GENERAL GOVERNMENT CABINET
KENTUCKY STATE BOARD OF ACCOUNTANCY
RELATES TO: KRS 325.220(6),
STATUTORY AUTHORITY: KRS 325.240(2),
325.301(4), (5), (6), (7), (8)[
NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.301 establishes the standards for the initial issuance and renewal of a license for a certified public accounting firm. 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) "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) Partner in a partnership or registered limited liability partnership;
(c) Member of a limited liability company; or
(d) Sole proprietor[
, beginning August
(2) "Firm" means the business entities defined in KRS 325.220(6).
(3) "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. To obtain an initial license to practice, the firm manager shall submit:
(1) A completed [
License[ "] form; and
(2) A check or money order made payable
to the [
"]Kentucky State Board of Accountancy[ "] in the
amount of $100.
Effective August 1, 2012,]
A sole proprietor shall obtain a public accounting firm license according to
the procedures contained in Section 2 of this administrative regulation.
Section 4. 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 [
on Quality Control Standards[ "], January, 2012[ June 2000],
issued by the American Institute of Certified Public Accountants Auditing
Standards Board, as incorporated by reference.
Section 5. 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. Renewal of a Firm License. (1) Except as provided in subsection (2) of this section, a firm manager shall renew a firm license by:
(a) Using the online [
License Renewal System[ "] offered by the board at www.cpa.ky.gov;
(b) Paying a renewal fee in the amount of $100.
(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.
Effective August 1, 2012,] A
sole proprietor shall renew his or her firm license according to the procedures
contained in this section.
(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 [
License Renewal System[ "] offered by the board at www.cpa.ky.gov;
(b) Paying the $100 renewal fee; and
(c) Paying a $100 late fee.
(2) A firm manager shall correct any
outdated or inaccurate information listed on the [
Renewal System[ "] except for a change in the name of the firm.
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.
10.] Changes in
firm information. A firm manager shall notify the board within thirty (30) days
of any changes to the licensing information on file with the board by
submitting a [ "]Firm Change[ Changes"] form.
11.] (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.
12.] The firm
name registered with the board shall be the firm name used in all circumstances.
13.] (1) The
following material is incorporated by reference:
Initial] Firm[ License]
Application", August, 2015[ 2012];
(b) "Firm Change Form" August,
(c) "Firm Online License Renewal
Process", August, 2015[
(d) "Firm License Renewal", January,
(e) "Statement on Quality Control Standards", January 2012; and
(f) "Sole Proprietor Firm
Application", August, 2015[
(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
between] 8 a.m. to[ and] 4:30 p.m.
KEVIN DOYLE, President
APPROVED BY AGENCY: August 12, 2015
FILED WITH LRC: August 13, 2015 at 10 a.m.
PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall be held on September 22, 2015, 2015 at 10 a.m., EST at the administrative offices of the Board located at 332 W. Broadway, Suite 310 Louisville, Kentucky 40202. Individuals interested in being heard at this hearing shall notify this agency in writing, by five work days prior to the meeting, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given the opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for at transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted until September 30, 2015. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
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.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person: Richard Carroll
(1) Provide a brief summary of:
(a) What this administrative regulation does: Describes the procedures to obtain and renew a CPA firm license
(b) The necessity of this administrative regulation: To establish the procedures to obtain and renew a CPA firm license.
(c) How this administrative regulation conforms to the content of the authorizing statutes: KRS 325.301 authorizes the board to license CPA firms and 325.340 authorizes the board to issue regulations.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: KRS 325.301 authorizes the board to license CPA firms and 325.340 authorizes the board to issue regulations.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation: It will update forms and remove language is no longer necessary.
(b) The necessity of the amendment to this administrative regulation: It will update forms and remove language that is no longer necessary.
(c) How the amendment conforms to the content of the authorizing statutes: KRS 325.301 authorizes the board to license CPA firms and 325.340 authorizes the board to issue regulations.
(d) How the amendment will assist in the effective administration of the statutes: Update forms and eliminate outdated language.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: Approximately 700 CPA firms.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: Complete an updated form.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): Nothing in addition to the current cost since it is an updated form.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
They will complete an updated form.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially: Nothing
(b) On a continuing basis: Nothing
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Agency restricted funds
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: No increase in fees.
(8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees: The fees have been in place for a number of years and there is no increase.
(9) TIERING: Is tiering applied? No, since all firms are treated the same.
FISCAL NOTE ON STATE OR LOCAL GOVERNMENT
1. What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? Board of Accountancy
2. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 325.301 and 325.240.
3. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? No additional revenue will be generated for local and state government by this amendment to this regulation since fees are not being increased. However firms renew their licenses once every two years and in 2014 the fees collected amounted to approximately $125,000.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? See the answer to question 3(a).
(c) How much will it cost to administer this program for the first year? There is no precise estimate since processing applications are a normal part of the duties of the board employees and the overwhelming number of application are renewed online.
(d) How much will it cost to administer this program for subsequent years? See the answer to question 3(c).
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Other Explanation: There is no increase in fees with this proposed amendment therefore there will be no change regarding the fiscal impact of this proposed amendment.