HB2476 - 572R

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

Section 1. Section 32-701, Arizona Revised Statutes, is amended to read:

START_STATUTE32-701. Definitions

In this chapter, unless the context otherwise requires:

1. "Accounting services" means services that are commonly and historically performed by accountants, including recording or summarizing financial transactions, bookkeeping, analyzing or verifying financial information, reporting financial results, financial planning or providing attest services, compilation services, tax services or consulting services.

2. "Accredited institution" means any public or private regionally or nationally accredited college or university that is accredited by an organization recognized by the council for higher education accreditation or its successor agency.

3. "Attest services" means the following services to be performed by the holder of a certificate issued by the board:

(a) Audits or other engagements to be performed in accordance with the statements on auditing standards adopted by the American institute of certified public accountants.

(b) Reviews of financial statements to be performed in accordance with the statements on standards for accounting and review services adopted by the American institute of certified public accountants.

(c) Any examination of prospective financial information to be performed in accordance with the statements on standards for attestation engagements adopted by the American institute of certified public accountants.

(d) Any engagement to be performed in accordance with the standards of the public company accounting oversight board or its successor.

(e) Any examination, review or agreed on procedure engagement to be performed in accordance with the statements on standards for attestation engagements adopted by the American institute of certified public accountants, other than an examination described in subdivision (c) of this paragraph.

4. "Baccalaureate degree" means an academic undergraduate degree awarded by an accredited institution or by a college or university that maintains standards comparable to those of an accredited institution.

4. 5. "Board" means the Arizona state board of accountancy established by section 32-702.

5. 6. "Business organization" means a partnership, professional corporation, professional limited liability company, limited liability company or limited liability partnership or any other entity that is recognized by the board and that is established under the laws of any state or foreign country.

6. 7. "Certified public accountant" means an individual who has been issued a certificate of authority by the board to practice as a certified public accountant or who meets the limited reciprocity privilege requirements pursuant to section 32-725.

7. 8. "Client" means a person or entity, other than one's employer, for whom accounting services are provided.

8. 9. "Compilation services" means providing a service of any compilation engagement to be performed in accordance with the statements on standards for accounting and review services.

10. "Complaint" means a written statement from a member of the public or a matter identified by the board, the board's advisory committees or the BOARD'S staff that involves a person, a certified public accountant or a firm subject to this chapter regarding any potential violation of this chapter or rules adopted pursuant to this chapter.

9. 11. "Consulting services" includes management advisory services, litigation support services, valuation services and other services that require the use of technical skills, education, observation, experience and knowledge to develop an analytical approach to process and to present findings, conclusions or recommendations.

10. 12. "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.

11. 13. "CPA designation" means the title "certified public accountant" or any abbreviation or grammatical derivative of the term "certified public accountant".

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

(a) An administrative penalty in an amount not to exceed $2,000 for each violation of this chapter or rules adopted pursuant to this chapter.

(b) Restrictions on the scope of the registrant's practice of accounting.

(d) Professional education requirements.

(e) A decree of censure.

(f) Probation requirements best adapted to protect the public welfare.

(g) Reimbursement of the board's costs of investigations and disciplinary proceedings initiated under this chapter, including attorney fees.

(h) 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.

15. "Disciplinary proceeding" means a proceeding at which a hearing occurs before the board or the office of administrative hearings and at which the legal rights, duties or privileges of an individual or firm subject to this chapter are at issue.

13. 16. "Employer" means a person or entity that hires an individual to perform a service and that directs and controls the manner in which the service is performed.

14. 17. "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.

15. 18. "Financial statements":

(a) Means statements and footnotes related to statements that purport to show a financial position or changes in a financial position in conformity with generally accepted accounting principles or other another comprehensive basis of accounting.

(b) Includes balance sheets, statements of income, statements of retained earnings, statements of cash flows, statements of changes in equity and other commonly used or recognized summaries of financial information.

16. 19. "Firm" means a business organization, a sole proprietorship or an individual who is registered pursuant to section 32-731.

17. 20. "Good cause" means factors that temporarily prevent a registrant from satisfying a particular requirement in a specific instance as determined by the board and may include:

(a) A disability.

(b) An illness.

(d) Military service.

(e) Financial hardship.

(f) A natural disaster.

(g) Any condition or circumstance that the board deems relevant.

21. "Investigation" means the processes undertaken during the period between receipt or initiation of a complaint or initiation of a continuing professional education audit and either a final disposition by the board or a disciplinary proceeding.

18. 22. "Jurisdiction" means, for the purposes of examination, certification, firm registration or limited reciprocity privilege, the fifty states of the United States, the District of Columbia, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands or the Commonwealth of Puerto Rico.

19. 23. "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.

20. 24. "Limited reciprocity privilege" means the permission to practice as a certified public accountant in this state pursuant to section 32-725 for an individual or firm whose principal place of business is outside of this state.

21. 25. "Management advisory services" means advisory services consisting of the development of findings, conclusions or recommendations for the recipient's consideration and decision making decision-making.

