SB 795: Accountancy: practice privileges.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2018-09-17
Existing law provides for the licensure and regulation of the practice of accountancy by the California Board of Accountancy within the Department of Consumer Affairs.
(1)Existing law, until January 1, 2019, authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license, if certain conditions are met. Related provisions of existing law, until January 1, 2019, specifically address the denial, revocation, or administrative suspension of practice privileges and the authority of an individual with a practice privilege to sign attest reports. Existing law, until January 1, 2019, requires the board to add specified content on out-of-state licensees to its Internet Web site. Existing law suspends, until January 1, 2019, certain provisions relating to the enforcement of practice privileges and notification of intent to practice under such a privilege. Existing law also suspends until January 1, 2019, a condition that makes the operation of practice privilege provisions contingent on a specified appropriation in the annual Budget Act to fund them. Existing law prohibits a person from engaging in the practice of accountancy as a partnership unless the partnership is registered with the board and meets specified requirements. Existing law, until January 1, 2019, authorizes a partnership registered to provide certain services through an individual who qualifies for the practice privilege to meet those requirements.
This bill would delete the repeal provisions, thereby extending indefinitely the operation of the above-specified provisions relating to practice privileges indefinitely.
(2)Existing law, until January 1, 2019, authorizes the board to make a determination based on specified factors about whether allowing individuals from a particular state to practice pursuant to a practice privilege violates the boards duty to protect the public and requires the board, if it makes such a determination, to submit a notification form and pay specified fees. Existing law provides that, if a state has in place and is operating pursuant to best practice guidelines adopted by the National Association of State Boards of Accountancy, no practice privilege form is required, subject to specified requirements.
This bill would delete the repeal provisions, thereby extending the operation of those provisions indefinitely. The bill would additionally require the board to consider the fact that a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practice guidelines adopted by the National Association of State Boards of Accountancy when making that determination and would provide a process for redeterminations based on these factors. The bill, among other things, would also delete obsolete provisions relating to reporting and adopting emergency regulations.
(3)By increasing administrative fees deposited into the Accountancy Fund, a continuously appropriated fund, the bill would make an appropriation.
(4)By expanding the scope of an existing crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law provides for the licensure and regulation of the practice of accountancy by the California Board of Accountancy within the Department of Consumer Affairs.
(1)Existing law, until January 1, 2019, authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license, if certain conditions are met. Related provisions of existing law, until January 1, 2019, specifically address the denial, revocation, or administrative suspension of practice privileges and the authority of an individual with a practice privilege to sign attest reports. Existing law, until January 1, 2019, requires the board to add specified content on out-of-state licensees to its Internet Web site. Existing law suspends, until January 1, 2019, certain provisions relating to the enforcement of practice privileges and notification of intent to practice under such a privilege. Existing law also suspends until January 1, 2019, a condition that makes the operation of practice privilege provisions contingent on a specified appropriation in the annual Budget Act to fund them. Existing law prohibits a person from engaging in the practice of accountancy as a partnership unless the partnership is registered with the board and meets specified requirements. Existing law, until January 1, 2019, authorizes a partnership registered to provide certain services through an individual who qualifies for the practice privilege to meet those requirements.
This bill would delete the repeal provisions, thereby extending indefinitely the operation of the above-specified provisions relating to practice privileges indefinitely.
(2)Existing law, until January 1, 2019, authorizes the board to make a determination based on specified factors about whether allowing individuals from a particular state to practice pursuant to a practice privilege violates the boards duty to protect the public and requires the board, if it makes such a determination, to submit a notification form and pay specified fees. Existing law provides that, if a state has in place and is operating pursuant to best practice guidelines adopted by the National Association of State Boards of Accountancy, no practice privilege form is required, subject to specified requirements.
This bill would delete the repeal provisions, thereby extending the operation of those provisions indefinitely. The bill would additionally require the board to consider the fact that a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practice guidelines adopted by the National Association of State Boards of Accountancy when making that determination and would provide a process for redeterminations based on these factors. The bill, among other things, would also delete obsolete provisions relating to reporting and adopting emergency regulations.
(3)By increasing administrative fees deposited into the Accountancy Fund, a continuously appropriated fund, the bill would make an appropriation.
(4)By expanding the scope of an existing crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law provides for the licensure and regulation of the practice of accountancy by the California Board of Accountancy within the Department of Consumer Affairs.
(1)Existing law, until January 1, 2019, authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license, if certain conditions are met. Related provisions of existing law, until January 1, 2019, specifically address the denial, revocation, or administrative suspension of practice privileges and the authority of an individual with a practice privilege to sign attest reports. Existing law, until January 1, 2019, requires the board to add specified content on out-of-state licensees to its Internet Web site. Existing law suspends, until January 1, 2019, certain provisions relating to the enforcement of practice privileges and notification of intent to practice under such a privilege. Existing law also suspends until January 1, 2019, a condition that makes the operation of practice privilege provisions contingent on a specified appropriation in the annual Budget Act to fund them.
This bill would extend the repeal dates of the above-specified practice privilege provisions to January 1, 2020, and would change the operative date for the above-specified suspended provisions from January 1, 2019, to January 1, 2020. The bill would make certain other conforming changes.(2) them. Existing law prohibits a person from engaging in the practice of accountancy as a partnership unless the partnership is registered with the board and meets specified requirements. Existing law, until January 1, 2019, authorizes a partnership registered to provide certain services through an individual who qualifies for the practice privilege to meet those requirements.
This bill would extend the repeal date to January 1, 2020. delete the repeal provisions, thereby extending indefinitely the operation of the above-specified provisions relating to practice privileges indefinitely.
(3)(2)Existing law, until January 1, 2019, authorizes the board to make a determination based on specified factors about whether allowing individuals from a particular state to practice pursuant to a practice privilege violates the boards duty to protect the public and requires the board, if it makes such a determination, to submit a notification form and pay specified fees. Existing law provides that, if a state has in place and is operating pursuant to best practice guidelines adopted by the National Association of State Boards of Accountancy, no practice privilege form is required, subject to specified requirements.
This bill would delete the repeal provision, provisions, thereby extending the operation of those provisions indefinitely. The bill would additionally require the board to consider the fact that a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practice guidelines adopted by the National Association of State Boards of Accountancy when making that determination and would provide a process for redeterminations based on these factors. The bill, among other things, would also delete obsolete provisions relating to reporting and adopting emergency regulations.
Existing(3)Existing law prohibits engaging in the practice of public accountancy without a valid permit or practice privilege and makes a violation of these provisions a crime. Existing law requires funds received by the board pursuant to the provisions regulating the practice of accounting to be deposited to the credit of the Accountancy Fund and continuously appropriates money in the Accountancy Fund to the board to carry out those provisions.
This bill would require individuals whose principal place of business is in a state that is subject an action of the board to not allow individuals from that state to practice pursuant to a practice privilege to submit notification to the board prior to practicing in California, and to pay a fee equal to reasonable administrative costs as established by the board. By increasing administrative fees deposited into the Accountancy Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would make failure to comply with these provisions unlawful, and would authorize the board to impose a fine that is equal to reasonable enforcement costs, in addition to other existing remedies. By expanding the scope of an existing crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law provides for the licensure and regulation of the practice of accountancy by the California Board of Accountancy within the Department of Consumer Affairs.
(1)Existing law, until January 1, 2019, authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license, if certain conditions are met. Related provisions of existing law, until January 1, 2019, specifically address the denial, revocation, or administrative suspension of practice privileges and the authority of an individual with a practice privilege to sign attest reports. Existing law, until January 1, 2019, requires the board to add specified content on out-of-state licensees to its Internet Web site. Existing law suspends, until January 1, 2019, certain provisions relating to the enforcement of practice privileges and notification of intent to practice under such a privilege. Existing law also suspends until January 1, 2019, a condition that makes the operation of practice privilege provisions contingent on a specified appropriation in the annual Budget Act to fund them.
This bill would extend the repeal dates of the above-specified practice privilege provisions to January 1, 2020, and would change the operative date for the above-specified suspended provisions from January 1, 2019, to January 1, 2020. The bill would make certain other conforming changes.
(2)Existing law prohibits a person from engaging in the practice of accountancy as a partnership unless the partnership is registered with the board and meets specified requirements. Existing law, until January 1, 2019, authorizes a partnership registered to provide certain services through an individual who qualifies for the practice privilege to meet those requirements.
This bill would extend the repeal date to January 1, 2020.
(3)Existing law, until January 1, 2019, authorizes the board to make a determination based on specified factors about whether allowing individuals from a particular state to practice pursuant to a practice privilege violates the boards duty to protect the public and requires the board, if it makes such a determination, to impose certain additional requirements on individuals. Existing law, until January 1, 2019, requires the board, by January 1, 2018, to prepare a report to be provided to the relevant policy committees of the Legislature and the director detailing, among other things, how the board has implemented these practice privilege provisions. submit a notification form and pay specified fees. Existing law provides that, if a state has in place and is operating pursuant to best practice guidelines adopted by the National Association of State Boards of Accountancy, no practice privilege form is required, subject to specified requirements.
This bill would extend the repeal dates to January 1, 2020. delete the repeal provision, thereby extending the operation of those provisions indefinitely. The bill would additionally require the board to consider the fact that a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practice guidelines adopted by the National Association of State Boards of Accountancy when making that determination and would provide a process for redeterminations based on these factors. The bill, among other things, would also delete obsolete provisions relating to reporting and adopting emergency regulations.
Existing law prohibits engaging in the practice of public accountancy without a valid permit or practice privilege and makes a violation of these provisions a crime. Existing law requires funds received by the board pursuant to the provisions regulating the practice of accounting to be deposited to the credit of the Accountancy Fund and continuously appropriates money in the Accoutancy Accountancy Fund to the board to carry out those provisions.
This bill, until January 1, 2020, bill would require individuals whose principal place of business is in another a state that is subject to a board determination an action of the board to not allow individuals from that state to practice pursuant to a practice privilege to submit notification to the board prior to practicing in California, and to pay a fee equal to reasonable administrative costs as established by the board. By increasing administrative fees deposited into the Accountancy Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would make failure to comply with these provisions unlawful, and would authorize the board to impose a fine that is equal to reasonable enforcement costs, in addition to other existing remedies. By expanding the scope of an existing crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law provides for the licensure and regulation of the practice of accountancy by the California Board of Accountancy within the Department of Consumer Affairs.
(1)Existing law, until January 1, 2019, authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license, if certain conditions are met, including a requirement that the individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years. met. Related provisions of existing law, until January 1, 2019, specifically address the denial, revocation, or administrative suspension of practice privileges and the authority of an individual with a practice privilege to sign attest reports. Existing law, until January 1, 2019, requires the board to add specified content on out-of-state licensees to its Internet Web site. Existing law suspends, until January 1, 2019, certain provisions relating to the enforcement of practice privileges and notification of intent to practice under such a privilege. Existing law also suspends until January 1, 2019, a condition that makes the operation of practice privilege provisions contingent on a specified appropriation in the annual Budget Act to fund them.
This bill would require that the term of continual practice under a valid license be for at least 5 years. The bill would remove those January 1, 2019, repeal dates, thereby making the affected provisions operative indefinitely. The bill would repeal the suspended enforcement and contingent operation provisions. extend the repeal dates of the above-specified practice privilege provisions to January 1, 2020, and would change the operative date for the above-specified suspended provisions from January 1, 2019, to January 1, 2020. The bill would make certain other conforming changes.
(2)Existing law prohibits a person from engaging in the practice of accountancy as a partnership unless the partnership is registered with the board and meets specified requirements. Existing law, until January 1, 2019, authorizes a partnership registered to provide certain services through an individual who qualifies for the practice privilege to meet those requirements.
This bill would remove the January 1, 2019, repeal date, thereby making that partnership provision operative indefinitely. extend the repeal date to January 1, 2020.
(3)Existing law, until January 1, 2019, authorizes the board to make a determination based on specified factors about whether allowing individuals from a particular state to practice pursuant to a practice privilege violates the boards duty to protect the public and requires the board, if it makes such a determination, to impose certain additional requirements on individuals. Existing law, until January 1, 2019, requires the board, by January 1, 2018, to prepare a report to be provided to the relevant policy committees of the Legislature and the director detailing, among other things, how the board has implemented these practice privilege provisions.
This bill would remove those January 1, 2019, repeal dates, thereby making the affected provisions operative indefinitely. extend the repeal dates to January 1, 2020.
Existing law prohibits engaging in the practice of public accountancy without a valid permit or practice privilege and makes a violation of these provisions a crime. Existing law requires funds received by the board pursuant to the provisions regulating the practice of accounting to be deposited to the credit of the Accountancy Fund and continuously appropriates money in the Accoutancy Fund to the board to carry out those provisions.
This bill, until January 1, 2020, would require individuals whose principal place of business is in another state that is subject to a board determination to submit notification to the board prior to practicing in California, and to pay a fee equal to reasonable administrative costs as established by the board. By increasing administrative fees deposited into the Accountancy Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would make failure to comply with these provisions unlawful, and would authorize the board to impose a fine that is equal to reasonable enforcement costs, in addition to other existing remedies. By expanding the scope of an existing crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law provides for the licensure and regulation of the practice of accountancy by the California Board of Accountancy within the Department of Consumer Affairs.
(1)Existing law, until January 1, 2019, authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license, if certain conditions are met, including a requirement that the individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years. Related provisions of existing law, until January 1, 2019, specifically address the denial, revocation, or administrative suspension of practice privileges and the authority of an individual with a practice privilege to sign attest reports. Existing law, until January 1, 2019, requires the board to add specified content on out-of-state licensees to its Internet Web site. Existing law suspends, until January 1, 2019, certain provisions relating to the enforcement of practice privileges and notification of intent to practice under such a privilege. Existing law also suspends until January 1, 2019, a condition that makes the operation of practice privilege provisions contingent on a specified appropriation in the annual Budget Act to fund them.
This bill would require that the term of continual practice under a valid license be for at least 5 years. The bill would remove those January 1, 2019, repeal dates, thereby making the affected provisions operative indefinitely. The bill would repeal the suspended enforcement and contingent operation provisions. The bill would make certain other conforming changes.
(2)Existing law prohibits a person from engaging in the practice of accountancy as a partnership unless the partnership is registered with the board and meets specified requirements. Existing law, until January 1, 2019, authorizes a partnership registered to provide certain services through an individual who qualifies for the practice privilege to meet those requirements.
This bill would remove the January 1, 2019, repeal date, thereby making that partnership provision operative indefinitely.
(3)Existing law, until January 1, 2019, authorizes the board to make a determination based on specified factors about whether allowing individuals from a particular state to practice pursuant to a practice privilege violates the boards duty to protect the public and requires the board, if it makes such a determination, to impose certain additional requirements on individuals. Existing law, until January 1, 2019, requires the board, by January 1, 2018, to prepare a report to be provided to the relevant policy committees of the Legislature and the director detailing, among other things, how the board has implemented these practice privilege provisions.
This bill would remove those January 1, 2019, repeal dates, thereby making the affected provisions operative indefinitely.
(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088, or the partnership shall be registered pursuant to subdivision (c) of Section 5096.12.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088, except for a partner with practice privileges pursuant to Section 5096.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is repealed.SEC. 3.Section 5096 of the Business and Professions Code, as amended by Section 6 of Chapter 400 of the Statutes of 2014, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years.
(2)The individual has a license, certificate, or permit from a state that has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)An individual who qualifies for the practice privilege under this section may engage in the practice of public accountancy in this state, and a notice, fee, or other requirement shall not be imposed on that individual by the board.
(d)An individual who qualifies for the practice privilege under this section may perform the following services only through a firm of certified public accountants that has obtained a registration from the board pursuant to Section 5096.12:
(1)An audit or review of a financial statement for an entity headquartered in California.
(2)A compilation of a financial statement when that person expects, or reasonably might expect, that a third party will use the financial statement and the compilation report does not disclose a lack of independence for an entity headquartered in California.
(3)An examination of prospective financial information for an entity headquartered in California.
(e)An individual who holds a practice privilege under this article, and is exercising the practice privilege in California:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state, except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when the individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(6)Shall cease exercising the practice privilege in this state if the regulatory agency in the state in which the individuals certificate, license, or permit was issued takes disciplinary action resulting in the suspension or revocation, including stayed suspension, stayed revocation, or probation of the individuals certificate, license, or permit, or takes other disciplinary action against the individuals certificate, license, or permit that arises from any of the following:
(A)Gross negligence, recklessness, or intentional wrongdoing relating to the practice of public accountancy.
(B)Fraud or misappropriation of funds.
(C)Preparation, publication, or dissemination of false, fraudulent, or materially incomplete or misleading financial statements, reports, or information.
(7)Shall cease exercising the practice privilege in this state if convicted in any jurisdiction of any crime involving dishonesty, including, but not limited to, embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or other valuable consideration by fraudulent means or false pretenses.
(8)Shall cease exercising the practice privilege if the United States Securities and Exchange Commission or the Public Company Accounting Oversight Board bars the individual from practicing before them.
(9)Shall cease exercising the practice privilege if any governmental body or agency suspends the right of the individual to practice before the body or agency.
(10)Shall report to the board in writing any pending criminal charges, other than for a minor traffic violation, in any jurisdiction within 30 days of the date the individual has knowledge of those charges.
(f)An individual who is required to cease practice pursuant to paragraphs (6) to (9), inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until he or she has received from the board written permission to do so.
(g)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by subdivision (f) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or (f) shall, for a minimum of one year from the date the board learns there has been a violation of subdivision (e) or (f), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individuals practice privilege shall be revoked and there shall be no possibility of reinstatement for a minimum of two years.
(h)The board shall require an individual who provides notice to the board pursuant to subdivision (f) to cease the practice of public accountancy in this state until the board provides the individual with written permission to resume the practice of public accountancy in this state.
(i)(1)An individual to whom, within the last seven years immediately preceding the date on which he or she wishes to practice in this state, any of the following criteria apply, shall notify the board, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until the board provides the individual with written permission to do so:
(A)He or she has been the subject of any final disciplinary action by the licensing or disciplinary authority of any other jurisdiction with respect to any professional license or has any charges of professional misconduct pending against him or her in any other jurisdiction.
(B)He or she has had his or her license in another jurisdiction reinstated after a suspension or revocation of the license.
(C)He or she has been denied issuance or renewal of a professional license or certificate in any other jurisdiction for any reason other than an inadvertent administrative error.
(D)He or she has been convicted of a crime or is subject to pending criminal charges in any jurisdiction other than a minor traffic violation.
(E)He or she has otherwise acquired a disqualifying condition as described in subdivision (a) of Section 5096.2.
(2)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by paragraph (1) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or paragraph (1) shall, for a minimum of one year from the date the board knows there has been a violation of subdivision (e) or paragraph (1), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individual shall be prohibited from practicing in this state in the same manner as if a licensee has his or her practice privilege revoked and there shall be no possibility of reinstatement for a minimum of two years.
SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 5.Section 5096.1 of the Business and Professions Code, as added by Section 12 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who does not qualify to practice pursuant to the practice privilege described in Section 5096 and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may revoke a practice privilege from any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 7.Section 5096.2 of the Business and Professions Code, as amended by Section 4 of Chapter 319 of the Statutes of 2013, is amended to read:5096.2.(a)(1)Practice privileges may be revoked for any of the following reasons:
(A)If an individual no longer qualifies under, or complies with, the provisions of this article, including, but not limited to, Section 5096, or implementing regulations.
(B)If an individual commits any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480.
(C)If an individual commits any act that if committed by a licensee would be grounds for discipline under Section 5100.
(D)If an individual commits any act outside of this state that would be a violation if committed within this state.
(E)If an individual acquires at any time, while exercising the practice privilege, any disqualifying condition under paragraph (2).
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(D)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(b)The board may revoke practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is revoked.
(B)The reasons for revocation.
(C)The earliest date on which the individual may qualify for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual whose practice privilege has been revoked may only subsequently exercise the practice privilege upon application to the board for reinstatement of the practice privilege not less than one year after the effective date of the notice or decision revoking the practice privilege, unless a longer time period is specified in the notice or decision revoking the practice privilege.
(d)Holders of practice privileges are subject to suspension, citations, fines, or other disciplinary actions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations adopted thereunder.
(e)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(f)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board, shall apply under this article.
(g)If the board revokes or otherwise limits an individuals practice privilege, the board shall promptly notify the regulatory agency of the state or states in which the individual is licensed, and the United States Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the National Association of State Boards of Accountancy.
SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 9.Section 5096.3 of the Business and Professions Code is repealed.SEC. 10.Section 5096.4 of the Business and Professions Code, as amended by Section 7 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation. The board shall consult the Public Company Accounting Oversight Board and the United States Securities and Exchange Commission at least once every six months to identify out-of-state licensees who may have disqualifying conditions or who may be obliged to cease practice, and shall disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully permitted to exercise the privilege. Disclosure of this information shall not be considered discipline.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the revocation of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state.
(g)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for revocation or discipline of a practice privilege.
SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is repealed.SEC. 12.Section 5096.5 of the Business and Professions Code, as added by Section 23 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095.
SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 14.Section 5096.6 of the Business and Professions Code, as added by Section 26 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 16.Section 5096.7 of the Business and Professions Code, as added by Section 29 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(c)For purposes of this article, the term license includes certificate or permit.
SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 18.Section 5096.9 of the Business and Professions Code is amended to read:5096.9.(a)The board is authorized to adopt regulations to implement, interpret, or make specific the provisions of this article.
(b)The board may adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish policies, guidelines, and procedures to initially implement this article as it goes into effect on July 1, 2013. The adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, or general welfare. The emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State in accordance with the Administrative Procedure Act.
(c)(1)Notwithstanding any other law, to ensure uninterrupted implementation of this article, the board may adopt or amend regulations consistent with Section 100 of Title 1 of the California Code of Regulations to remove or extend the inoperative date of its regulations in Article 3 (commencing with Section 18) of Division 1 of Title 16 of the California Code of Regulations, or to remove the inoperative dates for the regulations in Article 4 (commencing with Section 26) of Division 1 of Title 16 of the California Code of Regulations.
(2)Notwithstanding any other law, the Office of Administrative Law shall consider the boards action to remove or extend the inoperative dates of these regulations as a change without regulatory effect as described in Section 100 of Title 1 of the California Code of Regulations that exempts the board from complying with the rulemaking procedure specified in the Administrative Procedure Act (Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code).
