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Chapter 05 - Territorial Board of Public Accountancy-Rules for Certified Public Accountants and Public Accountants

Chapter 05 - Territorial Board of Public Accountancy-Rules for Certified Public Accountants and Public Accountants

31.0501 Objective.


This chapter has been adopted by the territorial board of public accountancy, hereafter referred to as “board”, and is intended to clarify Chapter 2. Section 31, American Samoa Code (annotated), and to implement the administration thereof to the end that Chapter 31.02, A.S.C.A., may be best effectuated and the public interest most effectively served.

31.0502 Biennial renewal of certificate of registration.


The certificate or registration of each certified public accountant and each registered public accountant shall be renewed biennially by paying the renewal fee on or before December 31 of each odd-numbered year.

31.0503 Notification and filing of names and addresses and changes.


The current mailing address of each certified public accountant, public accountant, and permit holder shall be registered with the board.

The board shall be immediately notified in writing, of all changes.

31.0504 Evidence of authority to practice.


Each permit holder shall at all times display evidence of the authority to practice, together with the certificate or registration and other evidence of current validation,’ in the permit holder’s place of business.

31.0505 Public accounting practice.


(a) The term, “public accounting practice”, also referred to as “public practice”, as used in Chapter 31.02 ASCA and in this chapter means the performing for a client, or a fee basis, one or more types of services rendered by public accountants and the holding out to the public to be a certified public accountant, licensed under 31.0210 A.S.C.A., or a public accountant, licensed under 31.0217 A.S.C.A., as:

(1) A sole practitioner; or

(2) A partner in a partnership of certified public accountant or public accountants or a combination of both; or

(3) A principal in a professional accounting corporation.

(b) the term shall also include a certified public accountant or public accountant employed as a staff employee of the sole practitioner, partnership or professional accounting corporation described in subsection (a).

31.0506 Not in a public accounting practice.


(a) Any certified public accountant, licensed under 31.0210 A.S.C.A., or any public accountant licensed under 31.0217 A.S.C.A., shall be considered not to be in public practice if the person does not obtain a permit to practice under

31.0507 Incidental to his practice in such other state or country.


(a) The meaning of the phrase “incidental to his practice in such other state or country” is to be reviewed annually by the board at its regular April meeting until the meaning in 31.0507(b) ASAC is adopted.

(b) The phrase “incidental to his practice in such other state or country” used in 31.0219(b)(1)

(D) A.S.C.A., shall mean services rendered in this territory by a non-licensee for work performed for a client outside the territory such as the audit of an American Samoa subsidiary of an out-of-state parent corporation, or an audit of an American Samoa branch or division of an out-of-state

partnership, joint venture, or individual proprietorship.

31.0508 Issuance.


A person shall be entitled to the issuance of a certificate of certified public accountant upon application to the board and upon the satisfactory fulfillment of the requirements set forth in 31.0210 A.S.C.A.

31.0509 Application for certificate.


After satisfactorily fulfilling the requirements of 31.0210 A.S.C.A., an application for a certificate of certified public accountant shall be filed not later than 45 days prior to the regular April or October meeting of the board, and shall be accompanied by a fee as provided by the board in accordance with 31.0220(b)(l) A.S.C.A.

31.0510 Competence, trustworthiness, and fairness (references).


(a) Each applicant for a certificate of a certified public accountant shall submit 3 letters of reference, from persons not related to the applicant, attesting to the applicant’s competence, trustworthiness, and fairness.

(b) Each applicant shall also authorize the Board to contact agencies of the American Samoa government and other organizations for information regarding the applicant’s competence, trustworthiness, and fairness.

