Introduced Version
SENATE BILL No. 540
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 25-2.1.
Synopsis: Application of quality review standards. Changes the
membership of the state board of accountancy. Permits individuals to
receive certification as an accounting practitioner even if the state
board of accountancy fails to establish the test required by law.
Specifies conditions that the rules requiring quality reviews of certified
public accountants and public accountants who perform attest
functions. Indicates that accounting practitioners may perform
compilations. Changes to 2007 the renewal date for certain firm
permits that would have expired in 2006.
Effective: Upon passage; November 12, 2004 (retroactive); July 1,
2005.
Young R Michael
January 20, 2005, read first time and referred to Committee on Governmental Affairs and
Interstate Cooperation.
Introduced
First Regular Session 114th General Assembly (2005)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
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Additions: Whenever a new statutory provision is being enacted (or a new constitutional
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NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
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between statutes enacted by the 2004 Regular Session of the General Assembly.
SENATE BILL No. 540
A BILL FOR AN ACT to amend the Indiana Code concerning
professions and occupations.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 25-2.1-1-13.6; (05)IN0540.1.1. -->
SECTION 1. IC 25-2.1-1-13.6 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2005]: Sec. 13.6. "Small business" has the
meaning set forth in 5 U.S.C. 601.
SOURCE: IC 25-2.1-2-3; (05)IN0540.1.2. -->
SECTION 2. IC 25-2.1-2-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2005]: Sec. 3. (a) The board
consists of six (6) members appointed by the governor.
(b)
Four (4) members One (1) member must meet the following
conditions:
(1) Be a resident of Indiana.
(2) Be a certified public accountant under IC 25-2.1-3 or
IC 25-2.1-4.
(3) Be a partner, shareholder, member, or full-time employee
of a CPA firm that has, in total, less than five (5) partners,
shareholders, or members.
(c) One (1) member must meet the following conditions:
(1) Be a resident of Indiana.
(2) Be a certified public accountant under IC 25-2.1-3 or
IC 25-2.1-4.
(3) Be a partner, shareholder, member, or full-time employee
of a CPA firm that has at least five (5) partners, shareholders,
or members.
(c) (d) One (1) member must meet the following conditions:
(1) Be a resident of Indiana.
(2) Be
certified as a public accountant
who holds an active
certificate under this article or an accounting practitioner
who
holds an active certificate under IC 25-2.1-6.
(d) (e) One (1) member must meet the following conditions:
(1) Be a resident of Indiana.
(2) Be a consumer:
(A) who:
(i) is not
and has never been certified under this article
but
or its predecessor laws; and
(ii) does not hold and has never held a certification from
another state that is substantially equivalent to a
certification under this article;
(B) has
acquired substantially all the individual's
professional or practical experience in the use of accounting
services
by and financial statements
that of nonprofit entities;
and
(C) whose professional or practical experience is sufficient
to qualify the individual to make judgments about the
qualifications and conduct of individuals and firms under this
article.
(f) One (1) member must meet the following conditions:
(1) Be a resident of Indiana.
(2) Be a consumer:
(A) who:
(i) is not and has never been certified under this article
or its predecessor laws; and
(ii) does not hold and has never held a certification from
another state that is substantially equivalent to a
certification under this article;
(B) has acquired substantially all the individual's
professional or practical experience in the use of
accounting services by and financial statements of small
businesses; and
(C) whose professional or practical experience is sufficient
to qualify the individual to make judgments about the
qualifications and conduct of individuals and firms under
this article.
(g) One (1) member must meet the following conditions:
(1) Be a resident of Indiana.
(2) Be employed by an approved institution of higher learning
(as defined in IC 20-12-21-3).
(3) Not be a member of or otherwise affiliated with the
Indiana CPA Society, the American Institute of Certified
Public Accountants, or the Indiana Society of Public
Accountants.
(4) Have sufficient teaching experience in any of the following
subjects to qualify the individual to make judgments about the
qualifications and conduct of individuals and firms under this
article:
(A) Accounting.
(B) Auditing.
(C) Management advisory, financial advisory, or
consulting services.
(D) The preparation of tax returns or the furnishing of
advice on tax matters.
