HB-5936, As Passed House, April 24, 2008
April 8, 2008, Introduced by Reps. Coulouris, Bieda, Griffin, Moore, Huizenga and Mayes and referred to the Committee on Banking and Financial Services.
A bill to amend 1980 PA 299, entitled
"Occupational code,"
by amending sections 720, 723, 724, 728, and 734 (MCL 339.720,
339.723, 339.724, 339.728, and 339.734), sections 720 and 724 as
added by 1997 PA 10, sections 723 and 734 as amended by 2005 PA
278, and section 728 as amended by 2000 PA 334, and by adding
sections 727a and 734a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 720. (1) As used in this article:
(a) "Attest" means providing the following financial statement
services:
(i) Any audit or other engagement to be performed in accordance
with the statements on auditing standards.
(ii) Any review of a financial statement to be performed in
accordance with the statements on standards for accounting and
review services.
(iii) Any examination of prospective financial information to be
performed in accordance with the statements on standards for
attestation engagements.
(iv) Any engagement to be performed in accordance with the
public company accounting oversight board auditing standards.
(b) (a)
"Certified public
accountant" means an individual who
is
qualified either of the
following:
(i) Qualified by education, examination, and experience to
engage or offer to engage in the practice of public accounting as
evidenced by the issuance of a certificate as a certified public
accountant
under section 725 or 726 to engage or offer to engage in
the
practice of public accounting and
a license or registration
issued under section 727.
(ii) An individual whose principal place of business is not in
this state and who satisfies the requirements set forth in section
727a.
(c) "Client" means a person or entity that engages a licensee
or licensee's employer to receive any service in the practice of
public accounting.
(d) "Compilation" means providing a service to be performed in
accordance with statements on standards for accounting and review
services that are presenting, in the form of financial statements,
information that is the representation of management or owners
without undertaking to express any assurance on the statements.
(e) (b)
"Firm" means a
corporation, partnership, limited
liability company, unincorporated association, sole proprietorship
operating under an assumed name, or other legal entity.
(f) "Home office" means the location specified by the client
as the address to which a service described in subdivision (a) or
(d) is directed.
(g) (c)
Subject to subsection (2),
"practice of public
accounting" means rendering or offering to render an opinion on or
attesting to or offering to attest to the reliability of a
representation or estimate, including, but not limited to, the
giving of an opinion in substance that financial information as set
forth
fairly presents fairly the condition of the entity reviewed
or audited, in regard to an entity embracing 1 or more of the
following:
(i) Financial information.
(ii) Facts respecting compliance with conditions established by
law or contract, including, but not limited to, a statute,
ordinance, regulation, grant, loan, or appropriation.
(iii) The scope of the accounting procedures rendered in
connection with the presentation of a financial statement.
(h) "Principal place of business" means the office location
designated by the licensee for the purposes of substantial
equivalency and reciprocity.
(i) "Report", when used with reference to financial
statements, means an opinion, report, or other form of language
that states or implies assurance as to the reliability of any
financial statements and that also includes, or is accompanied by,
any statement or implication that the person or firm issuing it has
special knowledge or competence in accounting or auditing. Such a
statement or implication of special knowledge or competence may
arise from use by the issuer of the report of names or titles
indicating that the person or firm is an accountant or auditor or
from the language of the report itself. Report includes any form of
language which disclaims an opinion when that form of language is
conventionally understood to imply any positive assurance as to the
reliability of the financial statements referred to or special
competence on the part of the person or firm issuing such language,
or both, and includes any other form of language that is
conventionally understood to imply that assurance or special
knowledge and competence, or both.
(2) In addition to the definition set forth in subsection
(1)(c)
(1)(g), practice of public accounting includes 1 or more
of
the following activities when performed or offered to be performed
by a person holding himself or herself out as a certified public
accountant for a client or a potential client:
(a) The issuance of reports on financial statements.
(b) One or more kinds of management advisory, financial
advisory, or consulting services.