31.0511 Education.


(a) An applicant for a certificate of certified public accountant shall:

(1) Present satisfactory evidence that the applicant has received a baccalaureate degree which shall have included a minimum of 12 semester hours of upper division, or graduate level accounting and auditing subjects from a university, college, or other 4 year institution of learning accredited by a regional or national accrediting agency or association included in a list of those agencies or associations published

31.0512 Examination.


The examination prescribed in 31.0213 ASCA shall consist of the following:

(1) American Institute of Certified Public Accountants (AICPA) examination; and

(2) Open-book examination. (American Institute of Certified Public Accountants (AICPA) continuing professional education course “Professional Ethics for CPAs”.)

31.0513 AICPA examination.


(a) The board shall use the examination prescribed by the AICPA.

(b) The examination may be taken in the State of Hawaii or at any other authorized testing center. The board will provide appropriate letters requesting that the applicant be allowed to take the examination at that location. As the board prefers to offer the examination in American Samoa, efforts will be continued to establish an authorized -testing center within the territory.

(c) The board will require direct confirmation of an applicant’s examination grades.

performance of audits involving the application of generally accepted accounting principles and generally accepted auditing standards; or

(2) Complete 2 years of professional experience in public accounting practice.

(b) The board shall require all experience to have been of a full-time nature, measured in terms of weeks, and shall require a statement signed, under oath, by a present or former employer in the practice of public accountancy. Full-time employment shall constitute at least 35 hours a week.

31.0516 Issuance.


A person shall be entitled to the issuance of a certificate of public accountant upon application to the board and upon the satisfactory fulfillment of the requirements set forth in 31.0217 A.S.C.A.

31.0517 Application for certificate.


After satisfactorily fulfilling the requirements of 31.0217 A.S.C.A., an application for a certificate of public accountant shall be filed not later than 45 days prior to the regular April or October meeting of the board, and shall be accompanied by a fee as provided by the board in accordance with 31.0220(b)(l) A.S.C.A.

31.0518 Competence, trustworthiness, and fairness (references).


(a) Each applicant for a certificate of public accountant shall submit 3 letters of references, from persons not related to the applicant, attesting to the applicant’s competence, trustworthiness, and fairness.

(b) Each applicant shall also authorize the Board to contact agencies of the American Samoa Government and other organizations for information regarding the applicant’s competence, trustworthiness, and fairness.

31.0519 Examination


The examination for a Certificate of Public Accountant shall consist of the following:

(1) National Society of Public Accountants (NSPA) Public Accountants Examination; and

(2) Open-book examination. (American Institute of Certified Public Accountants (AICPA) continuing professional education course “Professional Ethics for CPAs”.)

31.0520 NSPA examination.


(a) The board shall use the examination prescribed by the NSPA, and shall make all necessary arrangements with the society including the grading of the examination papers. The society’s grading of examination papers shall be subject to the review and approval of the board.

(b) Applications for the examination shall be:

(1) Filed by February 15, immediately preceding the May examination and by August 15, preceding the November examination: and

(2) Accompanied by the examination fee as provided by the board, which shall not be refundable. An application shall not be considered filed until all required documents have been received by the board.

(c) A candidate who, subsequent to filing an application, wishes to postpone taking the examination, shall notify the board in writing at least 30 days prior to the date of the examination, and the fee paid with the application shall be applied to the next succeeding examination. Only one postponement will be allowed. Failure to notify the board in writing within the prescribed time, or otherwise failing to obtain a postponement from the board shall cause the examination fee to be forfeited. For good cause shown, the board may waive the 30 day written, notice and the postponement limitation.

(d) The examination for the certificate of public accountant shall be held in the territory at places designated by the board.

(e) The board may apply security measures which are deemed necessary to confirm the identification of the candidates for examination.

(f) A candidate shall attain a grade of at least 75 in each of he parts of the examination in order to satisfactorily complete the entire examination.

