PRINTER'S NO. 2361
No. 1765 Session of 2007
INTRODUCED BY STURLA, READSHAW, GERGELY, JOSEPHS, HENNESSEY AND YOUNGBLOOD, JULY 17, 2007
REFERRED TO COMMITTEE ON PROFESSIONAL LICENSURE, JULY 17, 2007
AN ACT 1 Amending the act of May 26, 1947 (P.L.318, No.140), entitled, as 2 amended, "An act relating to the practice of public 3 accounting; providing for the examination, education and 4 experience requirements for certification of certified public 5 accountants and for the licensing of certified public 6 accountants, public accountants and firms; requiring 7 continuing education and peer review; providing for the 8 organization and ownership of firms and for the procedures 9 and grounds for discipline and reinstatement of licensees; 10 prescribing the powers and duties of the State Board of 11 Accountancy and the Department of State; providing for 12 ownership of working papers and confidentiality; regulating 13 the professional responsibility of licensees; defining 14 unlawful acts and acts not unlawful; providing penalties; and 15 repealing existing laws," further providing for the title, 16 for definitions, for the State Board of Accountancy, for 17 examinations and certificates, for education, for experience 18 and for reciprocity; providing for substantial equivalency; 19 and further providing for fees, for licensing, for peer 20 review, for grounds for discipline, for reinstatement, for 21 ownership of working papers, for unlawful acts and for lawful 22 acts. 23 The General Assembly of the Commonwealth of Pennsylvania 24 hereby enacts as follows: 25 Section 1. The title of the act of May 26, 1947 (P.L.318, 26 No.140), known as the CPA Law, reenacted and amended December 8, 27 1976 (P.L.1280, No.286) and amended December 4, 1996 (P.L.851, 28 No.140), is amended to read:
1 AN ACT 2 Relating to the practice of public accounting; providing for the 3 examination, education and experience requirements for 4 certification of certified public accountants and for the 5 licensing of certified public accountants, public accountants 6 and firms; providing for substantial equivalency; requiring 7 continuing education and peer review; providing for the 8 organization and ownership of firms and for the procedures 9 and grounds for discipline and reinstatement of licensees; 10 prescribing the powers and duties of the State Board of 11 Accountancy and the Department of State; providing for 12 ownership of working papers and confidentiality; regulating 13 the professional responsibility of licensees; defining 14 unlawful acts and acts not unlawful; providing penalties; and 15 repealing existing laws. 16 Section 2. The definitions of "attest activity" and 17 "certified public accountant" in section 2 of the act, amended 18 December 4, 1996 (P.L.851, No.140), are amended and the section 19 is amended by adding definitions to read: 20 Section 2. Definitions.--The following words and phrases 21 when used in this act shall have the meanings ascribed to them 22 in this section unless the context clearly indicates otherwise: 23 "AICPA." The American Institute of Certified Public 24 Accountants. 25 "Attest activity." [An examination, audit, review, 26 compilation or other agreed-upon procedure with respect to 27 financial information, together with the issuance of a report 28 expressing or disclaiming an opinion or other assurance on the 29 information.] The provision of any of the following financial 30 statement services together with the issuance of a report 20070H1765B2361 - 2 -
1 expressing or disclaiming an opinion or other assurance on the 2 information: 3 (1) an audit or other engagement performed in accordance 4 with the Statements on Auditing Standards (SAS); 5 (2) a review or compilation of a financial statement 6 performed in accordance with the Statements on Standards for 7 Accounting and Review Services (SSARS); 8 (3) an engagement performed in accordance with the 9 Statements on Standards for Attestation Engagements (SSAE); or 10 (4) any other engagement performed in accordance with 11 attestation standards established by an organization granted 12 authority by statute or regulation to establish attestation 13 standards, such as the American Institute of Certified Public 14 Accountants or the Public Company Accounting Oversight Board. 15 * * * 16 "Certificate." A certificate as "certified public 17 accountant" issued under this act or a corresponding certificate 18 as certified public accountant issued after examination under 19 the law of another jurisdiction. 20 "Certified public accountant." An individual to whom a 21 certificate [of certified public accountant] has been issued 22 [under the laws of this Commonwealth or another state]. 23 * * * 24 "Compilation." A service performed in accordance with 25 Statements on Standards for Accounting and Review Services 26 (SSARS) that presents, in the form of financial statements, 27 information that is the representation of management or the 28 owners without undertaking to express any assurance on the 29 statements. 30 * * * 20070H1765B2361 - 3 -
1 "Engagement review." A peer review process which provides 2 the reviewer with a reasonable basis for expressing limited 3 assurance that: 4 (1) the financial statements or information and the related 5 accountant's report on the accounting, review and attestation 6 engagements submitted for review conform with the requirements 7 of professional standards in all material respects; and 8 (2) the reviewed firm's documentation conforms with the 9 requirements of Statements on Standards for Accounting and 10 Review Services (SSARS) and the Statements on Standards for 11 Attestation Engagements (SSAE) applicable to those engagements 12 in all material respects. 13 * * * 14 "NASBA." The National Association of State Boards of 15 Accountancy. 16 "PCAOB." The Public Company Accounting Oversight Board. 17 * * * 18 "Principal place of business." The office location 19 designated by a licensee for purposes of substantial equivalency 20 and reciprocity. 21 * * * 22 "SAS." The Statements on Auditing Standards or any similar 23 professional standard which supersedes such statements. 24 "SSAE." The Statements on Standards for Attestation 25 Engagements or any similar professional standard which 26 supersedes such statements. 27 "SSARS." The Statements on Standards for Accounting and 28 Review Services or any similar professional standard which 29 supersedes such statements. 30 "Substantial equivalency" or "substantially equivalent." A 20070H1765B2361 - 4 -
1 determination by the board that: 2 (1) the education, experience and examination requirements 3 contained in the statutes and regulations of another 4 jurisdiction are comparable to or exceed the education, 5 experience and examination requirements contained in this act; 6 or 7 (2) a certified public accountant's education, experience 8 and examination qualifications are comparable to or exceed the 9 education, experience and examination requirements contained in 10 this act. 11 "System review." A peer review process which provides the 12 reviewer with a reasonable basis for expressing an opinion on 13 whether, during the year under review: 14 (1) the reviewed firm's system of quality control for its 15 accounting and auditing practice has been designed in accordance 16 with quality control standards established by the American 17 Institute of Certified Public Accountants (AICPA); and 18 (2) is being complied with to provide the firm with 19 reasonable assurance of conforming with professional standards 20 in all material respects. 21 Section 3. Sections 2.3(a), 3 and 3.1 of the act, amended 22 December 4, 1996 (P.L.851, No.140), are amended to read: 23 Section 2.3. State Board of Accountancy.--(a) The State 24 Board of Accountancy shall consist of fifteen members, one of 25 whom shall be the Commissioner of Professional and Occupational 26 Affairs in the Department of State or a designee, one of whom 27 shall be the Director of the Bureau of Consumer Protection in 28 the Office of Attorney General or his designee, and the 29 remaining thirteen of whom shall be appointed by the Governor, 30 subject to the consent of the Senate, as follows: 20070H1765B2361 - 5 -