(c) The preparation of tax returns.
(d) The furnishing of advice on tax matters.
Sec.
723. (1) Each licensed or registered individual holder of
a
certificate as a certified public accountant having complied with
the requirements described in section 720(1)(b) shall be known as a
certified
public accountant and a any
other person shall not use
that title or the abbreviation "CPA" or any other word, words,
letters, or figures to indicate that the person using them is a
certified public accountant unless the use is specifically approved
by the board. Use of the terms "certified accountant", "chartered
accountant", "public accountant", and "registered accountant" and
the abbreviations "C.A.", "P.A.", and "R.A." is specifically
prohibited as being prima facie misleading to the public.
(2) Except as provided in section 724, a person shall not
engage in the practice of public accounting either in the person's
own name, under an assumed name, or as a member of a firm or as an
employee,
unless the person holds a certificate as a certified
public
accountant and a Michigan license
as a certified public
accountant issued under this article or is practicing public
accounting in this state pursuant to section 727a.
(3) Unless use of a term is specifically approved by the
board, the display or uttering by a person of a card, sign,
advertisement, directory listing, or other printed, engraved, or
written instrument or device bearing a person's name in conjunction
with a title described in subsection (1) shall be prima facie
evidence that the person whose name is so displayed caused or
procured the display or uttering of the card, sign, advertisement,
directory listing, or other printed, engraved, or written
instrument or device. Evidence of the commission of a single act
prohibited by this section is sufficient to justify an injunction
or a conviction without evidence of a general course of conduct.
(4) Each licensed firm may use the designation "certified
public accountants" in connection with the firm name, except that a
licensed firm having only 1 member may use only the designation
"certified public accountant". An unlicensed firm shall not use the
designation "certified public accountants", "certified
accountants", "chartered accountants", "public accountants", or
"registered accountants" or the abbreviation "C.P.A.", "CPA",
"CPAs", "C.A.", "P.A.", or "R.A." in connection with the firm name
unless the firm is licensed under the laws of another licensing
jurisdiction and is permitted to practice in this state without
obtaining a license as described in section 728.
(5) A person that violates this section or a rule or order
promulgated or issued under or related to this section is liable
for an administrative fine payable to the department of not more
than $25,000.00 per violation.
(6) The department may conduct an investigation and proceed
under article 5 to enforce this section.
Sec. 724. This article does not prohibit the following:
(a) An individual who is not a certified public accountant
from serving as an employee of, or an assistant to, a certified
public accountant or firm composed of certified public accountants
licensed to practice under this article if the individual does not
issue an accounting or financial statement over his or her name.
(b)
A licensed certified public accountant of another state
licensing jurisdiction who does not meet the requirements of
section 727a, or an accountant who is licensed in a foreign country
for the practice of public accounting in that country, from
temporarily and periodically engaging in the practice of public
accounting in this state if all of the following requirements are
met:
(i) The individual is conducting a regular practice of public
accounting
in the other state another
licensing jurisdiction or
foreign country.
(ii) The temporary practice is conducted in conformity with
section 736 and applicable rules promulgated by the director, if
any.
(iii) The individual secures a temporary permit from the
department to conduct the practice in this state.
(c) A practicing attorney from preparing reports or presenting
records customarily prepared by an attorney in connection with the
attorney's professional work.
(d) A person from preparing a financial report or tax return,
not requiring the expression of an opinion on the report or return,
for filing with a federal, state, or local governmental unit.
(e) An officer, employee, partner, or principal of an
organization from signing a statement or report in reference to the
financial affairs of the organization with wording designating the
position, title, or office which the officer, employee, partner, or
principal of an organization holds in that organization.
(f) An act of a public official or public employee in the
performance of that individual's official duties.
(g) An individual who may be employed by more than 1 person or
firm from keeping books, making trial balances or statements, and
preparing audits or reports, if the audits or reports are not used
or issued by the employer as having been prepared by a certified
public accountant.