(g) Conditional credits shall be allowed at the first examination in which the candidate obtains a grade of 75 or more in 2 parts or practice alone and a grade of at least 50 on all parts not passed. This minimum grade requirement shall be waived if 3 parts are passed at a single sitting. To add to this conditional status the candidate shall obtain a grade of 75 or more in at least one part and a grade of at least 50 in all parts not passed. While a grade of less than 50 prevents the candidate from adding to the candidate’s conditional status, it alone does not remove or cancel a conditional status previously attained. A conditional status shall expire at the end of the sixth succeeding examination offered from that examination which first placed the candidate on conditional status.

(h) The board shall accept conditional credits for any part or parts of the NSPA examination earned by the candidate and given under the authority of another state; provided, that the candidate had received the grade of at least 75 in each part. However, recognition of conditional credits shall be subject to the limitation set forth in subsection (g).

(i) The board shall waive the examination for a certificate of public accountant, provided that:

(1) With respect to the holder of a valid certificate of PA issued under the laws of another state, the board shall obtain direct confirmation from an appropriate source that the certificate upon which an application for exemption is based is currently valid and unrevoked and was issued on the basis of an examination described at 31.0520(a) ASAC; and

(2) With respect to a holder of a certificate, license, or degree issued by a foreign country, the applicant shall furnish evidence, from a state of the United States, substantiating that the certificate, license, or degree is comparable to a certificate of public accountant of that state and was issued on the basis of an examination described at 31.0520(a) ASAC.

31.0521 Open-book examination.


Each applicant for a certificate of public accountant who has attained a passing score in all parts of the NSPA examination and each applicant who qualified for an exemption from the examination requirements under 31.0520(i) ASAC shall be required to take the AICPA CPE course “Professional Ethics for CPAs” as an open-book examination and receive continuing education credit. The examinations, which shall be administered by the board and at the applicant’s cost, shall be completed in the applicant’s own handwriting and may be retaken until continuing education credit is received.

31.0522 Experience.


(a) The board shall require a person applying for a certificate of public accountant to:

(1) Complete 2 years of public accounting experience with a CPA or PA; or

(2) Complete 5 years of accounting in industry, government or college teaching.

(b) The board shall require that all experience to have been of a full-time nature, measured in terms of weeks, and shall require a statement signed, under oath, by a present or former employer. Full-time employment shall constitute at least 35 hours a week.

31.0523 Requirements.


For a permit to practice public accountancy in any calendar year, a certified public accountant or public accountant, licensed under section 31.02 A.S.C.A., shall file an application which, after December 31, 1988, shall include a certificate of continuing education as specified under Subchapter 6 of these rules.

31.0524 Control and reporting.


(a) For the purpose of this section, a permit shall be obtained whether or not the public accounting practice is:

(1) One of continuation from the prior year;

(2) One to be entered into for the first time; or

(3) One to be resumed after causing to lapse the permit to practice of the prior year or prior years.

(b) For a 1987 permit, an applicant shall file an application prior to the commencement date of the applicant’s public practice. For a permit to practice public accountancy for the year 1988 and each biennium thereafter, the applicant shall file an application, on a form prescribed by the board, at least 30 days prior to the date on which the permit shall become effective;

31.0525 Temporary permit to practice.


An application for a temporary permit to practice, pursuant to 31.0219(b) A.S.C.A., shall be filed on a form prescribed by the board not later than 60 days prior to the commencement of the period covered by the application and shall be accompanied by a statement signed by an official of the jurisdiction which issued the certificate or registration, attesting that the same is currently va1id, and not revoked. The board may waive the filing deadline requirement for good cause.

31.0526 Basic concept.


The overriding consideration in determining whether or not a specific program qualifies as acceptable continuing education is whether the program is a formal program of learning which will contribute directly to the professional competence of a licensee in public practice. Each licensee shall determine the course of study to be pursued by the licensee within the guidelines established by this chapter.

31.0527 Persons covered.


Any person in public accounting practice, regardless of the extent or degree of the practice, shall be covered by this chapter.