SEC. 19.Section 5096.10 of the Business and Professions Code is repealed.SEC. 20.Section 5096.12 of the Business and Professions Code, as amended by Section 5 of Chapter 319 of the Statutes of 2013, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)A firm that provides the services described in subdivision (d) of Section 5096 shall obtain a registration from the board.
SEC. 21.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 22.Section 5096.13 of the Business and Professions Code is repealed.SEC. 23.Section 5096.14 of the Business and Professions Code is repealed.SEC. 24.Section 5096.15 of the Business and Professions Code is repealed.SEC. 25.Section 5096.20 of the Business and Professions Code is amended to read:5096.20.(a)To ensure that Californians are protected from out-of-state licensees with disqualifying conditions who may unlawfully attempt to practice in this state under a practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee feature to its license lookup tab of the home page of its Internet Web site that allows consumers to obtain information about an individual whose principal place of business is not in this state and who seeks to exercise a practice privilege in this state, that is at least equal to the information that was available to consumers through its home page prior to January 1, 2013, through the practice privilege form previously filed by out-of-state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of 2004, and the regulations adopted thereunder. At minimum, these features shall include all of the following:
(1)The ability of the consumer to search by name and state of licensure.
(2)The disclosure of information in the possession of the board, which the board is otherwise authorized to publicly disclose, about an individual exercising a practice privilege in this state, including, but not limited to, whether the board has taken action of any form against that individual and, if so, what the action was or is.
(3)A disclaimer that the consumer must click through prior to being referred to any other Internet Web site, which in plain language explains that the consumer is being referred to an Internet Web site that is maintained by a regulatory agency or other entity that is not affiliated with the board. This disclaimer shall include a link to relevant sections of this article that set forth disqualifying conditions, including, but not limited to, Section 5096.2.
(4)A statement in plain language that notifies consumers that they are permitted to file complaints against such individuals with the board.
(5)A link to the Internet Web site or sites that the board determines, in its discretion, provides the consumer the most complete and reliable information available about the individuals status as a licenseholder, permitholder, or certificate holder.
(6)If the board of another state does not maintain an Internet Web site that allows a consumer to obtain information about its licensees including, but not limited to, disciplinary history, and that information is not available through a link to an Internet Web site maintained by another entity, a link to contact information for that board, which contains a disclaimer in plain language that explains that the consumer is being referred to a board that does not permit the consumer to obtain information, including, but not limited to, disciplinary history, about individuals through the Internet Web site, and that the out-of-state board is not affiliated with the board.
(b)The board shall biennially survey the Internet Web sites and disclosure policies of other boards to ensure that its disclaimers are accurate.
SEC. 26.Section 5096.21 of the Business and Professions Code is amended to read:5096.21.(a)(1)On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the boards duty to protect the public, pursuant to Section 5000.1, the board shall require out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by Section 5096.22.
(2)A state for which the board has made a determination pursuant to paragraph (1) to require individuals licensed from that state to file a notification form and pay the applicable fees may subsequently be redetermined by the board, by majority vote of the board at a regularly scheduled meeting, to allow individuals from that state to practice in this state pursuant to a practice privilege as described in Section 5096.
(b)The board shall, at minimum, consider the following factors when making a determination or redetermination pursuant to subdivision (a):
(1)Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2)Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an Internet Web site to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3)Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(4)Whether the state has in place and is operating pursuant to enforcement practices substantially equivalent to the current best practices guidelines adopted by the National Association of State Boards of Accountancy provided those guidelines have been determined by the board to meet or exceed the boards own enforcement practices.
(c)On or before July 1, 2014, the board shall convene a stakeholder group consisting of members of the board, board enforcement staff, and representatives of the accounting profession and consumer representatives to consider whether the provisions of this article are consistent with the boards duty to protect the public consistent with Section 5000.1, and whether the provisions of this article satisfy the objectives of stakeholders of the accounting profession in this state, including consumers. The group, at its first meeting, shall adopt policies and procedures relative to how it will conduct its business, including, but not limited to, policies and procedures addressing periodic reporting of its findings to the board. The group shall provide recommendations to the board on any matter upon which it is authorized to act.
SEC. 27.Section 5096.22 is added to the Business and Professions Code, to read:5096.22.(a)An individual whose principal place of business is in a state subject to an action of the board pursuant to Section 5096.21 shall do both of the following:
(1)Prior to practicing, submit a notification form to the board in a manner prescribed by board regulation.
(2)Pay a fee equal to the reasonable administrative costs, as established by the board.
(b)Except as otherwise provided by this article or by board regulation, a practice privilege subject to this section shall commence when the individual submits a properly completed notification form to the board, provided that the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(c)An individual shall not be deemed to be in violation of this section solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (a), provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this subdivision shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee. Failure to comply with this section means that the individual is practicing public accountancy unlawfully in this state and is in violation of Section 5120. In addition to any other available remedy, the board may issue a fine equal to reasonable enforcement costs if an individual notifies the board more than five business days after beginning practice in California.
(d)An individual whose principal place of business is in a state subject to an action by the board pursuant to Section 5096.21 shall not be deemed in violation of the notice and fee requirements of this section if the failure to comply occurs within 60 days of the date of the board action.
SEC. 28.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088, or the partnership shall be registered pursuant to subdivision (c) of Section 5096.12.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088, except for a partner with practice privileges pursuant to Section 5096.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is repealed.SEC. 3.Section 5096 of the Business and Professions Code, as amended by Section 6 of Chapter 400 of the Statutes of 2014, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years.
(2)The individual has a license, certificate, or permit from a state that has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)An individual who qualifies for the practice privilege under this section may engage in the practice of public accountancy in this state, and a notice, fee, or other requirement shall not be imposed on that individual by the board.
(d)An individual who qualifies for the practice privilege under this section may perform the following services only through a firm of certified public accountants that has obtained a registration from the board pursuant to Section 5096.12:
(1)An audit or review of a financial statement for an entity headquartered in California.
(2)A compilation of a financial statement when that person expects, or reasonably might expect, that a third party will use the financial statement and the compilation report does not disclose a lack of independence for an entity headquartered in California.
(3)An examination of prospective financial information for an entity headquartered in California.
(e)An individual who holds a practice privilege under this article, and is exercising the practice privilege in California:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state, except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when the individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(6)Shall cease exercising the practice privilege in this state if the regulatory agency in the state in which the individuals certificate, license, or permit was issued takes disciplinary action resulting in the suspension or revocation, including stayed suspension, stayed revocation, or probation of the individuals certificate, license, or permit, or takes other disciplinary action against the individuals certificate, license, or permit that arises from any of the following:
(A)Gross negligence, recklessness, or intentional wrongdoing relating to the practice of public accountancy.
(B)Fraud or misappropriation of funds.
(C)Preparation, publication, or dissemination of false, fraudulent, or materially incomplete or misleading financial statements, reports, or information.
(7)Shall cease exercising the practice privilege in this state if convicted in any jurisdiction of any crime involving dishonesty, including, but not limited to, embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or other valuable consideration by fraudulent means or false pretenses.
(8)Shall cease exercising the practice privilege if the United States Securities and Exchange Commission or the Public Company Accounting Oversight Board bars the individual from practicing before them.
(9)Shall cease exercising the practice privilege if any governmental body or agency suspends the right of the individual to practice before the body or agency.
(10)Shall report to the board in writing any pending criminal charges, other than for a minor traffic violation, in any jurisdiction within 30 days of the date the individual has knowledge of those charges.
(f)An individual who is required to cease practice pursuant to paragraphs (6) to (9), inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until he or she has received from the board written permission to do so.
(g)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by subdivision (f) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or (f) shall, for a minimum of one year from the date the board learns there has been a violation of subdivision (e) or (f), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individuals practice privilege shall be revoked and there shall be no possibility of reinstatement for a minimum of two years.
(h)The board shall require an individual who provides notice to the board pursuant to subdivision (f) to cease the practice of public accountancy in this state until the board provides the individual with written permission to resume the practice of public accountancy in this state.
(i)(1)An individual to whom, within the last seven years immediately preceding the date on which he or she wishes to practice in this state, any of the following criteria apply, shall notify the board, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until the board provides the individual with written permission to do so:
(A)He or she has been the subject of any final disciplinary action by the licensing or disciplinary authority of any other jurisdiction with respect to any professional license or has any charges of professional misconduct pending against him or her in any other jurisdiction.
(B)He or she has had his or her license in another jurisdiction reinstated after a suspension or revocation of the license.
(C)He or she has been denied issuance or renewal of a professional license or certificate in any other jurisdiction for any reason other than an inadvertent administrative error.
(D)He or she has been convicted of a crime or is subject to pending criminal charges in any jurisdiction other than a minor traffic violation.
(E)He or she has otherwise acquired a disqualifying condition as described in subdivision (a) of Section 5096.2.
(2)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by paragraph (1) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or paragraph (1) shall, for a minimum of one year from the date the board knows there has been a violation of subdivision (e) or paragraph (1), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individual shall be prohibited from practicing in this state in the same manner as if a licensee has his or her practice privilege revoked and there shall be no possibility of reinstatement for a minimum of two years.
SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 5.Section 5096.1 of the Business and Professions Code, as added by Section 12 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who does not qualify to practice pursuant to the practice privilege described in Section 5096 and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may revoke a practice privilege from any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 7.Section 5096.2 of the Business and Professions Code, as amended by Section 4 of Chapter 319 of the Statutes of 2013, is amended to read:5096.2.(a)(1)Practice privileges may be revoked for any of the following reasons:
(A)If an individual no longer qualifies under, or complies with, the provisions of this article, including, but not limited to, Section 5096, or implementing regulations.
(B)If an individual commits any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480.
(C)If an individual commits any act that if committed by a licensee would be grounds for discipline under Section 5100.
(D)If an individual commits any act outside of this state that would be a violation if committed within this state.
(E)If an individual acquires at any time, while exercising the practice privilege, any disqualifying condition under paragraph (2).
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(D)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(b)The board may revoke practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is revoked.
(B)The reasons for revocation.
(C)The earliest date on which the individual may qualify for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual whose practice privilege has been revoked may only subsequently exercise the practice privilege upon application to the board for reinstatement of the practice privilege not less than one year after the effective date of the notice or decision revoking the practice privilege, unless a longer time period is specified in the notice or decision revoking the practice privilege.
(d)Holders of practice privileges are subject to suspension, citations, fines, or other disciplinary actions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations adopted thereunder.
(e)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(f)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board, shall apply under this article.
(g)If the board revokes or otherwise limits an individuals practice privilege, the board shall promptly notify the regulatory agency of the state or states in which the individual is licensed, and the United States Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the National Association of State Boards of Accountancy.
SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 9.Section 5096.3 of the Business and Professions Code is repealed.SEC. 10.Section 5096.4 of the Business and Professions Code, as amended by Section 7 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation. The board shall consult the Public Company Accounting Oversight Board and the United States Securities and Exchange Commission at least once every six months to identify out-of-state licensees who may have disqualifying conditions or who may be obliged to cease practice, and shall disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully permitted to exercise the privilege. Disclosure of this information shall not be considered discipline.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the revocation of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state.
(g)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for revocation or discipline of a practice privilege.
SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is repealed.SEC. 12.Section 5096.5 of the Business and Professions Code, as added by Section 23 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095.
SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 14.Section 5096.6 of the Business and Professions Code, as added by Section 26 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 16.Section 5096.7 of the Business and Professions Code, as added by Section 29 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(c)For purposes of this article, the term license includes certificate or permit.
SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 18.Section 5096.9 of the Business and Professions Code is amended to read:5096.9.(a)The board is authorized to adopt regulations to implement, interpret, or make specific the provisions of this article.
(b)The board may adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish policies, guidelines, and procedures to initially implement this article as it goes into effect on July 1, 2013. The adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, or general welfare. The emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State in accordance with the Administrative Procedure Act.
(c)(1)Notwithstanding any other law, to ensure uninterrupted implementation of this article, the board may adopt or amend regulations consistent with Section 100 of Title 1 of the California Code of Regulations to remove or extend the inoperative date of its regulations in Article 3 (commencing with Section 18) of Division 1 of Title 16 of the California Code of Regulations, or to remove the inoperative dates for the regulations in Article 4 (commencing with Section 26) of Division 1 of Title 16 of the California Code of Regulations.
(2)Notwithstanding any other law, the Office of Administrative Law shall consider the boards action to remove or extend the inoperative dates of these regulations as a change without regulatory effect as described in Section 100 of Title 1 of the California Code of Regulations that exempts the board from complying with the rulemaking procedure specified in the Administrative Procedure Act (Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code).
SEC. 19.Section 5096.10 of the Business and Professions Code is repealed.SEC. 20.Section 5096.12 of the Business and Professions Code, as amended by Section 5 of Chapter 319 of the Statutes of 2013, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)A firm that provides the services described in subdivision (d) of Section 5096 shall obtain a registration from the board.
SEC. 21.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 22.Section 5096.13 of the Business and Professions Code is repealed.SEC. 23.Section 5096.14 of the Business and Professions Code is repealed.SEC. 24.Section 5096.15 of the Business and Professions Code is repealed.SEC. 25.Section 5096.20 of the Business and Professions Code is amended to read:5096.20.(a)To ensure that Californians are protected from out-of-state licensees with disqualifying conditions who may unlawfully attempt to practice in this state under a practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee feature to its license lookup tab of the home page of its Internet Web site that allows consumers to obtain information about an individual whose principal place of business is not in this state and who seeks to exercise a practice privilege in this state, that is at least equal to the information that was available to consumers through its home page prior to January 1, 2013, through the practice privilege form previously filed by out-of-state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of 2004, and the regulations adopted thereunder. At minimum, these features shall include all of the following:
(1)The ability of the consumer to search by name and state of licensure.
(2)The disclosure of information in the possession of the board, which the board is otherwise authorized to publicly disclose, about an individual exercising a practice privilege in this state, including, but not limited to, whether the board has taken action of any form against that individual and, if so, what the action was or is.
(3)A disclaimer that the consumer must click through prior to being referred to any other Internet Web site, which in plain language explains that the consumer is being referred to an Internet Web site that is maintained by a regulatory agency or other entity that is not affiliated with the board. This disclaimer shall include a link to relevant sections of this article that set forth disqualifying conditions, including, but not limited to, Section 5096.2.
(4)A statement in plain language that notifies consumers that they are permitted to file complaints against such individuals with the board.
(5)A link to the Internet Web site or sites that the board determines, in its discretion, provides the consumer the most complete and reliable information available about the individuals status as a licenseholder, permitholder, or certificate holder.
(6)If the board of another state does not maintain an Internet Web site that allows a consumer to obtain information about its licensees including, but not limited to, disciplinary history, and that information is not available through a link to an Internet Web site maintained by another entity, a link to contact information for that board, which contains a disclaimer in plain language that explains that the consumer is being referred to a board that does not permit the consumer to obtain information, including, but not limited to, disciplinary history, about individuals through the Internet Web site, and that the out-of-state board is not affiliated with the board.
(b)The board shall biennially survey the Internet Web sites and disclosure policies of other boards to ensure that its disclaimers are accurate.
SEC. 26.Section 5096.21 of the Business and Professions Code is amended to read:5096.21.(a)(1)On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the boards duty to protect the public, pursuant to Section 5000.1, the board shall require out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by Section 5096.22.
(2)A state for which the board has made a determination pursuant to paragraph (1) to require individuals licensed from that state to file a notification form and pay the applicable fees may subsequently be redetermined by the board, by majority vote of the board at a regularly scheduled meeting, to allow individuals from that state to practice in this state pursuant to a practice privilege as described in Section 5096.
(b)The board shall, at minimum, consider the following factors when making a determination or redetermination pursuant to subdivision (a):
(1)Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2)Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an Internet Web site to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3)Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(4)Whether the state has in place and is operating pursuant to enforcement practices substantially equivalent to the current best practices guidelines adopted by the National Association of State Boards of Accountancy provided those guidelines have been determined by the board to meet or exceed the boards own enforcement practices.
(c)On or before July 1, 2014, the board shall convene a stakeholder group consisting of members of the board, board enforcement staff, and representatives of the accounting profession and consumer representatives to consider whether the provisions of this article are consistent with the boards duty to protect the public consistent with Section 5000.1, and whether the provisions of this article satisfy the objectives of stakeholders of the accounting profession in this state, including consumers. The group, at its first meeting, shall adopt policies and procedures relative to how it will conduct its business, including, but not limited to, policies and procedures addressing periodic reporting of its findings to the board. The group shall provide recommendations to the board on any matter upon which it is authorized to act.
SEC. 27.Section 5096.22 is added to the Business and Professions Code, to read:5096.22.(a)An individual whose principal place of business is in a state subject to an action of the board pursuant to Section 5096.21 shall do both of the following:
(1)Prior to practicing, submit a notification form to the board in a manner prescribed by board regulation.
(2)Pay a fee equal to the reasonable administrative costs, as established by the board.
(b)Except as otherwise provided by this article or by board regulation, a practice privilege subject to this section shall commence when the individual submits a properly completed notification form to the board, provided that the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(c)An individual shall not be deemed to be in violation of this section solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (a), provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this subdivision shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee. Failure to comply with this section means that the individual is practicing public accountancy unlawfully in this state and is in violation of Section 5120. In addition to any other available remedy, the board may issue a fine equal to reasonable enforcement costs if an individual notifies the board more than five business days after beginning practice in California.
(d)An individual whose principal place of business is in a state subject to an action by the board pursuant to Section 5096.21 shall not be deemed in violation of the notice and fee requirements of this section if the failure to comply occurs within 60 days of the date of the board action.
SEC. 28.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088, or the partnership shall be registered pursuant to subdivision (c) of Section 5096.12.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088, except for a partner with practice privileges pursuant to Section 5096.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(c)This section shall become operative on July 1, 2013.(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is amended to read:5072.(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088.(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.(c)This section shall become operative on January 1, 2020.SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is repealed.5072.(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088.(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.(c)This section shall become operative on January 1, 2019.SEC. 3.Section 5096 of the Business and Professions Code, as amended by Section 6 of Chapter 400 of the Statutes of 2014, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years.
(2)The individual has a license, certificate, or permit from a state that has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)An individual who qualifies for the practice privilege under this section may engage in the practice of public accountancy in this state, and a notice, fee, or other requirement shall not be imposed on that individual by the board.
(d)An individual who qualifies for the practice privilege under this section may perform the following services only through a firm of certified public accountants that has obtained a registration from the board pursuant to Section 5096.12:
(1)An audit or review of a financial statement for an entity headquartered in California.
(2)A compilation of a financial statement when that person expects, or reasonably might expect, that a third party will use the financial statement and the compilation report does not disclose a lack of independence for an entity headquartered in California.
(3)An examination of prospective financial information for an entity headquartered in California.
(e)An individual who holds a practice privilege under this article, and is exercising the practice privilege in California:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state, except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when the individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(6)Shall cease exercising the practice privilege in this state if the regulatory agency in the state in which the individuals certificate, license, or permit was issued takes disciplinary action resulting in the suspension or revocation, including stayed suspension, stayed revocation, or probation of the individuals certificate, license, or permit, or takes other disciplinary action against the individuals certificate, license, or permit that arises from any of the following:
(A)Gross negligence, recklessness, or intentional wrongdoing relating to the practice of public accountancy.
(B)Fraud or misappropriation of funds.
(C)Preparation, publication, or dissemination of false, fraudulent, or materially incomplete or misleading financial statements, reports, or information.
(7)Shall cease exercising the practice privilege in this state if convicted in any jurisdiction of any crime involving dishonesty, including, but not limited to, embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or other valuable consideration by fraudulent means or false pretenses.
(8)Shall cease exercising the practice privilege if the United States Securities and Exchange Commission or the Public Company Accounting Oversight Board bars the individual from practicing before them.
(9)Shall cease exercising the practice privilege if any governmental body or agency suspends the right of the individual to practice before the body or agency.
(10)Shall report to the board in writing any pending criminal charges, other than for a minor traffic violation, in any jurisdiction within 30 days of the date the individual has knowledge of those charges.
(f)An individual who is required to cease practice pursuant to paragraphs (6) to (9), inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until he or she has received from the board written permission to do so.
(g)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by subdivision (f) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or (f) shall, for a minimum of one year from the date the board learns there has been a violation of subdivision (e) or (f), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individuals practice privilege shall be revoked and there shall be no possibility of reinstatement for a minimum of two years.
(h)The board shall require an individual who provides notice to the board pursuant to subdivision (f) to cease the practice of public accountancy in this state until the board provides the individual with written permission to resume the practice of public accountancy in this state.
(i)(1)An individual to whom, within the last seven years immediately preceding the date on which he or she wishes to practice in this state, any of the following criteria apply, shall notify the board, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until the board provides the individual with written permission to do so:
(A)He or she has been the subject of any final disciplinary action by the licensing or disciplinary authority of any other jurisdiction with respect to any professional license or has any charges of professional misconduct pending against him or her in any other jurisdiction.
(B)He or she has had his or her license in another jurisdiction reinstated after a suspension or revocation of the license.
(C)He or she has been denied issuance or renewal of a professional license or certificate in any other jurisdiction for any reason other than an inadvertent administrative error.
(D)He or she has been convicted of a crime or is subject to pending criminal charges in any jurisdiction other than a minor traffic violation.
(E)He or she has otherwise acquired a disqualifying condition as described in subdivision (a) of Section 5096.2.
(2)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by paragraph (1) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or paragraph (1) shall, for a minimum of one year from the date the board knows there has been a violation of subdivision (e) or paragraph (1), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individual shall be prohibited from practicing in this state in the same manner as if a licensee has his or her practice privilege revoked and there shall be no possibility of reinstatement for a minimum of two years.
