100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB0657

 

Introduced , by Rep. Robert Rita

 

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 450/14.5 new
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 certain requirements but offer or render services in the State must hold a license issued under the Act. Provides for the appointment of a CPA Coordinator and provides the duties and responsibilities for the role. Provides that every application for renewal of a license by a licensed CPA who has been licensed under the Act for 3 years or 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). Provides that a CPA firm or sole practitioner shall comply with Department rules and notify the Peer Review Administrator within 30 days after accepting an engagement for services requiring a license and to undergo a peer review within 18 months after the end of the period covered by the engagement (rather than undergo its first peer review during the first full renewal cycle after it is granted its initial license). Effective immediately.


LRB100 03930 SMS 13935 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0657LRB100 03930 SMS 13935 b

1    AN ACT concerning accounting.
 
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 and adding Section 14.5
6as follows:
 
7    (225 ILCS 450/0.03)  (from Ch. 111, par. 5500.03)
8    (Section scheduled to be repealed on January 1, 2024)
9    Sec. 0.03. Definitions. As used in this Act, unless the
10context otherwise requires:
11    "Accountancy activities" means the services as set forth in
12Section 8.05 of the Act.
13    "Address of record" means the designated address recorded
14by the Department in the applicant's, licensee's, or
15registrant's application file or license file maintained by the
16Department's licensure maintenance unit. It is the duty of the
17applicant, licensee, or registrant to inform the Department of
18any change of address, and those changes must be made either
19through the Department's website or by directly contacting the
20Department.
21    "Certificate" means a certificate issued by the Board or
22University or similar jurisdictions specifying an individual
23has successfully passed all sections and requirements of the

 

 

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

 

 

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1historical financial information, including, but not limited
2to, related notes intended to communicate an entity's economic
3resources and obligations at a point in time or the changes
4therein for a period of time in accordance with generally
5accepted accounting principles (GAAP) or other comprehensive
6basis of accounting (OCBOA).
7    "Other attestation engagements" means an engagement
8performed in accordance with the Statements on Standards for
9Attestation Engagements.
10    "Registered Certified Public Accountant" or "registered
11CPA" means any person who has been issued a registration under
12this Act as a Registered Certified Public Accountant.
13    "Report", when used with reference to financial
14statements, means an opinion, report, or other form of language
15that states or implies assurance as to the reliability of any
16financial statements and that also includes or is accompanied
17by any statement or implication that the person or firm issuing
18it has special knowledge or competence in accounting or
19auditing. Such a statement or implication of special knowledge
20or competence may arise from use by the issuer of the report of
21names or titles indicating that the person or firm is an
22accountant or auditor, or from the language of the report
23itself. "Report" includes any form of language that disclaims
24an opinion when the form of language is conventionally
25understood to imply any positive assurance as to the
26reliability of the financial statements referred to or special

 

 

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

 

 

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

 

 

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1    requirements of the Uniform Accountancy Act of the American
2    Institute of Certified Public Accountants and the National
3    Association of State Boards of Accountancy; or
4        (2) holds a valid license as a certified public
5    accountant issued by another state and obtains from the
6    National Qualification Appraisal Service of the National
7    Association of State Boards of Accountancy verification
8    that the individual's CPA qualifications are substantially
9    equivalent to the CPA licensure requirements of the Uniform
10    Accountancy Act of the American Institute of Certified
11    Public Accountants and the National Association of State
12    Boards of Accountancy; however, any individual who has
13    passed the Uniform CPA Examination and holds a valid
14    license issued by any other state prior to January 1, 2012
15    shall be exempt from the education requirements of Section
16    3 of this Act for the purposes of this item (2).
17    (a-5) A CPA firm whose principal place of business is not
18in this State shall have all the privileges of a CPA firm
19licensed under this Act without the need to obtain a license
20from the Department or to file notice with the Department if
21the CPA firm complies with the requirements outlined in
22Sections 14.4 and 16 through substantial equivalency of their
23licensed state.
24    (b) Notwithstanding any other provision of law, an
25individual or CPA firm who offers or renders professional
26services under this Section, whether in person or by mail,

