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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 340-H.F.No. 2308 
                  An act relating to accountants; modifying licensing 
                  provisions; providing for firm licensure; authorizing 
                  rulemaking; amending Minnesota Statutes 1996, sections 
                  326.165; 326.17; 326.18; 326.19; 326.20; 326.211; 
                  326.212, subdivisions 1, 4, 5, and by adding a 
                  subdivision; 326.22, subdivision 2; 326.223; 326.228; 
                  and 326.229, subdivisions 3, 4, 6, and by adding a 
                  subdivision; proposing coding for new law in Minnesota 
                  Statutes, chapter 326; repealing Minnesota Statutes 
                  1996, sections 326.191; 326.21; and 326.225. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 326.165, is 
        amended to read: 
           326.165 [BOARD OF ACCOUNTANCY POLICY; DEFINITIONS.] 
           Subdivision 1.  [PURPOSE.] It is the policy of this state 
        to promote the dependability of information which is used for 
        guidance in financial transactions or for accounting for or 
        assessing the status or performance of commercial and 
        noncommercial enterprises, whether public, private, or 
        governmental.  The public interest requires that persons engaged 
        in the practice of public accounting be qualified; that a public 
        authority competent to prescribe and assess the qualifications 
        of public accountants be established; that the expression of any 
        form of assurance or of opinions on financial statements be 
        reserved to persons who demonstrate their ability and fitness to 
        observe and apply the standards of the accounting profession; 
        and that the use of accounting titles likely to confuse the 
        public be prohibited. 
           Subd. 1a.  [SCOPE.] For the purposes of sections 326.165 to 
        326.229, the definitions in this section have the meanings given.
           Subd. 2.  [PRACTICE OF PUBLIC ACCOUNTING.] The "practice of 
        public accounting" is:  (a) (1) holding one's self out to the 
        public as skilled in the knowledge and practice of 
        accounting; or (b) (2) expressing any form of assurance on 
        financial statements; or (c) (3) expressing opinions on 
        financial statements for credit purposes, for use in courts and 
        for other purposes involving third parties. 
           Subd. 3.  [ASSURANCE OR OPINIONS ON FINANCIAL STATEMENTS.] "
        Assurance or opinions on financial statements" are any opinions 
        or assurance expressed in accordance with generally accepted 
        auditing standards or other authoritative professional standards 
        as to the fairness of presentation of information which is used 
        for guidance in financial transactions or for accounting for or 
        assessing the status or performance of commercial and 
        noncommercial enterprises, whether public, private, or 
        governmental.  
           Subd. 4.  [CPA.] "CPA" means certified public accountant. 
           Subd. 5.  [FINANCIAL STATEMENTS.] "Financial statements" 
        means a presentation of financial data, including accompanying 
        notes, if any, intended to communicate an entity's economic 
        resources and/or obligations at a point in time, or the changes 
        therein for a period of time, in accordance with generally 
        accepted accounting principles or a comprehensive basis of 
        accounting other than generally accepted accounting principles. 
           Incidental financial data to support recommendations to a 
        client, management advisory service reports, or tax returns and 
        supporting schedules do not constitute financial statements.  
        The statement, affidavit, or signature of preparers required on 
        tax returns neither constitutes an opinion on financial 
        statements nor requires a disclaimer of the opinion. 
           Subd. 6.  [FIRM.] "Firm" means an entity of CPAs or LPAs 
        organized as a CPA or LPA partnership, professional corporation, 
        professional limited liability company, or professional limited 
        liability partnership, any cooperative auditing organization as 
        specified in section 326.192, subdivision 4, or any CPA or LPA 
        practice in any other form of business organization authorized 
        by law for use by CPAs and LPAs, including individual partners 
        or shareholders. 
           Subd. 7.  [LPA.] "LPA" means licensed public accountant.  
        Licensed public accountants are those accountants who were 
        eligible for licensure on July 1, 1979, under the law in effect 
        on that date and who were issued a license as a licensed public 
        accountant by the board at that time. 
           Sec. 2.  Minnesota Statutes 1996, section 326.17, is 
        amended to read: 
           326.17 [BOARD OF ACCOUNTANCY.] 
           (a) A board of accountancy is created to carry out the 
        purposes and enforce the provisions of sections 326.165 to 
        326.229.  It consists of between seven and nine citizens of this 
        state appointed by the governor as provided in this section.  
        Two shall be public members as defined by section 214.02, five 
        shall be currently actively licensed certified public 
        accountants, and two shall be actively licensed public 
        accountants under the provisions of sections 326.165 to 
        326.229.  When the number of licensed public accountants in this 
        state drops below 100, their representation on the board of 
        accountancy shall drop to one and the board shall consist of two 
        public members, five currently actively licensed certified 
        public accountants, and one actively licensed public 
        accountant.  At the time when the number of licensed public 
        accountants in this state drops below 25, the licensed public 
        accountants shall lose their representation on the board, except 
        that the licensed public accountant then serving on the board 
        shall be allowed to complete the term of office and.  The board 
        shall then consist of two public members and five currently 
        actively licensed certified public accountants.  
           (b) Membership terms, compensation of members, removal of 
        members, the filling of membership vacancies, and fiscal year 
        and reporting requirements shall be as provided in sections 
        214.07 to 214.09.  The provision of staff, administrative 
        services, and office space; the review and processing of 
        complaints; the setting of board fees; and other provisions 
        relating to board operations shall be as provided in chapter 214 
        and sections 326.165 to 326.229. 
           Sec. 3.  Minnesota Statutes 1996, section 326.18, is 
        amended to read: 
           326.18 [BOARD, DUTIES, OFFICERS, RULES, EXAMINATIONS.] 
           Subdivision 1.  [MEMBERS AND OFFICERS.] A majority of 
        the qualified members of the board constitutes a quorum.  The 
        board shall elect one of its number as chair, another as 
        vice-chair, and another as secretary and treasurer, who shall 
        hold their respective offices for a term of one year and until 
        their successors are elected.  The affirmative vote of a 
        majority of the qualified members of the board is considered the 
        action of the board.  
