ARIZONA HOUSE OF REPRESENTATIVES

SB 1443: certified public accountants

PRIME SPONSOR: Senator Yee, LD 20

BILL STATUS: Commerce

Abstract

Relating to CPA and Board regulations.

Provisions

CPA Firm Registration Requirements (Sec. 14)

1. Requires a CPA firm to meet the following registration criteria: 

a. A business organization must:

i. Have a simple majority of the ownership with direct and indirect financial interest, voting rights and certificates or licenses as CPA's in any jurisdiction;

ii. Have an office in Arizona; and

iii. Either:

Ø Provide attest or compilation services; or

Ø Use the CPA designation in its firm name.    

b. A sole proprietorship must:

i. Have an owner who is a CPA in good standing in Arizona;

ii. Have an office in Arizona; and

iii. Either:

Ø Provide attest or compilation services; or

Ø Uses the CPA designation in its firm name, unless the firm name is the name of the sole proprietor as registered with the Board. 

c. An individual must:

i. Be a CPA in good standing in Arizona; and

ii. Perform attest or compilation services in Arizona, but not as an employee of a business organization, sole proprietorship or a government agency. 

2. Requires any attest or compilation services in Arizona be provided by a registered firm.

3. Requires an attest or compilation service report be signed by a person.

4. Eliminates requirements for noncertified owners of a firm. 

5. Requires a firm to notify the board in writing within one month of any change in ownership that results in less than a CPA majority of owners. 

6. Repeals the terms partner and partnership, and replaces with the term owner and firm.

Powers and Duties of the Director (Sec. 4)

7. Delegates to the Director the authority to:

a. Approve:

i. An applicant to take the uniform CPA examination;

ii. An application for firm registration;

iii. A reissue of a certificate due to a name change of a CPA;

iv. A registrant cancelation request;

v. A request for retired status;

vi. Reactivation from inactive or retired status;

vii. Compliance with peer review requirements;

viii. Compliance with continuing education audits; and

ix. Continuing professional education compliance with decisions and orders.

b. Issue a certificate for a CPA; and

c. Terminate decisions and orders based on the successful completion of all order requirements by a registrant.

Reactivation and Reinstatement Requirements

8. States that if a registrant fails to:

a. Renew a certificate or registration within three months after the date of suspension, the certificate or registration expires; and

b. Meet the professional education requirements within six months after the date of suspension, the certificate expires. 

Note:  Current law allows 12 months after the date of suspension in both instances.  (Sec. 17, 18)

9. Permits the Board to grant an extension to a firm that is not in compliance with registration requirements before revoking the firm's registration.  (Sec. 19)

10. Repeals the statutes for reactivation or reinstatement requirements for CPA certificates.  (Sec. 8-13, 19)

11. Consolidates the statutes for reactivation or reinstatement requirements for CPA certificates.  (Sec. 15)

Miscellaneous

12. Clarifies that the limited reciprocity privilege may be exercised by an individual who does not have or represent to have an office in this state.  (Sec. 5) 

13. Allows a registrant to request an inactive or retired status on a certificate if the following requirements are met:

a. The registrant does not provide attest or compilation services in Arizona; and

b. The registrant does not provide accounting services for a fee or other compensation in this state.  (Sec. 8, 11)

14. Prohibits a firm from referring to itself as a CPA firm unless the majority of owners are holders of CPA certifications.  (Sec. 21) 

15. Permits a person who is aggrieved by an action taken by the Director to request a Board review within 30 days after receiving notification of the Director's decision.  (Sec. 23)

16. Eliminates statutory reference to public accountant.  (Sec. 2-4, 7, 9-14, 16, 17, 19-21, 24, 25)

17. Modifies the definition section.  (Sec. 3)

18. Makes technical and conforming changes.  (Sec. 1-3, 5, 6, 8, 11, 13, 14, 16, 19, 20, 21, 24, 25)

Current Law

The Board must issue a CPA certificate to an applicant who meets the following requirements:

1. Is a U.S. citizen;

2. Is at least 18 years of age;

3. Is of good moral character;

4. Has not engaged in any conduct that would result in the revocation or suspension of a certificate;

5. Passes the uniform CPA examination; and

6. Has obtained a baccalaureate degree from an accredited institution with 150 hours of education of which at least 36 hours are non-duplicative semester hours of accounting and 30 of the 36 hours are upper division course work.  (A.R.S. § 32-721)

A CPA partnership is required to register with the Board every two years and meet the following requirements:

1. At least one partner must be a resident of Arizona and a full time practicing CPA in good standing; and

2. At least 51% of ownership with direct and indirect financial interest, have voting rights and are holders of certificates or licenses to practice as a CPA or public accountant in any jurisdiction.  (A.R.S. § 32-731)

A registered partnership may include owners that are not a CPA if all the following apply;

1. An individual who is a CPA registers the partnership;

2. All noncertified partners participate in the management of the partnership; and

3. The partner who supervises attest services or signs reports related to attest services in Arizona is a CPA.  (A.R.S. § 32-731)

The Board may:

1. Investigate complaints filed with the Board;

2. Establish and maintain high standards of competence and integrity in the practice of accounting by a CPA;

3. Establish CPA reporting requirements;

4. Establish requirements for CPA continuing professional education; 

5. Adopt procedures for disciplinary actions, administrative hearings, and consent decisions;

6. Issue CPA certificates to qualified applicants;

7. Adopt or amend procedures and rules; and

8. Appoint relevant committees to assist or advise the Board.  (A.R.S. § 32-703)

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Fifty-third Legislature                  SB 1443

Second Regular Session                               Version 1: Commerce

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