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[Utah Administrative Code Table of Contents]
[Title R156. Table of Contents]
R156-26-101 Title.
These rules are known as the "Certified Public Accountant Licensing Act Rules".
R156-26-102 Definitions.
In addition to the definitions in Title 58, Chapters 1 and 26, as defined or used in these rules:
(1) "Act" means Title 58, Chapter 26, the Certified Public Accountant Licensing Act.
(2) "Administering organization" means an organization approved by the Division of Occupational and Professional Licensing and the Utah Board of Accountancy which will administer quality reviews in the Quality Review Program.
(3) "AICPA" means American Institute of Certified Public Accountants.
(4) "Committees" as used in these rules means the Education Advisory Committee, the Quality Review Oversight Committee (QROC), the Technical Standards Advisory Committee, and the Continuing Education Advisory Committee created in Section R156-26-201.
(5) "Conditioned" means that a person has taken the entire AICPA uniform examination and in one sitting has passed two or more subjects or both sections of any subjects having more than one section, and received a score of at least 50% in each subject not passed.
(6) "Firm" means an individual, a proprietorship, a partnership, a professional corporation or any other organization engaged in the practice of public accounting as set forth under Subsection 58-26-2 (8) of the Certified Public Accountant Licensing Act.
(7) "Incidental to regular practice" as defined in Subsection 58-26-2 (9) is further defined to mean:
(a) An individual or a firm licensed as a certified public accountant or equivalent designation in any other state, district, or territory of the United States or any foreign country may perform services in this state for a client whose principal office or residence is located outside of this state as long as the services are incidental to primary services being performed outside of this state for that client.
(b) An individual or firm licensed in another jurisdiction, as incidental to their practice in such other jurisdiction, may advertise in this state that their services are available by any means including, but not limited to television, radio, newspaper, magazine or Internet advertising provided such representations are not false, misleading or deceptive; and provided that such individual or firm does not establish a CPA/Client relationship to perform services requiring a CPA license or CPA firm registration with any individual, business or other legal entity having its principal office or residence in this state without first obtaining a CPA license and CPA firm registration in this state.
(c) Incidental to regular practice in another jurisdiction includes a licensed CPA or equivalent designation continuing a CPA/Client relationship with an individual which originated while the client's residence was located outside of this state but thereafter the client moved their residence to this state.
(8) "Institution acceptable to the board" means an educational institution which meets the requirements set forth in R156-26-302a.
(9) "Qualified continuing professional education (CPE)" as used in these rules means continuing education that meets the standards set forth in Section R156-26-303b.
(10) "Qualifying Examination" means the AICPA Uniform CPA Examination, the Utah law and rules examination and the AICPA Self Study Examination known as the "Professional Ethics for CPAs" or an equivalent ethics examination administered by another state licensing board.
(11) "Standard setting bodies" means the Financial Accounting Standards Board, the Government Accounting Standards Board, the American Institute of Certified Public Accountants, the Securities and Exchange Commission, and the Federal Accounting Standards Advisory Board and other generally recognized standard setting bodies.
(12) "Unprofessional conduct" as defined in Title 58, Chapters 1 and 26, is further defined, in accordance with Subsection 58-1-203 (5), in Section R156-26-501.
(13) "Year of review" means the calendar year during which a quality review is to be conducted.
(14) "Year under review" means the lesser of the twelve-month period or the period the firm has been in existence that will be reviewed by the reviewers.
R156-26-103 Authority.
These rules are adopted by the division under the authority of Subsection 58-1-106 (1) to enable the division to administer Title 58, Chapter 26.
R156-26-104 Organization - Relationship to Rule R156-1.
The organization of this rule and its relationship to Rule R156-1 is as described in Section R156-1-107.
R156-26-201 Advisory Peer Committees Created - Membership - Duties.
(1) There is created in accordance with Subsection 58-1-203 (6), the Education Advisory Committee to the Utah Board of Accountancy consisting of one full-time faculty from each college or university in Utah which has an accredited program as set forth in Section R156-26-302a, a majority of which committee are to be licensed CPAs.
(a) The Education Advisory Committee shall be appointed and serve in accordance with Section R156-1-204.
(b) The duties and responsibilities of the Education Advisory Committee shall include assisting the division in collaboration with the board in their duties, functions, and responsibilities defined in Section 58-1-202 as follows:
(i) reviewing an applicant's transcript of credits to determine satisfactory completion of the education requirements prior to approving the applicant to take the qualifying examination and advising the board as to the acceptability of an educational institution.
(c) The committee shall consider the following when advising the board of the acceptability of the educational institution:
(i) the institution's accreditation, the acceptability by other state licensing boards, faculty qualifications and other educational resources.
(2) There is created in accordance with Subsection 58-1-203 (6), the Quality Review Oversight Committee (QROC) to the Utah Board of Accountancy consisting of not more than seven licensed CPAs who represent a cross section of Utah firms.
(a) The committee shall be appointed and serve in accordance with Section R156-1-204.
(b) The duties and responsibilities of the QROC shall include assisting the division in collaboration with the board in their duties, functions, and responsibilities defined in Section 58-1-202 as follows:
(i) monitoring of the administering organization to provide reasonable assurance that quality reviews are being conducted and reported on in accordance with the quality review minimum standards;
(ii) reviewing the policies and procedures of administering organization applicants as to their conformity with the quality review minimum standards; and
(iii) reporting to the board on conclusions reached and making recommendations, including the continued approval of the administering organization, as a result of performing the functions described in R156-26-201(2)(b)(i) and (ii). Reports submitted to the board will not contain information concerning specific firms or reviewers;
(iv) consulting with the division regarding appropriate handling of individual licensees and firms which have unresolved matters resulting from the quality review process or have not complied with or have disregarded the quality review requirement; and
(v) other related duties and responsibilities as may be assigned by the board.
