SB0899 100TH GENERAL ASSEMBLY

  
  

 


 
100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB0899

 

Introduced 2/7/2017, by Sen. Pamela J. Althoff

 

SYNOPSIS AS INTRODUCED:
 
225 ILCS 450/0.03  from Ch. 111, par. 5500.03
225 ILCS 450/5.2
225 ILCS 450/13  from Ch. 111, par. 5514
225 ILCS 450/16  from Ch. 111, par. 5517

    Amends the Illinois Public Accounting Act. Allows a certified public accountant (CPA) firm whose principal place of business is not in this State to have all the privileges of a CPA firm licensed under the Act without the need to obtain a license from the Department of Financial and Professional Regulation or to file notice with the Department if the CPA firm complies with specified substantial equivalency requirements; makes conforming changes. Provides that firms that do not meet the certain requirements but offer or render services in the State must hold a license issued under the Act. Provides that every application for renewal of a license by a licensed CPA who has been licensed under the Act for 3 years of more shall be accompanied or supported by evidence showing the completion of professional education as prescribed by Department rule (rather than showing the completion of 120 hours of continuing professional education each 3 years as prescribed by Department rule) and makes related changes. Effective immediately.


LRB100 05774 SMS 15797 b

 

 

A BILL FOR

 

SB0899LRB100 05774 SMS 15797 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Public Accounting Act is amended by
5changing Sections 0.03, 5.2, 13, and 16 as follows:
 
6    (225 ILCS 450/0.03)  (from Ch. 111, par. 5500.03)
7    (Section scheduled to be repealed on January 1, 2024)
8    Sec. 0.03. Definitions. As used in this Act, unless the
9context otherwise requires:
10    "Accountancy activities" means the services as set forth in
11Section 8.05 of the Act.
12    "Address of record" means the designated address recorded
13by the Department in the applicant's, licensee's, or
14registrant's application file or license file maintained by the
15Department's licensure maintenance unit. It is the duty of the
16applicant, licensee, or registrant to inform the Department of
17any change of address, and those changes must be made either
18through the Department's website or by directly contacting the
19Department.
20    "Certificate" means a certificate issued by the Board or
21University or similar jurisdictions specifying an individual
22has successfully passed all sections and requirements of the
23Uniform Certified Public Accountant Examination. A certificate

 

 

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1issued by the Board or University or similar jurisdiction does
2not confer the ability to use the CPA title and is not
3equivalent to a registration or license under this Act.
4    "Compilation" means providing a service to be performed in
5accordance with Statements on Standards for Accounting and
6Review Services that is presented in the form of financial
7statements or information that is the representation of
8management or owners without undertaking to express any
9assurance on the statements.
10    "CPA" or "C.P.A." means a certified public accountant who
11holds a license or registration issued by the Department or an
12individual authorized to use the CPA title under Section 5.2 of
13this Act.
14    "CPA firm" means a sole proprietorship, a corporation,
15registered limited liability partnership, limited liability
16company, partnership, professional service corporation, or any
17other form of organization issued a license in accordance with
18this Act or a CPA firm authorized to use the CPA firm title
19under Section 5.2 of this Act.
20    "CPA (inactive)" means a licensed certified public
21accountant who elects to have the Department place his or her
22license on inactive status pursuant to Section 17.2 of this
23Act.
24    "Financial statement" means a structured presentation of
25historical financial information, including, but not limited
26to, related notes intended to communicate an entity's economic

 

 

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1resources and obligations at a point in time or the changes
2therein for a period of time in accordance with generally
3accepted accounting principles (GAAP) or other comprehensive
4basis of accounting (OCBOA).
5    "Other attestation engagements" means an engagement
6performed in accordance with the Statements on Standards for
7Attestation Engagements.
8    "Registered Certified Public Accountant" or "registered
9CPA" means any person who has been issued a registration under
10this Act as a Registered Certified Public Accountant.
11    "Report", when used with reference to financial
12statements, means an opinion, report, or other form of language
13that states or implies assurance as to the reliability of any
14financial statements and that also includes or is accompanied
15by any statement or implication that the person or firm issuing
16it has special knowledge or competence in accounting or
17auditing. Such a statement or implication of special knowledge
18or competence may arise from use by the issuer of the report of
19names or titles indicating that the person or firm is an
20accountant or auditor, or from the language of the report
21itself. "Report" includes any form of language that disclaims
22an opinion when the form of language is conventionally
23understood to imply any positive assurance as to the
24reliability of the financial statements referred to or special
25competence on the part of the person or firm issuing such
26language; it includes any other form of language that is