(j)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years.(2)The individual has a license, certificate, or permit from a state which has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.(3)The individual possesses education, examination, and experience qualifications for licensure which have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).(c)To obtain a practice privilege under this section, an individual who meets the requirements of subdivision (a), shall do the following:(1)In the manner prescribed by board regulation, notify the board of the individuals intent to practice.(2)Pay a fee as provided in Article 8 (commencing with Section 5130).(d)Except as otherwise provided by this article or by board regulation, the practice privilege commences when the individual notifies the board, provided the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.(e)An individual who holds a practice privilege under this article:(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when such individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.(f)A practice privilege expires one year from the date of the notice, unless a shorter period is set by board regulation.(g)(1)No individual may practice under a practice privilege without prior approval of the board if the individual has, or acquires at any time during the term of the practice privilege, any disqualifying condition under paragraph (2) of this subdivision.(2)Disqualifying conditions include:(A)Conviction of any crime other than a minor traffic violation.(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.(C)Pendency of any investigation, inquiry, or proceeding by or before any state, federal or local court or agency, including, but not limited to, the Public Company Accounting Oversight Board, involving the professional conduct of the individual.(D)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.(E)Any other conditions as specified by the board in regulation.(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.(h)This section shall become operative on January 1, 2020.SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is repealed.5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least four of the last 10 years.(2)The individual has a license, certificate, or permit from a state which has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.(3)The individual possesses education, examination, and experience qualifications for licensure which have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).(c)To obtain a practice privilege under this section, an individual who meets the requirements of subdivision (a), shall do the following:(1)In the manner prescribed by board regulation, notify the board of the individuals intent to practice.(2)Pay a fee as provided in Article 8 (commencing with Section 5130).(d)Except as otherwise provided by this article or by board regulation, the practice privilege commences when the individual notifies the board, provided the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.(e)An individual who holds a practice privilege under this article:(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when such individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.(f)A practice privilege expires one year from the date of the notice, unless a shorter period is set by board regulation.(g)(1)No individual may practice under a practice privilege without prior approval of the board if the individual has, or acquires at any time during the term of the practice privilege, any disqualifying condition under paragraph (2) of this subdivision.(2)Disqualifying conditions include:(A)Conviction of any crime other than a minor traffic violation.(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.(C)Pendency of any investigation, inquiry, or proceeding by or before any state, federal or local court or agency, including, but not limited to, the Public Company Accounting Oversight Board, involving the professional conduct of the individual.(D)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.(E)Any other conditions as specified by the board in regulation.(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.(h)This section shall become operative on January 1, 2019.SEC. 5.Section 5096.1 of the Business and Professions Code, as added by Section 12 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who does not qualify to practice pursuant to the practice privilege described in Section 5096 and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may revoke a practice privilege from any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
(c)This section shall become operative on July 1, 2013.(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who has not given notice of intent to practice under practice privileges and paid the fee required pursuant to the provisions of this article, and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:(1)Deemed to be practicing public accountancy unlawfully in this state.(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.(b)The board may prospectively deny a practice privilege to any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.(c)This section shall become operative on January 1, 2020.SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is repealed.5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who has not given notice of intent to practice under practice privileges and paid the fee required pursuant to the provisions of this article, and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:(1)Deemed to be practicing public accountancy unlawfully in this state.(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.(b)The board may prospectively deny a practice privilege to any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.(c)This section shall become operative on January 1, 2019.SEC. 7.Section 5096.2 of the Business and Professions Code, as amended by Section 4 of Chapter 319 of the Statutes of 2013, is amended to read:5096.2.(a)(1)Practice privileges may be revoked for any of the following reasons:
(A)If an individual no longer qualifies under, or complies with, the provisions of this article, including, but not limited to, Section 5096, or implementing regulations.
(B)If an individual commits any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480.
(C)If an individual commits any act that if committed by a licensee would be grounds for discipline under Section 5100.
(D)If an individual commits any act outside of this state that would be a violation if committed within this state.
(E)If an individual acquires at any time, while exercising the practice privilege, any disqualifying condition under paragraph (2).
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(D)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(b)The board may revoke practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is revoked.
(B)The reasons for revocation.
(C)The earliest date on which the individual may qualify for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual whose practice privilege has been revoked may only subsequently exercise the practice privilege upon application to the board for reinstatement of the practice privilege not less than one year after the effective date of the notice or decision revoking the practice privilege, unless a longer time period is specified in the notice or decision revoking the practice privilege.
(d)Holders of practice privileges are subject to suspension, citations, fines, or other disciplinary actions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations adopted thereunder.
(e)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(f)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board, shall apply under this article.
(g)If the board revokes or otherwise limits an individuals practice privilege, the board shall promptly notify the regulatory agency of the state or states in which the individual is licensed, and the United States Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the National Association of State Boards of Accountancy.
(h)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is amended to read:5096.2.(a)Practice privileges may be denied for failure to qualify under or comply with the provisions of this article or implementing regulations, or for any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480 or if committed by a licensee would be grounds for discipline under Section 5100, or for any act committed outside of this state that would be a violation if committed within this state.(b)The board may deny practice privileges using either of the following procedures:(1)Notifying the individual in writing of all of the following:(A)That the practice privilege is denied.(B)The reasons for denial.(C)The earliest date on which the individual is eligible for a practice privilege.(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).(c)An individual who had been denied a practice privilege may apply for a new practice privilege not less than one year after the effective date of the notice or decision denying the practice privilege unless a longer time period, not to exceed three years, is specified in the notice or decision denying the practice privilege.(d)This section shall become operative on January 1, 2020.SEC. 9.Section 5096.3 of the Business and Professions Code is amended to read:5096.3.(a)Practice privileges are subject to revocation, suspension, fines, or other disciplinary sanctions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations implementing this article.(b)Practice privileges are subject to discipline during any time period in which they are valid, under administrative suspension, or expired.(c)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.(d)An individual whose practice privilege has been revoked may apply for a new practice privilege not less than one year after the effective date of the boards decision revoking the individuals practice privilege unless a longer time period, not to exceed three years, is specified in the boards decision revoking the practice privilege.(e)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board shall apply under this article.(f)This section shall become operative on January 1, 2020.SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is repealed.5096.2.(a)Practice privileges may be denied for failure to qualify under or comply with the provisions of this article or implementing regulations, or for any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480 or if committed by a licensee would be grounds for discipline under Section 5100, or for any act committed outside of this state that would be a violation if committed within this state.(b)The board may deny practice privileges using either of the following procedures:(1)Notifying the individual in writing of all of the following:(A)That the practice privilege is denied.(B)The reasons for denial.(C)The earliest date on which the individual is eligible for a practice privilege.(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).(c)An individual who had been denied a practice privilege may apply for a new practice privilege not less than one year after the effective date of the notice or decision denying the practice privilege unless a longer time period, not to exceed three years, is specified in the notice or decision denying the practice privilege.(d)This section shall become operative on January 1, 2019.SEC. 9.Section 5096.3 of the Business and Professions Code is repealed.5096.3.(a)Practice privileges are subject to revocation, suspension, fines, or other disciplinary sanctions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations implementing this article.(b)Practice privileges are subject to discipline during any time period in which they are valid, under administrative suspension, or expired.(c)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.(d)An individual whose practice privilege has been revoked may apply for a new practice privilege not less than one year after the effective date of the boards decision revoking the individuals practice privilege unless a longer time period, not to exceed three years, is specified in the boards decision revoking the practice privilege.(e)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board shall apply under this article.(f)This section shall become operative on January 1, 2019.SEC. 10.Section 5096.4 of the Business and Professions Code, as amended by Section 7 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation. The board shall consult the Public Company Accounting Oversight Board and the United States Securities and Exchange Commission at least once every six months to identify out-of-state licensees who may have disqualifying conditions or who may be obliged to cease practice, and shall disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully permitted to exercise the privilege. Disclosure of this information shall not be considered discipline.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the revocation of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state.
(g)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for revocation or discipline of a practice privilege.
(h)This section shall become operative on July 1, 2013.(i)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the representations made in the notice, the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation.(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.(c)The administrative suspension order shall contain the following:(1)The reason for the suspension.(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.(3)A statement that any appeal hearing will be conducted under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the denial of practice privileges.(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer or expiration of the practice privilege under administrative suspension.(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state or from applying for a new practice privilege upon expiration of the one under administrative suspension, except that the new practice privilege shall not be effective until approved by the board.(g)Notwithstanding any administrative suspension, a practice privilege expires one year from the date of notice unless a shorter period is set by board regulation.(h)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for denial or discipline of a practice privilege.(i)This section shall become operative on January 1, 2020.SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is repealed.5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the representations made in the notice, the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation.(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.(c)The administrative suspension order shall contain the following:(1)The reason for the suspension.(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.(3)A statement that any appeal hearing will be conducted under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the denial of practice privileges.(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer or expiration of the practice privilege under administrative suspension.(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state or from applying for a new practice privilege upon expiration of the one under administrative suspension, except that the new practice privilege shall not be effective until approved by the board.(g)Notwithstanding any administrative suspension, a practice privilege expires one year from the date of notice unless a shorter period is set by board regulation.(h)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for denial or discipline of a practice privilege.(i)This section shall become operative on January 1, 2019.SEC. 12.Section 5096.5 of the Business and Professions Code, as added by Section 23 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095.
(b)This section shall become operative on July 1, 2013.(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095 and completes any continuing education or other conditions required by the board regulations implementing this article.(b)This section shall become operative on January 1, 2020.SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is repealed.5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095 and completes any continuing education or other conditions required by the board regulations implementing this article.(b)This section shall become operative on January 1, 2019.SEC. 14.Section 5096.6 of the Business and Professions Code, as added by Section 26 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
(b)This section shall become operative on July 1, 2013.(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing a notice of denial of a practice privilege and an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.(b)This section shall become operative on January 1, 2020.SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is repealed.5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing a notice of denial of a practice privilege and an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.(b)This section shall become operative on January 1, 2019.SEC. 16.Section 5096.7 of the Business and Professions Code, as added by Section 29 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(c)For purposes of this article, the term license includes certificate or permit.
(d)This section shall become operative on July 1, 2013.(e)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.Except as otherwise provided in this article, the following definitions apply:
(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Any notice of practice privileges under this article and supporting documents is deemed an application for licensure for purposes of the provisions of this code, including, but not limited to, the provisions of this chapter and the provisions of Division 1.5 (commencing with Section 475) related to the denial, suspension, and revocation of licenses.
(c)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(d)This section shall become operative on January 1, 2020.
SEC. 18.Section 5096.8 of the Business and Professions Code is amended to read:5096.8.(a)In addition to the authority otherwise provided by this code, all investigative powers of the board, including those delegated to the executive officer, shall apply to investigations concerning compliance with, or actual or potential violations of, the provisions of this article or implementing regulations, including, but not limited to, the power to conduct investigations and hearings by the executive officer under Section 5103 and to issuance of subpoenas under Section 5108.(b)This section shall become operative on January 1, 2020.SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is repealed.5096.7.Except as otherwise provided in this article, the following definitions apply:(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.(b)Any notice of practice privileges under this article and supporting documents is deemed an application for licensure for purposes of the provisions of this code, including, but not limited to, the provisions of this chapter and the provisions of Division 1.5 (commencing with Section 475) related to the denial, suspension, and revocation of licenses.(c)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.(d)This section shall become operative on January 1, 2019.SEC. 19.SEC. 18.Section 5096.9 of the Business and Professions Code is amended to read:5096.9.(a)The board is authorized to adopt regulations to implement, interpret, or make specific the provisions of this article.
(b)The board may adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish policies, guidelines, and procedures to initially implement this article as it goes into effect on July 1, 2013. The adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, or general welfare. The emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State in accordance with the Administrative Procedure Act.
(c)(1)Notwithstanding any other law, to ensure uninterrupted implementation of this article, the board may adopt or amend regulations consistent with Section 100 of Title 1 of the California Code of Regulations to remove or extend the inoperative date of its regulations in Article 3 (commencing with Section 18) of Division 1 of Title 16 of the California Code of Regulations, or to remove the inoperative dates for the regulations in Article 4 (commencing with Section 26) of Division 1 of Title 16 of the California Code of Regulations.
(2)Notwithstanding any other law, the Office of Administrative Law shall consider the boards action to remove or extend the inoperative dates of these regulations as a change without regulatory effect as described in Section 100 of Title 1 of the California Code of Regulations that exempts the board from complying with the rulemaking procedure specified in the Administrative Procedure Act (Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code).
SEC. 20.Section 5096.10 of the Business and Professions Code is amended to read:5096.10.(a)The provisions of this article shall only be operative if there is an appropriation from the Accountancy Fund in the annual Budget Act to fund the activities in the article and sufficient hiring authority is granted pursuant to a budget change proposal to the board to provide staffing to implement this article.(b)This section shall become operative on January 1, 2020.SEC. 19.Section 5096.10 of the Business and Professions Code is repealed.5096.10.(a)The provisions of this article shall only be operative if there is an appropriation from the Accountancy Fund in the annual Budget Act to fund the activities in the article and sufficient hiring authority is granted pursuant to a budget change proposal to the board to provide staffing to implement this article.(b)This section shall become operative on January 1, 2019.SEC. 21.SEC. 20.Section 5096.12 of the Business and Professions Code, as amended by Section 5 of Chapter 319 of the Statutes of 2013, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)A firm that provides the services described in subdivision (d) of Section 5096 shall obtain a registration from the board.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 22.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.(c)This section shall become operative on January 1, 2020.SEC. 23.Section 5096.13 of the Business and Professions Code is amended to read:5096.13.(a)The notification of intent to practice under a practice privilege pursuant to Section 5096 shall include the name of the firm, its address and telephone number, and its federal taxpayer identification number.(b)This section shall become operative on January 1, 2020.SEC. 24.Section 5096.14 of the Business and Professions Code is amended to read:5096.14.(a)An individual shall not be deemed to be in violation of this article solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (c) of Section 5096, provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this section shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee pursuant to subdivision (c) of Section 5096.(b)Subdivision (a) does not apply in those instances in which prior approval by the board is required pursuant to subdivision (g) of Section 5096.(c)In addition to any other applicable sanction, the board may issue a fine pursuant to Section 5096.3 for notifying the board more than five business days after beginning practice in California.(d)This section shall become operative on January 1, 2020.SEC. 25.Section 5096.15 of the Business and Professions Code is amended to read:5096.15.(a)It is the intent of the Legislature that the board adopt regulations providing for a lower fee or no fee for out-of-state accountants who do not sign attest reports for California clients under the practice privilege. These regulations shall ensure that the practice privilege program is adequately funded. These regulations shall be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code and, for purposes of that chapter, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare.(b)This section shall become operative on January 1, 2020.SEC. 21.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is repealed.5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.(c)This section shall become operative on January 1, 2019.SEC. 22.Section 5096.13 of the Business and Professions Code is repealed.5096.13.(a)The notification of intent to practice under a practice privilege pursuant to Section 5096 shall include the name of the firm, its address and telephone number, and its federal taxpayer identification number.(b)This section shall become operative on January 1, 2019.SEC. 23.Section 5096.14 of the Business and Professions Code is repealed.5096.14.(a)An individual shall not be deemed to be in violation of this article solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (c) of Section 5096, provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this section shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee pursuant to subdivision (c) of Section 5096.(b)Subdivision (a) does not apply in those instances in which prior approval by the board is required pursuant to subdivision (g) of Section 5096.(c)In addition to any other applicable sanction, the board may issue a fine pursuant to Section 5096.3 for notifying the board more than five business days after beginning practice in California.(d)This section shall become operative on January 1, 2019.SEC. 24.Section 5096.15 of the Business and Professions Code is repealed.5096.15.(a)It is the intent of the Legislature that the board adopt regulations providing for a lower fee or no fee for out-of-state accountants who do not sign attest reports for California clients under the practice privilege. These regulations shall ensure that the practice privilege program is adequately funded. These regulations shall be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code and, for purposes of that chapter, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare.(b)This section shall become operative on January 1, 2019.SEC. 26.SEC. 25.Section 5096.20 of the Business and Professions Code is amended to read:5096.20.(a)To ensure that Californians are protected from out-of-state licensees with disqualifying conditions who may unlawfully attempt to practice in this state under a practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee feature to its license lookup tab of the home page of its Internet Web site that allows consumers to obtain information about an individual whose principal place of business is not in this state and who seeks to exercise a practice privilege in this state, that is at least equal to the information that was available to consumers through its home page prior to January 1, 2013, through the practice privilege form previously filed by out-of-state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of 2004, and the regulations adopted thereunder. At minimum, these features shall include all of the following:
(1)The ability of the consumer to search by name and state of licensure.
(2)The disclosure of information in the possession of the board, which the board is otherwise authorized to publicly disclose, about an individual exercising a practice privilege in this state, including, but not limited to, whether the board has taken action of any form against that individual and, if so, what the action was or is.
(3)A disclaimer that the consumer must click through prior to being referred to any other Internet Web site, which in plain language explains that the consumer is being referred to an Internet Web site that is maintained by a regulatory agency or other entity that is not affiliated with the board. This disclaimer shall include a link to relevant sections of this article that set forth disqualifying conditions, including, but not limited to, Section 5096.2.
(4)A statement in plain language that notifies consumers that they are permitted to file complaints against such individuals with the board.
(5)A link to the Internet Web site or sites that the board determines, in its discretion, provides the consumer the most complete and reliable information available about the individuals status as a licenseholder, permitholder, or certificate holder.
(6)If the board of another state does not maintain an Internet Web site that allows a consumer to obtain information about its licensees including, but not limited to, disciplinary history, and that information is not available through a link to an Internet Web site maintained by another entity, a link to contact information for that board, which contains a disclaimer in plain language that explains that the consumer is being referred to a board that does not permit the consumer to obtain information, including, but not limited to, disciplinary history, about individuals through the Internet Web site, and that the out-of-state board is not affiliated with the board.
(b)The board shall biennially survey the Internet Web sites and disclosure policies of other boards to ensure that its disclaimers are accurate.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 27.SEC. 26.Section 5096.21 of the Business and Professions Code is amended to read:5096.21.(a)(1)On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the boards duty to protect the public, pursuant to Section 5000.1, the board shall require, by regulation, require out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by Section 5096.22.
(2)A state for which the board has made a determination pursuant to paragraph (1) to require individuals licensed from that state to file a notification form and pay the applicable fees may subsequently be redetermined by the board, by majority vote of the board at a regularly scheduled meeting, to allow individuals from that state to practice in this state pursuant to a practice privilege as described in Section 5096.
(b)The board shall, at minimum, consider the following factors when making a determination or redetermination pursuant to subdivision (a):
(1)Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2)Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an Internet Web site to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3)Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(4)Whether the state has in place and is operating pursuant to enforcement practices substantially equivalent to the current best practices guidelines adopted by the National Association of State Boards of Accountancy provided those guidelines have been determined by the board to meet or exceed the boards own enforcement practices.
(c)On or before July 1, 2014, the board shall convene a stakeholder group consisting of members of the board, board enforcement staff, and representatives of the accounting profession and consumer representatives to consider whether the provisions of this article are consistent with the boards duty to protect the public consistent with Section 5000.1, and whether the provisions of this article satisfy the objectives of stakeholders of the accounting profession in this state, including consumers. The group, at its first meeting, shall adopt policies and procedures relative to how it will conduct its business, including, but not limited to, policies and procedures addressing periodic reporting of its findings to the board. The group shall provide recommendations to the board on any matter upon which it is authorized to act.
SEC. 28.SEC. 27.Section 5096.22 is added to the Business and Professions Code, to read:5096.22.(a)An individual whose principal place of business is in a state subject to an action of the board pursuant to Section 5096.21 shall do both of the following:
(1)Prior to practicing, submit a notification form to the board in a manner prescribed by board regulation.
(2)Pay a fee equal to the reasonable administrative costs, as established by the board.
(b)Except as otherwise provided by this article or by board regulation, a practice privilege subject to this section shall commence when the individual submits a properly completed notification form to the board, provided that the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(c)An individual shall not be deemed to be in violation of this section solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (a), provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this subdivision shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee. Failure to comply with this section means that the individual is practicing public accountancy unlawfully in this state and is in violation of Section 5120. In addition to any other available remedy, the board may issue a fine equal to reasonable enforcement costs if an individual notifies the board more than five business days after beginning practice in California.
(d)An individual whose principal place of business is in a state subject to an action by the board pursuant to Section 5096.21 shall not be deemed in violation of the notice and fee requirements of this section if the failure to comply occurs within 60 days of the date of the board action.
SEC. 29.SEC. 28.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088, or the partnership shall be registered pursuant to subdivision (c) of Section 5096.12.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088, except for a partner with practice privileges pursuant to Section 5096.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(c)This section shall become operative on July 1, 2013.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is amended to read:5072.(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(c)This section shall become operative on January 1, 2020.
SEC. 3.Section 5096 of the Business and Professions Code, as amended by Section 6 of Chapter 400 of the Statutes of 2014, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years.
(2)The individual has a license, certificate, or permit from a state that has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)An individual who qualifies for the practice privilege under this section may engage in the practice of public accountancy in this state, and a notice, fee, or other requirement shall not be imposed on that individual by the board.
(d)An individual who qualifies for the practice privilege under this section may perform the following services only through a firm of certified public accountants that has obtained a registration from the board pursuant to Section 5096.12:
(1)An audit or review of a financial statement for an entity headquartered in California.
(2)A compilation of a financial statement when that person expects, or reasonably might expect, that a third party will use the financial statement and the compilation report does not disclose a lack of independence for an entity headquartered in California.
(3)An examination of prospective financial information for an entity headquartered in California.
(e)An individual who holds a practice privilege under this article, and is exercising the practice privilege in California:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state, except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when the individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(6)Shall cease exercising the practice privilege in this state if the regulatory agency in the state in which the individuals certificate, license, or permit was issued takes disciplinary action resulting in the suspension or revocation, including stayed suspension, stayed revocation, or probation of the individuals certificate, license, or permit, or takes other disciplinary action against the individuals certificate, license, or permit that arises from any of the following:
(A)Gross negligence, recklessness, or intentional wrongdoing relating to the practice of public accountancy.
(B)Fraud or misappropriation of funds.
(C)Preparation, publication, or dissemination of false, fraudulent, or materially incomplete or misleading financial statements, reports, or information.
(7)Shall cease exercising the practice privilege in this state if convicted in any jurisdiction of any crime involving dishonesty, including, but not limited to, embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or other valuable consideration by fraudulent means or false pretenses.
(8)Shall cease exercising the practice privilege if the United States Securities and Exchange Commission or the Public Company Accounting Oversight Board bars the individual from practicing before them.
(9)Shall cease exercising the practice privilege if any governmental body or agency suspends the right of the individual to practice before the body or agency.
(10)Shall report to the board in writing any pending criminal charges, other than for a minor traffic violation, in any jurisdiction within 30 days of the date the individual has knowledge of those charges.
(f)An individual who is required to cease practice pursuant to paragraphs (6) to (9), inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until he or she has received from the board written permission to do so.
(g)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by subdivision (f) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or (f) shall, for a minimum of one year from the date the board learns there has been a violation of subdivision (e) or (f), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individuals practice privilege shall be revoked and there shall be no possibility of reinstatement for a minimum of two years.
