Uniform Accountancy Act Model Rules - Nasba

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UNIFORM ACCOUNTANCY ACTMODEL RULESNovember 2020Published by theNational Association of State Boards ofAccountancy 150 4th Avenue North, Nashville, TN37219‐2417

Copyright 2020National Association of State Boards of Accountancy150 4th Avenue, North, Suite 700, Nashville, TN 37219-2417All rights reserved. For information about the procedure for requesting permission to makecopies of any part of this work, please contact the NASBA at NASBA-UAA@nasba.org.Otherwise, requests should be written and mailed to the Rights and Permissions Department,NASBA-UAA, 150 4th Avenue, North, Suite 700, Nashville, TN 37219-2417.1 2 3 4 5 6 7 8 9 0 SR 9 9 8

UNIFORM ACCOUNTANCY ACT MODEL RULESTable of ContentsINTRODUCTORY COMMENTS . Rules-I-5PREAMBLE. Rules-Pre-1Rule. Page3-13-23-33-43-53-63-73-83-93-10ARTICLE 3 - DEFINITIONSTerms used in these rules . 3-1Agreed upon procedure. 3-1Audit . 3-1Professional engagement . 3-2Continuing Professional Education . 3-2CPE reporting period . 3-2Subject matter expert . 3-2Technical committee . 3-2Technical fields of study . 3-2Non-technical fields of study . 3-34-6ARTICLE 4 - STATE BOARD OF ACCOUNTANCYBoard meetings . 4-1Election and tenure of officers . 4-1Duties of officers . 4-1Fees . 4-1Obligation of licensees to notify the Board of changes of address andother information . 4-2Communications . 4-25-15-25-25-35-45-55-65-75-85-95-105-11ARTICLE 5 - CERTIFIED PUBLIC ACCOUNTANTSEducation requirements - definitions . 5-1Education requirements – determining compliance of the applicant’seducation. 5-2Applications for examination . 5-5Time and place of examination. 5-6Examination content. 5-6Determining and reporting examination grades. 5-6Retake and granting of credit requirements . 5-6Candidate testing fee . 5-7Cheating . 5-7Security and irregularities . 5-9Good moral character . 5-96-1ARTICLE 6 - ISSUANCE OF CERTIFICATES AND RENEWAL OFCERTIFICATES AND REGISTRATIONS, CONTINUINGPROFESSIONAL EDUCATION AND RECIPROCITYApplications . 6-14-14-24-34-44-5Rules TOC-i

7-77-87-97-10Experience required for initial certificate . 6-1Evidence of applicant's experience . 6-1Continuing professional education requirements for renewal orreactivation of a certificate, license or registration . 6-2Activities qualifying for continuing professional education credit . 6-4Continuing professional education records . 6-6CPE reciprocity. 6-8Exceptions. 6-9Interstate practice . 6-10International reciprocity . 6-11Peer review for certificate holders who do not practice in a licensed firm . 6-12ARTICLE 7 - PERMITS TO PRACTICE -- FIRMSApplications . 7-1Notification of firm changes. 7-1Peer review definitions . 7-2Enrollment in board-approved peer review program. 7-3Submission of peer review documents . 7-4Approved peer review sponsoring organizations, programs and peer reviewstandards . 7-5Peer review oversight committee . 7-6Internet practice. 7-7Attest documentation and retention . 7-7Unregistered firm compliance with applicable peer review documentationrequirements . 7-710-110-210-3ARTICLE 10 - ENFORCEMENT ACTIONS AGAINST LICENSEESGrounds for enforcement actions against licensees . 10-1Return of certificate, registration or permit to practice . 10-3Applicable standards . 10-311-111-211-3ARTICLE 11 - ENFORCEMENT PROCEDURES -- INVESTIGATIONSReview of professional work product . 11-1Reporting convictions, judgments, and administrative proceedings . 11-1Participation in multistate enforcement compacts . 11-313-113-2ARTICLE 13 - REINSTATEMENTApplications for relief from disciplinary penalties . 13-1Action by the Board . 13-114-114-2ARTICLE 14 - UNLAWFUL ACTSCPA firm names. 14-1Safe harbor language. 14-323-123-2ARTICLE 23 - SUBSTANTIAL EQUIVALENCYSubstantial equivalency and internet practice . 23-1Practice in other states through substantial equivalency. 23-1Rules TOC-ii

23-323-3Reporting moral character violations . 23-1Continuing professional education requirements for practice privileges . 23-1Rules TOC-iii

