THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DENLINGER, ADOLPH, MAHER, PEIFER, DUNBAR, BOYD, CALTAGIRONE, CLYMER, CUTLER, DALEY, FARRY, FLECK, GINGRICH, GRELL, GROVE, HARRIS, HICKERNELL, M. K. KELLER, KILLION, MILLARD, MILLER, MURT, PETRARCA AND RAPP, MAY 8, 2012

REFERRED TO COMMITTEE ON PROFESSIONAL LICENSURE, MAY 8, 2012  

AN ACT

Amending the act of May 26, 1947 (P.L.318, No.140), entitled, as

amended, "An act relating to the practice of public

accounting; providing for the examination, education and

experience requirements for certification of certified public

accountants and for the licensing of certified public

accountants, public accountants and firms; requiring

continuing education and peer review; providing for the

organization and ownership of firms and for the procedures

and grounds for discipline and reinstatement of licensees;

prescribing the powers and duties of the State Board of

Accountancy and the Department of State; providing for

ownership of working papers and confidentiality; regulating

the professional responsibility of licensees; defining

unlawful acts and acts not unlawful; providing penalties; and

repealing existing laws," further providing for definitions,

for certificate requirements, for equivalency practice for

individuals and for equivalency practice for firms and

entities.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definition of "attest activity" in section 2

of the act of May 26, 1947 (P.L.318, No.140), known as the CPA

Law, reenacted and amended December 8, 1976 (P.L.1280, No.286)

and amended July 9, 2008 (P.L.954, No.73), is amended and the

section is amended by adding definitions to read:

Section 2.  Definitions.--The following words and phrases

when used in this act shall have the meanings ascribed to them

in this section unless the context clearly indicates otherwise:

* * *

"Attest activity."  The provision of any of the following

financial statement services together with the issuance of a

report expressing or disclaiming an opinion or other assurance

on the information:

(1)  an audit or other engagement performed in accordance

with Statements on Auditing Standards (SAS);

(2)  a review or compilation of a financial statement

performed in accordance with Statements on Standards for

Accounting and Review Services (SSARS);

(3)  an engagement performed in accordance with Statements on

Standards for Attestation Engagements (SSAE); or

[(4)  an audit or other engagement performed in accordance

with government auditing standards issued by the Comptroller

General of the United States; or]

(5)  any other engagement performed in accordance with

attestation standards established by an organization granted

authority by statute or regulation to establish attestation

standards, such as the American Institute of Certified Public

Accountants (AICPA) [or], the Public Company Accounting

Oversight Board (PCAOB), the Financial Accounting Standards

Board (FASB) or the International Accounting Standards Board

(IASB).

* * *

"FASB."  The Financial Accounting Standards Board.

* * *

"IASB."  The International Accounting Standards Board.

* * *

Section 2.  Sections 4.2, 5.2 and 5.4 of the act, amended or

added July 9, 2008 (P.L.954, No.73), are amended to read:

Section 4.2.  Requirements for Issuance of Certificate.--(a)

The board shall issue a certificate upon application by an

individual who has passed the examination and meets the

education and experience requirements in this section.

(b)  Before an individual may take the examination, the board

shall be satisfied that the individual:

(1)  has attained eighteen years of age;

(2)  is of good moral character; and

(3)  has graduated with:

(i)  a baccalaureate or higher degree from a college or

university accredited by a nationally recognized accrediting

agency recognized by the United States Department of Education,

or a college or university approved by the board, and completed

a total of one hundred fifty semester credits of post-secondary

education, including at least a total of twenty-four semester

credits of accounting and auditing, business law, finance or tax

subjects of a content satisfactory to the board and an

additional twelve semester credits in accounting, auditing and

tax subjects of a content satisfactory to the board, not

necessarily as part of the individual's undergraduate or

graduate work;

(ii)  a baccalaureate degree from a college or university

accredited by a nationally recognized accrediting agency

recognized by the United States Department of Education, or a

college or university approved by the board, and completed at

least a total of twenty-four semester credits, which credits

shall be in accounting and auditing, business law, finance or

tax subjects of a content satisfactory to the board, not

necessarily as a part of his undergraduate work; or

(iii)  a Master's Degree or other post-graduate degree from a

college or university accredited by a nationally recognized

accrediting agency recognized by the United States Department of

Education, or a college or university approved by the board, and

completed at least a total of twenty-four semester credits,

which credits shall be in accounting and auditing, business law,

finance or tax subjects of a content satisfactory to the board,

not necessarily as part of his undergraduate or graduate work.

