Chapter 362
2016 -- H 7838 SUBSTITUTE A
Enacted 07/06/2016

A N   A C T
RELATING TO BUSINESSES AND PROFESSIONS -- ACCOUNTANCY

Introduced By: Representatives O'Brien, McKiernan, Almeida, Carnevale, and Marshall
Date Introduced: March 03, 2016

It is enacted by the General Assembly as follows:
     SECTION 1. Sections 5-3.1-3, 5-3.1-7, 5-3.1-9 and 5-3.1-12 of the General Laws in
Chapter 5-3.1 entitled "Public Accountancy" are hereby amended to read as follows:
     5-3.1-3. Definitions. -- As used in this chapter, unless the context requires otherwise, the
following terms are construed as follows:
      (1) "Attest" means providing the following financial statement services:
      (i) Any audit or other engagement to be performed in accordance with the Statements on
Auditing Standards (SAS) as adopted by the American Institute of Certified Public Accountants;
      (ii) Any review of a financial statement to be performed in accordance with the
Statement on Standards for Accounting and Review Services (SSARS) as adopted by the
American Institute of Certified Public Accountants;
      (iii) Any examination of prospective financial information to be performed in accordance
with the Statements on Standards for Attestation Engagements (SSAE) as adopted by the
American Institute of Certified Public Accountants;
      (iv) Any services considered attest by the American Institute of Certified Public
Accountants Any engagement to be performed in accordance with the standards of the public
company accounting oversight board;
      (v) Any services that will provide assurance on financial information and will be
performed in accordance with appropriate professional standards; Any examination, review, or
agreed-upon procedures engagement to be performed in accordance with the SSAE, other than an
examination described in subsection (1)(iii); and
      (vi) The statements on standards specified in this definition shall be adopted by reference
by the board pursuant to rulemaking and shall be those standards developed by the American
Institute of Certified Public Accountants developed for general application by recognized national
accountancy organizations, such as the American Institute of Certified Public Accountants, and
the Public Company Accounting Oversight Board.
      (2) "Authority" means an authority to practice as a public accountant in this state granted
by the public accountants advisory commission under former § 5-3-6, (P.L. 1962, chapter 228,
Section 1, as amended by P.L. 1970, chapter 272, Section 1).
      (3) "Board" means the board of accountancy, a public authority created by § 5-3.1-4.
      (4) "Certificate" means a certificate as certified public accountant issued under this
chapter or corresponding provisions of prior law, or a corresponding certificate as certified public
accountant issued after examination under the law of any other state.
      (5) "Certified public accountant" or "CPA" means a person holding a certificate issued
under this chapter or corresponding provisions of prior law or under the accountancy act or
similar law of any other state.
      (6) "Compilation" means providing a service to be performed in accordance with the
Statement on Standards for Accounting and Review Services (SSARS), as adopted by the
American Institute of Certified Public Accountants, that is presenting in the form of financial
statements, information that is the representation of management without undertaking to express
any assurance on the statements.
      (7) "Entity" includes a general partnership, limited liability company, limited liability
partnership, a corporation, a sole proprietor, a trust and joint venture.
      (8) "Good moral character" for purposes of this section, means lack of a history of
dishonest or felonious acts.
      (9) "Licensee" means the holder of a certificate, authority, or permit issued under this
chapter or under the prior laws of this state.
      (10) "Majority" refers to more than fifty percent (50%) ownership in terms of financial
interests and voting rights.
      (11) "Peer review" means a study, appraisal, or review of one or more aspects of the
professional work of a practice unit engaged in the practice of public accountancy in this state, by
a licensee or licensees who are not affiliated with the practice unit being reviewed.
      (12) "Permit" means a permit to practice public accountancy issued under § 5-3.1-7, 5-
3.1-8, or 5-3.1-9, or under corresponding provisions of prior law, or under corresponding
provisions of the law of any other state.
      (13) "Practice of, (or practicing) public accounting or accountancy" means the
performance of or the offering to perform, in an independent posture, for a client or potential
client, one or more kinds of services involving the use of accounting or auditing skills, in
connection with the issuance of reports on financial statements as defined in subsection (17).
      (14) "Practice unit" means a sole proprietorship, corporation, partnership, or other entity
engaged in the practice of public accounting in this state. For the purpose of this chapter, the
office of the Aauditor Ggeneral is considered a practice unit.
