WEST virginia Legislature
2016 regular session
Senate Bill 271
By Senators Ferns and Gaunch
[Passed March 7, 2016; in effect 90 days from passage]
AN ACT to amend and reenact §30-9-2, §30-9-3 and §30-9-7 of the Code of West Virginia, 1931, as amended, and to amend said code by adding thereto two new sections, designated as §30-9-33 and §30-9-34, all relating to regulation of the practice of accountancy; redefining attest services; protecting board members from civil liability; revising requirements for issuance of certificate as certified public accountant including criminal background check; requiring Mandatory Training in federal antitrust law and state action immunity for members of the board of accountancy and their representatives from the Attorney General’s office; and providing for indemnification for board members.
Be it enacted by the Legislature of West Virginia:
That §30-9-2, §30-9-3 and §30-9-7 of the Code of West Virginia, 1931 as amended, be amended and reenacted, and that said Code be amended by adding thereto two new sections, designated as §30-9-33 and §30-9-34, all to read as follows:
ARTICLE 9. ACCOUNTANTS.
As used in this article, the following words and terms have the following meanings, unless the context or associated language clearly indicates otherwise:
(1) AAffiliated entity@ means an entity that controls, is controlled by, or is under common control with, a firm. For purposes of this definition, an entity controls another entity if the entity directly or indirectly or acting in concert with one or more other affiliated entities, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than fifty percent of the voting interest in such entity.
(2) AAssurance@ means any act or action, whether written or oral, expressing an opinion or conclusion about the reliability of a financial statement or about its conformity with any financial accounting standards.
(3) AAttest services@ means providing the following services:
(A) Any audit or other engagement to be performed in accordance with the statements on Auditing Standards (SAS);
(B) Any review of a financial statement to be performed in accordance with the statements on Standards for Accounting and Review Services (SSARS);
(C) Any examination of prospective financial information to be performed in accordance with applicable Statements on Standards for Attestation Engagements (SSAE);
(D) Any engagement to be performed in accordance with the Auditing Standards of the Public Company Accounting Oversight Board (PCAOB); or
(E) Any examination, review or agreed upon procedures engagement to be performed in accordance with the statements on Standards for Attestation Engagements (SSAE), other than an examination described in paragraph (C) of this subdivision.
(4) AAudit@ means expressing an opinion about the fairness of presentation of financial statements in accordance with the statements on Auditing Standards.
(5) “Authorization” means an authorization issued pursuant to this article that entitles a permit holder or an individual practitioner to perform attest or compilation services.
(6) ABoard@ means the West Virginia Board of Accountancy.
(7) ABusiness entity@ means any corporation, partnership, limited partnership, limited liability partnership, professional limited liability partnership, limited liability company, professional limited liability company, joint venture, business trust or any other form of business organization. The term Abusiness entity@ includes a firm.
(8) “Certificate” means a certificate as a certified public accountant issued or renewed by the board pursuant to this article or corresponding provisions of prior law.
(9) ACertified public accountant@ or ACPA@ means the holder of a certificate.
(10) AClient@ means a person or entity that agrees with a licensee or licensee=s employer to receive any professional service.
(11) ACommission@ means compensation, except a referral fee, for recommending or referring any product or service to be supplied by another person.
(12) ACompilation services@ means providing a service performed in accordance with the statements on Standards for Accounting and Review Services that presents, in the form of a financial statement, information that is the representation of management without an expression of assurance on the statement: Provided, That this definition does not apply to the use of the term Acompilation@ in section thirty-one of this article.
(13) AContingent fee@ means a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of the service. A fee fixed by a court, taxing authority or other public authority is not a contingent fee.
(14) AExamination”, when used with reference to prospective financial statements, means expressing an opinion about the fairness of presentation of financial information in accordance with the statements on Standards for Attestation Engagements.
(15) AFinancial statement@ means a writing or other presentation, including accompanying notes, which presents, in whole or in part, historical or prospective financial position, results of operations or changes in financial position of any person, corporation, partnership or other entity.
(16) AFirm@ means any business entity, including, but not limited to, accounting corporations and professional limited liability companies, in which two or more certified public accountants or public accountants hold an ownership or membership interest, in terms of the financial interests and voting rights of all partners, officers, shareholders, members or managers, and the primary business activity of which is the provision of professional services to the public by certified public accountants or public accountants.
(17) AFirm ownership requirements@ means, with respect to:
(A) Any professional limited liability company organized pursuant to article thirteen, chapter thirty-one-b of this code, consisting of one or more licensed certified public accountants or licensed public accountants;
(B) Any other firm where:
(i) A simple majority of ownership of the firm, in terms of financial interests and voting rights of all partners, officers, shareholders, members or managers, belongs either to:
(I) Certified public accountants holding a certificate under section twelve of this article or the equivalent provision of another state; or
(II) Public accountants who have met the continuing professional education requirements of subsection (b), section twelve of this article and who are not subject to the exemption or limitation set forth in subdivisions (1) or (2), subsection (b), section twelve of this article or similar provisions of another state.