31.0528 Basic requirements of study hours.


(a) For the calendar year 1989, each certified public accountant and public accountant shall file, on a form prescribed by the board, a certification as to the completion of at least 40 hours in continuing education programs as set forth in 31.0531 ASAC, except that at least 8 hours of continuing education shall be in subjects pertaining to accounting or auditing as designated by the board, as set forth 31.0539 ASAC.

(1) The certificate of continuing education form shall be filed no later than November 30, 1988.

(2) lf this continuing education requirement is not met, a permit to practice public accounting

during the calendar year ended December 31, 1989 will be suspended, as provided by 31.0221(a)(l) A.S.C.A., until the 1989 continuing education requirement has been satisfied.

(3) The board will not suspend a permit to practice to any applicant who has not fully complied with the 1989 continuing education requirement in cases where failure by the applicant to fulfill the requirement has been caused by reason of:

(a) Health, as certified by a medical doctor; or

(b) Military service on extended active duty with the armed forces of the United States; or

(4) Other good and valid causes, as determined and approved by the board.

(b) For a permit to practice public accountancy covering calendar year 1990, and for each biennium thereafter, an applicant shall file, together with the application for a permit to practice, a certification as to the completion of at least 80 hours in continuing education programs, as set forth in 31.0531 ASAC, except that at least 16 hours of continuing education shall be in subjects

pertaining to accounting or auditing as designated by the board, as set forth in 31.0539 ASAC.

31.0529 Hours which qualify.


Continuing education credit shall be given for whole hours only, with a minimum of 50 minutes constituting one class hour. No credit for continuing education hours shall be allowed for time expended for study outside of the classroom nor shall additional credits be allowed for programs or courses repeated in any single year. The hours spent in continuing education programs shall be measured, as follows:

(1) A one-day program, other than a university or college course, of not less than 6 hours shall equal 8 continuing education hours;

(2) One hour of attendance in a group program, other than a university or college course shall equal one continuing education hour;

(3) Each hour certified by the sponsor of an individual self-study program shall equal one continuing education hour;

(4) An academic credit hour for a semester earned from an accredited university or college as specified in section 31.051 l(a)(l) ASAC shall equal 15 continuing education hours;

(5) An academic credit hour for a quarter earned from an accredited university or college as specified in section 31.05 11 (a)( 1) shall equal 10 continuing education hours;

(6) Each university or college classroom hour in noncredit study shall equal one continuing education hour;

(7) Each hour of university or college classroom work as a teacher, instructor, or lecturer shall equal one continuing education hour; however, the total cumulative continuing education hours earned by this method shall not exceed 40 credit hours towards continuing education in any biennium: credit for tri-semester course shall be awarded only once during a 3 year period;

(8) Each hour spent at a group program, other than a university or college course by a lecturer, discussion leader, or speaker shall equal one continuing education hour if the attendees of the group program shall be able to earn continuing education credit as a result of the attendance; and provided that the total cumulative hours earned by this method shall not exceed 40 credit hours toward continuing education in any biennium; credit for the same course shall be awarded only once during a 3 year period;

(9) Fifty percent of each hour spent as a reviewer at a formally sponsored inter-office or inter-firm quality review program; and provided that the credit shall not exceed 20 continuing education hours in any biennium;

(10) Credit may be allowed for authoring articles and books published in any one year, provided that they contributed to the professional competence of the licensee. Credit for the publications may be given on a self-declaration basis; provided the credit shall not exceed 20 continuing education hours in any biennium; and

(11) An applicant for a permit to practice shall be allowed 80 hours of continuing education credit for passing either the AICPA or NSPA examination for the 2 years following the year in which the applicant is notified of passing the examination or 40 hours for the succeeding year of the permit renewal period; provided credit allowed in the periods specified in this paragraph may not be carried over to any other period.

31.0530 Deficiency in hours and carryover hours.


(a) ln the event an applicant, except as provided in 31.0541 ASAC and except for the requirements for calendar year 1989, is found to be lacking in continuing education hours as of December 31 of any biennium, the applicant shall be required to make up the deficient hours in the following 6 months, in addition to completing the minimum 80 hours of continuing education required for a pen-nit for the following biennium.