22. 26. "Office", for the purposes of firm registration, limited reciprocity privilege and fees, means any physical location that is used in the practice of accounting in this state and that is owned, leased, licensed for use or maintained by the firm or someone under the firm's authority.

27. "Postbaccalaureate degree" means an academic degree awarded after a baccalaureate degree by an accredited institution or by a college or university that maintains standards comparable to those of an accredited institution.

23. 28. "Practice of accounting" means providing accounting services for a client or an employer.

24. 29. "Registrant" means any certified public accountant or firm that is registered with the board.

25. 30. "Related courses" means:

(a) Business administration.

(b) Statistics.

(d) Economics.

(e) Finance.

(f) Management.

(g) Business law.

(h) College algebra or more advanced mathematics.

(i) Advanced written communication.

(j) Advanced oral communication.

(k) General ethics.

(l) Marketing.

(m) Other courses that are closely related to the subject of accounting or that are satisfactory to the board.

26. 31. "Sole proprietor" means the owner of a sole proprietorship.

27. 32. "Sole proprietorship" means a business that is owned by one individual and that does not have a legal distinction between the owner and the business. END_STATUTE

Sec. 2. Section 32-703, Arizona Revised Statutes, is amended to read:

START_STATUTE32-703. Powers and duties; rules; executive director; advisory committees and individuals

A. The primary duty of the board is to protect the public from unlawful, incompetent, unqualified or unprofessional certified public accountants and firms through certification, regulation and rehabilitation.

B. The board may:

1. Investigate complaints filed with the board or on its own motion to determine whether a certified public accountant registrant or limited reciprocity PRIVILEGE individual or firm has engaged in conduct in violation of this chapter or rules adopted pursuant to this chapter.

2. Establish and maintain high standards of competence, independence and integrity in the practice of accounting by a certified public accountant as required by generally accepted auditing standards and generally accepted accounting principles and, in the case of publicly held corporations or enterprises offering securities for sale, in accordance with state or federal securities agency accounting requirements.

3. Establish reporting requirements that require registrants to report:

(a) The imposition of any discipline on the right to practice before the federal securities and exchange commission, the internal revenue service, any state board of accountancy, other government agencies or the public company accounting oversight board.

(b) Any criminal conviction, any civil judgment involving negligence in the practice of accounting by a certified public accountant and any judgment or order as described in section 32-741, subsection A, paragraphs 7 and 8.

4. Establish basic requirements for continuing professional education of certified public accountants, except that the requirements shall not exceed eighty hours in any two-year registration renewal period.

5. Adopt procedures concerning disciplinary actions, administrative hearings and consent decisions.

6. Issue to qualified applicants certificates executed for and on behalf of the board by the signatures of the president and secretary of the board.

7. Adopt procedures and rules to administer this chapter.

8. Require peer review pursuant to rules adopted by the board on a general and random basis of the professional work of a registrant engaged in the practice of accounting.

9. Subject to title 41, chapter 4, article 4, employ an executive director and other personnel that it considers necessary to administer and enforce this chapter.

10. Appoint accounting and auditing, tax, peer review, law, certification, continuing professional education or other committees or individuals as it considers necessary to advise or assist the board or the board's executive director in administering and enforcing this chapter. These committees and individuals serve at the pleasure of the board.

11. Take all action that is necessary and proper to effectuate the purposes of this chapter.

12. Sue and be sued in its the board's official name as an agency of this state.

13. Adopt and amend rules concerning the definition of terms, the orderly conduct of the board's affairs and the effective administration of this chapter.

14. Delegate to the executive director the authority to:

(a) Approve an applicant to take the uniform certified public accountant examination pursuant to section 32-723.

(b) Issue a certificate of certified public accountant pursuant to section 32-721.

(d) Approve a registrant's name change and reissue a certificate of certified public accountant due to the name change.

(e) Approve a registrant's cancellation request pursuant to section 32-730.02.

(f) Approve a request for retired status pursuant to section 32-730.04.

(g) Approve reactivation from inactive status or retired status pursuant to section 32-732.

(h) Approve compliance with peer review requirements pursuant to this section.

(i) Approve compliance with continuing professional education audits.

(j) Approve continuing professional education compliance with decisions and orders.

(k) Terminate decisions and orders based on a registrant's successful completion of all order requirements.

(l) Approve a request for continuing professional education reciprocity.

(m) Approve a request for inactive status pursuant to section 32-730.01.

(n) Approve reinstatement from canceled or expired status pursuant to section 32-732.

C. The board or an authorized agent of the board may:

1. Issue subpoenas to compel the attendance of witnesses or the production of documents. If a subpoena is disobeyed, the board may invoke the aid of any court in requiring the attendance and testimony of witnesses and the production of documents.

2. Administer oaths and take testimony.

3. Cooperate with the appropriate authorities in other jurisdictions in investigation and enforcement concerning violations of this chapter and comparable statutes of other jurisdictions.

4. Receive evidence concerning all matters within the scope of this chapter. END_STATUTE

Sec. 3. Section 32-721, Arizona Revised Statutes, is amended to read:

START_STATUTE32-721. Certified public accountants; qualifications; rules; definition

A. The board shall issue a certificate of certified public accountant to any individual who complies with all of the following:

1. Meets the requirements of section 41-1080.

2. Is at least eighteen years of age.

3. 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.