(c) The oversight procedures to be performed by the QROC in monitoring of the administering organizations may consist of the following:
(i) where the administering organization is the AICPA Quality Review Program or other approved administering organizations other than the SEC Practice Section (SECPS) and the Private Companies Practice Section (PCPS), the QROC may perform the following functions:
(A) visit each administering organization annually.
(B) during the visits, the QROC shall:
(I) meet with the organization's quality review QROC during the QROC's consideration of quality review documents;
(II) review the organization's procedures for administering the quality review program;
(III) review, on the basis of a random selection, a number of on-site and off-site reviews administered by the organization to include, at a minimum, a review of the report on the quality review, the letter of comments, if any, the firm's response to the matters discussed in the letter of comments, the administering organization's acceptance letter outlining any additional corrective or monitoring procedures, and the working papers on the selected reviews. The purpose of the review by the QROC is to determine whether the reviews are being conducted and reported on in accordance with the quality review minimum standards; and
(IV) expand the review of quality review documents if significant deficiencies, problems, or inconsistencies are encountered during the review of the above-described documentation.
(C) based on the foregoing procedures, make an annual recommendation to the board as to the continued use of the administering organization;
(D) obtain reports and any documentation that are available from the oversight committees that perform the same procedures as described in R156-26-201(2)(c)(i)(B)(I), (II), (III) and (IV).
(ii) for reviews administered by the PCPS, review the annual statistics obtained from PCPS and perform other procedures as considered appropriate. Based on the results of its review, the committee shall make an annual recommendation to the board as to the qualifications of PCPS as an approved administering organization.
(iii) where the administering organization is the SECPS, the QROC shall review the published annual report of the Public Oversight Board and conclude whether the procedures carried out by the Public Oversight Board and the disclosures contained in the annual report are indicative of an acceptable level of oversight. Based on the results of its review, the QROC shall make an annual recommendation to the board as to the qualification of SECPS as an approved administering organization.
(d) With respect to proposals made by a prospective administering organization, the QROC shall perform the following procedures:
(i) review the policies as drafted by the prospective administering organization to determine whether they will provide reasonable assurance of conforming with the minimum standards for quality reviews;
(ii) review the procedures as proposed by the prospective administering organization to determine whether they will ensure the following:
(A) reviewers assigned are appropriately qualified to perform the review for the specific firm;
(B) reviewers are provided with appropriate materials, such as checklists;
(C) the prospective administering organization will consult with the reviewers on problems arising during the quality review and that specified occurrences requiring consultation are outlined;
(D) the prospective administering organization will review the results of the quality review; and
(E) the prospective administering organization has provided for an independent report acceptance body that meets the standards for quality review; the report acceptance body shall consider and accept the results of the review; the report acceptance body shall also require corrective actions of firms with significant deficiencies noted in the review process.
(iii) make recommendations to the board as to the acceptance of proposals to serve as an administering organization.
(3) There is created in accordance with Subsection 58-1-203 (6), the Continuing Education Advisory Committee to the Utah Board of Accountancy consisting of not more than seven licensed CPAs.
(a) The Continuing Education Advisory Committee shall be appointed and serve in accordance with Section R156-1-204.
(b) The duties and responsibilities of the Continuing Education Advisory Committee shall include assisting the division in collaboration with the board in their duties, functions, and responsibilities defined in Section 58-1-202 as follows:
(i) recommending CPE guidelines and standards;
(ii) evaluating compliance of CPE programs; and
(iii) performing random audits to determine compliance with the CPE requirements and the standards for CPE programs.
(4) There is created in accordance with Subsection 58-1-203 (6), the Technical Standards Advisory Committee to the Utah Board of Accountancy consisting of not more than seven licensed CPAs.
(a) The Technical Standards Advisory Committee shall be appointed and serve in accordance with Section R156-1-204.
(b) The duties and responsibilities of the Technical Standards Advisory Committee shall include assisting the division in collaboration with the board in their duties, functions, and responsibilities defined in Section 58-1-202 as follows:
(i) reviewing documents, reports, financial statements, and recommending whether or not those records conform to the standards of the profession;
(ii) reviewing complaints and recommending whether certain acts, practices or omissions violate the ethical standards of the profession;
(iii) providing technical assistance to the division; and
(iv) serving as expert witnesses at administrative hearings.
R156-26-302a Qualifications for Licensure - Education Requirements.