(h)The board shall require an individual who provides notice to the board pursuant to subdivision (f) to cease the practice of public accountancy in this state until the board provides the individual with written permission to resume the practice of public accountancy in this state.
(i)(1)An individual to whom, within the last seven years immediately preceding the date on which he or she wishes to practice in this state, any of the following criteria apply, shall notify the board, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until the board provides the individual with written permission to do so:
(A)He or she has been the subject of any final disciplinary action by the licensing or disciplinary authority of any other jurisdiction with respect to any professional license or has any charges of professional misconduct pending against him or her in any other jurisdiction.
(B)He or she has had his or her license in another jurisdiction reinstated after a suspension or revocation of the license.
(C)He or she has been denied issuance or renewal of a professional license or certificate in any other jurisdiction for any reason other than an inadvertent administrative error.
(D)He or she has been convicted of a crime or is subject to pending criminal charges in any jurisdiction other than a minor traffic violation.
(E)He or she has otherwise acquired a disqualifying condition as described in subdivision (a) of Section 5096.2.
(2)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by paragraph (1) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or paragraph (1) shall, for a minimum of one year from the date the board knows there has been a violation of subdivision (e) or paragraph (1), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individual shall be prohibited from practicing in this state in the same manner as if a licensee has his or her practice privilege revoked and there shall be no possibility of reinstatement for a minimum of two years.
(j)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 of the last 10 years.
(2)The individual has a license, certificate, or permit from a state which has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure which have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)To obtain a practice privilege under this section, an individual who meets the requirements of subdivision (a), shall do the following:
(1)In the manner prescribed by board regulation, notify the board of the individuals intent to practice.
(2)Pay a fee as provided in Article 8 (commencing with Section 5130).
(d)Except as otherwise provided by this article or by board regulation, the practice privilege commences when the individual notifies the board, provided the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(e)An individual who holds a practice privilege under this article:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when such individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(f)A practice privilege expires one year from the date of the notice, unless a shorter period is set by board regulation.
(g)(1)No individual may practice under a practice privilege without prior approval of the board if the individual has, or acquires at any time during the term of the practice privilege, any disqualifying condition under paragraph (2) of this subdivision.
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Pendency of any investigation, inquiry, or proceeding by or before any state, federal or local court or agency, including, but not limited to, the Public Company Accounting Oversight Board, involving the professional conduct of the individual.
(D)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(E)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(h)This section shall become operative on January 1, 2020.
SEC. 5.Section 5096.1 of the Business and Professions Code, as added by Section 12 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who does not qualify to practice pursuant to the practice privilege described in Section 5096 and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may revoke a practice privilege from any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
(c)This section shall become operative on July 1, 2013.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who has not given notice of intent to practice under practice privileges and paid the fee required pursuant to the provisions of this article, and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may prospectively deny a practice privilege to any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
(c)This section shall become operative on January 1, 2020.
SEC. 7.Section 5096.2 of the Business and Professions Code, as amended by Section 4 of Chapter 319 of the Statutes of 2013, is amended to read:5096.2.(a)(1)Practice privileges may be revoked for any of the following reasons:
(A)If an individual no longer qualifies under, or complies with, the provisions of this article, including, but not limited to, Section 5096, or implementing regulations.
(B)If an individual commits any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480.
(C)If an individual commits any act that if committed by a licensee would be grounds for discipline under Section 5100.
(D)If an individual commits any act outside of this state that would be a violation if committed within this state.
(E)If an individual acquires at any time, while exercising the practice privilege, any disqualifying condition under paragraph (2).
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(D)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(b)The board may revoke practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is revoked.
(B)The reasons for revocation.
(C)The earliest date on which the individual may qualify for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual whose practice privilege has been revoked may only subsequently exercise the practice privilege upon application to the board for reinstatement of the practice privilege not less than one year after the effective date of the notice or decision revoking the practice privilege, unless a longer time period is specified in the notice or decision revoking the practice privilege.
(d)Holders of practice privileges are subject to suspension, citations, fines, or other disciplinary actions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations adopted thereunder.
(e)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(f)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board, shall apply under this article.
(g)If the board revokes or otherwise limits an individuals practice privilege, the board shall promptly notify the regulatory agency of the state or states in which the individual is licensed, and the United States Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the National Association of State Boards of Accountancy.
(h)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is amended to read:5096.2.(a)Practice privileges may be denied for failure to qualify under or comply with the provisions of this article or implementing regulations, or for any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480 or if committed by a licensee would be grounds for discipline under Section 5100, or for any act committed outside of this state that would be a violation if committed within this state.
(b)The board may deny practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is denied.
(B)The reasons for denial.
(C)The earliest date on which the individual is eligible for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual who had been denied a practice privilege may apply for a new practice privilege not less than one year after the effective date of the notice or decision denying the practice privilege unless a longer time period, not to exceed three years, is specified in the notice or decision denying the practice privilege.
(d)This section shall become operative on January 1, 2020.
SEC. 9.Section 5096.3 of the Business and Professions Code is amended to read:5096.3.(a)Practice privileges are subject to revocation, suspension, fines, or other disciplinary sanctions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations implementing this article.
(b)Practice privileges are subject to discipline during any time period in which they are valid, under administrative suspension, or expired.
(c)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(d)An individual whose practice privilege has been revoked may apply for a new practice privilege not less than one year after the effective date of the boards decision revoking the individuals practice privilege unless a longer time period, not to exceed three years, is specified in the boards decision revoking the practice privilege.
(e)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board shall apply under this article.
(f)This section shall become operative on January 1, 2020.
SEC. 10.Section 5096.4 of the Business and Professions Code, as amended by Section 7 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation. The board shall consult the Public Company Accounting Oversight Board and the United States Securities and Exchange Commission at least once every six months to identify out-of-state licensees who may have disqualifying conditions or who may be obliged to cease practice, and shall disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully permitted to exercise the privilege. Disclosure of this information shall not be considered discipline.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the revocation of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state.
(g)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for revocation or discipline of a practice privilege.
(h)This section shall become operative on July 1, 2013.
(i)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the representations made in the notice, the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the denial of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer or expiration of the practice privilege under administrative suspension.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state or from applying for a new practice privilege upon expiration of the one under administrative suspension, except that the new practice privilege shall not be effective until approved by the board.
(g)Notwithstanding any administrative suspension, a practice privilege expires one year from the date of notice unless a shorter period is set by board regulation.
(h)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for denial or discipline of a practice privilege.
(i)This section shall become operative on January 1, 2020.
SEC. 12.Section 5096.5 of the Business and Professions Code, as added by Section 23 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095.
(b)This section shall become operative on July 1, 2013.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095 and completes any continuing education or other conditions required by the board regulations implementing this article.
(b)This section shall become operative on January 1, 2020.
SEC. 14.Section 5096.6 of the Business and Professions Code, as added by Section 26 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
(b)This section shall become operative on July 1, 2013.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing a notice of denial of a practice privilege and an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
(b)This section shall become operative on January 1, 2020.
SEC. 16.Section 5096.7 of the Business and Professions Code, as added by Section 29 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(c)For purposes of this article, the term license includes certificate or permit.
(d)This section shall become operative on July 1, 2013.
(e)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.Except as otherwise provided in this article, the following definitions apply:
(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Any notice of practice privileges under this article and supporting documents is deemed an application for licensure for purposes of the provisions of this code, including, but not limited to, the provisions of this chapter and the provisions of Division 1.5 (commencing with Section 475) related to the denial, suspension, and revocation of licenses.
(c)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(d)This section shall become operative on January 1, 2020.
SEC. 18.Section 5096.8 of the Business and Professions Code is amended to read:5096.8.(a)In addition to the authority otherwise provided by this code, all investigative powers of the board, including those delegated to the executive officer, shall apply to investigations concerning compliance with, or actual or potential violations of, the provisions of this article or implementing regulations, including, but not limited to, the power to conduct investigations and hearings by the executive officer under Section 5103 and to issuance of subpoenas under Section 5108.
(b)This section shall become operative on January 1, 2020.
SEC. 19.Section 5096.9 of the Business and Professions Code is amended to read:5096.9.(a)The board is authorized to adopt regulations to implement, interpret, or make specific the provisions of this article.
(b)The board may adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish policies, guidelines, and procedures to initially implement this article as it goes into effect on July 1, 2013. The adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, or general welfare. The emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State in accordance with the Administrative Procedure Act.
(c)(1)Notwithstanding any other law, to ensure uninterrupted implementation of this article, the board may adopt or amend regulations consistent with Section 100 of Title 1 of the California Code of Regulations to remove or extend the inoperative date of its regulations in Article 3 (commencing with Section 18) of Division 1 of Title 16 of the California Code of Regulations, or to remove the inoperative dates for the regulations in Article 4 (commencing with Section 26) of Division 1 of Title 16 of the California Code of Regulations.(2)Notwithstanding any other law, the Office of Administrative Law shall consider the boards action to remove or extend the inoperative dates of these regulations as a change without regulatory effect as described in Section 100 of Title 1 of the California Code of Regulations that exempts the board from complying with the rulemaking procedure specified in the Administrative Procedure Act (Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code).SEC. 20.Section 5096.10 of the Business and Professions Code is amended to read:5096.10.(a)The provisions of this article shall only be operative if there is an appropriation from the Accountancy Fund in the annual Budget Act to fund the activities in the article and sufficient hiring authority is granted pursuant to a budget change proposal to the board to provide staffing to implement this article.
(b)This section shall become operative on January 1, 2020.
SEC. 21.Section 5096.12 of the Business and Professions Code, as amended by Section 5 of Chapter 319 of the Statutes of 2013, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)A firm that provides the services described in subdivision (d) of Section 5096 shall obtain a registration from the board.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 22.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)This section shall become operative on January 1, 2020.
SEC. 23.Section 5096.13 of the Business and Professions Code is amended to read:5096.13.(a)The notification of intent to practice under a practice privilege pursuant to Section 5096 shall include the name of the firm, its address and telephone number, and its federal taxpayer identification number.
(b)This section shall become operative on January 1, 2020.
SEC. 24.Section 5096.14 of the Business and Professions Code is amended to read:5096.14.(a)An individual shall not be deemed to be in violation of this article solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (c) of Section 5096, provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this section shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee pursuant to subdivision (c) of Section 5096.
(b)Subdivision (a) does not apply in those instances in which prior approval by the board is required pursuant to subdivision (g) of Section 5096.
(c)In addition to any other applicable sanction, the board may issue a fine pursuant to Section 5096.3 for notifying the board more than five business days after beginning practice in California.
(d)This section shall become operative on January 1, 2020.
SEC. 25.Section 5096.15 of the Business and Professions Code is amended to read:5096.15.(a)It is the intent of the Legislature that the board adopt regulations providing for a lower fee or no fee for out-of-state accountants who do not sign attest reports for California clients under the practice privilege. These regulations shall ensure that the practice privilege program is adequately funded. These regulations shall be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code and, for purposes of that chapter, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare.
(b)This section shall become operative on January 1, 2020.
SEC. 26.Section 5096.20 of the Business and Professions Code is amended to read:5096.20.(a)To ensure that Californians are protected from out-of-state licensees with disqualifying conditions who may unlawfully attempt to practice in this state under a practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee feature to its license lookup tab of the home page of its Internet Web site that allows consumers to obtain information about an individual whose principal place of business is not in this state and who seeks to exercise a practice privilege in this state, that is at least equal to the information that was available to consumers through its home page prior to January 1, 2013, through the practice privilege form previously filed by out-of-state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of 2004, and the regulations adopted thereunder. At minimum, these features shall include all of the following:
(1)The ability of the consumer to search by name and state of licensure.
(2)The disclosure of information in the possession of the board, which the board is otherwise authorized to publicly disclose, about an individual exercising a practice privilege in this state, including, but not limited to, whether the board has taken action of any form against that individual and, if so, what the action was or is.
(3)A disclaimer that the consumer must click through prior to being referred to any other Internet Web site, which in plain language explains that the consumer is being referred to an Internet Web site that is maintained by a regulatory agency or other entity that is not affiliated with the board. This disclaimer shall include a link to relevant sections of this article that set forth disqualifying conditions, including, but not limited to, Section 5096.2.
(4)A statement in plain language that notifies consumers that they are permitted to file complaints against such individuals with the board.
(5)A link to the Internet Web site or sites that the board determines, in its discretion, provides the consumer the most complete and reliable information available about the individuals status as a licenseholder, permitholder, or certificate holder.
(6)If the board of another state does not maintain an Internet Web site that allows a consumer to obtain information about its licensees including, but not limited to, disciplinary history, and that information is not available through a link to an Internet Web site maintained by another entity, a link to contact information for that board, which contains a disclaimer in plain language that explains that the consumer is being referred to a board that does not permit the consumer to obtain information, including, but not limited to, disciplinary history, about individuals through the Internet Web site, and that the out-of-state board is not affiliated with the board.
(b)The board shall biennially survey the Internet Web sites and disclosure policies of other boards to ensure that its disclaimers are accurate.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 27.Section 5096.21 of the Business and Professions Code is amended to read:5096.21.(a)(1)On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the boards duty to protect the public, pursuant to Section 5000.1, the board shall require, by regulation, out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by Section 5096.22.
(2)The board may adopt emergency regulations, in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), to implement this subdivision. The adoption of the regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare for purposes of Sections 11346.1 and 11349.6 of the Government Code.(2)A state for which the board has made a determination pursuant to paragraph (1) to require individuals licensed from that state to file a notification form and pay the applicable fees may subsequently be redetermined by the board, by majority vote of the board at a regularly scheduled meeting, to allow individuals from that state to practice in this state pursuant to a practice privilege as described in Section 5096.
(b)The board shall, at minimum, consider the following factors in making the when making a determination required by or redetermination pursuant to subdivision (a):
(1)Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2)Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an Internet Web site to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3)Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(c)Notwithstanding subdivision (a), if (1) the National Association of State Boards of Accountancy (NASBA) adopts enforcement best practices guidelines, (2) the board, upon a majority vote at a regularly scheduled board meeting, issues a finding after a public hearing that those practices meet or exceed the boards own enforcement practices, (3) a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practices guidelines, and (4) disciplinary history of a states licensees is publicly available through the Internet in a manner that allows the board to link consumers to an Internet Web site to obtain information at least equal to the information that was previously available to consumers through the practice privilege form filed by out-of-state licensees pursuant to former Section 5096, as added by Chapter 921 of the Statutes of 2004, no practice privilege form shall be required to be filed by any licensee of that state as required by subdivision (a), nor shall the board be required to report on that state to the Legislature as required by subdivision (d).(d)(1)The board shall report to the relevant policy committees of the Legislature, the director, and the public, upon request, preliminary determinations made pursuant to this section no later than July 1, 2015. The board shall, prior to January 1, 2016, and thereafter as it deems appropriate, review its determinations made pursuant to subdivision (b) to ensure that it is in compliance with this section.(2)This subdivision shall become inoperative on July 1, 2017, pursuant to Section 10231.5 of the Government Code.(4)Whether the state has in place and is operating pursuant to enforcement practices substantially equivalent to the current best practices guidelines adopted by the National Association of State Boards of Accountancy provided those guidelines have been determined by the board to meet or exceed the boards own enforcement practices.
(e)(c)On or before July 1, 2014, the board shall convene a stakeholder group consisting of members of the board, board enforcement staff, and representatives of the accounting profession and consumer representatives to consider whether the provisions of this article are consistent with the boards duty to protect the public consistent with Section 5000.1, and whether the provisions of this article satisfy the objectives of stakeholders of the accounting profession in this state, including consumers. The group, at its first meeting, shall adopt policies and procedures relative to how it will conduct its business, including, but not limited to, policies and procedures addressing periodic reporting of its findings to the board.
(f)On or before January 1, 2018, the board shall prepare a report to be provided to the relevant policy committees of the Legislature, the director, and the public, upon request, that, at minimum, explains in detail all of the following:(1)How the board has implemented this article and whether implementation is complete.(2)Whether this article is, in the opinion of the board, more, less, or equivalent in the protection it affords the public than its predecessor article.(3)Describes how other state boards of accountancy have addressed referrals to those boards from the board, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by those boards.(g)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.SEC. 28.Section 5096.22 is added to the Business and Professions Code, to read:5096.22.(a)An individual whose principal place of business is in a state subject to a regulation adopted by an action of the board pursuant to Section 5096.21 shall do both of the following:
(1)Prior to practicing, submit a notification form to the board in a manner prescribed by board regulation.
(2)Pay a fee equal to the reasonable administrative costs, as established by the board.
(b)Except as otherwise provided by this article or by board regulation, a practice privilege subject to this section shall commence when the individual submits a properly completed notification form to the board, provided that the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(c)An individual shall not be deemed to be in violation of this section solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (a), provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this subdivision shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee. Failure to comply with this section means that the individual is practicing public accountancy unlawfully in this state and is in violation of Section 5120. In addition to any other available remedy, the board may issue a fine equal to reasonable enforcement costs if an individual notifies the board more than five business days after beginning practice in California.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.(d)An individual whose principal place of business is in a state subject to an action by the board pursuant to Section 5096.21 shall not be deemed in violation of the notice and fee requirements of this section if the failure to comply occurs within 60 days of the date of the board action.
SEC. 29.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088, or the partnership shall be registered pursuant to subdivision (c) of Section 5096.12.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088, except for a partner with practice privileges pursuant to Section 5096.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(c)This section shall become operative on July 1, 2013.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is repealed.SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is amended to read:5072.(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(c)This section shall become operative on January 1, 2019. 2020.
SEC. 3.Section 5096 of the Business and Professions Code, as amended by Section 6 of Chapter 400 of the Statutes of 2014, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 5 four of the last 10 years.
(2)The individual has a license, certificate, or permit from a state that has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)An individual who qualifies for the practice privilege under this section may engage in the practice of public accountancy in this state, and a notice, fee, or other requirement shall not be imposed on that individual by the board.
(d)An individual who qualifies for the practice privilege under this section may perform the following services only through a firm of certified public accountants that has obtained a registration from the board pursuant to Section 5096.12:
(1)An audit or review of a financial statement for an entity headquartered in California.
(2)A compilation of a financial statement when that person expects, or reasonably might expect, that a third party will use the financial statement and the compilation report does not disclose a lack of independence for an entity headquartered in California.
(3)An examination of prospective financial information for an entity headquartered in California.
(e)An individual who holds a practice privilege under this article, and is exercising the practice privilege in California:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state, except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when the individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(6)Shall cease exercising the practice privilege in this state if the regulatory agency in the state in which the individuals certificate, license, or permit was issued takes disciplinary action resulting in the suspension or revocation, including stayed suspension, stayed revocation, or probation of the individuals certificate, license, or permit, or takes other disciplinary action against the individuals certificate, license, or permit that arises from any of the following:
(A)Gross negligence, recklessness, or intentional wrongdoing relating to the practice of public accountancy.
(B)Fraud or misappropriation of funds.
(C)Preparation, publication, or dissemination of false, fraudulent, or materially incomplete or misleading financial statements, reports, or information.
(7)Shall cease exercising the practice privilege in this state if convicted in any jurisdiction of any crime involving dishonesty, including, but not limited to, embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or other valuable consideration by fraudulent means or false pretenses.
(8)Shall cease exercising the practice privilege if the United States Securities and Exchange Commission or the Public Company Accounting Oversight Board bars the individual from practicing before them.
(9)Shall cease exercising the practice privilege if any governmental body or agency suspends the right of the individual to practice before the body or agency.
(10)Shall report to the board in writing any pending criminal charges, other than for a minor traffic violation, in any jurisdiction within 30 days of the date the individual has knowledge of those charges.
(f)An individual who is required to cease practice pursuant to paragraphs (6) to (9), inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until he or she has received from the board written permission to do so.
(g)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by subdivision (f) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or (f) shall, for a minimum of one year from the date the board learns there has been a violation of subdivision (e) or (f), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individuals practice privilege shall be revoked and there shall be no possibility of reinstatement for a minimum of two years.
(h)The board shall require an individual who provides notice to the board pursuant to subdivision (f) to cease the practice of public accountancy in this state until the board provides the individual with written permission to resume the practice of public accountancy in this state.
(i)(1)An individual to whom, within the last seven years immediately preceding the date on which he or she wishes to practice in this state, any of the following criteria apply, shall notify the board, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until the board provides the individual with written permission to do so:
(A)He or she has been the subject of any final disciplinary action by the licensing or disciplinary authority of any other jurisdiction with respect to any professional license or has any charges of professional misconduct pending against him or her in any other jurisdiction.
(B)He or she has had his or her license in another jurisdiction reinstated after a suspension or revocation of the license.
(C)He or she has been denied issuance or renewal of a professional license or certificate in any other jurisdiction for any reason other than an inadvertent administrative error.
(D)He or she has been convicted of a crime or is subject to pending criminal charges in any jurisdiction other than a minor traffic violation.
(E)He or she has otherwise acquired a disqualifying condition as described in subdivision (a) of Section 5096.2.
(2)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by paragraph (1) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or paragraph (1) shall, for a minimum of one year from the date the board knows there has been a violation of subdivision (e) or paragraph (1), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individual shall be prohibited from practicing in this state in the same manner as if a licensee has his or her practice privilege revoked and there shall be no possibility of reinstatement for a minimum of two years.
(j)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least four of the last 10 years.
(2)The individual has a license, certificate, or permit from a state which has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure which have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)To obtain a practice privilege under this section, an individual who meets the requirements of subdivision (a), shall do the following:
(1)In the manner prescribed by board regulation, notify the board of the individuals intent to practice.
(2)Pay a fee as provided in Article 8 (commencing with Section 5130).
(d)Except as otherwise provided by this article or by board regulation, the practice privilege commences when the individual notifies the board, provided the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(e)An individual who holds a practice privilege under this article:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when such individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(f)A practice privilege expires one year from the date of the notice, unless a shorter period is set by board regulation.
(g)(1)No individual may practice under a practice privilege without prior approval of the board if the individual has, or acquires at any time during the term of the practice privilege, any disqualifying condition under paragraph (2) of this subdivision.
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Pendency of any investigation, inquiry, or proceeding by or before any state, federal or local court or agency, including, but not limited to, the Public Company Accounting Oversight Board, involving the professional conduct of the individual.
(D)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(E)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(h)This section shall become operative on January 1, 2019. 2020.