4. Meets the requirements of subsection B, C or D of this section.

B. If the applicant passes the uniform certified public accountant examination and has never been certified, registered or licensed as a certified public accountant in this state or another jurisdiction, the applicant must comply with both of the following:

1. Have had at least two thousand hours of paid or unpaid experience, either before or after passing all sections of the uniform certified public accountant examination, that has exposed the applicant to and provided the applicant with experience in the practice of accounting. The applicant's experience must be sufficient to demonstrate the applicant's ability for critical inquiry and analysis of financial accounting information, including balance sheets, income statements, cash flow statements or tax returns and the applicant's ability to communicate, either orally or in writing, on the results of an inquiry or analysis of that information to an employer, client or third party.

2. Present satisfactory evidence that the person has successfully obtained a baccalaureate degree or higher degree from an accredited institution or a college or university that maintains standards comparable to those of an accredited institution and that the applicant has completed at least one hundred fifty semester hours of education of which:

(a) At least thirty-six semester hours are nonduplicative accounting courses of which at least thirty semester hours are upper-level courses.

(b) At least thirty semester hours are related courses. present satisfactory evidence to the board that the applicant meets at least of one of the following:

1. has obtained a baccalaureate degree and has at least two years of EXPERIENCE.

2. has obtained a baccalaureate degree and thirty additional semester hours and has at least one year of experience.

3. has obtained a postbaccalaureate degree and at least one year of experience.

C. If the applicant passes the uniform certified public accountant examination or the international qualification examination and has a certificate, registration or license to practice as a certified public accountant in another jurisdiction and the applicant has never had a certificate issued by the board expire or be relinquished or revoked, at least one of the following shall must apply:

1. The certificate, registration or license is issued by a jurisdiction whose requirements are determined by the board to be substantially equivalent to the requirements prescribed in subsection B of this section.

2. The applicant has a baccalaureate degree or its equivalent or a higher degree from an accredited institution or a college or university that maintains standards comparable to those of an accredited institution and either of the following applies:

(a) The applicant has been employed as a certified public accountant in the practice of accounting for at least three years and has completed at least one hundred fifty semester hours of education that includes both of the following:

(i) At least twenty-four semester hours of nonduplicative accounting courses, of which twelve semester hours are upper-level courses.

(ii) At least eighteen semester hours in related courses.

(b) The applicant has been employed as a certified public accountant in the practice of accounting for at least five of the ten preceding years and has completed both of the following:

(i) At least twenty-four semester hours of nonduplicative accounting courses, of which twelve semester hours are upper-level courses.

(ii) At least eighteen semester hours in related courses.

2. The applicant has been employed as a certified public accountant in the practice of accounting for at least three years and has obtained either:

(a) a Postbaccalaureate degree.

(b) a Baccalaureate degree and thirty additional semester hours.

3. The applicant has been employed as a certified public accountant in the practice of accounting for at least five of the ten preceding years and has obtained a baccalaureate degree.

3. 4. The applicant has been employed as a certified public accountant in the practice of accounting for at least ten of the fifteen preceding years.

D. If an applicant passes the international uniform certified public accountant qualification examination of the American institute of certified public accountants, all both of the following apply:

1. The applicant's country has a mutual recognition agreement with the national association of state boards of accountancy that has been adopted by the board.

2. The board recognizes that the applicant's qualifications are substantially equivalent to the qualifications of certified public accountants in the United States in the areas of education, examination and experience.

e. The board shall adopt rules regarding the number of semester hours of accounting courses and related courses required to fulfill the requirements of subsections b and c of this section.

f. for the purposes of this section, "experience" means any verified paid or unpaid EXPERIENCE providing ACCOUNTING services through employment gained in government industry, academia or public practice in which one year equals two thousand hours. END_STATUTE

Sec. 4. Section 32-723, Arizona Revised Statutes, is amended to read:

START_STATUTE32-723. Uniform certified public accountant examination; qualifications; notification of grades; appeals

A. A person shall not be permitted allowed to take the uniform certified public accountant examination unless if the person presents satisfactory evidence that the person has successfully obtained either a baccalaureate degree or a higher degree from an accredited institution or a college or university that maintains standards comparable to those of an accredited institution. The evidence must show both of the following:

1. At least twenty-four semester hours of nonduplicative accounting courses of which twelve semester hours are upper-level courses.

2. At least eighteen semester hours in related courses. postbaccalaureate degree that includes a number of semester hours of accounting courses and related courses as determined by The board by rule.

B. The board may contract with a public or private entity for the administration of to administer the examination. The examination may be conducted under a uniform examination system.

C. Within a reasonable time after the examination, the board or its contracted agent shall notify each candidate of the candidate's grade. Any candidate may request a grade review or an appeal by submitting a uniform certified public accountant examination score review or appeal form to the board or the board's contracted agent. END_STATUTE

Sec. 5. Section 32-725, Arizona Revised Statutes, is amended to read:

START_STATUTE32-725. Limited reciprocity privilege; qualifications; business organizations; definition

A. The limited reciprocity privilege may be exercised by an individual who is not a resident of this state and who meets the requirements of this section.