1 (1) [Eight] Nine members shall be certified public 2 accountants, all of whom are licensees and at least six of whom 3 are actively engaged in the practice of public accounting as 4 their principal occupation at the time of their appointment. Two 5 of the members who are certified public accountants shall be 6 appointed from the eastern part of the State, two from the 7 western part, two from the central part, and [two] the remainder 8 from any part of the State. At least two of the members who are 9 certified public accountants shall be actively engaged at the 10 time of their appointment in the practice of public accounting 11 with firms that have five or fewer licensees participating in 12 the firm's practice. 13 (2) Three members shall be persons who are not affiliated in 14 any manner with the profession who shall represent the public at 15 large. 16 (3) [Two members shall be public accountants who are 17 licensees engaged in the practice of public accounting as their 18 principal occupation at the time of their appointment. The 19 number of public accountant members shall be reduced by one and 20 the number of certified public accountant members increased by 21 one when the number of public accountants who are licensees 22 falls below five hundred for the first time.] One member shall 23 be a public accountant who is a licensee engaged in the practice 24 of public accounting as the member's principal occupation at the 25 time of appointment. The [remaining] public accountant member 26 shall be eliminated and the number of certified public 27 accountant members increased by one when the number of public 28 accountants who are licensees falls below fifty for the first 29 time. [A decrease in the number of members of the board who are 30 required to be public accountants] The elimination of the public 20070H1765B2361 - 6 -
1 accountant member, as provided in this clause, shall not have 2 the effect of shortening the term of [an] the incumbent public 3 accountant member of the board. 4 * * * 5 Section 3. General Powers of the Board.--(a) The Board 6 shall have the power: 7 (1) To provide for, regulate and approve the issuance of a 8 certificate of certified public accountant to any person (a) who 9 meets the requirements for the issuance of a certificate in 10 section 3.1(e) of this act; or (b) who meets the requirements 11 for the issuance of a certificate by reciprocity in section 5 or 12 5.1 of this act. 13 (2) With respect to substantial equivalency, to do all of 14 the following: 15 (i) To provide for a determination of substantial 16 equivalency. 17 (ii) To regulate individuals practicing in this Commonwealth 18 under substantial equivalency. 19 (iii) To revoke, suspend or otherwise restrict the right of 20 an individual to practice in this Commonwealth under substantial 21 equivalency. This subparagraph includes assessing civil 22 penalties and other disciplinary measures in the case of 23 individuals practicing in this Commonwealth under substantial 24 equivalency when those individuals violate a provision of this 25 act or a regulation of the board. 26 (iv) To assess fees associated with substantial equivalency. 27 (v) To keep a record of the names of individuals, the 28 license numbers for all jurisdictions of individuals in which 29 the individual is authorized to practice public accounting and 30 the principal place of business of individuals practicing in 20070H1765B2361 - 7 -
1 this Commonwealth under substantial equivalency. 2 (vi) To provide a mechanism through which individuals 3 practicing in this Commonwealth under substantial equivalency 4 shall give notice to the board of their intent to enter this 5 Commonwealth in order to practice under substantial equivalency. 6 (vii) To adopt, promulgate and enforce rules and regulations 7 necessary to carry out the provisions of this act relating to 8 substantial equivalency. 9 (3) To contract with a professional testing organization for 10 the preparation and administration of the examination, in 11 accordance with section 812.1(a) of the act of April 9, 1929 12 (P.L.177, No.175), known as "The Administrative Code of 1929," 13 and to establish prior to the administration of each examination 14 an appropriate minimum passing score, in keeping with the 15 purposes of this act. 16 (4) To keep a record showing the names and the places of 17 business of persons to whom a certificate of certified public 18 accountant has been issued under this act or prior laws and all 19 other persons registered or holding licenses under this act or 20 prior laws. The department shall furnish copies of such record 21 to the public upon request and may establish a reasonable fee 22 for such copies which shall not exceed the cost of reproduction. 23 (5) To revoke, suspend, limit or otherwise restrict the 24 certificate or license of any certified public accountant or the 25 registration or license of any public accountant or the license 26 of any firm under this act, to censure or publicly reprimand the 27 holder of any certificate, registration or license, to require 28 completion of general or a specific number of continuing 29 professional education courses, to require more frequent peer 30 review or other remedial action and to impose civil penalties as 20070H1765B2361 - 8 -
1 provided in section 16 for violation of this act. 2 (6) To collect fees as provided for in this act and to 3 submit annually to the department an estimate of the financial 4 requirements of the board for its administrative, investigative, 5 legal and miscellaneous expenses. 6 (7) To arrange for assistance in the performance of its 7 duties, to administer and enforce the laws of this Commonwealth 8 relating to certification, registration, licensing and practice 9 by certified public accountants, public accountants and firms 10 and to instruct and require its agents to seek an injunction, or 11 bring a prosecution for a violation of this act. 12 (8) To keep minutes and records of all its transactions and 13 proceedings. To the extent required by the act of June 21, 1957 14 (P.L.390, No.212), referred to as the Right-to-Know Law, the 15 department shall furnish copies of such minutes and records to 16 the public upon request and may establish a reasonable fee for 17 such copies which shall not exceed the cost of reproduction. 18 (9) To become a member of the National Association of State 19 Boards of Accountancy, or a similar organization, and pay such 20 dues as said association shall establish and to send members of 21 the board and staff as delegates to the meetings of that 22 association and defray their expenses. 23 (10) To adopt, promulgate and enforce rules and regulations 24 consistent with the provisions of this act establishing 25 requirements of continuing education and peer review to be met 26 by certified public accountants, public accountants and firms as 27 a condition for renewal of biennial licenses to engage in the 28 practice of public accounting in this Commonwealth. Such rules 29 and regulations shall include, but not be limited to, analysis 30 of continuing education records by a consultant whose analysis 20070H1765B2361 - 9 -