SEC. 5.Section 5096.1 of the Business and Professions Code, as added by Section 12 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who does not qualify to practice pursuant to the practice privilege described in Section 5096 and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may revoke a practice privilege from any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
(c)This section shall become operative on July 1, 2013.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who has not given notice of intent to practice under practice privileges and paid the fee required pursuant to the provisions of this article, and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may prospectively deny a practice privilege to any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
(c)This section shall become operative on January 1, 2019. 2020.
SEC. 7.Section 5096.2 of the Business and Professions Code, as amended by Section 4 of Chapter 319 of the Statutes of 2013, is amended to read:5096.2.(a)(1)Practice privileges may be revoked for any of the following reasons:
(A)If an individual no longer qualifies under, or complies with, the provisions of this article, including, but not limited to, Section 5096, or implementing regulations.
(B)If an individual commits any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480.
(C)If an individual commits any act that if committed by a licensee would be grounds for discipline under Section 5100.
(D)If an individual commits any act outside of this state that would be a violation if committed within this state.
(E)If an individual acquires at any time, while exercising the practice privilege, any disqualifying condition under paragraph (2).
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(D)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(b)The board may revoke practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is revoked.
(B)The reasons for revocation.
(C)The earliest date on which the individual may qualify for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual whose practice privilege has been revoked may only subsequently exercise the practice privilege upon application to the board for reinstatement of the practice privilege not less than one year after the effective date of the notice or decision revoking the practice privilege, unless a longer time period is specified in the notice or decision revoking the practice privilege.
(d)Holders of practice privileges are subject to suspension, citations, fines, or other disciplinary actions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations adopted thereunder.
(e)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(f)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board, shall apply under this article.
(g)If the board revokes or otherwise limits an individuals practice privilege, the board shall promptly notify the regulatory agency of the state or states in which the individual is licensed, and the United States Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the National Association of State Boards of Accountancy.
(h)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is amended to read:5096.2.(a)Practice privileges may be denied for failure to qualify under or comply with the provisions of this article or implementing regulations, or for any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480 or if committed by a licensee would be grounds for discipline under Section 5100, or for any act committed outside of this state that would be a violation if committed within this state.
(b)The board may deny practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is denied.
(B)The reasons for denial.
(C)The earliest date on which the individual is eligible for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual who had been denied a practice privilege may apply for a new practice privilege not less than one year after the effective date of the notice or decision denying the practice privilege unless a longer time period, not to exceed three years, is specified in the notice or decision denying the practice privilege.
(d)This section shall become operative on January 1, 2019. 2020.
SEC. 9.Section 5096.3 of the Business and Professions Code is repealed.SEC. 9.Section 5096.3 of the Business and Professions Code is amended to read:5096.3.(a)Practice privileges are subject to revocation, suspension, fines, or other disciplinary sanctions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations implementing this article.
(b)Practice privileges are subject to discipline during any time period in which they are valid, under administrative suspension, or expired.
(c)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(d)An individual whose practice privilege has been revoked may apply for a new practice privilege not less than one year after the effective date of the boards decision revoking the individuals practice privilege unless a longer time period, not to exceed three years, is specified in the boards decision revoking the practice privilege.
(e)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board shall apply under this article.
(f)This section shall become operative on January 1, 2019. 2020.
SEC. 10.Section 5096.4 of the Business and Professions Code, as amended by Section 7 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation. The board shall consult the Public Company Accounting Oversight Board and the United States Securities and Exchange Commission at least once every six months to identify out-of-state licensees who may have disqualifying conditions or who may be obliged to cease practice, and shall disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully permitted to exercise the privilege. Disclosure of this information shall not be considered discipline.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the revocation of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state.
(g)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for revocation or discipline of a practice privilege.
(h)This section shall become operative on July 1, 2013.
(i)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is repealed.SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the representations made in the notice, the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the denial of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer or expiration of the practice privilege under administrative suspension.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state or from applying for a new practice privilege upon expiration of the one under administrative suspension, except that the new practice privilege shall not be effective until approved by the board.
(g)Notwithstanding any administrative suspension, a practice privilege expires one year from the date of notice unless a shorter period is set by board regulation.
(h)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for denial or discipline of a practice privilege.
(i)This section shall become operative on January 1, 2019. 2020.
SEC. 12.Section 5096.5 of the Business and Professions Code, as added by Section 23 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095.
(b)This section shall become operative on July 1, 2013.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095 and completes any continuing education or other conditions required by the board regulations implementing this article.
(b)This section shall become operative on January 1, 2019. 2020.
SEC. 14.Section 5096.6 of the Business and Professions Code, as added by Section 26 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
(b)This section shall become operative on July 1, 2013.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing a notice of denial of a practice privilege and an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
(b)This section shall become operative on January 1, 2019. 2020.
SEC. 16.Section 5096.7 of the Business and Professions Code, as added by Section 29 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(c)For purposes of this article, the term license includes certificate or permit.
(d)This section shall become operative on July 1, 2013.
(e)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 18.Section 5096.8 of the Business and Professions Code is repealed.SEC. 19.Section 5096.9 of the Business and Professions Code is repealed.SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.Except as otherwise provided in this article, the following definitions apply:
(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Any notice of practice privileges under this article and supporting documents is deemed an application for licensure for purposes of the provisions of this code, including, but not limited to, the provisions of this chapter and the provisions of Division 1.5 (commencing with Section 475) related to the denial, suspension, and revocation of licenses.
(c)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(d)This section shall become operative on January 1, 2019. 2020.
SEC. 18.Section 5096.8 of the Business and Professions Code is amended to read:5096.8.(a)In addition to the authority otherwise provided by this code, all investigative powers of the board, including those delegated to the executive officer, shall apply to investigations concerning compliance with, or actual or potential violations of, the provisions of this article or implementing regulations, including, but not limited to, the power to conduct investigations and hearings by the executive officer under Section 5103 and to issuance of subpoenas under Section 5108.
(b)This section shall become operative on January 1, 2020.
SEC. 19.Section 5096.9 of the Business and Professions Code is amended to read:5096.9.(a)The board is authorized to adopt regulations to implement, interpret, or make specific the provisions of this article.
(b)The board shall may adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish policies, guidelines, and procedures to initially implement this article as it goes into effect on July 1, 2013. The adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, or general welfare. The emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State in accordance with the Administrative Procedure Act.
(c)(1)Notwithstanding any other law, to ensure uninterrupted implementation of this article, the board may adopt or amend regulations consistent with Section 100 of Title 1 of the California Code of Regulations to remove or extend the inoperative date of its regulations in Article 3 (commencing with Section 18) of Division 1 of Title 16 of the California Code of Regulations, or to remove the inoperative dates for the regulations in Article 4 (commencing with Section 26) of Division 1 of Title 16 of the California Code of Regulations.(2)Notwithstanding any other law, the Office of Administrative Law shall consider the boards action to remove or extend the inoperative dates of these regulations as a change without regulatory effect as described in Section 100 of Title 1 of the California Code of Regulations that exempts the board from complying with the rulemaking procedure specified in the Administrative Procedure Act (Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code).SEC. 20.Section 5096.10 of the Business and Professions Code is repealed.SEC. 20.Section 5096.10 of the Business and Professions Code is amended to read:5096.10.(a)The provisions of this article shall only be operative if there is an appropriation from the Accountancy Fund in the annual Budget Act to fund the activities in the article and sufficient hiring authority is granted pursuant to a budget change proposal to the board to provide staffing to implement this article.
(b)This section shall become operative on January 1, 2019. 2020.
SEC. 21.Section 5096.12 of the Business and Professions Code, as amended by Section 5 of Chapter 319 of the Statutes of 2013, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)A firm that provides the services described in subdivision (d) of Section 5096 shall obtain a registration from the board.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 22.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is repealed.SEC. 22.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)This section shall become operative on January 1, 2019. 2020.
SEC. 23.Section 5096.13 of the Business and Professions Code is repealed.SEC. 24.Section 5096.14 of the Business and Professions Code is repealed.SEC. 25.Section 5096.15 of the Business and Professions Code is repealed.SEC. 23.Section 5096.13 of the Business and Professions Code is amended to read:5096.13.(a)The notification of intent to practice under a practice privilege pursuant to Section 5096 shall include the name of the firm, its address and telephone number, and its federal taxpayer identification number.
(b)This section shall become operative on January 1, 2019. 2020.
SEC. 24.Section 5096.14 of the Business and Professions Code is amended to read:5096.14.(a)An individual shall not be deemed to be in violation of this article solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (c) of Section 5096, provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this section shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee pursuant to subdivision (c) of Section 5096.
(b)Subdivision (a) does not apply in those instances in which prior approval by the board is required pursuant to subdivision (g) of Section 5096.
(c)In addition to any other applicable sanction, the board may issue a fine pursuant to Section 5096.3 for notifying the board more than five business days after beginning practice in California.
(d)This section shall become operative on January 1, 2019. 2020.
SEC. 25.Section 5096.15 of the Business and Professions Code is amended to read:5096.15.(a)It is the intent of the Legislature that the board adopt regulations providing for a lower fee or no fee for out-of-state accountants who do not sign attest reports for California clients under the practice privilege. These regulations shall ensure that the practice privilege program is adequately funded. These regulations shall be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code and, for purposes of that chapter, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare.
(b)This section shall become operative on January 1, 2019. 2020.
SEC. 26.Section 5096.20 of the Business and Professions Code is amended to read:5096.20.(a)To ensure that Californians are protected from out-of-state licensees with disqualifying conditions who may unlawfully attempt to practice in this state under a practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee feature to its license lookup tab of the home page of its Internet Web site that allows consumers to obtain information about an individual whose principal place of business is not in this state and who seeks to exercise a practice privilege in this state, that is at least equal to the information that was available to consumers through its home page prior to January 1, 2013, through the practice privilege form previously filed by out-of-state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of 2004, and the regulations adopted thereunder. At minimum, these features shall include all of the following:
(1)The ability of the consumer to search by name and state of licensure.
(2)The disclosure of information in the possession of the board, which the board is otherwise authorized to publicly disclose, about an individual exercising a practice privilege in this state, including, but not limited to, whether the board has taken action of any form against that individual and, if so, what the action was or is.
(3)A disclaimer that the consumer must click through prior to being referred to any other Internet Web site, which in plain language explains that the consumer is being referred to an Internet Web site that is maintained by a regulatory agency or other entity that is not affiliated with the board. This disclaimer shall include a link to relevant sections of this article that set forth disqualifying conditions, including, but not limited to, Section 5096.2.
(4)A statement in plain language that notifies consumers that they are permitted to file complaints against such individuals with the board.
(5)A link to the Internet Web site or sites that the board determines, in its discretion, provides the consumer the most complete and reliable information available about the individuals status as a licenseholder, permitholder, or certificate holder.
(6)If the board of another state does not maintain an Internet Web site that allows a consumer to obtain information about its licensees including, but not limited to, disciplinary history, and that information is not available through a link to an Internet Web site maintained by another entity, a link to contact information for that board, which contains a disclaimer in plain language that explains that the consumer is being referred to a board that does not permit the consumer to obtain information, including, but not limited to, disciplinary history, about individuals through the Internet Web site, and that the out-of-state board is not affiliated with the board.
(b)The board shall biennially survey the Internet Web sites and disclosure policies of other boards to ensure that its disclaimers are accurate.
(c)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 27.Section 5096.21 of the Business and Professions Code is amended to read:5096.21.(a)(1)On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the boards duty to protect the public, pursuant to Section 5000.1, the board shall require, by regulation, out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by former Section 5096, as added by Chapter 921 of the Statutes of 2004, and regulations adopted thereunder. Section 5096.22.
(2)The board may adopt emergency regulations, in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), to implement this subdivision. The adoption of the regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare for purposes of Sections 11346.1 and 11349.6 of the Government Code.
(b)The board shall, at minimum, consider the following factors in making the determination required by subdivision (a):
(1)Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2)Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an Internet Web site to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3)Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(c)Notwithstanding subdivision (a), if (1) the National Association of State Boards of Accountancy (NASBA) adopts enforcement best practices guidelines, (2) the board, upon a majority vote at a regularly scheduled board meeting, issues a finding after a public hearing that those practices meet or exceed the boards own enforcement practices, (3) a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practices guidelines, and (4) disciplinary history of a states licensees is publicly available through the Internet in a manner that allows the board to link consumers to an Internet Web site to obtain information at least equal to the information that was previously available to consumers through the practice privilege form filed by out-of-state licensees pursuant to former Section 5096, as added by Chapter 921 of the Statutes of 2004, no practice privilege form shall be required to be filed by any licensee of that state as required by subdivision (a), nor shall the board be required to report on that state to the Legislature as required by subdivision (d).
(d)(1)The board shall report to the relevant policy committees of the Legislature, the director, and the public, upon request, preliminary determinations made pursuant to this section no later than July 1, 2015. The board shall, prior to January 1, 2016, and thereafter as it deems appropriate, review its determinations made pursuant to subdivision (b) to ensure that it is in compliance with this section.
(2)This subdivision shall become inoperative on July 1, 2017, pursuant to Section 10231.5 of the Government Code.
(e)On or before July 1, 2014, the board shall convene a stakeholder group consisting of members of the board, board enforcement staff, and representatives of the accounting profession and consumer representatives to consider whether the provisions of this article are consistent with the boards duty to protect the public consistent with Section 5000.1, and whether the provisions of this article satisfy the objectives of stakeholders of the accounting profession in this state, including consumers. The group, at its first meeting, shall adopt policies and procedures relative to how it will conduct its business, including, but not limited to, policies and procedures addressing periodic reporting of its findings to the board.
(f)On or before January 1, 2018, the board shall prepare a report to be provided to the relevant policy committees of the Legislature, the director, and the public, upon request, that, at minimum, explains in detail all of the following:
(1)How the board has implemented this article and whether implementation is complete.
(2)Whether this article is, in the opinion of the board, more, less, or equivalent in the protection it affords the public than its predecessor article.
(3)Describes how other state boards of accountancy have addressed referrals to those boards from the board, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by those boards.
(g)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 28.Section 5096.22 is added to the Business and Professions Code, to read:5096.22.(a)An individual whose principal place of business in a state subject to a regulation adopted by the board pursuant to Section 5096.21 shall do both of the following:
(1)Prior to practicing, submit a notification form to the board in a manner prescribed by board regulation.
(2)Pay a fee equal to the reasonable administrative costs, as established by the board.
(b)Except as otherwise provided by this article or by board regulation, a practice privilege subject to this section shall commence when the individual submits a properly completed notification form to the board, provided that the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.
(c)An individual shall not be deemed to be in violation of this section solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (a), provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this subdivision shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee. Failure to comply with this section means that the individual is practicing public accountancy unlawfully in this state and is in violation of Section 5120. In addition to any other available remedy, the board may issue a fine equal to reasonable enforcement costs if an individual notifies the board more than five business days after beginning practice in California.
(d)This section shall remain in effect only until January 1, 2020, and as of that date is repealed.
SEC. 29.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.
(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:
(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088, or the partnership shall be registered pursuant to subdivision (c) of Section 5096.12.
(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088, except for a partner with practice privileges pursuant to Section 5096.
(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.
(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.
(c)This section shall become operative on July 1, 2013.
(d)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 2.Section 5072 of the Business and Professions Code, as added by Section 4.7 of Chapter 661 of the Statutes of 2012, is repealed.5072.(a)No persons shall engage in the practice of accountancy as a partnership unless the partnership is registered by the board.(b)A partnership, other than a limited partnership, may be registered by the board to engage in the practice of public accountancy provided it meets the following requirements:(1)At least one general partner shall hold a valid permit to practice as a certified public accountant, public accountant, or accountancy corporation, or shall be an applicant for a certificate as a certified public accountant under Sections 5087 and 5088.(2)Each partner engaged within this state in the practice of public accountancy as defined by Section 5051 shall hold a valid permit to practice in this state or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.(3)Each partner not engaged in the practice of public accountancy within this state shall be a certified public accountant in good standing of some state, except as permitted by Section 5079.(4)Each resident manager in charge of an office of the firm in this state shall be a licensee in good standing of this state, or shall have applied for a certificate as a certified public accountant under Sections 5087 and 5088.(c)This section shall become operative on January 1, 2019.SEC. 3.Section 5096 of the Business and Professions Code, as amended by Section 6 of Chapter 400 of the Statutes of 2014, is amended to read:5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:
(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least 4 5 of the last 10 years.
(2)The individual has a license, certificate, or permit from a state that has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.
(3)The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.
(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).
(c)An individual who qualifies for the practice privilege under this section may engage in the practice of public accountancy in this state, and a notice, fee, or other requirement shall not be imposed on that individual by the board.
(d)An individual who qualifies for the practice privilege under this section may perform the following services only through a firm of certified public accountants that has obtained a registration from the board pursuant to Section 5096.12:
(1)An audit or review of a financial statement for an entity headquartered in California.
(2)A compilation of a financial statement when that person expects, or reasonably might expect, that a third party will use the financial statement and the compilation report does not disclose a lack of independence for an entity headquartered in California.
(3)An examination of prospective financial information for an entity headquartered in California.
(e)An individual who holds a practice privilege under this article, and is exercising the practice privilege in California:
(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.
(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state, except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when the individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.
(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.
(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.
(6)Shall cease exercising the practice privilege in this state if the regulatory agency in the state in which the individuals certificate, license, or permit was issued takes disciplinary action resulting in the suspension or revocation, including stayed suspension, stayed revocation, or probation of the individuals certificate, license, or permit, or takes other disciplinary action against the individuals certificate, license, or permit that arises from any of the following:
(A)Gross negligence, recklessness, or intentional wrongdoing relating to the practice of public accountancy.
(B)Fraud or misappropriation of funds.
(C)Preparation, publication, or dissemination of false, fraudulent, or materially incomplete or misleading financial statements, reports, or information.
(7)Shall cease exercising the practice privilege in this state if convicted in any jurisdiction of any crime involving dishonesty, including, but not limited to, embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or other valuable consideration by fraudulent means or false pretenses.
(8)Shall cease exercising the practice privilege if the United States Securities and Exchange Commission or the Public Company Accounting Oversight Board bars the individual from practicing before them.
(9)Shall cease exercising the practice privilege if any governmental body or agency suspends the right of the individual to practice before the body or agency.
(10)Shall report to the board in writing any pending criminal charges, other than for a minor traffic violation, in any jurisdiction within 30 days of the date the individual has knowledge of those charges.
(f)An individual who is required to cease practice pursuant to paragraphs (6) to (9), inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until he or she has received from the board written permission to do so.
(g)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by subdivision (f) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or (f) shall, for a minimum of one year from the date the board learns there has been a violation of subdivision (e) or (f), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individuals practice privilege shall be revoked and there shall be no possibility of reinstatement for a minimum of two years.
(h)The board shall require an individual who provides notice to the board pursuant to subdivision (f) to cease the practice of public accountancy in this state until the board provides the individual with written permission to resume the practice of public accountancy in this state.
(i)(1)An individual to whom, within the last seven years immediately preceding the date on which he or she wishes to practice in this state, any of the following criteria apply, shall notify the board, on a form prescribed by the board, and shall not practice public accountancy in this state pursuant to this section until the board provides the individual with written permission to do so:
(A)He or she has been the subject of any final disciplinary action by the licensing or disciplinary authority of any other jurisdiction with respect to any professional license or has any charges of professional misconduct pending against him or her in any other jurisdiction.
(B)He or she has had his or her license in another jurisdiction reinstated after a suspension or revocation of the license.
(C)He or she has been denied issuance or renewal of a professional license or certificate in any other jurisdiction for any reason other than an inadvertent administrative error.
(D)He or she has been convicted of a crime or is subject to pending criminal charges in any jurisdiction other than a minor traffic violation.
(E)He or she has otherwise acquired a disqualifying condition as described in subdivision (a) of Section 5096.2.
(2)An individual who fails to cease practice as required by subdivision (e) or who fails to provide the notice required by paragraph (1) shall be subject to the personal and subject matter jurisdiction and disciplinary authority of the board as if the practice privilege were a license and the individual were a licensee. An individual in violation of subdivision (e) or paragraph (1) shall, for a minimum of one year from the date the board knows there has been a violation of subdivision (e) or paragraph (1), not practice in this state and shall not have the possibility of reinstatement during that period. If the board determines that the failure to cease practice or provide the notice was intentional, that individual shall be prohibited from practicing in this state in the same manner as if a licensee has his or her practice privilege revoked and there shall be no possibility of reinstatement for a minimum of two years.
(j)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 4.Section 5096 of the Business and Professions Code, as added by Section 10 of Chapter 411 of the Statutes of 2012, is repealed.5096.(a)An individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state may, subject to the conditions and limitations in this article, engage in the practice of public accountancy in this state under a practice privilege without obtaining a certificate or license under this chapter if the individual satisfies one of the following:(1)The individual has continually practiced public accountancy as a certified public accountant under a valid license issued by any state for at least four of the last 10 years.(2)The individual has a license, certificate, or permit from a state which has been determined by the board to have education, examination, and experience qualifications for licensure substantially equivalent to this states qualifications under Section 5093.(3)The individual possesses education, examination, and experience qualifications for licensure which have been determined by the board to be substantially equivalent to this states qualifications under Section 5093.(b)The board may designate states as substantially equivalent under paragraph (2) of subdivision (a) and may accept individual qualification evaluations or appraisals conducted by designated entities, as satisfying the requirements of paragraph (3) of subdivision (a).(c)To obtain a practice privilege under this section, an individual who meets the requirements of subdivision (a), shall do the following:(1)In the manner prescribed by board regulation, notify the board of the individuals intent to practice.(2)Pay a fee as provided in Article 8 (commencing with Section 5130).(d)Except as otherwise provided by this article or by board regulation, the practice privilege commences when the individual notifies the board, provided the fee is received by the board within 30 days of that date. The board shall permit the notification to be provided electronically.(e)An individual who holds a practice privilege under this article:(1)Is subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state.(2)Shall comply with the provisions of this chapter, board regulations, and other laws, regulations, and professional standards applicable to the practice of public accountancy by the licensees of this state and to any other laws and regulations applicable to individuals practicing under practice privileges in this state except the individual is deemed, solely for the purpose of this article, to have met the continuing education requirements and ethics examination requirements of this state when such individual has met the examination and continuing education requirements of the state in which the individual holds the valid license, certificate, or permit on which the substantial equivalency is based.(3)Shall not provide public accountancy services in this state from any office located in this state, except as an employee of a firm registered in this state. This paragraph does not apply to public accountancy services provided to a client at the clients place of business or residence.(4)Is deemed to have appointed the regulatory agency of the state that issued the individuals certificate, license, or permit upon which substantial equivalency is based as the individuals agent on whom notices, subpoenas, or other process may be served in any action or proceeding by the board against the individual.(5)Shall cooperate with any board investigation or inquiry and shall timely respond to a board investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely provide to the board the identified information and documents.(f)A practice privilege expires one year from the date of the notice, unless a shorter period is set by board regulation.(g)(1)No individual may practice under a practice privilege without prior approval of the board if the individual has, or acquires at any time during the term of the practice privilege, any disqualifying condition under paragraph (2) of this subdivision.(2)Disqualifying conditions include:(A)Conviction of any crime other than a minor traffic violation.(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.(C)Pendency of any investigation, inquiry, or proceeding by or before any state, federal or local court or agency, including, but not limited to, the Public Company Accounting Oversight Board, involving the professional conduct of the individual.(D)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.(E)Any other conditions as specified by the board in regulation.(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.(h)This section shall become operative on January 1, 2019.SEC. 5.Section 5096.1 of the Business and Professions Code, as added by Section 12 of Chapter 411 of the Statutes of 2012, is amended to read:5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who does not qualify to practice pursuant to the practice privilege described in Section 5096 and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:
(1)Deemed to be practicing public accountancy unlawfully in this state.