B. To qualify to exercise the limited reciprocity privilege, an individual must:

1. Have a principal place of business that is not in this state.

2. Not have or represent to have an office in this state.

3. Not be the subject of suspension or revocation of a certificate as provided by section 32-741 or relinquishment of a certificate as provided by section 32-730.06.

4. Hold a valid registration, certificate or license as a certified public accountant issued by another jurisdiction and either of the following applies:

(a) The other jurisdiction requires as a condition of licensure that an individual has all of the following:

(i) At least one hundred fifty semester hours of college education, including a baccalaureate degree or a higher degree that is conferred by an accredited institution or a college or university that maintains standards that are comparable to those of an accredited institution.

(ii) A passing grade on the uniform certified public accountant examination.

(iii) At least one year of experience in the practice of accounting that has been verified.

(b) The individual meets the qualifications prescribed in section 32-721, subsection C.

(a) The individual meets the qualifications prescribed in either:

(i) Section 32-721, subsection a.

(ii) Section 32-4302.

(b) the individual holds a valid active registration, certificate or license as a certified public accountant from any jurisdiction as of December 31, 2024.

C. An individual qualifying who qualifies for limited reciprocity privilege under this section is considered to have qualifications that are substantially equivalent to the requirements prescribed pursuant to this chapter and has all of the privileges of registrants, certificate holders or licensees in this state without obtaining a registration, certificate or license under this chapter.

D. An individual qualifying who qualifies for limited reciprocity privilege under this section may use the CPA designation and may offer or practice accounting in person or by mail, telephone or electronic means. A notice, fee or other submission is not required. The individual is subject to the requirements prescribed in subsection E of this section.

E. Each individual who holds a registration, certificate or license issued by another jurisdiction and who exercises the limited reciprocity privilege and each partnership, corporation or other entity engaging in the practice of accounting as provided by this section, as a condition of exercising the privilege provided by this section:

1. Shall:

(a) Comply with article 3 of this chapter and rules adopted pursuant to article 3 of this chapter. In any investigation or other proceedings disciplinary proceeding conducted pursuant to article 3 of this chapter, an individual claiming permission to practice as a certified public accountant in this state under the limited reciprocity privilege has the burden of demonstrating that the applicable requirements of subsection B of this section have been satisfied.

(b) Cease the offering or practicing of accounting in person or by mail, telephone or electronic means in this state if the individual no longer satisfies the requirements of subsection B of this section or the partnership, corporation or other entity no longer satisfies the requirements of subsection G of this section.

2. Is subject to:

(a) The personal and subject matter jurisdiction of the board and the power of the board to investigate complaints and take disciplinary action.

(b) Service by either of the following:

(i) The appointment of the state board that issued the registration, certificate or license to the individual as agent, on whom process may be served in any action or proceeding against the person by the board.

(ii) Directly on the person.

F. Any individual who holds a valid registration, certificate or license as a certified public accountant issued by another jurisdiction or a foreign country, whose principal place of business is not in this state and who does not otherwise qualify under this section for limited reciprocity privilege may enter this state and provide services if the services are limited to the following:

1. Expert witness services.

2. Teaching or lecturing.

3. Other services as determined by the board.

G. A business organization formed under the laws of another jurisdiction relating to the practice of accounting in that jurisdiction may use the CPA designation in this state and may engage in the practice of accounting in this state, including the provision of attest services, without having to register as a firm if all of the following apply:

1. The business organization is owned by or employs an individual who is a limited reciprocity privilege holder pursuant to this section.

2. The business organization is in good standing in its principal place of business under the laws of that jurisdiction relating to the practice of accounting.

3. The principal place of business of the limited reciprocity privilege holder is a recognized place of business for the practice of accounting by the business organization.

4. The business organization does not have an office in this state and does not represent that it has an office in this state.

5. The business organization holds an active permit or registration as a certified public accountant firm in another jurisdiction.

6. The practice of accounting is performed by or under the direct supervision of an individual who is qualified for the limited reciprocity privilege under this section.

H. For the purposes of this section, "principal place of business" means the office designated by the individual or firm as the principal location for the individual's or firm's practice of accounting.END_STATUTE

Sec. 6. Section 32-729, Arizona Revised Statutes, is amended to read:

START_STATUTE32-729. Fees

The board shall establish and collect:

1. A uniform fee from an applicant for each initial examination and reexamination application pursuant to section 32-723 to cover reasonable costs of reviewing the applicant's eligibility to take the examination and facilitating the applicant to take the examination until the applicant passes all sections.

2. A uniform fee from each applicant for a certificate to be issued pursuant to section 32-721.

3. A uniform registration fee of at least one hundred $100 and not more than three hundred dollars $300 from each applicant for registration as a certified public accountant pursuant to section 32-730. The registration fee is due during the month of the anniversary of the registrant's birth. Registrants for less than two years shall be charged on a pro rata basis for the remainder of the registration period. The board shall establish and collect a late fee, if applicable, of not more than one hundred dollars $100.