The education requirements for licensure in Subsection 58-26-4 (1)(d)(ii) are defined, clarified, or established as follows:
(1) An applicant shall submit transcripts showing completion of course work consisting of a minimum of 150 semester hours (225 quarter hours) as follows:
(a) a graduate or undergraduate program within an institution whose business or accounting education program is accredited by the American Assembly of Collegiate Schools of Business (AACSB), or the Association of Collegiate Business Schools and Programs (ACBSP), from which the applicant received one of the following:
(i) a graduate degree in accounting;
(ii) a graduate degree in business including not less than:
(A) 24 semester hours (36 quarter hours) in upper division accounting courses covering the subjects of financial accounting, auditing, taxation, and management accounting; or
(B) 15 semester hours (23 quarter hours) graduate level accounting courses covering the subjects of financial accounting, auditing, taxation, and management accounting; or
(C) an equivalent combination of graduate and upper division accounting courses covering the subjects of financial accounting, auditing, taxation, and management accounting with one hour of graduate level course work being equivalent to 1.6 hours of upper division course work; or
(iii) a baccalaureate degree in business or accounting and 30 semester hours (45 quarter hours) beyond the requirements for a baccalaureate degree which includes not less than:
(A) 16 semester hours (24 quarter hours) in upper division accounting courses, which when combined with the accounting courses listed in Subsection (B) below, have at least one course with a minimum of two semester hours (three quarter hours) each covering the subjects of financial accounting, auditing, taxation, and management accounting;
(B) eight semester hours (12 quarter hours) in graduate level accounting courses, which when combined with the accounting courses listed in Subsection (A) above, have at least one course each covering the subjects of financial accounting, auditing, taxation, and management accounting;
(C) 12 semester hours (18 quarter hours) in upper division non-accounting business courses;
(D) 12 semester hours (18 quarter hours) in graduate level business or accounting courses; and
(E) 10 semester hours (15 quarter hours) of either graduate or upper division accounting or business courses.
(b) a graduate or undergraduate program from an institution accredited by the Northwest Association of Schools and Colleges, Commission on Colleges, or the North Central Association of Colleges and Schools, Commission on Institutions of Higher Education, or an equivalent accrediting institution from which the applicant received a baccalaureate or graduate degree with not less than:
(i) 30 semester hours (45 quarter hours) in business or related courses providing a minimum of two semester hours (three quarter hours) in each of the following subjects:
(A) business law;
(B) computers;
(C) economics;
(D) ethics;
(E) finance;
(F) statistics and quantitative methods;
(G) written and oral communications; and
(H) business administration such as marketing, production, management, policy or organizational behavior;
(ii) 24 semester hours (36 quarter hours) in upper division accounting courses with a minimum of two semester hours (three quarter hours) in each of the following subjects:
(A) auditing;
(B) finance;
(C) managerial or cost;
(D) systems; and
(E) taxes; and
(iii) 30 semester hours (45 quarter hours) beyond the requirements for a baccalaureate degree of additional business related course work including not less than:
(A) eight semester hours (12 quarter hours) in graduate accounting courses;
(B) 12 semester hours (18 quarter hours) in graduate accounting or graduate business courses; and
(C) 10 semester hours (15 quarter hours) of additional business related hours shall be taken in upper division undergraduate or graduate level courses.
(2) The division in collaboration with the board or the education subcommittee of the board may make a written finding for cause that a particular accredited institution or program is not acceptable.
(3) The Division in collaboration with the board or the education subcommittee of the board may accept education of a person who holds a license as a certified public accountant or equivalent designation in a foreign country, if the applicant has obtained from the National Association of State Boards of Accountancy (NASBA) verification of compliance with the terms of an agreement for reciprocal licensure between the foreign country and the International Qualifications Appraisal Board of NASBA, which agreement provides the applicant's examinations, education and experience is determined to be substantially equivalent to the 1994 Uniform Accountancy Act licensure requirements or a version of the Uniform Accountancy Act having substantially equivalent requirements.
R156-26-302b Qualifications for Licensure - Experience Requirements.
In accordance with Subsections 58-1-203 (7) and 58-1-301 (3), the experience requirements for licensure in Subsection 58-26-4 (1)(e) are defined, clarified, or established as follows:
(1) "Qualifying experience" as defined in Subsection 58-26-2 (15) and as required as a condition for licensure in Subsection 58-26-4-(1)(e) shall be completed in a public accounting firm or an organization providing equivalent experience as determined by the division in collaboration with the board under the supervision of a licensed CPA who is an officer, shareholder, partner, proprietor or manager within that CPA firm or organization. The firm or organization shall be regularly engaged in the practice of public accountancy as defined in Subsection 58-26-2 (12). Recognition shall be given to "qualifying experience" obtained only after completion of the education requirement upon which the application for licensure is based.
(2) "Accounting experience" shall be completed under the supervision of a licensed CPA and may be performed in a public accounting firm or other organization. The accounting experience shall include the performance of one or more types of services or functions involving the use of accounting or auditing skills, one or more types of management advisory or consulting skills, or the preparation of tax returns or the furnishing of advice on tax matters. The accounting experience shall provide the applicant the opportunity to gain an understanding of the entire accounting and reporting cycle comprising the generation and recording of transactions through the preparation and analysis of financial statements. The accounting experience does not, however, need to be derived through the maintenance of a set of accounting records or ledgers. The accounting experience may be derived either in the practice of public accountancy or not in the practice of public accountancy, through employment in private industry, education or the government sector. Prior to July 1, 1994, an applicant with a baccalaureate degree with less than 150 semester hours shall obtain 2000 hours of accounting experience before being permitted to take the qualifying examination. Accounting experience shall not be counted as satisfying the qualifying experience requirement. After July 1, 1994, an applicant with a baccalaureate degree with 150 or more semester hours may obtain accounting experience either before or after satisfying the education requirement and shall be permitted to take the qualifying examination upon completion of the educational requirements whether or not the accounting experience requirement has been completed.
(3) The Division in collaboration with the board may accept experience of a person who holds a license as a certified public accountant or equivalent designation in a foreign country, if the applicant has obtained from the National Association of State Boards of Accountancy (NASBA) verification of compliance with the terms of an agreement for reciprocal licensure between the foreign country and the International Qualifications Appraisal Board of NASBA, which agreement provides the applicant's examinations, education and experience is determined to be substantially equivalent to the 1994 Uniform Accountancy Act licensure requirements or a version of the Uniform Accountancy Act having substantially equivalent requirements.
