SF 698

as introduced - 91st Legislature (2019 - 2020) Posted on 07/19/2019 01:36pm

A bill for an act
relating to state government; modifying provisions related to the practice of certified
public accounting; amending Minnesota Statutes 2018, sections 326A.01,
subdivision 2; 326A.04, subdivisions 4, 5; 326A.08, subdivisions 4, 5, by adding
a subdivision; 326A.10; proposing coding for new law in Minnesota Statutes,
chapter 326A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 326A.01, subdivision 2, is amended to read:

Subd. 2.

Attest.

"Attest" means providing any of the following services:

(1) an audit or other engagement performed in accordance with the Statements on
Auditing Standards (SAS);

(2) new text begin an audit or other engagement performed in accordance with the Government Auditing
Standards (GAS);
new text end

new text begin (3) new text end a review of a financial statement performed in accordance with the Statements on
Standards for Accounting and Review Services (SSARS);

deleted text begin (3) deleted text end new text begin (4) new text end an examination of prospective financial information performed in accordance
with the Statements on Standards for Attestation Engagements (SSAE);

deleted text begin (4) deleted text end new text begin (5) new text end an engagement performed in accordance with the standards of the Public Company
Accounting Oversight Board (PCAOB); and

deleted text begin (5) deleted text end new text begin (6) new text end an examination, review, or agreed-upon procedures engagement performed in
accordance with SSAE, other than an examination described in clause (3).

Sec. 2.

Minnesota Statutes 2018, section 326A.04, subdivision 4, is amended to read:

Subd. 4.

Program of learning.

Each licensee shall participate in a program of learning
designed to maintain professional competency. The program of learning must comply with
rules adopted by the board. The board may by rule create an exception to this requirement
for licensees who do not perform or offer to perform for the public one or more kinds of
services involving the use of deleted text begin accounting or deleted text end auditing skills, including issuance of reports on
deleted text begin financial statements or of one or more kinds of deleted text end new text begin : attest or compilation engagements, new text end
management advisory new text begin services new text end , financial advisory new text begin services, new text end or consulting services deleted text begin , or the
preparation of tax returns or the furnishing of advice on tax matters deleted text end . A licensee granted such
an exception by the board must place the word "inactive" new text begin or "retired," if applicable, new text end adjacent
to the CPA title on any business card, letterhead, or any other document or device, with the
exception of the licensee's certificate on which the CPA title appears.

Sec. 3.

Minnesota Statutes 2018, section 326A.04, subdivision 5, is amended to read:

Subd. 5.

Fee.

(a) The board shall charge a fee for each application for initial issuance
or renewal of a certificate or temporary military certificate under this section as provided
in paragraph (b). deleted text begin The fee for the temporary military certificate is $100.
deleted text end

(b) The board shall charge the following fees:

(1) initial issuance of certificate, $150;

(2) renewal of certificate with an active status, $100 per year;

(3) initial CPA firm permits, except for sole practitioners, $100;

(4) renewal of CPA firm permits, except for sole practitioners and those firms specified
in clause deleted text begin (17) deleted text end new text begin (16) new text end , $35 per year;

(5) initial issuance and renewal of CPA firm permits for sole practitioners, except for
those firms specified in clause deleted text begin (17) deleted text end new text begin (16) new text end , $35 per year;

(6) annual late processing delinquency fee for permit, certificate, or registration renewal
applications not received prior to expiration date, $50;

(7) copies of records, per page, 25 cents;

(8) registration of noncertificate holders, nonlicensees, and nonregistrants in connection
with renewal of firm permits, $45 per year;

(9) applications for reinstatement, $20;

(10) initial registration of a registered accounting practitioner, $50;

(11) initial registered accounting practitioner firm permits, $100;

(12) renewal of registered accounting practitioner firm permits, except for sole
practitioners, $100 per year;

(13) renewal of registered accounting practitioner firm permits for sole practitioners,
$35 per year;

deleted text begin (14) CPA examination application, $40;
deleted text end

deleted text begin (15) deleted text end new text begin (14) new text end CPA examination, fee determined by third-party examination administrator;

deleted text begin (16) deleted text end new text begin (15) new text end renewal of certificates with an inactive status, $25 per year; deleted text begin and
deleted text end

deleted text begin (17) deleted text end new text begin (16) new text end renewal of CPA firm permits for firms that have one or more offices located
in another state, $68 per year new text begin ; and
new text end

new text begin (17) temporary military certificate, $100 new text end .

