Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2001, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 109-S.F.No. 859
An act relating to professions; creating the
Accountancy Act of 2001; authorizing rulemaking;
imposing penalties; amending Minnesota Statutes 2000,
sections 3.972, subdivision 1; 116J.70, subdivision
2a; 214.01, subdivision 3; 319B.02, subdivision 19;
326.53; 367.36, subdivision 1; 412.222; 471.49,
subdivision 10; and 544.42, subdivision 1; proposing
coding for new law as Minnesota Statutes, chapter
326A; repealing Minnesota Statutes 2000, sections
326.165; 326.1655; 326.17; 326.18; 326.19; 326.192;
326.197; 326.20; 326.201; 326.211; 326.212; 326.22;
326.223; 326.224; 326.228; and 326.229.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
REGULATION OF ACCOUNTANCY
Section 1. [TITLE.]
This act may be cited as the "Accountancy Act of 2001."
Sec. 2. [PURPOSE.]
It is the policy of this state, and the purpose of this
act, to promote the reliability of information that is used for
guidance in financial transactions or for accounting for, or
assessing the financial status or performance of, commercial,
noncommercial, and governmental enterprises. The public
interest requires that persons professing special competence in
accountancy or offering assurance as to the reliability or
fairness of presentation of such information must have
demonstrated their qualifications to do so, and that persons who
have not demonstrated and maintained such qualifications, not be
permitted to represent themselves as having such special
competence or to offer such assurance; that the conduct of
persons licensed or registered as having special competence in
accountancy be regulated in all aspects of their professional
work; that a public authority competent to prescribe and assess
the qualifications and to regulate the conduct of licensees and
registrants be established; and that the use of titles that have
a capacity or tendency to deceive the public as to the status or
competence of the persons using such titles be prohibited.
Sec. 3. [326A.01] [DEFINITIONS.]
Subdivision 1. [SCOPE.] When used in this chapter, the
terms in this section have the meanings given.
Subd. 2. [ATTEST.] "Attest" means to provide the following
financial statement services:
(1) an audit or other engagement performed in accordance
with the Statements on Auditing Standards (SAS);
(2) a review of a financial statement performed in
accordance with the Statements on Standards for Accounting and
Review Services (SSARS); and
(3) an examination of prospective financial information
performed in accordance with the Statements on Standards for
Attestation Engagements (SSAE).
Subd. 3. [BOARD.] "Board" means the Minnesota board of
accountancy established under section 326A.02 or its predecessor
under prior law.
Subd. 4. [CERTIFICATE.] "Certificate" means a certificate
as a certified public accountant issued under section 326A.04,
or corresponding provisions of prior law, or a corresponding
certificate as certified public accountant issued after
examination under the law of any other state.
Subd. 5. [CLIENT.] "Client" means a person or entity that
agrees with a licensee, a person registered under section
326A.06, paragraph (b), or the person's or licensee's employers
to receive any professional service.
Subd. 6. [COMPILATION.] "Compilation" means the provision
of a service performed in accordance with Statements on
Standards for Accounting and Review Services (SSARS) that
presents in the form of financial statements information that is
the representation of management or owners without undertaking
to express any assurance on the statements.
Subd. 7. [CPA FIRM.] "CPA Firm" means a sole
proprietorship, a corporation, a partnership, or any other form
of organization issued a permit under section 326A.05.
Subd. 8. [LICENSE.] "License" means a certificate issued
under section 326A.04, a permit issued under section 326A.05, or
a certificate or permit issued under corresponding provisions of
prior law.
Subd. 9. [LICENSEE.] "Licensee" means the holder of a
license.
Subd. 10. [MANAGER.] "Manager" means a manager of a
limited liability company.
Subd. 11. [MEMBER.] "Member" means a member of a limited
liability company.
Subd. 12. [PEER REVIEW.] "Peer review" means a study,
appraisal, or review of one or more aspects of the professional
work of a certificate holder or CPA firm that performs attest or
compilation services, or the professional work of a person
registered under section 326A.06, paragraph (b), by a person or
persons who hold certificates and who are not affiliated with
the certificate holder, CPA firm, or person being reviewed.
Subd. 13. [PERMIT.] "Permit" means a permit to practice as
a CPA firm issued under section 326A.05, or corresponding
provisions of prior law, or under corresponding provisions of
the laws of other states.
Subd. 14. [PROFESSIONAL.] "Professional" means arising out
of or related to the specialized knowledge or skills associated
with certified public accountants or persons registered under
section 326A.06, paragraph (b).
Subd. 15. [REPORT.] "Report," when used with reference to
financial statements, means an opinion, report, or other form of
language that states or implies assurance as to the reliability
of any financial statements and that also includes or is
accompanied by a statement or implication that the person or
firm issuing it has special knowledge or competence in
accounting or auditing. Such a statement or implication of
special knowledge or competence may arise from use by the issuer
of the report of names or titles indicating that the person or
firm is an accountant or auditor, or from the language of the
report itself. The term "report" includes any form of language
that disclaims an opinion when the form of language is
conventionally understood to imply any positive assurance as to
the reliability of the financial statements referred to or
special competence on the part of the person or firm issuing the
language. It includes any other form of language that is
conventionally understood to imply such assurance or such
special knowledge or competence.
Subd. 16. [STATE.] "State" means any state of the United
States, the District of Columbia, Puerto Rico, the U.S. Virgin
Islands, and Guam; except that "this state" means the state of
Minnesota.
Subd. 17. [SUBSTANTIAL EQUIVALENCY.] "Substantial
equivalency" is a determination under section 326A.14 by the
board of accountancy or its designee that the education,
examination, and experience requirements contained in the
statutes and administrative rules of another jurisdiction are
comparable to, or exceed the education, examination, and
experience requirements contained in this chapter or that an
individual CPA's education, examination, and experience
qualifications are comparable to or exceed the education,
examination, and experience requirements contained in this
chapter.
Sec. 4. [326A.02] [STATE BOARD OF ACCOUNTANCY.]
Subdivision 1. [BOARD.] A board of accountancy is created
to carry out the purposes and enforce the provisions of this
chapter. It consists of nine citizens of this state appointed
by the governor. Two must be public members as defined by
section 214.02, and seven must be certified public accountants
under the provisions of this chapter. Effective January 1,
2003, no fewer than five of the certified public accountants
must be owners or employees of a CPA firm that holds a current
permit and provides professional services at the time of
appointment and reappointment. At least two of the seven
certified public accountants at the time of appointment and
reappointment must be owners or employees of a CPA firm that:
(1) holds a current permit;
(2) provides professional services; and
(3) consists of ten or fewer certified public accountants.
