Reference Title: board of accountancy; omnibus

AN ACT
AMENDING SECTIONS 32-701.01, 32-721, 32-723, 32-727, 32-731, 32-732 AND 32-741, ARIZONA REVISED STATUTES; AMENDING TITLE 32, CHAPTER 6, ARTICLE 3, ARIZONA REVISED STATUTES, BY ADDING SECTION 32-747.01; RELATING TO THE BOARD OF ACCOUNTANCY.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 32-701.01, Arizona Revised Statutes, is amended to read:

32-701.01 . Definitions

In this chapter, unless the context otherwise requires:

1. "Attest function engagement" means an engagement in which the registrant is engaged to issue or issues a written communication that expresses a conclusion about the reliability of a written assertion that is the responsibility of another party.

2. "Board" means the board of accountancy established by section 32-701.

3. "Conviction" means a judgment of conviction by any state or federal court of competent jurisdiction in a criminal cause, regardless of whether an appeal is pending or could be taken, and includes any judgment or order based on a plea of no contest.

4. "Disciplinary action" means any other regulatory sanctions imposed by the board in combination with, or as an alternative to, revocation or suspension of a certificate or registration, including the imposition of:

(a) An administrative penalty in an amount not to exceed two thousand dollars for each violation of this chapter or rules adopted pursuant to this chapter.

(b) Restrictions on the scope of registrants' accounting practice, including, without limitation, restriction of audit or attest function practice, restriction of tax practice, or restriction of management advisory practice.

(c) Peer review and professional education requirements.

(d) A decree of censure.

(e) Probation requirements best adapted to protect the public welfare including a requirement for restitution payments to accounting services clients or to other persons suffering economic loss resulting from violations of this chapter or rules adopted pursuant to this chapter.

5. "Federal securities laws" means the securities act of 1933, the securities exchange act of 1934, the public utility holding company act of 1935 and the investment company act of 1940, as amended.

6. "Firm" means a business organization established under the laws of any state as a sole practitioner, partnership, professional corporation or professional limited liability company. Firm also includes a limited liability company THAT IS established under the laws of any state or foreign country , in which each member of the company is a certified public accountant or public accountant in good standing in any state or foreign country , THAT IS organized for the purpose of rendering accounting services and THAT has met the requirements of title 29, chapter 4 and any additional nonconflicting THE APPLICABLE requirements contained in sections 32-731 and 32-732.

7. "Letter of concern" means an advisory letter to notify a registrant that, while the evidence does not warrant disciplinary action, the board believes that the registrant should modify or eliminate certain practices and that continuation of the activities that led to the evidence being submitted to the board may result in board action against the registrant. A letter of concern is not a disciplinary action.

8. "Practice of accounting as a certified public accountant or as a public accountant" means the provision of any accounting services, including recording and summarizing financial transactions, analyzing and verifying financial information, reporting financial results to an employer, clients or other parties and rendering tax and management advisory services to an employer, clients or other parties.

9. "PUBLIC ACCOUNTANT" MEANS A PERSON WHO HAS BEEN ISSUED A CERTIFICATE OF AUTHORITY BY THE BOARD TO PRACTICE AS A PUBLIC ACCOUNTANT.

10. "RELATED COURSES" MEANS ECONOMICS, CORPORATE FINANCE, BUSINESS LAW, MATHEMATICS AND ADVANCED ENGLISH COMPOSITION OR OTHER COURSES CLOSELY RELATED TO THE SUBJECT OF ACCOUNTING AND SATISFACTORY TO THE BOARD.

11. "RESTRICTED FINANCIAL SERVICES" MEANS THE FOLLOWING SERVICES RENDERED BY THE HOLDER OF A CERTIFICATE ISSUED BY THE BOARD:

( a ) AUDITS OR OTHER ENGAGEMENTS PERFORMED IN ACCORDANCE WITH THE STATEMENTS ON AUDITING STANDARDS ADOPTED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS.

( b ) REVIEWS OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH THE STATEMENTS ON STANDARDS FOR ACCOUNTING AND REVIEW SERVICES ADOPTED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS.