(h) A firm that does not hold a valid license under section
728 and that does not have an office in this state from providing
its professional services in this state in the practice of public
accountancy and from using the certified public accountant
designation so long as it complies with the requirements of section
728(5) or (6), whichever is applicable.
Sec. 727a. (1) An individual whose principal place of business
is not in this state shall be considered to have qualifications
substantially equivalent to this state's requirements, shall have
all the privileges of licensees of this state, and may practice
public accountancy without the need to obtain a certificate,
license, or temporary practice permit under this article, if the
individual meets either or both of the following:
(a) Holds a valid license as a certified public accountant
from another licensing jurisdiction that requires, as a condition
of licensure, that the individual meets all of the following:
(i) Has at least 150 semester hours of college education
including a baccalaureate or higher degree conferred by a college
or university.
(ii) Achieves a passing grade on the uniform certified public
accountant examination.
(iii) Possesses at least 1 year of experience including
providing any type of service or advice involving the use of
accounting, attest, compilation, management advisory, financial
advisory, tax, or consulting skills, all of which may be obtained
through government, industry, academic, or public practice as
verified by a licensee.
(b) Holds a valid license as a certified public accountant
from another licensing jurisdiction that does not meet the
requirements of subdivision (a), but such individual's certified
public accountant qualifications are substantially equivalent to
those requirements. Any individual who passed the uniform certified
public accountant examination and holds a valid license issued by
another licensing jurisdiction prior to January 1, 2012 is exempt
from the education requirement in subdivision (a)(i) for purposes of
this subdivision.
(2) Notwithstanding any other provision of law, an individual
who offers or renders professional services, whether in person or
by mail, telephone, or electronic means under this section shall be
granted practice privileges in this state, and no notice, fee, or
other submission shall be required of any such individual. Such an
individual is subject to the requirements of section 734a.
Sec. 728. (1) A firm organized for the practice of public
accounting shall apply for and obtain a Michigan license under this
article in order to engage in the practice of public accounting in
this
state . The if
either of the following apply:
(a) The firm establishes or maintains an office in this state.
(b) An individual representing the firm performs any
engagement described in section 720(1)(a)(i), (iii), or (iv) for any
client having its home office in this state.
(2) Reports produced pursuant to engagements in subsection
(1)(b) may be supervised or signed, or the report's signature may
be authorized for the firm, by an individual practicing public
accounting in Michigan pursuant to section 727a.
(3) A firm applying for licensure under this article shall
meet
both all of the following requirements:
(a) At least a simple majority of the equity and voting rights
of the firm are held directly or beneficially by individuals who
are licensed in good standing as certified public accountants of
this or another state or the equivalent in another licensing
jurisdiction acceptable to the board. Owners who are not certified
public accountants as defined by section 720(1)(b) must be active
individual participants in the firm or its affiliated entities. An
individual with practice privileges under section 727a who performs
services for which a firm permit is required under this section is
not required to obtain a certificate under section 726 or a
registration or license under section 727.
(b) The principal officer of the firm and each officer or
director having authority for the practice of public accounting by
the firm are licensed in good standing as certified public
accountants in this or another state or the equivalent in another
licensing jurisdiction acceptable to the board.
(c) Has filed the required certificate of authority with the
department pursuant to the business corporations act, 1972 PA 284,
MCL 450.2001 to 450.2098, if applicable.
(4) (2)
A firm shall provide a change in
address to the
department within 30 days of the change.
(5) A firm not required to obtain a Michigan license under
subsection (1) may perform a review engagement in accordance with
the statements on standards for accounting and review services or a
compilation for a client having its home office in this state, may
use the title "CPA" or "CPA firm", and may practice public
accountancy as authorized in this section without a license issued
under subsection (1) only if it meets both of the following
conditions:
(a) It has met the requirements in subsection (3)(a) and (b)
and section 729(2).
(b) It performs such services through an individual with
practice privileges under section 727a.