(ii) All owners of the firm who are not certified public accountants or public accountants are active participants in the firm or in affiliated entities.
(18) AForeign@ means any country other than the United States.
(19) AGood moral character@ means lack of a history of dishonesty or felonious activity.
(20) AHome office@ means the client=s office address.
(21) AIndividual practitioner@ means a certified public accountant or a public accountant who offers professional services to the public but who does not practice in a firm.
(22) “License” means a certificate, permit, registration or authorization.
(23) “Licensee” means the holder of a license.
(24) “Manager” means a manager of a professional limited liability company.
(25) “Member” means a member of a professional limited liability company.
(26) ANonlicensee@ means a person or business entity that does not hold a license.
(27) AOut-of-state certificate@ means a valid certificate as a certified public accountant or equivalent designation issued or renewed under the laws of another state: Provided, That Aout-of-state certificate@ does not include any certificate as a certified public accountant or equivalent designation that was issued or renewed solely by virtue of a holder=s prior status as a public accountant or its equivalent in the state of issuance and not by virtue of the holder=s having met the certification requirements of the state of issuance.
(28) AOut-of-state permit@ means a valid permit as a firm of certified public accountants or another designation equivalent to a permit issued or renewed by the board and that is issued or renewed under the laws of another state.
(29) “Peer Review” means a study, appraisal or review of one or more aspects of the professional work of a licensee by a person who holds a certificate or an out-of-state certificate and who is not affiliated with the licensee being reviewed.
(30) “Permit” means a permit issued to a firm pursuant to this article.
(31) APrincipal place of business@ means the licensee=s office location in the state where the licensee holds a certificate or registration.
(32) AProfessional services@ means those services that involve the specialized knowledge and skills of a certified public accountant or a public accountant delivered by any means, including but not limited to, in person, by mail, telephone or by electronic means.
(33) APublic accountant@ means a person holding a registration who is not a certified public accountant.
(34) AReferral fee@ means compensation for recommending or referring any service of a licensee to any person.
(35) ARegistration@ means a registration as a public accountant issued by the board pursuant to prior law governing the registration of public accountants and renewed by the board pursuant to this article.
(36) “Report”, when used with reference to financial statements, means an opinion or disclaimer of opinion or other form of language or representation which states or implies any form of assurance or denial of assurance.
(37) “Rule” means any rule proposed for legislative approval by the board pursuant to this article.
(38) “State” means any state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands or Guam.
(39) ASubstantial equivalency@ or Asubstantially equivalent@ means or refers to a determination by the board or its designee that the education, examination and experience requirements contained in the statutes or rules of another state are comparable to or exceed the education, examination and experience requirements contained in the Uniform Accountancy Act, or that an individual certified public accountant=s education, examination and experience qualifications are comparable to or exceed the education, examination and experience requirements contained in the Uniform Accountancy Act.
(40) ASubstantial equivalency practitioner@ means any individual whose principal place of business is not in this state, who holds a certificate from another state and has complied with the provisions of section sixteen of this article.
(41) AUniform Accountancy Act@ means the Uniform Accountancy Act, fifth edition, revised (July 2007), jointly published by the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy.
§30-9-3. Board of accountancy; appointment; terms, qualifications of members; removal of members; compensation of members; civil liability protection for members.
(a) The West Virginia board of accountancy is hereby continued.
(b) (1) Commencing with the board terms beginning July 1, 2001, the board shall consist of seven members appointed for terms of three years by the Governor with the advice and consent of the Senate. Five members must be certified public accountants; one member must be a public accountant so long as twenty-five or more public accountants are registered by the board, but if there are fewer than twenty-five public accountants registered by the board, then the member may be either a public accountant or a certified public accountant; and one member must be a citizen member who is a resident of this state, who is not licensed under the provisions of this article and who also is not a bookkeeper, enrolled agent or a person who provides or offers to provide to the public any bookkeeping, tax preparation, financial advisory or insurance service: Provided, That the members of the board in office on July 1, 2001, shall continue to serve until their respective terms expire.
(2) Each licensed member of the board, at the time of his or her appointment, must have held a license in this state for a period of not less than five years immediately preceding the appointment and each member must be a resident of this state during the appointment term.