4. A uniform registration fee of at least one hundred dollars $100 and not more than three hundred dollars $300 from each applicant for registration as a firm pursuant to section 32-730. The registration fee is due during the month of the anniversary of the effective date of the firm's formation. Registrants for less than two years shall be charged on a pro rata basis for the remainder of the registration period. The board shall establish and collect a late fee, if applicable, of not more than one hundred dollars $100. The board shall not charge a fee for the registration of additional offices of the same firm or for the registration of a sole proprietorship or an individual who is required to register as a firm pursuant to section 32-731.

5. A uniform application fee in an amount to be determined by the board to reinstate for reinstatement pursuant to this chapter.

6. A uniform registration fee of fifty dollars $50 for retired status registration as described in section 32-730.04. The registration fee is due during the month of the anniversary of the REGISTRANT'S birth. Registrants for less than two years shall be charged on a pro rata basis for the remainder of the registration period. The board shall establish and collect a late fee, if applicable, and it is the intent of the legislature that the fee be not more than one hundred dollars $100. END_STATUTE

Sec. 7. Section 32-730, Arizona Revised Statutes, is amended to read:

START_STATUTE32-730. Biennial registration; continuing professional education

A. Except as provided in subsection B of this section and in section 32-4301, the board shall require every each certified public accountant and firm to register once every two years with the board and pay a registration fee pursuant to section 32-729.

B. The registration fee for certified public accountants may be reduced or waived by the board for registrants with a disability to a degree precluding the continuance of their practice for six months or more prior to before the due date of any renewal registration fee.

C. At the time of registration, every each certified public accountant, as a prerequisite to biennial registration, shall submit to the board satisfactory proof in a manner prescribed by the board that the registrant has completed the continuing professional education requirements established by the board. The board may grant a full or partial exemption from continuing professional education requirements or an extension of time to complete the continuing professional education requirements for registrants on a demonstration of good cause.END_STATUTE

Sec. 8. Section 32-730.02, Arizona Revised Statutes, is amended to read:

START_STATUTE32-730.02. Canceled status

A. A registrant may cancel a certificate or registration by submitting a written request on a form prescribed by the board. A registrant whose certificate or registration is under investigation or a disciplinary order by the board, except for suspension for nonregistration pursuant to section 32-741.01, or against whom disciplinary proceedings have been initiated may not cancel the certificate or registration.

B. An individual whose certificate has been A registrant whose certificate or registration is canceled shall not assume or use the CPA designation while the certificate or registration remains on canceled status unless the individual or firm qualifies for limited reciprocity privilege pursuant to section 32-725.END_STATUTE

Sec. 9. Section 32-730.06, Arizona Revised Statutes, is amended to read:

START_STATUTE32-730.06. Relinquished status; acknowledgment

A. A registrant may relinquish a certificate or firm registration pending or in lieu instead of an investigation or disciplinary proceeding or while under a disciplinary order. The board shall consider a relinquishment tendered by a registrant pursuant to this section and shall determine whether to accept the relinquishment. The board may offer relinquishment to a registrant pursuant to this section. The board shall issue an order documenting its decision.

B. An individual whose certificate, or an individual, sole proprietor or business organization whose firm registration, has been relinquished shall not assume or use the CPA designation.

C. If the board accepts the relinquishment of a certificate of a certified public accountant or registration of a firm, in order to complete the relinquishment the registrant shall acknowledge that an investigation or disciplinary proceedings have proceeding has been initiated against the registrant pursuant to article 3 of this chapter and that the registrant relinquishes the right to practice accounting as a certified public accountant or firm in this state. The registrant shall acknowledge that the registrant understands both of the following:

1. If the registrant chooses to apply for reinstatement of a new certificate or firm registration, the registrant shall meet all requirements for certification or firm registration pursuant to section 32-731 reinstatement pursuant to section 32-732.

2. In deciding whether to issue a new reinstate a certificate or firm registration to the registrant, the board will consider all disciplinary actions currently pending against the registrant and any other matters it the board determines to be appropriate. END_STATUTE

Sec. 10. Section 32-731, Arizona Revised Statutes, is amended to read:

START_STATUTE32-731. Firms; registration requirements; performance of attest services and compilation services; definition

A. Except as provided in section 32-725, subsection G, once every two years each of the following shall pay the registration fee pursuant to section 32-729 and register with the board as a firm:

1. A business organization that meets all of the following criteria:

(a) Has a simple majority of the ownership, in terms of direct and indirect financial interests and voting rights, that belongs to holders in good standing of certificates or licenses as certified public accountants in any jurisdiction.

(b) Has an office in this state.

(i) Performs attest services or compilation services.

(ii) Uses the CPA designation in its firm name.

2. A sole proprietorship that meets all of the following criteria:

(a) Has an owner that is a certified public accountant in good standing in this state.

(b) Has an office in this state.

(i) Performs attest services or compilation services.

