GENERAL GOVERNMENT CABINET

Kentucky State Board of Accountancy

(As Amended at ARRS, April 11, 2012)

 

      201 KAR 1:081. Initial f[F]irm license, renewal, and reinstatement.

 

      RELATES TO: KRS 325.220, 325.301, 325.380.

      STATUTORY AUTHORITY: KRS 325.240, 325.301.

      NECESSITY, FUNCTION, AND CONFORMITY:[KRS 325.220 defines peer review.] KRS 325.301 establishes the standards for the initial issuance and renewal of a license for[licensure of] a certified public accounting firm.[KRS 325.380 establishes the standards for certified public accounting firm names and usage.] This administrative regulation establishes the procedures for firms to obtain and renew a license to practice as required by KRS 325.301.

 

      Section 1. Definitions. (1)[A] "Certified public accountant owner" means a certified public accountant with a current and active license to practice issued by a state board of accountancy and who is operating a public accounting firm as a:

      (a) Shareholder in a professional service corporation or corporation;

      (b)[a] Partner in a partnership or registered limited liability partnership;[or]

      (c)[a] Member of a limited liability company; or

      (d) Sole proprietor, beginning August 1, 2012.

      (2)[A "nonlicensed owner of the firm" means a person referred to in KRS 325.301(3)(b).

      (3)] "Firm" means the business entities defined in KRS 325.220(6).

      (3)[(4)] "Firm manager" means a CPA as defined in KRS 325.220(7).

      (4) "Nonlicensed owner of the firm" means a person referred to in KRS 325.301(3)(b).

 

      Section 2.[In order] T[t]o obtain an initial license to practice, the[a] firm manager[except a firm operating as a sole proprietorship,] shall submit:

      (1) A completed "Initial Firm License[Registration]" form; and

      (2) A check or money order made payable to the "Kentucky State Board of Accountancy" in the amount of $100 [for the initial firm registration fee].

 

      Section 3. Effective August 1, 2012, a sole proprietor[proprietors] shall obtain a public accounting firm license according to the procedures contained in Section 2 of this administrative regulation.

 

      Section 4[3]. A certified public accountant shall:

      (1) Have ultimate responsibility for all services provided by the firm;

      (2) Have ultimate authority over any unit, division, or branch of the firm that performs attest services; and

      (3) Comply with the "Statement on Quality Control Standards", June 2000, issued by the American Institute of Certified Public Accountants Auditing Standards Board, as incorporated by reference.

 

      Section 5[4]. A nonlicensed owner of the firm shall not sell or otherwise transfer any ownership interest in the firm to any person who fails to satisfy the requirements of KRS 325.301(3).

 

      Section 6[5]. Renewal of a Firm License. (1) Except as provided in subsection (2)[2] of this section, a firm manager shall renew a firm license by:

      (a) Using the online "Firm License Renewal System" offered by the board at www.cpa.ky.gov; and

      (b) Paying a renewal fee in the amount of $100.[(1) A certified public accountant seeking to engage in a regulated activity as a sole proprietor shall register the firm by writing a letter to the board stating the firm office address, phone number, and indicating whether he is engaging in a regulated activity on a full-time or part-time basis; or]

      (2) If a firm manager is unable to use the online procedure, he or she shall:

      (a) Submit a written request to obtain a paper copy of the Firm License Renewal form to the Kentucky State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202;

      (b) Complete and submit the form to the board; and

      (c) Submit a check or money order made payable to the Kentucky State Board of Accountancy in the amount of $100.

      (3) Effective August 1, 2012, a sole proprietor[sole proprietors] shall renew his or her[their] firm license according to the procedures contained in this section [6 of this administrative regulation].[If he is establishing the firm within thirty (30) days of his individual permit renewal date, he may submit this information when he renews his individual permit to practice.

      (3) A fee shall not be assessed for this registration.

 

      Section 6. In May of the firm's renewal year, the board shall send the firm a computer generated notice containing current firm registration information. The firm CPA manager shall renew the firm license to practice by submitting:

      (1) The notice with corrections, deletions, or additions as appropriate; and

      (2) A check made payable to the "Kentucky State Board of Accountancy" in the amount of $100 for the firm license.

      (3) A sole proprietor shall renew his license by providing the information required in Section 3(1) of this administrative regulation when he renews his individual license. A fee shall not be charged for this firm license renewal.]

      (4) Failure to receive a notice to renew shall not constitute an adequate excuse for failing to renew the firm license.

 

      Section 7. (1) A firm manager who fails to renew the firm license by the August 1 deadline shall renew the license on or before September 1 by:

      (a) Utilizing the online "Firm License Renewal System" offered by the board at www.cpa.ky.gov;

      (b) Paying the $100[one hundred dollar ($100)] renewal fee; and

      (c) Paying a $100[one hundred ($100) dollar] late fee.

      (2) A firm manager shall correct any outdated or inaccurate[If any of the] information listed on the "Firm License Renewal System" except for a change in the name of the firm.[firm registration form submitted by the firm's certified public accountant manager changes, he shall indicate the changes on the "Firm Registration Changes" form].

 

      Section 8.[(1)] A firm license that expired on July 1, 2011 shall be renewed by the firm manager[:] utilizing the process described in Section 6 of this administrative regulation.

 

      Section 9. A firm is prohibited from operating and holding out as a CPA firm if the firm license is expired for a period of more than one (1) month.

 

      Section 10. Changes in firm information. A firm manager shall notify the board within thirty (30) [thirty] days of any changes to the licensing information on file with the board by submitting a "Firm Changes" form.

 

      Section 11.[(8}](1) Upon the death or retirement of a firm member which is composed of only two (2) certified public accountant owners, the board shall authorize the continuation of the use of the firm name by the surviving certified public accountant owner for a period of time not to exceed two (2) years from the date of the certified public accountant owner's death or retirement.

      (2) The remaining certified public accountant owner shall advise the board in writing of this change within thirty (30) days of its occurrence.

 

      Section 12[9]. The firm name registered with the board shall be the firm name used in all circumstances.

 

      Section 13.[10.](1) The following material is incorporated by reference:

      (a) "Instate Initial Firm License Application", [Registration] [(]2012[)][(2000)]["];

      (b) "Firm Change[Registration Changes] Form" [(]2012[)] [(2000)]["]; [and]

      (c) "Firm Online License Renewal Process", [(]2012[)];

      (d) "Firm License Renewal", [(]2012[)]; and

      (e)[(c)] "Statement on Quality Control Standards", January [(]2000[)"].

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through Friday, between 8 a.m. and 4:30 p.m.

 

JOSEPH HANCOCK, CPA, President

      APPROVED BY AGENCY: January 11, 2012

      FILED WITH LRC: January 13, 2012 at 8 a.m.

      CONTACT PERSON: Richard C. Carroll, Executive Director, Kentucky State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, phone (502) 595-3037, fax (502) 595-4281.