Subd. 2. [MEMBERSHIP CONDITIONS.] Membership terms,
compensation of members, removal of members, the filling of
membership vacancies, and fiscal year and reporting requirements
are 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
this chapter and chapter 214.
Any member of the board whose certificate under section
326A.04 is revoked or suspended automatically ceases to be a
member of the board.
Subd. 3. [OFFICERS; PROCEEDINGS.] The board shall elect
one of its number as chair, another as vice-chair, and another
as secretary and treasurer. The officers 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. The board shall meet at such times and places as may
be fixed by the board. Meetings of the board are subject to
chapter 13D. A majority of the board members then in office
constitutes a quorum at any meeting duly called. The board
shall have a seal, which must be judicially noticed. The board
shall retain or arrange for the retention of all applications
and all documents under oath that are filed with the board and
also records of its proceedings, and it shall maintain a
registry of the names and addresses of all licensees and
registrants under this chapter. In any proceeding in court,
civil or criminal, arising out of or founded upon any provision
of this chapter, copies of records of the proceeding certified
as true copies under the seal of the boards shall be admissible
in evidence as tending to prove the contents of the records.
Subd. 4. [POWERS.] The board may issue subpoenas to compel
the attendance of witnesses and the production of documents, to
administer oaths, to take testimony, to cooperate with the
appropriate authorities in other states in investigation and
enforcement concerning violations of this chapter and comparable
acts of other states, and to receive evidence concerning all
matters within the scope of this chapter. In case of
disobedience of a subpoena, the board may invoke the aid of any
court in requiring the attendance and testimony of witnesses and
the production of documentary evidence. The board, its members,
and its agents are immune from personal liability for actions
taken in good faith in the discharge of the board's
responsibilities, and the state shall hold the board, its
members, and its agents harmless from all costs, damages, and
attorneys' fees arising from claims and suits against them with
respect to matters to which such immunity applies. 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 experience, as prescribed
in this chapter.
Subd. 5. [RULES.] The board may adopt rules governing its
administration and enforcement of this chapter and the conduct
of licensees and persons registered under section 326A.06,
paragraph (b), including:
(1) rules governing the board's meetings and the conduct of
its business;
(2) rules of procedure governing the conduct of
investigations and hearings and discipline by the board;
(3) rules specifying the educational and experience
qualifications required for the issuance of certificates and the
continuing professional education required for renewal of
certificates;
(4) rules of professional conduct directed to controlling
the quality and probity of services by licensees, and dealing
among other things with independence, integrity, and
objectivity; competence and technical standards; and
responsibilities to the public and to clients;
(5) rules governing the professional standards applicable
to licensees including adoption of the statements on standards
specified in section 326A.01, subdivision 2, and as developed
for general application by recognized national accountancy
organizations such as the American Institute of Certified Public
Accountants;
(6) rules governing the manner and circumstances of use of
the titles "certified public accountant," "CPA," "registered
accounting practitioner," and "RAP";
(7) rules regarding peer review that may be required to be
performed under provisions of this chapter;
(8) rules on substantial equivalence to implement section
326A.14;
(9) rules regarding the conduct of the certified public
accountant examination;
(10) rules regarding the issuance and renewals of
certificates, permits, and registrations;
(11) rules regarding transition provisions to implement
this chapter;
(12) rules specifying the educational and experience
qualifications for registration, rules of professional conduct,
rules regarding peer review, rules governing standards for
providing services, and rules regarding the conduct and content
of examination for those persons registered under section
326A.06, paragraph (b); and
(13) rules regarding fees for examinations, certificate
issuance and renewal, firm permits, registrations under section
326A.06, paragraph (b), notifications made under section
326A.14, and late processing fees.
Subd. 6. [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 this chapter. The
complaint committee shall consist of three members of the board.
Subd. 7. [EXPENSES OF ADMINISTRATION.] The expenses of
administering this chapter must be paid from appropriations made
to the board.
Sec. 5. [326A.03] [QUALIFICATIONS FOR A CERTIFICATE AS A
CERTIFIED PUBLIC ACCOUNTANT.]
Subdivision 1. [QUALIFICATIONS.] The certificate of
certified public accountant shall be granted to persons of good
moral character who meet the education, experience, and
examination requirements of this section and rules adopted under
it and who apply under section 326A.04.
Good moral character for purposes of this section means
lack of a history of dishonest or felonious acts. The board may
refuse to grant a certificate on the ground of failure to
satisfy this requirement only if there is a substantial
connection between the lack of good moral character of the
applicant and the professional responsibilities of a licensee
and if the finding by the board of lack of good moral character
is supported by clear and convincing evidence. When an
applicant is found to be unqualified for a certificate because
of a lack of good moral character, the board shall furnish the
applicant a statement containing the findings of the board, a
complete record of the evidence upon which the determination was
based, and a notice of the applicant's right of appeal.
Subd. 2. [EDUCATIONAL AND EXPERIENCE REQUIREMENTS TO TAKE
EXAMINATION BEFORE JULY 1, 2006.] Until July 1, 2006, the
examination must be administered by the board only to a
candidate who:
(1) holds a master's degree with a major in accounting from
a college or university that is fully accredited by a recognized
accrediting agency listed with the United States Department of
Education;
(2) holds a baccalaureate degree, with a major in
accounting, from a college or university 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;
(3) holds a baccalaureate degree from a college or
university 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, provided that at least one year of experience of the
type specified in subdivision 8 has been completed;
(4) provides evidence of having completed two or more years
of study with a passing grade average or above from a college,
university, technical college, or a Minnesota licensed private
school 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, provided that at least three years experience of the
type specified in subdivision 8 has been completed; or
(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, provided that at least five years
experience of the type specified in subdivision 8 has been
completed.
Subd. 3. [EDUCATIONAL REQUIREMENTS TO TAKE EXAMINATION ON
OR AFTER JULY 1, 2006.] On or after July 1, 2006, the
examination must be administered by the board only to a
candidate who has a baccalaureate or higher degree, with a major
in accounting or a major in business with accounting emphasis,
or an equivalent education, from a college or university that is
fully accredited by a recognized accrediting agency listed with
the United States Department of Education or an equivalent
accrediting association.
