Accountancy Act

Current as of April 22, 2024

USINESS AND PROFESSIONS CODE

DIVISION 3. PROFESSIONS AND VOCATIONS GENERALLY

HAPTER 1. ACCOUNTANTS

ontents

ARTICLE 1. ADMINISTRATION .......................................................................................... 6

5000. Board of Accountancy; Members; Powers and Duties; Repeal of Section

[Repealed Effective January 1, 2025] .............................................................................. 6

5000.1. Priority of Board; Protection of the Public ........................................................... 6

5000.5. Requirements for Public Member of Board ........................................................ 6

5001. Eligibility for Appointment; Oath of Office .............................................................. 6

5002. Terms; Vacancies; Removal from Board ............................................................... 7

5003. Officers of Board ................................................................................................... 7

5004. Election of Officers ................................................................................................ 7

5006. Continuance in Office ............................................................................................ 7

5007. Duties ................................................................................................................... 7

5008. Reports; Preparation and Distribution ................................................................... 7

5009. Register ................................................................................................................ 7

5009.5. Privacy of Applicants’ and Licensees’ Email Addresses ..................................... 8

5010. Adoption, Repeal and Amendment of Regulations ................................................ 8

5011. Offices................................................................................................................... 8

5012. Seal ...................................................................................................................... 8

5013. Records; Admissibility in Evidence........................................................................ 8

5015. Employees; Salaries and Expenses ...................................................................... 8

5015.6. Executive Officer [Repealed Effective January 1, 2025] ..................................... 8

5016. Quorum; Notice of Meetings; Waiver .................................................................... 8

5017. Board Meetings; Executive Sessions .................................................................... 9

5017.1. Posting of Board Meeting Minutes on Internet Website ...................................... 9

5017.5. Posting of Live Audio or Video Broadcast on Internet Website of Open and

Public Meetings ............................................................................................................... 9

5018. Rules and Standards of Professional Conduct ...................................................... 9

5019. Rules of Professional Conduct ............................................................................ 10

5020. Enforcement Advisory Committee; Appointment; Authority ................................. 10

5021. Terms of Office of Committee Members ............................................................. 10

5022. Recommendations and Report of Committee; Appeal; Examination by Board .... 10

5023. Qualifications Committee to Examine and Recommend Applicants .................... 10

5024. Other Advisory Committees ................................................................................ 10

5025.1. Accountants as Consultants and Experts ......................................................... 10

5025.2. Legislative Findings; Authorization of Additional Expenditures ........................ 11

5025.3. Contracts for Litigation or Enforcement; Funds Encumbered ........................... 12

ARTICLE 1.5. CONTINUING EDUCATION .......................................................................... 12

5026. Continuing Education Requirement..................................................................... 12

5027. Rules Concerning Continuing Education; Standards Established ....................... 12

5028. Exceptions from Continuing Education Requirement .......................................... 12

ARTICLE 2. GENERAL POWERS AND DEFINITIONS ........................................................... 13

5030. “Board” ................................................................................................................ 13

5031. “Committee” ........................................................................................................ 13

5032. “State” ................................................................................................................. 13

5033. “Certified Public Accountant” ............................................................................... 13

5033.1. “License” as Including “Certificate” ................................................................... 13

5034. “Public Accountant” ............................................................................................. 13

5035. “Person” .............................................................................................................. 13

5035.1. “Firm” ............................................................................................................... 13

5035.2. “Client” ............................................................................................................. 13

5035.3. “Firm” Includes ................................................................................................. 13

5036. Construction of Statute Requiring Preparation of Documents ............................. 14

5037. Statements and Other Records as Property of Accountant; Access by Client ..... 14

5037.1. Construction of Section 5037 ........................................................................... 14

5038. Severability of Provisions .................................................................................... 14

5040. Informing Taxpayers of Voluntary Contributions ................................................. 14

ARTICLE 3. APPLICATION OF CHAPTER .......................................................................... 15

5050. Public Accountancy Not to be Practiced without Permit; Temporary Practice ..... 15

5050.1. Practice of Foreign Entity within State Subject to Jurisdiction of Board ............ 15

5050.2. Revocation, Suspension or Fine for Foreign Licensee Authorized ................... 15

5051. Practice of Public Accountancy ........................................................................... 16

5052. Exemptions ......................................................................................................... 17

