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PRIOR PRINTER'S NO. 1458
PRINTER'S NO. 2641
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1328
Session of
2021
INTRODUCED BY GREINER, BROOKS, PISCIOTTANO, ZIMMERMAN, SMITH,
SANCHEZ, DUNBAR, GROVE, JAMES, PEIFER, MENTZER, RYAN,
WHEELAND AND GILLEN, MAY 6, 2021
AS REPORTED FROM COMMITTEE ON PROFESSIONAL LICENSURE, HOUSE OF
REPRESENTATIVES, AS AMENDED, JANUARY 24, 2022
AN ACT
Amending the act of May 26, 1947 (P.L.318, No.140), entitled "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 general powers of the board, for requirements for
issuance of certificate, for peer review and for unlawful
acts.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 3(a)(11), 4.2(b)(3) and (d)(4), 8.9 and
12(f)(2) of the act of May 26, 1947 (P.L.318, No.140), known as
the CPA Law, are amended to read:
SECTION 1. SECTION 3(A)(11) OF THE ACT OF MAY 26, 1947
(P.L.318, NO.140), KNOWN AS THE CPA LAW, IS AMENDED TO READ:
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Section 3. General Powers of the Board.--(a) The Board
shall have the power:
* * *
(11) To promulgate and amend rules [of professional
conduct], including adoption of AICPA's Code of Professional
Conduct A NATIONALLY RECOGNIZED CODE OF PROFESSIONAL CONDUCT ,
uniformly applicable to certified public accountants and public
accountants, appropriate to establish and maintain a high
standard of integrity, objectivity and dignity by certified
public accountants, public accountants and firms.
* * *
SECTION 2. SECTION 4.2(B) INTRODUCTORY PARAGRAPH AND (3) AND
(D)(4) OF THE ACT ARE AMENDED AND THE SECTION IS AMENDED BY
ADDING A SUBSECTION TO READ:
Section 4.2. Requirements for Issuance of Certificate.--* *
*
(b) [Before] EXCEPT AS PROVIDED UNDER SUBSECTION (B.1),
BEFORE an individual may take the examination, the board shall
be satisfied that the individual:
* * *
(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, economics,
technology, finance or tax subjects of a content satisfactory to
the board and an additional twelve semester credits in
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accounting and auditing subjects or 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, economics,
technology, 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,
economics, technology, finance or tax subjects of a content
satisfactory to the board, not necessarily as part of his
undergraduate or graduate work.
(B.1) AN INDIVIDUAL MAY TAKE THE EXAMINATION ON OR AFTER THE
EFFECTIVE DATE OF THIS SUBSECTION IF THE BOARD IS SATISFIED THAT
THE INDIVIDUAL MEETS THE REQUIREMENTS UNDER SUBSECTION (B)(1)
AND (2) AND HAS COMPLETED A TOTAL OF ONE HUNDRED TWENTY SEMESTER
CREDITS OF POST-SECONDARY EDUCATION.
* * *
(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:
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* * *
(4) was 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 or a
substantially equivalent licensed individual from a foreign
country.
* * *
SECTION 3. SECTIONS 8.9 AND 12(F)(2) OF THE ACT ARE AMENDED
TO READ:
Section 8.9. Peer Review.--(a) As a condition for granting
a firm a renewal license, or an initial license in the case of a
firm that has previously been engaged in practice in another
jurisdiction, the board shall require that the firm [undergo a
peer review in accordance with this section] be enrolled in a
board-approved peer review program unless the firm meets one of
the exemptions in subsection (g). The initial or renewal license
application of a firm that does not meet one of those exemptions
shall include a certification that the firm is in compliance
with this section and shall state the name of the organization
administering the firm's most [recent] recently accepted peer
review, the date of acceptance of that peer review and the
period covered by that peer review. The board shall not require
submittal of the letter of acceptance, peer review report,
[letter of comment,] letter of response or working papers
related to the peer review [process, but the board may require
the organization administering the firm's most recent peer
review to confirm the date of acceptance and the period covered
by that peer review. As used in this section, the term "firm"
includes, but is not limited to, a sole practitioner.]. The
board shall verify the date of acceptance and period covered by
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the firm's most recently accepted peer review through a secure
website provided by the entity administering the peer review ,
such as AICPA Facilitated State Board Access .