      (15) "Principal residence" means the state in which a person has the right to register to
vote for, or the right to vote in, general elections and in which he or she qualifies to file a resident
state income tax return.
      (16) "Public accountant" or "PA" means a person holding an authority as a public
accountant issued under the prior laws of this state.
      (17) "Report" means an opinion, report, or other form of language that states or implies
assurance as to the reliability of the attested information or compiled financial statements and that
also includes, or is accompanied by, a statement or implication that the person or practice unit
issuing the financial statements has special knowledge or competence in accounting or auditing.
A statement or implication of special knowledge or competence may arise from use by the issuer
of the report of names or titles indicating that the issuer is an accountant or auditor, or from the
language of the report itself. The term "report" includes any form of language which that
disclaims an opinion when that language is conventionally understood to imply any positive
assurance as to the reliability of the attested information or compiled financial statements referred
to and/or any special competence on the part of the person or practice unit issuing that language;
and it also includes any other form of language that is conventionally understood to imply that
assurance and/or special knowledge or competence.
      (18) "State" means the states of the United States, the District of Columbia, Puerto Rico,
Guam, and the U.S. Virgin Islands. The term "this state" means the state of Rhode Island.
      (19) "Substantial equivalency" means a determination by the board of accountancy that
the education, examination, and experience requirements contained in the statutes and
administrative rules of another state or jurisdiction are comparable to or exceed the education,
examination, and experience requirements included in this chapter or that an individual CPA's
education, examination, and experience qualifications are comparable to or exceed the education,
examination, and experience requirements contained in this chapter. In ascertaining substantial
equivalency as used in this chapter, the board shall take into account the qualifications without
regard to the sequence in which experience, education, or examination requirements were
attained.
     5-3.1-7. Permits for public accountants and certified public accountants. -- (a)
Annual permits to engage in the practice of public accounting in this state shall be issued by the
board, upon application for the permit and payment of the required fee, to certified public
accountants qualified under § 5-3.1-5 or eligible under the substantial equivalency standard set
out in subsection (g) of this section, and to public accountants qualified under § 5-3.1-6.
Effective January 1, 2009, all permits issued by the board shall be valid for a period of three (3)
years and shall expire upon the last day of June of the year in which the permit is scheduled to
expire. To transition existing licensees to a three- (3) year (3) licensing cycle, the board shall have
the authority and discretion in 2008 to issue permits under this section that are valid for one, two
(2), or three (3) years. All such permits issued during 2008 shall expire upon the last day of June
of the year in which the permit is scheduled to expire. The board's authority to issue permits valid
for one or two (2) years shall cease as of December 31, 2008.
      (b) A certified public accountant who holds a permit issued by another state and who
desires to practice in this state shall apply for a permit in this state if that person does not qualify
for reciprocity under the substantial equivalency standard set out in subsection (g) of this section.
Upon the date of filing the completed application with the board, the applicant is deemed
qualified to practice, and may practice, public accounting in this state pending board review of
the application; provided, that the applicant meets all other applicable requirements under this
chapter. Submission of the application constitutes the appointment of the secretary of state as an
agent for the applicant for service of process in any action or proceeding arising out of any
transaction or operation connected with or incidental to the practice of public accounting in this
state by the applicant.
      (c) Applications for renewal of a permit under this section shall be submitted to the
board by February 15 of the year in which the permit is scheduled to expire and shall be
accompanied by evidence that the applicant has satisfied the continuing professional education
requirements promulgated by board regulation. That evidence shall be in a form that the board
requires. Failure to furnish that evidence constitutes grounds for refusal to renew the permit
unless the board in its discretion determines that the failure was due to reasonable cause or
excusable neglect.
      (d) Applications for renewal of a permit under this section shall also identify any
practice unit with which the applicant is affiliated. In the event the practice unit fails to comply
with §§ 5-3.1-9 or 5-3.1-10, the board may refuse to renew the applicant's individual permit if the
board determines that the applicant was personally and substantially responsible for the failure of
the practice unit to meet the requirements of §§ 5-3.1-9 and 5-3.1-10.