(3) Each appointment of a public accountant, whether for a full term or to fill a vacancy, must be made by the Governor from among three nominees selected by the West Virginia Public Accountants Association and each appointment of a certified public accountant, whether for a full term or to fill a vacancy, must be made by the Governor from among three nominees selected by the West Virginia Society of Certified Public Accountants: Provided, That when the appointment of a certified public accountant is to fill the seat held on July 1, 2001, by a public accountant, then the appointment, whether for a full term or to fill a vacancy, must be made by the Governor from among three nominees selected by the West Virginia Public Accountants Association. When the appointment is for a full term, the nominations must be submitted to the Governor not later than eight months prior to the date on which the appointment will become effective. When the appointment is to fill a vacancy, the nominations must be submitted to the Governor within ten days after a request for the nominations has been made by the Governor to the president of the West Virginia Society of Certified Public Accountants or president of the West Virginia Public Accountants Association. If the society or the association fails to submit to the Governor nominations for an appointment in accordance with the requirements of this section, the Governor may make the appointment without the nominations.
(c) No member may serve more than two consecutive full terms, and any member having served two full terms may not be appointed for one year after completion of his or her second full term. A member shall continue to serve until his or her successor has been appointed and qualified.
(d) If a board member is unable to complete a term, the Governor shall appoint a person of similar qualifications to complete the unexpired term: Provided, That if the board member is a certified public accountant or public accountant, the Governor shall appoint a person from any nominees submitted pursuant to subdivision (3), subsection (b) of this section. Each vacancy occurring on the board must be filled by appointment within sixty days after the vacancy is created.
(e) The Governor may remove any member from the board for neglect of duty, incompetency or official misconduct.
(f) Any member of the board shall immediately and automatically forfeit his or her membership if he or she has his or her certificate or registration suspended or revoked by the board, is convicted of a felony under the laws of any state or the United States, or becomes a nonresident of this state.
(g) Each member of the board shall receive compensation and expense reimbursement in accordance with section eleven, article one of this chapter.
(h) Board members are exempt from civil liability for any decision made or any act done in good faith in the performance of any duty or the exercise of any power granted under this article.
§30-9-7. Issuance of certificate; certificates issued prior to the first day of July, two thousand one.
(a) The board shall issue an original certificate to an applicant who demonstrates that:
(1) He or she has met one of the following qualifications for a certificate:
(A) He or she meets the qualifications for a certificate set forth in section eight of this article;
(B) He or she holds an out-of-state certificate and meets the requirements of section nine of this article;
(C) He or she holds an out-of-state certificate, does not meet the requirements of section nine of this article but does meet the requirements of section ten of this article; or
(D) He or she holds a substantially equivalent foreign designation and meets the requirements of section eleven of this article.
(2) He or she has submitted an application, in writing, on a form prescribed by the board: Provided, That the application must require an applicant to list all states in which he or she has applied for or holds an out-of-state certificate and any past denial, revocation or suspension of an out-of-state certificate;
(3) He or she is trustworthy and of good moral character;
(4) He or she has paid the appropriate fee prescribed by the board;
(5) He or she has submitted to a state and national criminal history record check, as set forth in this subdivision.
(A) This requirement is found not to be against public policy.
(B) The criminal history record check shall be based on fingerprints submitted to the West Virginia State Police or its assigned agent for forwarding to the Federal Bureau of Investigation.
(C) The applicant shall meet all requirements necessary to accomplish the state and national criminal history record check, including:
(i) Submitting fingerprints for the purposes set forth in this subsection; and
(ii) Authorizing the board, the West Virginia State Police and the Federal Bureau of Investigation to use all records submitted and produced for the purpose of screening the applicant for a certificate.
(D) The results of the state and national criminal history record check may not be released to or by a private entity except:
(i) To the individual who is the subject of the criminal history record check;
(ii) With the written authorization of the individual who is the subject of the criminal history record check; or
(iii) Pursuant to a court order.
(E) The criminal history record check and related records are not public records for the purposes of chapter twenty-nine-b of this code.
(F) The applicant shall pay the actual costs of the fingerprinting and criminal history record check.
(G) The board may propose rules to implement the provisions of this section for legislative approval in accordance with article three, chapter twenty-nine-a of this code. The rules must be consistent with standards established by the Federal Bureau of Investigation and the National Crime Prevention and Privacy Compact as authorized by 42 U. S. C. §14611, et seq.
(b) Certificates will initially be issued for a period to expire on June 30 following the date of issue.
(c) A certificate issued by the board prior to July 1, 2001, will for all purposes be considered a certificate issued under this section: Provided, That a person holding a certificate issued prior to July 1, 2001, must renew the certificate pursuant to section twelve of this article.
§30-9-33. Mandatory training in federal antitrust law and state action immunity.
It shall be required of the West Virginia Board of Accountancy, and their representatives from the Attorney General’s office, to obtain initial training on the subject of federal antitrust law and state action immunity by July 1, 2016, and thereafter on an annual basis. The purpose of the training is to provide those members with the knowledge to be able to identify the risks of any action that may be taken by the board that could be construed as possible antitrust violations.
In the event that a lawsuit is filed alleging violation of federal antitrust laws, the board may indemnify its board members and current and former employees for expenses reasonably incurred in connection with judicial or administrative proceedings to which they are or may become parties by reason of the performance of their official duties.