5053. Employee or Assistant Under Supervision of Certified Public Accountant or Public

Accountant; Attorney at Law .......................................................................................... 17

5054. Preparation of Tax Returns by Individuals and Firms Licensed Outside the State

...................................................................................................................................... 17

5055. Designation of Recipient of Certificate and Permit as Certified Public Accountant

...................................................................................................................................... 18

5056. Designation of Recipient of Certificate and Permit as Public Accountant ............ 18

5057. Licensed Out of State Public Accountants Exempt from Permitting Requirements;

Conditions ...................................................................................................................... 18

5058. Assumption or Use of Confusing Title ................................................................. 18

5058.1. Misleading Accountant Designations ............................................................... 19

5058.2. Designation of Inactive Status .......................................................................... 19

5058.3. Holder of Retired License; Requirement .......................................................... 19

5058.4. Holder of Permit in Military Inactive Status; Requirement ................................ 19

ARTICLE 3.5. STANDARDS OF PROFESSIONAL CONDUCT ................................................ 19

5060. Use of Individual Names ..................................................................................... 19

5061. Fees and Commissions ...................................................................................... 19

5062. Report Following Compilation, Review, or Audit of Financial Statements ........... 21

5062.2. Restrictions on Employment with Publicly Traded Company ........................... 21

5063. Licensee Report .................................................................................................. 21

5063.1. Report by Court Rendering Certain Convictions or Judgments Involving

Licensee ........................................................................................................................ 22

5063.2. Report by Insurer on Certain Settlements or Arbitration Awards Involving

Licensee ........................................................................................................................ 22

5063.3. Disclosure of Confidential Information Prohibited; Exceptions; Disclosure to

Persons and Entities Outside the United States ............................................................ 23

5063.10. Restatement of Financial Statement Included in Filed Report Exempt from

Certain Requirements .................................................................................................... 23

ARTICLE 4. APPLICATIONS, REGISTRATIONS, PERMITS GENERALLY ................................ 23

5070. Permits; Registration of Entity Authorized to Practice Public Accountancy Under

the Laws of Another State; Fees; Certificate of Registration .......................................... 23

5070.1. Establishment of System for Placement of License on Retired Status; Duties of

Board ............................................................................................................................. 24

5070.2. Application for Military Inactive Status Permit; Conversion of Permit Status;

Holder of Permit; Requirements; Adoption of Regulations ............................................. 25

5070.5. Expiration of Permits; Renewal of Unexpired Permits ...................................... 25

5070.6. Prerequisites to Renewal of Expired Permits; Commencement and Duration of

Renewal ......................................................................................................................... 26

5070.7. Cancellation of Permit Not Renewed within Statutory Period; New Certificate

and Permit; Reinstatement ............................................................................................ 26

5070.8. Expiration and Renewal of Suspended or Revoked Permit; Absence of Right to

Practice While Permit Suspended; Reinstatement Fee .................................................. 27

5072. Registration of Partnership of Certified Public Accountants; Requirements ........ 27

5073. Application for Registration of Partnership as Certified Public Accountants;

Termination of Registration ............................................................................................ 28

5076. Peer Review of Registration Renewal of Firm Providing Attest Services;

Frequency of Peer Review; Definitions; Peer Review Oversight Committee; Review and

Report on Programs; Peer Review Report with a Rating of Fail; Filing; Requirements .. 28

5076.1. Peer Review Oversight Committee; Requests; Terms; Regulations ................ 29

5078. Supervision by Accountant Required Where Office Not Under Management of

Accountant ..................................................................................................................... 30