Subd. 4. [EXAMINATION REQUIREMENTS.] (a) The examination
required to be passed as a condition for the granting of a
certificate must be held as often as convenient, in the opinion
of the board, and must test the applicant's knowledge of the
subjects of accounting and auditing, and other related subjects
that the board may specify by rule, including but not limited to
business law and taxation. The time for holding the examination
must be determined by the board and may be changed from time to
time. The board shall prescribe by rule the methods of applying
for and conducting the examination, including methods for
grading and determining a passing grade required of an applicant
for a certificate. However, the board shall to the extent
possible ensure that the examination itself, grading of the
examination, and the passing grades, are uniform with those
applicable in all other states. The board may make such use of
all or any part of the Uniform Certified Public Accountant
Examination and Advisory Grading Service of the American
Institute of Certified Public Accountants and may contract with
third parties to perform administrative services with respect to
the examination that it considers appropriate to assist it in
performing its duties under this paragraph.
(b) The board may charge, or provide for a third party
administering the examination to charge, each applicant a fee.
Subd. 5. [EXPERIENCE REQUIREMENTS FOR CERTIFICATE BEFORE
JULY 1, 2006.] Until July 1, 2006, those persons who have passed
the examination required by this section and who meet all other
requirements for a certificate, including payment of required
fees, must be granted certificates as certified public
accountants, providing that they have completed the following
experience requirements of the type specified in subdivision 8
in addition to any experience already required in subdivision 2:
(1) for those whose educational qualifications meet the
requirements of subdivision 2, clause (1), the experience
requirement is one year;
(2) for those whose educational qualifications meet the
requirements of subdivision 2, clause (2), the experience
requirement is two years;
(3) for those whose educational and experience
qualifications meet the requirements of subdivision 2, clause
(3), the additional required experience is two years;
(4) for those whose educational and experience
qualifications meet the requirements of subdivision 2, clause
(4), the additional required experience is two years; and
(5) for those whose educational and experience
qualifications meet the requirements of subdivision 2, clause
(5), the additional required experience is one year.
Subd. 6. [EXPERIENCE AND EDUCATIONAL REQUIREMENTS FOR
CERTIFICATE ON OR AFTER JULY 1, 2006.] (a) On or after July 1,
2006, those persons who have passed the examination required in
this section must be granted certificates as certified public
accountants provided they certify to the board that they have
completed at least 150 semester or 225 quarter hours at a
college or university that is fully accredited by a recognized
accrediting agency listed with the United States Department of
Education, or an equivalent accrediting association, and have
completed at least one year of experience of the type specified
in paragraph (b).
(b) An applicant for initial issuance of a certificate
under this subdivision shall show that the applicant has had one
year of experience. Acceptable experience includes providing
any type of service or advice involving the use of accounting,
attest, compilation, management advisory, financial advisory,
tax, or consulting skills, as verified by a licensee and meeting
requirements prescribed by the board by rule. Acceptable
experience may be gained through employment in government,
industry, academia, or public practice. Experience as an
auditor in the office of the legislative auditor or state
auditor, as verified by a licensee, shall be acceptable
experience.
Subd. 7. [EQUIVALENT EDUCATION CRITERIA.] The board, in
consultation with the University of Minnesota, the Minnesota
state colleges and universities, private colleges, and private
career schools regulated under chapter 141, shall establish
criteria to assess equivalent education for purposes of
subdivision 3.
Subd. 8. [QUALIFYING EXPERIENCE UNTIL JULY 1, 2006.] Until
July 1, 2006, qualifying experience includes public accounting
experience:
(1) as a staff employee of a certified public accountant,
or a firm;
(2) as an auditor in the office of the legislative auditor
or state auditor, or as an auditor of examiner with any other
agency of government, if the experience, in the opinion of the
board, is equally comprehensive and diversified;
(3) as a self-employed public accountant or as a partner in
a firm; or
(4) in any combination of the foregoing capacities.
Sec. 6. [326A.04] [ISSUANCE AND RENEWAL OF CERTIFICATES,
AND MAINTENANCE OF COMPETENCY.]
Subdivision 1. [ELIGIBILITY.] The board shall grant or
renew certificates to persons who make application and
demonstrate:
(1) that their qualifications, including where applicable
the qualifications prescribed by section 326A.03, are in
accordance with this section; or
(2) that they are eligible under the substantial
equivalency standard in section 326A.14, subdivision 1,
paragraph (b), which requires licensure for those certified
public accountants who establish their principal places of
business in another state. The holder of a certificate issued
under this section may only provide attest services in a CPA
firm that holds a permit issued under section 326A.05.
Subd. 2. [TIMING.] (a) Certificates must be initially
issued and renewed for periods of not more than one year but in
any event must expire on the December 31 following issuance or
renewal. Applications for certificates must be made in the
form, and in the case of applications for renewal between the
dates, specified by the board in rule. The board shall grant or
deny an application no later than 90 days after the application
is filed in proper form. If the applicant seeks the opportunity
to show that issuance or renewal of a certificate was mistakenly
denied, or if the board is unable to determine whether it should
be granted or denied, the board may issue to the applicant a
provisional certificate that expires 90 days after its issuance,
or when the board determines whether or not to issue or renew
the certificate for which application was made, whichever occurs
first.
(b) Certificate holders who do not provide professional
services and do not use the certified public accountant
designation in any manner are not required to renew their
certificates provided they have notified the board as provided
in board rule and comply with the requirements for nonrenewal as
specified in board rule.
Subd. 3. [RESIDENTS OF OTHER STATES.] (a) With regard to
applicants who do not qualify for reciprocity under the
substantial equivalency standard in section 326A.14, subdivision
1, paragraph (b), the board shall issue a certificate to a
holder of a certificate, license, or permit issued by another
state upon a showing that:
(1) the applicant passed the examination required for
issuance of the applicant's certificate with grades that would
have been passing grades at the time in this state;
(2) the applicant had four years of experience outside of
this state of the type described in section 326A.03, subdivision
6, paragraph (b), if application is made on or after July 1,
2006, or section 326A.03, subdivision 8, if application is made
before July 1, 2006; or the applicant meets equivalent
requirements prescribed by the board by rule, after passing the
examination upon which the applicant's certificate was based and
within the ten years immediately preceding the application; and
(3) if the applicant's certificate, license, or permit was
issued more than four years prior to the application for
issuance of an initial certificate under this subdivision, that
the applicant has fulfilled the requirements of continuing
professional education that would have been applicable under
subdivision 4.
(b) As an alternative to the requirements of paragraph (a),
a certificate holder licensed by another state who establishes a
principal place of business in this state shall request the
issuance of a certificate from the board prior to establishing
the principal place of business. The board shall issue a
certificate to the person if the person's individual certified
public accountant qualifications, upon verification, are
substantially equivalent to the certified public accountant
licensure requirements of this chapter.