R156-26-302c Transitional Provisions.
(1) An individual whose qualifications for licensure are based upon obtaining a baccalaureate degree without completion of the 150 semester hour requirement, who conditioned on the qualifying examination prior to July 1, 1994, and who subsequently passes all parts of the examination within six immediately successive examination administrations, shall have until July 1, 2004, to obtain three years of qualifying experience for licensure without being required to complete the 150 semester hour education requirement.
(2) An individual approved to take the qualifying examination prior to July 1, 1994, based upon the baccalaureate standard, who has not taken, has not passed, or has not conditioned on the qualifying examination prior to July 1, 1994, or who conditioned prior to July 1, 1994, and does not pass the examination in the immediate six successive examination administrations of the examination after conditioning, shall be required to qualify for any subsequent administration of the examination and licensure by meeting the 150 semester hour education requirement.
(3) After July 1, 1994, no individual will be approved to take the qualifying examination without completing the 150 semester hour education requirement, unless the individual is one who conditioned on the examination prior to July 1, 1994, and the individual is taking one of the examinations included in the immediate six successive administrations of the examination after conditioning.
(4) The education requirements for licensure in Subsection 58-26-4 (1)(d)(i), for applicants referred to in this section who have conditioned on the exam prior to July 1, 1994, are defined, clarified, or established to include completion of a baccalaureate degree at an institution approved under Section R156-26-302a or approved by the board as equivalent, which shall include not less than:
(a) 24 semester hours(36 quarter hours) in upper division accounting courses including not less than one course each in financial accounting, systems, auditing, taxation, and management accounting; and
(b) 30 semester hours(45 quarter hours) of upper division non-accounting business courses.
R156-26-302d Qualifications for Licensure - Examinations.
(1) The qualifying examinations required for licensure as provided for in Subsections 58-26-4 (1)(f), 58-26-5 (2), 58-26-6 (1)(a), and 58-26-2 (14) shall include the following examinations:
(a) the Uniform CPA Examination of the American Institute of Certified Public Accountants.
(i) A person must sit for all parts of the uniform examination upon their first and all subsequent sittings of the uniform examination unless previously conditioned upon. A person who conditioned on the uniform examination shall receive credit for the parts passed and shall have six successive examination administrations to pass the remaining parts without being required to retake the entire examination.
(ii) The Division in collaboration with the board may accept testing of a person who holds a license as a certified public accountant or equivalent designation in a foreign country, if the applicant has obtained from the National Association of State Boards of Accountancy (NASBA) verification of compliance with the terms of an agreement for reciprocal licensure between the foreign country and the International Qualifications Appraisal Board of NASBA, which agreement provides the applicant's examinations, education and experience is determined to be substantially equivalent to the 1994 Uniform Accountancy Act licensure requirements or a version of the Uniform Accountancy Act having substantially equivalent requirements.
(b) the American Institute of Certified Public Accountants Self Study Ethics Examination; and
(c) the Utah Laws and Rules Examination.
R156-26-303a Renewal Requirements - Quality Review.
(1) General.
In accordance with Subsection 58-1-308 (3)(b) and Section 58-26-7 , there is created a quality review requirement as a condition for renewal of licenses issued under the Certified Public Accountant Licensing Act, providing for review of the work products of licensees and firms.
(a) The purpose of the program is to monitor compliance with applicable accounting and auditing standards adopted by generally recognized standard setting bodies. The program shall emphasize education and may include other remedial actions determined appropriate where a firm's work product and services do not comply with established professional standards. In the event a firm is unwilling or unable to comply with established standards, or intentionally disregards professional standards so as to warrant disciplinary action, the committee shall refer the matter to the division and shall consult with the division regarding appropriate action to protect the public interest.
(2) Scheduling of the Quality Review.
(a) A firm's initial quality review will be assigned a due date with the administering organization by July 1, 1994 unless the firm was created after July 1, 1994, in which case the firm's initial quality review shall be assigned a due date to require that the initial review be started no later than 18 months after the date of the issuance of its initial report as defined in Subsection 58-26-2 (17).
(b) Not less than once in each three years a firm engaged in the practice of public accounting shall undergo, at its own expense, a quality review commensurate in scope with its practice.
(c) The administering organization will assign the year of review. A firm enrolled in a practice monitoring program which is administered by the American Institute of Certified Public Accountants (AICPA) will use the year of review assigned by the AICPA. The firm will notify the administering organization of the deadlines set by the AICPA.
(d) A quality review number will be assigned by the administering organization. The firm is required to provide this number and its registration number assigned by the division to all licensees employed by the firm. Licensees will be required to include these numbers with their application for renewal of a license to practice public accounting.
(3) Selection of a Quality Reviewer.
A firm scheduled for quality review shall engage a reviewer qualified to conduct the quality review.
(4) Qualifications of a Quality Reviewer.
(a) Quality reviewers must provide evidence of one of the two following minimum qualifications to the administering organization:
(i) acceptance as a peer reviewer or quality reviewer by the AICPA; or
(ii) compliance with the qualifications required by the AICPA to qualify as a peer reviewer or quality reviewer.
(b) Quality reviewers must be licensed or hold a permit to practice as a CPA in the state of Utah or another state or jurisdiction of the United States.
(c) The administering organization will approve reviewers for those reviews not administered by the AICPA.