(b) A firm [with less than three licensees] shall not be
required to undergo a peer review more frequently than once
every [five years and a firm with three or more licensees shall
not be required to undergo a peer review more frequently than
once every] three years, except that:
(1) The board may order a firm that has been disciplined
under section 9.1 of this act or that has been ordered to take
remedial action under subsection (e) to undergo a peer review
more frequently.
(2) A new firm that is not subject to subsection (j) shall
[undergo] have its first peer review [within] due eighteen
months [after it is granted its initial license.] from the date
it was required to enroll in a board-approved peer review
program.
(2.2) A firm that was not previously required to [undergo a
peer review] enroll in a board-approved peer review program must
notify the board within thirty days after accepting an
engagement to perform an attest activity other than a
compilation and shall [undergo a peer review within eighteen
months after commencing the engagement.] have its initial peer
review due eighteen months from the date it was required to
enroll in a board-approved peer review program.
(3) The regulations of the board may lengthen any of the
periods between required peer reviews prescribed in this
subsection in such manner, under such circumstances or with
respect to such firms as the board in its discretion may
consider appropriate.
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(4) Firms A FIRM with fewer than three licensees that were
WAS previously not required to undergo a peer review more
frequently than once every five years shall be permitted to
maintain that five-year peer review cycle until their next peer
review is completed. , NO LATER THAN THREE YEARS BEFORE DECEMBER
31, 2027, AND EVERY THREE YEARS THEREAFTER, UNDERGO A PEER
REVIEW CONDUCTED PURSUANT TO PEER REVIEW STANDARDS ADOPTED BY
THE BOARD.
(c) The board shall adopt regulations establishing
guidelines for peer reviews which shall:
(1) Require that a peer review be conducted pursuant to a
program and standards approved by the board. The board shall
approve only peer review programs that the board finds comply
with established standards for performing and reporting on peer
reviews.
(2) Require that a peer review be conducted by a reviewer
that is independent of the firm reviewed[, qualified pursuant to
board rules] and approved by the organization administering the
peer review program.
(3) Other than in the peer review process, prohibit the use
or public disclosure of information obtained by the reviewer,
any organization administering an approved peer review program
or the board during or in connection with the peer review
process without the firm's permission. The requirement that
information not be publicly disclosed shall not apply to a
hearing before the board that the firm requests be public under
subsection (e) or to the information described in subsection (h)
(3).
(d) (1) The peer review of a firm that performs one or more
[audits of historical financial statements or examinations of
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prospective financial information shall be a system review,
including a study and evaluation of a representative selection
of audit, examination, review and compilation reports, the
financial information upon which those reports were based and
the associated working papers. The system review shall include
additional procedures relating to the firm's system of quality
control sufficient to provide the reviewer with a reasonable
basis upon which to issue a peer review report.] engagements
under the Statements on Auditing Standards (SAS), Government
Auditing Standards, examinations in accordance with the
Statements on Standards for Attestation Engagements (SSAE) , or
engagements under PCAOB standards as their highest level of
service shall have a system review.
(2) The peer review of a firm that performs no [audit or
examination engagements] engagements under the Statements on
Auditing Standards (SAS), Government Auditing Standards,
examination engagements in accordance with the Statements on
Standards for Attestation Engagements (SSAE) or engagements
under PCAOB standards but does perform one or more review
engagements in accordance with the Statements on Standards for
Accounting and Review Services (SSARS) or services under the
Statements on Standards for Attestation Engagements (SSAE) not
included in a system review shall be required only to be an
engagement review.[, including a study and evaluation of a
representative selection of reports issued by the firm and the
financial information upon which those reports were based; but,
if such a firm elects to have a system review, that review shall
also be acceptable. The engagement review shall include a study
of the associated working papers and procedures and inquiries
sufficient to provide the reviewer with a reasonable basis upon
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which to issue a peer review report.