Subd. 4. [PROGRAM OF LEARNING.] For renewal of a
certificate under this section, 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 accounting or auditing skills, including issuance of
reports on financial statements or of one or more kinds of
management advisory, financial advisory or consulting services,
or the preparation of tax returns or the furnishing of advice on
tax matters. A licensee granted such an exception by the board
must place the word "inactive" 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.
Subd. 5. [FEE.] The board shall charge a fee for each
application for initial issuance or renewal of a certificate
under this section.
Subd. 6. [OTHER STATE LICENSES.] Applicants for initial
issuance or renewal of certificates under this section shall in
their applications list all states in which they have applied
for or hold certificates, licenses, or permits and list any past
denial, revocation, or suspension of a certificate, license, or
permit. Each holder of or applicant for a certificate under
this section shall notify the board in writing, within 30 days
after its occurrence, of any issuance, denial, revocation, or
suspension of a certificate, license, or permit by another state.
Subd. 7. [CERTIFICATES ISSUED BY FOREIGN COUNTRIES.] The
board shall issue a certificate to a holder of a substantially
equivalent foreign country designation, provided that:
(1) the foreign authority that granted the designation
makes similar provision to allow a person who holds a valid
certificate issued by this state to obtain the foreign
authority's comparable designation;
(2) the foreign designation:
(i) was duly issued by a foreign authority that regulates
the practice of public accountancy and the foreign designation
has not expired or been revoked or suspended;
(ii) entitles the holder to issue reports upon financial
statements; and
(iii) was issued upon the basis of educational,
examination, and experience requirements established by the
foreign authority or by law; and
(3) the applicant:
(i) received the designation, based on educational and
examination standards substantially equivalent to those in
effect in this state, at the time the foreign designation was
granted;
(ii) has, within the ten years immediately preceding the
application, completed an experience requirement that is
substantially equivalent to the requirement in section 326A.03,
subdivision 6, paragraph (b), if application is made on or after
July 1, 2006, or section 326A.03, subdivision 8, if application
is made before July 1, 2006, in the jurisdiction that granted
the foreign designation; completed four years of professional
experience in this state; or met equivalent requirements
prescribed by the board by rule; and
(iii) passed a uniform qualifying examination in national
standards and an examination on the laws, regulations, and code
of ethical conduct in effect in this state acceptable to the
board.
Subd. 8. [OTHER JURISDICTIONS IN WHICH FOREIGN APPLICANT
IS LICENSED.] An applicant under subdivision 7 shall in the
application list all jurisdictions, foreign and domestic, in
which the applicant has applied for or holds a designation to
practice public accountancy. Each holder of a certificate
issued under subdivision 7 shall notify the board in writing,
within 30 days after its occurrence, of any issuance, denial,
revocation, or suspension of a designation or commencement of a
disciplinary or enforcement action by any jurisdiction.
Subd. 9. [APPLICATION BY FOREIGN CERTIFICATE HOLDER.] The
board has the sole authority to interpret the application of the
provisions of subdivisions 7 and 8.
Subd. 10. [PEER REVIEW.] The board shall by rule require
as a condition for renewal of a certificate under this section
by any certificate holder who performs compilation services for
the public other than through a CPA firm, that the individual
undergo, no more frequently than once every three years, a peer
review conducted in a manner specified by the board in rule.
The review shall include verification that the individual has
met the competency requirements set out in professional
standards for the services described in this subdivision as set
forth by rule.
Subd. 11. [AUTOMATIC REVOCATION.] The certificates of
persons who fail to renew their certificates for more than two
years after expiration shall be automatically revoked by order
of the board. 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 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, under section 326A.09. This
subdivision does not apply to certified public accountants who
have notified the board that they will not use the CPA
designation in any manner and will not provide professional
services.
Sec. 7. [326A.05] [CPA FIRM PERMITS TO PRACTICE, ATTEST
AND COMPILATION COMPETENCY, AND PEER REVIEW.]
Subdivision 1. [GENERAL.] The board shall grant or renew
permits to practice as a CPA firm to entities that make
application and demonstrate their qualifications in accordance
with this section. A firm must hold a permit issued under this
section in order to provide attest services or to use the title
"CPAs" or "CPA firm."
Subd. 2. [TIMING.] Permits must be initially issued and
renewed for periods of not more than one year but in any event
must expire on December 31 following issuance or renewal.
Applications for permits shall be made in the form, and in the
case of applications for renewal between the dates, as the board
specifies in rule. The board shall grant or deny an application
no later than 90 days after the application is filed in proper
form. If the applicant seeks the opportunity to show that
issuance or renewal of a permit was mistakenly denied or if the
board is not able to determine whether it should be granted or
denied, the board may issue to the applicant a provisional
permit, which expires 90 days after its issuance, or when the
board determines whether or not to issue or renew the permit for
which application was made, whichever occurs first.
Subd. 3. [QUALIFICATIONS.] (a) An applicant for initial
issuance or renewal of a permit to practice under this section
shall comply with the requirements in this subdivision.
(b) Notwithstanding chapter 319B or any other provision of
law, a simple majority of the ownership of the firm, in terms of
financial interests and voting rights of all partners, officers,
shareholders, members, or managers, must belong to holders of
certificates who are licensed in some state, and the partners,
officers, shareholders, members, or managers, whose principal
place of business is in this state, and who perform professional
services in this state, must hold valid certificates issued
under section 326A.04 or the corresponding provision of prior
law. Although firms may include nonlicensee owners, the firm
and its ownership must comply with rules adopted by the board.
The firm shall register all nonlicensee owners with the state
board as set forth by rule.
(c) A CPA firm may include nonlicensee owners provided that:
(1) the firm designates a licensee of this state, who is
responsible for the proper registration of the firm and
identifies that individual to the board;
(2) all nonlicensee owners are active individual
participants in the CPA firm or affiliated entities; and
(3) the firm complies with other requirements imposed by
the board in rule.
(d) An individual licensee who is responsible for
supervising attest or compilation services and signs or
authorizes someone to sign the accountant's report on the
financial statements on behalf of the firm, shall meet the
competency requirements set out in the professional standards
for such services.
(e) An individual licensee who signs or authorizes someone
to sign the accountants' report on the financial statements on
behalf of the firm shall meet the competency requirement of
paragraph (d).
Subd. 4. [INITIAL ISSUANCE OR RENEWAL.] An applicant for
initial issuance or renewal of a permit to practice under this
section shall register each office of the firm within this state
with the board and to show that all attest and compilation
services rendered in this state are under the charge of a person
holding a valid certificate, or the corresponding provision of
prior law.