(5) Conduct of Quality Review. Quality review shall be conducted as follows:
(a) Minimum Standards: The "Standards for Performing and Reporting on Peer Reviews" promulgated by the AICPA, effective April 13, 1995 as amended, are hereby incorporated by reference and adopted as the minimum standards for quality reviews of all firms. A copy of this document can be obtained at the Division of Occupational and Professional Licensing. This section shall not require any firm or licensee to become a member of AICPA or any administering organization.
(b) On-Site Review: In the case of a firm which performs one or more audits of historical financial statements or examinations of prospective financial statements, the quality review shall include an on-site study and evaluation of a representative selection of audit, examination, review and compilation reports, the financial statements upon which those reports were based and the associated working papers. The on-site review shall include procedures sufficient to provide the quality reviewer with a reasonable basis upon which to issue a report as required by R156-26-303a(6)(a).
(c) Off-Site Review: In the case of a firm which performs no audit or examination engagements, but does perform one or more review engagements or one or more compilation engagements, the quality review may be limited to an off-site study and evaluation of review and compilation reports and the financial statements upon which those reports were based. The off-site review need not include a study of the associated working papers, but shall include procedures sufficient to provide the quality reviewer with a reasonable basis upon which to issue a report as required by R156-26-303a(6)(b).
(6) Results of Review.
(a) In the case of a firm which performs one or more audit or examination engagements, upon completion of the quality review, the reviewer shall issue a report which, at a minimum, shall consist of a letter setting forth the scope of the quality review, including any limitations thereon; identifying the comprehensive set of standards under which the quality review was performed; stating an opinion on whether, during the year under review, the system of quality control for the accounting and auditing practice of the firm under quality review met the objectives of quality control standards generally recognized in the profession as authoritative, and whether that system of quality control was being complied with so as to provide the firm with reasonable assurance of conforming with professional standards. That letter shall also describe the reason for any modification or qualification of the report set forth in R156-26-303a(6)(d).
(b) In the case of a firm which performs no audit or examination engagements, but does perform one or more compilation engagements or one or more review engagements, upon completion of the quality review, the quality reviewer shall issue a report which, at a minimum, consists of a letter describing the limited scope of the quality review and disclaiming an opinion or any form of assurance about the firm's quality control policies and procedures for its accounting practice; identifying the comprehensive set of standards under which the quality review was conducted; stating whether anything came to the quality reviewer's attention that caused the quality reviewer to believe that the review or compilation reports submitted for quality review did not conform with the requirements of professional standards in all material respects. If applicable, the letter or a separate letter of comments shall describe the general nature of significant departures from professional standards disclosed by the quality review; and, if the departures from professional standards disclosed by the quality review are sufficiently numerous or serious, the letter shall set forth the quality reviewer's conclusion that the firm did not have reasonable assurance of conforming with professional standards in the conduct of its accounting practice during the year under review.
(c) In the case of a firm which performs one or more audits or examinations, an "unqualified" report shall be a report in which the quality reviewer expresses the opinion that the system of quality control for the accounting and auditing practice of the firm met the objectives of quality control standards generally recognized in the profession and was being complied with during the year under review so as to provide the firm with reasonable assurance of conforming with professional standards.
(d) In the case of a firm which performs one or more audits or examinations, any report which sets forth an opinion other than an unqualified opinion, or which qualifies, limits or changes that opinion shall be a "modified report".
(e) In the case of a firm which performs no audit or examination engagements, but does perform one or more review engagements or one or more compilation engagements, an "unqualified" report shall be a report which states that nothing came to the quality reviewer's attention that caused the quality reviewer to believe that the review or compilation reports submitted for review did not conform with the requirements of professional standards in all material respects.
(f) In the case of a firm which performs no audit or examination engagements, but does perform one or more review engagements or one or more compilation engagements, any report which sets forth a statement other than an unqualified report, or which limits, qualifies or changes that statement shall be a "modified report".
(g) The quality reviewer shall also issue to the firm under review, if appropriate, a letter of comments suggesting areas where improvement can be made.
(h) The reviewer shall issue a report to the firm within 30 days after completion of the review.
(i) The firm shall file the final report and letter of comments, if applicable, issued by the quality reviewer and the firm's response to the letter of comments with the responsible administering organization within 30 days after the receipt of the reports.
(7) Procedures in Case of a Modified Report.
(a) If the report issued as a result of a quality review is "unqualified", the administering organization shall take no further action, provided that the quality review was conducted in accordance with these rules. Modified reports identifying practice behavior which is below accepted standards but which may be corrected by a change in practice methodologies or education shall be monitored by the administering organization. The administering organization shall assure that the firm demonstrates that changes in practice methodologies or additional education suggested by the quality reviewer or deemed necessary by the administering organization have been completed. If the report is "modified", the administering organization will refer to the QROC any unresolved matters.
(b) If the administering organization or the QROC finds that a quality review was not performed in accordance with these rules, in addition to any other action permitted by law, the administering organization or the QROC may, at its discretion, require the firm to undergo additional quality reviews at times and on terms as the administering organization or the QROC may determine. The cost of the additional reviews shall be the responsibility of the firm.
(c) To monitor situations in R156-26-303a(7)(a) and (b), the QROC may review information and documents maintained by the reviewers and the administering organization.
(d) If a firm does not comply with any remedial actions determined appropriate by the administering organization or the QROC, the administering organization or the QROC will refer the firm to the division and the board, to determine if disciplinary action is warranted.
(8) Review of Multi-State Firms.