(3) A firm that does not perform any audits or reviews,
regardless of whether or not the firm performs compilations,
shall be exempt from the requirement to undergo a peer review to
the extent provided in subsection (g)(2).]
(e) [If a firm does not comply with any remedial actions
determined appropriate by the administering organization, the
administering organization shall refer the matter to the board
to determine if further action under this subsection is
warranted. The board may at its discretion or shall upon
submission of a written application by the firm hold a hearing
to determine whether the firm complies with the appropriate
professional standards and practices.] When the board is made
aware that a firm has had the firm's enrollment in peer review
dropped or terminated and is not in compliance with the
enrollment requirements in section 8.9, the board may consider,
pursuant to a hearing or with consent, other measures, including
disciplinary action, against the reviewed firm and any
individual licensee employed by the reviewed firm. The hearing
shall be confidential and shall not be open to the public unless
requested by the firm. [If the board after conducting a hearing
determines that the firm complies with the appropriate
professional standards and practices, it shall issue an order
requiring the reviewer and the administering organization to
take any necessary action to record and implement the board's
determination and to restore the status of compliance of the
firm. However, if the board after conducting the hearing
determines that the firm does not comply with the appropriate
professional standards and practices, it] After conducting the
hearing, the board may issue an order that requires both of the
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following:
(1) Remedial action, which may include any or all of the
following:
(i) Requiring employes of the firm to complete general or
specific continuing professional education courses.
(ii) Requiring the firm to undergo a peer review more
frequently than every three years.
(iii) Any other remedial action specified by the board.
(2) An affidavit from the firm, submitted within the time
specified by the board, indicating completion of the required
remedial [actions.] or other actions causing the firm's
enrollment in the peer review program to be dropped or
terminated and evidence that the firm has reenrolled in peer
review. The board shall verify a firm's reenrollment in peer
review through a secure website provided by the entity
administering the peer review such as AICPA Facilitated State
Board Access .
(f) The firm reviewed shall pay for any peer review
performed.
(g) A firm shall be exempt from the requirement to undergo a
peer review if any of the following applies:
(1) Within three years before the date of application for
initial or renewal licensure, the firm has undergone a peer
review conducted in another state or foreign jurisdiction which
meets the requirements of subsection (c)(1) and (2). [The firm
shall submit to the board a letter from the organization
administering the firm's most recent peer review stating the
date on which the peer review was completed.] The board shall
verify the date of acceptance through Facilitated State Board
Access. The board shall verify the date of acceptance and period
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covered by the firm's most recently accepted peer review through
a secure website provided by the entity administering the peer
review such as AICPA Facilitated State Board Access .
(2) [The firm satisfies both of the following conditions:
(i)] During the preceding two years, the firm has not
accepted or performed any [audit or review engagement.
(ii) Within the next two years, the firm does not intend to
accept or perform any audit or review engagement.] attestation
engagements other than a compilation.
(3) For reasons of personal health, military service or
other good cause, the [board determines that the firm is
entitled to an exemption for a period of time not to exceed
twelve months.] firm shall provide to the board a copy of a
grant of an extension, including the resulting new due date,
within thirty days of receipt from the administering
organization.
(h) In any civil action, arbitration or administrative
proceeding, regardless of whether a licensee is a party thereto,
all of the following shall apply:
(1) The proceedings, records (including, without limitation,
letters of acceptance, peer review reports, letters of comment
and letters of response) and working papers related to the peer
review process of any reviewer, administering organization or
board member are privileged and not subject to discovery,
subpoena or other means of legal process and may not be
introduced into evidence.