( c ) EXAMINATIONS OF PROSPECTIVE FINANCIAL INFORMATION PERFORMED IN ACCORDANCE WITH THE STATEMENTS ON STANDARDS FOR ATTESTATION ENGAGEMENTS ADOPTED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS.

Sec. 2. Section 32-721, Arizona Revised Statutes, is amended to read:

32-721 . Certified public accountant; qualifications

THE BOARD SHALL ISSUE a certificate of certified public accountant shall be issued by the board to any person who:

1. Is at least eighteen years of age and is of good moral character.

2. Has not engaged in any conduct which would constitute grounds for revocation or suspension of a certificate or other disciplinary action pursuant to section 32-741.

1. MEETS THE FOLLOWING EXAMINATION REQUIREMENTS:

3. ( a ) Has met The requirements to take the examination provided in section 32-723.

4. ( b ) Has, Within a period of time specified in the rules of the board, HAS obtained a grade of seventy-five per cent in each subject of the examination for certified public accountant in this state, or in any state, territory or possession, which uses the questions and grading facilities of the American institute of certified public accountants.

5. 2. Has been employed as a full-time staff accountant, either before or after passing EACH SECTION OF the examination for certified public accountant, for a minimum period of two years in the office of a certified public accountant or public accountant, within private industry or a government agency that has exposed the applicant to and provided the applicant with experience in the practice of accounting, including examinations of financial statements and reporting thereon, or has completed one year of the experience prescribed in this paragraph and holds a master's or more advanced degree in accounting or business administration from a college or university recognized by the board, provided that the academic transcript showing completion of the degree program shall include a minimum of thirty semester hours in accounting, business administration, economics and related subjects COURSES the board determines to be appropriate, of which a minimum of twelve semester hours of credit shall be in graduate-level accounting courses. The board may accept part-time employment in a period of four years or more as a substitute for the requirement of two years of full-time employment if the part-time employment provides the applicant with equivalent experience in the practice of accounting.

3. MEETS THE FOLLOWING EDUCATIONAL REQUIREMENTS:

( a ) THROUGH JUNE 30, 2004, THE PERSON HAS OBTAINED A BACCALAUREATE DEGREE FROM A COLLEGE OR UNIVERSITY RECOGNIZED BY THE BOARD.

( b ) FROM AND AFTER JUNE 30, 2004, THE PERSON PRESENTS SATISFACTORY EVIDENCE THAT THE PERSON HAS COMPLETED AT LEAST ONE HUNDRED FIFTY SEMESTER HOURS OF EDUCATION INCLUDING THE ATTAINMENT OF A BACCALAUREATE OR HIGHER DEGREE FROM A COLLEGE OR UNIVERSITY RECOGNIZED BY THE BOARD IN ITS RULES. THE ONE HUNDRED FIFTY SEMESTER HOURS SHALL INCLUDE:

( i ) AT LEAST THIRTY-SIX SEMESTER HOURS IN ACCOUNTING COURSES, OF WHICH AT LEAST THIRTY SEMESTER HOURS ARE UPPER LEVEL COURSES.

( ii ) AT LEAST THIRTY SEMESTER HOURS IN RELATED COURSES.

4. MEETS THE FOLLOWING CHARACTER AND FITNESS REQUIREMENTS:

( a ) THE PERSON IS AT LEAST EIGHTEEN YEARS OF AGE.

( b ) GOOD MORAL CHARACTER.

( c ) THE PERSON HAS NOT ENGAGED IN ANY CONDUCT THAT WOULD CONSTITUTE GROUNDS FOR REVOCATION OR SUSPENSION OF A CERTIFICATE OR OTHER DISCIPLINARY ACTION PURSUANT TO SECTION 32-741.

Sec. 3. Section 32-723, Arizona Revised Statutes, is amended to read:

32-723 . Certified public accountant examination; qualifications

A. Examination of persons applying for certificates under this chapter shall be held within the state, as the board decides, at least once each year. The time and place for holding an examination shall be advertised for not less than three consecutive days, not less than thirty days prior to the date of the examination, in at least one daily newspaper of general circulation published in the state.

