AB725: Bill Text

This bill 1) revises provisions in the statutes concerning educational requirements to become a certified public accountant, or CPA; 2) reorganizes and makes various revisions to the rules of the Accounting Examining Board, which issues CPA certificates and licenses; and 3) requires the board to study the feasibility of establishing continuing education requirements for CPAs.

Changes to statutes

Current law provides that a CPA certificate may be granted only to a person who has completed at least 150 semester hours of education with an accounting concentration at an institution, except that if an applicant does not have an accounting concentration, the board may review other educational experience and grant the CPA certificate if it determines that such other experience provides the reasonable equivalence of an accounting concentration. This bill deletes the requirement that an applicant for a CPA certificate have an accounting concentration at an institution or its reasonable equivalence and instead requires that an applicant for a CPA certificate have completed course work in accounting and business subjects, as determined by the board.

Current law does not contain specific continuing education requirements for CPAs licensed by the board. This bill requires the board to research the feasibility of rules establishing such continuing education requirements and to report its findings and recommendations to the legislature.

Changes to rules

The bill makes various substantive and organizational changes to administrative rules promulgated by the board, including all of the following:

1. Specifying the number of semester hours of and subjects in which a person must have completed course work in order to take a CPA exam or to receive a CPA certificate.

2. Revising provisions concerning peer reviews for CPA firms, including adding provisions regarding peer reviews in the case of firm structure changes and extensions for peer-review deadlines. The bill also repeals provisions regarding board approval of peer-review programs and instead lists qualifying peer-review programs, which are limited to the peer-review process developed and maintained by the American Institute of Certified Professional Accountants and administered by the Wisconsin Institute of Certified Professional Accountants or a corresponding administrator approved in another state.

3. Adopting by reference the most recent version of the American Institute of Certified Public Accountants' Code of Professional Conduct and establishing a list of grounds for discipline of a licensee.

4. Specifying what experience constitutes qualifying experience to be eligible for a CPA certificate. The bill also provides that experience must be obtained after completing 120 semester hours of qualifying education at an accredited institution.

5. Specifically prohibiting a CPA from providing attest services, except when in a licensed CPA firm.

6. Revising provisions concerning permissible CPA firm names, requiring notices for certain changes to CPA firms, and establishing requirements for CPA firms offering services via an Internet site.

7. Revising provisions concerning the CPA examination and repealing references to having an accounting major or its reasonable equivalence.

8. Repealing a provision concerning the release of reports by the board on statistical studies of CPA examination results.

9. Requiring that a CPA convicted of a crime notify the board within 48 hours after being convicted, instead of within 60 days.

10. Revising provisions concerning late renewal of licenses and reinstatement of surrendered or revoked licenses.

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:

AB725,1 Section 1. 442.04 (5) (b) 3. of the statutes is amended to read:

AB725,3,6 442.04 (5) (b) 3. The person has completed at least 150 semester hours of education with an accounting concentration at an institution that include course work in accounting and business subjects, as determined by the examining board, and has received a bachelor's or higher degree with an accounting concentration from an institution, except as provided in par. (c).

AB725,2 Section 2. 442.04 (5) (b) 4. of the statutes is amended to read:

AB725,3,13 442.04 (5) (b) 4. Except as provided in s. 442.05, the person has successfully passed an examination in such subjects affecting accountancy and business as the examining board considers necessary. A person is not eligible to take the examination under this subdivision unless the person has completed at least 120 semester hours under subd. 3. of education at an institution that include course work in accounting and business subjects, as determined by the examining board.

AB725,3 Section 3. 442.04 (5) (c) of the statutes is repealed.

AB725,4 Section 4. Accy 1.001 (1) of the administrative code is amended to read:

AB725,3,17 Accy 1.001 (1) Chapters Accy 1 to 9 6 apply to a person who practices as a certified public accountant in this state.