           Subd. 2.  [DUTIES.] The board shall enforce the standard of 
        general education;, the standard of special education in the 
        science and art of accounting;, and the standard of good 
        character and general public experience, as prescribed in 
        sections 326.165 to 326.229, in all examinations conducted 
        thereunder.  
           Subd. 3.  [RULES.] The board shall make rules for the 
        conduct of applicants' examinations and the character and scope 
        of the examinations, the method and time of filing applications 
        for examinations and their form and contents, and all other 
        rules proper to carry into effect the purposes of sections 
        326.165 to 326.229.  The board shall make rules to govern 
        administration of the board, examinations, issuance of 
        certificates, licensing, professional conduct and discipline, 
        continuing education, fees, and practice monitoring. 
           Subd. 4.  [EXAMINATION.] The board may make use of all or 
        any part of the uniform certified public accountant examination 
        and advisory grading service provided by the American Institute 
        of Certified Public Accountants if it deems it appropriate to 
        assist it in performing its duties.  These examinations shall be 
        conducted by the board of accountancy.  The examinations shall 
        take place as often as may be convenient in the opinion of the 
        board.  The board may make rules necessary to implement and 
        enforce sections 326.165 to 326.229, and 214.12, including but 
        not limited to rules of professional conduct, pertaining to 
        individuals, partnerships and corporations practicing public 
        accounting which it deems consistent with or required by the 
        public welfare and rules of continuing education to be met by 
        persons licensed under sections 326.165 to 326.229. 
           Subd. 5.  [RECORDS, CERTIFICATES, AND LICENSES.] (a) The 
        board shall keep records of its proceedings, an accurate list of 
        all applications made, licenses and certificates issued, and 
        licenses and certificates revoked disciplined pursuant to 
        section 326.229, and shall keep proper financial records in 
        which there shall be entered a complete statement of the cash 
        receipts and disbursements.  All records of the board shall be 
        subject to chapter 13. 
           (b) The board shall issue to each person who satisfies the 
        examination requirements of section 326.19, subdivision 1, a 
        certified public accountant certificate and shall maintain a 
        record of that issuance.  The board shall issue a license as a 
        certified public accountant to each holder of a certified public 
        accountant certificate who satisfies the experience requirements 
        for a license as a certified public accountant or to a person 
        who has been issued a certified public accountant certificate 
        under section 326.19, subdivision 3.  The board shall maintain a 
        record of the issuance.  It shall adopt and provide itself with 
        a seal with a band inscribed "Certified Public Accountant, State 
        of Minnesota," with the coat of arms of Minnesota in the center, 
        which seal shall be affixed to each certificate of the certified 
        public accountant issued under sections 326.17 326.165 to 
        326.229. 
           (c) The board shall issue to each person who qualifies for 
        a license under sections 326.17 326.165 to 326.229 as a licensed 
        public accountant a certificate as a licensed public accountant 
        and shall maintain a record of that issuance.  It shall adopt 
        and provide itself with a seal with a band inscribed "Licensed 
        Public Accountant, State of Minnesota," with the coat of arms of 
        Minnesota in the center, which seal shall be affixed to each 
        certificate of the licensed public accountant, issued under 
        sections 326.17 326.165 to 326.229.  All records of the board 
        shall be open to the inspection of the public at the office of 
        its secretary. 
           Sec. 4.  Minnesota Statutes 1996, section 326.19, is 
        amended to read: 
           326.19 [LICENSURE; QUALIFICATIONS OF CERTIFIED PUBLIC 
        ACCOUNTANTS; CERTIFICATES AND LICENSING.] 
           Subdivision 1.  [CERTIFICATES AND LICENSES AS CERTIFIED 
        PUBLIC ACCOUNTANTS.] (a) A certified public accountant 
        certificate shall be granted to any person: 
           (a) (1) who has attained the age of 18 years; and 
           (b) (2) who is of good character; and 
           (c) (3) who has successfully completed an examination in 
        the subjects and at the times the board may prescribe in its 
        rules; and 
           (4) who meets all other requirements for issuance of a 
        certificate, including payment of required fees.  
           (b) The examination shall be administered by the board only 
        to a candidate who holds:  
           (i) (1) holds a master's degree with a major in accounting 
        from a college or university that is fully accredited by the 
        North Central Association of Colleges and Secondary Schools, or 
        an equivalent accrediting association, or who has in the opinion 
        of the board at least an equivalent education a recognized 
        accrediting agency listed with the United States Department of 
        Education; or 
           (ii) (2) holds a baccalaureate degree, with a major in 
        accounting, from a college or university that is fully 
        accredited by the North Central Association of Colleges and 
        Secondary Schools, or an equivalent accrediting association, or 
        whose credits are acceptable to the University of Minnesota for 
        admission to graduate study, a recognized accrediting agency 
        listed with the United States Department of Education or who has 
        in the opinion of the board at least an equivalent education; or 
           (iii) (3) holds a baccalaureate degree from a college or 
        university that is fully accredited by the North Central 
        Association of Colleges and Secondary Schools, or an equivalent 
        accrediting association, or whose credits are acceptable to the 
        University of Minnesota for admission to graduate study, or a 
        recognized accrediting agency listed with the United States 
        Department of Education and who has in the opinion of the board 
        at least an equivalent education, or providing at least one year 
        of experience of the type specified in subdivision 4, has been 
        completed; or 
           (iv) (4) provides evidence of having completed two or more 
        years of study with passing grade average or above from a 
        college or, university that is fully accredited by the North 
        Central Association of Colleges and Secondary Schools, or an 
        equivalent accrediting association, or whose credits are 
        acceptable to the University of Minnesota for admission to 
        graduate study, or a, technical college, or a Minnesota licensed 
        private vocational school which fulfills the requirements of 
        sections 141.21 to 141.36, that is fully accredited by a 
        recognized accrediting agency listed with the United States 
        Department of Education or who has in the opinion of the board 
        at least an equivalent education, providing that at least three 
        years experience of the type specified in subdivision 4, has 
        been completed; or 
           (v) (5) holds a diploma as a graduate of an accredited high 
        school or who has in the opinion of the board at least an 
        equivalent education, providing that at least five years 
        experience of the type specified in subdivision 4 has been 
        completed.  