B. No A person shall NOT be permitted to take the examination unless the person presents satisfactory evidence that the person has successfully completed the courses required for OBTAINED a bachelor's BACCALAUREATE degree from a public or private regionally accredited university or college in this state or from a college or university maintaining standards comparable to those of the private or public regionally accredited universities and colleges in this state. The academic transcript presented shall include a minimum of twenty-four semester hours in accounting courses of which twelve semester hours must be in intermediate accounting theory, advanced accounting, cost accounting, auditing theory and practice or income taxes, or any combination thereof, or advanced accounting courses equivalent thereof, and shall include an additional eighteen semester hours in related courses , or courses satisfactory to the board. As used in this subsection, related courses means economics, corporation finance, business law, mathematics and advanced English composition, or other courses closely related to the subject of accounting and satisfactory to the board .

C. The subjects in which applicants may be examined are:

1. Financial accounting and reporting for business enterprises.

2. Accounting and reporting for taxation and managerial purposes and for governmental and nonprofit organizations.

3. Auditing.

4. Business law and professional responsibilities.

5. Other subjects as the board may adopt.

D. All examinations provided for in this section shall be written upon forms provided by the board and may be held under the joint auspices and control of the board and the American institute of certified public accountants. The board may make use of all or any part of the uniform certified public accountants' examination and advisory grading service, or both, as it deems appropriate to assist it in performing its duties.

E. All examination papers shall be graded under the auspices of the board or the board of examiners of the American institute of certified public accountants. Each subject shall be graded separately. Within a reasonable time after the examination the board shall notify each candidate of the candidate's grading. All examination papers shall be preserved for ninety days after the uniform grade release date. If a candidate submits a written request to the board within thirty days after the uniform grade release date, the candidate shall have access to the candidate's examination papers under conditions imposed by the board. No candidate may have access to examination papers within thirty days before the administration of a certified public accountant examination.

F. A candidate who successfully passes sections of an examination shall be deemed to have received a condition as provided by rules of the board and shall have the right to be reexamined in the remaining sections at subsequent examinations held by the board. If the candidate passes in the remaining sections within a period of time specified in the rules of the board , the candidate shall be considered to have passed the examination in its entirety.

G. A candidate who has received a condition in an examination in any state whose examination is satisfactory to the board and in which the requirements to take the examination are as high as those required in this state may be deemed to have received a condition and may be given credit in the candidate's Arizona examination for those sections passed. The out-of-state condition must be in effect as determined by the rules of the board. The candidate may be reexamined only in the remaining sections at subsequent examinations held by the board. If the candidate passes in the remaining sections within a period of time specified in the rules of the board the candidate shall be considered to have passed the examination in its entirety.

H. Any candidate who has taken two examinations and has failed to receive a condition may be required, before being accepted for further examinations, to furnish evidence satisfactory to the board that the candidate has made further diligent study in the failed section or sections.

I. The board may permit an Arizona applicant for the Arizona examination to take the examination for certified public accountant outside of this state under the auspices and control of any other state board of accountancy and the American institute of certified public accountants giving an examination for certified public accountants.

J. The board may adopt rules regarding the scope of the examinations and the method and time of filing applications and may adopt all other rules necessary to implement this section.

Sec. 4. Section 32-727, Arizona Revised Statutes, is amended to read:

32-727 . Certified public accountant; reciprocity; qualifications

A. The board may issue a certificate OF RECIPROCITY to a THE holder of a certificate , OR license or permit issued by another state on a showing that THE EDUCATION, EXAMINATION AND EXPERIENCE REQUIREMENTS IN THE STATE OF CERTIFICATION OR LICENSURE ARE SUBSTANTIALLY EQUIVALENT TO THE REQUIREMENTS IN THIS STATE AND THAT the applicant either:

1. Passed the examination required for the issuance of the applicant's certificate with grades SCORES that would have been passing grades SCORES at the time in this state and meets all current requirements in this state for issuance of a certificate at the time application is made or at the time of the issuance of the applicant's certificate , OR license or permit in the other state, met all the requirements then applicable in this state.