 

 

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

 

 

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

 

 

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

 

 

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1satisfies any peer review requirements in those states in which
2the individuals with practice privileges under Section 5.2 have
3their principal place of business; and (iii) meets the
4qualifications set forth in paragraph (1) of Section 14.4 of
5this Act.
6    (d) A CPA firm that is not subject to the requirements of
7subsection (b) or (c) of this Section may perform professional
8services that are not regulated under subsection (b) or (c) of
9this Section while using the title "CPA" or "CPA firm" in this
10State without obtaining a license as a CPA firm under this Act
11if the firm (i) performs such services through individuals with
12practice privileges under Section 5.2 of this Act and (ii) may
13lawfully perform such services in the state where those
14individuals with practice privileges under Section 5.2 of this
15Act have their principal place of business.
16(Source: P.A. 98-254, eff. 8-9-13.)
 
17    (225 ILCS 450/14.5 new)
18    Sec. 14.5. CPA Coordinator; duties. The Secretary shall
19appoint a CPA Coordinator, who shall hold a currently valid CPA
20license or registration. The Coordinator shall not practice
21during the term of his or her appointment. The Coordinator
22shall be exempt from all fees related to his or her CPA license
23or registration that come due during his or her employment. In
24appointing the Coordinator, the Secretary shall give due
25consideration to recommendations made by members,

 

 

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1organizations, and associations of the CPA and accounting
2profession. The Coordinator shall:
3        (1) act as Chairperson of the Committee, ex officio,
4    without a vote;
5        (2) be the direct liaison between the Department, the
6    profession, and CPA and accounting organizations and
7    associations;
8        (3) prepare and circulate to licensees any educational
9    and informational material that the Department deems
10    necessary for providing guidance or assistance to
11    licensees;
12        (4) appoint any necessary committees to assist in the
13    performance of the functions and duties of the Department
14    under this Act; and
15        (5) subject to the administrative approval of the
16    Secretary, supervise all activities relating to the
17    regulation of the CPA profession.
 
18    (225 ILCS 450/16)  (from Ch. 111, par. 5517)
19    (Section scheduled to be repealed on January 1, 2024)
20    Sec. 16. Expiration and renewal of licenses; renewal of
21registration; continuing education; peer review.
22    (a) The expiration date and renewal period for each license
23or registration issued under this Act shall be set by rule.
24    (b) Every holder of a license or registration under this
25Act may renew such license or registration before the

 

 

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

 

 

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

 

 

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1through audits of records maintained by licensees; by requiring
2the filing of continuing education certificates with the
3Department; or by other means established by the Department.
4    The Department may establish, by rule, guidelines for
5acceptance of continuing education on behalf of licensed CPAs
6taking continuing education courses in other jurisdictions.
7    (e) For renewals on and after July 1, 2012, as a condition
8for granting a renewal license to CPA firms and sole
9practitioners who perform accountancy activities outlined in
10paragraph (1) of subsection (a) of Section 8.05 under this Act,
11the Department shall require that the CPA firm or sole
12practitioner satisfactorily complete a peer review during the
13immediately preceding 3-year period, accepted by a Peer Review
14Administrator in accordance with established standards for
15performing and reporting on peer reviews, unless the CPA firm
16or sole practitioner is exempted under the provisions of
17subsection (i) of this Section. A CPA firm or sole practitioner
18shall, at the request of the Department, submit to the
19Department a letter from the Peer Review Administrator stating
20the date on which the peer review was satisfactorily completed.
21    A new CPA firm or sole practitioner shall not be required
22to comply with the peer review requirements for the first
23license renewal. A CPA firm or sole practitioner shall comply
24with the Department's rules adopted under this Act and agree to
25notify the Peer Review Administrator within 30 days after
26accepting an engagement for services requiring a license under

 

 