Uniform Accountancy ActModel RulesNational Association of State Boards of Accountancy

Introductory CommentsThese Uniform Accountancy Rules (“Rules”) have been prepared by the NationalAssociation of State Boards of Accountancy (“NASBA”) as part of its continuing effort toupdate and promote uniformity in the regulatory schemes governing the practice ofaccountancy in the various jurisdictions.These Rules are keyed to the Uniform Accountancy Act (“Uniform Act”) – EighthEdition in several respects. Like most rules of administrative agencies they are intendedin a general sense to implement or to explain specific statutory provisions governing theoperations of the agency concerned; thus, in those cases where it appears appropriate fora Rule to contain a reference to a statutory provision, the reference provided in theseRules is to a provision of the Uniform Act. The organizing pattern of the Rules alsoreflects that of the Uniform Act: the numbered Articles under which the Rules aregrouped correspond to section numbers in the Uniform Act.The Rules are not intended to depend entirely upon the Uniform Act, or to besuitable for adoption only in jurisdictions where the accountancy law corresponds to theUniform Act. Where the law that is in force varies from the Uniform Act, modificationsmay be necessary to adapt the Rules to the pertinent statute.Rules Intro

PreambleThese Rules are adopted by the Board of Accountancy, pursuant to itsauthority under the [Public] Accountancy Act of 20 . Their purpose is to promote andprotect the public interest by implementing the provisions of that Act, which provide forthe issuance and renewal of certificates as certified public accountants; the renewal ofregistrations to public accountants; the issuance and renewal of permits to firms; and theregulation of licensees, all to enhance the reliability of information which is used forguidance in financial transactions or accounting for or assessing the financial status orperformance of commercial, noncommercial and governmental enterprises.Rules - Pre

ARTICLE 3DEFINITIONSRule 3-1 - Terms used in these rules.For purposes of these Rules the following terms have the meanings indicated:(a)“Act” means the [Public] Accountancy Act of ,[statutory reference].(b)“Financial statements” means statements and footnotes related thereto thatundertake to present an actual or anticipated financial position as of a point intime, or results of operations, cash flow, or changes in financial position for aperiod of time, in conformity with Generally Accepted Accounting Principles oranother comprehensive basis of accounting. The term does not include incidentalfinancial data included in management advisory service reports to supportrecommendations to a client; nor does it include tax returns and supportingschedules.(c)For purposes of the definition of "attest" as provided in Section 3(b) of the Act, theBoard adopts and incorporates by reference:(1)(2)Each of the following as issued by the AICPA and including subsequentamendments and editions:(A)The Statements on Auditing Standards (SAS),(B)The Statements on Standards for Accounting and Review Services(SSARS), and(C)The Statements on Standards for Attestation Engagements (SSAE);The standards and rules adopted by the PCAOB including subsequentamendments and editions.COMMENT: This is the adoption by reference required by UAA 3(b). This adoption is inaddition to “applicable standards” set forth in Rule 10-3. Caution: Some jurisdictions haveconstitutional or statutory restrictions limiting or prohibiting evergreen adoptions by reference,and require that only specific, dated versions of standards be adopted.Rule 3-2 – Agreed upon procedure.An “agreed-upon procedures engagement” is one which is to be performed in accordancewith applicable attestation standards and is one in which a licensee is engaged to issue awritten finding(s) that (i) is based on specific procedures that the specified parties agreeare sufficient for their purposes, (ii) is restricted to the specified parties, and (iii) does notprovide an opinion or negative assurance.Rule 3-3 - Audit.“Audit” means the procedures performed in accordance with applicable auditingstandards for the purpose of expressing or disclaiming an opinion on the fairness withwhich the historical financial information is presented in conformity with GenerallyRules 3-1