2. MEETS ALL CURRENT REQUIREMENTS IN THIS STATE FOR ISSUANCE OF A CERTIFICATE AT THE TIME APPLICATION IS MADE OR AT THE TIME OF THE ISSUANCE OF THE APPLICANT'S CERTIFICATE OR LICENSE IN THE OTHER STATE, MET ALL THE REQUIREMENTS THEN APPLICABLE IN THIS STATE AND has had five years of experience in the practice of public accountancy, if either:

(a) The five years of experience occurred after passing the examination on which the applicant's certificate , OR license or permit was based and occurred within the ten years immediately preceding the application.

(b) The experience complies with equivalent requirements prescribed by the board by rule. PURSUANT TO SECTION 32-721.

B. THE BOARD MAY ISSUE A CERTIFICATE OF LIMITED RECIPROCITY THAT ALLOWS AN APPLICANT TO PRACTICE AS A CERTIFIED PUBLIC ACCOUNTANT IN THIS STATE FOR A PERIOD OF UP TO TWELVE MONTHS TO THE HOLDER OF A CERTIFICATE OR LICENSE ISSUED BY ANOTHER STATE ON A SHOWING THAT THE EDUCATION, EXAMINATION AND EXPERIENCE REQUIREMENTS IN THE APPLICANT'S INITIAL STATE OF CERTIFICATION OR LICENSURE ARE SUBSTANTIALLY EQUIVALENT TO THE REQUIREMENTS IN THIS STATE.

C. THE BOARD SHALL ONLY ISSUE A CERTIFICATE OF RECIPROCITY PURSUANT TO SUBSECTION A OR B TO AN APPLICANT WHO IS IN GOOD STANDING IN EACH STATE IN WHICH THE APPLICANT HOLDS A CERTIFICATE OR LICENSE.

D. A CERTIFIED PUBLIC ACCOUNTANT WHO HOLDS A CERTIFICATE OF RECIPROCITY PURSUANT TO SUBSECTION A OR B IS SUBJECT TO THIS CHAPTER AND THE RULES ADOPTED BY THE BOARD PURSUANT TO THIS CHAPTER.

E. ON APPLICATION BY THE HOLDER OF A CERTIFICATE OF LIMITED RECIPROCITY, THE BOARD MAY EXTEND THE CERTIFICATE FOR AN ADDITIONAL TWELVE MONTH PERIOD. THE BOARD MAY EXTEND A CERTIFICATE OF LIMITED RECIPROCITY AN UNLIMITED NUMBER OF TIMES.

B. F. Nothing in this section shall be construed as invalidating the A certificate to practice as a certified public accountant issued under prior laws of this state.

Sec. 5. Section 32-731, Arizona Revised Statutes, is amended to read:

32-731 . Certified public accountant partnership; qualifications

A. A partnership engaged in this state in the practice of public accounting as certified public accountants shall register biennially with the board as a partnership of certified public accountants and shall meet the following requirements:

1. At least one partner thereof shall be a resident and a full-time practicing certified public accountant in good standing in this state.

2. Each partner thereof actively engaged within this state in the practice of public accounting as a member thereof shall be a certified public accountant in good standing in this state.

2. ANY PARTNER INCLUDED IN DETERMINING THE REQUISITE FIFTY-ONE PER CENT OWNERSHIP AND PROVIDING ACCOUNTING SERVICES THROUGH THE PARTNERSHIP SHALL BE CERTIFIED IN THIS STATE IF THE PARTNER IS ENGAGED IN THE PRACTICE OF ACCOUNTING IN THIS STATE.

3. Each partner thereof shall be WHO IS a certified public accountant SHALL HOLD A CERTIFICATE OR LICENSE in good standing in some ANY state or foreign country ON A SHOWING THAT THE STATE OR FOREIGN COUNTRY HAS EDUCATION, EXAMINATION AND EXPERIENCE REQUIREMENTS THAT ARE SUBSTANTIALLY EQUIVALENT TO THE REQUIREMENTS IN THIS STATE .