(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.
(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.
(b)The board may revoke a practice privilege from any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.
(c)This section shall become operative on July 1, 2013.
(d)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 6.Section 5096.1 of the Business and Professions Code, as added by Section 13 of Chapter 411 of the Statutes of 2012, is repealed.5096.1.(a)Any individual, not a licensee of this state, who is engaged in any act which is the practice of public accountancy in this state, and who has not given notice of intent to practice under practice privileges and paid the fee required pursuant to the provisions of this article, and who has a license, certificate, or other authority to engage in the practice of public accountancy in any other state, regardless of whether active, inactive, suspended, or subject to renewal on payment of a fee or completion of an educational or ethics requirement, is:(1)Deemed to be practicing public accountancy unlawfully in this state.(2)Subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state to the same extent as a holder of a valid practice privilege.(3)Deemed to have appointed the regulatory agency of the state that issued the individuals certificate or license as the individuals agent on whom notice, subpoenas, or other process may be served in any action or proceeding by the board against the individual.(b)The board may prospectively deny a practice privilege to any individual who has violated this section or implementing regulations or committed any act which would be grounds for discipline against the holder of a practice privilege.(c)This section shall become operative on January 1, 2019.SEC. 7.Section 5096.2 of the Business and Professions Code, as amended by Section 4 of Chapter 319 of the Statutes of 2013, is amended to read:5096.2.(a)(1)Practice privileges may be revoked for any of the following reasons:
(A)If an individual no longer qualifies under, or complies with, the provisions of this article, including, but not limited to, Section 5096, or implementing regulations.
(B)If an individual commits any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480.
(C)If an individual commits any act that if committed by a licensee would be grounds for discipline under Section 5100.
(D)If an individual commits any act outside of this state that would be a violation if committed within this state.
(E)If an individual acquires at any time, while exercising the practice privilege, any disqualifying condition under paragraph (2).
(2)Disqualifying conditions include:
(A)Conviction of any crime other than a minor traffic violation.
(B)Revocation, suspension, denial, surrender, or other discipline or sanctions involving any license, permit, registration, certificate, or other authority to practice any profession in this or any other state or foreign country or to practice before any state, federal, or local court or agency, or the Public Company Accounting Oversight Board.
(C)Any judgment or arbitration award against the individual involving the professional conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.
(D)Any other conditions as specified by the board in regulation.
(3)The board may adopt regulations exempting specified minor occurrences of the conditions listed in subparagraph (B) of paragraph (2) from being disqualifying conditions under this subdivision.
(b)The board may revoke practice privileges using either of the following procedures:
(1)Notifying the individual in writing of all of the following:
(A)That the practice privilege is revoked.
(B)The reasons for revocation.
(C)The earliest date on which the individual may qualify for a practice privilege.
(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.
(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.
(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c)An individual whose practice privilege has been revoked may only subsequently exercise the practice privilege upon application to the board for reinstatement of the practice privilege not less than one year after the effective date of the notice or decision revoking the practice privilege, unless a longer time period is specified in the notice or decision revoking the practice privilege.
(d)Holders of practice privileges are subject to suspension, citations, fines, or other disciplinary actions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations adopted thereunder.
(e)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.
(f)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board, shall apply under this article.
(g)If the board revokes or otherwise limits an individuals practice privilege, the board shall promptly notify the regulatory agency of the state or states in which the individual is licensed, and the United States Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the National Association of State Boards of Accountancy.
(h)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 8.Section 5096.2 of the Business and Professions Code, as added by Section 16 of Chapter 411 of the Statutes of 2012, is repealed.5096.2.(a)Practice privileges may be denied for failure to qualify under or comply with the provisions of this article or implementing regulations, or for any act that if committed by an applicant for licensure would be grounds for denial of a license under Section 480 or if committed by a licensee would be grounds for discipline under Section 5100, or for any act committed outside of this state that would be a violation if committed within this state.(b)The board may deny practice privileges using either of the following procedures:(1)Notifying the individual in writing of all of the following:(A)That the practice privilege is denied.(B)The reasons for denial.(C)The earliest date on which the individual is eligible for a practice privilege.(D)That the individual has a right to appeal the notice and request a hearing under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of appeal and request for hearing is made within 60 days.(E)That, if the individual does not submit a notice of appeal and request for hearing within 60 days, the boards action set forth in the notice shall become final.(2)Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).(c)An individual who had been denied a practice privilege may apply for a new practice privilege not less than one year after the effective date of the notice or decision denying the practice privilege unless a longer time period, not to exceed three years, is specified in the notice or decision denying the practice privilege.(d)This section shall become operative on January 1, 2019.SEC. 9.Section 5096.3 of the Business and Professions Code is repealed.5096.3.(a)Practice privileges are subject to revocation, suspension, fines, or other disciplinary sanctions for any conduct that would be grounds for discipline against a licensee of the board or for any conduct in violation of this article or regulations implementing this article.(b)Practice privileges are subject to discipline during any time period in which they are valid, under administrative suspension, or expired.(c)The board may recover its costs pursuant to Section 5107 as part of any disciplinary proceeding against the holder of a practice privilege.(d)An individual whose practice privilege has been revoked may apply for a new practice privilege not less than one year after the effective date of the boards decision revoking the individuals practice privilege unless a longer time period, not to exceed three years, is specified in the boards decision revoking the practice privilege.(e)The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but not limited to, the commencement of a disciplinary proceeding by the filing of an accusation by the board shall apply under this article.(f)This section shall become operative on January 1, 2019.SEC. 10.Section 5096.4 of the Business and Professions Code, as amended by Section 7 of Chapter 400 of the Statutes of 2014, is amended to read:5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation. The board shall consult the Public Company Accounting Oversight Board and the United States Securities and Exchange Commission at least once every six months to identify out-of-state licensees who may have disqualifying conditions or who may be obliged to cease practice, and shall disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully permitted to exercise the privilege. Disclosure of this information shall not be considered discipline.
(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.
(c)The administrative suspension order shall contain the following:
(1)The reason for the suspension.
(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.
(3)A statement that any appeal hearing will be conducted under the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the revocation of practice privileges.
(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.
(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer.
(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state.
(g)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for revocation or discipline of a practice privilege.
(h)This section shall become operative on July 1, 2013.
(i)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 11.Section 5096.4 of the Business and Professions Code, as amended by Section 8 of Chapter 400 of the Statutes of 2014, is repealed.5096.4.(a)The right of an individual to practice in this state under a practice privilege may be administratively suspended at any time by an order issued by the board or its executive officer, without prior notice or hearing, for the purpose of conducting a disciplinary investigation, proceeding, or inquiry concerning the representations made in the notice, the individuals competence or qualifications to practice under practice privileges, failure to timely respond to a board inquiry or request for information or documents, or under other conditions and circumstances provided for by board regulation.(b)The administrative suspension order is immediately effective when mailed to the individuals address of record or agent for notice and service as provided for in this article.(c)The administrative suspension order shall contain the following:(1)The reason for the suspension.(2)A statement that the individual has the right, within 30 days, to appeal the administrative suspension order and request a hearing.(3)A statement that any appeal hearing will be conducted under the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) applicable to individuals who are denied licensure, including the filing of a statement of issues by the board setting forth the reasons for the administrative suspension of practice privileges and specifying the statutes and rules with which the individual must show compliance by producing proof at the hearing and in addition any particular matters that have come to the attention of the board and that would authorize the administrative suspension, or the denial of practice privileges.(d)The burden is on the holder of the suspended practice privilege to establish both qualification and fitness to practice under practice privileges.(e)The administrative suspension shall continue in effect until terminated by an order of the board or the executive officer or expiration of the practice privilege under administrative suspension.(f)Administrative suspension is not discipline and shall not preclude any individual from applying for a license to practice public accountancy in this state or from applying for a new practice privilege upon expiration of the one under administrative suspension, except that the new practice privilege shall not be effective until approved by the board.(g)Notwithstanding any administrative suspension, a practice privilege expires one year from the date of notice unless a shorter period is set by board regulation.(h)Proceedings to appeal an administrative suspension order may be combined or coordinated with proceedings for denial or discipline of a practice privilege.(i)This section shall become operative on January 1, 2019.SEC. 12.Section 5096.5 of the Business and Professions Code, as added by Section 23 of Chapter 411 of the Statutes of 2012, is amended to read:5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095.
(b)This section shall become operative on July 1, 2013.
(c)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 13.Section 5096.5 of the Business and Professions Code, as added by Section 24 of Chapter 411 of the Statutes of 2012, is repealed.5096.5.(a)Notwithstanding any other provision of this article, an individual may not sign any attest report pursuant to a practice privilege unless the individual meets the experience requirements of Section 5095 and completes any continuing education or other conditions required by the board regulations implementing this article.(b)This section shall become operative on January 1, 2019.SEC. 14.Section 5096.6 of the Business and Professions Code, as added by Section 26 of Chapter 411 of the Statutes of 2012, is amended to read:5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.
(b)This section shall become operative on July 1, 2013.
(c)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 15.Section 5096.6 of the Business and Professions Code, as added by Section 27 of Chapter 411 of the Statutes of 2012, is repealed.5096.6.(a)In addition to the authority otherwise provided for by this code, the board may delegate to the executive officer the authority to issue any notice or order provided for in this article and to act on behalf of the board, including, but not limited to, issuing a notice of denial of a practice privilege and an interim suspension order, subject to the right of the individual to timely appeal and request a hearing as provided for in this article.(b)This section shall become operative on January 1, 2019.SEC. 16.Section 5096.7 of the Business and Professions Code, as added by Section 29 of Chapter 411 of the Statutes of 2012, is amended to read:5096.7.(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.
(b)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.
(c)For purposes of this article, the term license includes certificate or permit.
(d)This section shall become operative on July 1, 2013.
(e)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 17.Section 5096.7 of the Business and Professions Code, as added by Section 30 of Chapter 411 of the Statutes of 2012, is repealed.5096.7.Except as otherwise provided in this article, the following definitions apply:(a)Anywhere the term license, licensee, permit, or certificate is used in this chapter or Division 1.5 (commencing with Section 475), it shall include persons holding practice privileges under this article, unless otherwise inconsistent with the provisions of the article.(b)Any notice of practice privileges under this article and supporting documents is deemed an application for licensure for purposes of the provisions of this code, including, but not limited to, the provisions of this chapter and the provisions of Division 1.5 (commencing with Section 475) related to the denial, suspension, and revocation of licenses.(c)Anywhere the term employee is used in this article it shall include, but is not limited to, partners, shareholders, and other owners.(d)This section shall become operative on January 1, 2019.SEC. 18.Section 5096.8 of the Business and Professions Code is repealed.5096.8.In addition to the authority otherwise provided by this code, all investigative powers of the board, including those delegated to the executive officer, shall apply to investigations concerning compliance with, or actual or potential violations of, the provisions of this article or implementing regulations, including, but not limited to, the power to conduct investigations and hearings by the executive officer under Section 5103 and to issuance of subpoenas under Section 5108.SEC. 19.Section 5096.9 of the Business and Professions Code is repealed.5096.9.(a)The board is authorized to adopt regulations to implement, interpret, or make specific the provisions of this article.(b)The board shall adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish policies, guidelines, and procedures to initially implement this article as it goes into effect on July 1, 2013. The adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, or general welfare. The emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State in accordance with the Administrative Procedure Act.SEC. 20.Section 5096.10 of the Business and Professions Code is repealed.5096.10.(a)The provisions of this article shall only be operative if there is an appropriation from the Accountancy Fund in the annual Budget Act to fund the activities in the article and sufficient hiring authority is granted pursuant to a budget change proposal to the board to provide staffing to implement this article.(b)This section shall become operative on January 1, 2019.SEC. 21.Section 5096.12 of the Business and Professions Code, as amended by Section 5 of Chapter 319 of the Statutes of 2013, is amended to read:5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:
(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.
(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.
(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.
(c)A firm that provides the services described in subdivision (d) of Section 5096 shall obtain a registration from the board.
(d)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 22.Section 5096.12 of the Business and Professions Code, as added by Section 36 of Chapter 411 of the Statutes of 2012, is repealed.5096.12.(a)A certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided that:(1)The practice of public accountancy by the firm is limited to authorized practice by the holder of the practice privilege.(2)A firm that engages in practice under this section is deemed to consent to the personal, subject matter, and disciplinary jurisdiction of the board with respect to any practice under this section.(b)The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing with Section 5116), or otherwise restrict or discipline the firm for any act that would be grounds for discipline against a holder of a practice privilege through which the firm practices.(c)This section shall become operative on January 1, 2019.SEC. 23.Section 5096.13 of the Business and Professions Code is repealed.5096.13.(a)The notification of intent to practice under a practice privilege pursuant to Section 5096 shall include the name of the firm, its address and telephone number, and its federal taxpayer identification number.(b)This section shall become operative on January 1, 2019.SEC. 24.Section 5096.14 of the Business and Professions Code is repealed.5096.14.(a)An individual shall not be deemed to be in violation of this article solely because he or she begins the practice of public accounting in California prior to notifying the board as indicated in subdivision (c) of Section 5096, provided the notice is given within five business days of the date practice begins. An individual who properly notifies the board within the five-day period provided for in this section shall be deemed to have a practice privilege from the first day of practice in California unless the individual fails to timely submit the required fee pursuant to subdivision (c) of Section 5096.(b)Subdivision (a) does not apply in those instances in which prior approval by the board is required pursuant to subdivision (g) of Section 5096.(c)In addition to any other applicable sanction, the board may issue a fine pursuant to Section 5096.3 for notifying the board more than five business days after beginning practice in California.(d)This section shall become operative on January 1, 2019.SEC. 25.Section 5096.15 of the Business and Professions Code is repealed.5096.15.(a)It is the intent of the Legislature that the board adopt regulations providing for a lower fee or no fee for out-of-state accountants who do not sign attest reports for California clients under the practice privilege. These regulations shall ensure that the practice privilege program is adequately funded. These regulations shall be adopted as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code and, for purposes of that chapter, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare.(b)This section shall become operative on January 1, 2019.SEC. 26.Section 5096.20 of the Business and Professions Code is amended to read:5096.20.(a)To ensure that Californians are protected from out-of-state licensees with disqualifying conditions who may unlawfully attempt to practice in this state under a practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee feature to its license lookup tab of the home page of its Internet Web site that allows consumers to obtain information about an individual whose principal place of business is not in this state and who seeks to exercise a practice privilege in this state, that is at least equal to the information that was available to consumers through its home page prior to January 1, 2013, through the practice privilege form previously filed by out-of-state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of 2004, and the regulations adopted thereunder. At minimum, these features shall include all of the following:
(1)The ability of the consumer to search by name and state of licensure.
(2)The disclosure of information in the possession of the board, which the board is otherwise authorized to publicly disclose, about an individual exercising a practice privilege in this state, including, but not limited to, whether the board has taken action of any form against that individual and, if so, what the action was or is.
(3)A disclaimer that the consumer must click through prior to being referred to any other Internet Web site, which in plain language explains that the consumer is being referred to an Internet Web site that is maintained by a regulatory agency or other entity that is not affiliated with the board. This disclaimer shall include a link to relevant sections of this article that set forth disqualifying conditions, including, but not limited to, Section 5096.2.
(4)A statement in plain language that notifies consumers that they are permitted to file complaints against such individuals with the board.
(5)A link to the Internet Web site or sites that the board determines, in its discretion, provides the consumer the most complete and reliable information available about the individuals status as a licenseholder, permitholder, or certificate holder.
(6)If the board of another state does not maintain an Internet Web site that allows a consumer to obtain information about its licensees including, but not limited to, disciplinary history, and that information is not available through a link to an Internet Web site maintained by another entity, a link to contact information for that board, which contains a disclaimer in plain language that explains that the consumer is being referred to a board that does not permit the consumer to obtain information, including, but not limited to, disciplinary history, about individuals through the Internet Web site, and that the out-of-state board is not affiliated with the board.
(b)The board shall biennially survey the Internet Web sites and disclosure policies of other boards to ensure that its disclaimers are accurate.
(c)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.SEC. 27.Section 5096.21 of the Business and Professions Code is amended to read:5096.21.(a)(1)On and after January 1, 2016, if the board determines, through a majority vote of the board at a regularly scheduled meeting, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege as described in Section 5096, violates the boards duty to protect the public, pursuant to Section 5000.1, the board shall require, by regulation, out-of-state individuals licensed from that state, as a condition to exercising a practice privilege in this state, to file the notification form and pay the applicable fees as required by former Section 5096, as added by Chapter 921 of the Statutes of 2004, and regulations adopted thereunder.
(2)The board may adopt emergency regulations, in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), to implement this subdivision. The adoption of the regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare for purposes of Sections 11346.1 and 11349.6 of the Government Code.
(b)The board shall, at minimum, consider the following factors in making the determination required by subdivision (a):
(1)Whether the state timely and adequately addresses enforcement referrals made by the board to the accountancy regulatory board of that state, or otherwise fails to respond to requests the board deems necessary to meet its obligations under this article.
(2)Whether the state makes the disciplinary history of its licensees publicly available through the Internet in a manner that allows the board to adequately link consumers to an Internet Web site to obtain information that was previously made available to consumers about individuals from the state prior to January 1, 2013, through the notification form.
(3)Whether the state imposes discipline against licensees that is appropriate in light of the nature of the alleged misconduct.
(c)Notwithstanding subdivision (a), if (1) the National Association of State Boards of Accountancy (NASBA) adopts enforcement best practices guidelines, (2) the board, upon a majority vote at a regularly scheduled board meeting, issues a finding after a public hearing that those practices meet or exceed the boards own enforcement practices, (3) a state has in place and is operating pursuant to enforcement practices substantially equivalent to the best practices guidelines, and (4) disciplinary history of a states licensees is publicly available through the Internet in a manner that allows the board to link consumers to an Internet Web site to obtain information at least equal to the information that was previously available to consumers through the practice privilege form filed by out-of-state licensees pursuant to former Section 5096, as added by Chapter 921 of the Statutes of 2004, no practice privilege form shall be required to be filed by any licensee of that state as required by subdivision (a), nor shall the board be required to report on that state to the Legislature as required by subdivision (d).
(d)(1)The board shall report to the relevant policy committees of the Legislature, the director, and the public, upon request, preliminary determinations made pursuant to this section no later than July 1, 2015. The board shall, prior to January 1, 2016, and thereafter as it deems appropriate, review its determinations made pursuant to subdivision (b) to ensure that it is in compliance with this section.
(2)This subdivision shall become inoperative on July 1, 2017, pursuant to Section 10231.5 of the Government Code.
(e)On or before July 1, 2014, the board shall convene a stakeholder group consisting of members of the board, board enforcement staff, and representatives of the accounting profession and consumer representatives to consider whether the provisions of this article are consistent with the boards duty to protect the public consistent with Section 5000.1, and whether the provisions of this article satisfy the objectives of stakeholders of the accounting profession in this state, including consumers. The group, at its first meeting, shall adopt policies and procedures relative to how it will conduct its business, including, but not limited to, policies and procedures addressing periodic reporting of its findings to the board.
(f)On or before January 1, 2018, the board shall prepare a report to be provided to the relevant policy committees of the Legislature, the director, and the public, upon request, that, at minimum, explains in detail all of the following:
(1)How the board has implemented this article and whether implementation is complete.
(2)Whether this article is, in the opinion of the board, more, less, or equivalent in the protection it affords the public than its predecessor article.
(3)Describes how other state boards of accountancy have addressed referrals to those boards from the board, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by those boards.