(b) In the event the total continuing education hours is found to be in excess of the minimum requirements in any biennium, the applicant may carryover the excess to the

following biennium’s requirements but the carryover shall be limited to 40 hours.

31.0531 Program classifications.


The continuing education programs are classified into 4 categories, as follows:

(1) Group programs which automatically qualify, as prescribed in 31.0534 ASAC;

(2) Individual self-study programs which automatically qualify as prescribed in 31.0535 ASAC;

(3) Group programs which require board approval, as prescribed in 31.0536 ASAC; and

(4) Individual self-study programs which require board approval as prescribed in 31.0537 ASAC.

31.0532 Requirements for group programs.


The requirements of each group program shall be:

(1) That it requires attendance;

(2) That it be at least 50 minutes in duration;

(3) That it is conducted by a qualified instructor or discussion leader;

(4) That its sponsor shall maintain written records of its attendees and of the program outline for a period of 2 years immediately following the conclusion of the program: and

(5) That written evidence of attendance shall be issued to each attendee by the sponsor, with the suggested continuing education credit hours shown thereon, exclusive of any study or preparation time.

31.0533 Requirements for individual self-study programs.


The requirements of each individual self-study program shall be:

(1) That it is conducted by a qualified sponsor;

(2) That a certificate of completion is issued by the sponsor specifying subject matter and recommended continuing education credit hours; and

(3) That its sponsor shall maintain written records of each student and of the program outline for a period of 2 years immediately following the conclusion of the program.

31.0534 Group programs which automatically qualify.


Subject to compliance with the requirements of 31.0532 ASAC, the group programs which automatically qualify shall be:

(1) Professional development courses and other technical sessions of non-profit nationally recognized accounting associations, such as, the American Institute of Certified Public Ac-countants, the National Society of Public Accountants, the American Society of Women Accountants, the National Association of Accountants, the National Association of State Boards of Accountancy, and their respective state societies, chapters, or branches; and

(2) Credit or noncredit courses offered by universities and colleges, provided that the institutions are accredited as specified under 31.0511l(a)(l) ASAC.

31.0535 Individual self-study programs which automatically qualify.


Subject to compliance with the requirements of. 31.0533 ASAC, the individual self-study programs which automatically qualify are educational courses through correspondence, audio-visual methods, and other educational techniques of non-profit nationally recognized accounting associations, such as, the American institute of Certified Public Accountants, the National Society of Public Accountants, the American Society of Women Accountants, the National Association of Accountants, the National Association of State Boards of Accountancy, and their respective state societies, chapters or branches.

31.0536 Group programs which require approval.


Subject to compliance with 31.0532 ASAC, each group program which is not specifically listed under 31.0534 ASAC shall be required to have its sponsor apply for approval of the programs by the board on a form prescribed by the board.

31.0537 Individual self-study programs which require approval.


Subject to compliance with the requirements of 31.0533 ASAC, each individual self-study program which is not specifically listed under 31.0535 ASAC, shall be required to have its sponsor apply to the board on a form prescribed by it, and to obtain the approval of the board of the program.

31.0538 Duration of approval.


The approval by the board of each group program and each individual self-study program shall expire at the conclusion of each program or on December 31 of each year, whichever is later; provided approval may be withdrawn by the board at any time for good cause.

31.0539 List of continuing education subjects.


(a) Subjects qualifying for continuing education under this chapter include, but are not limited to:

(1) Accounting and auditing subjects directly related to the application of auditing procedures and techniques to the usual and customary financial transactions recorded in accounting records or the preparation of financial statements in accordance with generally accepted accounting principles or both;

(2) Taxation;

(3) Management services;

(4) Computer science;

(5) communication arts;

(6) Mathematics, statistics, probability, and quantitative applications to business;

(7) Economics;

(8) Business law;

(9) Functional fields of business, (finance, production, marketing, personnel relations, business organization, and business management);

(10) Social environment of business;

(11) Administrative practice (engagement letters, fees structure, personnel, etc.); and

(12) Specialized financial areas of business, industry, and profession.

