2007 Minnesota Statutes

326A.05 PERMIT TO PRACTICE AS A CPA FIRM.
    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.
History: 2001 c 109 art 1 s 7