5079. Nonlicensee Owners of Accounting Firms .......................................................... 30

ARTICLE 5. CERTIFICATES, INFORMATION AND RECORDS ................................................ 32

5080. To Whom Certificate may be Granted ................................................................. 32

5080.1. Personal Appearance of Applicant Before Board to Determine Qualifications . 32

5081. Requirements of Applicant for Admission to Examination for Certified Public

Accountant Certificate .................................................................................................... 32

5082. Examination; Subjects, Conduct and Grading ..................................................... 32

5082.1. Conduct of Examinations; Contract with Public or Private Organizations;

Uniform System ............................................................................................................. 32

5082.2. Right to Reexamination .................................................................................... 32

5082.3. Method of Satisfying Examination Requirements ............................................. 33

5082.4. Canadian Examination to Fulfill Examination Requirement .............................. 33

5082.5. Credit Given to Candidate Passing All or Part of Examination in Another State

or Territory ..................................................................................................................... 33

5086. Individuals Already Certified Not Required to Secure Additional Certificates ...... 33

5087. Reciprocity of License from Another State; Waiver of Examination Requirements

...................................................................................................................................... 33

5088. Temporary Practice of Applicant ......................................................................... 34

5090. Compliance with Specified Requirements ........................................................... 34

5092. Requirements to Qualify for License Under this Section ..................................... 34

5093. Conditions to Qualify for License Under this Section .......................................... 35

5093.5. Student Admission to the CPA Exam ............................................................... 36

5094. Standards for Qualifying Education ..................................................................... 37

5094.3. Certified Public Accountant License; Coursework; Ethics Study; Examination

Exemption ...................................................................................................................... 38

5094.6. Accounting Study Guidelines ........................................................................... 38

5095. Minimum Number of Attest Services Hours; Attest Experience ........................... 39

ARTICLE 5.1. PRACTICE PRIVILEGES ............................................................................. 39

5096. Requirements of Out-of-State Practitioners; Responsibilities of Individual

Qualifying or With Practice Privilege; Failure to Cease Practice or Provide Notice;

Disqualifying Conditions................................................................................................. 39

5096.1. Practice by Out-of-State Practitioner Unqualified to Practice Privilege; Violation;

Grounds for Discipline ................................................................................................... 42

5096.2. Revocation; Procedures; Reinstatement of Practice; Disciplinary Actions; Costs

...................................................................................................................................... 42

5096.4. Administrative Suspension ............................................................................... 44

5096.5. Experience Requirement for Signing Attest Report .......................................... 44

5096.6. Delegation of Authority to Executive Officer ..................................................... 44

5096.7. Definitions ........................................................................................................ 45

5096.8. Additional Authority Applicable to Investigations and Implementing Regulations

...................................................................................................................................... 45

5096.9. Authority to Adopt Regulations ......................................................................... 45

5096.12. Practice of Public Accountancy by Firm from Another State .......................... 46

5096.20. Information on Out-of-State Licensees with Disqualifying Conditions;

Maintenance of Internet Website; Features; Disclaimers ............................................... 46

5096.21. Determinations Regarding Out-of-State Practitioners; Redetermination;

Factors to be Considered; Stakeholder Group ............................................................... 47

5096.22. Notification Form and Fee by Out-of-State Practitioner; Commencement of

Practice Privilege; Failure to Comply as Violation .......................................................... 48

ARTICLE 5.5. AUDIT DOCUMENTATION ........................................................................... 48

5097. Contents; Presumptions Raised by Improper Documentation; Retention and

Destruction of Documentation ........................................................................................ 48

5098. Adoption of Regulations by Board ....................................................................... 49

ARTICLE 6. DISCIPLINARY PROCEEDINGS ....................................................................... 49

5100. Revocation or Suspension of Permit or Certificate; Refusal to Renew; Censure of

Holder; Grounds ............................................................................................................ 49

5100.1. Copy of Disciplinary or Other Action as Evidence ............................................ 50

5100.2. Denial of License for Financial Crime or Disciplinary Action by Other Jurisdiction

...................................................................................................................................... 50