 

 

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1conventionally understood to imply such assurance or such
2special knowledge or competence.
3    "Licensed Certified Public Accountant" or "licensed CPA"
4means any person licensed under this Act as a Licensed
5Certified Public Accountant.
6    "Committee" means the Public Accountant Registration and
7Licensure Committee appointed by the Secretary.
8    "Department" means the Department of Financial and
9Professional Regulation.
10    "License", "licensee", and "licensure" refer to the
11authorization to practice under the provisions of this Act.
12    "Peer review" means a study, appraisal, or review of one or
13more aspects of a CPA firm's or sole practitioner's compliance
14with applicable accounting, auditing, and other attestation
15standards adopted by generally recognized standard-setting
16bodies.
17    "Principal place of business" means the office location
18designated by the licensee from which the person directs,
19controls, and coordinates his or her professional services.
20    "Review committee" means any person or persons conducting,
21reviewing, administering, or supervising a peer review
22program.
23    "Secretary" means the Secretary of the Department of
24Financial and Professional Regulation.
25    "University" means the University of Illinois.
26    "Board" means the Board of Examiners established under

 

 

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1Section 2.
2    "Registration", "registrant", and "registered" refer to
3the authorization to hold oneself out as or use the title
4"Registered Certified Public Accountant" or "Certified Public
5Accountant", unless the context otherwise requires.
6    "Peer Review Administrator" means an organization
7designated by the Department that meets the requirements of
8subsection (f) of Section 16 of this Act and other rules that
9the Department may adopt.
10(Source: P.A. 98-254, eff. 8-9-13; 99-78, eff. 7-20-15.)
 
11    (225 ILCS 450/5.2)
12    (Section scheduled to be repealed on January 1, 2024)
13    Sec. 5.2. Substantial equivalency.
14    (a) An individual whose principal place of business is not
15in this State shall have all the privileges of a person
16licensed under this Act as a licensed CPA without the need to
17obtain a license from the Department or to file notice with the
18Department, if the individual:
19        (1) holds a valid license as a certified public
20    accountant issued by another state that the National
21    Qualification Appraisal Service of the National
22    Association of State Boards of Accountancy has verified to
23    be in substantial equivalence with the CPA licensure
24    requirements of the Uniform Accountancy Act of the American
25    Institute of Certified Public Accountants and the National

 

 

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1    Association of State Boards of Accountancy; or
2        (2) holds a valid license as a certified public
3    accountant issued by another state and obtains from the
4    National Qualification Appraisal Service of the National
5    Association of State Boards of Accountancy verification
6    that the individual's CPA qualifications are substantially
7    equivalent to the CPA licensure requirements of the Uniform
8    Accountancy Act of the American Institute of Certified
9    Public Accountants and the National Association of State
10    Boards of Accountancy; however, any individual who has
11    passed the Uniform CPA Examination and holds a valid
12    license issued by any other state prior to January 1, 2012
13    shall be exempt from the education requirements of Section
14    3 of this Act for the purposes of this item (2).
15    (a-5) A CPA firm whose principal place of business is not
16in this State shall have all the privileges of a CPA firm
17licensed under this Act without the need to obtain a license
18from the Department or to file notice with the Department if
19the CPA firm complies with the requirements outlined in
20Sections 14.4 and 16 through substantial equivalency of their
21licensed state.
22    (b) Notwithstanding any other provision of law, an
23individual or CPA firm who offers or renders professional
24services under this Section, whether in person or by mail,
25telephone, or electronic means, shall be granted practice
26privileges in this State and no notice or other submission must

 

 