(ii) Uses the CPA designation in its business name, unless the business name is the name of the sole proprietor as registered with the board.

3. An individual who meets both of the following criteria:

(a) Is a certified public accountant in good standing in this state.

(b) Either:

(i) Performs attest services or compilation services in this state, other than as an owner or employee of a sole proprietorship or business organization required to register under paragraph 1 or 2 of this subsection or in the capacity as an employee of a governmental entity.

(ii) Uses the CPA designation, unless the name used is the name of the individual as registered with the board.

B. Attest services or compilation services shall be provided only through a registered firm in good standing in this state. Any attest services or compilation services reports issued by a firm must be signed by a person who is certified pursuant to this chapter or qualified to exercise the limited reciprocity privilege pursuant to section 32-725, subsection G.

C. An application or registration pursuant to this section shall be made by an owner of the firm who is a certified public accountant in good standing. A firm that is registered pursuant to this section may use the CPA designation in connection with its firm name as provided for by the board in its rules.

D. A firm that applies or registers pursuant to this section shall list in its application or registration all jurisdictions in which the firm has any disciplinary actions, other than for failure to timely renew a registration, register a license or permit, by any other jurisdiction.

E. Except as provided in subsection F of this section, an applicant for registration or a firm registered pursuant to this section shall notify the board in writing within one month of any change in owners that results in less than a simple majority of the ownership in terms of direct and indirect financial interests and voting rights that belong to holders in good standing of certificates or licenses as certified public accountants in any jurisdiction.

F. The board or the board's executive director may grant a reasonable period of time for the firm to take corrective action to maintain its qualifications as a firm.

G. Professional corporations that are composed of certified public accountants shall meet the requirements of title 10, chapter 20 and any additional nonconflicting requirements contained in this section.

H. Limited liability companies, professional limited liability companies and limited liability partnerships composed of certified public accountants shall meet the requirements of title 29, chapter 5 or 7 and any additional nonconflicting requirements contained in this section.

I. A registrant may not use any firm name other than the firm name that is registered with the board.

J. For the purposes of this section, "good standing" means:

1. For an individual, a status that allows the individual to use the CPA designation and to perform accounting services for a fee or other compensation.

2. For a firm, a status that allows the firm to use the CPA designation. END_STATUTE

Sec. 11. Section 32-732, Arizona Revised Statutes, is amended to read:

START_STATUTE32-732. Reactivation from inactive or retired status; reinstatement from canceled, expired, relinquished or revoked status

A. A certified public accountant with a certificate status of inactive or retired may request that the certified public accountant's certificate be reactivated if all of the following apply:

1. The registrant files an application for renewal on the form prescribed by the board and pays the registration fee pursuant to section 32-729.

2. The registrant submits proof that the registrant has satisfied continuing professional education requirements as prescribed by the board.

3. Either:

(a) The registrant affirms that the registrant has not engaged in any conduct during the period of time that the certificate was in inactive or retired status that would constitute a reason to revoke or suspend the certificate pursuant to section 32-741.

(b) The board determines that good cause exists for the conduct.

B. An individual with a certificate status of canceled, who does not qualify for certification by reciprocity pursuant to section 32-721, subsection C, may request that the individual's certificate be reinstated if all of the following apply:

1. The registrant files an application for reinstatement on the form prescribed by the board and pays the reinstatement application fee pursuant to section 32-729.

2. The registrant submits proof that the registrant has satisfied continuing professional education requirements as prescribed by the board.

3. Either:

(a) The registrant affirms that the individual has not engaged in any conduct during the period of time that the certificate was in canceled status that would constitute a reason to suspend or revoke the certificate pursuant to section 32-741.

(b) The board determines that good cause exists for the conduct.

4. On board approval of reinstatement, pays the registration fee pursuant to section 32-729.

C. An individual with a certificate status of expired, relinquished or revoked may request that the individual's certificate be reinstated if the individual meets all the following requirements:

1. The requirements prescribed by subsection B, paragraphs 1, 2 and 4 of this section.

2. If prescribed by a board relinquishment or revocation order, presents satisfactory evidence from an accredited institution or a college or university that maintains standards comparable to those of an accredited institution that the individual has completed at least one hundred fifty semester hours of education as follows:

(a) At least thirty-six semester hours of accounting courses of which at least thirty semester hours are upper-level courses.

(b) At least thirty semester hours of accounting-related courses. obtained a baccalaureate degree or postbaccalaureate degree. The board shall adopt rules regarding the number of semester hours of accounting courses and related courses required to fulfill this requirement.

3. If prescribed by a board relinquishment or revocation order, presents evidence that the individual has retaken and passed the uniform certified public accountant examination.

4. Demonstrates through substantial evidence presented to the board that the individual is completely rehabilitated with respect to the conduct that was pending or outstanding at the time the certificate was relinquished or revoked or that occurred before or after the certificate expired. Demonstration of rehabilitation includes evidence of the following:

(a) The individual has not engaged in any conduct that, if the individual had been registered during the period the conduct occurred, would have constituted a basis for revocation or suspension pursuant to section 32-741.