Accepted Accounting Principles, another comprehensive basis of accounting, or a basis ofaccounting described in the report.Rule 3-4 – Professional engagement."Professional engagement" means an agreement between a client and a licensee relativeto the performance of professional services and the services performed under thisagreement.Rule 3-5 – Continuing Professional Education (CPE).Continuing Professional Education (CPE) is an integral part of the lifelong learningrequired to provide competent service to the public. It is the set of activities that enablesCPAs to maintain or improve their professional competence.Rule 3-6 – CPE reporting period.A “CPE reporting period” is the period of time as to which a licensee in this State mustreport or attest to the completion of CPE requirements to the Board of Accountancy.Rule 3-7 - Subject matter expert.A “subject matter expert” is a person who is an authority in a particular area or topic. Asubject matter expert is involved in developing CPE materials where knowledge expertiseis needed.Rule 3-8 - Technical committee.A “technical committee” is a committee that serves as a resource to identify issuesregarding the practice of accountancy and develop technical or policy recommendationson those issues.Rule 3-9 - Technical fields of study.“Technical fields of study” are technical subjects that contribute to the maintenanceand/or improvement of the competence of a CPA in the profession of accountancy andthat directly relate to the CPA’s field of business. These fields of study include, but arenot limited to:(a)Accounting;(b)Accounting (Government);(c)Auditing:(d)Auditing (Government);(e)Business Law;Rules 3-2

(f)Economics;(g)Finance;(h)Information Technology;(i)Management Services;(j)Regulatory Ethics;(k)Specialized Knowledge;(l)Statistics; and(m)Taxes.COMMENT: The technical subjects are further defined in the “Fields of Study” document, aspublished on NASBA’s website, www.nasbaregistry.org, and included in the “Statement onStandards for Continuing Professional Education (CPE) Programs,” appended to the UniformAccountancy Act. The “Fields of Study” document provides descriptions of each technicalsubject area and examples of the types of topics that might be included in each area.Rule 3–10 – Non-technical fields of study.“Non-technical fields of study” are subjects that contribute to the maintenance and/orimprovement of the competence of a CPA in areas that indirectly relate to the CPA’s fieldof business. These fields of study include, but are not limited to:(a)Behavioral Ethics;(b)Business Management & Organization;(c)Communications and Marketing;(d)Computer Software & Applications;(e)Personal Development;(f)Personnel/Human Resources; and(g)Production.COMMENT: The non-technical subjects are further defined in the “Fields of Study” document,as published on NASBA’s website, www.nasbaregistry.org, and included in the “Statement onStandards for Continuing Professional Education (CPE) Programs,” appended to the UniformAccountancy Act. The “Fields of Study” document provides descriptions of each non-technicalsubject area and examples of the types of topics that might be included in each area.Rules 3-3

ARTICLE 4STATE BOARDS OF ACCOUNTANCYRule 4-1 – Board meetings.The Board shall meet at least times each year. The chair or a quorum of the Boardshall have the authority to call meetings of the Board. The Board shall follow and applythe rules of procedure, [statutory reference], as regards notice andconduct of meetings.Rule 4-2 – Election and tenure of officers.The Board shall elect annually from among its members a chair, a vice-chair, and suchother officers as the Board may require. The officers shall assume the duties of theirrespective offices at the conclusion of the meeting at which they were elected. They shallserve a term of one year, but shall be eligible for reelection.Rule 4-3 – Duties of officers.The chair or, in the event of the chair’s absence or inability to act, the vice-chair shallpreside at all meetings of the Board. The Board shall determine other duties of the officers.Rule 4-4 – Fees.Fees charged by the Board shall be as follows:(a)Examination applications (b)Administration of examination, per section (c)Initial issuance of certificate (d)Renewal of certificate or registration (e)Initial firm permits (f)Renewal of firm permits, except for sole practitioners (g)Renewal of firm permits for sole practitioners (a)Delinquency fee for permit, certificate or registration renewalapplications (i)Copies of records, per page (j)Applications for reinstatement (k)Annual reports of the Board, per copy Rules 4-1

(l)Other fees (The Board may charge other fees as required) Rule 4-5 - Obligation of licensees to notify the Board of changes of address and otherinformation.Each licensee shall notify the Board in writing within thirty (30) days of any change ofaddress or, in the case of individual licensees, change of employment.Rule 4-6 - Communications.A licensee or anyone using practice privileges pursuant to Sections 7 or 23 of the Act shallrespond in writing to any registered or certified communication from the Boardrequesting a response. Unless otherwise specified in the Board’s communication, theresponse must be sent within thirty (30) days of the date of such communication.Rules 4-2