           Subd. 2.  [EXPERIENCE.] A certified public accountant 
        license shall be granted to any person who has been issued a 
        certified public accountant certificate under subdivision 3.  
        Those persons holding certified public accountant certificates 
        issued under subdivision 1 who meet all other requirements for 
        licensure, including payment of required fees, shall be granted 
        licenses as certified public accountants, providing that they 
        have completed the following required experience of the type 
        specified in subdivision 4 in addition to any experience 
        required in subdivision 1, clause (c)(i) to (v) paragraph (b): 
           (i) (1) for those whose educational qualifications meet the 
        requirements of subdivision 1, paragraph (b), clause (c)(i) (1), 
        the experience requirement is one year; 
           (ii) (2) for those whose educational qualifications meet 
        the requirements of subdivision 1, paragraph (b), clause 
        (c)(ii) (2), the experience requirement is two years; 
           (iii) (3) for those whose educational and experience 
        qualifications meet the requirements of subdivision 1, paragraph 
        (b), clause (c)(iii) (3), the additional required experience is 
        two years; 
           (iv) (4) for those whose educational and experience 
        qualifications meet the requirements of subdivision 1, paragraph 
        (b), clause (c)(iv) (4), the additional required experience is 
        two years; and 
           (v) (5) for those whose educational and experience 
        qualifications meet the requirements of subdivision 1, paragraph 
        (b), clause (c)(v) (5), the additional required experience is 
        one year. 
           Subd. 3.  [CERTIFICATE AND LICENSE WITHOUT EXAMINATION.] 
        The state board of accountancy may, in its discretion, waive the 
        examination of, and may issue a certificate and license as, a 
        certified public accountant to any person possessing the 
        qualifications mentioned in this section, who: 
           (a) (1) is the holder of a C.P.A. CPA license or 
        certificate, issued under the laws of another state, provided 
        the requirements for the license or certificate in the state 
        which has granted it to the applicant are, in the opinion of the 
        state board of accountancy, equivalent to those herein 
        provided in subdivisions 1 and 2; or 
           (b) shall be (2) is the holder of a degree or certificate 
        of certified public accountant or chartered accountant, or the 
        equivalent thereof, issued in any foreign country, provided that 
        the requirements for the degree or certificate are equivalent to 
        those herein provided in subdivisions 1 and 2 for the license of 
        certified public accountant in this state.; or 
           (c) Shall (3) has in another jurisdiction have completed 
        successfully an examination which, in the opinion of the board, 
        is comparable to that prescribed by the board in its rules and 
        provided that such the person has satisfied the other 
        requirements of subdivisions 1 and 2. 
           Subd. 4.  [QUALIFYING EXPERIENCE FOR EXAMINATION AND 
        GRANTING OF LICENSE.] Qualifying experience for subdivisions 1, 
        2, and 3 include public accounting experience: 
           (1) as a staff employee of a certified public 
        accountant or, licensed public accountant, or a firm of 
        certified public accountants or public accountants, or a 
        corporation formed licensed for the practice of public 
        accounting; or 
           (2) as an auditor in the office of the legislative auditor 
        or state auditor, or as an auditor or examiner with any other 
        agency of government, which experience, in the opinion of the 
        board is equally comprehensive and diversified; or 
           (3) as a self-employed public accountant or as a partner in 
        a firm of public accountants; or 
           (4) in any combination of the foregoing capacities. 
           Sec. 5.  [326.192] [LICENSURE; QUALIFICATIONS OF FIRMS.] 
           Subdivision 1.  [APPLICATION.] Upon application made upon 
        the affidavit of a general partner of the partnership, secretary 
        of the corporation, or member of the limited liability company 
        or partnership who is a CPA or a LPA of this state in good 
        standing, the board shall issue a firm license.  The license 
        shall be valid for a period prescribed by the board, unless the 
        license is revoked sooner.  The application shall confer upon 
        the board the consent of the partnership, corporation, or 
        limited liability company or partnership, and of the general 
        partner, secretary, or member making the application, to the 
        board's jurisdiction over the acts of the partnership and its 
        partners or agents, of the corporation and its shareholders or 
        agents within the state, or of the limited liability company or 
        partnership and its members or agents. 
           Subd. 2.  [CPA FIRMS.] No partnership, corporation, or 
        limited liability company or partnership shall style itself as a 
        firm of CPAs unless: 
           (1) all partners, shareholders, or members resident in this 
        state are CPAs of this state; 
           (2) all managers in charge of offices maintained in this 
        state are CPAs of this state; 
           (3) all partners, shareholders, or members, wherever 
        situated, are CPAs of one of the states or territories or of the 
        District of Columbia; and 
           (4) the partnership, corporation, or limited liability 
        company or partnership is duly licensed under this section. 
           Subd. 3.  [LPA FIRMS.] No partnership, corporation, or 
        limited liability company or partnership shall style itself as a 
        firm of LPAs unless: 
           (1) all partners, shareholders, or members resident in this 
        state are LPAs or CPAs of this state; 
           (2) all managers in charge of offices maintained in this 
        state are LPAs or CPAs of this state; 
           (3) all partners, shareholders, or members, wherever 
        situated, are LPAs of this state or CPAs of one of the states or 
        territories or the District of Columbia; and 
           (4) the partnership, corporation, or limited liability 
        company or partnership is duly licensed under this section. 
           Subd. 4.  [COOPERATIVE AUDITING ORGANIZATION.] Any 
        cooperative auditing organization organized under chapter 308A 
        is qualified for a cooperative auditing service license and may 
        style itself as a licensed cooperative auditing service if: 
           (1) for a minimum of one year prior to July 1, 1979, it 
        rendered auditing or accounting of business analysis services to 
        its members only; and 
           (2) its managers in charge of offices maintained in this 
        state are certified public accountants or licensed public 
        accountants of this state.  