5100.5. Restricted Practice of a Licensee; Petition for Reduction in Penalty ................ 51

5101. Revocation, Suspension or Refusal to Renew Permit of Partnership; Censure;

Grounds ......................................................................................................................... 51

5102. Conduct of Proceedings; Powers of Board ......................................................... 51

5103. Authority of Board to Investigate Complaints ...................................................... 51

5103.5. Notice of Formal Accusations Posted on Internet Website; Statement that

Accusations are not Final Determinations of Wrongdoing .............................................. 52

5104. Relinquishment of Revoked, Etc., Certificate or Permit; Return of Certificate or

Permit on Expiration of Period of Suspension ................................................................ 52

5105. Relinquishment of Certificate and Permit Where Payment of Renewal Fee

Delinquent; Reissuance; Conditions .............................................................................. 52

5106. Plea or Verdict of Guilty or Conviction Following Plea of Nolo Contendere as

Conviction Within Meaning of Article; Effect of Record of Conviction; Suspension or

Revocation of Certificate or Permit, Declining to Issue Certificate or Permit .................. 53

5107. Payment to Board of Costs of Investigation and Prosecution of Certain

Disciplinary Cases ......................................................................................................... 53

5108. Authority of Board to Issue Subpoenas ............................................................... 54

5109. Jurisdiction of Board not Affected by Change in Status of Licensee ................... 54

5110. Acts Constituting Cause for Board’s Denial of Exam Application or Admission,

Voidance of Grades, or Denial of License Application or Registration; Powers of Board 54

5111. Acts Constituting Cheating, Subverting or Attempting to Subvert Licensing

Examination ................................................................................................................... 55

5112. Procedures for Denial of Exam Application or Admittance, or Voidance of Grades;

Notice ............................................................................................................................ 55

5113. Rights After Denial of Admission to Licensing Examination ................................ 56

5115. Revocation or Surrender of License .................................................................... 56

ARTICLE 6.5. ADMINISTRATIVE PENALTIES ..................................................................... 57

5116. Notice and Hearing Opportunity Required; Penalties Assessed Under More Than

One Section of Article; Regulations; Penalties Additional to Other Sanctions; Money to

be Deposited into Accountancy Fund ............................................................................ 57

5116.1. Penalty Amounts for Violation of Provisions of Chapter ................................... 57

5116.2. Penalty Amounts for Violation of Specified Subdivisions of § 5100 .................. 57

5116.3. Penalty Amounts for Specified Prohibited Acts ................................................ 57

5116.4. Penalties in Conjunction with Disciplinary Proceedings or Notice .................... 58

5116.5. Where Judgment Obtainable ........................................................................... 58

5116.6. “Licensee” ........................................................................................................ 58

ARTICLE 7. PROHIBITIONS AND OFFENSES AGAINST THE CHAPTER GENERALLY ............... 58

5120. Misdemeanors; Punishment; Certification of Facts to Enforcement Officer;

Proceedings ................................................................................................................... 58

5121. Use of Words “Certified Public Accountants”; Evidentiary Effect; Evidence of

Single Act ...................................................................................................................... 58

5122. Application for Order Enjoining Illegal Acts or Practices...................................... 59

ARTICLE 8. REVENUE ................................................................................................... 59

5130. Applicant’s Fees; Application Form ..................................................................... 59

5131. Application Fee and Examination Fees ............................................................... 59

5132. Disposition of Moneys Received by Board .......................................................... 59

5133. Appropriation of Money in Accountancy Fund; Per Diem and Expenses of

Members ........................................................................................................................ 60

5134. Schedule of Fees ................................................................................................ 60

ARTICLE 9. ACCOUNTANCY CORPORATIONS .................................................................. 61

5150. “Accountancy Corporation”; Right to Practice Accountancy; California Board of

Accountancy as Governmental Agency Under Moscone-Knox Professional Corporation

Act ................................................................................................................................. 61