1 shall cover licensee forms and records of continuing education 2 sponsors. The analysis shall be designed to determine compliance 3 with all continuing education regulations of the board, 4 including attendance of licensees, qualifications of sponsors 5 and qualifications of courses for credit. 6 (11) To promulgate and amend rules of professional conduct, 7 uniformly applicable to certified public accountants and public 8 accountants, appropriate to establish and maintain a high 9 standard of integrity, objectivity and dignity by certified 10 public accountants, public accountants and firms. 11 (12) To adopt, promulgate and enforce such administrative 12 rules and regulations not inconsistent with this act, or other 13 acts, as are necessary and proper to carry into effect the 14 provisions of this act. 15 (15) To submit annually to the House and Senate 16 Appropriations Committees, not later than fifteen days after the 17 Governor has submitted his budget to the General Assembly, a 18 copy of the budget request for the upcoming year that the board 19 previously submitted to the department. 20 (16) To engage consultants as may be deemed necessary to 21 carry out and enforce the provisions of this act. 22 (b) The board shall not require a photograph as part of an 23 application for a certificate of certified public accountant. 24 Section 3.1. Examination and Issuance of Certificate.--(a) 25 An individual shall be permitted to take the examination for the 26 certificate of certified public accountant if the individual: 27 [(1) At the time the individual first sits for the 28 examination: 29 (i) is a resident of this Commonwealth; 30 (ii) is enrolled in or has graduated from a college or 20070H1765B2361 - 10 -
1 university in this Commonwealth; or 2 (iii) is employed in this Commonwealth under the supervision 3 of a licensee.] 4 (2) Has attained the age of eighteen years. 5 (3) Is of good moral character. 6 (4) Meets the education requirements of section 4 of this 7 act. 8 (b) The examination [shall be held at least twice in each 9 calendar year and simultaneously in at least two counties of 10 this Commonwealth and shall be a written examination in business 11 law and professional responsibilities, auditing, accounting and 12 reporting, and financial accounting and reporting.] may be 13 administered in either written or computerized form. The 14 examination shall test the applicant's knowledge and skills 15 required for performance as certified public accountant. The 16 examination shall include the subject areas of accounting, 17 auditing, reporting professional responsibility and such related 18 knowledge and skills as the board may require. The time and 19 location for holding the examination shall be determined by the 20 board. The board may use all parts of the Uniform Certified 21 Public Accountants' examination and [Advisory Grading Service] 22 designated grading service of the [American Institute of 23 Certified Public Accountants] AICPA to assist in performing its 24 duties hereunder. 25 (c) Subject to such regulations as the board may adopt 26 governing reexaminations, a candidate shall be entitled to 27 retake the examination. 28 (d) An individual who has previously taken an examination 29 for a certificate of certified public accountant under the 30 provisions of a prior law of this Commonwealth shall continue to 20070H1765B2361 - 11 -
1 be permitted to take the examination and receive a certificate 2 subject to such prior provisions and applicable regulations. 3 (e) A certificate of certified public accountant shall be 4 issued by the board upon application by an individual who has 5 passed the examination and meets the experience requirements 6 provided for in section 4.1 of this act. 7 Section 4. Section 4 of the act, amended December 4, 1996 8 (P.L.851, No.140) and May 9, 1997 (P.L.145, No.9), is amended to 9 read: 10 Section 4. Education Requirements.--(a) Before an 11 individual is permitted to take the examination, the board shall 12 be satisfied that[, except as provided in subsection (b),] he 13 has: 14 (1) graduated with a baccalaureate degree from a board- 15 approved college or university [approved at the time of 16 graduation by the Department of Education] and also completed at 17 least a total of twenty-four semester credits, which credits 18 shall be in accounting and auditing, business law, finance or 19 tax subjects of a content satisfactory to the board, not 20 necessarily as a part of his undergraduate work; 21 (2) graduated with a Master's Degree or other post-graduate 22 degree from a board-approved college or university [approved at 23 the time of graduation by the Department of Education] and 24 completed at least a total of twenty-four semester credits, 25 which credits shall be in accounting and auditing, business law, 26 finance or tax subjects of a content satisfactory to the board, 27 not necessarily as part of his undergraduate or graduate work; 28 or 29 [(3) within two years of the effective date of this clause, 30 graduated with a baccalaureate degree, Master's Degree or other 20070H1765B2361 - 12 -
1 post-graduate degree from a college or university approved at 2 the time of graduation by the Department of Education with 3 subjects of a content satisfactory to the board which meet or 4 exceed the education requirement for licensure as of January 1, 5 1996; or] 6 (4) graduated with a baccalaureate or higher degree from a 7 board-approved college or university [approved at the time of 8 graduation by the Department of Education] and completed a total 9 of one hundred fifty semester credits of post-secondary 10 education, including at least a total of twenty-four semester 11 credits of accounting and auditing, business law, finance or tax 12 subjects of a content satisfactory to the board, and an 13 additional twelve semester credits in accounting, auditing and 14 tax subjects of a content satisfactory to the board, not 15 necessarily as part of his undergraduate or graduate work. 16 (b.1) Beginning on January 1, 2012, before an individual who 17 has taken the examination pursuant to subsection (a)(1) or (2) 18 may be issued a certificate of certified public accountant under 19 section 3.1(e) of this act, the board shall be satisfied that 20 the individual has satisfied the requirements of subsection 21 (a)(4). However, this provision shall not apply to an individual 22 who successfully completed one or more parts of the examination 23 prior to January 1, 2012. 24 [(g) The board shall permit an applicant taking the 25 examination for the first time within one year after the 26 effective date of this subsection to take the examination during 27 the final term, semester or quarter of the school year in which 28 he will graduate, if it is reasonably expected that he will 29 fulfill the educational requirements of subsection (a) and 30 receive the required degree within ninety days after the date of 20070H1765B2361 - 13 -