(b) The individual's civil rights have been fully restored pursuant to statute or an applicable recognized judicial or gubernatorial order with respect to any criminal conviction that constitutes any part of the basis for the relinquishment or revocation or that occurred before or after the certificate expired.

(c) The individual has addressed or remedied any complaints, investigations or board-ordered requirements that were pending or outstanding at the time of expiration, relinquishment or revocation.

(d) The individual has made restitution as ordered by the board or by a court of competent jurisdiction as a result of the individual's violation of this chapter or rules adopted pursuant to this chapter.

(e) Other evidence of rehabilitation that the board deems appropriate.

D. Except as otherwise provided in subsection C of this section, the board may not issue a certificate to an individual whose certificate has been revoked until five years after the effective date of revocation. If the revocation is based only on section 32-741, subsection A, paragraph 1 or 2 and the criminal conviction is ultimately reversed on appeal, the board shall enter an order vacating the revocation.

E. An individual, sole proprietor or business organization whose firm registration has been canceled may request that the firm registration be reinstated if the individual, sole proprietor or business organization does all of the following:

1. Files an application for reinstatement on the form prescribed by the board and pays the reinstatement application fee pursuant to section 32-729.

2. Meets the requirements of section 32-731.

3. On board approval of reinstatement, pays the registration fee pursuant to section 32-729.

F. An individual, sole proprietor or business organization whose firm registration has expired or been relinquished or revoked may request that the firm registration be reinstated if the individual, sole proprietor or business organization meets all of the following requirements:

1. The requirements prescribed by subsection E of this section.

2. Demonstrates through substantial evidence presented to the board that the firm is completely rehabilitated with respect to the conduct that was pending or outstanding at the time the registration was relinquished or revoked or that occurred before or after the registration expired. Demonstration of rehabilitation includes evidence of the following:

(a) The firm or any owner of the firm has not engaged in any conduct that, if the firm had been registered during the period the conduct occurred, would have constituted a basis for revocation or suspension pursuant to section 32-741.

(b) The firm has addressed or remedied any complaints, investigations or board-ordered requirements that were pending or outstanding at the time of expiration, relinquishment or revocation.

(c) The firm has made restitution as ordered by the board or by a court of competent jurisdiction as a result of any violation of this chapter or rules adopted pursuant to this chapter.

(d) Other evidence of rehabilitation that the board deems appropriate. END_STATUTE

Sec. 12. Section 32-741, Arizona Revised Statutes, is amended to read:

START_STATUTE32-741. Revocation or suspension of certificate or registration; summary suspension; disciplinary actions; 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 jurisdiction or of the United States if civil rights have not been restored pursuant to title 13, chapter 9 or other another applicable recognized judicial or gubernatorial order.

2. Conviction of any crime that has a reasonable relationship to the practice of accounting by a certified 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 under this chapter.

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

5. Discipline to the holder of any certificate or other authority to practice or refusal to renew register the certificate or other authority to practice as a certified public accountant by any other jurisdiction 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 any jurisdiction or federal securities laws.

9. 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 and exchange commission or any other governmental body or agency or the public company accounting oversight board or its successor.

11. Offering or accepting commissions or contingency fees for services rendered for clients for whom attest 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 attest services.

13. Making any false or misleading statement or verification in support of an application for a certificate, registration or permit filed by another person.

14. Making a false or misleading statement:

(a) To the board or its designated agent.

(b) On a form required by the board.

15. Failing to respond in writing or furnish information in a timely manner to the board or its designated agent, if the information is legally requested by the board and is in the registrant's possession or control.

B. Pursuant to title 41, chapter 6, article 10, the board may summarily suspend the certificate of any certified public accountant pending proceedings for revocation or other disciplinary action on the receipt of either of the following:

1. A notice of conviction 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 or of any felony.

2. 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 any jurisdiction or federal securities laws.

C. 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 and even if the person is practicing accounting in a firm that is not registered by the board.

D. 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. END_STATUTE

Sec. 13. Section 32-741.01, Arizona Revised Statutes, is amended to read:

START_STATUTE32-741.01. Suspension for nonregistration; expiration of certificate or registration

A. The certificate or registration of any registrant who fails to timely register and pay the biennial registration fee as required by section 32-729 is automatically suspended without prior notice or a hearing.

B. A registrant whose certificate or registration is suspended shall not assume or use the CPA designation while the registrant's certificate or registration remains on suspended status.

C. A suspension under this section is vacated when the board has determined that the registrant has paid all past due fees and has satisfied all other requirements for renewal registration.

D. If the registrant fails to renew register the registrant's certificate or registration within three months after the date of suspension, the certificate or registration expires. END_STATUTE

Sec. 14. Section 32-741.02, Arizona Revised Statutes, is amended to read:

START_STATUTE32-741.02. Suspension for noncompliance with continuing education requirements; expiration of certificate

A. After notice and an opportunity for a hearing, the board shall suspend the certificate of any registrant who fails to show proof of compliance with the continuing professional education requirements established by the board pursuant to section 32-730.

B. A registrant whose certificate is suspended shall not assume or use the CPA designation while the registrant's certificate remains on suspended status.