4. AT LEAST FIFTY-ONE PER CENT OF THE OWNERSHIP OF THE PARTNERSHIP, IN TERMS OF FINANCIAL INTERESTS AND VOTING RIGHTS, MUST BELONG TO HOLDERS IN GOOD STANDING OF CERTIFICATES OR LICENSES TO PRACTICE ACCOUNTING AS CERTIFIED PUBLIC ACCOUNTANTS IN ANY STATE OR FOREIGN COUNTRY ON A SHOWING THAT THE STATE OR FOREIGN COUNTRY HAS EDUCATION, EXAMINATION AND EXPERIENCE REQUIREMENTS THAT ARE SUBSTANTIALLY EQUIVALENT TO THE REQUIREMENTS IN THIS STATE.

B. A PARTNERSHIP REGISTERED WITH THE BOARD PURSUANT TO THIS SECTION MAY INCLUDE OWNERS WHO ARE NOT CERTIFIED PURSUANT TO THIS CHAPTER IF ALL OF THE FOLLOWING APPLY:

1. THE PARTNERSHIP DESIGNATES A PERSON WHO IS CERTIFIED PURSUANT TO THIS CHAPTER AND WHO IS RESPONSIBLE FOR THE PROPER REGISTRATION OF THE FIRM.

2. ALL NONCERTIFIED PARTNERS ACTIVELY PARTICIPATE IN THE MANAGEMENT OF THE PARTNERSHIP OR A DIRECTLY AFFILIATED ENTITY THAT HAS BEEN APPROVED BY THE BOARD.

3. ANY PERSON WHO IS RESPONSIBLE FOR SUPERVISING ATTEST SERVICES OR FOR SIGNING REPORTS ON FINANCIAL STATEMENTS ON BEHALF OF THE PARTNERSHIP SHALL BE CERTIFIED PURSUANT TO THIS CHAPTER AND SHALL MEET THE EXPERIENCE REQUIREMENTS FOR CARRYING OUT THESE FUNCTIONS ADOPTED BY THE BOARD IN ITS RULES.

4. THE PARTNERSHIP COMPLIES WITH OTHER REQUIREMENTS IMPOSED BY THE BOARD IN ITS RULES.

B. C. Application for such registration PURSUANT TO THIS SECTION shall be made upon affidavit of a partner of such THE partnership who is a certified public accountant in good standing in this state , or has applied for a certificate as a certified public accountant under Arizona law . The board shall in each case determine whether the applicant is eligible for registration. A partnership which is so registered PURSUANT TO THIS SECTION may use the words "certified public accountants" or the abbreviation "C.P.A.'s" in connection with its partnership name AS PROVIDED FOR BY THE BOARD IN ITS RULES. PARTNERSHIPS REGISTERED PURSUANT TO THIS CHAPTER MAY PROVIDE RESTRICTED FINANCIAL SERVICES . Notification shall be given TO the board within one month of the termination of any partnership, or of the admission to or withdrawal of an Arizona partner from any partnership so registered PURSUANT TO THIS SECTION .

C. D. Any registration of a partnership under this section granted in reliance upon the provisions of the Arizona law ON THIS CHAPTER shall terminate forthwith PROMPTLY if the board rejects the application of the partner who signed the application for registration as a partnership, or of any partner actively engaged in the practice of public accounting in this state.

E. A PARTNERSHIP THAT APPLIES FOR AN INITIAL REGISTRATION OR A RENEWAL PURSUANT TO THIS SECTION SHALL LIST IN ITS APPLICATION ALL STATES IN WHICH THE PARTNERSHIP HAS APPLIED FOR OR HOLDS A REGISTRATION, LICENSE OR PERMIT AS A CERTIFIED PUBLIC ACCOUNTANT PARTNERSHIP AND SHALL LIST ANY PAST DENIALS, REVOCATIONS OR SUSPENSIONS OF REGISTRATIONS, LICENSES OR PERMITS BY ANY OTHER STATE.