SOURCE: IC 25-2.1-5-8; (05)IN0540.1.3. -->
SECTION 3. IC 25-2.1-5-8 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE NOVEMBER 12, 2004 (RETROACTIVE)]:
Sec. 8. (a) The board may adopt rules that require as a condition to
renew a permit under this chapter, that an applicant undergo, not more
than once every three (3) years, a quality review conducted in a manner
the board specifies.
(b) If the board adopts rules under subsection (a)
and
IC 25-2.1-2-15(7), the rules must:
(1) be adopted reasonably in advance of the time when a quality
review first becomes effective;
(2) include reasonable provision for compliance by an applicant
showing that the applicant has in the preceding three (3) years
undergone a quality review that is a satisfactory equivalent to the
quality review required under this section;
(3) require, with respect to quality reviews under subdivision (2),
that the quality review be subject to review by an oversight body
established or sanctioned by the board that shall periodically
report to the board on the effectiveness of the review program and
provide to the board a listing of firms that have participated in a
quality review program;
and
(4) require, with respect to quality reviews under subdivision (2),
that:
(A) the proceedings, records, and work papers of a review
committee are privileged and are not subject to discovery,
subpoena, or other means of legal process or introduction into
evidence in a civil action, arbitration, administrative
proceeding, or Indiana board of accountancy proceeding; and
(B) that a member of the review committee or individual who
was involved in the quality review process is not permitted or
required to testify in a civil action, arbitration, administrative
proceeding, or Indiana board of accountancy proceeding to
matters:
(i) produced, presented, disclosed or discussed during, or in
connection with, the quality review process; or
(ii) that involve findings, recommendations, evaluations,
opinions, or other actions of the committee or a committee
member;
(5) specify that completion and acceptance by the oversight
body of a quality review of a firm that has not performed any
attest engagements after the latest of:
(A) the date the firm's permit was issued;
(B) June 30, 2005; or
(C) the date that the firm's permit was last renewed;
is not a condition of renewal of a permit;
(6) specify that the quality review standards of the National
Society of Accountants shall be treated as equivalent to the
quality review standards of the American Institute of
Certified Public Accountants and a quality review of a firm
conducted in conformity with either set of standards, at the
election of the firm, shall be meeting any quality review
requirements imposed under this article; and
(7) specify that completion and acceptance by the oversight
body of any component of a quality review of a firm that
constitutes a systems review or an engagement, as those terms
are defined in the standards incorporated by reference into
872 IAC 1-6-11, is not a condition for the renewal of a permit
for a firm:
(A) that has not performed more than fifteen (15) attest
engagements after the latest of:
(i) the date the firm's permit was issued;
(ii) June 30, 2005, if the permit expires after June 30,
2005; or
(iii) the date that the firm's permit was last renewed; and
(B) whose attest engagements were limited to entities that
qualify as small business entities without publically traded
securities, or nonprofit entities.
SOURCE: IC 25-2.1-6-1; (05)IN0540.1.4. -->
SECTION 4. IC 25-2.1-6-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. (a) A certificate
shall be granted by the board to any individual who:
(1) is at least eighteen (18) years of age;
(2) has not been convicted of:
(A) an act that would constitute a ground for disciplinary
sanction under IC 25-2.1-8; or
(B) a felony that has a direct bearing on the applicant's ability
to practice competently;
(3) has met either of the following education and examination
requirements:
(A) Graduation with a two (2) year associate degree from an
accredited business college, college, or university recognized
by the board, the total educational program to include an
accounting concentration or equivalent, and passage of an
examination established by the board in accounting theory and
practice.
(B) Graduation with a baccalaureate degree conferred by a
college or university recognized by the board and the
satisfactory completion of the semester hours in accounting,
business administration, economics, and other related subjects
as the board determines to be appropriate, and passage of an
examination established by the board in accounting theory;
and
(4) meets the experience requirements set forth in subsection (b).
(b) A person who submits an application for the initial issuance of
a certificate under this chapter after June 30, 2001, shall show that the
applicant has two (2) years of experience that meets the requirements
of the board. To qualify as experience under this section, the
experience must be verified by a licensee.
