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Accountancy
Examining Board [193A] Pursuant to the authority of Iowa Code section 542C.3, the Accountancy Examining Board hereby rescinds Chapters 1 to 19 and adopts new Chapter 1, "Definitions"; Chapter 2, "Organization and Administration"; Chapter 3, "Certification of CPAs"; Chapter 4, "Licensure of LPAs"; Chapter 5, " Registration and Renewal of Certificates and Licenses"; Chapter 6, "Attest Services"; Chapter 7, "Registration and Renewal of Certified Public Accounting Firms"; Chapter 8, "Licensed Public Accounting Firms"; Chapter 9, "Substantial Equivalency"; Chapter 10, "Continuing Education"; Chapter 11, "Peer Review"; Chapter 12, "Fees''; Chapter 13, "Rules of Professional Conduct"; Chapter 14, "Disciplinary Authority and Grounds for Discipline"; Chapter 15, "Disciplinary Investigations"; Chapter 16, "Disciplinary Proceedings"; Chapter 17, "Enforcement Proceedings Against Nonlicensees"; Chapter 18, "Licensees' Duty to Report"; and Chapter 19, "Transitional Rules," Iowa Administrative Code. Notice of Intended Action was published in the Administrative Bulletin on March 6, 2002, as ARC1408B. A public hearing was held on March 26, 2002 and comments were received from members of the Iowa Society of Certified Public Accountants. The concerns expressed by the Society relate to the Board's decision not to adopt a rule exempting certain persons holding certificates from continuing education. The Board's choice is expressly allowed by law. The Board has worked cooperatively with the Iowa Society of Certified Public Accountants, the Iowa Society of Accounting Practitioners and the Accountants Association of Iowa during the drafting of these rules. Prior to the formal rule making process, the Board shared drafts of the rules with these organizations. The Society provided 63 comments on the rules. All comments received from all sources were successfully resolved but one. The major issue relating to the use of the CPA designation without a continuing education requirement centers around the definition of the "practice of public accounting". The Society believes that the "practice of public accounting" relates only to a person or persons working in an accounting firm providing services to the clients. It is the Board's position that the practice of public accounting relates to discharging responsibilities to clients, employers, the business community, governmental bodies and the general public. As the board's purpose for existence is to protect the public's interest, the board feels that the public is better served by CPAs and LPAs that continue to upgrade and improve their skills regardless of who their clients or employers may be. During the period of public comment it became apparent to the board that there is not a clear understanding of the definition of the "practice of accounting" even among those that hold a CPA certificate. Examples of comments received include individuals who offer financial and managerial advice to clients as "business consultants" while using the title "CPA", but do not consider providing such service to be the practice of accounting. These individuals do not think that they should be required to acquire continuing education to maintain competency. As a result of this confusion and the differing opinions, the board decided to make no changes with regard to continuing education. Attempting to hastily add a provision on "inactive status" when the board adopts the rules would only add to the existing confusion and could be harmful to the public. The most immediate concern of the comments received from the Society related to the current requirement that a CPA or LPA who fails to renew a certificate or license, because the CPA or LPA does not meet the continuing education requirements, might be required to surrender possession of the lapsed certificate or license. Since the board traditionally has not required a lapsed certificate or license to be returned, the board addressed this issue by amending rule 193A-5.6(79GA, ch55) by adding the following new sentence to the end of the paragraph: However, a person shall be entitled to retain possession of a lapsed certificate or license which has not been revoked, suspended or voluntarily surrendered in a disciplinary action as long as the person complies with all provisions of 2001 Iowa Acts, chapter 55, sections 10 and 13. A lapsed certificate or license may be reinstated to effective status at anytime pursuant to 193A-subrule 5.2(2). Additional changes made to this Notice as a result of comments received from the Iowa Society of CPAs are as follows: 1. Amend rule 193A-1.1 by adding the word "corporation" to the definitions of "Firm" and "Licensed public accounting firm" as follows: "Firm" means a sole
proprietorship, partnership, corporation, professional corporation,
professional limited liability company, limited liability partnership or any
other form of organization issued a permit to practice as a firm under 2001
Iowa Acts, chapter 55, section 7 or 8, or the office of the auditor of
state, state of Iowa, when the auditor of state is a certified public
accountant. 2. Change the title of Chapter 3 to "Certification of CPAs." 3. Change the title of Chapter 4 to "Licensure of LPAs." 4. Amend 193A-subrule 5.4(3) by changing the word "certificate" to "certification" as follows: 5.4(3) A licensee who performs compilation services for the public other than through a certified public accounting or licensed public accounting firm shall submit a certification of completion of a peer review conducted in accordance with 193A-Chapter 11 no less often than once every three years. 5. Amend 193A-subrule 7.1(8) as follows: 7.1(8) The application shall affirm that all nonlicensee owners are active participants in the firm or an affiliated entity. 6. Amend 193A-subrule 10.6(3), paragraph "c" as follows: c. Distance learning programs or group study webcast programs. 7. Comments were received from the Certified Financial Planner Board of Standards, Inc. regarding their trademark and requesting "Certified Financial Planner/CFP" be listed exactly as registered in order to protect the trademark. 193A-subrule 10.6(9), the first sentence is modified as follows: 10.6(9) Credit may be allowed for the successful completion of examinations for Certified Management Accountant/CMA, Certified Information Systems Auditor/CISA, Certified Financial Planner/CFP, Enrolled Agent (EA), as well as other similar examinations approved by the board. The board voted to adopt these rules with the outlined amendments by conference call on April 10, 2002. The meeting was held by conference call in lieu of an on-site meeting due to severe budget constraints and for the convenience of the practicing CPAs and LPAs who are extremely busy at this time of year. These rules are intended to implement 2001 Iowa Acts, chapter 55, which becomes effective July 1, 2002. These rules become shall become effective July 1, 2002. The following rules are adopted. CHAPTER 2 ORGANIZATION AND ADMINISTRATION CHAPTER 3 CERTIFICATION OF CPAS CHAPTER 5 RENEWAL OF CERTIFICATES AND LICENSES CHAPTER 7 CERTIFIED PUBLIC ACCOUNTING FIRMS CHAPTER 8 LICENSED PUBLIC ACCOUNTING FIRMS CHAPTER 9 SUBSTANTIAL EQUIVALENCY CHAPTER 10 CONTINUING EDUCATION CHAPTER 13 RULES OF PROFESSIONAL CONDUCT CHAPTER 14 DISCIPLINARY AUTHORITY AND GROUNDS FOR DISCIPLINE CHAPTER 15 DISCIPLINARY INVESTIGATIONS CHAPTER 16 DISCIPLINARY PROCEEDINGS CHAPTER 17 ENFORCEMENT PROCEEDINGS AGAINST NONLICENSEES CHAPTER 18 LICENSEES' DUTY TO REPORT
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