Sec. 4.

new text begin [326A.045] RETIRED STATUS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin A retired certified public accountant age 55 or older who
holds a current license to practice public accounting in Minnesota under this chapter with
a license status of active or inactive, or who has been granted exempt status under Minnesota
Rules, part 1105.3700, may apply to the board for certified public accountant retired status
if the person declares that he or she is retired in all jurisdictions from the practice of public
accounting. A person must submit an application for retired status on a form provided by
the board.
new text end

new text begin Subd. 2. new text end

new text begin Status of registrant. new text end

new text begin Retired status is not a license to engage in the practice of
public accounting. A person granted retired status under this section shall not perform or
offer to perform for the public one or more kinds of services involving the use of auditing
skills, including issuance of reports on attest or compilation engagements, management
advisory services, financial advisory services, or consulting services.
new text end

new text begin Subd. 3. new text end

new text begin Documentation of status. new text end

new text begin A person granted retired status shall receive a
document certifying that retired status has been granted by the board and that the licensee
has completed the licensee's active career as a CPA licensed in good standing with the board.
new text end

new text begin Subd. 4. new text end

new text begin Representation to the public. new text end

new text begin A person granted retired status may represent
themselves as "Certified Public Accountant - Retired," "CPA - Retired," "Retired Certified
Public Accountant," or "Retired CPA" but shall not represent themselves or allow themselves
to be represented to the public as a current licensee of the board.
new text end

new text begin Subd. 5. new text end

new text begin Continuing education requirements. new text end

new text begin The continuing education requirements
that apply to certificate holders with a status of "active" do not apply to a person granted
retired status under this section.
new text end

new text begin Subd. 6. new text end

new text begin Renewal cycle or fee. new text end

new text begin A person granted retired status under this section shall
not be subject to registration renewal.
new text end

new text begin Subd. 7. new text end

new text begin Change to active or inactive status. new text end

new text begin A person granted retired status who
requests to reactivate his or her license to a status of active or inactive shall meet the
requirements for reactivation as prescribed by rule.
new text end

Sec. 5.

Minnesota Statutes 2018, section 326A.08, subdivision 4, is amended to read:

Subd. 4.

Cease and desist orders.

(a) The board, or the complaint committee if
authorized by the board, may issue and have served upon a certificate holder, a permit
holder, a registration holder, a person with practice privileges granted under section 326A.14,
a person who has previously been subject to a disciplinary order by the board, or an
unlicensed firm or person an order requiring the person or firm to cease and desist from the
act or practice constituting a violation of the statute, rule, or order. The order must be
calculated to give reasonable notice of the rights of the person or firm to request a hearing
and must state the reasons for the entry of the order. No order may be issued until an
investigation of the facts has been conducted pursuant to section 214.10.

(b) Service of the order deleted text begin is effective when the order is served on the person, firm, or
counsel of record personally, or by certified mail to the most recent address provided to the
board for the person, firm, or counsel of record. deleted text end new text begin may be by first class United States mail,
including certified United States mail, or overnight express mail service, postage prepaid
and addressed to the party at the party's last known address. Service by United States mail,
including certified mail, is complete upon placing the order in the mail or otherwise delivering
the order to the United States mail service. Service by overnight express mail service is
complete upon delivering the order to an authorized agent of the express mail service.
new text end

(c) Unless otherwise agreed by the board, or the complaint committee if authorized by
the board, and the person or firm requesting the hearing, the hearing must be held no later
than 30 days after the request for the hearing is received by the board.