(b) In order for a subject to be designated as accounting or auditing for the purposes of 31.0528 ASAC, sponsors shall request approval from the board, citing the reasons why a par¬ticular course or courses should be designated as an accounting or auditing subject.

31.0540 Information requirements.


Accompanying an application for a permit to practice, each certified public accountant and each public accountant shall also file, on a form prescribed by the board, a certification relating to the applicant’s continuing education setting forth the following:

(1) Name of sponsor of course;

(2) Address of sponsor;

(3) Address at which the course was given;

(4) Title of course and description of its contents;

(5) Principal instructor or discussion leader;

(6) Dates attended;

(7) Hours claimed; and

(8) Written evidence of attendance at group programs or completion of individual self study programs.

31.0541 Exceptions.


The board may issue a permit to practice to any applicant who has not fully complied with the continuing education requirement in cases where failure by the applicant to fulfill the requirement has been caused by reason of:

(1) Health, as certified by a medical doctor; or

(2) Military service on extended active duty with the armed forces of the United States; or

(3) Other good and valid causes, as determined and approved by the board.

31.0542 Certification to other jurisdiction.


The board shall certify upon request, to any state as to the compliance with continuing education requirements under the laws of the territory by any of its licensees.

31.0543 Exception for temporary permits.


This subchapter governing continuing education shall not apply to any applicant for a temporary permit to be issued under 31.0219(3)(b) A.S.C.A.

31.0545 Registration.


A professional public accounting corporation shall file an application setting forth the information as may be prescribed or required by the board, and shall furnish the additional information bearing upon the issuance of the license as it requires.

31.0546 Annual report.


each year not later than March 31 of the following year setting forth the information as maybe prescribed or required by the board including:

(1) The names of shareholders and their share of ownership;

(2) The names of directors, officers, licensed employees performing professional services;

(3) Amendments of its articles of association and by-laws during the current year; and

(4) Whether liability insurance with minimum coverage prescribed by 31.0549 ASAC, has been obtained.

31.0547 Capital stock.


A professional public accounting corporation shall provide in its by-laws a provision whereby its capital stock owned by a disqualified persons, or a deceased person, shall be transferred to the corporation provided it has sufficient retained earnings or to its licensed employees, within the time specified by the American Samoa Code Annotated.

31.0548 Professional services.


A professional public accounting corporation shall render the services, as defined in Chapter 2.31, A.S.C.A. It shall render the services through a person who is licensed by the board. A professional public accounting corporation, however, may employ a person, who is not licensed by the board, as is the general pattern in the practice of public accountancy; provided the work of the unlicensed person is performed under the supervision of a licensed person, who shall assume all responsibilities of the professional services.

31.0549 Liability insurance: security.


(a) The board will survey all locally licensed insurance carriers each January to determine the availability and cost of professional liability insurance.

(b) If at its May meeting the board determines that professional liability insurance is offered locally at a cost which the board considers reasonable, all professional accounting corporations will be required to meet the requirements of 31.0549(c), ASAC.

(c) Within 6 months of the notice by the board that it has determined that professional liability insurance is available, a professional public accounting corporation, as a condition of obtaining a certificate pursuant to Chapter 2.31 A.S.C.A., shall provide at least $34,000 for each occurrence and an annual aggregate of $100,000 of professional liability insurance for claims against it arising out of rendering professional service.