1 the examination.] 2 Section 5. Sections 4.1 and 5 of the act, amended or added 3 December 4, 1996 (P.L.851, No.140), are amended to read: 4 Section 4.1. Experience Requirements.--(a) An individual 5 shall be issued the certificate of certified public accountant 6 under section 3.1(e) of this act after the individual has 7 complied with the following experience requirements: 8 (1) An individual taking the examination on the basis of 9 having satisfied the education requirements in section 4(a)(1) 10 of this act shall have completed at least two years of 11 experience[.], including not less than eight hundred hours of 12 attest activity. 13 (2) An individual taking the examination on the basis of 14 having satisfied the education required in section 4(a)(2) of 15 this act shall need only one year of qualifying experience[.], 16 including not less than four hundred hours of attest activity. 17 (3) Beginning on January 1, 2000, an individual taking the 18 examination on the basis of having satisfied the education 19 required in section 4(a)(4) of this act shall need only one year 20 of qualifying experience[.], including not less than four 21 hundred hours of attest activity. 22 (4) Beginning on January 1, 2012, an individual who, at the 23 time of application for a certificate of certified public 24 accountant, has satisfied the education requirements in section 25 4(a)(4) of this act shall need only one year of qualifying 26 experience, including not less than four hundred hours of attest 27 activity. 28 (b) The experience required under subsection (a) must: 29 (1) [Be in public accounting or as an internal auditor or an 30 auditor with a unit of Federal, State or local government.] With 20070H1765B2361 - 14 -
1 regard to attest activity, have been acquired: 2 (i) In public accounting; 3 (ii) as an internal auditor, provided the internal audit 4 function reports to an independent board or similar body 5 responsible for the oversight of the financial reporting 6 process; or 7 (iii) as an auditor with a unit of Federal, State or local 8 government. 9 (2) Be of a caliber satisfactory to the board. 10 [(3) Satisfy the requirements of subsection (d).] 11 (4) Have been supervised by an individual who is currently 12 licensed to practice public accounting as a certified public 13 accountant or public accountant in this Commonwealth or another 14 state. 15 (c) Individuals [taking] who first sat for the examination 16 [for the first time] after January 1, 2000, but before January 17 1, 2012, must complete the experience required by this section 18 within one hundred twenty months preceding the date of 19 application for a certificate of certified public accountant 20 under section 3.1(e) of this act. Individuals who first sat for 21 the examination after January 1, 2012, must complete the 22 experience required by this section with sixty months preceding 23 the date of application for a certificate of certified public 24 accountant. Individuals [taking] who first sat for the 25 examination before January 1, 2000, need not attain the 26 experience required by this section within any particular period 27 of time. 28 [(d) The experience required under subsection (a)(1) must 29 include not less than eight hundred hours of attest activity, 30 and the experience required under subsection (a)(2) or (4) must 20070H1765B2361 - 15 -
1 include not less than four hundred hours of attest activity.]
2 Section 5. Certificates Issued by Domestic Reciprocity.--(a)
3 Without requiring the examination otherwise required under
4 section 3.1(e) of this act, the board may, in its discretion,
5 issue a certificate of certified public accountant to a holder
6 of a certificate of certified public accountant then in full
7 force and effect issued by any other state following passage of
8 [a written] an examination if the applicant shall submit
9 evidence satisfactory to the board that he:
10 (1) possesses the general qualifications specified in
11 section 3.1(a) of this act, has passed the [written] examination
12 required to practice as a certified public accountant under the
13 laws of the other state, meets the continuing education
14 requirements specified in section 8.2(b) of this act and has the
15 experience required under section 4.1 of this act to receive the
16 certificate in this Commonwealth; or
17 (2) has passed the [written] examination required to
18 practice as a certified public accountant under the laws of the
19 other state and has held a certificate and license to practice
20 public accounting for the immediately preceding five years in
21 another state.
22 (b) An applicant for a certificate under this section shall
23 list in the application all states and foreign jurisdictions in
24 which the applicant has applied for or holds a designation or
25 certificate to practice public accounting.
26 (c) Each holder of a certificate issued under this section
27 shall notify the board in writing within thirty days after its
28 occurrence of any issuance, denial, revocation or suspension of
29 his designation, certificate or license to practice public
30 accounting or the commencement of a disciplinary or enforcement
20070H1765B2361 - 16 -
1 action against him or his firm by any state or foreign 2 jurisdiction. 3 Section 6. The act is amended by adding sections to read: 4 Section 5.2. Substantial Equivalency.--(a) An individual 5 who holds current, valid and unexpired credentials from the 6 licensing authority of another jurisdiction authorizing the 7 individual to practice public accounting and who does not apply 8 to practice in this Commonwealth under section 5, 5.1 or under a 9 temporary practice public accounting permit may apply to 10 practice in this Commonwealth under this section. 11 (b) Before authorizing the individual to practice in this 12 Commonwealth under substantial equivalency, the board shall 13 determine whether the individual holds qualifications 14 substantially equivalent to those required of individuals 15 holding a certificate of certified public accountant issued by 16 the board. In making its determination, the board may utilize 17 the National Qualification Appraisal Service of the NASBA. 18 (c) In addition to the determination under subsection (b), 19 before authorizing the individual to practice in this 20 Commonwealth under substantial equivalency, the board shall: 21 (1) Verify the individual holds current, valid and unexpired 22 credentials issued by the licensing authority of another 23 jurisdiction authorizing the individual to practice public 24 accounting. 25 (2) Require the individual to apply for authorization to 26 practice in this Commonwealth under substantial equivalency. The 27 application shall provide notice of the individual's intent to 28 enter this Commonwealth and shall include the following 29 information: 30 (i) The name of the individual. 20070H1765B2361 - 17 -
1 (ii) A listing of the license numbers and jurisdictions in 2 which the individual holds current, valid and unexpired 3 credentials authorizing the individual to practice public 4 accounting. 5 (iii) The individual's principal place of business. 6 (iv) Any other information deemed appropriate by the board. 7 (3) Require the individual to pay a fee. 8 (d) The board shall approve the individual's application for 9 authorization to practice in this Commonwealth under substantial 10 equivalency if: 11 (1) The individual's qualifications are substantially 12 equivalent to those qualifications required of individuals 13 holding certificates of certified public accountant issued by 14 the board. 15 (2) The individual pays the fee. 16 (3) The individual completes the application. 17 (e) The authorization to practice in this Commonwealth under 18 substantial equivalency shall expire at the end of the current 19 biennial license renewal period, but may be renewed for 20 subsequent biennial license renewal periods. A fee shall be 21 required for each biennial renewal. 22 (f) The board's approval of the individual's application for 23 authorization to practice in this Commonwealth under substantial 24 equivalency shall constitute consent of the individual to: 25 (1) The exercise of personal and subject matter jurisdiction 26 of the courts of this Commonwealth and the board over the 27 individual. 28 (2) The disciplinary authority of the board over the 29 individual. 30 (3) Comply with the provisions of this act and regulations 20070H1765B2361 - 18 -