(6) A firm not required to obtain a Michigan license under
subsection (1) and that is not seeking to practice under subsection
(5) may perform other professional services within the practice of
public accountancy while using the title "CPA" or "CPA firm" in
this state without a license issued under subsection (1) only if it
meets both of the following conditions:
(a) It performs such services though an individual with
practice privileges under section 727a.
(b) It can lawfully do so in the licensing jurisdiction where
such individuals with practice privilege have their principal place
of business.
Sec. 734. (1) A holder of a certificate, registration, or
license as a certified public accountant ,
a registration, or a
license
an individual exercising the
practice privilege granted
under section 727a and the firm employing that individual is
subject to the penalties of section 602 for 1 or more of the
following:
(a) Fraud or deceit in obtaining a certificate or registration
as a certified public accountant, a license to practice public
accounting,
or a registration practice
privilege under this
article.
(b) Dishonesty, fraud, or negligence in the practice of public
accounting.
(c) Violation of a rule of professional conduct promulgated
under this article.
(d) Conviction of a felony under the laws of this or another
state or the United States or conviction of a crime, an element of
which is dishonesty, fraud, or negligence, under the laws of this
or another state or of the United States, including, but not
limited to, the failure to file a personal federal, state, or local
income tax return.
(e) Cancellation, revocation, suspension, or refusal to renew
authority to practice as a certified public accountant by another
state for a cause other than failure to pay a licensure or other
required fee in that state.
(f) Suspension or revocation for cause of the right to engage
in the practice of public accounting before a state or federal
agency.
(g) Conduct discreditable to the public accounting profession.
(h) Determination of mental incompetency by a court of law.
(i) A violation of this article or a rule promulgated under
this article.
(j) A violation of the provisions of section 604.
(k) A violation of professional standards regarding the
issuance of reports on financial statements; 1 or more kinds of
management advisory, financial advisory, or consulting services;
the preparation of tax returns; or the furnishing of advice on tax
matters.
(2) Notwithstanding section 602(e), a person that violates
this article or a rule or order promulgated or issued under or
related to this article is liable for an administrative fine
payable to the department of not more than $25,000.00 per
violation.
(3) Within 30 days after a final determination rendered by a
federal or state administrative agency or a judgment or conviction
issued by a federal court, a state court, or any other court of
record, a licensee or registrant shall report to the department in
writing or electronically a determination, order, judgment, or
conviction regarding a violation in which dishonesty, fraud, or
negligence is an element of that determination, order, judgment, or
conviction.
Sec. 734a. (1) An individual, having met the requirements of,
and exercising the practice privilege granted by, section 727a, and
the firm employing that individual, simultaneously consent to all
of the following as a condition of the exercise of that privilege:
(a) To the personal and subject matter jurisdiction and
disciplinary authority of the board and the department.
(b) To comply with this act and the applicable rules.
(c) In the event the license from the licensing jurisdiction
of the individual's principal place of business is no longer valid,
the individual will cease offering or rendering professional
services in this state individually and on behalf of a firm.
(d) To the appointment of the state board or other licensing
authority issuing his or her license as the agent upon whom process
may be served in any action or proceeding by this board against the
individual or the firm employing that individual.
(2) An individual having met the requirements as described by
section 727a may perform an engagement described in section
720(1)(a)(i), (iii), or (iv) for an entity with its home office in
this state only through a firm that has obtained a license under
section 728.
(3) A licensee of this state offering or rendering services or
using the certified public accountant title in another licensing
jurisdiction or before a state or federal agency is subject to the
disciplinary action in this state for an act committed in another
licensing jurisdiction or before a state or federal agency for
which the licensee would be subject to discipline for an act
committed in another licensing jurisdiction or before a state or
federal agency. The department is required to examine any complaint
made by the state board or other licensing jurisdictional authority
and may accept, as prima facie evidence of a violation of this act,
the final order of violation issued by another state board or other
licensing jurisdictional authority.