(g)This section shall remain in effect only until January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.
|
Date
|
Status
|
|---|---|
| Sep 17, 2018 | Chaptered by Secretary of State. Chapter 447, Statutes of 2018. |
| Sep 17, 2018 | Approved by the Governor. |
| Aug 28, 2018 | Enrolled and presented to the Governor at 3:30 p.m. |
| Aug 21, 2018 | Assembly amendments concurred in. (Ayes 38. Noes 0.) Ordered to engrossing and enrolling. |
| Aug 16, 2018 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 16, 2018 | Read third time. Passed. Ordered to the Senate. |
| Aug 9, 2018 | Read second time. Ordered to consent calendar. |
| Aug 8, 2018 | From committee: Do pass. Ordered to consent calendar. (Ayes 17. Noes 0.) (August 8). |
| Jul 3, 2018 | Read second time and amended. Re-referred to Com. on APPR. |
| Jul 2, 2018 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 19. Noes 0.) (June 26). |
| Jun 20, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on B. & P. |
| Apr 19, 2018 | Referred to Com. on B. & P. |
| Jan 23, 2018 | In Assembly. Read first time. Held at Desk. |
| Jan 22, 2018 | Read third time. Passed. (Ayes 38. Noes 0.) Ordered to the Assembly. |
| Jan 17, 2018 | Read second time. Ordered to third reading. |
| Jan 16, 2018 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| Jan 12, 2018 | Set for hearing January 16. |
| Jan 10, 2018 | Read second time and amended. Re-referred to Com. on APPR. |
| Jan 9, 2018 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (January 8). |
| Dec 21, 2017 | Set for hearing January 8. |
| Apr 18, 2017 | April 24 set for second hearing canceled at the request of author. |
| Apr 4, 2017 | Set for hearing April 24. |
| Apr 3, 2017 | April 17 set for first hearing canceled at the request of author. |
| Mar 28, 2017 | Set for hearing April 17. |
| Mar 9, 2017 | Referred to Com. on B., P. & E.D. |
| Feb 21, 2017 | From printer. May be acted upon on or after March 23. |
| Feb 17, 2017 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 21, 2018 | Unfinished Business SB795 Galgiani Concurrence | Senate Floor |
Passed |
|
| Aug 16, 2018 | SB 795 Galgiani Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Aug 8, 2018 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 26, 2018 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Business and Professions |
Passed |
|
| Jan 22, 2018 | Senate 3rd Reading SB795 Galgiani | Senate Floor |
Passed |
|
| Jan 8, 2018 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Business, Professions and Economic Development |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Board of Accountancy | ** Support | Aug 18, 2018 |
| California Society Of Certified Public Accountants | ** Support | Aug 18, 2018 |
| California Society of CPAs | ** Support | Jan 17, 2018 |
| Deloitte LLP | ** Support | Aug 18, 2018 |
| Ernst & Young LLP | ** Support | Aug 18, 2018 |
| Grant Thornton LLP | ** Support | Aug 18, 2018 |
| Kpmg LLP | ** Support | Aug 18, 2018 |
| National Accounting Firms | * Indeterminate | Jan 8, 2018 |
| Pricewaterhousecoopers LLP | ** Support | Aug 18, 2018 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
UNFINISHED BUSINESS
Bill No: SB 795
:
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 1/8/18
AYES: Hill, Fuller, Dodd, Galgiani, Glazer, Hernandez, Newman, Pan, Wilk
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 38-0, 1/22/18
AYES: Allen, Anderson, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk
NO VOTE RECORDED: Lara, Mendoza
ASSEMBLY FLOOR: 76-0, 8/16/18 (Consent) - See last page for vote
SOURCE: California Society of Certified Public Accountants
DIGEST:
This bill extends the current practice privilege requirements for out-of-state licensees who are currently authorized to practice public accountancy in California indefinitely, and makes other technical and conforming changes.
Assembly Amendments
remove the one-year sunset date, thereby extending the current practice privilege program indefinitely, and make other technical and clarifying changes.
Existing law:
- Authorizes an individual whose principal place of business is not in this state
and who has a valid and current license to practice public accountancy from another state to engage in the practice of public accountancy in California under a “practice privilege” without obtaining a certificate or license if the individual meets one of the following requirements: a) the individual has continually practiced public accountancy as a certified public accountant (CPA) under a valid license issued by any state for at least four of the last 10 years; and, b) the individual has a license, certificate, or permit from a state that has been determined by the Board of Accountancy (BOA) to have substantially equivalent education, examination and experience qualifications for licensure, as specified. (Business and Professions Code (BPC) § 5096 (a))
- Permits an individual who qualifies for the practice privilege to engage in the practice of public accountancy without a notice, fee, or other requirement from the BOA. (BPC § 5096 (c))
- Declares an individual who holds a practice privilege in California is still subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state and shall be responsible for complying with the laws, regulations and professional standards applicable to the practice of public accountancy by licensees of this state. (BPC § 5096 (e))
- Provides that a certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided it meets requirements as specified. (BPC § 5096.12)
- Establishes a stakeholder group, as of July 1, 2014, to consider whether the provisions regarding the practice privilege are consistent with the BOA’s duty to protect the public and make other considerations as specified, and requires the BOA to prepare a report on or before January 1, 2018, that explains in detail if the requirements of the practice privilege have been implemented and if the implementation is complete, whether the current requirements of the practice privilege are more or less equivalent to the protections afforded by the prior requirements of the practice privilege, and describe how other state boards of accountancy have addressed referrals to those boards from the BOA, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by these boards. (BPC § 5096.21(e)(f)).
- Repeals as of January 1, 2019, current provisions regarding the practice privilege and instead will substitute prior provisions regarding the practice privilege, as specified. (BPC § 5096.21 (g))
This bill:
- Removes the January 1, 2019 sunset date on the current practice privilege program, thereby extending the program indefinitely.
- Authorizes a state for which the BOA has made a determination to require individuals licensed from that state to file a notification form and pay the applicable fees, to be subsequently re-determined by the BOA through a majority vote of the BOA at a regularly scheduled meeting to allow individuals in that state to practice pursuant to the practice privilege program.
- Adds an additional factor for the BOA to consider when making a determination or re-determination, as specified.
- Repeals and recasts provisions related to the prior fee and notification practice privilege program.
- Makes numerous other technical and clarifying changes and repeals outdated provisions.
Background
Board of Accountancy. The BOA enforces the Accountancy Act which defines the practice of public accountancy as the process of recording classifying, reporting and interpreting the financial data of an individual or an organization. In California, the accounting profession’s licensed practitioners are CPAs and Public Accountants (PAs). A CPA is a person who has met education, examination, and experience requirements and has been issued a license to practice public accountancy by the BOA. Additionally, the BOA exercises regulatory authority over accountancy firms.
Practice Privilege. Prior to 2013, the practice privilege required out-of-state CPAs to provide the BOA with a notice of intent to practice accountancy in California by filling out a form, which could be completed online, and paying a fee to the BOA. The practice privilege form was four pages in length and required basic professional identifying information such as name, address, CPA certificate, nature of the intended practice in California, etc.
As a result of SB 1405 (De Leon, Chapter 411, Statutes of 2012), there was a consensus reached on changes to the practice privilege to facilitate better cross-border practice in California consistent with what was being done nationally by other state boards. SB 1405 eliminated the requirement to submit the form and fee to the BOA beginning July 1, 2013, and instead allowed out-of-state licensees to practice without any fee or notification to the BOA. It proposed to maintain many of the consumer protection provisions that existed in the prior practice privilege statutes, added stop-practice provisions, and added consumer information provisions by requiring the BOA to post information on its Web site about out-of-state licensees operating under a practice privilege. The current provisions of the practice privilege is functioning as a pilot program until January 1, 2019, when the prior practice privilege program would be reinstated, including the fee and the notification form. In addition to establishing a temporary program, SB 1405 required the BOA convene a stakeholder group and evaluate whether the revised practice privilege provisions are more or less equivalent to the prior law in the protection they afford the public, among other things and report to the Legislature by January 1, 2018 (BPC § 5096.21). This bill would delete the current January 1, 2019, sunset date thereby extending the program indefinitely and maintains the BOA’s authority to continue to evaluate other states regarding the practice privilege program.
Mobility Stakeholder Group and Report to the Legislature. The Mobility Stakeholder Group (MSG) was established as a result of the mandate in SB 1405. Part of the MSG’s mission was to assess whether states adequately and in a timely manner address enforcement referrals by the BOA; whether other states make disciplinary history publicly available; and, whether the enforcement is appropriate. The BOA was required to submit a report to the Legislature on January 1, 2018, assessing the current practice privilege provisions. Presumably, the intent of conducting the stakeholder group meetings and the production of a report was for the Legislature, along with other interested stakeholders to determine whether or not the current practice privilege provisions should remain in place; whether there should be changes to the current provisions; or if the current practice privilege provisions should sunset and the prior notification and fee system should be reinstated. Although the BOA adopted California’s Mobility Program for Accountancy—Implementation, Enforcement and its Consumer Benefits report at its November 2017 board meeting, the full report was not submitted to the Legislature until the end of December 2017. This bill will not change any of the current licensure, examination, or other qualifications for CPAs or PAs or the regulation of accountancy firms.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
According to the Assembly Appropriations Committee, this bill will result in a negligible fiscal impact to the BOA, as this program is currently in practice.
California Society of Certified Public Accountants (source)
California Board of Accountancy
Deloitte LLP
Ernst & Young LLP
Grant Thornton LLP
KPMG LLP
PricewaterhouseCoopers LLP
OPPOSITION: (Verified 8/16/18)
None received
ARGUMENTS IN SUPPORT: The California Society of Certified Public Accountants writes in support, “Making the current CPA mobility program permanent allows CPAs to continue to serve a wide spectrum of businesses and individuals working in a borderless economy as efficiently and effectively as possible, while also maintaining seamless, uniform consumer protection. For the CPA profession, and the taxpayers they serve, we urge your support of SB 795.”
PricewaterhouseCoopers LLP, Ernst & Young LLP, Deloitte LLP, KPMG LLP, and Grant Thorton LLP write in support, “under the mobility program, CPAs can effectively and efficiently serve clients across state lines without unnecessary delays—an important benefit give the geographically diverse nature of many CPA clients.”
The California Board of Accountancy writes in support, “On January 18, 2018, the California Board of Accountancy (CBA) voted to take a Support if amended position on Senate Bill (SB) 795. In light of the amendments to the bill on July 3, 2018, the CBA is pleased to now Support SB 795. The CBA’s current mobility program, enacted by SB 1405 (Chapter 411 of 2012 Statutes), replaced the prior practice privilege program, which required out-of-state licensees to provide notice and pay a fee prior to practicing in California. The current mobility program also required the CBA to develop and implement various other measures intended to enhance consumer protection.”
ASSEMBLY FLOOR: 76-0, 8/16/18
AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Maienschein, Mathis, Mayes, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rivas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon
NO VOTE RECORDED: Bloom, Cristina Garcia, Low, McCarty
8/18/18 12:29:01
**** END ****
Date of Hearing: August 8, 2018
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
SBPCA Bill Id:SB 795
Author:(Galgiani) – As Amended Ver:July 3, 2018
Policy Committee: | Business and Professions | Vote: | 19 - 0 |
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill removes the sunset date for the current “practice privilege” requirements for out-of-state licensees who are authorized to practice public accountancy in California.
FISCAL EFFECT:
Negligible fiscal impact to the California Board of Accountancy. This program is currently in practice.
COMMENTS:
- Purpose. This bill intends to make permanent the California Board of Accountancy’s (CBA’s) current practice privilege program (mobility program). The California Society of CPAs writes in support:
The mobility program, which was established by SB 1405 (Chapter 411, Statutes of 2012), conformed California’s CPA practice privilege provisions to those of the rest of the nation and eased the burdens of interstate practice for CPAs. Since businesses, taxpayers, and other clients of CPAs are financially and geographically diverse, the practice of CPAs regularly extends across state lines in order to support the needs of clients. This streamlined mobility process allows CPAs to serve clients across state lines without costly delays and allows a CPA to assist clients in a timely and efficient manner.
Making the CPA mobility program permanent allows CPAs to continue to serve a wide spectrum of businesses and individuals working in a borderless economy as efficiently and effectively as possible, while also maintaining seamless, uniform consumer protection.
- Background. The CBA enforces the Accountancy Act and exercises regulatory authority over accountancy firms. In the early 2000s, the issue emerged of accounting professionals who were licensed outside of California, but who wanted to practice in California. Prior to 2013, the practice privilege required out-of-state CPAs to provide notice of their intent to practice accountancy in California to the CBA by submitting a form and paying a fee.
SB 1405 (De Leon, Chapter 411, Statutes of 2012), produced a consensus on changes to the practice privilege to facilitate better cross-border practice in California consistent with what is being done by other states. Established as a pilot program until January 1, 2019, SB 1405 eliminated the requirement to submit a form and fee to CBA and instead allowed out-of-state licensees to practice under a practice privilege without any fee or notification to the CBA. SB 1405 maintained many of the consumer protection provisions that already existed, added protective provisions to ensure other states maintain “substantially equivalent” enforcement practices, and added consumer information provisions by requiring the CBA to post information on its website about out-of-state licensees operating under a practice privilege.
In addition, SB 1405 required the CBA convene a stakeholder group and to evaluate whether the revised practice privilege provisions provided consumer protections equivalent to the prior law, among other things, and to report to the Legislature by January 1, 2018.
In December 2017, the CBA issued a report (California’s Mobility Program for Accountancy – Implementation, Enforcement and its Consumer Benefits) to the Legislature regarding its implementation of the program and concluded that the current mobility program provides an equivalent, and in some aspects a greater, level of consumer protection in comparison to the prior practice privilege program.
This bill removes the January 1, 2019, sunset date, thus making the current practice privilege program permanent.
- Prior Legislation.
SB 547 (Hill, Chapter 429, Statutes of 2017), among other things, allows the CBA to extend existing regulations related to the practice privilege without it being considered a change with regulatory effect.
AB 2560 (Obernolte, Chapter 302, Statutes of 2016) authorizes the CBA to promulgate emergency regulations if it determines, under the current Practice Privilege Program, that allowing individuals from a state with substantially similar enforcement practices to practice in California violates its duty to protect consumers.
SB 1467 (Committee on Business, Professions and Economic Development, Chapter 400, Statutes of 2014) requires an individual who holds and exercises a practice privilege in California to notify the BOA of any pending criminal charges, other than a minor traffic violation, in writing within 30 days of the date the individual has knowledge of those charges.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
Date of Hearing:
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Evan Low, Chair
SBPCA Bill Id:
Author:() – As Ver:
SENATE VOTE:
SUBJECT:
SUMMARY:
As proposed to be amended, this bill would remove the sunset date for the current practice privilege requirements for out-of-state licensees who are currently authorized to practice public accountancy in California. The bill would make certain other conforming changes.
EXISTING LAW:
- Authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in California under a “practice privilege” without obtaining a certificate or license if the individual meets one of the following requirements in Business and Professions Code (BPC) § 5096 (a):
- The individual has continually practiced public accountancy as a certified public accountant (CPA) under a valid license issued by any state for at least four of the last 10 years;
- The individual has a license, certificate, or permit from a state that has been determined by the California Board of Accountancy (CBA) to have substantially equivalent education, examination and experience qualifications for licensure, as specified. (
- The individual possesses education, examination, and experience qualifications for licensure that have been determined by the board to be substantially equivalent to this state’s qualifications.
- Permits an individual who qualifies for the practice privilege to engage in the practice of public accountancy without a notice or fee requirements from the CBA. (BPC § 5096 (c))
- Provides that the CBA may designate states as substantially equivalent for purposes of determining and accepting individual qualifications evaluations or appraisals. (BPC § 5096 (b))
- Declares that an individual who holds a practice privilege in California is still subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state and shall be responsible for complying with the laws, regulations, and professional standards applicable to the practice of public accountancy by licensees of this state. (BPC § 5096 (e))
- Provides for circumstances under which the individual would be required to cease practice in this state and what requirements they must meet. (BPC § 5096 (e), (f), (g), (h) and (i)).
- Provides for circumstances under which any individual not a licensee of this state would be practicing public accountancy unlawfully and under what circumstances the practice privilege may be revoked or suspended. (BPC §§ 5096.1, 5096.2 and 5096.4)
- Provides that an individual may not sign any attest report pursuant to a practice privilege unless the individual meets specified experience requirements. (BPC § 5096.5)
- Authorizes the CBA to adopt emergency regulations to implement, interpret, or make specific the provisions of the practice privilege. (BPC § 5096.9)
- Provides that a certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided it meets requirements as specified. (BPC § 5096.12)
- Provides that if the board determines, as specified, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege violates the board’s duty to protect the public, then the board shall require, as a condition to exercise a practice privilege in this state, that those individuals shall file a notification form and the applicable fees to the board. (BPC § 5096.12 (a) and (b))
- Establishes a stakeholder group, as of July 1, 2014, to consider whether the provisions regarding the practice privilege are consistent with the CBA’s duty to protect the public and make other considerations as specified. (BPC § 5096.21 (e))
- Requires the CBA to prepare a report to be provided to relevant policy committees of the Legislature, the DCA director, and the public on or before January 1, 2018, that explains in detail if the requirements of the practice privilege have been implemented and if the implementation is complete, whether the current requirements of the practice privilege program are more or less equivalent to the protections afforded by the prior requirements of the practice privilege, and describe how other state boards of accountancy have addressed referrals to those boards from the CBA, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by these boards. (BPC § 5096.21(f))
Repeals as of January 1, 2019 current provisions regarding the practice privilege and reinstates the practice privilege provisions regarding the practice privilege which are similar to current requirements, but require a qualified individual notify the CBA of intent to practice in California and pay a fee in order to obtain a practice privilege in California. (BPC § 5096.21 (g))
THIS BILL:
- Clarifies in BPC § 5096.21(a) that the CBA may remove a state out of mobility and reinstate the prior notice and fee requirements through a majority vote of the CBA.
2) Provides in BPC section 5096.21 (a)(2) that the CBA may also return a state to mobility by a majority vote.
- Deletes the language in BPC § 5096.21 that pertains to the two mobility reports the CBA previously submitted to the Legislature.
- Clarifies language related to the use of National Association of State Boards of Accountancy (NASBA) enforcement guidelines in BPC § 5096.21.
- Adds a 60 day safe harbor for licensees from a state that is subject to an action under BPC § 5096.21.
- Extends the sunset date for the current practice privilege requirements for out-of-state licensees who are authorized to practice in California by one year until January 1, 2020.
- Makes other minor and technical changes.
FISCAL EFFECT: According to The Senate Appropriations Committee, pursuant to Senate Rule 28.8, no significant state fiscal impact is anticipated.
COMMENTS:
- Purpose. This bill is sponsored by The California Society of CPAs and intended to make permanent the CBA’s current practice privilege program. According to the Author:
In 2012, the Legislature conformed California’s CPA practice privilege provisions to those of the rest of the nation and eased the burdens of interstate practice for Certified Public Accountants. The mobility programs established in 2012 contained many of the same consumer protection provisions and required the Board of Accountancy to report back to the Legislature on how well the provisions of the law protect the public. Senate Bill 795, as amended, will remove the January 1, 2019 sunset on these mobility provisions and remove the sunset date permanently.
As indicated below, in Proposed Amendments, committee staff recommends certain amendments necessary to make the CBA’s practice privilege program permanent.
Background.
California Board of Accountancy. The CBA enforces the Accountancy Act which defines the practice of public accountancy as the process of recording classifying, reporting and interpreting the financial data of an individual or an organization. In California, the accounting profession’s licensed practitioners are Certified Public Accountants (CPAs) and the Public Accountants. A CPA is a person who has met the requirements of California state law, including education, examination, and experience, and has been issued a license to practice public accountancy by the CBA. Only persons who are licensed can legally be called a CPA or a PA. Additionally, the CBA exercises regulatory authority over accountancy firms. As accounting practitioners, CPAs and PAs are proprietors, partners, shareholders, and staff employees of public accounting firms. They provide professional services to individuals, private and public companies, financial institutions, nonprofit organizations, and local, state, and federal government entities. The CBA’s regulatory authority over CPAs, PAs, and accounting firms is guided by its statutory mandate to protect the public. The accountancy profession in California has been regulated since the early 1900’s. The regulation of the accountancy profession helps to ensure both the integrity of the accounting practice and protection of public interests given the wide breadth of entities receiving accounting services. This bill will not change any of the current licensure, examination, or other qualifications for CPAs or PAs or the regulation of accountancy firms.
Practice Privilege. While the accountancy industry has been regulated in California since the early 1900s, the issue of cross-border practices has been at the forefront of accountancy issues in the last 20 years. The expectation that persons providing accountant services are licensed and required to abide by professional and ethical standards are paramount to ensuring the integrity of the accounting profession. Persons providing accountancy services work across various industries and licensure for accountants is required across the country. In California, in the early 2000s, the issue was raised regarding accounting professionals who were licensed outside of California but who wanted to practice in California. The issue of cross-border practice was not unique to California and other states began to address the same issue. Prior to 2013, the practice privilege required out-of-state CPAs to provide notice of their intent to practice accountancy in California to the CBA by filling out a form, which could be completed online, and paying a fee to the CBA. The practice privilege form was four pages in length and required basic professional identifying information such as name, address, CPA certificate, nature of the intended practice in California, etc.
As a result of SB 1405 (De Leon, Chapter 411, Statutes of 2012), which was a multi-year effort on the part of the accounting profession and consumer advocates, there was a consensus reached on changes to the practice privilege to facilitate better cross-border practice in California consistent with what is being done nationally by other state boards. SB 1405 eliminated the requirement to submit the form and fee to CBA beginning July 1, 2013, and ending January 1, 2019, and instead allowed out-of-state licensees to practice under a practice privilege without any fee or notification to the CBA. It maintains many of the consumer protection provisions that existed in the prior practice privilege statutes, added protective provisions to ensure other states maintain “substantially equivalent” enforcement practices or risk falling out of “mobility” , and added consumer information provisions by requiring the CBA to post information on its website about out-of-state licensees operating under a practice privilege. The current provisions of the practice privilege law are functioning as a pilot program until January 1, 2019. Unless the Legislature acts, the prior law regarding the practice privilege would be reinstated, which would include the fee and the notification form. In addition to establishing a temporary program, SB 1405 additionally required the CBA convene a stakeholder group and to evaluate whether the revised practice privilege provisions are more or less equivalent to the prior law in the protection they afford the public, among other things and to reporti to the Legislature by January 1, 2018.
Mobility Stakeholder Group and Report to the Legislature. The Mobility Stakeholder Group (MSG) which was established as a result of the mandate in SB 1405 began meeting in February of 2014 and met approximately three times a year. Part of the MSG’s mission was to assess whether states adequately and in a timely manner address enforcement referrals by the BOA, whether other states make disciplinary history publicly available, and whether the enforcement is appropriate. The CBA was required to submit a report to the Legislature on January 1, 2018 assessing the current practice privilege provisions. Presumably, the intent of conducting the stakeholder group meetings and the production of a report was for the Legislature, along with other interested stakeholders, to determine whether or not the current practice privilege provisions should remain in place, whether there should be changes to the current provisions, or if the current practice privilege provisions should sunset and the prior notification and fee system should be reinstated. Although the CBA adopted California’s Mobility Program for Accountancy—Implementation, Enforcement and its Consumer Benefits report at its November 2017 full board meeting, the full report was not submitted to the Legislature until the end of December 2017.
Additional Background Information. As stated above, this bill removes the previous practice privilege language. This is the old notice and fee program that has not been in effect since CPA mobility was established by SB 1405 in 2012. With the mobility program being made permanent, removing the old language helps clarify the statute. The key provisions of the old program are kept in a revised version of BPC 5096.22. This maintains the provisions of the prior “notice and fee practice privilege system” for licensees for states should the CBA need to take a future action to remove one or more states from the mobility program in the interest of consumer protection.
The purpose in clarifying BPC § 5096.21(a), that the CBA may remove a state out of mobility and reinstate the prior notice and fee requirements through a majority vote of the CBA, is to remove the need for the CBA to do emergency regulations to accomplish this. Similarly, language is added to clarify that the CBA can return a state to the mobility program in the same manner by a vote of the CBA.