        Cooperative auditing services shall comply with all requirements 
        imposed by sections 326.165 to 326.229 and the board's rules 
        governing firms. 
           Sec. 6.  Minnesota Statutes 1996, section 326.20, is 
        amended to read: 
           326.20 [RENEWAL; UNLICENSED PRACTICE.] 
           Subdivision 1.  [LICENSE RENEWAL OF CERTIFIED PUBLIC 
        ACCOUNTANTS AND LICENSED PUBLIC ACCOUNTANTS.] (a) Every holder 
        of a certified public accountant CPA license or a licensed 
        public accountant an LPA license issued by the board, if 
        engaged, or intending to be engaged, in public the practice of 
        public accounting within this state at any time during a 
        calendar year, shall renew the license as active as prescribed 
        by the board by rule. 
           (b) Every holder of a CPA license or an LPA license issued 
        by the board, who does not intend to actively engage in the 
        practice of public accounting within this state at any time 
        during a calendar year, shall renew the license as inactive or 
        active, as prescribed by the board by rule under authority 
        granted in section 326.18, subdivision 3.  Previously licensed 
        individuals who do not actively engage in the practice of public 
        accounting in any manner or who do not hold out as CPAs or LPAs 
        in any manner are not required to obtain a license nor may the 
        board require those individuals to surrender their 
        certificates.  The board must provide for the relicensing of 
        those individuals if they wish to return to the practice of 
        public accounting.  
           (c) The board may establish temporary, active, and inactive 
        licenses and adopt rules, under authority granted in section 
        326.18, subdivision 3, governing them. 
           (d) The board shall, upon application made by any holder of 
        an unrevoked Minnesota or unsuspended license as a certified 
        public accountant CPA or unrevoked or unsuspended Minnesota 
        license as a licensed public accountant LPA, renew the license 
        which shall be good for a period prescribed by the board, unless 
        the said certificate or license shall sooner be is revoked or 
        suspended during that period.  Interim licenses shall be issued 
        to individuals who have satisfied the provisions of 
        sections 326.17 326.165 to 326.229 within the year.  If a 
        license has been conditioned, limited, or otherwise restricted 
        or disciplined pursuant to section 326.229, any other condition, 
        limitation, or discipline shall remain for the term of the 
        board's order imposing the condition, limitation, or other 
        discipline, notwithstanding renewal of the license.  
           (e) The CPA certificates of persons who fail to renew their 
        licenses as required by this subdivision for more than two years 
        after expiration shall be automatically revoked by order of the 
        board.  This includes all persons who, on the effective date of 
        this section, did not hold an active or an inactive license in 
        1996, 1997, and 1998.  The orders may be issued by the board 
        without following the procedures of chapter 14, provided the 
        board notifies each such person by mail at the person's last 
        known address on file with the board at least three days prior 
        to the issuance of any such order.  No such notice is required 
        if the last communication sent by the board to a licensee was 
        returned to the board by the United States Postal Service as 
        undeliverable and with no forwarding address.  Certificates so 
        revoked by the board may be reinstated, if at all, pursuant to 
        section 326.229, subdivision 7.  This paragraph shall not apply 
        to previously licensed individuals who have notified the board 
        that they will not hold out as CPAs or LPAs in any manner or 
        practice public accounting in any manner. 
           Subd. 2.  [LICENSURE OF PARTNERSHIPS AND CORPORATIONS.] 
        Every partnership or corporation in which one or more certified 
        public accountants or licensed public accountants of this state 
        is a partner or shareholder, if it is engaged, or intends to be 
        engaged, in public practice within this state at any time shall 
        be licensed by the state board of accountancy for that period.  
        Upon application made upon the affidavit of a general partner of 
        the partnership or secretary of the corporation who is a 
        certified public accountant or a licensed public accountant of 
        this state in good standing, the board shall issue a license 
        which shall be good for a period prescribed by the board, unless 
        the license shall sooner be revoked.  Interim licenses shall be 
        issued to partnerships or corporations which have satisfied the 
        provisions of this subdivision.  The application shall confer 
        upon the board the consent of the partnership or corporation, 
        and of the general partner or secretary making the application, 
        to the board's jurisdiction over the acts of the partnership and 
        its partners or agents or of the corporation and its 
        shareholders or agents within the state. 
           No partnership or corporation shall style itself as a firm 
        of certified public accountants unless (a) all partners or 
        shareholders resident in this state are certified public 
        accountants of this state, (b) all managers in charge of offices 
        maintained in this state are certified public accountants of 
        this state, (c) all partners or shareholders, wherever situated, 
        are certified public accountants of one of the states or 
        territories or of the District of Columbia and (d) the 
        partnership or corporation is duly licensed under this section.  
           No partnership or corporation shall style itself as a firm 
        of licensed public accountants unless (a) all partners or 
        shareholders resident in this state are licensed public 
        accountants or certified public accountants of this state, (b) 
        all managers in charge of offices maintained in this state are 
        licensed public accountants or certified public accountants of 
        this state, (c) all partners or shareholders, wherever situated, 
        are licensed public accountants of this state or certified 
        public accountants of one of the states or territories or the 
        District of Columbia and (d) the partnership or corporation is 
        duly licensed under this section.  
           Any cooperative auditing organization organized under 
        chapter 308A (a) which for a minimum of one year prior to July 
        1, 1979, has been rendering auditing, accounting of business 
        analysis services to its members only, and (b) whose managers in 
        charge of offices maintained in this state are certified public 
        accountants or licensed public accountants of this state, shall 
        be deemed to be qualified for a cooperative auditing service 
        license and may style itself as a licensed cooperative auditing 
        service.  