(d) The administrative law judge shall issue a report within 30 days of the close of the
contested case hearing record, notwithstanding Minnesota Rules, part 1400.8100, subpart
3. Within 30 days after receiving the report and any exceptions to it, the board shall issue
a further order vacating, modifying, or making permanent the cease and desist orders as the
facts require.

(e) If no hearing is requested within 30 days of service of the order, the order becomes
final and remains in effect until it is modified or vacated by the board.

(f) If the person or firm to whom a cease and desist order is issued fails to appear at the
hearing after being duly notified, the person or firm is in default and the proceeding may
be determined against that person or firm upon consideration of the cease and desist order,
the allegations of which may be considered to be true.

(g) In lieu of or in addition to the order provided in paragraph (a), the board may require
the person or firm to provide to the board a true and complete list of the person's or firm's
clientele so that they can, if deemed necessary, be notified of the board's action. Failure to
do so, or to provide an incomplete or inaccurate list, is an act discreditable.

Sec. 6.

Minnesota Statutes 2018, section 326A.08, subdivision 5, is amended to read:

Subd. 5.

Actions against persons or firms.

(a) The board may, by order, deny, refuse
to renew, suspend, temporarily suspend, or revoke the application, or practice privileges,
registration or certificate of a person or firm; censure or reprimand the person or firm;
prohibit the person or firm from preparing tax returns or reporting on financial statements;
limit the scope of practice of any licensee; limit privileges under section 326A.14; refuse
to permit a person to sit for examination; or refuse to release the person's examination grades
if the board finds that the order is in the public interest and that, based on a preponderance
of the evidence presented, the person or firm:

(1) has violated a statute, rule, or order that the board has issued or is empowered to
enforce;

(2) has engaged in conduct or acts that are fraudulent, deceptive, or dishonest whether
or not the conduct or acts relate to performing or offering to perform professional services,
providing that the fraudulent, deceptive, or dishonest conduct or acts reflect adversely on
the person's or firm's ability or fitness to provide professional services;

(3) has engaged in conduct or acts that are negligent or otherwise in violation of the
standards established by board rule, where the conduct or acts relate to providing professional
services, including in the filing or failure to file the licensee's income tax returns;

(4) has been convicted of, has pled guilty or nolo contendere to, or has been sentenced
as a result of the commission of a felony or crime, an element of which is dishonesty or
fraud; has been shown to have or admitted to having engaged in acts or practices tending
to show that the person or firm is incompetent; or has engaged in conduct reflecting adversely
on the person's or firm's ability or fitness to provide professional services, whether or not
a conviction was obtained or a plea was entered or withheld and whether or not dishonesty
or fraud was an element of the conduct;

(5) employed fraud or deception in obtaining a certificate, permit, registration, practice
privileges, renewal, or reinstatement or in passing all or a portion of the examination;

(6) has had the person's or firm's permit, registration, practice privileges, certificate,
right to examine, or other similar authority revoked, suspended, canceled, limited, or not
renewed for cause, or has committed unprofessional acts for which the person or firm was
otherwise disciplined or sanctioned, including, but not limited to, being ordered to or agreeing
to cease and desist from prescribed conduct, in any state or any foreign country;

(7) has had the person's or firm's right to practice before any federal, state, other
government agency, or Public Company Accounting Oversight Board revoked, suspended,
canceled, limited, or not renewed for cause, or has committed unprofessional acts for which
the person or firm was otherwise disciplined or sanctioned, including, but not limited to,
being ordered to or agreeing to cease and desist from prescribed conduct;

(8) failed to meet any requirement for the issuance or renewal of the person's or firm's
certificate, registration or permit, or for practice privileges;

(9) with respect to temporary suspension orders, has committed an act, engaged in
conduct, or committed practices that may result or may have resulted, in the opinion of the
board or the complaint committee if authorized by the board, in an immediate threat to the
public;

(10) has engaged in any conduct reflecting adversely upon the person's or firm's fitness
to perform services while a licensee, individual granted privileges under section 326A.14,
or a person registered under section 326A.06, paragraph (b); or

(11) has, prior to a voluntary surrender of a certificate or permit to the board, engaged
in conduct which at any time resulted in the discipline or sanction described in clause (6)
or (7).