Regarding clarifying language related to the use of National Association of State Boards of Accountancy (NASBA) enforcement guidelines, it has been determined by the CBA that these guidelines meet or exceed their own enforcement practices – hence these guidelines serve as the basis for evaluating other states for purposes of mobility.
Prior Related Legislation. SB 547 (Hill, Chapter 429, Statutes of 2017) allows the CBA to extend existing regulations without it being considered a change with regulatory effect related to the practice privilege and made numerous other technical and substantive changes to various boards and bureaus under the jurisdiction of the DCA and the weights and measures program under the Department of Food and Agriculture.
AB 2560 (Obernolte, Chapter 302, Statutes of 2016) authorizes the BOA to promulgate emergency regulations if it determines, under the current Practice Privilege Program, that allowing individuals from a substantially similar state to practice in California violates its duty to protect consumers.
SB 1467 (Committee on Business, Professions and Economic Development, Chapter 400, Statutes of 2014) requires an individual who holds and exercises a practice privilege in California to notify the BOA of any pending criminal charges other than a minor traffic violation in writing within 30 days of the date the individual has knowledge of those charges, among numerous other technical and non-controversial changes to numerous boards and bureaus under the DCA.
SB 822 (Committee on Business, Professions and Economic Development, Chapter 319, Statutes of 2013) requires an out-of-state licensee, exercising a practice privilege in California to notify the BOA of pending criminal charges, to determine if there is consumer harm, authorizes the CBA to issue citations to out-of-state licensees practicing in California under a practice privilege, and, makes numerous other technical and non-controversial changes to boards and bureaus under the DCA.
SB 1405 (De Leon, Chapter 411, Statutes of 2012) revised California’s practice privilege statutes for the practice of accountancy to allow out-of-state licensees to practice in California with no notice or fee paid to the BOA and allows CPAs, public accountants, and public accounting firms to have their permits placed on military inactive status.
ARGUMENTS IN SUPPORT: The California Society of CPAs writes in support, noting that:
“The mobility program, which was established by SB 1405 (Chapter 411, of 2012 Statutes), conformed California’s CPA practice privilege provisions to those of the rest of the nation and eased the burdens of interstate practice for CPAs. Since businesses, taxpayers, and other clients of CPAs are financially and geographically diverse, the practice of CPAs regularly extends across state lines in order to support the needs of clients. This streamlined mobility process allows CPAs to serve clients across state lines without costly delays and allows a CPA to assist clients in a timely and efficient manner.
Making the CPA mobility program permanent allows CPAs to continue to serve a wide spectrum of businesses and individuals working in a borderless economy as efficiently and effectively as possible, while also maintaining seamless, uniform consumer protection.”
The California Board of Accountancy states in its Support if Amended letter, that consumers gained numerous benefits during the implementation of the mobility program. Therefore the CBA believes the program should be made permanent. In addition, the CBA requests certain technical amendments.
PROPOSED AMENDMENTS:
- Remove the language in various sections of the Accountancy Act related to the previous Practice Privilege program.
- Remove the all sunset dates for the current CPA Mobility program (this makes the current mobility program permanent).
- Remove obsolete sunrise provisions related to the 2013 implementation of the current mobility program.
- Remove an incorrectly placed operative date to BPC 5096.8 that was mistakenly inserted in a prior amendment.
- Make technical changes to the CBA’s Mobility Stakeholder Group to be consistent with other CBA committees.
- Amend BPC § 5096.21(a) to remove the words “, by regulation,.” This is necessary to conform to other amendments to this section that allow the CBA, by majority vote, to require out-of-state licensees from certain state to file notice and pay a fee.
- Make a technical, clarifying amendment to BPC § 5096.21(b).
REGISTERED SUPPORT:
California Society of CPAs (CalCPA)
The National Accounting Firms
California Board of Accountancy (if amended)
REGISTERED OPPOSITION:
None on File.
Analysis Prepared by: Danielle Sires / B. & P. / (916) 319-3301
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
THIRD READING
Bill No: SB 795
:
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 1/8/18
AYES: Hill, Fuller, Dodd, Galgiani, Glazer, Hernandez, Newman, Pan, Wilk
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SOURCE: California Society of CPAs
DIGEST:
This bill extends the sunset date for the current practice privilege requirements for out-of-state licensees who currently are authorized to practice public accountancy in California by one year until January 1, 2020, and makes other technical and conforming changes.
Existing law:
- Authorizes an individual whose principal place of business is not in this state and who has a valid and current license to practice public accountancy from another state to engage in the practice of public accountancy in California under a “practice privilege” without obtaining a certificate or license if the individual meets one of the following requirements: (a) the individual has continually practiced public accountancy as a certified public accountant (CPA) under a valid license issued by any state for at least four of the last 10 years; and, (b) the individual has a license, certificate, or permit from a state that has been determined by the Board of Accountancy (BOA) to have substantially equivalent education, examination and experience qualifications for licensure, as specified. (Business and Professions Code (BPC) § 5096 (a))
- Permits an individual who qualifies for the practice privilege to engage in the practice of public accountancy without a notice, fee, or other requirement from the BOA. (BPC § 5096 (c))
- Declares an individual who holds a practice privilege in California is still subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state and shall be responsible for complying with the laws, regulations and professional standards applicable to the practice of public accountancy by licensees of this state. (BPC § 5096 (e))
- Provides that a certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided it meets requirements as specified. (BPC § 5096.12)
- Establishes a stakeholder group, as of July 1, 2014, to consider whether the provisions regarding the practice privilege are consistent with the BOA’s duty to protect the public and make other considerations as specified, and requires the BOA to prepare a report on or before January 1, 2018, that explains in detail if the requirements of the practice privilege have been implemented and if the implementation is complete, whether the current requirements of the practice privilege are more or less equivalent to the protections afforded by the prior requirements of the practice privilege, and describe how other state boards of accountancy have addressed referrals to those boards from the BOA, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by these boards. (BPC § 5096.21(e)(f)).
- Repeals as of January 1, 2019, current provisions regarding the practice privilege and instead will substitute prior provisions regarding the practice privilege, as specified. (BPC § 5096.21 (g))
This bill extends the sunset date for the current practice privilege program by one year until January 1, 2020, and makes other minor, technical and conforming changes.
Background
Board of Accountancy. The BOA enforces the Accountancy Act which defines the practice of public accountancy as the process of recording classifying, reporting and interpreting the financial data of an individual or an organization. In California, the accounting profession’s licensed practitioners are the CPAs and the Public Accountants (PAs). A CPA is a person who has met education, examination, and experience requirements and has been issued a license to practice public accountancy by the BOA. Additionally, the BOA exercises regulatory authority over accountancy firms.
Practice Privilege. Prior to 2013, the practice privilege required out-of-state CPAs to provide the BOA with a notice of intent to practice accountancy in California by filling out a form, which could be completed online, and paying a fee to the BOA. The practice privilege form was four pages in length and required basic professional identifying information such as name, address, CPA certificate, nature of the intended practice in California, etc.
As a result of SB 1405 (De Leon, Chapter 411, Statutes of 2012), there was a consensus reached on changes to the practice privilege to facilitate better cross-border practice in California consistent with what was being done nationally by other state boards. SB 1405 eliminated the requirement to submit the form and fee to the BOA beginning July 1, 2013, and instead allowed out-of-state licensees to practice without any fee or notification to the BOA. It proposed to maintain many of the consumer protection provisions that existed in the prior practice privilege statutes, added stop-practice provisions, and added consumer information provisions by requiring the BOA to post information on its Web site about out-of-state licensees operating under a practice privilege. The current provisions of the practice privilege is functioning as a pilot program until January 1, 2019, when the prior practice privilege program would be reinstated, including the fee and the notification form. In addition to establishing a temporary program, SB 1405 required the BOA convene a stakeholder group and evaluate whether the revised practice privilege provisions are more or less equivalent to the prior law in the protection they afford the public, among other things and report to the Legislature by January 1, 2018 (BPC § 5096.21).
Mobility Stakeholder Group and Report to the Legislature. The Mobility Stakeholder Group (MSG) was established as a result of the mandate in SB 1405. Part of the MSG’s mission was to assess whether states adequately and in a timely manner address enforcement referrals by the BOA; whether other states make disciplinary history publicly available; and, whether the enforcement is appropriate. The BOA was required to submit a report to the Legislature on January 1, 2018, assessing the current practice privilege provisions. Presumably, the intent of conducting the stakeholder group meetings and the production of a report was for the Legislature, along with other interested stakeholders to determine whether or not the current practice privilege provisions should remain in place; whether there should be changes to the current provisions; or if the current practice privilege provisions should sunset and the prior notification and fee system should be reinstated. Although the BOA adopted California’s Mobility Program for Accountancy—Implementation, Enforcement and its Consumer Benefits report at its November 2017 board meeting, the full report was not submitted to the Legislature until the end of December 2017. This bill will not change any of the current licensure, examination, or other qualifications for CPAs or PAs or the regulation of accountancy firms. This bill will simply extend the current practice privilege program by one year to allow Committee members and staff, the Legislature, the BOA and other interested stakeholders additional time to review the report and assess whether the current practice provisions should be extended indefinitely this year, or if any changes to the program should be made.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Society of CPAs
OPPOSITION: (Verified 1/16/18)
None received
ARGUMENTS IN SUPPORT: The California Society of CPAs writes in support, noting that “the mobility program, which was established by SB 1405 (Chapter 411, of 2012 Statutes), conformed California’s CPA practice privilege provisions to those of the rest of the nation and eased the burdens of interstate practice for CPAs. Since businesses, taxpayers, and other clients of CPAs are financially and geographically diverse, the practice of CPAs regularly extends across state lines in order to support the needs of clients. This streamlined mobility process allows CPAs to serve clients across state lines without costly delays and allows a CPA to assist clients in a timely and efficient manner.”
1/17/18 13:29:27
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SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2017 - 2018 Regular
Bill No: SB 795 Hearing Date: January 8, 2018
Author: | Galgiani | ||
Version: |
| ||
Urgency: | Fiscal: | ||
Consultant: | |||
Subject: Accountancy: practice privileges
SUMMARY:
Repeals the January 1, 2019 sunset date on the current practice privilege requirements for out-of-state licensees who currently are authorized to practice public accountancy in California, thereby, making the current regulatory structure operative indefinitely, and makes other technical and clarifying changes.
Existing law:
- Authorizes an individual whose principal place of business is not in this state and who has a valid and current license, certificate, or permit to practice public accountancy from another state to engage in the practice of public accountancy in California under a “practice privilege” without obtaining a certificate or license if the individual meets one of the following requirements:
- The individual has continually practiced public accountancy as a certified public accountant (CPA) under a valid license issued by any state for at least four of the last 10 years; and,
- The individual has a license, certificate, or permit from a state that has been determined by the Board of Accountancy (BOA) to have substantially equivalent education, examination and experience qualifications for licensure, as specified. (Business and Professions Code (BPC) § 5096 (a))
- Permits an individual who qualifies for the practice privilege to engage in the practice of public accountancy without a notice, fee, or other requirement from the BOA. (BPC § 5096 (c))
- Provides that the BOA may designate states as substantially equivalent for purposes of determining and accepting individual qualifications evaluations or appraisals. (BPC § 5096 (b))
- Declares an individual who holds a practice privilege in California is still subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this state and shall be responsible for complying with the laws, regulations and professional standards applicable to the practice of public accountancy by licensees of this state. (BPC § 5096 (e))
- Provides for circumstances under which the individual would be required to cease practice in this state and what requirements they must meet. (BPC § 5096 (e), (f), (g), (h) and (i)).
- Provides for circumstances under which any individual not a licensee of this state would be practicing public accountancy unlawfully and under what circumstances the practice privilege may be revoked, suspended. (BPC §§ 5096.1, 5096.2 and 5096.4)
- Provides that an individual may not sign any attest report pursuant to a practice privilege unless the individual meets specified experience requirements.
(BPC § 5096.5) - Authorizes the BOA to adopt emergency regulations to implement, interpret, or make specific the provisions of the practice privilege. (BPC § 5096.9)
- Provides that a certified public accounting firm that is authorized to practice in another state and that does not have an office in this state may engage in the practice of public accountancy in this state through the holder of a practice privilege provided it meets requirements as specified. (BPC § 5096.12)
- Provides that if the board determines, as specified, that allowing individuals from a particular state to practice in this state pursuant to a practice privilege violates the board’s duty to protect the public, then the board shall require as a condition to exercise a practice privilege in this state that those individuals shall file a notification form and the applicable fees to the board. (BPC § 5096.12 (a) and (b))
- Establishes a stakeholder group, as of July 1, 2014, to consider whether the provisions regarding the practice privilege are consistent with the BOA’s duty to protect the public and make other considerations as specified. (BPC § 5096.21 (e))
- Requires the BOA to prepare a report to be provided to relevant policy committees of the Legislature, the DCA director and the public on or before January 1, 2018, that explains in detail if the requirements of the practice privilege have been implements and if the implementation is complete, whether the current requirements of the practice privilege are more or less equivalent to the protections afforded by the prior requirements of the practice privilege, and describe how other state boards of accountancy have addressed referrals to those boards from the BOA, the timeframe in which those referrals were addressed, and the outcome of investigations conducted by these boards. (BPC § 5096.21(f))
- Repeals as of January 1, 2019 current provisions regarding the practice privilege and instead will substitute prior provisions regarding the practice privilege which are similar to current requirements, but also required that a qualified individual notify the BOA of intent to practice in California and pay a fee in order to obtain a practice privilege in California. (BPC § 5096.21 (g))
This bill:
- Deletes the January 1, 2019 sunset date for the current practice privilege program, thereby, extending the program indefinitely.
- Repeals the provisions of the practice privilege program which was scheduled to take effect on January 1, 2019.
- Changes the number of years from four to five of the last ten years that a person must have a valid license issued by another state in order to practice public accountancy in California, as specified.
- Makes other minor and technical changes.
FISCAL EFFECT:
Unknown. This measure is keyed “fiscal” by Legislative Counsel.
COMMENTS:
- Purpose. This bill is sponsored by The California Society of CPAs. According to the Author, “current law on this matter is scheduled to sunset on January 1, 2019. The practice privilege for out of state accountants has served California consumers well, and the provision should be extended indefinitely. The California Board of Accountancy prepared a report for the Legislature, as required by the original mobility legislation (SB 1405, De Leon, 2012), which concluded that the mobility law had adequately protected the interests of California consumers, and resulted in national improvements in the regulation of the accounting profession.”
- Background.
- Board of Accountancy. The BOA enforces the Accountancy Act which defines the practice of public accountancy as the process of recording classifying, reporting and interpreting the financial data of an individual or an organization. In California, the accounting profession’s licensed practitioners are the Certified Public Accountants (CPAs) and the Public Accountants. A CPA is a person who has met the requirements of California state law, including education, examination, and experience, and has been issued a license to practice public accountancy by the BOA. Only persons who are licensed can legally be called a CPA or a PA. Additionally, the BOA exercises regulatory authority over accountancy firms. As accounting practitioners, CPAs and PAs are proprietors, partners, shareholders and staff employees of public accounting firms. They provide professional services to individuals, private and public companies, financial institutions, nonprofit organizations, and local, state and federal government entities. The BOA’s regulatory authority over CPAs, PAs, and accounting firms is guided by its statutory mandate to protect the public. The accountancy profession in California has been regulated since the early 1900’s. The regulation of the accountancy profession helps to ensure both the integrity of the accounting practice and protection of public interests given the wide breadth of entities receiving accounting services. This bill will not change any of the current licensure, examination of other qualifications for CPAs or PAs or the regulation of accountancy firms. This bill will codify the BOA’s current practice privilege statutes which have been in effect since July 1, 2013.
- Practice Privilege. While the accountancy industry has been regulated in California since the early 1900’s; the issue of cross border practices has been at the forefront of accountancy issues in the last 20 years. The expectation that persons providing accountant services are licensed and required to abide by professional and ethical standards are paramount to ensuring the integrity of the accounting profession. Persons providing accountancy services work across various industries, both in and outside of public and private services and licensure for accountants is required across the country. In California, in the early 2000’s, the issue was raised regarding accounting professionals who were licensed outside of California but who wanted to practice in California. The issue of cross border practices was not unique to California and other states began to address the same issue. Prior to 2013, the practice privilege required out-of-state CPAs to provide notice of their intent to practice accountancy in California to the BOA by filling out a form, which could be completed online, and paying a fee to the BOA. The practice privilege form was four pages in length and required basic professional identifying information such as name, address, CPA certificate, nature of the intended practice in California, etc.
As a result of SB 1405 (De Leon, Chapter 411, Statutes of 2012), which was a multi-year effort on the part of the accounting profession and consumer advocates, there was a consensus reached on changes to the practice privilege to facilitate better cross-border practice in California consistent with what is being done nationally by other state boards. SB 1405 eliminated the requirement to submit the form and fee to BOA beginning July 1, 2013, and ending January 1, 2019, and instead allowed out-of-state licensees to practice under a practice privilege without any fee or notification to the BOA. It proposed to maintain many of the consumer protection provisions that existed in the prior practice privilege statutes, added stop-practice provisions, and added consumer information provisions by requiring the BOA to post information on its website about out-of-state licensees operating under a practice privilege. The current provisions of the practice privilege is functioning as a pilot program until January 1, 2019, when, unless the Legislature acts, the prior law regarding the practice privilege would be reinstated, which would include the fee and the notification form. In addition to establishing a temporary program, SB 1405 additionally required the BOA convene a stakeholder group and to evaluate whether the revised practice privilege provisions are more or less equivalent to the prior law in the protection they afford the public, among other things and reporting to the Legislature by January 1, 2018 (BPC § 5096.21).
- Mobility Stakeholder Group and Report to the Legislature. The Mobility Stakeholder Group (MSG) which was established as a result of the mandate in SB 1405 began meeting in February of 2014 and met approximately three times a year. Part of the MSG’s mission was to assess whether states adequately and in a timely manner address enforcement referrals by the BOA; whether other states make disciplinary history publicly available; and whether the enforcement is appropriate. The BOA was required to submit a report to the Legislature on January 1, 2018 assessing the current practice privilege provisions. Presumably, the intent of conducting the stakeholder group meetings and the production of a report was for the Legislature, along with other interested stakeholders to determine whether or not the current practice privilege provisions should remain in place; whether there should be changes to the current provisions; or if the current practice privilege provisions should sunset and the prior notification and fee system should be reinstated. Although the BOA adopted California’s Mobility Program for Accountancy—Implementation, Enforcement and its Consumer Benefits report at its November 2017 full board meeting, the full report was not submitted to the Legislature until the end of December 2017.
- Arguments in Support. The California Society of CPAs writes in support, noting that “the mobility program, which was established by SB 1405 (Chapter 411, of 2012 Statutes), conformed California’s CPA practice privilege provisions to those of the rest of the nation and eased the burdens of interstate practice for CPAs. Since businesses, taxpayers, and other clients of CPAs are financially and geographically diverse, the practice of CPAs regularly extends across state lines in order to support the needs of clients. This streamlined mobility process allows CPAs to serve clients across state lines without costly delays and allows a CPA to assist clients in a timely and efficient manner.”
- Prior Related Legislation. SB 547 (Hill, Chapter 429, Statutes of 2017) allowed the BOA to extend existing regulations without it being considered a change with regulatory effect related to the practice privilege, and made numerous other technical and substantive changes to various boards and bureaus under the jurisdiction of the DCA and the weights and measures program under the Department of Food and Agriculture.
AB 2560 (Obernolte, Chapter 302, Statutes of 2016) authorized the BOA to promulgate emergency regulations if it determines, under the current Practice Privilege Program, that allowing individuals from a substantially similar state to practice in California violates its duty to protect consumers.
SB 1467 (Committee on Business, Professions and Economic Development, Chapter 400, Statutes of 2014) required an individual who holds and exercises a practice privilege in California to notify the BOA of any pending criminal charges other than a minor traffic violation in writing within 30 days of the date the individual has knowledge of those charges, among numerous other technical and non-controversial changes to numerous boards and bureaus under the DCA.
SB 822 (Committee on Business, Professions and Economic Development, Chapter 319, Statutes of 2013) required an out-of-state licensee, exercising a practice privilege in California to notify the BOA of pending criminal charges, as specified, to determine if there is consumer harm; authorized the CBA to issue citations to out-of-state licensees practicing in California under a practice privilege, as specified; and, makes numerous other technical and makes several technical and non-controversial changes to numerous boards and bureaus under the DCA.
SB 1405 (De Leon, Chapter 411, Statutes of 2012) revised California’s practice privilege statutes for the practice of accountancy to allow out-of-state licensees to practice in California with no notice or fee paid to the BOA, and allowed CPAs, public accountants, and public accounting firms to have their permits placed on military inactive status.
- Policy Concerns and Suggested Author Amendment. This bill was introduced in February of 2017. At that time, the Committee noted that the BOA’s final report on the practice privilege provisions was incomplete and the repeal of the January 1, 2019 dates would appear to have been premature because the Legislature and other stakeholders had not received or reviewed the report to ensure that the continued implementation of the practice privilege provides adequate protection to consumers. After discussions with the sponsors of SB 795, it was decided that it might be best to hold this bill in the Senate Committee on Business, Professions and Economic Development Committee until such time as the report is received and reviewed. The BOA voted on a final report at its November 2017 board meeting, but the report was not submitted to the Legislature until late December of 2017. Unfortunately, as a result of the circumstance that the two-year bill deadline and the final report submission coincide, the Committee may wish to consider extending the sunset date of the current practice privilege program by one year for now, in an effort to allow Committee members and staff, the Legislature, the BOA and other interested stakeholders additional time to review the report and assess whether extending the current practice provisions should be extended indefinitely this year, or if any changes to the practice privilege program should be made.
- Proposed Author’s Amendments. In addition to the one-year sunset extension noted above, the Author is proposing technical amendments based on discussions with BOA that will update BOA’s notification and procedural processes, as well as regulations, related to the practice privilege. The technical Author’s Amendments will also correct drafting errors in the current version of the bill.
SUPPORT AND OPPOSITION:
Support:
California Society of CPAs
Opposition:
None on file.
-- END --
Discussed in Hearing
2MIN
Senate Floor
1MIN
Senate Floor
3MIN
Senate Standing Committee on Business, Professions and Economic Development
Bill Author
Bill Co-Author(s):