(a) With respect to a multi-state firm, the QROC may accept a quality review based solely upon work conducted outside of this state as satisfying the requirement to undergo quality review under these rules, if:
(i) the quality review is conducted during the year scheduled or rescheduled under R156-26-303a(2);
(ii) the quality review is performed in accordance with requirements equivalent to those of this state;
(iii) the quality review:
(A) studies, evaluates and reports on the quality control system of the firm as a whole in the case of on-site reviews, or;
(B) results in an evaluation and report on selected engagements in the case of off-site reviews;
(iv) the firm's internal inspection procedures require that the firm's personnel from another office outside the state perform the inspection of the office located in this state not less than once in each three year period; and
(v) at the conclusion of the quality review, the quality reviewer issues a report equivalent to that required by R156-26-303a(6).
(b) A multi-state firm not granted approval under R156-26-303a(8)(a) shall undergo a quality review pursuant to these rules which shall comply with R156-26-303a(8)(a) of the multi-state firm within this state.
(c) A multi-state firm seeking approval under R156-26-303a(8)(a) shall submit an application to the administering organization by February 1 of the year of review establishing that the quality review it proposes to undergo meets all of the requirements of R156-26-303a(5).
(d) A multi-state firm shall submit the quality review report it receives to the Utah administering organization as required by R156-26-303a(6) within 30 days of acceptance.
(9) Exemption.
(a) A firm which does not perform services as set out in R156-26-303a(5)(b) or (c) is exempt from quality review and shall notify the Division of Occupational and Professional Licensing of the exemption at the time of renewal of its registration. A firm which begins providing these services must commence a quality review within 18 months of the date of the issuance of its initial report as defined in Subsection 58-26-2 (17).
(10) Mergers, Combinations, Dissolutions or Separations.
(a) Mergers or combinations: In the event that two or more firms are merged or sold and combined, the surviving firm shall retain the year of review of the largest firm.
(b) Dissolutions or separations: In the event that a firm is divided, the new firms shall retain the year of review of the former firm. In the event that this period is less than 12 months, a new year shall be assigned so that the review occurs after 12 months of operation.
(c) Upon application to the administering organization and a showing of hardship caused solely by compliance with R156-26-303a(10)(a) or (b), the QROC may authorize a change in a firm's year of review.
(11) Extension.
(a) If the firm can demonstrate that the time established for the conduct of a quality review will create an unreasonable hardship upon the firm, the QROC may approve an extension not to exceed 180 days from the date the quality review was originally scheduled. A request for extension shall be addressed in writing by the firm to the QROC, in care of the division, with a copy to the administering organization responsible for administration of that firm's quality review. The written request for extension must be received by the QROC and the administering organization not less than 30 days prior to the date of scheduled review or the request will not be considered. The QROC shall inform the administering organization of the approval of any extension.
(12) Retention of Documents Relating to Quality Reviews.
(a) All documentation necessary to establish that each quality review was performed in conformity with quality review standards adopted by the board, including the quality review working papers, the quality review report, comment letters and related correspondence indicating the firm's concurrence or nonconcurrence, and any proposed remedial actions and related implementation shall be maintained.
(b) The documents described in R156-26-303a(12)(a) shall be retained for a period of time corresponding to the designated retention period of the relevant administering organization and, upon request of the QROC, shall be made available to it. In no event shall the retention period be less than 90 days.
(13) Costs and Fees for Quality Review.
(a) All costs associated with firm-on-firm reviews will be negotiated between the firm and the reviewer and paid directly to the reviewer. All costs associated with committee assigned review team (CART) reviews will be set by the administering organization. The administering organization will collect the fees associated with CART reviews and pay the reviewer.
(b) All costs associated with the administration of the review process, including the administering organization and the QROC, will be paid from fees charged to the firms. The fees will be collected by the administering organization. The schedule of fees will be included in the administering organization's proposal. The fee schedule will specify how much is to be paid each year and will be based on the firm size.
(14) Quality Review Administered by the Division of Occupational and Professional Licensing.
(a) Any firms not participating in a quality review program administered by an administering organization approved by the QROC will be administered by the division.
(b) The division will appoint an independent acceptance body, to review and determine the results of a firm's quality review in substantially the same manner as the minimum standards described in Subsection R156-26-303a(5)(a).
(i) The acceptance body shall consider and accept the results of the review; and require corrective actions of firms with significant deficiencies noted in the review process.
(15) Pursuant to Subsection 58-26-7 (4)(c), all financial statements, working papers, or other documents reviewed are confidential. Access to those documents shall be limited to being made available, upon request, to the Quality Review Oversight Committee, the Quality Review Acceptance Body or the technical reviewer for purposes of assuring that quality reviews are performed according to professional standards.
R156-26-303b Renewal and Reinstatement Requirements - Continuing Professional Education (CPE).