           Subd. 3.  [UNLICENSED PRACTICE.] It shall be is unlawful 
        for any certified public accountant CPA or any LPA, or a firm 
        defined under section 326.165, subdivision 6, partnership 
        containing one or more certified public accountants to engage in 
        public the practice of public accounting within this state 
        unless such certified public accountant or the CPA, LPA, 
        partnership or firm defined under section 326.165, subdivision 
        6, is duly licensed as provided by this section.  A partnership 
        shall be deemed in public practice within this state if it 
        performs professional accounting services for a fee.  A 
        certified public accountant shall be deemed in public practice 
        within this state if the accountant performs professional 
        accounting services for a fee within this state to the extent 
        required by sections 326.165 to 326.229. 
           Subd. 4.  [TAX CLEARANCE CERTIFICATE.] (a) Notwithstanding 
        subdivisions 1 and 2, the board may not issue or renew a license 
        under sections 326.165 to 326.229 if the commissioner of revenue 
        notifies the board and the licensee or applicant for a license 
        that the licensee or applicant owes the state delinquent taxes 
        in the amount of $500 or more.  The board may issue or renew the 
        license only if (1) the commissioner of revenue issues a tax 
        clearance certificate and (2) the commissioner of revenue or the 
        licensee or applicant forwards a copy of the clearance to the 
        board.  The commissioner of revenue may issue a clearance 
        certificate only if the licensee or applicant does not owe the 
        state any uncontested delinquent taxes. 
           (b) For purposes of this subdivision, the following terms 
        have the meanings given. 
           (1) "Taxes" are all taxes payable to the commissioner of 
        revenue, including penalties and interest due on those taxes. 
           (2) "Delinquent taxes" do not include a tax liability if 
        (i) an administrative or court action that contests the amount 
        or validity of the liability has been filed or served, (ii) the 
        appeal period to contest the tax liability has not expired, or 
        (iii) the licensee or applicant has entered into a payment 
        agreement to pay the liability and is current with the payments. 
           (c) When a licensee or applicant is required to obtain a 
        clearance certificate under this subdivision, a contested case 
        hearing must be held if the licensee or applicant requests a 
        hearing in writing to the commissioner of revenue within 30 days 
        of the date of the notice provided in paragraph (a).  The 
        hearing must be held within 45 days of the date the commissioner 
        of revenue refers the case to the office of administrative 
        hearings.  Notwithstanding any law to the contrary, the licensee 
        or applicant must be served with 20 days' notice in writing 
        specifying the time and place of the hearing and the allegations 
        against the licensee or applicant.  The notice may be served 
        personally or by mail. 
           (d) The board shall require all licensees or applicants to 
        provide their social security number and Minnesota business 
        identification number on all license applications.  Upon request 
        of the commissioner of revenue, the board must provide to the 
        commissioner of revenue a list of all licensees and applicants, 
        including the name and address, social security number, and 
        business identification number.  The commissioner of revenue may 
        request a list of the licensees and applicants no more than once 
        each calendar year. 
           Sec. 7.  [326.201] [PRACTICE MONITORING.] 
           The board shall, by rule adopted under authority granted in 
        section 326.18, subdivision 3, provide for a practice monitoring 
        program designed to ensure the competency of licensees engaged 
        in the practice of public accountancy in this state.  The 
        program shall be designed to promote remediation of deficiencies 
        in lieu of removal from or restriction of practice.  However, 
        this shall not be construed to prohibit the board from imposing 
        discipline, including removal from or restriction of practice, 
        where necessary and appropriate to protect the public.  The 
        board may determine which classes of licensees and what types of 
        practice shall be subject to practice monitoring based on the 
        need to protect the public.  For those licensees subject to the 
        rules, renewal of the license is conditional upon compliance 
        with the rules. 
           Sec. 8.  Minnesota Statutes 1996, section 326.211, is 
        amended to read: 
           326.211 [PROHIBITED ACTS.] 
           Subdivision 1.  [CERTIFIED PUBLIC ACCOUNTANT; USE OF TITLE 
        BY INDIVIDUAL.] Except as permitted by the board, no person 
        shall assume or use the title or designation "certified public 
        accountant," or the abbreviation "C.P.A. CPA" or any other 
        title, designation, words, letters, abbreviation, sign, card, or 
        device tending to indicate or imply that the person is a 
        certified public accountant, unless the person has received a 
        certificate as a certified public accountant under sections 
        326.17 326.165 to 326.229, holds a license issued under sections 
        326.17 326.165 to 326.229 which is not revoked or suspended, and 
        has all offices in this state for the practice of public 
        accounting maintained and licensed as to the extent required 
        under section 326.20 by sections 326.165 to 326.229.  
           Subd. 2.  [CERTIFIED PUBLIC ACCOUNTANT; USE OF TITLE BY 
        INDIVIDUAL ENTITY.] No partnership or, corporation, or limited 
        liability company or partnership shall assume or use the title 
        or designation "certified public accountant," or the 
        abbreviation "C.P.A. CPA," or any other title, designation, 
        words, letters, abbreviation, sign, card, or device tending to 
        indicate or imply that the partnership or, corporation, or 
        limited liability company or partnership is composed of 
        certified public accountants, unless the partnership or, 
        corporation, or limited liability company or partnership is 
        licensed as a partnership or, corporation, or limited liability 
        company or partnership of certified public accountants under 
        section 326.20 326.192 and all offices of the partnership or, 
        corporation, or limited liability company or partnership in this 
        state for the practice of public accounting are maintained and 
        licensed as required under section 326.20 326.192.  
           Subd. 3.  [LICENSED PUBLIC ACCOUNTANT; USE OF TITLE BY 
        INDIVIDUAL.] No person shall assume or use the title or 
        designation "licensed public accountant" or any other title, 
        designation, words, letters, abbreviation, sign, card, or device 
        tending to indicate or imply that the person is a licensed 
        public accountant, unless the person is licensed as a licensed 
        public accountant under section 326.191 326.20, and all of the 
        person's offices in this state for the practice of public 
        accounting are maintained and licensed as required under section 
        326.20 326.192, or unless the person has received a certificate 
        as a certified public accountant under section 326.19, holds a 
        license issued under section 326.19 or 326.20, and all of the 
        person's offices in this state for the practice of public 
        accounting are maintained and licensed as required under section 
        326.20 326.192. 