      (e) All applicants for a permit under this section shall list in the application all other
states in which the applicant has applied for or holds a permit to practice. Each applicant for, or
holder of, a permit issued under this section, or any individual who has entered the state under the
provisions of substantial equivalency, shall, within thirty (30) days of the occurrence of the event,
notify the board in writing:
      (1) Of the issuance, denial, revocation, or suspension of any certificate, license, degree,
or permit by any other state; or
      (2) Of the commencement of any disciplinary or enforcement action against the
applicant, holder, or individual by any other state.
      (f) Fees for the issuance and renewal of permits under this section shall be established
from time to time by the board. In no case shall the three- (3) year (3) renewal fee be less than
three hundred and seventy-five dollars ($375). The required fee shall be paid by the applicant at
the time the application is filed with the board.
      (g) Substantial equivalency.
      (1) An individual whose principal place of business or principal residence is not in this
state having a valid certificate or license as a certified public accountant from any state whose
licensure requirements are determined to be substantially equivalent with the conditions of this
section shall have all the privileges of certificate holders and licensees of this state without the
need to obtain a certificate or permit from this state under this section as long as the conditions of
this section are met. The individual must have one year or more of experience. This experience
shall include providing any type of service or advice involving the use of accounting, attest,
management advisory, financial advisory, tax, or consulting skills all of which was verified by a
licensee, meeting requirements prescribed by the board by rule. This experience is acceptable if it
was gained through employment in government, industry, academia, or public practice.
Notwithstanding any other provision of law, an individual who offers or renders professional
services, whether in person, by mail, telephone, or electronic means, under this section shall be
granted practice privileges in this state and no notice or other submission shall be provided by any
such individual. Such an individual shall be subject to the requirements in subdivision (g)(3). If
this individual is responsible for supervising attest services and signs or authorizes another
licensee to sign the accountant's report on the financial statements on behalf of the firm, this
individual shall meet the experience requirements set out in the professional standards for such
services. If this individual is responsible for signing or authorizing another licensee to sign the
accountant's report on the financial statements on behalf of the firm, this individual shall meet the
experience requirements set out in the professional standards for such services. The board may
use the NASBA National Qualification Appraisal Service to determine which other states have
substantial equivalence with this chapter.
      (2) An individual whose principal place of business is not in this state and who holds a
valid certificate or license as a certified public accountant from any state which that the NASBA
National Qualification Appraisal Service has not verified to be in substantial equivalence with the
CPA licensure requirements if of the AICPAASBA AICPA/NASBA Uniform Accountancy Act
shall be presumed to have qualifications substantially equivalent to this state's requirements and
shall have all the privileges of certificate holders and licenses of this state without the need to
obtain a certificate or permit under this section if such individual obtains from the NASBA
National Qualification Appraisal Service verification that such individual's CPA qualifications
are substantially equivalent to the CPA licensure requirements of the AICPAASBA
AICPA/NASBA Uniform Accountancy Act. Any individual who passed the Uniform CPA
Examination and holds a valid license issued by any other state prior to January 1, 2012, may be
exempt from the education requirement in subdivision 5-3.1-5(a)(3) for purposes of this section.
      (3) Any individual licensee of another state exercising the privilege afforded under this
section and the CPA firm which that employs that licensee hereby simultaneously consents, as a
condition of the granting of this privilege:
      (i) To the personal and subject-matter jurisdiction and disciplinary authority of the
board;
      (ii) To comply with this chapter and the board's rules;
      (iii) That, in the event the certificate or license from the state of the individual's principal
place of business is no longer valid, the individual will cease offering or rendering professional
services in this state individually and on behalf of a CPA firm; and
      (iv) To the appointment of the board which that issued their license as their agent upon
whom process may be served in any action or proceeding by this board against the licensee.
      (4) A licensee of this state offering or rendering services or using their CPA title in
another state shall be subject to disciplinary action in this state for an act committed in another
state for which the licensee would be subject to discipline for an act committed in the other state.
     5-3.1-9. Permits for practice units. -- (a) Permits to engage in the practice of public
accounting in this state as a practice unit shall be issued by the board, upon application therefore
and payment of the required fee, to an entity that demonstrates its qualifications in accordance
with this chapter or to certified public accounting firms originally licensed in another state that
establish an office in this state. A practice unit must hold a permit issued under this section in
order to provide attest and compilation services as defined or to use the title "CPAs" or "CPA
firm." An applicant entity for initial issuance or renewal of a permit to practice under this section
shall be required to register each office of the firm within this state with the board and to show
that all attest and compilation services as defined in this chapter rendered in this state are under
the charge of a person holding a valid certificate issued under this chapter, or the corresponding
provision of prior law or some other state.