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1be provided by any such individual or CPA firm.
2    (c) An individual licensee or CPA firm of another state who
3is exercising the privilege afforded under this Section and the
4CPA firm that employs such individual licensee, if any, as a
5condition of the grant of this privilege, hereby simultaneously
6consents:
7        (1) to the personal and subject matter jurisdiction and
8    disciplinary authority of the Department;
9        (2) to comply with this Act and the Department's rules
10    adopted under this Act;
11        (3) that in the event that the license from the state
12    of the individual's or CPA firm's principal place of
13    business is no longer valid, the individual or CPA firm
14    shall cease offering or rendering accountancy activities
15    as outlined in paragraphs (1) and (2) of Section 8.05 in
16    this State individually or on behalf of a CPA firm; and
17        (4) to the appointment of the state board that issued
18    the individual's or the CPA firm's license as the agent
19    upon which process may be served in any action or
20    proceeding by the Department against the individual or CPA
21    firm.
22    (d) An individual licensee who qualifies for practice
23privileges under this Section who, for any entity headquartered
24in this State, performs (i) a financial statement audit or
25other engagement in accordance with Statements on Auditing
26Standards; (ii) an examination of prospective financial

 

 

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1information in accordance with Statements on Standards for
2Attestation Engagements; or (iii) an engagement in accordance
3with Public Company Accounting Oversight Board Auditing
4Standards may only do so through a CPA firm licensed under this
5Act or a CPA firm with practice privileges under this Section.
6    (e) A CPA firm that qualifies for practice privileges under
7this Section and, for any entity headquartered in this State,
8performs the following may only do so through an individual or
9individuals licensed under this Act or an individual or
10individuals with practice privileges under this Section:
11        (1) a financial statement audit or other engagement in
12    accordance with Statements on Auditing Standards;
13        (2) an examination of prospective financial
14    information in accordance with Statements on Standards for
15    Attestation Engagements; or
16        (3) an engagement in accordance with Public Company
17    Accounting Oversight Board auditing standards.
18(Source: P.A. 98-254, eff. 8-9-13.)
 
19    (225 ILCS 450/13)  (from Ch. 111, par. 5514)
20    (Section scheduled to be repealed on January 1, 2024)
21    Sec. 13. Application for licensure.
22    (a) A person or CPA firm that wishes to perform accountancy
23activities in this State, as defined in paragraph (1) of
24subsection (a) of Section 8.05 of this Act, or use the CPA
25title shall make application to the Department and shall pay

 

 

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1the fee required by rule.
2    Applicants have 3 years from the date of application to
3complete the application process. If the process has not been
4completed in 3 years, the application shall be denied, the fee
5forfeited and the applicant must reapply and meet the
6requirements in effect at the time of reapplication.
7    (b) Any CPA firm that (i) has an office in this State that
8uses the title "CPA" or "CPA firm"; (ii) has an office in this
9State that performs accountancy activities, as defined in
10paragraph (1) of subsection (a) of Section 8.05 of this Act; or
11(iii) does not have an office in this State and does not meet
12the practice privilege requirements as defined in Section 5.2
13of this Act, but offers or renders performs services, as set
14forth in subsection (e) (d) of Section 5.2 of this Act, for a
15client that is headquartered in this State must hold a license
16as a CPA firm issued under this Act.
17    (c) (Blank). A CPA firm that does not have an office in
18this State may perform a review of a financial statement in
19accordance with the Statements on Standards for Accounting and
20Review Services for a client with its headquarters in this
21State and may use the title "CPA" or "CPA firm" without
22obtaining a license as a CPA firm under this Act, only if the
23firm (i) performs such services through individuals with
24practice privileges under Section 5.2 of this Act; (ii)
25satisfies any peer review requirements in those states in which
26the individuals with practice privileges under Section 5.2 have

 

 

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1their principal place of business; and (iii) meets the
2qualifications set forth in paragraph (1) of Section 14.4 of
3this Act.
4    (d) A CPA firm that is not subject to the requirements of
5subsection (b) or (c) of this Section may perform professional
6services that are not regulated under subsection (b) or (c) of
7this Section while using the title "CPA" or "CPA firm" in this
8State without obtaining a license as a CPA firm under this Act
9if the firm (i) performs such services through individuals with
10practice privileges under Section 5.2 of this Act and (ii) may
11lawfully perform such services in the state where those
12individuals with practice privileges under Section 5.2 of this
13Act have their principal place of business.
14(Source: P.A. 98-254, eff. 8-9-13.)
 