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1this Act and to undergo a peer review within 18 months after
2the end of the period covered by the engagement undergo its
3first peer review during the first full renewal cycle after it
4is granted its initial license.
5    The requirements of this subsection (e) shall not apply to
6any person providing services requiring a license under this
7Act to the extent that such services are provided in the
8capacity of an employee of the Office of the Auditor General or
9to a nonprofit cooperative association engaged in the rendering
10of licensed service to its members only under paragraph (3) of
11Section 14.4 of this Act or any of its employees to the extent
12that such services are provided in the capacity of an employee
13of the association.
14    (f) The Department shall approve only Peer Review
15Administrators that the Department finds comply with
16established standards for performing and reporting on peer
17reviews. The Department may adopt rules establishing
18guidelines for peer reviews, which shall do all of the
19following:
20        (1) Require that a peer review be conducted by a
21    reviewer that is independent of the CPA firm reviewed and
22    approved by the Peer Review Administrator under
23    established standards.
24        (2) Other than in the peer review process, prohibit the
25    use or public disclosure of information obtained by the
26    reviewer, the Peer Review Administrator, or the Department

 

 

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1    during or in connection with the peer review process. The
2    requirement that information not be publicly disclosed
3    shall not apply to a hearing before the Department that the
4    CPA firm or sole practitioner requests be public or to the
5    information described in paragraph (3) of subsection (i) of
6    this Section.
7    (g) If a CPA firm or sole practitioner fails to
8satisfactorily complete a peer review as required by subsection
9(e) of this Section or does not comply with any remedial
10actions determined necessary by the Peer Review Administrator,
11the Peer Review Administrator shall notify the Department of
12the failure and shall submit a record with specific references
13to the rule, statutory provision, professional standards, or
14other applicable authority upon which the Peer Review
15Administrator made its determination and the specific actions
16taken or failed to be taken by the licensee that in the opinion
17of the Peer Review Administrator constitutes a failure to
18comply. The Department may at its discretion or shall upon
19submission of a written application by the CPA firm or sole
20practitioner hold a hearing under Section 20.1 of this Act to
21determine whether the CPA firm or sole practitioner has
22complied with subsection (e) of this Section. The hearing shall
23be confidential and shall not be open to the public unless
24requested by the CPA firm or sole practitioner.
25    (h) The CPA firm or sole practitioner reviewed shall pay
26for any peer review performed. The Peer Review Administrator

 

 

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1may charge a fee to each firm and sole practitioner sufficient
2to cover costs of administering the peer review program.
3    (i) A CPA firm or sole practitioner shall not be required
4to comply with the peer review requirements if:
5        (1) Within 3 years before the date of application for
6    renewal licensure, the sole practitioner or CPA firm has
7    undergone a peer review conducted in another state or
8    foreign jurisdiction that meets the requirements of
9    paragraphs (1) and (2) of subsection (f) of this Section.
10    The sole practitioner or CPA firm shall, at the request of
11    the Department, submit to the Department a letter from the
12    organization administering the most recent peer review
13    stating the date on which the peer review was completed; or
14        (2) Within 2 years before the date of application for
15    renewal licensure, the sole practitioner or CPA firm
16    satisfies all of the following conditions:
17            (A) has not accepted or performed any accountancy
18        activities outlined in paragraph (1) of subsection (a)
19        of Section 8.05 of this Act; and
20            (B) the firm or sole practitioner agrees to notify
21        the Peer Review Administrator within 30 days of
22        accepting an engagement for services requiring a
23        license under this Act and to undergo a peer review
24        within 18 months after the end of the period covered by
25        the engagement; or
26        (3) For reasons of personal health, military service,

 

 

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1    or other good cause, the Department determines that the
2    sole practitioner or firm is entitled to an exemption,
3    which may be granted for a period of time not to exceed 12
4    months.
5    (j) If a peer review report indicates that a CPA firm or
6sole practitioner complies with the appropriate professional
7standards and practices set forth in the rules of the
8Department and no further remedial action is required, the Peer
9Review Administrator shall, after issuance of the final letter
10of acceptance, destroy all working papers and documents related
11to the peer review, other than report-related documents and
12documents evidencing completion of remedial actions, if any, in
13accordance with rules established by the Department.
14    (k) (Blank).
15(Source: P.A. 98-254, eff. 8-9-13; 98-730, eff. 1-1-15.)
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.