Subd. 5. [FEES.] The board shall charge a fee for each
application for initial issuance or renewal of a permit under
this section.
Subd. 6. [OTHER JURISDICTIONS IN WHICH APPLICANT HOLDS A
PERMIT.] An applicant for initial issuance or renewal of permits
under this section shall in the applicant's application list all
states in which the applicant has applied for or holds permits
as a CPA firm and list any past denial, revocation, or
suspension of a permit by any other state. Each holder of or
applicant for a permit under this section shall notify the board
in writing, within 30 days after its occurrence, of any change
in the identities of partners, officers, shareholders, members,
or managers whose principal place of business is in this state,
any change in the number or location of offices within this
state, any change in the identity of the persons in charge of
such offices, and any issuance, denial, revocation, or
suspension of a permit by any other state.
Subd. 7. [CORRECTIVE ACTIONS, REVOCATION.] Firms that fall
out of compliance with the provisions of the section due to
changes in firm ownership or personnel, after receiving or
renewing a permit, shall take corrective action to bring the
firm back in to compliance as quickly as possible. Failure to
bring the firm back into compliance within a reasonable period
as defined by the board rule shall result in the suspension or
revocation of the firm permit.
Subd. 8. [PEER REVIEW; RULES.] (a) The board shall by rule
require as a condition to renewal of permits under this section,
that applicants undergo, no more frequently than once every
three years, peer reviews conducted in a manner specified by the
board. The review must include a verification that individuals
in the firm who are responsible for supervising attest and
compilation services and who sign or authorize someone to sign
the accountant's report on the financial statements on behalf of
the firm meet the competency requirements set out in the
professional standards for such services. In addition, the
rules must meet the requirements in paragraphs (b) to (d).
(b) The rules must be adopted reasonably in advance of the
time when they first become effective.
(c) The rules must include reasonable provision for
compliance by an applicant showing that it has, within the
preceding three years, undergone a peer review that is a
satisfactory equivalent to peer review generally required
pursuant to this subdivision.
(d) The rules must require, with respect to peer reviews
contemplated by paragraph (c), that they be subject to oversight
by an oversight body established or sanctioned by board rule.
This body shall periodically report to the board on the
effectiveness of the review program under its charge, and
provide to the board a listing of firms that have participated
in a peer review program that is satisfactory to the board.
(e) The rules must require, with respect to peer reviews
contemplated by paragraph (c), that the peer review processes be
operated and documents maintained in a manner designed to
preserve confidentiality, and that neither the board nor any
third party, other than the oversight body, has access to
documents furnished or generated in the course of the review.
The applicant shall submit to the board reports and letters
received at the conclusion of the peer review process as
provided for in board rule.
Subd. 9. [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 of this state.
Cooperative auditing services shall comply with all
requirements imposed on CPA firms and the board's rules
governing firms.
Sec. 8. [326A.06] [LICENSED PUBLIC ACCOUNTANTS AND
REGISTERED ACCOUNTING PRACTITIONERS.]
(a) All licensed public accountants (LPA) who are actively
licensed by the state board on December 31, 2002, shall be
issued a certified public accountant certificate. LPA's 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.
(b) By July 1, 2004, the board shall implement a voluntary
registration of accounting practitioners. The board shall
prescribe by rule the limitations of practice, educational
preparation, examination, registration, fees, peer review, and
continuing education requirements for the registration. The
board shall consult with the University of Minnesota, the
Minnesota state colleges and universities, the Minnesota
association of private post-secondary schools, the private
college council, the Minnesota association of public
accountants, and other organizations as appropriate in the
implementation of this section.
Sec. 9. [326A.07] [APPOINTMENT OF SECRETARY OF STATE AS
AGENT.]
Application by a person or a firm not a resident of this
state for a certificate or a permit shall constitute appointment
of the secretary of state as the applicant's agent upon whom
process may be served in any action or proceeding against the
applicant arising out of any transaction or operation connected
with or incidental to services performed by the applicant while
a licensee within this state.
Sec. 10. [326A.08] [ENFORCEMENT.]
Subdivision 1. [BASIS FOR CONDUCTING INVESTIGATIONS.] If
the board, or the complaint committee if authorized by the
board, has a reasonable basis to believe that a person or firm
has engaged in or is about to engage in a violation of a
statute, rule, or order that the board has issued or is
empowered to enforce, the board, or the complaint committee if
authorized by the board, may proceed as described in this
section. The board may, upon receipt of a complaint or other
information suggesting violations of this chapter or of the
rules of the board, conduct investigations to determine whether
there is reasonable basis to institute proceedings under this
section against any person or firm for such violations. The
investigation is not a prerequisite to such proceedings in the
event that a determination can be made without investigation.
Subd. 2. [HEARINGS CONDUCTED UNDER CHAPTER 14.] Except as
otherwise described in this section, all hearings shall be
conducted in accordance with chapter 14.
Subd. 3. [LEGAL ACTION.] (a) When necessary to prevent an
imminent violation of a statute, rule, or order that the board
has issued or is empowered to enforce, the board, or the
complaint committee if authorized by the board, may bring an
action in the name of the state in the district court in Ramsey
county, when necessary to prevent imminent harm to the public,
or in any county in which jurisdiction is proper to enjoin the
act or practice and to enforce compliance with the statute,
rule, or order. Upon a showing that a person or firm has
engaged in or is about to engage in an act or practice
constituting a violation of a statute, rule, or order that the
board has issued or is empowered to enforce, a permanent or
temporary injunction, restraining order, or other appropriate
relief shall be granted.
(b) For purposes of injunctive relief under this
subdivision, irreparable harm exists when the board shows that a
person or firm has engaged in or is about to engage in an act or
practice constituting a violation of a statute, rule, or order
that the board has issued or is empowered to enforce.
(c) Injunctive relief granted under paragraph (a) does not
relieve an enjoined person or firm from criminal prosecution
from a competent authority or from action by the board pursuant
to subdivisions 4 to 7 with respect to the person's or firm's
certificate, permit, registration, or practice privileges
granted under section 326A.14 or application for examination,
certificate, registration, permit, or renewal or notification
for practice privileges granted under section 326A.14.
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 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 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.
(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.
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;
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;
(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 plea
was entered or withheld;
(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, or other government agency 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; or
(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).
(b) In lieu of or in addition to any remedy provided in
paragraph (a), 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 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. 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 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.