(c) If a person submits an application for an accounting
practitioner's certificate after June 30, 2005, and the board has not
established the test required under P.L.128-2001, SECTION 52(a),
the board shall give an applicant the test established by the board
before July 1, 2002. An applicant subject to this subsection shall be
required to pass the test established by the board before July 1,
2002, in order to receive an accounting practitioner's certificate
under this chapter.
SOURCE: IC 25-2.1-6-5; (05)IN0540.1.5. -->
SECTION 5. IC 25-2.1-6-5 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5.
(a) An
individual who is registered with the board to practice accounting as an
accounting practitioner and holds a valid certificate issued under
section 1 of this chapter or renewed under IC 25-2.1-4 may be known
as an "accounting practitioner" and may use the abbreviation "AP".
However,
(b) Subject to subsection (c), an individual registered as an
accounting practitioner may not prepare or render accounting opinions
or certificates for any purpose, including financial statements,
schedules, reports, or exhibits for publication, credit purposes, and use
in a court.
(c) An individual registered as an accounting practitioner may:
(1) prepare a compilation, including any related schedules and
exhibits, and issue a report on a compilation of financial
information of another individual, member, organization, or
governmental unit; and
(2) prepare a tax return, including any related schedules and
exhibits.
SOURCE: IC 25-2.1-12-2; (05)IN0540.1.6. -->
SECTION 6. IC 25-2.1-12-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. (a) Except as
provided in subsection (b), an individual or a firm not holding a valid
CPA or public accountant certificate under this article or permit under
IC 25-2.1-5 may not issue a report on financial statements of another
individual, member, organization, or governmental unit.
(b) Notwithstanding subsection (a):
(1) an officer, a partner, or an employee of a firm or an
organization may sign a statement or report in reference to the
financial affairs of the firm or organization with any wording
designating the position, title, or office that the signor holds;
and
(2) a public official or employee may, in the performance by an
individual of other services, use accounting skills, including the
preparation of tax returns, management advisory services, and the
preparation of financial statements without the issuance of reports
related to those documents;
and
(3) an individual or a firm holding a valid accounting
practitioner certificate under this article or registration under
IC 25-2.1-6 may issue a report on a compilation of financial
information of another individual, member, organization, or
governmental unit.
(c) A CPA,
or a public accountant,
or an accounting practitioner
may not issue a report in standard form upon a compilation of financial
information through any form of business that does not hold a valid
permit issued under IC 25-2.1-5 unless the report discloses the name
of the business through which the individual is issuing the report, and
the individual:
(1) signs the compilation report identifying the individual as a
CPA, or a public accountant, or an accounting practitioner; and
(2) meets the competency requirement provided in applicable
standards.
SOURCE: ; (05)IN0540.1.7. -->
SECTION 7. [EFFECTIVE NOVEMBER 12, 2004
(RETROACTIVE)] (a) The definitions in IC 25-2.1 apply
throughout this SECTION.
(b) Notwithstanding IC 25-2.1-5-2, an initial or renewed permit
that would otherwise expire in 2006, is extended and expires June
30, 2007. The June 30, 2007, date shall be treated as the end of the
renewal period for all purposes.
(c) An individual who:
(1) is a member of the state board of accountancy on June 30,
2005; and
(2) as a result of the amendment of IC 25-2.1-2-3 by this act
no longer qualifies to hold that position after June 30, 2005;
may not hold over as a member of the board until the member's
successor is appointed and qualified. If more than one (1) member
of the board on June 30, 2005, could qualify for continued
membership on the board after June 30, 2005, but there are
insufficient positions after June 30, 2005, for all the similarly
situated members to continue to serve on the board, the governor
shall designate which members are retained as members of the
board. A member of the board who is retained under this
SECTION is eligible after June 30, 2005, to serve the remaining
unexpired term of the member. The initial individual appointed to
replace a disqualified member is eligible after June 30, 2005, to
serve the unexpired term of the member that the appointee
replaces.
(d) 872 IAC 1-6 is void to the extent that it conflicts with the
following:
(1) IC 25-2.1-5-8, as amended by this act.
(2) IC 25-2.1-12-2, as amended by this act.
(3) This SECTION.
SOURCE: ; (05)IN0540.1.8. -->
SECTION 8.
An emergency is declared for this act.