AB725,5 Section 5. Accy 1.001 (2) of the administrative code is amended to read:

AB725,4,2 Accy 1.001 (2) A certified public accountant may be held responsible for compliance with the rules of the examining board by any person associated with the certified public accountant in a firm who is either under his or her supervision or is a member of the firm.

AB725,6 Section 6. Accy 1.001 (3) of the administrative code is amended to read:

AB725,4,7 Accy 1.001 (3) A certified public accountant shall not permit others to carry out acts on his or her the accountant's behalf, either with or without compensation, which, if carried out by the certified public accountant, would violate chs. Accy 1 to 9 6.

AB725,7 Section 7. Accy 1.002 (1) and (2) of the administrative code are amended to read:

AB725,4,14 Accy 1.002 (1) A person licensed as a certified public accountant that has significant influence over a CPA-related business is considered to be practicing as a certified public accountant in the CPA-related business and all persons with ownership interest in the business shall follow the rules of the examining board in the operation of the CPA-related business.

AB725,4,18 (2) A person who operates a business and is licensed as a certified public accountant and who advertises or otherwise holds out as a certified public accountant shall follow the rules of the examining board in the operation of any business.

AB725,8 Section 8. Accy 1.003 (intro.) of the administrative code is amended to read:

AB725,4,20 Accy 1.003 Definitions. (intro.) As used in chs. Accy 1 to 9 6:

AB725,9 Section 9. Accy 1.003 (2m), (2r) and (7m) of the administrative code are created to read:

AB725,4,23 Accy 1.003 (2m) "Board" means the accounting examining board.

AB725,4,25 (2r) "Certified public accountant" or "CPA" means a person considered to be in practice as a certified public accountant under s. 442.02, Stats.

AB725,5,8 (7m) "Financial statements" means statements and footnotes related thereto that undertake to present an actual or anticipated financial position as of a point in time, or results of operations, cash flow, or changes in financial position for a period of time, in conformity with generally accepted accounting principles or another comprehensive basis of accounting. "Financial statements" does not include incidental financial data included in management advisory service reports to support recommendations to a client; nor does it include tax returns and supporting schedules.

AB725,10 Section 10. Subchapter II (title) of chapter Accy 1 [precedes Accy 1.101] of the administrative code is amended to read:

AB725,5,11 Chapter accy 1

AB725,5,12 subchapter II

AB725,5,15 INDEPENDENCE PROFESSIONAL CONDUCT, INTEGRITY, AND OBJECTIVITY

AB725,11 Section 11. Accy 1.101 of the administrative code is repealed and recreated to read:

AB725,5,22 Accy 1.101 Professional conduct. (1) The board adopts by reference the "Code of Professional Conduct" published by the American Institute of Certified Public Accountants, effective as of December 15, 2014, except that references to "member" are replaced by "a person licensed to practice as a certified public accountant."

AB725,5,24 (2) All definitions included in the American Institute of Certified Public Accountants' Code of Professional Conduct shall apply only within that document.

AB725,6,2 Note: The AICPA Code of Professional Conduct is available electronically at http://pub.aicpa.org/codeofconduct/Ethics.aspx or may be obtained from:

AB725,6,3 American Institute of Certified Public Accountants

AB725,6,4 1211 Avenue of the Americas

AB725,6,5 New York, NY 10036-8775

AB725,12 Section 12 . Accy 1.102 of the administrative code is renumbered Accy 1.102 (intro.) and amended to read:

AB725,6,10 Accy 1.102 Integrity and objectivity. (intro.) No person licensed to practice as a certified public accountant, as defined in the statutes, shall knowingly may do any of the following:

AB725,6,11 (1) Knowingly misrepresent facts, and when.

AB725,6,15 (2) When engaged in the practice of public accounting, including the rendering of tax and management advisory services, shall not subordinate his or her judgment to others. In tax practice, a member may resolve doubt in favor of the client as long as there is reasonable support for that position.