Subd. 6. [PROCEDURE FOR TEMPORARY SUSPENSION OF PERMIT,
REGISTRATION, OR CERTIFICATE OR PRACTICE PRIVILEGES.] (a) When
the board, or the complaint committee if authorized by the
board, issues a temporary suspension order, the suspension is in
effect upon service of a written order on the person, firm, or
counsel of record, specifying the statute, rule, or order
violated. The order remains in effect until the board issues a
final order in the matter after a hearing or upon agreement
between the board and the person or firm.
(b) The order may prohibit the person or firm from
providing professional services in whole or in part, as the
facts may require, and may condition the end of such suspension
on compliance with a statute, rule, or order that the board has
issued or is empowered to enforce.
(c) The order must set forth the rights to hearing
contained in this section and must state the reasons for the
entry of order.
(d) Within ten days after service of the order, the person
or firm may request a hearing in writing. The board shall hold
a hearing before its own members within five working days of a
receipt of a request for hearing or within five working days of
receipt of a request for hearing on the sole issue of whether
there is a reasonable basis to continue, modify, or lift the
temporary suspension. This hearing is not subject to chapter
14. Evidence presented by the board or the person or firm shall
be in affidavit form only. The person, firm, or counsel of
record may appear for oral argument.
(e) Within five working days after the hearing, the board
shall issue its order and, if the suspension is continued,
schedule a contested case hearing within 30 days after issuance
of the order. The administrative law judge shall issue a report
within 30 days after closing of the contested case hearing
record, notwithstanding the provisions of Minnesota Rules, part
1400.8100, subpart 3. The board shall issue a final order
within 30 days after receipt of that report.
Subd. 7. [VIOLATION; PENALTIES; COSTS OF PROCEEDING.] (a)
The board may impose a civil penalty not to exceed $2,000 per
violation upon a person or firm that 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 or firm that 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 must be
conducted in accordance with chapter 14.
Subd. 8. [PERSONS AND ENTITIES SUBJECT TO DISCIPLINE.] Any
person or entity who prepares or reports on financial statements
or schedules for a client for a fee is subject to this section
and the practice of the person or entity may be disciplined by
the boards as provided for in this section. The board may
discipline a person or entity based on violations of this
chapter, the board's rules, or misrepresentations made by the
person or entity regarding the work the person or entity
performed.
Subd. 9. [NOTIFICATION OF OTHER STATES.] In any case where
the board renders a decision imposing discipline against a
person or firm, the board shall examine its records to determine
whether the person or firm holds a certificate or a permit in
any other state. If so, the board shall notify the board of
accountancy of the other state of its decision, by mail, within
45 days of the decision becoming final.
Sec. 11. [326A.09] [REINSTATEMENT.]
The board may reinstate a suspended, revoked, or
surrendered certificate, registration, or permit or suspended,
revoked, or surrendered practice privileges upon petition of the
person or firm holding or formerly holding the registration,
permit, or certificate, or practice privileges. The board may,
in its sole discretion, require that the person or firm submit
to the board evidence of having obtained up to 120 hours of
continuing professional education credits that would have been
required had the person or firm held a registration,
certificate, permit, or practice privileges continuously. The
board may, in its sole discretion, place any other conditions
upon reinstatement of a suspended, revoked, or surrendered
certificate, permit, registration, or of practice privileges
that it finds appropriate and necessary to ensure that the
purposes of this chapter are met. No suspended certificate,
registration, permit, or practice privileges may be reinstated
until the former holder, or person with practice privileges has
completed one-half of the suspension.
Sec. 12. [326A.10] [UNLAWFUL ACTS.]
(a) Only a licensee 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, 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 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 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
"CPAs," 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 holds a valid permit
issued under 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 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. 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), 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 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) 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.
(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 financial
statements 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 in standard
form 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 in standard form 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) Notwithstanding other provisions of this section,
persons preparing unaudited financial statements under
corresponding provisions of prior law shall be permitted to
perform compilation services until six months after the board
adopts rules under section 326A.06.
Sec. 13. [326A.11] [SINGLE ACT EVIDENCE OF PRACTICE.]
In any action brought under section 326A.08, evidence of
the commission of a single act prohibited by this chapter is
sufficient to justify a penalty, injunction, restraining order,
or conviction, respectively, without evidence of a general
course of conduct.
Sec. 14. [326A.12] [CONFIDENTIAL COMMUNICATIONS.]
(a) Except by permission of the client for whom a licensee
performs services or the heirs, successors, or personal
representatives of the client, a licensee shall not voluntarily
disclose information communicated to the licensee by the client
relating to and in connection with services rendered to the
client by the licensee. Nothing in this section may be
construed to prohibit:
(1) the disclosure of information required to be disclosed
by the standards of the public accounting profession in
reporting on the examination of financial statements; or
(2) disclosures in court proceedings, in investigations or
proceedings under section 326A.08, in ethical investigations
conducted by private professional organizations, in the course
of peer reviews, to other persons active in the organization
performing services for that client on a need-to-know basis, or
to persons in the entity who need this information for the sole
purpose of assuring quality control.
(b) This section also applies to persons registered under
section 326A.06, paragraph (b).
Sec. 15. [326A.13] [WORKING PAPERS; CLIENTS' RECORDS.]
(a) Subject to the provisions of section 326A.12, all
statements, records, schedules, working papers, and memoranda
made by a licensee or a partner, shareholder, officer, director,
member, manager, or employee of a licensee, incident to, or in
the course of, rendering services to a client while a licensee,
except the reports submitted by the licensee to the client and
except for records that are part of the client's records, remain
the property of the licensee in the absence of an express
agreement between the licensee and the client to the contrary.
No statement, record, schedule, working paper, or memorandum may
be sold, transferred, or bequeathed, without the consent of the
client or the client's personal representative or assignee, to
anyone other than one or more surviving partners, stockholders,
members or new partners, new stockholders, new members of the
licensee, or any combined or merged firm or successor in
interest to the licensee. Nothing in this section may be
construed as prohibiting any temporary transfer of workpapers or
other material necessary in the course of carrying out peer
reviews or as otherwise interfering with the disclosure of
information pursuant to section 326A.12.
(b) A licensee shall furnish to a client or former client,
upon request and reasonable notice:
(1) a copy of the licensee's working papers, to the extent
that the working papers include records that would ordinarily
constitute part of the client's records and are not otherwise
available to the client; and
(2) any accounting or other records belonging to, or
obtained from or on behalf of, the client that the licensee
removed from the client's premises or received for the client's
account. The licensee may make and retain copies of such
documents of the client when they form the basis for work done
by the licensee.
(c) Nothing in this section requires a licensee to keep any
work paper beyond the period prescribed in any other applicable
statute.
(d) This section also applies to persons registered under
section 326A.06, paragraph (b).