1 of the board. 2 (4) The appointment of the licensing authority which issued 3 the individual's credentials authorizing the individual to 4 practice public accounting as the individual's agent upon whom 5 process may be served in any action or proceeding instituted by 6 the board against the individual. 7 (5) Notify the board in writing within 30 days if the 8 individual moves his principal place of business to this 9 Commonwealth. In such a case, the individual's authorization to 10 practice public accounting in this Commonwealth under 11 substantial equivalency shall be revoked. 12 (6) Notify the board immediately in writing if the 13 individual's credentials authorizing the individual to practice 14 public accounting in any jurisdiction have been: 15 (i) Suspended or revoked. 16 (ii) Subject to disciplinary action. 17 (iii) Allowed to lapse or have otherwise become invalid. 18 (f.1) In the case of subsection (f)(6)(i) or (iii), the 19 individual's authorization to practice in this Commonwealth 20 under substantial equivalency shall be revoked. 21 (g) The board shall investigate any complaint made by the 22 licensing authority of another jurisdiction against an 23 individual authorized to practice in this Commonwealth under 24 substantial equivalency. The board shall cooperate with any 25 investigation or prosecution of an individual authorized to 26 practice in this Commonwealth under substantial equivalency 27 instituted by the licensing authority of another jurisdiction. 28 Section 5.3. Substantial Equivalency for Commonwealth 29 Licensees.--(a) A licensee who practices public accounting in 30 another jurisdiction under substantial equivalency shall be 20070H1765B2361 - 19 -
1 subject to disciplinary action in this Commonwealth for conduct 2 committed in the other jurisdiction if the conduct: 3 (1) subjects the licensee to discipline in the other 4 jurisdiction; or 5 (2) would subject the licensee to discipline in this 6 Commonwealth if it had occurred in this Commonwealth. 7 (b) The board shall investigate any complaint against a 8 licensee by the licensing authority of another jurisdiction 9 where the licensee is practicing public accounting under 10 substantial equivalency. 11 Section 7. Sections 8.8(e), 8.9(a) and (d) and 9.1 of the 12 act, amended or added December 4, 1996 (P.L.851, No.140), are 13 amended to read: 14 Section 8.8. Licensing of Firms.--* * * 15 (e) Notwithstanding any other provision of law, a qualified 16 nonlicensee may own an equity interest in a firm if all of the 17 following conditions are met: 18 (1) All of the qualified nonlicensees owning equity 19 interests in the firm shall not: 20 (i) own in the aggregate equity interests in the firm 21 entitling them to cast more than [one-third] forty-nine percent 22 of the votes on any issue or to receive more than [one-third] 23 forty-nine percent of any dividend or other distribution of 24 profits or assets of the firm; or 25 (ii) constitute more than [one-third] forty-nine percent in 26 number of the owners of equity interests in the firm. 27 (2) The qualified nonlicensee shall not hold himself out as 28 a certified public accountant or public accountant. 29 (3) The qualified nonlicensee shall be permitted to 30 designate or refer to himself as a principal, owner, officer, 20070H1765B2361 - 20 -
1 member or shareholder of the firm. The qualified nonlicensee may 2 also use such other titles as may be authorized by the 3 regulations of the board. 4 (4) The qualified nonlicensee shall not: 5 (i) have pleaded guilty to, entered a plea of nolo 6 contendere to or been found guilty or been convicted of a felony 7 under the laws of this Commonwealth or any other jurisdiction; 8 or 9 (ii) be in violation of any regulation of the board 10 regarding the character or conduct of a qualified nonlicensee 11 who is the owner of an equity interest in a firm. 12 (5) The participation of the qualified nonlicensee in the 13 business of the firm must be the principal occupation of the 14 individual and shall be in the nature of providing services to 15 the firm or clients of the firm and not solely as an investor or 16 in another commercial or passive capacity. 17 (6) The qualified nonlicensee has graduated with a 18 baccalaureate or higher degree from a college or university 19 approved at the time of graduation by the Department of 20 Education. 21 (7) The qualified nonlicensee shall comply with all 22 applicable provisions of this act and the regulations of the 23 board. 24 * * * 25 Section 8.9. Peer Review.--(a) As a condition for granting 26 a firm a renewal license, or an initial license in the case of a 27 firm that has previously been engaged in practice in another 28 jurisdiction, the board shall require that the firm undergo a 29 peer review in accordance with this section unless the firm 30 meets one of the exemptions in subsection (g). [The firm shall 20070H1765B2361 - 21 -
1 submit to the board with its license application a letter from 2 the organization administering the firm's most recent peer 3 review stating the date on which the peer review was completed.] 4 The initial or renewal license application of a firm that does 5 not meet one of those exemptions shall include a certification 6 that the firm is in compliance with this section and shall state 7 the name of the organization administering the firm's most 8 recent peer review, the date of acceptance of that peer review 9 and the period covered by that peer review. The board shall not 10 require submittal of the letter of acceptance, peer review 11 report, letter of comment, letter of response or working papers 12 related to the peer review process[.], but the board may require 13 the organization administering the firm's most recent peer 14 review to confirm the date of acceptance and the period covered 15 by that peer review. As used in this section, the term "firm" 16 includes, but is not limited to, a sole practitioner. 17 * * * 18 (d) (1) The peer review of a firm that performs one or more 19 audits of historical financial statements or examinations of 20 prospective financial information shall [include an onsite] be a 21 system review, including a study and evaluation of a 22 representative selection of audit, examination, review and 23 compilation reports, the financial information upon which those 24 reports were based and the associated working papers. The 25 [onsite] system review shall include additional procedures 26 relating to the firm's system of quality control sufficient to 27 provide the reviewer with a reasonable basis upon which to issue 28 a peer review report. 29 (2) The peer review of a firm that performs no audit or 30 examination engagements but does perform one or more review 20070H1765B2361 - 22 -