C. A suspension issued under this section is vacated when the board has determined that the registrant has complied with the continuing professional education requirements and has satisfied all other requirements for renewal registration.

D. If the registrant fails to meet the requirements of subsection C of this section within six months after the date of suspension, the certificate expires. END_STATUTE

Sec. 15. Section 32-742, Arizona Revised Statutes, is amended to read:

START_STATUTE32-742. Revocation or suspension of firm's registration; failure to register or reinstate; reinstatement; relinquishment

After notice and an opportunity for a hearing, the board may either revoke or suspend a firm's registration or may take disciplinary action for any of the causes enumerated in section 32-741, subsection A or for either of the following:

1. The relinquishment, revocation or suspension of any certificate issued by the board to any owner of the firm. This paragraph does not apply to a suspension for nonregistration pursuant to section 32-741.01.

2. The failure to comply with section 32-731, subsection E. END_STATUTE

Sec. 16. Section 32-743, Arizona Revised Statutes, is amended to read:

START_STATUTE32-743. Disciplinary proceedings; notice; hearings; attorney general representation; judicial review

A. The board may initiate disciplinary proceedings under this chapter, for cause, either on its own motion or a verified complaint pursuant to title 41, chapter 6, article 10.

B. A written notice stating the nature of the charge or charges against the holder of a certificate a registrant and the time and place of the a hearing before the board on the charges shall be served not less than at least twenty days prior to before the date of the hearing either personally or by mailing a copy of the notice, by certified mail, to the address last known to the board.

C. If, after having been served with the notice of hearing, the person fails to appear at the hearing and defend, the board may proceed to hear evidence against the person and may enter such an order as shall be is justified by the evidence.

D. At all hearings the attorney general of this state, one of the attorney general's assistants or a special assistant designated by the attorney general shall appear and represent the board.

E. The decision of the board shall be by majority vote. Any person aggrieved by the decision may file a motion for a rehearing pursuant to title 41, chapter 6, article 10.

F. Except as provided in section 41-1092.08, subsection H, the board's final decision is subject to judicial review pursuant to title 12, chapter 7, article 6. END_STATUTE

Sec. 17. Section 32-749, Arizona Revised Statutes, is amended to read:

START_STATUTE32-749. Confidential nature of information acquired by accountants; privilege; conditions for disclosure; public records; exceptions

A. Certified public accountants registrants practicing in this state shall not be required to divulge, nor shall they voluntarily divulge, client records or information they have received by reason of the confidential nature of their employment. Information derived from or as a result of a professional source shall be kept confidential as provided in this section, but this section does not modify, change or affect the criminal or bankruptcy laws of this state or the United States or limit the authority of this state or any agency of this state to subpoena and use the information in connection with any investigation, public hearing or other proceeding.

B. The board shall not require a registrant to disclose taxpayer information protected from disclosure by section 42-2069 or section 43-381 except as provided by those sections.

C. This section and section 32-744 do not prohibit the disclosure of information for:

1. Compliance with ethical investigations or practice monitoring programs conducted by the board or private professional organizations pursuant to programs preapproved by the board. These programs include, but are not limited to, quality and peer reviews. The scope of quality and peer reviews may include subsequent, remedial or corrective actions. Disclosure of information under this paragraph shall does not destroy its confidentiality and privilege nor or relieve any registrant of the obligation of confidentiality. The registrants to whom the information is provided shall be bound by this section.

2. Access by the board or its duly authorized agents or employees during business hours to examine and copy any documents, reports, records or other physical evidence of any person being investigated by the board on its own motion or as the result of a complaint received, if the documents, reports, records or evidence relates to the competence or professional conduct of the registrant who is being investigated.

D. Records the board maintains in exercising its statutory duties are presumed to be public records pursuant to title 39, chapter 1, article 2 and are generally accessible for inspection and copying. Exceptions to the public records presumption include investigations of registrants, except for continuing professional education audits. The board shall treat as confidential information the complaint, the investigation report, the testimony and documents submitted in support of the complaint or gathered in the investigation, including information obtained pursuant to section 32-721, and any correspondence related to the complaint or investigation. After the initial analysis under section 32-742.01, if the board opens an investigation file on a complaint, the details and records of the complaint and investigation shall remain confidential. However the fact that a complaint or investigation is pending and the nature of the complaint shall be public. The board shall not disclose this confidential information to any person except law enforcement authorities and, to the extent deemed necessary to conduct the investigation, the subject of the investigation, persons whose complaints are being investigated and witnesses questioned in the course of the investigation. Except for client records or information and any information from which the client or the client's property may be identified, the information made confidential under this subsection becomes public record if the board institutes civil enforcement or disciplinary proceedings or issues a consent order in lieu of disciplinary proceedings. If the board dismisses the matter with no disciplinary action, the board may disclose the information relating to the matter only with the consent of the registrant or entity under investigation.END_STATUTE

Sec. 18. Effective date

This act is effective from and after December 31, 2026.

Sec. 19. Short title

This act may be cited as the "Certified Public Accounting Act of 2026".