firm undergoes peer review at least once every three years. "Peer
review" is defined as a process for evaluating the professional competency of the
members of a firm who are responsible for attest or compilation services provided by
the firm or who sign or authorize another individual to sign accounting reports or
financial statements on behalf of the firm. DORL must promulgate rules for
approving persons to conduct the peer reviews. A person who conducts a peer review
may not disclose to any person, including the board or DORL, information or
documents produced from the review, unless the firm undergoing the review
consents to the disclosure.
The bill makes other changes to the regulation of certified public accountants
under current law, including the following:
1. The bill creates additional exceptions to the prohibition on practicing as a
certified public accountant without a certificate granted by the board. The
exceptions are for a person who either: 1) performs services involving the use of
accounting skills, the preparation of tax returns, or the preparation of financial
statements without issuing reports on the statements; or 2) prepares financial
statements and issues information thereon that does not purport to be in compliance
with the statement on standards for accounting and review services issued by the
Institute.
2. The bill requires an applicant for a certificate as certified public accountant
to have one year of public accounting experience or its equivalent. Under current
law, two years are required.
3. The bill allows for the formation of an accounting service corporation if more
than 50% of the shareholders are certified public accountants. Under current law,
all of the shareholders must be certified public accountants.
4. The bill eliminates outdated provisions regarding the regulation of certified
public accountants that no longer apply.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB177, s. 1
1Section
1. 39.75 (7) (d) of the statutes is amended to read:
SB177,4,82
39.75
(7) (d) The commission shall keep accurate accounts of all receipts and
3disbursements. The receipts and disbursements of the commission shall be subject
4to the audit and accounting procedures established by its bylaws. However, all
5receipts and disbursements of funds handled by the commission shall be audited
6yearly by a qualified
certified public accountant
licensed or certified under ch. 442,
7and the report of the audit shall be included in and become part of the annual reports
8of the commission.
SB177, s. 2
9Section
2. 39.80 (5) (c) of the statutes is amended to read:
SB177,4,1610
39.80
(5) (c) The commission shall keep accurate accounts of all receipts and
11disbursements. The receipts and disbursements of the commission shall be subject
12to the audit and accounting procedures established under its bylaws. However, all
13receipts and disbursements of funds handled by the commission shall be audited
14yearly by a certified
or licensed public accountant
licensed or certified under ch. 442 15and the report of the audit shall be included in and become part of the annual report
16of the commission.
SB177, s. 3
17Section
3. 45.353 (3) of the statutes is amended to read:
SB177,5,1718
45.353
(3) Application by any such state veterans organization shall be filed
19annually with the department for the 12-month period commencing on April 1 and
20ending on March 31 of the year in which it is filed. An application shall contain a
1statement of salaries and travel expenses paid to employees engaged in veterans
2claims service maintained at the regional office by such state veterans organization
3covering the period for which application for a grant is made, which statement has
4been certified as correct by
an a certified public accountant
licensed or certified under
5ch. 442 and sworn to as correct by the adjutant or principal officer of the state
6veterans organization. The application shall also contain the state organization's
7financial statement for its last completed fiscal year and such evidence of claims
8service activity as the department requires. Sufficient evidence shall be submitted
9with an initial application to establish that the state veterans organization, or its
10national organization, or both, has maintained a full-time service office at the
11regional office without interruption throughout 5 years out of the 10-year period
12immediately preceding such application. Subsequent applications must be
13accompanied by an affidavit by the adjutant or principal officer of such state veterans
14organization stating that a full-time service office was maintained at the regional
15office by such state veterans organization, or by such state organization and its
16national organization, for the entire 12-month period for which application for a
17grant is made.
SB177, s. 4
18Section
4. 64.12 (4) of the statutes is amended to read:
SB177,5,2419
64.12
(4) At the end of each fiscal year the council shall cause a full and
20complete examination of all the books and accounts of the city to be made by
21competent
certified public accountants
licensed or certified under ch. 442 who shall
22report in full to the council. The summaries of such audits shall be presented and
23furnished to all newspapers and libraries of the city and to such other persons as
24shall apply therefor.
SB177, s. 5
25Section
5. 64.34 (2) of the statutes is amended to read:
SB177,6,5
164.34
(2) At the end of each year the council shall cause a full and complete
2examination of all of the books and accounts of the city to be made by competent
3certified public accountants
licensed or certified under ch. 442, who shall report in
4full thereon to the council. Copies of such reports shall be furnished by the council
5to all newspapers of the city and to all persons who shall apply therefor.
SB177, s. 6
6Section
6. 66.0609 (3) of the statutes is amended to read:
SB177,6,107
66.0609
(3) The ordinance under sub. (1) shall require that the governing body
8of the city or village obtain an annual detailed audit of its financial transactions and
9accounts by a
certified public accountant licensed
or certified under ch. 442 and
10designated by the governing body.