31.0550 Independence, integrity, and objectivity.


(a) Independence. A licensee shall not express an opinion on financial statements of an enterprise in a manner as to imply that the licensee is acting as an independent public accountant with respect thereto unless the licensee is independent with respect to the enterprise independence shall be considered to be impaired if, for example:

(1) During the period of the licensee’s professional engagement, or at the time of expressing an opinion, the licensee:

(A) Had or was committed to acquire any direct or material indirect financial interest in the enterprise; or

(B) Was a trustee of any trust or executor or administrator of any estate if the trust or estate had or was committed to acquire any direct or material indirect financial interest in the enterprise; or

(C) Had any joint closely-held business investment with the enterprise or any officer, director, or principal stockholder thereof which was material in relation to the net worth of either the licensee or the enterprise; or (1)) Had any loan to or from the enterprise or any officer, director, or principal stockholder thereof other than loans of the following kinds made by a financial institution under normal lending procedures, terms, and requirements:

(i) Loans obtained by the licensee which are not material in relation to the net worth of the borrower;

(ii) Home mortgages; and

(iii) Other secured loans, except those secured solely by a guarantee of the licensee;

(2) During the period covered by the financial statements, during the period of the professional engagement, or at the time of expressing an opinion, the licensee:

(A) Was connected with the enterprise as a promoter, underwriter, or voting trustee, a director or officer or in any capacity equivalent to a member of management or of an employee; or

(B) Was a trustee of any pension or profit-sharing trust of the enterprise; and

(3) Paragraphs (1) and (2) are not intended to be all inclusive examples.

(b) A licensee, in the performance of professional services shall not knowingly misrepresent facts, and shall not subordinate the licensee’s judgment to others. In tax practice, however, a licensee may resolve doubt in favor of a client as long as there is reasonable support for the position.

(c) A licensee shall not pay a commission to obtain a client, nor accept a commission for a referral to a client of products or services of others. This subsection shall not prohibit payments for the purpose of all, or a material part, of an accounting practice or retirement payments to persons formerly engaged in the practice of public accountancy, or payments to the heirs or estates of those persons.

(d) A licensee shall not offer or perform professional services for a fee which is contingent upon the findings or results of those services; provided this subsection shall not apply to professional services involving federal, territory, state, or other taxes in which the findings are those of the tax authorities and not those of the licensee, nor shall it apply to professional services for which the fees are to be fixed by courts or other public authorities, and which are, therefore, indeterminate in amount of the time the professional services are undertaken.

(e) A licensee shall not concurrently engage in the practice of public accountancy and in any other business or occupation which impairs the licensee’s independence or objectivity in rendering professional services.

31.0551 Competence and technical standards.


(a) A licensee shall not undertake any engagement for the performance of professional services which the licensee cannot reasonably expect to complete with due professional competence, including compliance, where applicable, with 31.0551(b) ASAC and 31.0551(c) ASAC.

(b) A licensee’s name shall not be permitted to be associated with financial statements in a manner as to imply that the licensee is acting as an independent public accountant with respect to the financial statements unless the licensee has complied with applicable generally accepted auditing standards. Statement on Auditing Standards issued by the American institute of Certified Public Accountants, and other pronouncements having similar generally recognized authority, are considered to be interpretations of generally accepted auditing standards, and departures therefrom shall be justified by those who do not follow them.

(c) A licensee shall not express an opinion that financial statements are presented in conformity with generally accepted accounting principles if the financial statements contain any departure from the accounting principles which has a material effect on the financial statements taken as a whole, unless the licensee can demonstrate that by reason of unusual circumstances, the financial statements would otherwise have been misleading. In that case, the licensee’s report shall describe the departure, the approximate effects thereof, if practicable, and the reasons why compliance with the principle would result in a misleading statement. For purposes of this subsection, generally accepted accounting principles are considered to be defined by pronouncements issued by the Financial Accounting Standards Board and its predecessor entities and similar pronouncements issued by other entities having similar generally recognized authority.

(d) A licensee, in the performance of professiona1 services, shall not permit the licensee’s name to be used in conjunction with any forecast of future transactions in a manner which may reasonably lead to the belief that the licensee vouches for the achievability of the forecast.