AB725,13 Section 13 . Accy 1.201 (1) (intro.) of the administrative code is amended to read:

AB725,6,21 Accy 1.201 (1) (intro.) All persons A person licensed to practice as a certified public accountant, as defined in the statutes, shall comply with all of the following general standards as interpreted by bodies designated by the American Institute of Certified Public Accountants Council, and must justify any departures therefrom.:

AB725,14 Section 14. Accy 1.202 of the administrative code is amended to read:

AB725,7,8 Accy 1.202 Auditing standards. A person licensed to practice as a certified public accountant shall not permit the certified public accountant's name to be associated with financial statements in such a manner as to imply that the certified public accountant is acting as an independent public accountant unless the certified public accountant has complied with the applicable generally accepted auditing standards promulgated by the American Institute of Certified Public Accountants. Statements on auditing standards used by the American Institute of Certified Public Accountants auditing standards executive committee board are, for purposes of this rule chapter, considered to be interpretations of the generally accepted auditing standards, and departures from such statements must be justified by those who do not follow them.

AB725,15 Section 15. Accy 1.301 (2) (d) and (4) of the administrative code are amended to read:

AB725,7,16 Accy 1.301 (2) (d) To preclude a certified public accountant from responding to an inquiry made by the Professional Ethics Division of the American Institute of Certified Public Accountants, by the duly constituted investigative or disciplinary body of a state society of certified public accountants, or under any state statutes or the standards of the Securities and Exchange Commission or the Public Company Accounting Oversight Board.

AB725,7,24 (4) The prohibition in sub. (1) against disclosure of confidential information obtained in the course of a professional engagement does not apply to disclosure of such information when required to properly discharge the certified public accountant's responsibility according to the profession's standards. The prohibition would not apply, for example, to disclosure, as required by AU-C section 561 560 of Statement on Auditing Standards No. 1 , of, regarding the subsequent discovery of facts existing at the date of the auditor's report which would have affected the auditor's report had the auditor been aware of such facts.

AB725,16 Section 16. Accy 1.302 (1) and (3) of the administrative code are amended to read:

AB725,8,9 Accy 1.302 (1) Contingent fees. Except as provided in sub. (3) (2), a certified public accountant may charge a contingent fee provided the accountant and the client make a contingent fee agreement in writing, signed by the client, which states the method by which the fee is to be determined and describes all costs and expenses to be charged to the client. Upon conclusion of the contingent fee matter, the accountant shall provide the client with a written statement showing the fee and all the costs and expenses charged to the client.

AB725,8,13 (3) Commissions. Except as provided in sub. (5) (4), a certified public accountant may receive a commission provided that at the time the referral or recommendation is made, the accountant informs the client in writing of the amount and reason for the commission.

AB725,17 Section 17. Accy 1.401 (1) and (2) (a) (intro.), (c) and (e) 2. of the administrative code are amended to read:

AB725,8,17 Accy 1.401 (1) No person licensed to practice as a certified public accountant, as defined in the statutes, shall commit an act discreditable to the profession.

AB725,9,8 (2) (a) Client's records and accountant's workpapers. (intro.) Retention of client records after a demand is made for them is an act discreditable to the profession in violation of this section. It would be a violation of the code to retain a client's records to enforce payment. A certified public accountant's working papers are his or her the property of the certified public accountant and need not be surrendered to the client. However, in some instances working papers will contain data which that should properly be reflected in the client's books and records but which that for convenience have not been duplicated therein, with the result that the client's records are incomplete. In such instances, the portion of the working papers containing such data constitutes part of the client's records, and copies should be made available to the client upon request. If a certified public accountant is engaged to perform certain work for a client and the engagement is terminated prior to the completion of such work, the certified public accountant is required to return or furnish copies of only those records originally given to the certified public accountant by the client. Examples of working papers that are considered to be the client's records would include all of the following:

AB725,9,12 (c) Duty discharged. Once the certified public accountant has returned the client's records or furnished the copies of such records and/or and necessary supporting data, the obligation has been discharged in this regard and it is not necessary to comply with any subsequent requests to again furnish such records.