SB177, s. 7
11Section
7. 100.03 (1) (bm) of the statutes is amended to read:
SB177,6,1712
100.03
(1) (bm) "Audited financial statement" means a financial statement
13that, in the accompanying opinion of an independent certified public accountant
or
14a public accountant holding a certificate of authority licensed or certified under ch.
15442, fairly and in all material respects represents the financial position of the
16contractor, the results of the contractor's operations and the contractor's cash flows
17in conformity with generally accepted accounting principles.
SB177, s. 8
18Section
8. 100.03 (1) (ym) 2. of the statutes is amended to read:
SB177,6,2119
100.03
(1) (ym) 2. Reviewed according to generally accepted accounting
20principles by an independent certified public accountant
or a public accountant
21holding a certificate of authority licensed or certified under ch. 442.
SB177, s. 9
22Section
9. 100.06 (1g) (c) of the statutes is amended to read:
SB177,7,923
100.06
(1g) (c) The department shall require the applicant to file a financial
24statement of his or her business operations and financial condition that meets the
25requirements of par. (d). The licensee, during the term of his or her license, may be
1required to file such statements periodically. All such statements shall be
2confidential and shall not be open for public inspection, except that the department
3shall provide the name and address of an individual, the name and address of the
4individual's employer and financial information related to the individual contained
5in such statements if requested under s. 49.22 (2m) by the department of workforce
6development or a county child support agency under s. 59.53 (5). The department
7may require such statements to be certified by a
certified public accountant
licensed
8or certified under ch. 442. Such statements and audits, when made by the
9department, shall be paid for at cost.
SB177, s. 10
10Section
10. 115.817 (5) (b) 1. of the statutes is amended to read:
SB177,7,1311
115.817
(5) (b) 1. At the close of each fiscal year, the board shall employ a
12licensed certified public accountant
licensed or certified under ch. 442 to audit its
13accounts and certify the audit. The cost of the audit shall be paid from board funds.
SB177, s. 11
14Section
11. 120.14 (3) of the statutes is amended to read:
SB177,7,1715
120.14
(3) The annual meeting may authorize and direct an audit of the school
16district accounts by a
licensed certified public accountant
licensed or certified under
17ch. 442.
SB177, s. 12
18Section
12. 120.18 (1) (gm) of the statutes is amended to read:
SB177,8,719
120.18
(1) (gm) Payroll and related benefit costs for all school district
20employees in the previous school year. Costs for represented employees shall be
21based upon the costs of any collective bargaining agreements covering such
22employees for the previous school year. If, as of the time specified by the department
23for filing the report, the school district has not entered into a collective bargaining
24agreement for any portion of the previous school year with the recognized or certified
25representative of any of its employees and the school district and the representative
1have been required to submit final offers under s. 111.70 (4) (cm) 6., increased costs
2limited to the lower of the school district's offer or the representative's offer shall be
3reflected in the report. The school district shall amend the annual report to reflect
4any change in such costs as a result of any award or settlement under s. 111.70 (4)
5(cm) 6. between the date of filing the report and October 1. Any such amendment
6shall be concurred in by the
licensed certified public accountant
licensed or certified
7under ch. 442 certifying the school district audit.
SB177, s. 13
8Section
13. 127.01 (1r) of the statutes is amended to read:
SB177,8,139
127.01
(1r) "Audited financial statement" means a financial statement on
10which an independent certified public accountant
, or an independent public
11accountant holding a certificate of authority licensed or certified under ch. 442
, has
12expressed an opinion according to generally accepted accounting principles and has
13conducted an audit according to generally accepted auditing standards.
SB177, s. 14
14Section
14. 127.01 (25m) (b) of the statutes is amended to read:
SB177,8,1815
127.01
(25m) (b) The financial statement is reviewed according to generally
16accepted accounting principles by an independent certified public accountant
or an
17independent public accountant who holds a certificate of authority
licensed or
18certified under ch. 442.
SB177, s. 15
19Section
15. 127.06 (1) (e) of the statutes is amended to read:
SB177,9,220
127.06
(1) (e) The department may extend the filing deadline under par. (a) 2.
21by up to 30 days in response to a written request from a warehouse keeper or an
22independent certified public accountant
, or an independent public accountant
23holding a certificate of authority licensed or certified under ch. 442
, that is auditing
24or reviewing the financial statement for a warehouse keeper if the department
25receives the request on or before the 5th day of the 4th month beginning after the
1close of the warehouse keeper's fiscal year and if the request states the reason for the
2extension.