ARTICLE 5CERTIFIED PUBLIC ACCOUNTANTSRule 5-1 - Education requirements – definitions.(a)“Semester credit hour” (SCH) means the conventional college semester credithour. “Quarter credit hours” may be converted to semester credit hours bymultiplying them by two-thirds; i.e., one quarter credit hour equals two-thirds ofa semester credit hour.(b)“College(s) or university(ies)” means Board-recognized institution(s) of highereducation accredited by Board-recognized accrediting organizations.(c)“Accredited” or “Accreditation” reflects the quality control of the educationprocess provided by Board-recognized accreditation organizations. In determiningacceptable accreditation organization, the Board may recognize a Council forHigher Education (CHEA) recognized accreditation organization. These Rulesrefer to three levels of accreditation. Level 1 represents the most comprehensivereview at the accounting program level and Level 3 is the least comprehensivereview at the college or university level. Colleges or universities withoutaccreditation, as defined below, would generally lack any level of accreditationincluding the college or university, the business school or program (“businessschool”), and/or the accounting department or program (“accounting program”).(1)Level 1 accreditation – the accounting program. In a Level 1 accreditation,the college or university must meet the business accreditation standardsplus the additional accounting accreditation standards to achievesupplemental accounting accreditation. This level applies to an accountingprogram that is accredited by an organization recognized by the Councilfor Higher Education Accreditation (CHEA) as a specialized orprofessional accrediting organization, such as the Association to AdvanceCollegiate Schools of Business-International (AACSB). Accreditedaccounting programs have met standards substantially higher and muchmore specific than those required for Level 2 or Level 3 accreditation.(2)Level 2 accreditation – the business school. In a Level 2 accreditation, thecollege or university and the business school are accredited, but theaccounting program is not separately accredited. This level applies to abusiness school that is accredited by an organization recognized by theCouncil for Higher Education Accreditation (CHEA) as a specialized orprofessional accrediting organization, such as the AACSB or theAssociation of Collegiate Business Schools and Programs (ACBSP).(3)Level 3 accreditation – the college or university. In a Level 3 accreditation,the college or university is accredited, but neither the business school northe accounting program meet Level 1 or Level 2 accreditationrequirements. This level applies to a degree-granting college or universitythat is not accredited at Level 1 or Level 2, but is accredited by anRules 5-1

organization currently recognized by the Board as an accreditingorganization, such as Higher Learning Commission, Middle StatesCommission on Higher Education, New England Commission on HigherEducation, Northwest Commission on Colleges and Universities, SouthernAssociation of Colleges and Schools Commission on Colleges, and WASCSenior College and University Commission.(4)College or university without accreditation – an educational institution orentity that does not have an accreditation of either the college or university,business school, or accounting program; or a college or universityaccredited by organizations not recognized by the Board.(d)“Integration of subject matter” means a program of learning where certainsubjects, which may be standalone courses in some colleges or universities, areintegrated or embedded within related courses. Colleges or universities that use anintegrated approach to cover such multiple course subjects should provideevidence of the required coverage pursuant to Rule 5-2(d). Acceptance ofintegration of any subject matter requires Board approval.(e)“Ethics” means a program of learning that provides students with a framework ofethical reasoning, professional values and attitudes for exercising professionalskepticism and other behavior that is in the best interest of the public andprofession. At a minimum, an ethics program should provide a foundation forethical reasoning and the core values of integrity, objectivity and independence.(f)“Internship” means faculty pre-approved and appropriately supervised shortterm work experience, usually related to a student’s major field of study, for whichthe student earns academic credit.(g)“Independent study” means academic work selected or designed by the studentwith the pre-approval of the appropriate department of a college or universityunder faculty supervision. This work typically occurs outside of the regularclassroom structure.Rule 5-2 - Education requirements - determining compliance of the applicant’s education.(a)These requirements are intended to provide a foundation in accounting andbusiness course subjects. The program should:(1)Develop the skills required to apply the knowledge attained (including skillsin communications, critical thinking, research and analysis).(2)Include and emphasize ethical behavior, professional skepticism andjudgment, and professional responsibility.(3)Provide the highest quality instruction in subjects that clearly contribute tothe knowledge, skills and abilities necessary to meet the public’sexpectations of a CPA.Rules 5-2