F. AN APPLICANT FOR REGISTRATION OR A PARTNERSHIP REGISTERED PURSUANT TO THIS SECTION SHALL NOTIFY THE BOARD IN WRITING WITHIN ONE MONTH OF ANY CHANGE OF PARTNERS WHOSE PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE, ANY CHANGE IN THE NUMBER OR LOCATION OF OFFICES OF THE PARTNERSHIP IN THIS STATE, ANY CHANGE IN THE IDENTITY OF THE PERSONS IN CHARGE OF THE PARTNERSHIP'S OFFICES IN THIS STATE AND ANY ISSUANCE, DENIAL, REVOCATION OR SUSPENSION OF A REGISTRATION, LICENSE OR PERMIT BY ANY OTHER STATE.

D. G. The board shall by the date of initial registration with the board every other year require every partnership that desires to practice under this chapter for the succeeding two years to register with the board and pay a fee of not less than one hundred dollars nor more than three hundred dollars for the privilege of practicing in this state for the following two years. In the administration of this subsection, a partnership registering for less than two years shall be required to pay a pro rata portion of the fee.

Sec. 6. Section 32-732, Arizona Revised Statutes, is amended to read:

32-732 . Public accountant partnership; requirements

A. A partnership engaged in this state in the practice of public accounting as public accountants shall register biennially with the board as a partnership of public accountants and shall meet the following requirements:

1. All public accountant members of the partnership shall be residents and in good standing in this state.

2. Each certified public accountant partner of the partnership shall be a certified public accountant in good standing in some ANY state or foreign country ON A SHOWING THAT THE STATE OR FOREIGN COUNTRY HAS EDUCATION, EXAMINATION AND EXPERIENCE REQUIREMENTS THAT ARE SUBSTANTIALLY EQUIVALENT TO THE REQUIREMENTS IN THIS STATE .

3. AT LEAST FIFTY-ONE PER CENT OF THE OWNERSHIP OF THE PARTNERSHIP, IN TERMS OF FINANCIAL INTERESTS AND VOTING RIGHTS, MUST BELONG TO HOLDERS IN GOOD STANDING OF CERTIFICATES OR LICENSES TO PRACTICE ACCOUNTING AS PUBLIC ACCOUNTANTS IN ANY STATE OR FOREIGN COUNTRY ON A SHOWING THAT THE STATE OR FOREIGN COUNTRY HAS EDUCATION, EXAMINATION AND EXPERIENCE REQUIREMENTS THAT ARE SUBSTANTIALLY EQUIVALENT TO THE REQUIREMENTS IN THIS STATE.

B. A PARTNERSHIP REGISTERED WITH THE BOARD PURSUANT TO THIS SECTION MAY INCLUDE OWNERS WHO ARE NOT PUBLIC ACCOUNTANTS IF ALL OF THE FOLLOWING APPLY:

1. THE PARTNERSHIP DESIGNATES A PERSON WHO IS A PUBLIC ACCOUNTANT AND WHO IS RESPONSIBLE FOR THE PROPER REGISTRATION OF THE FIRM.

2. ALL PARTNERS WHO ARE NOT PUBLIC ACCOUNTANTS ACTIVELY PARTICIPATE IN THE MANAGEMENT OF THE PARTNERSHIP OR A DIRECTLY AFFILIATED ENTITY THAT HAS BEEN APPROVED BY THE BOARD.

3. ANY PERSON WHO IS RESPONSIBLE FOR SUPERVISING ATTEST SERVICES OR FOR SIGNING REPORTS ON FINANCIAL STATEMENTS ON BEHALF OF THE PARTNERSHIP SHALL BE CERTIFIED PURSUANT TO THIS CHAPTER AND SHALL MEET THE EXPERIENCE REQUIREMENTS FOR CARRYING OUT THESE FUNCTIONS ADOPTED BY THE BOARD IN ITS RULES.

4. THE PARTNERSHIP COMPLIES WITH OTHER REQUIREMENTS IMPOSED BY THE BOARD IN ITS RULES.

B. C. Application for such registration PURSUANT TO THIS SECTION shall be made upon affidavit of a partner of such THE partnership who is a certified public accountant or public accountant in good standing in this state. The board shall in each case determine whether the applicant is eligible for registration. A partnership which is so registered PURSUANT TO THIS SECTION and which holds a certificate issued under the Arizona law PURSUANT TO THIS CHAPTER may use the words "public accountants" or the abbreviation "P.A.'s" in connection with its partnership name AS PROVIDED FOR BY THE BOARD IN ITS RULES. EACH PARTNERSHIP REGISTERED PURSUANT TO THIS CHAPTER MAY PROVIDE RESTRICTED FINANCIAL SERVICES . Notification shall be given TO the board within one month of the termination of any partnership, or of the admission to or withdrawal of an Arizona partner from any partnership so registered PURSUANT TO THIS SECTION .