1 engagements shall be required only to be an [offsite] engagement 2 review, including a study and evaluation of a representative 3 selection of reports issued by the firm and the financial 4 information upon which those reports were based; but, if such a 5 firm elects to have [an onsite] a system review, that review 6 shall also be acceptable. The [offsite] engagement review shall 7 [not be required to] include a study of the associated working 8 papers [but shall include] and procedures and inquiries 9 sufficient to provide the reviewer with a reasonable basis upon 10 which to issue a peer review report. 11 (3) A firm that does not perform any audits or reviews, 12 regardless of whether or not the firm performs compilations, 13 shall be exempt from the requirement to undergo a peer review to 14 the extent provided in subsection (g)(2). 15 * * * 16 Section 9.1. Grounds for Discipline.--(a) In accordance 17 with the procedure provided in section 9 of this act, the board 18 may revoke, suspend, limit or otherwise restrict the certificate 19 of a certified public accountant or the registration of a public 20 accountant, may revoke, suspend, limit or otherwise restrict any 21 license [issued under this act] or any authorization to practice 22 under substantial equivalency, may censure or publicly reprimand 23 the holder of any certificate, registration [or], license or 24 authorization to practice under substantial equivalency, may 25 require completion of general or a specific number of continuing 26 professional education courses or may require more frequent peer 27 review or other remedial action for any one or any combination 28 of the following causes: 29 (1) Fraud or deceit in obtaining a certificate of certified 30 public accountant [or in obtaining registration under this act 20070H1765B2361 - 23 -
1 or], in obtaining a license [to practice under this act.], or in 2 obtaining authorization to practice under substantial 3 equivalency. 4 (2) Dishonesty, fraud or gross negligence in the practice of 5 public accounting. 6 (3) Violation of any of the provisions of section 12 of this 7 act. 8 (4) Violation of a rule of professional conduct promulgated 9 by the board under the authority granted by this act. 10 (5) Pleading guilty to, entering a plea of nolo contendere 11 to or being found guilty of a felony under any Federal or State 12 law or the laws of any foreign jurisdiction. 13 (6) Pleading guilty to, entering a plea of nolo contendere 14 to or being found guilty of any crime, an element of which is 15 dishonesty or fraud under any Federal or State law or the laws 16 of any foreign jurisdiction. 17 (6.1) Pleading guilty to, entering a plea of nolo contendere 18 to or being found guilty of violating any Federal or State 19 revenue law or the revenue laws of any foreign jurisdiction. 20 (7) Cancellation, revocation, suspension or refusal to renew 21 his authority to practice as a certified public accountant or 22 public accountant by any other state or foreign jurisdiction for 23 any cause other than failure to pay a registration or other fee 24 in such other state or foreign jurisdiction. 25 (8) Suspension or revocation of the right to practice before 26 any Federal or State governmental agency. 27 (10) Failure of certified public accountant or public 28 accountant to furnish evidence of completion of the requirements 29 for continuing education under section 8.2 of this act or to 30 meet any conditions with respect to continuing education that 20070H1765B2361 - 24 -
1 the board may have ordered in respect to such certified public 2 accountant or public accountant under that section. 3 (12) Failure of a firm or sole proprietorship to satisfy the 4 peer review requirements in section 8.9 of this act. 5 (13) Failure of a firm to satisfy any of the organizational 6 requirements in section 8.8(d) of this act. 7 (14) Conduct that brings the profession of public accounting 8 into disrepute or that lowers public esteem for the profession. 9 (15) Violation of an order of the board. 10 (16) Engaging in unprofessional conduct. Discipline may be 11 imposed under this clause whether or not actual injury or loss 12 to a client is established. 13 (17) Conduct by a licensee practicing in another 14 jurisdiction under substantial equivalency of the conduct either 15 subjects the licensee to discipline in the other jurisdiction or 16 would subject the licensee to discipline in this Commonwealth if 17 the conduct had occurred in this Commonwealth. 18 (b) The fact that a certified public accountant or public 19 accountant is on inactive status under section 8.2(a.1) of this 20 act or that a person does not hold a current license for any 21 reason shall not limit or otherwise affect the power of the 22 board to discipline him or it as provided in subsection (a). 23 (c) For the purposes of this section only, "unprofessional 24 conduct" means: 25 (1) undertaking to perform professional services that the 26 certified public accountant, public accountant or firm cannot 27 reasonably expect to complete with professional competence; 28 (2) failure to exercise due professional care in the 29 performance of professional services; 30 (3) failure to adequately plan and supervise the performance 20070H1765B2361 - 25 -
1 of professional services; 2 (4) failure to obtain sufficient data to afford a reasonable 3 basis for conclusions or recommendations in relation to any 4 professional services performed; or 5 (5) failure to comply with any standard promulgated by any 6 recognized public or private standard-setting body that is 7 applicable to the professional service being performed. 8 Section 8. Section 9.2 of the act, amended December 4, 1996 9 (P.L.851, No.140) and May 9, 1997 (P.L.145, No.9), is amended to 10 read: 11 Section 9.2. Reinstatement.--(a) Except as provided in 12 subsection (b), upon application in writing and after hearing 13 pursuant to notice, the board may reinstate or modify the 14 suspension of any authorization to practice in this Commonwealth 15 under substantial equivalency or any license to practice which 16 has been suspended. Reinstatement shall not be granted under 17 this subsection: 18 (1) To an individual unless he demonstrates that he has 19 completed the biennial continuing education requirements that he 20 would have been required to complete during the immediately 21 preceding reporting period if his license had not been 22 suspended. This paragraph shall not apply to an individual who 23 is authorized to practice in this Commonwealth under substantial 24 equivalency. 25 (2) Unless the person seeking reinstatement pays the current 26 biennial licensing fee plus a reinstatement fee. 27 (b) An individual whose license or authority to practice in 28 this Commonwealth under substantial equivalency has been 29 suspended for more than five years shall not be eligible to 30 apply for reinstatement of the license or authority to practice 20070H1765B2361 - 26 -
1 in this Commonwealth under substantial equivalency, but instead 2 must take the examination and apply for a certificate of 3 certified public accountant in accordance with section 3.1 of 4 this act. 5 (c) Unless ordered to do so by a court, the board shall not 6 reinstate the authority of an individual authorized to practice 7 in this Commonwealth under substantial equivalency, the 8 certificate of a person to practice as a certified public 9 accountant or the registration of a person to practice as a 10 public accountant which has been revoked. A person whose 11 certification or registration has been revoked may take the 12 examination and apply for a certificate in accordance with 13 section 3.1 of this act not earlier than five years after his 14 certificate or registration was revoked if he desires to resume 15 the practice of public accounting. 16 (d) A person whose license to practice has expired for 17 failure to make biennial registration or who has been on the 18 inactive roll under section 8.2(a.1) of this act may have the 19 license reinstated upon compliance with the following: 20 (1) In the case of an individual, presentation to the board 21 of satisfactory evidence of having completed eighty hours of 22 continuing education in programs approved by the board under 23 section 8.2(d) of this act within two years preceding the date 24 of the application for reinstatement. 25 (2) Payment of the current biennial licensing fee plus a 26 reinstatement fee. 27 Section 9. Section 11 of the act is amended by adding a 28 subsection to read: 29 Section 11. Ownership of Working Papers.--* * * 30 (c) Except as provided by law other than this act, a 20070H1765B2361 - 27 -