(1) Standards for programs which qualify. Qualified continuing professional education must be current and relevant to the practice of accountancy and maintain or increase the licensee's competence and shall meet the following standards:
(a) an outline of the program shall be prepared in advance and retained by the program sponsor for four years from the date of the program;
(b) the program developers and instructors shall be qualified in content and teaching methods used to develop and teach the subjects covered;
(c) the program shall clearly identify learning objectives and specify the level of knowledge participants should have in order to participate in the program;
(d) the program shall be reviewed or evaluated by a qualified person other than the developer or instructor to ensure compliance with these standards and evidence of such review shall be available upon request;
(e) the program sponsors shall have an effective means for evaluating the performance of the program including whether the standards described herein have been met;
(f) participants shall be informed in advance of objectives, prerequisites, prior education or experience levels needed, program content, nature and extent of advance preparation, teaching method to be used, recommended or approved continuing professional education hours allowed for credit, and any relevant administrative policies necessary to obtain the maximum benefit of the program and encourage participation only by individuals with appropriate education or experience;
(g) the program sponsor shall maintain a record of registration and attendance for four years from the date of the program;
(h) the number of participants and physical facilities shall be consistent with the teaching method specified;
(i) Subjects which qualify. The program and material provided to participants shall be sufficient to meet the program objectives and be current, relevant and technically accurate for the approved subjects which qualify under this section. These include:
(i) Accounting and Auditing;
(ii) Taxation;
(iii) Management Advisory Services;
(iv) Information Technology;
(v) Communication Arts;
(vi) Mathematics, Statistics, Probability and Quantitative Analysis;
(vii) Economics;
(viii) Business Law and Litigation Support;
(ix) Functional Fields of Business:
(A) Finance;
(B) Production;
(C) Marketing;
(D) Personnel Relations, Development and Management;
(E) Business Management and Organizations;
(F) Social Environment of Business;
(G) Specialized Areas of Industry such as Film Industry, Real Estate, Farming;
(j) Program Sponsorship. A program may be sponsored by one of the following, provided that all standards are met:
(i) professional development programs of recognized national and state accounting organizations;
(ii) technical sessions at meetings of recognized national and state accounting organizations and their chapters;
(iii) formal organized in-firm educational programs;
(iv) programs of other state or nationally recognized non-profit or educational organizations including colleges and universities; and
(v) any other program that complies with the standards of this section;
(k) Continuing Education Credit Hours. Qualifying continuing education programs must be at least 50 minutes in length. Continuing education credits will be determined based on the total number of minutes of formal presentations, supervised practice or supervised study time divided by 50 minutes. The resulting credit hours will be rounded down to the nearest whole number. No fractional credit hours will be granted. For example, a program that lasts from 8:00 a.m. until 12:00 noon with two 15 to 20 minute breaks would qualify for four CPE credits;
(i) Accredited University or College Credits.
(A) Each semester hour credit shall equal 15 hours toward the requirement. A quarter hour shall equal ten hours;
(B) Non-credit short courses or other individual study programs which require registration and provide evidence of satisfactory completion will qualify;
(ii) Self Study or Correspondence Courses. Formal correspondence or other individual study programs which require registration, provide evidence of satisfactory completion including test results, and are susceptible to verification of satisfaction of the Standards for Programs Which Qualify noted above will qualify. The CPA Board or CPE committee or the Approved CPE Registry will determine if number of credit hours recommended is equivalent to the hours as determined under Subsection (1)(l).
(l) Instructor CPE Credit. Instructors of programs meeting the standards under this section will be granted two hours of CPE credit for each hour of instruction time for the first class taught on a particular topic which meets the criteria of this rule, not to exceed 24 hours for any one topic. No credit is given for class subjects which have been previously taught by the instructor. The maximum credit for teaching and preparation cannot exceed 50% (or 40 hours) of the CPE requirement;
(m) Authors of published books and articles may apply to have CPE credit granted in an amount to be determined by the board upon review of the book or article. The maximum credit for books or articles cannot exceed 25% of the CPE requirement; and
(n) Programs or Activities Which Do Not Qualify. The following activities do not satisfy the standards for programs of this section and are not eligible for satisfaction of CPE requirements:
(i) personal study: personal study includes reading professional journals and publications, studying and researching matters such as tax code revisions, practicing software programs on a computer and watching video movies of a conference; and
(ii) committee meetings, dinner and luncheon meetings, firm meetings or other activities that do not meet the standards outlined in this section.
(2) Reporting Requirements. Each licensee applying for license renewal shall report, by January 31 of each even numbered year, qualified continuing professional education hours completed for the preceding two calendar years. Each person applying for license reinstatement shall file a report at the time of application.
(a) Such report shall be by means of one of the following:
(i) certification from an approved continuing professional education registry of the hours of qualified continuing education completed; or
(ii) a report to the Division for review and approval of continuing professional education.
(b) It is the responsibility of the applicant or licensee to demonstrate to the Division that the applicant or licensee successfully completed all CPE reported and meets the requirements of Subsection (1) or that the CPE has been approved by an approved continuing professional education registry and that reported courses maintained or increased the professional competence of the applicant or licensee.
(3) Continuing Professional Education Registry. To obtain approval as a continuing professional education registry, an organization shall:
(a) be a professional association primarily consisting of individuals licensed as certified public accountants;
(b) be organized and in good standing according to the laws of the state;
(c) enter into a written agreement with the Division under which the organization agrees to:
(i) review and approve only those programs which meet the standards set forth under Subsection (1);
(ii) publish and disseminate to their members or other CPAs on request, listings of continuing professional education programs which meet the standards and are approved for qualified continuing professional education credit;
(iii) maintain accurate records of qualified continuing professional education completed by each of its registrants and provide each of its registrants with a certificate on a timely basis to permit the registrant to file that certificate with the registrant's application to the division for renewal or reinstatement of his license as a certified public accountant. The certificate shall contain the name of the instructor, the date of the program, location of the program, title of the program, the name of the sponsor, the name of the CPE registry issuing approval, and the approval number assigned to that program by the Registry, and the number of CPE hours granted; and
(iv) make records of approved of qualified continuing professional education programs and records of qualified continuing professional education completed by registrants available for audit by representatives of the division, the board or peer advisory committees of the board.
(4) Fees. A registry may charge a reasonable fee to registrants for services provided for approval of courses. Sponsors of approved courses may charge a lower fee to members of the sponsoring association for participation as a registrant than it charges to non-members of the association.
(5) Other CPE requirements and failure to complete CPE requirements.