(b) In lieu of or in addition to any remedy provided in paragraph (a), the board, or the
complaint committee if authorized by the board, may require, as a condition of continued
possession of a certificate, a registration, or practice privileges, termination of suspension,
reinstatement of permit, registration of a person or firm or of practice privileges under
section 326A.14, a certificate, an examination, or release of examination grades, that the
person or firm:

(1) submit to a peer review of the person's or firm's ability, skills, or quality of work,
conducted in a fashion and by persons, entity, or entities as required by the board; and

(2) complete to the satisfaction of the board continuing professional education courses
specified by the board.

(c) Service of the order deleted text begin is effective if the order is served on the person, firm, or counsel
of record personally or by certified mail to the most recent address provided to the board
for the person, firm, or counsel of record. deleted text end new text begin may be by first class United States mail, including
certified United States mail, or overnight express mail service, postage prepaid and addressed
to the party at the party's last known address. Service by United States mail, including
certified mail, is complete upon placing the order in the mail or otherwise delivering the
order to the United States mail service. Service by overnight express mail service is complete
upon delivering the order to an authorized agent of the express mail service. new text end The order shall
state the reasons for the entry of the order.

(d) All hearings required by this subdivision must be conducted in accordance with
chapter 14 except with respect to temporary suspension orders as provided for in subdivision
6.

(e) In addition to the remedies authorized by this subdivision, the board, or the complaint
committee if authorized by the board, may enter into an agreement with the person or firm
for corrective action and may unilaterally issue a warning to a person or firm.

(f) The board shall not use agreements for corrective action or warnings in any situation
where the person or firm has been convicted of or pled guilty or nolo contendere to a felony
or crime and the felony or crime is the basis of the board's action against the person or firm,
where the conduct of the person or firm indicates a pattern of related violations of paragraph
(a) or the rules of the board, or where the board concludes that the conduct of the person or
firm will not be deterred other than by disciplinary action under this subdivision or
subdivision 4 or 6.

(g) Agreements for corrective action may be used by the board, or the complaint
committee if authorized by the board, where the violation committed by the person or firm
does not warrant disciplinary action pursuant to this subdivision or subdivision 4 or 6, but
where the board, or the complaint committee if authorized by the board, determines that
corrective action is required to prevent further such violations and to otherwise protect the
public. Warnings may be used by the board, or the complaint committee if authorized by
the board, where the violation of the person or firm is de minimus, does not warrant
disciplinary action under this subdivision or subdivision 4 or 6, and does not require
corrective action to protect the public.

(h) Agreements for corrective action must not be considered disciplinary action against
the person's or firm's application, permit, registration or certificate, or practice privileges
under section 326A.14. However, agreements for corrective action are public data. Warnings
must not be considered disciplinary action against the person's or firm's application, permit,
registration, or certificate or person's practice privileges and are private data.

Sec. 7.

Minnesota Statutes 2018, section 326A.08, is amended by adding a subdivision to
read:

new text begin Subd. 10. new text end

new text begin Actions against lapsed license, certificate, or permit. new text end

new text begin If a person's or firm's
permit, registration, practice privileges, license, certificate, or other similar authority lapses,
expires, is surrendered, withdrawn, terminated, canceled, limited, not renewed, or otherwise
becomes invalid, the board may institute a proceeding under this subdivision within two
years after the date the license, certificate, or permit was last effective and enter a revocation
or suspension order as of the last date on which the license, certificate, or permit was in
effect, or impose a civil penalty as provided for in subdivision 7.
new text end

Sec. 8.