SB177, s. 16
3Section
16. 127.06 (1m) (e) of the statutes is amended to read:
SB177,9,104
127.06
(1m) (e) The department may extend the filing deadline under par. (b)
52. by up to 30 days in response to a written request from a grain dealer or an
6independent certified public accountant
, or an independent public accountant who
7holds a certificate of authority licensed or certified under ch. 442
, that is auditing or
8reviewing the financial statement for a grain dealer, if the department receives the
9written request on or before the 5th day of the 4th month beginning after the close
10of the grain dealer's fiscal year and if the request states the reason for the extension.
SB177, s. 17
11Section
17. 148.19 (2) of the statutes is amended to read:
SB177,9,1412
148.19
(2) Legal counsel,
certified public accountants
licensed or certified
13under ch. 442, or other persons as to matters the director or officer believes in good
14faith are within the person's professional or expert competence.
SB177, s. 18
15Section
18. 180.0701 (4) (c) of the statutes is amended to read:
SB177,9,1716
180.0701
(4) (c) Ratification of the selection of independent
certified public
17accountants
licensed or certified under ch. 442.
SB177, s. 19
18Section
19. 180.0826 (2) of the statutes is amended to read:
SB177,9,2119
180.0826
(2) Legal counsel,
certified public accountants
licensed or certified
20under ch. 442, or other persons as to matters that the director or officer believes in
21good faith are within the person's professional or expert competence.
SB177, s. 20
22Section
20. 180.1903 (1) of the statutes is amended to read:
SB177,9,2523
180.1903
(1) One Except as provided in sub. (1m), one or more natural persons
24licensed, certified
, or registered pursuant to any provisions of the statutes, if all have
25the same license, certificate
, or registration or if all are health care professionals,
1may organize and own shares in a service corporation. A service corporation may
2own, operate
, and maintain an establishment and otherwise serve the convenience
3of its shareholders in carrying on the particular profession, calling
, or trade for which
4the licensure, certification
, or registration of its organizers is required.
SB177, s. 21
5Section
21. 180.1903 (1m) of the statutes is created to read:
SB177,10,86
180.1903
(1m) A service corporation for carrying on the profession of certified
7public accounting may be organized under sub. (1) if more than 50% of the
8shareholders are certified public accountants.
SB177, s. 22
9Section
22. 181.0850 (2) of the statutes is amended to read:
SB177,10,1310
181.0850
(2) Professionals and experts. Legal counsel,
certified public
11accountants
licensed or certified under ch. 442, or other persons as to matters the
12director or officer believes in good faith are within the person's professional or expert
13competence.
SB177, s. 23
14Section
23. 181.1620 (2) (intro.) of the statutes is amended to read:
SB177,10,2015
181.1620
(2) (intro.)
Accountant's Certified public accountant's report or
16officer's statement. If annual financial statements are reported upon by a
certified 17public accountant
licensed or certified under ch. 442, the
certified public 18accountant's report must accompany them. If not, the statements must be
19accompanied by a statement of the president or the person responsible for the
20corporation's financial accounting records that includes all of the following:
SB177, s. 24
21Section
24. 185.363 (2) of the statutes is amended to read:
SB177,10,2422
185.363
(2) Legal counsel,
certified public accountants
licensed or certified
23under ch. 442, or other persons as to matters the director or officer believes in good
24faith are within the person's professional or expert competence.
SB177, s. 25
25Section
25. 186.094 (2) of the statutes is amended to read:
SB177,11,3
1186.094
(2) Legal counsel,
certified public accountants
licensed or certified
2under ch. 442, or other persons as to matters the director or officer believes in good
3faith are within the person's professional or expert competence.
SB177, s. 26
4Section
26. 186.15 (1) of the statutes is amended to read:
SB177,11,85
186.15
(1) Annual audit. Except as provided in sub. (2), the board of directors
6shall hire a
licensed certified public accountant
licensed or certified under ch. 442 or
7other qualified person to conduct a comprehensive annual audit of the records,
8accounts and affairs of the credit union.
SB177, s. 27
9Section
27. 187.31 (2) of the statutes is amended to read:
SB177,11,1310
187.31
(2) Legal counsel,
certified public accountants
licensed or certified
11under ch. 442, or other professional persons or experts employed by the incorporated
12Roman Catholic church, as to matters the director or officer believes in good faith are
13within the person's professional or expert competence.
SB177, s. 28
14Section
28. 187.41 (2) of the statutes is amended to read:
SB177,11,1815
187.41
(2) Legal counsel,
certified public accountants
licensed or certified
16under ch. 442, or other professional persons or experts employed by the religious
17organization, as to matters the director or officer believes in good faith are within the
18person's professional or expert competence.