      (b) An entity shall satisfy the following requirements:
      (1) For corporations, general partnerships, joint ventures, limited liability partnerships,
and limited liability companies:
      (i) The principal purpose and business of the partnership must be to furnish public
accounting services to the public not inconsistent with this chapter and the rules and regulations
of the board;
      (ii) A majority of the ownership of the entity, in terms of financial interests and voting
rights of all partners, shareholders or members, belongs to holders of a certificate who shall hold
a certificate and a permit from some state, and such partners, shareholders, or members, whose
principal place of business is in this state and who perform professional services in this state, hold
a valid permit issued under this chapter or are public accountants registered under § 5-3.1-7.
Although firms may include non-licensee owners, the firm and its ownership and all parties must
comply with rules promulgated by the board. For firms of public accountants, a majority of the
ownership of the firm, in terms of financial interests and voting rights, must belong to holders of
permits under § 5-3.1-7, and provided, that any such entity, as defined by this subsection, may
include non-licensee owners, provided that:
      (A) The entity designates a licensee of this state, who is responsible for the proper
registration of the firm and identifies that individual to the board;
      (B) All non-licensee owners are active individual participants in the entity;
      (C) The entity complies with such other requirements as the board may impose by rule;
      (D) Any individual licensee who is responsible for supervising attest and compilation
services and signs or authorizes another licensee to sign the accountant's report on the financial
statements on behalf of the firm, shall meet the experience requirements as set out in professional
standards for such services;
      (E) Any individual licensee who signs or authorizes another licensee to sign the
accountants' report on the financial statements on behalf of the firm shall meet the experience
requirement as set out in professional standards for such services.
      (iii) At least one partner, shareholder, or member must be a certified public accountant or
a public accountant holding a certificate or authority under this chapter and a permit to practice in
this state under § 5-3.1-7;
      (iv) The address of every office of the entity located in this state must be listed in the
application for the permit.
      (2) For a sole proprietorship:
      (i) The principal purpose and business of the sole proprietorship must be to furnish
public accounting services to the public not inconsistent with this chapter and the rules and
regulations of the board;
      (ii) The sole proprietor must be a certified public accountant or a public accountant
holding a certificate or authority under this chapter and a permit to practice in this state under § 5-
3.1-7;
      (iii) The address of every office of the sole proprietorship located in this state must be
listed in the application for the permit.
      (iv) Any individual licensee who is responsible for supervising attest and compilation
services and signs or authorizes another licensee to sign the accountant's report on the financial
statements on behalf of the sole proprietor shall meet the experience requirements as set out in
professional standards for such services; and
      (v) Any individual licensee who signs or authorizes another licensee to sign the
accountants' report on the financial statements on behalf of the firm shall meet the experience
requirement as set out in professional standards for such services.
      (c) Application for a permit under this section must be made upon the affidavit of the
partner, shareholder, member, or sole proprietor who holds a permit to practice in this state under
§ 5-3.1-7 as a certified public accountant or a public accountant. All applications for a permit
under this section must include, in addition to any other information required by this chapter or
by rule or regulation of the board to be stated in the application, a list of all other states in which
the entity has applied for or holds a permit. Upon receipt of the application, the board shall
determine whether the entity is eligible for a permit. In the event the board determines the entity
is ineligible for a permit under this section, that determination shall be stated in writing and
delivered to the applicant at the address that is stated in the application.
      (d) All applicants for, or holders of, a permit under this section shall notify the board in
writing within thirty (30) days of the occurrence of the event:
      (1) Of any change in the identities of the partners, officers, directors, or shareholders
who are personally engaged in this state in the practice of public accounting;
      (2) Of any change in the number or location of offices within this state required to be
listed in the application pursuant to this section;
      (3) Of any change in the identities of the persons supervising the offices;
      (4) Of any issuance, denial, revocation, or suspension of a permit by any other state. The
board may prescribe fees, which are to be paid by the applicants or holders upon the notification;
and
      (5) Of a reduction below a majority of the ownership in the entity in terms of financial
interests and voting rights.