Minnesota Statutes 2018, section 326A.10, is amended to read:

326A.10 UNLAWFUL ACTS.

(a) Only a licensee and individuals who have been granted practice privileges under
section 326A.14 may issue a report on financial statements of any person, firm, organization,
or governmental unit that results from providing attest services, or offer to render or render
any attest service. Only a certified public accountant, an individual who has been granted
practice privileges under section 326A.14, a CPA firm, or, to the extent permitted by board
rule, a person registered under section 326A.06, paragraph (b), may issue a report on financial
statements of any person, firm, organization, or governmental unit that results from providing
compilation services or offer to render or render any compilation service. These restrictions
do not prohibit any act of a public official or public employee in the performance of that
person's duties or prohibit the performance by any nonlicensee of other services involving
the use of accounting skills, including the preparation of tax returns, management advisory
services, and the preparation of financial statements without the issuance of reports on them.
Nonlicensees may prepare financial statements and issue nonattest transmittals or information
on them which do not purport to be in compliance with the Statements on Standards for
Accounting and Review Services (SSARS). Nonlicensees registered under section 326A.06,
paragraph (b), may, to the extent permitted by board rule, prepare financial statements and
issue nonattest transmittals or information on them.

(b) Licensees and individuals who have been granted practice privileges under section
326A.14 performing attest or compilation services must provide those services in accordance
with professional standards. To the extent permitted by board rule, registered accounting
practitioners performing compilation services must provide those services in accordance
with standards specified in board rule.

(c) A person who does not hold a valid certificate issued under section 326A.04 or a
practice privilege granted under section 326A.14 shall not use or assume the title "certified
public accountant," the abbreviation "CPA," or any other title, designation, words, letters,
abbreviation, sign, card, or device tending to indicate that the person is a certified public
accountant.

(d) A firm shall not provide attest services or assume or use the title "certified public
accountants," the abbreviation "CPA's," or any other title, designation, words, letters,
abbreviation, sign, card, or device tending to indicate that the firm is a CPA firm unless (1)
the firm has complied with section 326A.05, and (2) ownership of the firm is in accordance
with this chapter and rules adopted by the board.

(e) A person or firm that does not hold a valid certificate or permit issued under section
326A.04 or 326A.05 or has not otherwise complied with section 326A.04 or 326A.05 as
required in this chapter shall not assume or use the title "certified accountant," "chartered
accountant," "enrolled accountant," "licensed accountant," "registered accountant,"
"accredited accountant," "accounting practitioner," "public accountant," "licensed public
accountant," or any other title or designation likely to be confused with the title "certified
public accountant," or use any of the abbreviations "CA," "LA," "RA," "AA," "PA," "AP,"
"LPA," or similar abbreviation likely to be confused with the abbreviation "CPA." The title
"enrolled agent" or "EA" may only be used by individuals so designated by the Internal
Revenue Service.

(f) Persons registered under section 326A.06, paragraph (b), may use the title "registered
accounting practitioner" or the abbreviation "RAP." A person who does not hold a valid
registration under section 326A.06, paragraph (b), shall not assume or use such title or
abbreviation.