Sec. 16. [326A.14] [SUBSTANTIAL EQUIVALENCY.]
Subdivision 1. [REQUIREMENTS.] (a) An individual whose
principal place of business is not in this state and who has a
valid certificate or license as a certified public accountant
from any state which, upon verification, is in substantial
equivalence with the certified public accountant licensure
requirements of this chapter shall be presumed to have
qualifications substantially equivalent to this state's
requirements and shall have all the privileges of certificate
holders and licensees of this state without the need to obtain a
certificate or permit. However, such individuals shall notify
the board of their intent to enter the state under this
provision as provided for in board rule and pay the required fee.
(b) An individual whose principal place of business is not
in this state and who has a valid certificate or license as a
certified public accountant from any state whose certified
public accountant licensure qualifications, upon verification,
are not substantially equivalent with the licensure requirements
of this chapter shall be presumed to have qualifications
substantially equivalent to this state's requirements and shall
have all the privileges of certificate holders and licensees of
this state without the need to obtain a certificate or permit if
the individual obtains verification, as specified in board rule,
that the individual's qualifications are substantially
equivalent to the licensure requirements of this chapter. Such
individuals shall notify the board of their intent to enter the
state under this provision as provided for in board rule and pay
the required fee.
(c) Any licensee of another state exercising the privilege
afforded under this section consents, as a condition of the
grant of this privilege:
(1) to the personal and subject matter jurisdiction and
disciplinary authority of the board;
(2) to comply with this chapter and the board's rules; and
(3) to the appointment of the state board that issued the
license as the licensee's agent upon whom process may be served
in any action or proceeding by this board against the licensee.
Subd. 2. [USE OF TITLE IN ANOTHER STATE.] A licensee of
this state offering or rendering services or using the CPA title
in another state is subject to the same disciplinary action in
this state for which the licensee would be subject to discipline
for an act committed in the other state. The board shall
investigate any complaint made by the board of accountancy of
another state.
Sec. 17. [TRANSITIONAL PROVISIONS FOR BOARD MEMBERS.]
Notwithstanding Minnesota Statutes, section 326A.02,
members of the board of accountancy who were appointed to the
board prior to January 1, 2003, may complete their terms.
Appointments made on or after January 1, 2003, are governed by
Minnesota Statutes, section 326A.02.
Sec. 18. [REPEALER.]
Minnesota Statutes 2000, sections 326.165; 326.1655;
326.17; 326.18; 326.19; 326.192; 326.197; 326.20; 326.201;
326.211; 326.212; 326.22; 326.223; 326.224; 326.228; and
326.229, are repealed.
Sec. 19. [EFFECTIVE DATE.]
This article is effective January 1, 2003.
ARTICLE 2
CONFORMING CHANGES
Section 1. Minnesota Statutes 2000, section 3.972,
subdivision 1, is amended to read:
Subdivision 1. [PUBLIC ACCOUNTANT.] For the purposes of
this section, "public accountant" means a certified public
accountant, or certified public accounting firm, or a licensed
public accountant licensed by the board of accountancy
under sections 326.17 to 326.229 chapter 326A.
Sec. 2. Minnesota Statutes 2000, section 116J.70,
subdivision 2a, is amended to read:
Subd. 2a. [LICENSE; EXCEPTIONS.] "Business license" or
"license" does not include the following:
(1) any occupational license or registration issued by a
licensing board listed in section 214.01 or any occupational
registration issued by the commissioner of health pursuant to
section 214.13;
(2) any license issued by a county, home rule charter city,
statutory city, township, or other political subdivision;
(3) any license required to practice the following
occupation regulated by the following sections:
(i) abstracters regulated pursuant to chapter 386;
(ii) accountants regulated pursuant to chapter 326 326A;
(iii) adjusters regulated pursuant to chapter 72B;
(iv) architects regulated pursuant to chapter 326;
(v) assessors regulated pursuant to chapter 270;
(vi) athletic trainers regulated pursuant to chapter 148;
(vii) attorneys regulated pursuant to chapter 481;
(viii) auctioneers regulated pursuant to chapter 330;
(ix) barbers regulated pursuant to chapter 154;
(x) beauticians regulated pursuant to chapter 155A;
(xi) boiler operators regulated pursuant to chapter 183;
(xii) chiropractors regulated pursuant to chapter 148;
(xiii) collection agencies regulated pursuant to chapter
332;
(xiv) cosmetologists regulated pursuant to chapter 155A;
(xv) dentists, registered dental assistants, and dental
hygienists regulated pursuant to chapter 150A;
(xvi) detectives regulated pursuant to chapter 326;
(xvii) electricians regulated pursuant to chapter 326;
(xviii) mortuary science practitioners regulated pursuant
to chapter 149A;
(xix) engineers regulated pursuant to chapter 326;
(xx) insurance brokers and salespersons regulated pursuant
to chapter 60A;
(xxi) certified interior designers regulated pursuant to
chapter 326;
(xxii) midwives regulated pursuant to chapter 147D;
(xxiii) nursing home administrators regulated pursuant to
chapter 144A;
(xxiv) optometrists regulated pursuant to chapter 148;
(xxv) osteopathic physicians regulated pursuant to chapter
147;
(xxvi) pharmacists regulated pursuant to chapter 151;
(xxvii) physical therapists regulated pursuant to chapter
148;
(xxviii) physician assistants regulated pursuant to chapter
147A;
(xxix) physicians and surgeons regulated pursuant to
chapter 147;
(xxx) plumbers regulated pursuant to chapter 326;
(xxxi) podiatrists regulated pursuant to chapter 153;
(xxxii) practical nurses regulated pursuant to chapter 148;
(xxxiii) professional fund raisers regulated pursuant to
chapter 309;
(xxxiv) psychologists regulated pursuant to chapter 148;
(xxxv) real estate brokers, salespersons, and others
regulated pursuant to chapters 82 and 83;
(xxxvi) registered nurses regulated pursuant to chapter
148;
(xxxvii) securities brokers, dealers, agents, and
investment advisers regulated pursuant to chapter 80A;
(xxxviii) steamfitters regulated pursuant to chapter 326;
(xxxix) teachers and supervisory and support personnel
regulated pursuant to chapter 125;
(xl) veterinarians regulated pursuant to chapter 156;
(xli) water conditioning contractors and installers
regulated pursuant to chapter 326;
(xlii) water well contractors regulated pursuant to chapter
103I;
(xliii) water and waste treatment operators regulated
pursuant to chapter 115;
(xliv) motor carriers regulated pursuant to chapter 221;
(xlv) professional firms regulated under chapter 319B;
(xlvi) real estate appraisers regulated pursuant to chapter
82B;
(xlvii) residential building contractors, residential
remodelers, residential roofers, manufactured home installers,
and specialty contractors regulated pursuant to chapter 326;
(4) any driver's license required pursuant to chapter 171;
(5) any aircraft license required pursuant to chapter 360;
(6) any watercraft license required pursuant to chapter
86B;
(7) any license, permit, registration, certification, or
other approval pertaining to a regulatory or management program
related to the protection, conservation, or use of or
interference with the resources of land, air, or water, which is
required to be obtained from a state agency or instrumentality;
and
(8) any pollution control rule or standard established by
the pollution control agency or any health rule or standard
established by the commissioner of health or any licensing rule
or standard established by the commissioner of human services.