      (e) All permits issued by the board under this section subsequent to January 1, 2009,
shall be valid for a period of three (3) years and shall expire on the last day of June of the year in
which the permit is scheduled to expire unless the permit is renewed in accordance with the
provisions of this section. To transition existing licensees to a three- (3) year (3) licensing cycle,
the board shall have the authority and discretion in 2008 to issue permits under this section that
are valid for one, two (2), or three (3) years. All such permits issued during 2008 shall expire
upon the last day of June of the year in which the permit is scheduled to expire. The board's
authority to issue permits valid for one or two (2) years shall cease as of December 31, 2008.
      Effective January 1, 2009, permits issued pursuant to this section may be renewed for a
period of three (3) years, and the renewed permit shall expire on the last day of June of the year in
which the renewed permit is scheduled to expire, unless the renewed permit is again renewed by
its holder. All applications for renewal of permits under this section shall be submitted to the
board by February 15 of the year in which a permit or renewed permit is scheduled to expire. All
applicants for permit renewal shall satisfy the quality review requirements prescribed in § 5-3.1-
10.
      (f) Fees to be paid upon application for initial issuance or renewal of a permit under this
section shall be established, from time to time, by the board. Fees shall be paid at the time the
application is filed with the board.
      (g) An annual permit to engage in the practice of public accounting in this state shall be
issued by the board, upon application for it and payment of the required fee, to the office of the
auditor general, provided the office is in compliance with § 5-3.1-10.
      (h) An entity which that falls out of compliance with the provisions of this section due
to changes in firm ownership or personnel, after receiving or renewing a permit, shall take
corrective action to bring the firm into compliance as quickly as possible. The board may grant a
reasonable period of time for a firm to take such corrective action. Failure to bring the firm into
compliance within a reasonable period as defined by the board will result in the suspension or
revocation of the permit.
     5-3.1-12. Revocation or suspension of certificate, authority or permit. -- (a) After
notice and a hearing as provided in § 5-3.1-14, the board may: (1) sSuspend, for a period not to
exceed two (2) years, or revoke any certificate issued under § 5-3.1-5, or any predecessor
provision, and any authority as a public accountant issued under the prior laws of this state; (2)
rRevoke or suspend any permit issued under §§ 5-3.1-7, 5-3.1-8, 5-3.1-9, or their predecessor
provisions; and (3) rReprimand or censure in writing, limit the scope of practice, impose an
administrative fine upon, not to exceed one thousand dollars ($1,000), or place on probation, all
with or without terms, conditions, or limitations, a licensee, for any of the causes specified in
subsection (b) of this section.
      (b) The board may take action specified in subsection (a) of this section for any one or
more of the following causes:
      (1) Fraud or deceit in obtaining a certificate or permit under this chapter;
      (2) Dishonesty, fraud, or gross negligence in the practice of public accounting or in the
filing, or failing to file, the licensee's own income tax returns;
      (3) Violation of any of the provisions of this chapter;
      (4) Violation of any rules and regulations, including, but not limited to, any rules of
professional conduct, promulgated by the board under the authority granted by this chapter;
      (5) Conviction of, or pleading guilty or nolo contendere to, a crime or an act constituting
a crime of forgery, embezzlement, obtaining money under false pretenses, bribery, larceny,
extortion, conspiracy to defraud, misappropriation of funds, tax evasion, or any other similar
offense or offenses involving moral turpitude, in a court of competent jurisdiction of this or any
other state or in federal court;
      (6) Cancellation, revocation, or suspension of, or refusal to renew, the licensee's
certificate or permit from another state by the other state for any cause other than failure to pay a
fee or to meet the requirements of continuing education in that other state;
      (7) Suspension or revocation of the right to practice public accounting before any state or
federal agency;
      (8) As to accountants licensed by foreign countries, cancellation, revocation, suspension,
or refusal to renew the person's certificate, license, or degree evidencing his or her qualification to
practice public accounting by the foreign country issuing the certificate, license, or degree, the
certificate, license, or degree having qualified the accountant for issuance of an annual limited
permit to practice under § 5-3.1-8;
      (9) Failure to furnish the board, or any persons acting on behalf of the board, any
information that is legally requested by the board;
      (10) Any conduct reflecting adversely upon the licensee's fitness to engage in the
practice of public accountancy; and
      (11) Any other conduct discreditable to the public accounting profession.
     SECTION 2. This act shall take effect upon passage.
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LC004966/SUB A
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