(g) Except to the extent permitted in paragraph (a), nonlicensees may not use language
in any statement relating to the financial affairs of a person or entity that is conventionally
used by licensees in reports on financial statements or on an attest service. In this regard,
the board shall issue by rule safe harbor language that nonlicensees may use in connection
with such financial information. A person or firm that does not hold a valid certificate or
permit, or a registration issued under section 326A.04, 326A.05, or 326A.06, paragraph (b),
or has not otherwise complied with section 326A.04 or 326A.05 as required in this chapter
shall not assume or use any title or designation that includes the word "accountant" or
"accounting" in connection with any other language, including the language of a report, that
implies that the person or firm holds such a certificate, permit, or registration or has special
competence as an accountant. A person or firm that does not hold a valid certificate or
permit issued under section 326A.04 or 326A.05 or has not otherwise complied with section
326A.04 or 326A.05 as required in this chapter shall not assume or use any title or designation
that includes the word "auditor" in connection with any other language, including the
language of a report, that implies that the person or firm holds such a certificate or permit
or has special competence as an auditor. However, this paragraph does not prohibit any
officer, partner, member, manager, or employee of any firm or organization from affixing
that person's own signature to any statement in reference to the financial affairs of such firm
or organization with any wording designating the position, title, or office that the person
holds, nor prohibit any act of a public official or employee in the performance of the person's
duties as such.

(h)(1) No person holding a certificate or registration or firm holding a permit under this
chapter shall use a professional or firm name or designation that is misleading about the
legal form of the firm, or about the persons who are partners, officers, members, managers,
or shareholders of the firm, or about any other matter. However, names of one or more
former partners, members, managers, or shareholders may be included in the name of a firm
or its successor.

(2) A common brand name or network name part, including common initials, used by
a CPA firm in its name, is not misleading if the firm is a network firm as defined in the
American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct
deleted text begin in effect July 1, 2011 deleted text end new text begin incorporated by reference in Minnesota Rules, part 1105.0250 new text end , and
when offering or rendering services that require independence under AICPA standards, the
firm must comply with the AICPA code's applicable standards on independence.

(i) Paragraphs (a) to (h) do not apply to a person or firm holding a certification,
designation, degree, or license granted in a foreign country entitling the holder to engage
in the practice of public accountancy or its equivalent in that country, if:

(1) the activities of the person or firm in this state are limited to the provision of
professional services to persons or firms who are residents of, governments of, or business
entities of the country in which the person holds the entitlement;

(2) the person or firm performs no attest or compilation services and issues no reports
with respect to the information of any other persons, firms, or governmental units in this
state; and

(3) the person or firm does not use in this state any title or designation other than the
one under which the person practices in the foreign country, followed by a translation of
the title or designation into English, if it is in a different language, and by the name of the
country.

(j) No holder of a certificate issued under section 326A.04 may perform attest services
through any business form that does not hold a valid permit issued under section 326A.05.

(k) No individual licensee may issue a report deleted text begin in standard form deleted text end upon a compilation of
financial information through any form of business that does not hold a valid permit issued
under section 326A.05, 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 certified public accountant;

(2) meets the competency requirement provided in applicable standards; and

(3) undergoes no less frequently than once every three years, a peer review conducted
in a manner specified by the board in rule, and the review includes verification that the
individual has met the competency requirements set out in professional standards for such
services.

(l) No person registered under section 326A.06, paragraph (b), may issue a report deleted text begin in
standard form deleted text end upon a compilation of financial information unless the board by rule permits
the report and the person:

(1) signs the compilation report identifying the individual as a registered accounting
practitioner;

(2) meets the competency requirements in board rule; and

(3) undergoes no less frequently than once every three years a peer review conducted
in a manner specified by the board in rule, and the review includes verification that the
individual has met the competency requirements in board rule.

(m) Nothing in this section prohibits a practicing attorney or firm of attorneys from
preparing or presenting records or documents customarily prepared by an attorney or firm
of attorneys in connection with the attorney's professional work in the practice of law.

(n) The board shall adopt rules that place limitations on receipt by a licensee or a person
who holds a registration under section 326A.06, paragraph (b), of:

(1) contingent fees for professional services performed; and

(2) commissions or referral fees for recommending or referring to a client any product
or service.

(o) Anything in this section to the contrary notwithstanding, it shall not be a violation
of this section for a firm not holding a valid permit under section 326A.05 and not having
an office in this state to provide its professional services in this state so long as it complies
with the applicable requirements of section 326A.05, subdivision 1.