(a) Interim Licensure CPE requirements. Those individuals who become licensed or certified between renewal periods shall be required to complete CPE based upon ten hours per calendar quarter for the remaining quarters of the reporting period.
(b) Carry Forward Provision. A licensee who completes more than 80 hours of CPE during the two year reporting period may carry forward up to 40 hours to the next succeeding reporting period. Carry forward credits may not be used to satisfy the 20 hour minimum annual CPE requirement.
(c) Failure to comply with CPE requirements.
(i) Failure to meet the 80 hour requirement. An individual holding a current Utah license who fails to complete the required 80 hours of CPE by the reporting deadline will not be allowed to renew their license unless they complete and report to the division at least 30 days prior to their expiration date two times the number of CPE hours the license holder was short for the reporting period (penalty hours). The penalty hours shall not be considered to satisfy in whole or part any of the CPE hours required for subsequent renewal of the license.
(ii) Failure to meet the 20 hour minimum per year requirement. An individual who fails to complete the 20 hour minimum per calendar year requirement will not be allowed to renew their license unless they complete and report to the division at least 30 days prior to their expiration date, the AICPA Ethics Self-Study Examination and the Utah Law and Rules Examination with passing scores required for initial licensure. CPE credit will not be given for completion of this requirement.
(iii) Non-Qualifying or Disqualified CPE hours. An individual who reports nonqualifying hours or who has hours disqualified by the Utah Board of Accountancy shall not be allowed to renew their license unless they complete and report to the division, within 60 days of receiving notification by the division of their shortage, the relevant requirement under R156-26-303b(6)(c)(i) or (ii).
(iv) Waiver for Medical Reasons. A licensee may request the board to waive the requirements or grant an extension for continuing professional education on the basis that the licensee was not able to complete the continuing professional education due to medical or related conditions confirmed by a qualified health care provider. Such medical confirmation shall include the beginning and ending dates during which the medical condition would have prevented the licensee from completing the continuing professional education, the extent of the medical condition and the effect that the medical condition had upon the ability of the licensee to continue to engage in the practice of accountancy. The board in determining whether the waiver is appropriate shall consider whether or not the licensee continued to be engaged in the practice of accountancy practice on a full or part time basis during the period specified by the medical confirmation.
R156-26-303c Renewal Cycle.
In accordance with Subsection 58-1-308 (1), the renewal date for the two-year renewal cycle applicable to licensees under Title 58, Chapter 26 is established by rule in Section R156-1-308.
R156-26-303d Renewal Procedures.
Renewal procedures shall be in accordance with Section R156-1-308.
R156-26-305 Use of Certified Public Accountant (CPA) Title.
An individual who has a current CPA license issued by any other state may use the title or designation "Certified Public Accountant" but may only practice public accountancy in the state of Utah if currently licensed in the state of Utah or if performing public accountancy which is incidental to regular practice in another state as defined in Subsection 58-26-2 (12).
R156-26-307 Reinstatement of Licenses.
(1) An individual having held a Utah license which has expired for failure to renew for nonpayment of fees, or an individual applying for reinstatement from emeritus status, may be relicensed upon satisfactory completion of:
(a) the requirements of Section 58-26-8 ;
(b) submission of an application on forms supplied by the division which shall contain information as to why the person allowed their license to lapse;
(c) 80 hours of acceptable CPE, completed within the 12 months preceding the submission of an application for reinstatement, which shall include a minimum of 16 hours in accounting or auditing or both and shall include successful completion of the AICPA Ethics Self-Study Examination and the Utah Law and Rules Examination with a minimum score of at least the minimum score required for initial licensure. Successful completion of the two examinations will count as eight hours of CPE towards the 80 hour requirement.
(i) This 80 hour requirement is waived if the reinstatement applicant has not been practicing within the state of Utah since the expiration of the license being reinstated, the reinstatement applicant has continuously since the expiration been licensed and practicing in another state and the reinstatement applicant demonstrates that the applicant has met all the CPE requirements that would have been applicable in the state of Utah during the time the license was expired in the state of Utah.
(ii) This 80 hours requirement is waived, if the applicant failed to renew because of inadvertent failure to pay the renewal fees and the application for reinstatement is filed with the Division within six months after expiration date of the license and at time of application for reinstatement the applicant demonstrates by proof of attendance at acceptable CPE courses that at all times the applicant was in full compliance with the CPE requirements.
(2) A licensee who reinstates their license must obtain ten hours of CPE per full calendar quarter remaining in the current CPE reporting period after reinstatement is granted.
(3) The number of hours required to reinstate the license shall not be considered to satisfy in whole or part any of the 80 hours of CPE required for subsequent renewal of the license.
(4) No certificates will be issued, renewed or reinstated after July 1, 1994.
R156-26-501 Unprofessional Conduct.
"Unprofessional conduct" includes:
(1) a licensee willfully failing to comply with continuing professional education or fraudulently reporting continuing professional education; or
(2) commission of an act or omission that fails to conform to the accepted and recognized standards and ethics of the profession including those stated in the "Code of Professional Conduct" of the American Institute of Certified Public Accountants (AICPA) as adopted January 12, 1998, as amended, January 14, 1992 and October 28, 1997, which is hereby incorporated by reference. A copy of this document can be obtained at the Division of Occupational and Professional Licensing.
[Indexing]
KEY: accountants, licensing, quality review*
August 24, 1999
[Editor's note: Below are references
to the Utah Code that are listed by the
agency making this rule as authority
for the rule.]
58-26-1
58-1-106
(1)
58-1-202
(1)
Notice of Continuation May 12, 1997