           Subd. 4.  [LICENSED PUBLIC ACCOUNTANT; USE OF TITLE BY 
        PARTNERSHIP OR CORPORATION ENTITY.] No partnership or, 
        corporation, or limited liability company or partnership shall 
        assume or use the title or designation "licensed public 
        accountant" or any other title, designation, words, letters, 
        abbreviation, sign, card, or device tending to indicate or imply 
        that the partnership or, corporation, or limited liability 
        company or partnership is composed of licensed public 
        accountants, unless the partnership or, corporation, or limited 
        liability company or partnership is licensed as a partnership, 
        corporation, or limited liability company or partnership of 
        licensed public accountants under section 326.20 326.192, and 
        all offices of the partnership or, corporation, or limited 
        liability company or partnership in this state for the practice 
        of public accounting are maintained and licensed as required 
        under section 326.20 326.192.  
           Subd. 5.  [PROHIBITED AND PERMITTED TITLES.] No person, 
        partnership, or corporation, or limited liability company or 
        partnership shall assume or use the title or designation 
        "certified accountant," "chartered accountant," "enrolled 
        accountant," "licensed accountant," "public accountant," 
        "accredited accountant," "accounting practitioner," "registered 
        accountant," or any other title or designation likely to be 
        confused with "certified public accountant," or "licensed public 
        accountant," or any of the abbreviations "C.A. CA," "L.A. LA," 
        "P.A. PA," "R.A. RA," "A.A. AA," "A.P. AP," or similar 
        abbreviations likely to be confused with "C.P.A. CPA" or "L.P.A 
        LPA."  Anyone who holds a current license issued under sections 
        326.18 and section 326.19 or 326.20 and all of whose offices in 
        this state for the practice of public accounting are maintained 
        and licensed as required under section 326.20 326.192 may hold 
        out to the public as an "auditor." 
           Subd. 6.  [FINANCIAL STATEMENT BY INDIVIDUAL.] No person's 
        name shall be signed or affixed by the person nor shall any 
        trade or assumed name be used by the person professionally or in 
        business to any opinion or certificate attesting in any way to 
        the reliability of any representation or estimate in regard to 
        any person or organization embracing (1) financial information, 
        or (2) facts respecting compliance with conditions established 
        by law or contract, including, but not limited to, statutes, 
        ordinances, rules, grants, loans, and appropriations, together 
        with any wording accompanying or contained in the opinion or 
        certificate, which indicates (a) that the person is an 
        accountant or auditor or (b) that the person has expert 
        knowledge in accounting or auditing, without holding a current 
        license issued under section 326.19 or 326.20 and all of the 
        person's offices in this state for the practice of public 
        accounting are maintained and licensed under section 326.20 
        326.192.  The provisions of this subdivision shall not prohibit 
        any officer, employee, partner, or principal of any organization 
        from affixing that person's signature to any statement or report 
        in reference to the affairs of the organization with any wording 
        designating the position, title, or office which the person 
        holds in the organization, nor shall the provisions of this 
        subdivision prohibit any act of a public official or public 
        employee in the performance of duties.  
           Subd. 7.  [FINANCIAL STATEMENT BY PARTNERSHIP OR, 
        CORPORATION, OR LIMITED LIABILITY COMPANY OR PARTNERSHIP.] No 
        person shall sign or affix a partnership or, corporate, or 
        limited liability company or partnership name to any opinion or 
        certificate attesting in any way to the reliability of any 
        representation or estimate in regard to any person or 
        organization embracing (a) financial information, or (b) facts 
        respecting compliance with conditions established by law or 
        contract, including, but not limited to, statutes, ordinances, 
        rules, grants, loans, and appropriations, together with any 
        wording accompanying or contained in the opinion or certificate 
        which indicates that the partnership or, corporation, or limited 
        liability company or partnership is composed of or employs (1) 
        accountants, or auditors or (2), persons having expert knowledge 
        in accounting or auditing, unless the partnership or, 
        corporation, or limited liability company or partnership is 
        licensed under sections 326.17 to 326.229.  
           Subd. 8.  [AUDITOR; USE OF TITLE.] No person, 
        partnership or, corporation, or limited liability company or 
        partnership not licensed under section 326.18 sections 326.19 to 
        326.20 shall assume or use the title "auditor" on any sign, 
        card, letterhead, or in any advertisement or directory without 
        indicating thereon or therein that the person, partnership or, 
        corporation, or limited liability company or partnership does 
        not hold such a license, provided that this subdivision shall 
        not prohibit any officer, employee, partner, or principal of any 
        organization from being described by the position, title, or 
        office that person holds in the organization, nor shall this 
        subdivision prohibit any act of a public official or public 
        employee in the performance of duties. 
           Subd. 9.  [TITLE INDICATING PARTNERSHIP OR, CORPORATION, OR 
        LIMITED LIABILITY COMPANY OR PARTNERSHIP.] (a) No person shall 
        assume or use the title or designation "certified public 
        accountant" or "licensed public accountant" in conjunction with 
        names indicating or implying that there is a partnership or, 
        corporation, or limited liability company or partnership, if 
        there is no bona fide partnership or, corporation, or limited 
        liability company or partnership licensed under section 326.20 
        326.192. 
           (b) No person shall assume or use the title or designation 
        "certified public accountant" or "licensed public accountant" in 
        conjunction with the designation "and Company," "and Co.," "and 
        Associates," "Co.," or a similar designation if, in any such 
        case, there is in fact no bona fide partnership or, corporation, 
        or limited liability company or partnership with more than one 
        shareholder licensed under section 326.20 326.192.  
           (c) A sole proprietor, partnership, or corporation lawfully 
        using the title or designation in conjunction with the names or 
        designation on July 1, 1992, may continue to do so if otherwise 
        in compliance with the provisions of sections 326.165 to 326.229 
        until December 31, 1999. 