(b)For purposes of Section 5(c) of the Uniform Accountancy Act, an applicant will bedeemed to have met the education requirement(s) if the Board has determined theapplicant has met the requirements of Rule 5-2(c) and Rule 5-2(d), together withappropriate consideration of Rule 5-2(a).(c)While the Board can rely on the accreditation to assess the overall quality of theeducational institutions, the Board will also review transcripts to ascertainappropriate accounting and business contents regardless of the level ofaccreditation. Determining compliance of the applicant’s education shall beaccomplished through the Board’s use of the following procedures:(d)(1)Reliance on accreditation, as defined in Rule 5-1(c), of the college oruniversity, from which the candidate has obtained the necessary degree andhours as defined in Rule 5-2(d) for purposes of determining theacceptability of the degree and the amount of detailed review required forcompliance with the accounting and business content. The Board may placesignificant reliance on the quality of accounting and business coursesincluded in accounting degrees from Level 1 colleges or universities,however, the Board should complete a transcript review to ascertainappropriate coverage of accounting and business content in accordancewith Rule 5-2(d). The Board may place reliance on the quality of thebusiness courses included in business degrees from colleges or universitieswith Level 2 accreditation, however, the Board should complete a transcriptreview to ascertain appropriate coverage of accounting and businesscontent in accordance with Rule 5-2(d), including a more thorough reviewof the accounting content than from Level 1 colleges or universities.Transcripts from a Level 3 college or university would require moredetailed review by the Board for compliance with the accounting andbusiness content. Degrees from colleges or universities withoutaccreditation or with accreditation by an organization not recognized bythe Board would generally not be acceptable.(2)Reliance on other procedures and information where the degree and/orcourses were obtained from a college or university(s) not meeting theaccreditation requirements of Rule 5-2(c)(1). Accepting degrees or coursesunder Rule 5-2(d) should only be based on evidence of acceptable coursecontent, instruction and quality as would be expected by accreditation andas approved by the Board.(3)Reliance on other procedures and information where the requirements ofRule 5-2(d) are met by integration of subject matter. The requirements setforth in Rule 5-2(e) should be used to determine compliance.An applicant shall be deemed to have satisfied the education requirements if thefollowing conditions are met:(1)Earned a graduate degree and/or a baccalaureate degree at a college oruniversity that is accredited, as described in Rule 5-1(c);Rules 5-3

(2)Earned a minimum of six SCH at the undergraduate level or three SCH atthe graduate level of principles or introductory accounting and a minimumof 24 SCH (or the equivalent) of accounting content at the undergraduateor graduate level requiring a minimum of three SCH in each of the subjectmatter content areas listed in Rule 5-2(d)(2)i, through iv below, and aminimum of twelve SCH in some or all of the subject-matter content areaslisted in Rule 5-2(d)(2)v through xvii below:(i)Financial accounting and reporting for business organizations(ii)Financial statement auditing(iii) Taxation(iv)Accounting information systems(v)Financial accounting and reporting for government and not-forprofit entities(vi)Attestation engagements(vii) Managerial or cost accounting(viii) Mergers and acquisitions(ix)Tax and financial planning(x)Fraud examination(xi)Internal controls and risk assessment(xii) Financial statement analysis(xiii) Accounting research analysis(xiv) Tax research and analysis(xv) Data analytics, data interrogation techniques, and/or digital acumenin an accounting context, whether taken in the business school or inanother college or university program, such as the engineering,computer science, or math programs(xvi) Ethics (accounting course)(xvii) Other accounting -related content areas included in the UniformCPA Examination Blueprints or as may be approved by the Board.(3)Earned a minimum of two SCH in research and analysis relevant to thecourse content described in 5-2(d)(2) through a standalone undergraduateand/or graduate accounting course, or two SCH integrated throughout theundergraduate and/or graduate accounting curriculum. Colleges oruniversities must provide evidence of coverage under integration asspecified in Rule 5-2(e). The SCH earned through a standalone course inresearch and analysis in accounting may fulfill two of the SCH of theaccounting subject matter requirements in Rule 5-2(d)(2).(4)Earned a minimum of 24 SCH (or the equivalent) of business courses, otherthan accounting, at the undergraduate and/or graduate level, covering someor all of the following subject-matter content:(b)(ii)(iii)(iv)(v)(vi)Business lawEconomicsManagementMarketingFinanceBusiness communicationsRules 5-4

ve methodsInformation systems or technologyData analytics, data interrogation techniques, and/or digitalacumen, whether taken in the business school or in another collegeor university program, such as the engineering, computer science ormath programs.Ethics (business course)Other business-related content areas included in the Uniform CPAExamination Blueprints or as may be approved by the Board.(5)Earned a minimum of two SCH in communications in an undergraduateand/or a graduate course listed or cross-listed a

Rule 3-8 - Technical committee. A "technical committee" is a committee that serves as a resource to identify issues regarding the practice of accountancy and develop technical or policy recommendations on those issues. Rule 3-9 - Technical fields of study. "Technical fields of study" are technical subjects that contribute to the maintenance

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