(2) No employe, member or agent of an administering
organization, reviewer or board member shall be permitted or
required to testify as to any matters produced, presented,
disclosed or discussed during or in connection with the peer
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review process or be required to testify to any finding,
recommendation, evaluation, opinion or other actions of any
person in connection with the peer review process.
(3) No privilege exists under this subsection:
(i) For information presented or considered in the peer
review process that was otherwise available to the public.
(ii) For material not prepared in connection with a peer
review merely because they subsequently are presented or
considered as part of the peer review process.
(iii) In connection with an administrative proceeding or
related civil action brought for the purpose of enforcing this
section.
[(i) If a peer review report indicates that a firm complies
with the appropriate professional standards and practices set
forth in the regulations of the board, the administering
organization shall destroy all working papers and documents,
other than report-related documents, related to the peer review
within ninety days after issuance to the firm of the letter of
acceptance by the administering organization. If a peer review
letter of acceptance indicates that corrective action by a firm
is required, the administering organization may retain documents
and reports related to the peer review until completion of the
next peer review or other agreed-to corrective actions.]
(j) [In the event the practices of two or more firms are
merged or otherwise combined, the surviving firm shall retain
the peer review year of the largest firm, as determined by the
number of accounting and auditing hours of each of the
practices. In the event that the practice of a firm is divided
or a portion of its practice is sold or otherwise transferred,
any firm acquiring some or all of the practice that does not
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already have its own review year shall retain the review year of
the former firm. In the event that the first peer review of a
firm that would otherwise be required by this subsection would
be less than twelve months after its previous review, a review
year shall be assigned by the administering organization so that
the firm's next peer review occurs after not less than twelve
months of operation, but not later than eighteen months of
operation.] In the event a practice unit is sold, dissolved or
merged with the practice of one or more other practice units,
the determination of successor or predecessor practice unit,
peer review year end and the peer review due date shall be made
in accordance with the administering organization's guidance.
(k) (1) None of the following persons shall be held to have
violated any criminal law or to be civilly liable by reason of
the performance by him or it of any duty, function or activity
under this section so long as the person has not engaged in
recklessness or willful misconduct:
(i) reviewers;
(ii) the administering organization or any of its members,
employees or agents or any person furnishing professional
counsel or services to the administering organization; or
(iii) board members.
(2) Subsection (h) shall not apply to the defense of a claim
alleging conduct not protected under clause (1).
[(l) This section shall apply as follows:
(1) Except as provided in clause (2), this section shall
take effect on February 3, 1997. This clause includes without
limitation effectiveness for the purposes of permitting the
board to promulgate the regulations under subsection (c) and of
applying subsections (h) and (k).
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(2) This section shall not become applicable to firms and no
firm shall be required to undergo a peer review under this
section until May 1, 2000, except that this section shall not
become applicable until May 1, 2004, to a firm that has not
accepted or performed any audit engagements during the period
May 1, 1998, through April 30, 2004.]
(m) The fees charged by an administering organization under
this section shall not vary depending on whether or not a firm
or some or all of its owners or employees are members of the
administering organization.
Section 12. Unlawful Acts.--* * *
(f) Except as provided in this subsection, in sections 5.2
and 5.4 of this act or in subsections (a) and (c), it is
unlawful for any person to use a title that includes the word
"certified" as a part thereof, or any other title or designation
likely to be confused with "certified public accountant," or any
title or designation implying or connoting accreditation by any
jurisdiction for the practice of any type of bookkeeping,
accounting, auditing, tax or other professional practice related
thereto, or to use any abbreviation of such title or
designation. It is not a violation of this subsection for an
individual:
* * *
(2) to use the designation "certified financial planner" or
"chartered global management accountant" or an abbreviation of
[that] the designation if the designation has been conferred by
a private organization after evaluation of the individual's
credentials or qualifications.
* * *
Section 2 4. This act shall take effect in 60 days.
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