           Subd. 10.  [UNLICENSED CORPORATION; PROHIBITED USE OF 
        TITLE.] No partnership, corporation, or limited liability 
        company or partnership, other than one licensed under sections 
        326.17 326.165 to 326.229, and in compliance with the rules of 
        the board, shall style itself as certified public accountants or 
        licensed public accountants, or use the abbreviation 
        "C.P.A. CPA" or "L.P.A. LPA" in connection with its corporate 
        name.  
           Sec. 9.  Minnesota Statutes 1996, section 326.212, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EMPLOYEES; ASSISTANTS.] Nothing contained 
        in sections 326.17 326.165 to 326.229 shall prohibit any person 
        not a certified public accountant or licensed public accountant 
        from serving as an employee of, or an assistant to, a certified 
        public accountant or licensed public accountant, or 
        partnership or, corporation, or limited liability company or 
        partnership composed of certified public accountants or licensed 
        public accountants, provided that the person shall not issue any 
        accounting or financial statement over the person's name. 
           Sec. 10.  Minnesota Statutes 1996, section 326.212, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PERSONS PREPARING UNAUDITED FINANCIAL 
        STATEMENTS.] Nothing contained in sections 326.165 to 326.229 
        shall prohibit any person, partnership or, corporation, or 
        limited liability company or partnership, not licensed under 
        sections 326.165 to 326.229, from preparing and presenting 
        unaudited financial statements and unaudited schedules on 
        printed forms or the letterheads letterhead of the preparer if 
        they are clearly marked on each page, "unaudited."  Any person 
        or entity who prepares unaudited financial statements and 
        unaudited schedules for a client for a fee is subject to section 
        326.229 and the practice of the person or entity may be 
        disciplined by the board as provided for in section 326.229.  
        The board may discipline a person or entity based on violations 
        of sections 326.165 to 326.229, the board's rules, or 
        misrepresentations made by such person or entity regarding the 
        work the person or entity performed. 
           Sec. 11.  Minnesota Statutes 1996, section 326.212, 
        subdivision 5, is amended to read: 
           Subd. 5.  [TAX RETURNS.] Nothing contained in sections 
        326.165 to 326.229 shall prohibit any person, partnership or, 
        corporation, or limited liability company or partnership, not 
        licensed under sections 326.165 to 326.229, from preparing tax 
        returns. 
           Sec. 12.  Minnesota Statutes 1996, section 326.212, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [MAINTAIN OR SURRENDER LICENSE.] Once licensed, a 
        certified public accountant or licensed public accountant in 
        order to perform any of the services listed in section 326.165, 
        subdivision 2, shall maintain an active license.  
           Sec. 13.  Minnesota Statutes 1996, section 326.22, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ANNUAL LICENSE FEE.] Each person or, 
        partnership, corporation, or limited liability company or 
        partnership to whom a license is issued shall pay a renewal fee 
        at the rate set by the board for such year. 
           Sec. 14.  Minnesota Statutes 1996, section 326.223, is 
        amended to read: 
           326.223 [EQUIVALENCY.] 
           Whenever any statute or rule, city charter, ordinance, or 
        other similar statute or rule of any other political subdivision 
        of the state of Minnesota specifically requires professional 
        services to be performed by a certified public accountant, the 
        requirement shall be construed to mean certified public 
        accountant or licensed public accountant.  
           Sec. 15.  Minnesota Statutes 1996, section 326.228, is 
        amended to read: 
           326.228 [COMPLAINT COMMITTEE.] 
           The board shall establish a complaint committee to 
        investigate, mediate, or initiate administrative or legal 
        proceedings on behalf of the board with respect to complaints 
        filed with or information received by the board alleging or 
        indicating violations of sections 326.165 to 326.229.  The 
        complaint committee shall consist of three members of the board, 
        one of whom shall be a certified public accountant, and one of 
        whom shall be a licensed public accountant.  When the licensed 
        public accountants lose their representation on the board 
        pursuant to section 326.17, the complaint committee shall 
        consist of three members of the board, two of whom shall be 
        certified public accountants. 
           Sec. 16.  Minnesota Statutes 1996, section 326.229, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CEASE AND DESIST ORDERS.] (a) The board, or the 
        complaint committee if authorized by the board, may issue and 
        have served upon a licensee who has previously been subject to a 
        disciplinary order by the board, an unlicensed person or, an 
        unlicensed certificate holder, or a firm an order requiring the 
        licensee, unlicensed person or, unlicensed certificate holder, 
        or firm to cease and desist from the act or practice 
        constituting a violation of the statute, rule, or order.  The 
        order shall be calculated to give reasonable notice of the 
        rights of the licensee, unlicensed person, or unlicensed 
        certificate holder, or firm to request a hearing and shall state 
        the reasons for the entry of the order.  No such order shall be 
        issued until an investigation of the facts has been conducted 
        pursuant to section 214.10. 
           (b) Service of the order is effective when the order is 
        served on the licensee, unlicensed person, unlicensed 
        certificate holder, firm, or counsel of record personally or by 
        certified mail to the most recent address provided to the board 
        for the licensee, unlicensed person, unlicensed certificate 
        holder, firm, or counsel of record.  