31.0552 Responsibilities to clients.


(a) A licensee, without the consent of the client shall not disclose any confidential information pertaining to the client obtained in the course of performing professional services.

(b) Subsection (a) does not:

(1) Relieve a licensee of any obligations under 31.0551(b) ASAC and 31.0551(c) ASAC;

(2) Affect in any way a licensee’s obligation to comply with a validly issued subpoena or summons enforceable by order of a court; or

(3) Prohibit disclosures in the course of a quality review of a licensee’ professional services; or

(4) Preclude a licensee from responding to any inquiry made by the board or any investigative or disciplinary body established by law or formally recognized by the board.

(c) Members of the board and professional practice reviewers shall not disclose any confidential client information which comes to their attention from licensees in disciplinary proceedings or otherwise in carrying out their responsibilities, except that they may furnish the information to an investigative or disciplinary body of the kind referred to in subsection (b).

(d) A licensee shall furnish to a client or former client, upon request made within a reasonable time after original issuance of the document in question:

(1) A copy of a tax return of the client;

(2) A copy of any report, or other document, issued by the licensee to or for the client;

(3) Any accounting or other records belonging to, or obtained from or on behalf of, the client which the licensee removed from the client’s premises or received for the client’s account, but the licensee may make and retain copies of the documents when they form the basis of work done; and

(4) A copy of the licensee’s working papers, to the extent that the working papers include records which would ordinarily part of the client’s books and records and are not otherwise available to the client.

31.0553 Other responsibilities and practices.


(a) Discreditable acts. A licensee shall not commit any act which reflects adversely on the licensee’s fitness to engage in the practice of public accountancy.

(b) Acting through others. A licensee shall not permit others to carry out on the licensee’s behalf, either with or without compensation, acts which, if carried out by the licensee, would place the licensee in violation of the rules of conduct.

(c) A licensee shall not use or participate in the use of any form of public communication having reference to the licensee’s professional services which contains a false, fraudulent, misleading, deceptive, or unfair statement or claim. A false, fraudulent, misleading, deceptive, or unfair statement or claim includes but is not limited to a statement or claim which:

(1) Contains a misrepresentation of fact; or

(2) Is likely to mislead or deceive because it fails to make full disclosure of relevant facts; or

(3) Contains any testimonial or laudatory statement, or other statement or implication that the licensee’s professional services are of exceptional quality; or

(4) Is intended or likely to create false or unjustified expectations of favorable results; or

(5) Implies educational or professional attainments or licensing recognition not supported in fact; or

(6) States or implies that the licensee has received formal recognition as a specialist in any aspect of the practice of public accountancy, if this is not the case; or or will be competently performed for a stated fee when this is not the case, or makes representations with respect to fees for professional services that do not disclose all variables affecting the fees that will be charged; or

(8) Contains other representations or modifications that in reasonable probability will cause an ordinarily prudent person to misunderstand or be deceived.

(d) A licensee shall not by any direct personal communication solicit an engagement to perform professional services:

(1) If the communication would violate 31.0553(c) ASAC and it were a public communication; or

(2) By the use of coercion, duress, compulsion, intimidation, threats, overreaching, or vexations or harassing conduct.

(e) A licensee shall not practice public accountancy under a firm name which is misleading in any way, as to the legal form of the firm, or as to the persons who are sole practitioners, partners, officers, or shareholders of the firm, or as to any matter with respect to which public communications are restricted by 31.0553(c) ASAC. A firm name shall not be used by a licensee in the practice of public accountancy unless the name has been registered with and approved by the board. However, names of one or more past partners or shareholders may be included in the firm name of a partnership or corporation or its successor, and a partner surviving the death or withdrawal of all other partners may continue to practice under a partnership name for up to 2 years after becoming a sole practitioner.

(f) A licensee, when requested, shall respond to communications from the board within 30 days of the mailing of the communications by registered or certified mail.