C. D. Any registration of a partnership under this section granted in reliance upon the provisions of the Arizona law shall terminate forthwith ON THIS CHAPTER TERMINATES PROMPTLY if the board rejects the application of the partner who signed the application for registration as a partnership, or of any partner actively engaged in the practice of public accounting in this state.

E. A PARTNERSHIP THAT APPLIES FOR AN INITIAL REGISTRATION OR A RENEWAL PURSUANT TO THIS SECTION SHALL LIST IN ITS APPLICATION ALL STATES IN WHICH THE PARTNERSHIP HAS APPLIED FOR OR HOLDS A REGISTRATION, LICENSE OR PERMIT AS A PUBLIC ACCOUNTANT PARTNERSHIP AND SHALL LIST ANY PAST DENIALS, REVOCATIONS OR SUSPENSIONS OF REGISTRATIONS, LICENSES OR PERMITS BY ANY OTHER STATE.

F. AN APPLICANT FOR REGISTRATION OR A PARTNERSHIP REGISTERED PURSUANT TO THIS SECTION SHALL NOTIFY THE BOARD IN WRITING WITHIN ONE MONTH OF ANY CHANGE OF PARTNERS WHOSE PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE, ANY CHANGE IN THE NUMBER OR LOCATION OF OFFICES OF THE PARTNERSHIP IN THIS STATE, ANY CHANGE IN THE IDENTITY OF THE PERSONS IN CHARGE OF THE PARTNERSHIP'S OFFICES IN THIS STATE AND ANY ISSUANCE, DENIAL, REVOCATION OR SUSPENSION OF A REGISTRATION, LICENSE OR PERMIT BY ANY OTHER STATE.

D. G. The board shall by the date of initial registration with the board every other year require every partnership that desires to practice under this chapter for the succeeding two years to register with the board and pay a fee of not less than one hundred dollars nor more than three hundred dollars for the privilege of practicing in this state for the following two years. In the administration of this subsection, a partnership registering for less than two years shall be required to pay a pro rata portion of the fee.

Sec. 7. Section 32-741, Arizona Revised Statutes, is amended to read:

32-741 . Revocation or suspension of certificate; disciplinary action; letter of concern

A. After notice and an opportunity for a hearing, the board may revoke or suspend any certificate granted under this chapter and may take disciplinary action concerning the holder of any certificate for any of the following causes:

1. Conviction of a felony under the laws of any state or of the United States if civil rights have not been restored pursuant to title 13, chapter 9 or other applicable recognized judicial or gubernatorial order.

2. Conviction of any crime that has a reasonable relationship to the practice of accounting as a certified public accountant or as a public accountant, including crimes involving accounting or tax violations, dishonesty, fraud, misrepresentation, embezzlement, theft, forgery, perjury or breach of fiduciary duty, regardless of whether civil rights have been restored.

3. Fraud or deceit in obtaining a certificate as a certified public accountant or in obtaining a certificate as a public accountant under this chapter.

4. Dishonesty, fraud or gross or continuing negligence in the practice of accounting.

5. Cancellation, revocation or suspension of any certificate or other authority to practice or refusal to renew the certificate or other authority to practice as a certified public accountant by any other state or foreign country for any cause other than failure to pay license or registration fees.

6. Violation of any of the provisions of this chapter, of title 44, chapter 12, article 13 or of any fraud provisions of the federal securities laws.

7. Final judgment in a civil action if the court makes findings of accounting violations, dishonesty, fraud, misrepresentation or breach of fiduciary duty.

8. Final judgment or order in a civil action or administrative proceeding if the court or agency makes findings of violations of any fraud provisions of the laws of this state or federal securities laws.

