2001 Minnesota Statutes

     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 this section due 
 to changes in firm ownership or personnel, after receiving or 
 renewing a permit, shall take corrective action to bring the 
 firm back into 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. 

    HIST: 2001 c 109 art 1 s 7 

*   NOTE:  This section, as added by Laws 2001, chapter 109, 
*article 1, section 7, is effective January 1, 2003.  Laws 2001, 
*chapter 109, article 1, section 19.