1 licensee shall keep working papers and other materials described 2 in this section for seven years. 3 Section 10. Sections 12 and 13 of the act, amended December 4 4, 1996 (P.L.851, No.140), are amended to read: 5 Section 12. Unlawful Acts.--(a) It is unlawful for any 6 person to hold himself out as or otherwise use the title or 7 designation "certified public accountant," or the abbreviation 8 "CPA," or any other title, designation, words, letters or 9 abbreviation tending to indicate that the person is a certified 10 public accountant or engaged in the practice of public 11 accounting unless the person has received or has been notified 12 in writing by the board that he has qualified to receive a 13 certificate of certified public accountant issued by this 14 Commonwealth, which is not revoked or suspended. This subsection 15 shall not apply to an individual authorized to practice in this 16 Commonwealth under substantial equivalency. 17 (b) It is unlawful for any person to hold himself out or 18 otherwise use the title "certified public accountant," "public 19 accountant" or any abbreviation thereof, or the letters "CPA" or 20 "PA" by virtue of any certificate, registration or license 21 illegally or fraudulently obtained by the person, or issued 22 unlawfully or through any fraudulent representation or deceit, 23 or misstatement of material fact or fraudulent concealment of a 24 material fact made or induced or aided or abetted by the person. 25 (c) It is unlawful for any partnership, corporation or other 26 association to hold itself out as or otherwise use the title or 27 designation "certified public accountant" or "public accountant" 28 or the abbreviation "CPA" or "PA," or any other title, 29 designation, words, letters or abbreviation tending to indicate 30 that the partnership, corporation or other association is 20070H1765B2361 - 28 -
1 composed of or includes certified public accountants or public 2 accountants unless the partnership, corporation or other 3 association holds a current license under section 8.8 of this 4 act. 5 (f) Except as provided in this subsection or in subsections 6 (a) and (c), it is unlawful for any person to use a title that 7 includes the word "certified" as a part thereof, or any other 8 title or designation likely to be confused with "certified 9 public accountant," or any title or designation implying or 10 connoting accreditation by any jurisdiction for the practice of 11 any type of bookkeeping, accounting, auditing, tax or other 12 professional practice related thereto, or to use any 13 abbreviation of such title or designation. It is not a violation 14 of this subsection for an individual: 15 (1) except as provided in clause (2), to use a title or 16 designation that includes the word "accredited" or "certified" 17 or an abbreviation of such a title or designation if the title 18 or designation has been conferred by a private organization 19 after evaluation of the individual's credentials or 20 qualifications and if when the title or designation is used on 21 the individual's stationery it is accompanied by a statement 22 that it has been conferred by an organization not affiliated 23 with the Federal or any State government; or 24 (2) to use the designation "certified financial planner" or 25 an abbreviation of that designation if the designation has been 26 conferred by a private organization after evaluation of the 27 individual's credentials or qualifications. 28 (j) It is unlawful for any person to hold himself out as or 29 otherwise use the title or designation "public accountant" or 30 the abbreviation "PA" or any other title, designation, words, 20070H1765B2361 - 29 -
1 letters or abbreviation tending to indicate that the person is a 2 public accountant, unless such person is registered as a public 3 accountant and is a licensee, or unless such person has 4 received, or has been notified in writing by the board that he 5 has qualified to receive a certificate as certified public 6 accountant issued by this Commonwealth. This subsection shall 7 not apply to an individual authorized to practice in this 8 Commonwealth under substantial equivalency. 9 (l) It is unlawful for any person, partnership or 10 corporation to hold himself or itself out as or otherwise use 11 the title or designation "certified accountant," "chartered 12 accountant," "enrolled accountant," "licensed accountant," 13 "registered accountant," "licensed public accountant," 14 "registered public accountant" or "accredited accountant" or any 15 other title or designation likely to be confused with "certified 16 public accountant" or "public accountant," or any abbreviation 17 of any of those prohibited titles or designations or similar 18 abbreviations likely to be confused with "CPA," except that a 19 person who is a licensee may hold himself out to the public as 20 an "accountant," "auditor" or "accountant and auditor." This 21 subsection shall not apply to an individual authorized to 22 practice in this Commonwealth under substantial equivalency. It 23 is not a violation of this clause for an individual designated 24 by the Internal Revenue Service as an enrolled agent to use that 25 title or the abbreviation "EA." 26 (l.1) It is unlawful for any person to sell or offer to sell 27 or fraudulently obtain, furnish or procure any certificate, 28 registration or license under the provisions of this act or 29 cause or aid or abet another person to do so. 30 (l.2) It is unlawful for any person that is not a licensee 20070H1765B2361 - 30 -
1 or is not authorized to practice in this Commonwealth under 2 substantial equivalency to sign, affix a firm name to or 3 otherwise issue any: 4 (1) report; or 5 (2) opinion, certificate or other communication respecting 6 compliance with conditions established by law or contract, 7 including, but not limited to, statutes, ordinances, 8 regulations, grants, loans and appropriations, together with any 9 wording, accompanying or contained in such opinion or 10 certificate, that indicates that the person is composed of or 11 employs: 12 (i) accountants or auditors; or 13 (ii) persons having expert knowledge in accounting or 14 auditing. 15 (l.3) It is unlawful for a licensee to use a professional or 16 firm name that the licensee is prohibited from using by other 17 applicable provision of law or that is misleading as to the 18 persons who are partners, officers, members, directors, 19 employees or shareholders of the firm or as to any other matter, 20 except that the names of one or more former partners, 21 shareholders or members may be included in the name of a firm or 22 its successor. 23 (m) It is unlawful for any person who is not a licensee to 24 sign or affix his name or any trade or assumed name used by him 25 in his profession or business to or otherwise issue any: 26 (1) report; or 27 (2) opinion, certificate or other communication respecting 28 compliance with conditions established by law or contract, 29 including, but not limited to, statutes, ordinances, 30 regulations, grants, loans and appropriations, together with any 20070H1765B2361 - 31 -