9. Knowing violation of any decision, order or rule issued or adopted by the board.

10. Suspension or revocation for cause of the right to practice before the federal securities exchange commission or any other governmental body or agency.

11. Offering or accepting commissions or contingency fees for services rendered for clients for whom attest function services are also offered or rendered in the performance of the practice of accounting unless:

(a) The fee is fixed by a court or another public authority.

(b) In a tax matter, the fee is determined based on the results of a judicial proceeding or the finding of a governmental agency.

12. Failing to disclose to a client that the registrant has received or expects to receive a commission from a third party for any engagement, services or product sales involving services other than the attest function.

B. The board may suspend the certificate of any certified public accountant or public accountant or the registration of any firm pending proceedings for revocation or other disciplinary action on the receipt of a certified copy of a record of conviction of a felony or of any crime that has a reasonable relationship to the practice of accounting, including crimes involving accounting or tax violations, dishonesty, fraud, misrepresentation, embezzlement, theft, forgery, perjury or breach of fiduciary duty. The board may also suspend the certificate of any certified public accountant or public accountant or the registration of any firm pending proceedings for revocation or other disciplinary action on the receipt of a final judgment or order in a civil action or administrative proceeding in which the court or agency made findings of violations of any fraud provisions of the laws of this state or federal securities laws.

C. The board shall suspend, without notice or A hearing, the certificate of any certified public accountant or public accountant who fails to register and pay the biennial registration fee as required by section 32-730. Terms of a suspension issued under this subsection shall include a provision that the suspension shall be vacated when the registrant has paid all past due fees not to exceed three hundred fifty dollars. The board may waive the collection of any fee after suspension under conditions which the board deems justifiable. If the certified public accountant or public accountant fails to reinstate the certificate within twelve months of the date of suspension, the certificate expires. The board shall not reissue a certificate to a certified public accountant or public accountant whose certificate has expired pursuant to this subsection unless the certified public accountant or public accountant complies with section 32-748 and all other requirements for reinstatement.

D. The board shall, after notice and a hearing, suspend the certificate of any certified public accountant or public accountant who fails to show proof, in accordance with section 32-730, of compliance with the continuing education requirements established by the board. If the board determines that the failure was due to reasonable cause or excusable neglect, the board may require compliance as expeditiously as possible. Any certificate suspended pursuant to this section shall be reinstated upon compliance with rules governing these cases as adopted by the board.

E. The board may take disciplinary action against a holder of a certificate issued pursuant to this chapter who is practicing accounting even if the person is not representing to the public that the person is a certified public accountant or a public accountant or even if the person is practicing accounting in or through a corporation, partnership or proprietorship which is not registered by the board.

F. The board may issue a letter of concern if, in the opinion of the board, there is insufficient evidence to support disciplinary action against the registrant, but the board believes, as a result of information ascertained during an investigation, that continuation of the activities that led to the investigation may result in future board action against the registrant. A registrant may file a response with the board within thirty days after receipt of a letter of concern. Letters of concern issued by the board and records kept by the board in connection with investigations leading to letters of concern are confidential and are not public records.

Sec. 8. Title 32, chapter 6, article 3, Arizona Revised Statutes, is amended by adding section 32-747.01, to read:

32-747.01 . Restricted financial services; requirements

A PERSON WHO HOLDS A CERTIFICATE ISSUED BY THE BOARD TO PRACTICE AS A CERTIFIED PUBLIC ACCOUNTANT OR A PUBLIC ACCOUNTANT MAY PROVIDE RESTRICTED FINANCIAL SERVICES ONLY IF THE PERSON PROVIDES RESTRICTED FINANCIAL SERVICES THROUGH A FIRM REGISTERED PURSUANT TO THIS CHAPTER.

Sec. 9. Effective date

Sections 32-731 and 32-732, Arizona Revised Statutes, as amended by this act, are effective from and after December 31, 2000.

APPROVED BY THE GOVERNOR MAY 4, 1999.

FILED IN THE OFFICE OF THE SECRETARY OF STATE MAY 4, 1999.