15    (225 ILCS 450/16)  (from Ch. 111, par. 5517)
16    (Section scheduled to be repealed on January 1, 2024)
17    Sec. 16. Expiration and renewal of licenses; renewal of
18registration; continuing education; peer review.
19    (a) The expiration date and renewal period for each license
20or registration issued under this Act shall be set by rule.
21    (b) Every holder of a license or registration under this
22Act may renew such license or registration before the
23expiration date upon payment of the required renewal fee as set
24by rule.
25    (c) Every application for renewal of a license by a

 

 

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1licensed CPA who has been licensed under this Act for 3 years
2or more shall be accompanied or supported by any evidence the
3Department shall prescribe, in satisfaction of completing,
4each 3 years, not less than 120 hours of continuing
5professional education as prescribed by Department rules. Of
6the 120 hours, not less than 4 hours shall be courses covering
7the subject of professional ethics. All continuing education
8sponsors applying to the Department for registration shall be
9required to submit an initial nonrefundable application fee set
10by Department rule. Each registered continuing education
11sponsor shall be required to pay an annual renewal fee set by
12Department rule. Publicly supported colleges, universities,
13and governmental agencies located in Illinois are exempt from
14payment of any fees required for continuing education sponsor
15registration. Failure by a continuing education sponsor to be
16licensed or pay the fees prescribed in this Act, or to comply
17with the rules and regulations established by the Department
18under this Section regarding requirements for continuing
19education courses or sponsors, shall constitute grounds for
20revocation or denial of renewal of the sponsor's registration.
21    (d) Licensed CPAs are exempt from the continuing
22professional education requirement for the first renewal
23period following the original issuance of the license.
24    Failure by an applicant for renewal of a license as a
25licensed CPA to furnish the evidence shall constitute grounds
26for disciplinary action, unless the Department in its

 

 

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1discretion shall determine the failure to have been due to
2reasonable cause. The Department, in its discretion, may renew
3a license despite failure to furnish evidence of satisfaction
4of requirements of continuing education upon condition that the
5applicant follow a particular program or schedule of continuing
6education. In issuing rules and individual orders in respect of
7requirements of continuing education, the Department in its
8discretion may, among other things, use and rely upon
9guidelines and pronouncements of recognized educational and
10professional associations; may prescribe rules for the
11content, duration, and organization of courses; shall take into
12account the accessibility to applicants of such continuing
13education as it may require, and any impediments to interstate
14practice of public accounting that may result from differences
15in requirements in other states; and may provide for relaxation
16or suspension of requirements in regard to applicants who
17certify that they do not intend to engage in the performance of
18accountancy activities, and for instances of individual
19hardship.
20    The Department shall establish by rule a means for the
21verification of completion of the continuing education
22required by this Section. This verification may be accomplished
23through audits of records maintained by licensees; by requiring
24the filing of continuing education certificates with the
25Department; or by other means established by the Department.
26    The Department may establish, by rule, guidelines for

 

 

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1acceptance of continuing education on behalf of licensed CPAs
2taking continuing education courses in other jurisdictions.
3    (e) For renewals on and after July 1, 2012, as a condition
4for granting a renewal license to CPA firms and sole
5practitioners who perform accountancy activities outlined in
6paragraph (1) of subsection (a) of Section 8.05 under this Act,
7the Department shall require that the CPA firm or sole
8practitioner satisfactorily complete a peer review during the
9immediately preceding 3-year period, accepted by a Peer Review
10Administrator in accordance with established standards for
11performing and reporting on peer reviews, unless the CPA firm
12or sole practitioner is exempted under the provisions of
13subsection (i) of this Section. A CPA firm or sole practitioner
14shall, at the request of the Department, submit to the
15Department a letter from the Peer Review Administrator stating
16the date on which the peer review was satisfactorily completed.
17    A new CPA firm or sole practitioner shall not be required
18to comply with the peer review requirements for the first
19license renewal. A CPA firm or sole practitioner shall undergo
20its first peer review during the first full renewal cycle after
21it is granted its initial license.
22    The requirements of this subsection (e) shall not apply to
23any person providing services requiring a license under this
24Act to the extent that such services are provided in the
25capacity of an employee of the Office of the Auditor General or
26to a nonprofit cooperative association engaged in the rendering

 

 

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1of licensed service to its members only under paragraph (3) of
2Section 14.4 of this Act or any of its employees to the extent
3that such services are provided in the capacity of an employee
4of the association.
5    (f) The Department shall approve only Peer Review
6Administrators that the Department finds comply with
7established standards for performing and reporting on peer
8reviews. The Department may adopt rules establishing
9guidelines for peer reviews, which shall do all of the
10following:
11        (1) Require that a peer review be conducted by a
12    reviewer that is independent of the CPA firm reviewed and
13    approved by the Peer Review Administrator under
14    established standards.
15        (2) Other than in the peer review process, prohibit the
16    use or public disclosure of information obtained by the
17    reviewer, the Peer Review Administrator, or the Department
18    during or in connection with the peer review process. The
19    requirement that information not be publicly disclosed
20    shall not apply to a hearing before the Department that the
21    CPA firm or sole practitioner requests be public or to the
22    information described in paragraph (3) of subsection (i) of
23    this Section.
24    (g) If a CPA firm or sole practitioner fails to
25satisfactorily complete a peer review as required by subsection
26(e) of this Section or does not comply with any remedial

 

 

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1actions determined necessary by the Peer Review Administrator,
2the Peer Review Administrator shall notify the Department of
3the failure and shall submit a record with specific references
4to the rule, statutory provision, professional standards, or
5other applicable authority upon which the Peer Review
6Administrator made its determination and the specific actions
7taken or failed to be taken by the licensee that in the opinion
8of the Peer Review Administrator constitutes a failure to
9comply. The Department may at its discretion or shall upon
10submission of a written application by the CPA firm or sole
11practitioner hold a hearing under Section 20.1 of this Act to
12determine whether the CPA firm or sole practitioner has
13complied with subsection (e) of this Section. The hearing shall
14be confidential and shall not be open to the public unless
15requested by the CPA firm or sole practitioner.
16    (h) The CPA firm or sole practitioner reviewed shall pay
17for any peer review performed. The Peer Review Administrator
18may charge a fee to each firm and sole practitioner sufficient
19to cover costs of administering the peer review program.
20    (i) A CPA firm or sole practitioner shall not be required
21to comply with the peer review requirements if:
22        (1) Within 3 years before the date of application for
23    renewal licensure, the sole practitioner or CPA firm has
24    undergone a peer review conducted in another state or
25    foreign jurisdiction that meets the requirements of
26    paragraphs (1) and (2) of subsection (f) of this Section.

 

 

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1    The sole practitioner or CPA firm shall, at the request of
2    the Department, submit to the Department a letter from the
3    organization administering the most recent peer review
4    stating the date on which the peer review was completed; or
5        (2) Within 2 years before the date of application for
6    renewal licensure, the sole practitioner or CPA firm
7    satisfies all of the following conditions:
8            (A) has not accepted or performed any accountancy
9        activities outlined in paragraph (1) of subsection (a)
10        of Section 8.05 of this Act; and
11            (B) the firm or sole practitioner agrees to notify
12        the Peer Review Administrator within 30 days of
13        accepting an engagement for services requiring a
14        license under this Act and to undergo a peer review
15        within 18 months after the end of the period covered by
16        the engagement; or
17        (3) For reasons of personal health, military service,
18    or other good cause, the Department determines that the
19    sole practitioner or firm is entitled to an exemption,
20    which may be granted for a period of time not to exceed 12
21    months.
22    (j) If a peer review report indicates that a CPA firm or
23sole practitioner complies with the appropriate professional
24standards and practices set forth in the rules of the
25Department and no further remedial action is required, the Peer
26Review Administrator shall, after issuance of the final letter

 

 

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1of acceptance, destroy all working papers and documents related
2to the peer review, other than report-related documents and
3documents evidencing completion of remedial actions, if any, in
4accordance with rules established by the Department.
5    (k) (Blank).
6(Source: P.A. 98-254, eff. 8-9-13; 98-730, eff. 1-1-15.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.