(c)  Before an individual who takes the examination under

subsection (b)(3)(ii) or (iii) may be issued a certificate, the

individual must also satisfy the education requirement in

subsection (b)(3)(i).

(d)  Before an individual may be issued a certificate, the

board shall be satisfied that the individual has completed at

least one year of experience that:

(1)  was completed within sixty months preceding the date of

application for a certificate;

(2)  included [not less than four hundred hours of attest

activity in any of the following:

(i)  public accounting;

(ii)  as an internal auditor, if the internal audit function

reports to an independent board or similar body responsible for

oversight of the financial reporting process; or

(iii)  as an auditor with a unit of Federal, State or local

government] providing any type of service or advice involving

the use of accounting, attest, compilation, management advisory,

financial advisory, tax or consulting skills, which were gained

through employment in government, industry, academia or public

practice;

(3)  was of a caliber satisfactory to the board; and

(4)  was [supervised] verified by an individual with a

current license to practice public accounting as a certified

public accountant or public accountant in this Commonwealth or

another state.

(e)  The following requirements may be complied with instead

of the otherwise applicable provisions of subsections (b), (c)

and (d):

(1)  An individual who [takes] took the examination before

December 31, 2011, but [does] did not pass at least one part

taken before that date, may not be issued a certificate until

the individual:

(i)  has satisfied the education requirement in subsection

(c), if applicable; and

(ii)  has completed at least one year of experience described

in subsection (d)(2), (3) and (4) within one hundred twenty

months preceding the date of application for a certificate.

(2)  An individual who [passes] passed at least one part of

the examination taken before December 31, 2011, pursuant to

subsection (b)(3)(ii), may be issued a certificate before or

after December 31, 2011, without satisfying the education

requirement in subsection (c), but not until the individual has

completed at least two years of experience that satisfies the

requirements in subsection [(d)(3)] (d)(2), (3) and (4)[, except

that the experience must include at least eight hundred hours of

attest activity]. The experience may be completed within one

hundred-twenty months preceding the date of application for a

certificate.

(3)  An individual who [passes] passed at least one part of

the examination taken before December 31, 2011, pursuant to

subsection (b)(3)(iii), may be issued a certificate before or

after December 31, 2011, without satisfying the education

requirement in subsection (c) and may complete the one year of

experience required by subsection (d) within one hundred twenty

months preceding the date of application for a certificate.

Section 5.2.  Practice in this Commonwealth by Individuals

under Substantial Equivalency.--(a)  A person may practice

public accounting in this Commonwealth under substantial

equivalency as provided in this section and section 5.4 [if the

state the person is licensed in has also adopted into law a

provision allowing for practice under substantial equivalency

that includes no notice and no fee as provided for in subsection

(b)(9)]. Any determination as to whether substantial equivalency

exists with respect to a state or individual for purposes of

this act shall be consistent with any determination as to

substantial equivalency with respect to that state or individual

made by the National Association of State Boards of Accountancy

National Qualification Appraisal Service.

(b)  The following apply to practice in this Commonwealth

under substantial equivalency:

(1)  Notwithstanding any other provision of this act, an

individual whose principal place of business is not in this

Commonwealth and who has a valid certificate or right to

practice public accounting from a state that is substantially

equivalent shall be presumed to have qualifications

substantially equivalent to the Commonwealth's requirements and

shall have all the privileges and obligations of a licensee of

the Commonwealth without the need to obtain a certificate or

license under this act.

(2)  Notwithstanding any other provision of this act, an

individual whose principal place of business is not in this

Commonwealth and who has a valid certificate or right to

practice public accounting from a state that is not

substantially equivalent shall be presumed to have

qualifications substantially equivalent to the Commonwealth's

requirements and shall have all the privileges and obligations

of a licensee of the Commonwealth without the need to obtain a

certificate or license if there is substantial equivalency as to

the individual. In determining whether substantial equivalency

exists as to an individual, the order in which the individual

satisfied the experience, education and examination requirements

shall be disregarded.