1 wording accompanying or contained in such report or other 2 communication, which indicates: 3 (i) that he is an accountant or auditor; or 4 (ii) that he has expert knowledge in accounting or auditing. 5 This subsection shall not apply to an individual authorized to 6 practice in this Commonwealth under substantial equivalency. 7 The provisions of this subsection shall not prohibit any 8 officer, employe, partner, or principal of any organization from 9 affixing his signature to any report or other communication in 10 reference to the affairs of the organization with any wording 11 designating the position, title, or office which he holds in the 12 organization, nor shall the provisions of this subsection 13 prohibit any act of a public official or public employe in the 14 performance of his duties as such. 15 (n) It is unlawful for any person not a licensee to hold 16 himself or itself out to the public as an "auditor" or as an 17 "accountant and auditor". employe, partner, or principal of any 18 organization from describing himself by the position, title or 19 office he holds in the organization, nor shall this subsection 20 prohibit any action of a public official or public employe in 21 the performance of his duties as such. This subsection shall not 22 apply to an individual authorized to practice in this 23 Commonwealth under substantial equivalency. 24 (o) It is unlawful for any person to hold himself or itself 25 out as a member of any society, association or organization of 26 certified public accountants or public accountants, unless such 27 person holds a valid certificate of certified public accountant 28 issued by this Commonwealth or by some state or is registered as 29 a public accountant in this Commonwealth or, in the case of a 30 firm, is licensed under section 8.8 of this act. 20070H1765B2361 - 32 -
1 (p) Commissions and referral fees shall comply with the 2 following: 3 (1) A licensee in public practice shall not for a commission 4 recommend or refer to a client any product or service, or for a 5 commission recommend or refer any product or service to be 6 supplied by a client, or receive a commission when the licensee 7 or the licensee's firm also performs for that client any of the 8 following: 9 (i) An audit or review of a financial statement. 10 (ii) A compilation of a financial statement when the 11 licensee expects, or reasonably might expect, that a third party 12 will use the financial statement and the licensee's compilation 13 report does not disclose a lack of independence. 14 (iii) An examination of prospective financial information. 15 This prohibition applies during the period in which the licensee 16 is engaged to perform any of the services listed in this clause 17 and the period covered by any historical financial statements 18 involved in such listed services. 19 (2) A licensee in public practice who is not prohibited by 20 this act from performing services for or receiving a commission 21 and who is paid or expects to be paid commission shall disclose 22 that fact to any person to whom the licensee recommends or 23 refers a product or service to which the commission relates. 24 (3) Any licensee who accepts a referral fee or who pays a 25 referral fee shall disclose such acceptance or payment to the 26 client. 27 (4) The board shall promulgate regulations specifying the 28 terms of the disclosures required by clause (2) or (3), the 29 manner in which the disclosures shall be made and such other 30 matters regarding the disclosures as the board shall deem 20070H1765B2361 - 33 -
1 appropriate. The regulations shall require, at a minimum, that a 2 disclosure shall comply with all of the following: 3 (i) Be in writing and be clear and conspicuous. 4 (ii) State the amount of the commission or referral fee or 5 the basis on which it will be computed. 6 (iii) Be made at or prior to the time: 7 (A) the recommendation or referral of the product or service 8 is made in the case of a commission; or 9 (B) the client retains the licensee to whom the client has 10 been referred in the case of a referral fee. 11 (5) This subsection does not apply to: 12 (i) Payments for the purchase of all or part of an 13 accounting practice. 14 (ii) Retirement or similar payments to persons formerly 15 engaged in the practice of public accounting. 16 (iii) Payments to the heirs or estates of persons formerly 17 engaged in the practice of public accounting. 18 (iv) Incentive or bonus payments to a licensee by a firm 19 employing the licensee. 20 (q) It is unlawful for any person not a licensee to engage 21 in the practice of public accounting in this Commonwealth. 22 Section 13. Acts Not Unlawful.--(a) Nothing contained in 23 this act shall prohibit any person not a certified public 24 accountant or a public accountant from serving as an employe of 25 or an assistant to a certified public accountant, a public 26 accountant or firm, but an employe or assistant shall not issue 27 any report or accounting or financial statement over his name or 28 signature. 29 (b) Nothing contained in this act shall prohibit a certified 30 public accountant, or association composed of certified public 20070H1765B2361 - 34 -
1 accountants, of another state who is concurrently engaged in 2 public practice in such state from temporarily practicing in 3 this Commonwealth on professional business if the practice is 4 conducted in conformity with the regulations and rules governing 5 temporary practice promulgated by the board. 6 (c) Nothing contained in this act shall prohibit a person 7 while not holding himself out as a certified public accountant, 8 public accountant or licensee from offering and rendering 9 bookkeeping and similar technical services or other services 10 involving the use of accounting skills, including the 11 preparation of tax returns and the preparation of financial 12 information without issuing a report or other communication that 13 expresses an opinion or assurance on the statements. A letter or 14 other text that accompanies financial information prepared under 15 this subsection shall not constitute a report or other 16 communication that expresses an opinion or assurance only if it 17 contains and is limited to the following wording: 18 The accompanying financial information of (company) as of 19 (date and year), and for the year then ended have been 20 prepared by (me/us). 21 This financial information is the representation of the 22 management (owners) of (company). 23 A person who prepares financial information as permitted by this 24 subsection may use the title or designation "accountant" or 25 "accountants" and may refer to the services being provided as 26 "accounting" only if the person includes in any letter or other 27 text accompanying the financial information the following 28 statement: 29 I am not a certified public accountant or public 30 accountant. 20070H1765B2361 - 35 -
1 We are not certified public accountants or public 2 accountants. 3 Section 11. Within two years of the effective date of the 4 next section, the board shall promulgate regulations to carry 5 out this act. 6 Section 12. This act shall take effect as follows: 7 (1) The addition of section 5.2 shall take effect 8 January 1, 2012. 9 (2) This section shall take effect immediately. 10 (3) The remainder of this act shall take effect in 60 11 days. G10L63BIL/20070H1765B2361 - 36 -