TITLE 5
Businesses and Professions

CHAPTER 5-3.1
Public Accountancy

SECTION 5-3.1-16


§ 5-3.1-16 Acts declared unlawful.

(a) Except as permitted by the board pursuant to § 5-3.1-18(b), no person shall hold himself or herself out to the public as a certified public accountant or assume or use the designation "certified public accountant" or "CPA" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the person is a certified public accountant or CPA, unless that person has been issued a permit to practice under § 5-3.1-7.

(b) No entity shall provide attest or compilation services or assume or use the designation "certified public accountants" or "CPAs" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the practice unit is composed of certified public accountants or CPAs, unless:

(1) The practice unit holds a permit to practice under § 5-3.1-9;

(2) Ownership of the firm is in accord with this chapter and rules promulgated by the board.

(c) No person shall hold himself or herself out to the public as a public accountant, or assume or use the designation "public accountant" or "PA" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the person is a public accountant or PA, unless that person holds an authority as a public accountant and a permit to practice in this state issued under § 5-3.1-7. This subsection does not apply to those persons qualified under subsection (a) of this section to hold themselves out to the public as certified public accountants and to use the designation "certified public accountant" or "CPA".

(d) No entity shall provide attest or compilation services or assume or use the designation "public accountants" or "PAs" or any other title, designation, words, letters, abbreviation, sign, card, or device tending to indicate that the practice unit is composed of public accountants or PAs, unless the practice unit holds a permit to practice under § 5-3.1-9.

(e) No person or entity not holding a valid permit shall assume or use the title or designation "certified accountant", "chartered accountant", "enrolled accountant", "licensed accountant", "registered accountant", "accredited accountant", or any other title or designation likely to be confused with "certified public accountant" or "public accountant", any of the abbreviations "CA", "RA", "LA", "AA", or similar abbreviation likely to be confused with "CPA" or "PA"; provided, that anyone who holds a permit to practice under § 5-3.1-7 may hold himself or herself out to the public as an "accountant" or "auditor". The title "Enrolled Agent" or the abbreviation "EA" may only be used by those individuals so designated by the Internal Revenue Service. In addition, the board may at its discretion allow titles or abbreviations to be used which do not mislead the public and for which appropriate certification or accreditation by a national organization can be demonstrated.

(f) No person or entity shall prepare or attempt to prepare, or sign, affix, or associate the person's or entity's name or any trade name used by him, her, or it in the person's or entity's business or profession or practice unit to any attest or compilation reports unless the individual holds a permit to practice under § 5-3.1-7 or 5-3.1-8, and unless the practice unit holds a permit to practice under § 5-3.1-9.

(g) No person or entity not holding a permit to practice under this chapter shall hold himself, herself, or itself out to the public as an "accountant" or "auditor", whether or not the term is accompanied by any other description or designation, on any sign, card, or letterhead, or in any advertisement or directory.

(h) No person holding a permit shall assume or use a professional or firm name or designation that is misleading about the legal form of the firm, or the persons who are partners, officers, members, managers or shareholders of the firm, or about any other matter; provided, however, that names of one or more former partners, members, managers or shareholders may be included in the name of a firm or its successor.

(i) No person or entity shall hold himself, herself, or itself out to the public as being qualified for the practice of public accounting unless the person or entity holds a permit to practice under this chapter.

(j) The provisions of subsections (a), (c), and (e) of this section do not prohibit any accountant licensed by a foreign country who holds an annual limited permit to engage in the practice of public accounting under § 5-3.1-8 from using the accounting designation by which he or she is known in his or her own country, translated into the English language, followed by the name of the country from which his or her certificate, license, or degree was issued, as required by § 5-3.1-8.

(k) Any person or practice unit that is found to have violated any provision of this section by a court of competent jurisdiction is liable to the board for reasonable attorneys' fees in connection with the proceeding in which the finding was made.

(l)(1) A licensee, practice unit, or affiliated entity shall not directly or indirectly for a commission, recommend or refer to a client any product or service, or for a commission, recommend or refer any product or service to be supplied by a client, or receive a commission, when the licensee, practice unit, or affiliated entity also performs for that client any attest or compilation services or reports. This prohibition applies during the period in which the licensee or practice unit or affiliated entity is engaged to perform any services listed above and the period covered by any historical financial statements involved in such listed services.

(2) A licensee, practice unit, or affiliated entity who is not prohibited by this section from performing services for or receiving a commission, and who is paid or expects to be paid a commission, shall disclose that fact to any person or entity to whom the licensee, practice unit, or affiliated entity recommends or refers a product or service to which the commission relates. The disclosure must be made in writing contemporaneously with or prior to the referral or recommendation.

(3) Any licensee, practice unit, or affiliated entity who accepts a referral fee for recommending or referring any service of a licensee to any person or entity or who pays a referral fee to obtain a client shall disclose the acceptance or payment to the client. The disclosure must be made, in writing, contemporaneously with or prior to the referral or recommendation.

(4) For purposes of this section, an "affiliated entity" is defined as an entity in which the licensee, and/or any member and/or employee of the practice unit, has more than an aggregate twenty percent (20%) direct or indirect financial interest.

(5) A licensee or practice unit in public practice who is not prohibited by this section from performing service for or receiving a commission shall comply with all applicable federal and state securities laws, rules promulgated thereunder, and registration requirements.

(m)(1) A licensee, practice unit, or affiliated entity shall not: perform for a contingent fee any professional services for, or receive such a fee from, a client for whom the licensee or practice unit performs any attest or compilation services or reports; or prepare an original or amended tax return or claim for a tax refund for a contingent fee for any client.

(2) The prohibitions in subdivision ( l )(1) of this section apply during the period in which the licensee is engaged to perform any of the services listed above and the period covered by any historical financial statements involved in any such listed services.

(3) Except as stated in the next sentence, a "contingent fee" is a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of such service. Solely for purposes of this section, fees are not regarded as being contingent if fixed by courts or other public authorities, or, in tax matters, if determined based on the results of judicial proceedings or the findings of governmental agencies. A licensee's fees may vary depending, for example, on the complexity of services rendered.

(4) For purposes of this section, an "affiliated entity" is defined as any entity in which the licensee, or any member or employee of the practice unit, has more than an aggregate twenty percent (20%) direct or indirect financial interest.

(5) Any licensee who receives a contingent fee pursuant to this section shall comply with all applicable federal and state securities laws, rules promulgated thereunder, and registration requirements.

History of Section.
(P.L. 1995, ch. 159, § 2; P.L. 2001, ch. 87, § 1; P.L. 2001, ch. 336, § 1; P.L. 2009, ch. 310, § 23.)