Sec. 3. Minnesota Statutes 2000, section 214.01,
subdivision 3, is amended to read:
Subd. 3. [NON-HEALTH-RELATED LICENSING BOARD.]
"Non-health-related licensing board" means the board of teaching
established pursuant to section 122A.07, the board of barber
examiners established pursuant to section 154.22, the board of
assessors established pursuant to section 270.41, the board of
architecture, engineering, land surveying, landscape
architecture, geoscience, and interior design established
pursuant to section 326.04, the board of accountancy established
pursuant to section 326.17, the board of electricity established
pursuant to section 326.241, the private detective and
protective agent licensing board established pursuant to section
326.33, the board of accountancy established pursuant to section
326A.02, the board of boxing established pursuant to section
341.01, and the peace officer standards and training board
established pursuant to section 626.841.
Sec. 4. Minnesota Statutes 2000, section 319B.02,
subdivision 19, is amended to read:
Subd. 19. [PROFESSIONAL SERVICES.] "Professional services"
means services of the type required or permitted to be furnished
by a professional under a license, registration, or certificate
issued by the state of Minnesota to practice medicine and
surgery under sections 147.01 to 147.22, as a physician
assistant pursuant to sections 147A.01 to 147A.27, chiropractic
under sections 148.01 to 148.105, registered nursing under
sections 148.171 to 148.285, optometry under sections 148.52 to
148.62, psychology under sections 148.88 to 148.98, dentistry
and dental hygiene under sections 150A.01 to 150A.12, pharmacy
under sections 151.01 to 151.40, podiatric medicine under
sections 153.01 to 153.25, veterinary medicine under sections
156.001 to 156.14, architecture, engineering, surveying,
landscape architecture, geoscience, and certified interior
design under sections 326.02 to 326.15, accountancy
under sections 326.17 to 326.229 chapter 326A, or law under
sections 481.01 to 481.17, or under a license or certificate
issued by another state under similar laws. Professional
services includes services of the type required to be furnished
by a professional pursuant to a license or other authority to
practice law under the laws of a foreign nation.
Sec. 5. Minnesota Statutes 2000, section 326.53, is
amended to read:
326.53 [VIOLATIONS; PENALTY PROVISIONS.]
Subdivision 1. [GENERALLY.] (1) Any violation of the
provisions of sections 326.02 to 326.229 shall be chapter 326A
is a gross misdemeanor.
(2) Every person violating any of the provisions of
sections 326.523 to 326.526, or assisting in such violation,
shall, upon conviction thereof, be punished by a fine not
exceeding $3,000 or, in default of the payment of such fine, by
imprisonment in the county jail for not more than one year. In
the case of a corporation, the violation of these sections shall
be deemed to be also that of the individual directors, officers,
or agents of such corporation who have assisted in such
violation, or who have authorized, ordered, or done the acts or
omissions constituting, in whole or in part, such violation;
and, upon conviction thereof, any such directors, officers, or
agents shall be punished by fine or imprisonment as herein
provided.
Sec. 6. Minnesota Statutes 2000, section 367.36,
subdivision 1, is amended to read:
Subdivision 1. [TRANSITION; AUDIT.] In a town in which
option D is adopted, the incumbent treasurer shall continue in
office until the expiration of the term. Thereafter the duties
of the treasurer prescribed by law shall be performed by the
clerk who shall be referred to as the clerk-treasurer. If the
offices of clerk and treasurer are combined and the town's
annual revenue is more than $100,000, the town board shall
provide for an annual audit of the town's financial affairs by
the state auditor or a public accountant in accordance with
minimum audit procedures prescribed by the state auditor. If
the offices of clerk and treasurer are combined and the town's
annual revenue is $100,000 or less, the town board shall provide
for an audit of the town's financial affairs by the state
auditor or a public accountant in accordance with minimum audit
procedures prescribed by the state auditor at least once every
five years, which audit shall be for a one-year period to be
determined at random by the person conducting the audit. Upon
completion of an audit by a public accountant, the public
accountant shall forward a copy of the audit to the state
auditor. For purposes of this subdivision, "public accountant"
means a certified public accountant, or a certified public
accounting firm, or a licensed public accountant, all licensed
by the board of accountancy under sections 326.17 to 326.229
chapter 326A.
Sec. 7. Minnesota Statutes 2000, section 412.222, is
amended to read:
412.222 [PUBLIC ACCOUNTANTS IN STATUTORY CITIES.]
The council of any city may employ public accountants on a
monthly or yearly basis for the purpose of auditing, examining,
and reporting upon the books and records of account of such
city. For the purpose of this section, "public accountant"
means a certified public accountant, or a certified public
accounting firm, or a licensed public accountant, all licensed
by the board of accountancy under sections 326.17 to 326.23
chapter 326A. All expenditures for these purposes shall be
within the statutory limits upon tax levies in such cities.
Sec. 8. Minnesota Statutes 2000, section 471.49,
subdivision 10, is amended to read:
Subd. 10. [PUBLIC ACCOUNTANT.] "Public accountant" means a
certified public accountant, or a certified public accounting
firm, or a licensed public accountant, all licensed by the board
of accountancy under sections 326.17 to 326.229 chapter 326A.
Sec. 9. Minnesota Statutes 2000, section 544.42,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For purposes of this section:
(1) "professional" means a licensed attorney or an
architect, certified public accountant, engineer, land surveyor,
or landscape architect licensed or certified under sections
326.02 to 326.229 chapter 326 or 326A; and
(2) "action" includes an original claim, cross-claim,
counterclaim, or third-party claim. An action does not include
a claim for damages requiring notice pursuant to section 604.04.
Sec. 10. [EFFECTIVE DATE.]
This article is effective January 1, 2003.
Presented to the governor May 14, 2001
Signed by the governor May 17, 2001, 10:25 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes