| 3 | 2 | | *LGL122* 03/11/2025 2:19:18 PM LGL122 |
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| 4 | 3 | | State of Arkansas 1 |
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| 5 | 4 | | 95th General Assembly A Bill 2 |
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| 6 | 5 | | Regular Session, 2025 SENATE BILL 432 3 |
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| 7 | 6 | | 4 |
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| 8 | 7 | | By: Senator J. Petty 5 |
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| 9 | 8 | | By: Representative Warren 6 |
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| 10 | 9 | | 7 |
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| 11 | 10 | | For An Act To Be Entitled 8 |
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| 12 | 11 | | AN ACT TO AMEND THE LAW CONCERNING ACCOUNTANTS; TO 9 |
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| 13 | 12 | | AMEND THE DEFINITION OF SUBSTANTIAL EQUIVALENCY FOR 10 |
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| 14 | 13 | | THE PRACTICE OF ACCOUNTANCY; AND FOR OTHER PURPOSES. 11 |
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| 15 | 14 | | 12 |
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| 16 | 15 | | 13 |
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| 17 | 16 | | Subtitle 14 |
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| 18 | 17 | | TO AMEND THE LAW CONCERNING ACCOUNTANTS; 15 |
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| 19 | 18 | | AND TO AMEND THE DEFINITION OF 16 |
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| 20 | 19 | | SUBSTANTIAL EQUIVALENCY FOR THE PRACTICE 17 |
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| 21 | 20 | | OF ACCOUNTANCY. 18 |
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| 22 | 21 | | 19 |
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| 23 | 22 | | BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 20 |
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| 24 | 23 | | 21 |
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| 25 | 24 | | SECTION 1. Arkansas Code § 17 -12-306(d), concerning examination fees 22 |
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| 26 | 25 | | for the initial licensure of an accountant, is amended to read as follows: 23 |
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| 27 | 26 | | (d)(1) The Except as provided under subdivision (d)(2) of this 24 |
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| 28 | 27 | | section, the applicable fees payable pursuant to this section shall be paid 25 |
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| 29 | 28 | | by the applicant at the time he or she applies for examination or 26 |
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| 30 | 29 | | reexamination. 27 |
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| 31 | 30 | | (2) An applicant eligible for a program of the board in which 28 |
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| 32 | 31 | | the board waives or assumes any applicable examination fees is not required 29 |
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| 33 | 32 | | to pay a fee at the time he or she applies for examination or reexamination 30 |
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| 34 | 33 | | under subdivision (d)(1) of this section. 31 |
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| 35 | 34 | | 32 |
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| 36 | 35 | | SECTION 2. The introductory language of Arkansas Code § 17 -12-308(a), 33 |
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| 37 | 36 | | concerning reciprocity for the licensure of an accountant, is amended to read 34 |
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| 38 | 37 | | as follows: 35 |
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| 39 | 38 | | (a) With regard to applicants that do not qualify for reciprocity 36 SB432 |
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| 40 | 39 | | |
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| 42 | 41 | | under the substantial equivalency standard set out in § 17-12-311, the The 1 |
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| 43 | 42 | | Arkansas State Board of Public Accountancy shall issue a certificate as a 2 |
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| 44 | 43 | | certified public accountant to a holder of a certificate, license, or permit 3 |
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| 45 | 44 | | issued by another state upon a showing that: 4 |
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| 46 | 45 | | 5 |
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| 47 | 46 | | SECTION 3. Arkansas Code § 17 -12-309(a), concerning experience 6 |
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| 48 | 47 | | requirements for the initial issuance of a certificate for an accountant, is 7 |
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| 49 | 48 | | amended to read as follows: 8 |
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| 50 | 49 | | (a) An applicant for initial issuance of a certificate under this 9 |
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| 51 | 50 | | subchapter shall show that the applicant has had at least one (1) year of 10 |
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| 52 | 51 | | experience. 11 |
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| 53 | 52 | | 12 |
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| 54 | 53 | | SECTION 4. Arkansas Code § 17 -12-311 is amended to read as follows: 13 |
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| 55 | 54 | | 17-12-311. Substantial equivalency. 14 |
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| 56 | 55 | | (a)(1) An individual whose principal place of business is not in this 15 |
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| 57 | 56 | | state and who holds a valid license as a certified public accountant from a 16 |
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| 58 | 57 | | state which the NASBA National Qualification Appraisal Service has verified 17 |
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| 59 | 58 | | to be in substantial equivalence with the CPA licensure requirements of the 18 |
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| 60 | 59 | | AICPA/NASBA Uniform Accountancy Act: To promote the professional practice of 19 |
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| 61 | 60 | | accountancy within and outside the State of Arkansas, the Arkansas State 20 |
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| 62 | 61 | | Board of Public Accountancy may: 21 |
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| 63 | 62 | | (A)(1) Shall be presumed to have qualifications 22 |
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| 64 | 63 | | substantially equivalent to this state's requirements; Determine substantial 23 |
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| 65 | 64 | | equivalency requirements and provide the parameters encompassing substantial 24 |
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| 66 | 65 | | equivalency; and 25 |
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| 67 | 66 | | (B)(2) Shall have all the privileges of licensees of this 26 |
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| 68 | 67 | | state without the need to obtain a certificate under § 17 -12-301 or § 17-12-27 |
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| 69 | 68 | | 308 or a license under § 17 -12-313 or § 17-12-501; and Promulgate any rules 28 |
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| 70 | 69 | | necessary to define or promote substantial equivalency and provide the 29 |
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| 71 | 70 | | parameters encompassing substantial equivalency. 30 |
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| 72 | 71 | | (C) May offer or render professional services in person, 31 |
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| 73 | 72 | | by mail, by telephone, or by electronic means without notifying the Arkansas 32 |
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| 74 | 73 | | State Board of Public Accountancy or paying a fee. 33 |
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| 75 | 74 | | (2)(A) An individual whose principal place of business is not in 34 |
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| 76 | 75 | | this state and who holds a valid license as a certified public accountant 35 |
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| 77 | 76 | | from a state which the NASBA National Qualification Appraisal Service has not 36 SB432 |
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| 78 | 77 | | |
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| 80 | 79 | | verified to be in substantial equivalence with the CPA licensure requirements 1 |
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| 81 | 80 | | of the AICPA/NASBA Uniform Accountancy Act: 2 |
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| 82 | 81 | | (i) Shall be presumed to have qualifications 3 |
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| 83 | 82 | | substantially equivalent to the requirements of this state; 4 |
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| 84 | 83 | | (ii) Shall have all the privileges of licensees of 5 |
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| 85 | 84 | | this state without the need to obtain a certificate under § 17 -12-301 or § 6 |
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| 86 | 85 | | 17-12-308 or a license under § 17 -12-313 or § 17-12-501 if the individual 7 |
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| 87 | 86 | | obtains from the NASBA National Qualification Appraisal Service verification 8 |
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| 88 | 87 | | that the individual's CPA qualifications are substantially equivalent to the 9 |
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| 89 | 88 | | CPA licensure requirements of the AICPA/NASBA Uniform Accountancy Act; and 10 |
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| 90 | 89 | | (iii) May offer or render professional services, 11 |
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| 91 | 90 | | whether in person, by mail, by telephone, or by electronic means without 12 |
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| 92 | 91 | | notifying the board or paying a fee. 13 |
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| 93 | 92 | | (B) An individual who passed the Uniform CPA Examination 14 |
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| 94 | 93 | | and holds a valid license issued by any other state before January 1, 2012, 15 |
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| 95 | 94 | | may be exempt from the education requirement in § 17 -12-302 for purposes of 16 |
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| 96 | 95 | | this subdivision (a)(2). 17 |
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| 97 | 96 | | (3) An individual licensee of another state exercising the 18 |
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| 98 | 97 | | privilege afforded under this section and the firm that employs that 19 |
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| 99 | 98 | | individual licensee consent and agree, as a condition of the exercise of this 20 |
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| 100 | 99 | | privilege to: 21 |
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| 101 | 100 | | (A) The personal and subject matter jurisdiction and 22 |
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| 102 | 101 | | disciplinary authority of the board; 23 |
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| 103 | 102 | | (B) Comply with this chapter and the board's rules; 24 |
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| 104 | 103 | | (C) Cease offering or rendering professional services in 25 |
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| 105 | 104 | | this state individually and on behalf of a firm if the license from the state 26 |
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| 106 | 105 | | of the individual's principal place of business is no longer valid; and 27 |
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| 107 | 106 | | (D) The appointment of the board that issued his or her 28 |
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| 108 | 107 | | license as his or her agent upon whom process may be served in an action or 29 |
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| 109 | 108 | | proceeding by the board against the licensee. 30 |
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| 110 | 109 | | (4) An individual who qualifies for practice privileges under 31 |
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| 111 | 110 | | this section may perform the following services for a client with its home 32 |
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| 112 | 111 | | office in this state only through a firm that has registered under § 17 -12-33 |
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| 113 | 112 | | 401: 34 |
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| 114 | 113 | | (A) A financial statement audit or other engagement to be 35 |
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| 115 | 114 | | performed in accordance with the “Statements on Auditing Standards”; 36 SB432 |
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| 116 | 115 | | |
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| 118 | 117 | | (B) An examination of prospective financial information to 1 |
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| 119 | 118 | | be performed in accordance with “Statements on Standards for Attestation 2 |
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| 120 | 119 | | Engagements”; or 3 |
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| 121 | 120 | | (C) An engagement to be performed in accordance with PCAOB 4 |
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| 122 | 121 | | standards. 5 |
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| 123 | 122 | | (b) A licensee of this state offering or rendering services or using 6 |
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| 124 | 123 | | his or her CPA title in another state shall be subject to disciplinary action 7 |
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| 125 | 124 | | in this state for an act committed in another state for which the licensee 8 |
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| 126 | 125 | | would be subject to discipline for an act committed in the other state. 9 |
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| 127 | 126 | | (c) The board may investigate any complaint made by the board of 10 |
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| 128 | 127 | | accountancy of another state. 11 |
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| 129 | 128 | | 12 |
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| 130 | 129 | | SECTION 5. Arkansas Code § 17 -12-504(g), concerning the reinstatement 13 |
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| 131 | 130 | | of a lapsed accountant license, is amended to read as follows: 14 |
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| 132 | 131 | | (g)(1) Upon application received within three (3) years following the 15 |
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| 133 | 132 | | expiration on or before July 1 following the lapse of a license, the board 16 |
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| 134 | 133 | | may reinstate a lapsed the license. if the applicant: 17 |
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| 135 | 134 | | (2) A license may be reinstated if the applicant: 18 |
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| 136 | 135 | | (A)(1) Pays a reinstatement fee determined by the board; 19 |
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| 137 | 136 | | and 20 |
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| 138 | 137 | | (B)(2) Complies with continuing professional education and 21 |
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| 139 | 138 | | any other requirements applicable to : the reinstatement of the license on or 22 |
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| 140 | 139 | | before the date of the application for reinstatement. 23 |
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| 141 | 140 | | (i) The renewal of the license at the date of its 24 |
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| 142 | 141 | | expiration; and 25 |
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| 143 | 142 | | (ii) The reinstatement of the license at the date of the 26 |
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| 144 | 143 | | application for reinstatement. 27 |
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| 145 | 144 | | 28 |
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| 146 | 145 | | SECTION 6. Arkansas Code § 17 -12-504(h), concerning the revocation of 29 |
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| 147 | 146 | | a lapsed accountant license, is amended to read as follows: 30 |
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| 148 | 147 | | (h)(1) Any license or registration that is not reinstated within three 31 |
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| 149 | 148 | | (3) years following expiration shall be void for which a reinstatement 32 |
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| 150 | 149 | | application has not been received on or before July 1 following the lapse of 33 |
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| 151 | 150 | | a license shall, after notice and a hearing, be revoked by the board and 34 |
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| 152 | 151 | | shall not be subject to renewal or reinstatement. 35 |
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| 153 | 152 | | (2) The holder of a void revoked license or registration may 36 SB432 |
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| 154 | 153 | | |
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| 156 | 155 | | apply for a new license or registration under § 17-12-301 et seq. or § 17-12-1 |
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| 157 | 156 | | 401 et seq. 2 |
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| 158 | 157 | | (3) The board may require the applicant to comply with 3 |
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| 159 | 158 | | educational or other requirements deemed appropriate by the board, including 4 |
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| 160 | 159 | | successful completion of the examination identified in § 17-12-304 in order 5 |
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| 161 | 160 | | to obtain a new license. 6 |
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| 162 | 161 | | 7 |
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| 163 | 162 | | SECTION 7. Arkansas Code § 17 -12-507 is amended to read as follows: 8 |
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| 164 | 163 | | 17-12-507. Quality review of each practice unit. Practice review. 9 |
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| 165 | 164 | | (a) The Arkansas State Board of Public Accountancy may by rule require 10 |
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| 166 | 165 | | as a condition for the renewal of a license a quality practice review of each 11 |
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| 167 | 166 | | practice unit maintained every certified public accountant and firm licensed 12 |
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| 168 | 167 | | in this state. 13 |
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| 169 | 168 | | (b)(1) The practice review shall identify any type of report issued by 14 |
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| 170 | 169 | | a licensee including without limitation: 15 |
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| 171 | 170 | | (1) Compilation services; or 16 |
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| 172 | 171 | | (2) Attest services as defined under § 17 -12-103. 17 |
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| 173 | 172 | | (c) The practice review shall be conducted annually on one -third (1/3) 18 |
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| 174 | 173 | | of the active licensees on a rotating basis. 19 |
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| 175 | 174 | | (d)(1) A licensee that is selected for a practice review and whose 20 |
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| 176 | 175 | | highest level of report issuance is a compilation report shall also be 21 |
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| 177 | 176 | | subject to a quality review. 22 |
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| 178 | 177 | | (2) The board may charge the accountant or firm reviewed licensee 23 |
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| 179 | 178 | | a fee for each a: 24 |
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| 180 | 179 | | (A) Quality review of each practice unit; and 25 |
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| 181 | 180 | | (B) Follow-up action to a quality review that is not in 26 |
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| 182 | 181 | | conformity with applicable professional standards. 27 |
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| 183 | 182 | | (3) The amount of the fee shall be established by board rule. 28 |
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| 184 | 183 | | (4) The licensee shall submit the latest report issued after the 29 |
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| 185 | 184 | | date of his or her last quality review submission for each type of 30 |
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| 186 | 185 | | compilation report. 31 |
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| 187 | 186 | | (5) A person acting on behalf of the board in a quality review 32 |
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| 188 | 187 | | program under this section shall be an officer or employee of the State of 33 |
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| 189 | 188 | | Arkansas for the purpose of: 34 |
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| 190 | 189 | | (A) Immunity from civil liability under § 19-10-301 et 35 |
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| 191 | 190 | | seq.; and 36 SB432 |
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| 192 | 191 | | |
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| 194 | 193 | | (B) Payment of actual damages on behalf of state officers 1 |
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| 195 | 194 | | or employees under § 21-9-201 et seq. 2 |
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| 196 | 195 | | (6)(A) Except as provided under subdivision (d)(6)(B) of this 3 |
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| 197 | 196 | | section, all financial statements, working papers, and other documents 4 |
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| 198 | 197 | | obtained from an applicant for quality review shall be confidential and shall 5 |
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| 199 | 198 | | not be subject to public inspection, including without limitation documents 6 |
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| 200 | 199 | | exempt under the Freedom of Information Act of 1967, § 25 -19-101 et seq. 7 |
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| 201 | 200 | | (B) A document under subdivision (d)(6)(A) of this section 8 |
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| 202 | 201 | | may be: 9 |
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| 203 | 202 | | (i) Disclosed pursuant to a court order; or 10 |
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| 204 | 203 | | (ii) Introduced as evidence in a relevant proceeding 11 |
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| 205 | 204 | | before the board. 12 |
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| 206 | 205 | | (e) A peer review shall be obtained by a licensee who issues a report 13 |
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| 207 | 206 | | identified under subdivision (b)(2) of this section. 14 |
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| 208 | 207 | | (f)(1)(A) Notwithstanding any provision to the contrary in this 15 |
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| 209 | 208 | | chapter, a certified public accountant or firm of certified public 16 |
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| 210 | 209 | | accountants currently licensed by another state or a foreign country shall 17 |
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| 211 | 210 | | not be required to obtain a license under this chapter for the purpose of 18 |
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| 212 | 211 | | conducting a peer review of a licensee in this state as defined by board 19 |
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| 213 | 212 | | rule. 20 |
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| 214 | 213 | | (B) A certified public accountant or firm of certified 21 |
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| 215 | 214 | | public accounts under subdivision (f)(1)(A) of this section may use the 22 |
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| 216 | 215 | | applicable title of “certified public accountant” or the abbreviation “CPA” 23 |
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| 217 | 216 | | only in conjunction with the peer review activities identified under 24 |
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| 218 | 217 | | subdivision (f)(1)(A) of this section. 25 |
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| 219 | 218 | | (2) A certified public accountant or firm of certified public 26 |
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| 220 | 219 | | accountants licensed in this state or in another jurisdiction shall meet the 27 |
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| 221 | 220 | | standards adopted by the board to accomplish the goals of this chapter in 28 |
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| 222 | 221 | | order to perform a peer review of a licensee under this chapter. 29 |
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| 223 | 222 | | (c)(1) The quality review shall consist of either a uniform or random 30 |
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| 224 | 223 | | annual submission by each licensee of the following kinds of reports issued 31 |
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| 225 | 224 | | by that licensee during the twelve -month period immediately preceding the 32 |
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| 226 | 225 | | date of submission, if reports were issued during the period: 33 |
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| 227 | 226 | | (A) A compilation report; 34 |
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| 228 | 227 | | (B) A review report; 35 |
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| 229 | 228 | | (C) An agreed-upon procedures report; 36 SB432 |
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| 230 | 229 | | |
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| 232 | 231 | | (D) An audit report; 1 |
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| 233 | 232 | | (E) An audit report under a federal grant program or other 2 |
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| 234 | 233 | | government program; and 3 |
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| 235 | 234 | | (F) An examination of prospective financial information. 4 |
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| 236 | 235 | | (2) If none of the above reports were issued during the twelve 5 |
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| 237 | 236 | | (12) months immediately preceding the date of submission, a licensee is 6 |
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| 238 | 237 | | required to submit reports issued since the date of its last quality review 7 |
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| 239 | 238 | | survey submission. 8 |
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| 240 | 239 | | (d) All persons acting on behalf of the board in a quality review 9 |
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| 241 | 240 | | program under this section shall be considered officers or employees of the 10 |
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| 242 | 241 | | State of Arkansas for purposes of: 11 |
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| 243 | 242 | | (1) Immunity from civil liability pursuant to § 19-10-301 et 12 |
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| 244 | 243 | | seq.; and 13 |
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| 245 | 244 | | (2) Payment of actual damages on behalf of state officers or 14 |
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| 246 | 245 | | employees pursuant to § 21-9-201 et seq. 15 |
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| 247 | 246 | | (e) All financial statements, working papers, or other documents 16 |
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| 248 | 247 | | obtained from applicants for quality review shall be confidential and shall 17 |
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| 249 | 248 | | not be subject to public inspection except pursuant to an order of a court of 18 |
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| 250 | 249 | | competent jurisdiction. However, the documents may be introduced as evidence 19 |
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| 251 | 250 | | in any relevant proceedings before the board. 20 |
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| 252 | 251 | | (f) For purposes of this section, a “practice unit” shall be deemed to 21 |
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| 253 | 252 | | be any firm registered with the board under § 17-12-401 et seq., and any 22 |
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| 254 | 253 | | licensee not employed by or associated with any firm registered with the 23 |
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| 255 | 254 | | board under § 17-12-401 et seq. but who has issued one (1) or more 24 |
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| 256 | 255 | | compilation reports. 25 |
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| 257 | 256 | | (g)(1) Notwithstanding any provision to the contrary in this chapter, 26 |
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| 258 | 257 | | a certified public accountant, public accountant, or firm of certified public 27 |
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| 259 | 258 | | accountants or public accountants currently licensed by another state or 28 |
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| 260 | 259 | | foreign country shall not be required to obtain a license under this chapter 29 |
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| 261 | 260 | | for the sole purpose of conducting peer review as defined by board rule of a 30 |
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| 262 | 261 | | licensee in this state and may use the applicable title “certified public 31 |
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| 263 | 262 | | accountant” or “public accountant” or abbreviation “CPA” or “PA” solely in 32 |
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| 264 | 263 | | conjunction with the peer review activities. 33 |
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| 265 | 264 | | (2) Any certified public accountant, public accountant, or firm 34 |
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| 266 | 265 | | of certified public accountants or public accountants, whether licensed in 35 |
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| 267 | 266 | | this state or in another jurisdiction, shall meet standards adopted by the 36 SB432 |
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| 268 | 267 | | |
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| 270 | 269 | | board to accomplish the goals of this chapter in order to qualify to perform 1 |
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| 271 | 270 | | peer review of licensees under this chapter. 2 |
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| 272 | 271 | | (h) Effective January 1, 2019, licensees that are required to enroll 3 |
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| 273 | 272 | | in peer review under § 17-12-508 are exempt from the requirements of this 4 |
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| 274 | 273 | | section and the rules of the board implementing this section. 5 |
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| 275 | 274 | | (i) The requirements of subdivisions (c)(1)(B) -(F) of this section 6 |
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| 276 | 275 | | expire on December 31, 2018. 7 |
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| 277 | 276 | | 8 |
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| 278 | 277 | | 9 |
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