AB725,9,20 (e) 2. On conviction for willful failure to file an income tax return or other another document which, that the certified public accountant as an individual is required by law to file, for filing a false or fraudulent income tax return or other document on his or her or a client's behalf, or for willful aiding in the preparation and/or and presentation of a false or fraudulent income tax return of a client, or for the willful making of a false representation in connection with the determination, collection, or refund of any tax, whether it be in his or her own behalf or in behalf of a client, the board will initiate charges in every instance.

AB725,18 Section 18. Accy 1.401 (2) (f) of the administrative code is amended to read:

AB725,9,23 Accy 1.401 (2) (f) Notification of convictions. A certified public accountant shall notify the board in writing within 60 days 48 hours after being convicted of a crime.

AB725,19 Section 19. Accy 1.404 (1) of the administrative code is amended to read:

AB725,10,4 Accy 1.404 (1) A person who is engaged in practice as a certified public accountant, as defined in the statutes, shall not concurrently engage in any business or occupation which that would create a conflict of interest rendering professional services.

AB725,20 Section 20. Accy 1.405 of the administrative code is repealed and recreated to read:

AB725,10,11 Accy 1.405 Firm Names. (1) An individual or firm may practice as a certified public accountant in any form of business organization permitted by state law. No person licensed to practice as a certified public accountant may practice under a firm name that is misleading as to the type of organization. A misleading CPA firm name is any of the following:

AB725,10,16 (a) A name that contains any representation that would be likely to cause a reasonable person to misunderstand or be confused about the legal form of the firm, or about who the owners or members of the firm are, such as a reference to a type of organization or an abbreviation thereof that does not accurately reflect the form under which the firm is organized, including any of the following:

AB725,10,20 1. A name that implies the existence of a corporation when the firm is not a corporation, such as through the use of the words "corporation," "incorporated," "Ltd.," "professional corporation," or an abbreviation thereof as part of the firm name if the firm is not incorporated or is not a professional corporation.

AB725,10,23 2. A name that implies the existence of a partnership when there is not a partnership, such as by use of the term "partnership" or "limited liability partnership" or the abbreviation "LLP" if the firm is not such an entity.

AB725,10,25 3. A name that includes the name of an individual who is not a CPA if the title "CPAs" is included in the firm name.

AB725,11,2 4. A name that includes information about or indicates an association with persons who are not members of the firm, except as provided in subs. (3) and (4).

AB725,11,6 5. A name that includes the terms "& Company," "& Associate," or "Group," if the firm does not include, in addition to the named partner, shareholder, owner, or member, at least one other unnamed partner, shareholder, owner, member, or staff employee.

AB725,11,10 (b) A name that contains any representation that would be likely to cause a reasonable person to have a false or unjustified expectation of favorable results or capabilities, through the use of a false or unjustified statement of fact as to any material matter.

AB725,11,12 (c) A name that claims or implies the ability to influence a regulatory body or official.

AB725,11,16 (d) A name that includes the name of an owner whose license has been revoked for disciplinary reasons by the board, whereby the licensee has been prohibited from practicing public accountancy or prohibited from using the title CPA or holding himself or herself out as a certified public accountant.

AB725,11,18 (2) Any of the following is a permissible type of CPA firm name if it does not otherwise violate this subchapter:

AB725,11,20 (a) A firm name that includes the names of one or more former or present owners.

AB725,11,22 (b) A firm name that excludes the names of one or more former or present owners.

AB725,11,25 (c) A firm name that uses the CPA title as part of the firm name when all named individuals are owners of the firm who hold such title or are former owners who held such title at the time they ceased to be owners of the firm.

AB725,12,2 (d) A firm name that includes the name of a non-CPA owner if the CPA title is not a part of the firm name.