(3)  The exercise by an individual of the right to practice

in this Commonwealth under this section constitutes:

(i)  sufficient contact with this Commonwealth for the

exercise of personal jurisdiction by the board and the courts of

this Commonwealth over the individual in any action or

proceeding arising out of acts or omissions by the individual;

(ii)  consent by the individual to the personal and subject

matter jurisdiction and disciplinary authority of the board;

(iii)  an agreement by the individual to comply with the

provisions of this act and regulations promulgated by the board;

and

(iv)  consent by the individual to the appointment of the

board of accountancy or other regulatory authority of the state

in which the principal place of business of the individual is

located as the agent upon which process may be served in any

action or proceeding by the board against the individual.

(4)  An individual who exercises the right to practice under

this section shall be subject to disciplinary action in this

Commonwealth for any act or omission that would subject the

holder of a Pennsylvania certificate or license to disciplinary

action.

(5)  An individual who passed the Uniform CPA Examination and

holds a valid license to practice public accounting issued by

any other state on or before December 31, 2011, may be exempt

from the education requirements in section 4.2(b)(3)(i) and (c)

of this act for purposes of this section.

(6)  If the board imposes discipline on an individual

exercising the right to practice under this section, the board

shall, as soon as practicable, notify the board of accountancy

or other regulatory authority in each state where the board has

learned during the disciplinary process that the individual has

been granted a certificate or license to practice public

accounting of the imposition of the discipline. If the order

imposing discipline is appealed or stayed, the board shall send

a subsequent notice to each regulatory authority advising of the

filing of the appeal or entry of the stay. As an alternative to

sending the notices to each regulatory authority, the board may

send the notices instead to a multistate enforcement information

network maintained at the time by AICPA or NASBA. The board may

furnish investigative information and the hearing record

relating to the disciplinary proceeding to such other regulatory

authorities upon request.

(7)  An individual exercising the right to practice under

this section may identify the fact that the individual practices

with a partnership, corporation or other association and may use

its name even if the partnership, corporation or other

association is not a licensee.

(8)  An individual practicing under this section or a firm or

qualified unlicensed entity practicing under section 5.4 may

provide professional services in this Commonwealth in the same

manner as a licensee, including without limitation, in person or

by mail, telephone or electronic means.

(9)  The board shall not require a filing or payment of a fee

by an individual, firm or qualified unlicensed entity in

connection with practicing under this section or section 5.4.

Section 5.4.  Practice by Firms and Unlicensed Entities under

Substantial Equivalency.--(a)  A firm may practice public

accounting in this Commonwealth through an individual who is not

a licensee if the individual has the right to practice in this

Commonwealth under section 5.2 of this act [and if the state the

firm is licensed in has also adopted into law a provision

allowing for practice under substantial equivalency that

includes no notice and no fee as provided for in section 5.2(b)

(9) of this act]. The exercise by a firm of the right to

practice through such individuals under this subsection

constitutes an agreement by the firm:

(1)  to be subject to the jurisdiction and disciplinary

authority of the board with respect to acts or omissions of the

individuals through whom it practices under this subsection;

(2)  to accept service of process from the board on behalf of

the individuals through whom it practices under this subsection;

and

(3)  to cooperate in any investigation by the board involving

an individual through which the firm has practiced under this

subsection even if the individual is no longer an owner of or

employed by the firm.

(b)  A qualified unlicensed entity may practice public

accounting in this Commonwealth through an individual who:

(1)  has the right to practice in this Commonwealth under

section 5.2 of this act; or

(2)  is a licensee.

(c)  The exercise by a qualified unlicensed entity of the

right to practice in this Commonwealth under subsection (b)

constitutes:

(1)  sufficient contact with this Commonwealth for the

exercise of personal jurisdiction by the board and the courts of

this Commonwealth over the qualified unlicensed entity in any

action or proceeding arising out of acts or omissions by an

individual associated with the qualified unlicensed entity in

any capacity;

(2)  consent by the qualified unlicensed entity to the

personal and subject matter jurisdiction and disciplinary

authority of the board;

(3)  an agreement by the qualified unlicensed entity to

comply with the provisions of this act and regulations

promulgated by the board; and

(4)  consent by the qualified unlicensed entity to the

appointment of the board of accountancy or other regulatory

authority of the state in which the principal place of business

of the qualified unlicensed entity is located as the agent upon

which process may be served in any action or proceeding by the

board against the qualified unlicensed entity.

(d)  As used in this section "qualified unlicensed entity"

means a partnership, corporation or other association that:

(1)  is not a licensee;

(2)  does not have an office in this Commonwealth; and

(3)  may lawfully practice public accounting in another

state.

Section 3.  This act shall take effect in 60 days.