           (c) Unless otherwise agreed by the board, or the complaint 
        committee if authorized by the board, and the person requesting 
        the hearing, the hearing shall 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 to whom a cease and desist order is 
        issued fails to appear at the hearing after being duly notified, 
        the person is in default and the proceeding may be determined 
        against that person 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 applicant, licensee, 
        unlicensed certificate holder, or firm to provide to the board a 
        true and complete list of the person'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. 17.  Minnesota Statutes 1996, section 326.229, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ACTIONS AGAINST APPLICANTS, LICENSEES, OR 
        CERTIFICATE HOLDERS.] (a) The board may, by order, deny, refuse 
        to renew, suspend for not more than five years, temporarily 
        suspend, or revoke the application, certificate, or license of a 
        person; censure or reprimand that person; prohibit that person 
        from preparing tax returns or unaudited financial statements; 
        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 applicant, 
        licensee, or certificate holder: 
           (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 the practice of public accounting, providing that the 
        fraudulent, deceptive, or dishonest conduct or acts reflect 
        adversely on the person's ability or fitness to engage in the 
        practice of public accounting; 
           (3) has engaged in conduct or acts that are negligent or 
        otherwise in violation of the standards established by Minnesota 
        Rules, parts 1100.4700 and 1100.4800, where the conduct or acts 
        relate to the practice of public accounting; 
           (4) has been convicted of or, has pled guilty or nolo 
        contendere to, or is sentenced as a result of the commission of 
        a felony or crime, an element of which is dishonesty or fraud, 
        or has been shown to have or admitted to having engaged in acts 
        or practices tending to show that the applicant, licensee, or 
        certificate holder is incompetent or has engaged in conduct 
        reflecting adversely on the person's ability or fitness to 
        engage in the practice of public accounting whether or not a 
        plea was entered or withheld; 
           (5) employed fraud or deception in obtaining a certificate, 
        license, renewal, or reinstatement or in passing all or a 
        portion of the examination; 
           (6) has had the person's public accounting license, 
        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 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, commonwealth, or territory of 
        the United States, in the District of Columbia, or in any 
        foreign country; 
           (7) has had the person's right to practice before any 
        federal, state, or other government agency revoked, suspended, 
        canceled, limited, or not renewed for cause, or has committed 
        unprofessional acts for which the person 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 license or certificate; or 
           (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.  
           (b) In lieu of or in addition to any remedy provided in 
        paragraph (a), the board may require, as a condition of 
        continued licensure, possession of certificate, termination of 
        suspension, reinstatement of license or certificate, 
        examination, or release of examination grades, that the person: 
           (1) submit to a quality review of the person's ability, 
        skills, or quality of work, conducted in such fashion and by 
        such persons, entity, or entities as the board may require; and 
           (2) complete to the satisfaction of the board such 
        continuing professional education courses as the board may 
        specify. 
           (c) Service of the order is effective if the order is 
        served on the applicant, licensee, firm, certificate holder, 
        person, or counsel of record personally or by certified mail to 
        the most recent address provided to the board for the licensee, 
        certificate holder, applicant, person, or counsel of record.  
        The order shall state the reasons for the entry of the order.  
           (d) All hearings required by this subdivision shall be 
        conducted in accordance with chapter 14 except with respect to 
        temporary suspension orders, as provided for in subdivision 5, 
        paragraph (e). 
           Sec. 18.  Minnesota Statutes 1996, section 326.229, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [OTHER ACTIONS AGAINST APPLICANTS, LICENSEES, OR 
        CERTIFICATE HOLDERS.] (a) In addition to the remedies authorized 
        by subdivision 4, the board may enter into an agreement with the 
        applicant, licensee, or certificate holder for corrective action 
        and may unilaterally issue a warning to an applicant, licensee, 
        or certificate holder. 
           (b) The board shall not use agreements for corrective 
        action or warnings in any situation where the applicant, 
        licensee, or certificate holder has been convicted of or pled 
        guilty or nolo contendere to a felony or crime and such felony 
        or crime is the basis of the board's action against the 
        applicant, licensee, or certificate holder; where the conduct of 
        the applicant, licensee, or certificate holder indicates a 
        pattern of repeated violations of subdivision 4, paragraph (a), 
        or the rules of the board; or where the board concludes that the 
        conduct of the applicant, licensee, or certificate holder will 
        not be deterred other than by disciplinary action pursuant to 
        subdivision 3, 4, or 5. 
           (c) 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 applicant, licensee, or 
        certificate holder does not warrant disciplinary action pursuant 
        to subdivision 3, 4, or 5, 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 application, licensee, or certificate 
        holder is de minimis, does not warrant disciplinary action 
        pursuant to subdivision 3, 4, or 5, and does not require 
        corrective action to protect the public. 
           (d) Agreements for corrective action shall not be 
        considered disciplinary action against the person's application, 
        license, or certificate.  However, agreements for corrective 
        action are public data.  Warnings shall not be considered 
        disciplinary action against the person's application, license, 
        or certificate and are private data. 
           Sec. 19.  Minnesota Statutes 1996, section 326.229, 
        subdivision 6, is amended to read: 
           Subd. 6.  [VIOLATION; PENALTIES; COSTS OF PROCEEDING.] (a) 
        The board may impose a civil penalty not to exceed $2,000 per 
        violation upon a person who violates an order, statute, or rule 
        that the board has issued or is empowered to enforce.  
           (b) The board may, in addition, impose a fee to reimburse 
        the board for all or part of the cost of the proceedings, 
        including reasonable investigative costs, resulting in 
        disciplinary or corrective action authorized by this section, 
        the imposition of civil penalties, or the issuance of a cease 
        and desist order.  The fee may be imposed when the board shows 
        that the position of the person who violates a statute, rule, or 
        order that the board has issued or is empowered to enforce is 
        not substantially justified, unless special circumstances make 
        an award unjust, notwithstanding the provisions of Minnesota 
        Rules, part 1400.8401.  The costs include, but are not limited 
        to, the amount paid by the board for services from the office of 
        administrative hearings, attorney and reasonable investigative 
        fees, court reporters, witnesses, reproduction of records, board 
        members' per diem compensation, board staff time, and expense 
        incurred by board members and staff. 
           (c) All hearings required by this subdivision shall be 
        conducted in accordance with chapter 14. 
           Sec. 20.  [INSTRUCTION TO REVISOR.] 
           The revisor shall renumber the definitions in Minnesota 
        Statutes, section 326.165, in alphabetical order, as a separate 
        section and shall correct references to those sections in 
        Minnesota Statutes and Minnesota Rules. 
           Sec. 21.  [REPEALER.] 
           Minnesota Statutes 1996, sections 326.191; 326.21; and 
        326.225, are repealed. 
           Presented to the governor March 27, 1998 
           Signed by the governor March 31, 1998, 10:46 a.m.