AN ACT RELATIVE TO THE PRACTICE OF PUBLIC ACCOUNTANCY.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Section 87B½ of chapter 112 of the General Laws, as appearing in the 2000 Official Edition, is hereby amended by striking out paragraph (b) and inserting in place thereof the following paragraph:-
(b)(1) An applicant for initial issuance of a license or for renewal of a permit to practice under this section shall be required to show, at a minimum, that:
(i) a simple majority of the ownership of the firm, in terms of financial interests and voting rights of all partners, officers, shareholders, members or managers, belongs to holders of a certificate who are licensed in any state;
(ii) a simple majority of the ownership of the firm, in terms of financial interests and voting rights of all partners, officers, shareholders, members or managers, belongs to holders of a certificate who are licensed in any state, and such partners, officers, shareholders, members or managers, whose principal place of business is in the commonwealth, and who perform professional services in the commonwealth hold valid licenses issued by the board or are public accountants licensed by the board. The firm and its ownership, including nonlicensee owners, shall comply with rules promulgated by the board; and
(iii) the firm is organized as a partnership, including a registered limited liability partnership registered pursuant to the laws of the state of its organization, a limited liability company registered pursuant to the laws of the state of its organization, a professional corporation organized pursuant to the provisions of chapter 156A or that agrees to comply with all requirements of sections 10 to 12, inclusive, of said chapter 156A or a business corporation.
(2) A firm may include nonlicensee owners if:
(i) the firm designates a commonwealth licensee as its managing partner or agent, who shall be responsible for the proper registration of the firm and shall be identified to the board by the firm;
(ii) all nonlicensee owners are natural persons active in the firm or affiliated entities;
(iii) nonlicensee owners do not hold themselves out as certified public accountants or sign accountants' reports on financial statements; and
(iv) the firm and its ownership, including nonlicensee owners, comply with such other requirements as the board may impose.
(3) Except as permitted by the board in the exercise of its discretion, a person may not become a nonlicensee owner or remain a nonlicensee owner if such person:
(i) has been convicted of a felony or of any other crime, an element of which is dishonesty or fraud, under the laws of any state of the United States or of any other jurisdiction if the acts committed would constitute a crime under the laws of the commonwealth; or
(ii) had a professional or vocational license or the right to practice a profession or vocation revoked or suspended for reasons other than nonpayment of dues or fees or if the person has voluntarily surrendered a professional or vocational license or the right to practice because of disciplinary charges or a pending disciplinary investigation and not reinstated by a licensing agency of any state or the United States, or of any other jurisdiction;
(iii) has been or is in violation of any rule or regulation regarding character or conduct adopted and promulgated by the board relating to nonlicensee owners; or
(iv) fails to timely file a report required by subparagraph (4).
(4) A nonlicensee owner of a licensee firm shall report to the board and the firm in writing of the occurrence of any of the events set forth in subparagraph (3) within 30 days of the date that the nonlicensee first has knowledge of the event. A conviction shall include the initial plea, verdict or finding of guilt, a plea of no contest or pronouncement of sentence by trial court even though the conviction may not be final until appeals are exhausted. The report shall be signed by the nonlicensee owner and shall set forth the facts that constitute the reportable event. The report shall identify, as appropriate, the event by the name of the agency or court, the title of the matter, the docket number and the date of the occurrence of the event. A firm shall report to the board within 30 days of its notice of any of the events set forth in said subparagraph (3) if no report has been filed by the nonlicensee owner.
(5) Application for registration by the firm shall be made upon the affidavit of a member of the partnership or the limited liability company, or officer, director or shareholder of the professional or business corporation depending upon the organizational form of the firm, who is a certified public accountant registered under section 87A1/2 and who holds a valid license issued under section 87B. The board shall in each case determine whether the applicant is eligible for registration. A firm which is so registered and which holds a valid license issued under this section may use the words "certified public accountants" or the abbreviation "CPA" in connection with its name. In the case of a partnership firm, notification shall be given to the board within 90 days after the admission to or withdrawal of a partner from any partnership so registered and after the commencement or termination of a partner's personal and regular practice of public accounting in the commonwealth as a member thereof. In the case of a limited liability company firm, notification shall be given to the board within 90 days after the admission to or withdrawal of a member from any limited liability company so registered and after the commencement or termination of a member's personal and regular practice of public accounting in the commonwealth as a member thereof. In the case of a firm organized as a corporation, notification shall be given to the board within 90 days after the admission to or withdrawal of an officer, director or shareholder from a corporation so registered and after the commencement or termination of an officer's, director's or shareholder's personal and regular practice of public accounting in the commonwealth as a member thereof. The board shall collect a fee for the registration of each such firm.
(6) An individual licensee who is responsible for supervising attest or compilation services and signs or authorizes someone to sign an accountant's report on the financial statements on behalf of a firm shall meet the competency requirements set out in the professional standards for such services.
(7) An individual licensee who signs or authorizes someone to sign an accountant's report on financial statements on behalf of a firm shall meet the competency requirements set out in the professional standards for such services.
(8) The board shall adopt and promulgate rules and regulations for the purposes of interpretation of and enforcement of compliance with this paragraph.
SECTION 2. Said section 87B½ of said chapter 112, as so appearing, is hereby further amended by striking out paragraphs (f) to (h), inclusive.
SECTION 3. Paragraph (i) of said section 87B½ of said chapter 112, as so appearing, is hereby amended by striking out subparagraph (A).