5151. Application for Registration; Documents and Information Required; Form .......... 61

5152. Reports by Corporations; Signature and Verification .......................................... 62

5152.1 Renewal by Accountancy Corporation Biennially; Fee ...................................... 62

5154. Directors, Shareholders, and Officers; License Requirements ............................ 62

5155. Prohibition Against Accrual of Income to Benefit of Disqualified Shareholders ... 62

5156. Prohibition Against Unprofessional Conduct; Binding Effect of Statutes, Rules,

and Regulations; Provisions Governing Disciplinary Proceedings ................................. 62

5157. Rules and Regulations; Formulation and Enforcement; Provisions Authorized ... 63

5158. Management of Accountancy Corporation .......................................................... 63

ARTICLE 1. Administration

5000. Board of Accountancy; Members; Powers and Duties; Repeal of Section

[Repealed Effective January 1, 2025]

(a) There is in the Department of Consumer Affairs the California Board of Accountancy,

which consists of 15 members, 7 of whom shall be licensees, and 8 of whom shall be

public members who shall not be licentiates of the board or registered by the board. The

board has the powers and duties conferred by this chapter.

(b) The Governor shall appoint four of the public members, and the seven licensee

members as provided in this section. The Senate Committee on Rules and the Speaker

of the Assembly shall each appoint two public members. In appointing the seven

licensee members, the Governor shall appoint individuals representing a cross section

of the accounting profession.

repealed.

(d) Notwithstanding any other law, the repeal of this section renders the board subject to

review by the appropriate policy committees of the Legislature. However, the review of

the board shall be limited to reports or studies specified in this chapter and those issues

identified by the appropriate policy committees of the Legislature and the board

regarding the implementation of new licensing requirements.

5000.1. Priority of Board; Protection of the Public

Protection of the public shall be the highest priority for the California Board of

Accountancy in exercising its licensing, regulatory, and disciplinary functions. Whenever

the protection of the public is inconsistent with other interests sought to be promoted,

the protection of the public shall be paramount.

5000.5. Requirements for Public Member of Board

No public member shall be a current or former licensee of the board or an immediate

family member of a licensee, or be currently or formerly employed by a public

accounting firm, bookkeeping firm, or firm engaged in providing tax preparation as its

primary business, or have any financial interest in the business of a licensee. Each

public member shall meet all of the requirements for public membership on the board as

set forth in Chapter 6 (commencing with Section 450) of Division 1.

5001. Eligibility for Appointment; Oath of Office

(a) Except as provided in subdivision (b), each member of the board, except the public

members, shall be actively engaged in the practice of public accountancy and shall

have been so engaged for a period of not less than five years preceding the date of his

appointment. Each member shall be a citizen of the United States and a resident of this

state for at least five years next preceding his appointment, and shall be of good

character. Within 30 days after their appointment, the members of the board shall take

and subscribe to the oath of office as prescribed by the Government Code and shall file

the same with the Secretary of State.

(b) One licensee member appointed by the Governor may be an active educator within

a program that emphasizes the study of accounting within a college, university, or four-

year educational institution.

5002. Terms; Vacancies; Removal from Board

Each member shall be appointed for a term of four years and shall hold office until the

appointment and qualification of his successor or until one year shall have elapsed

since the expiration of the term for which he was appointed, whichever first occurs.

Vacancies occurring shall be filled by appointment for the unexpired term of a person

licensed in the same capacity as the person being replaced. No person shall serve

more than two terms consecutively. The Governor shall remove from the board any

member, except a public member, whose permit to practice has become void, revoked

or suspended. The Governor may, after hearing, remove any member of the board for

neglect of duty or other just cause.

5003. Officers of Board

The officers of the board are a president, vice president and a secretary-treasurer.

5004. Election of Officers

The president, vice president, and secretary-treasurer shall be elected by the board for

a term of one year from among its members at the time of the annual meeting. The

newly elected president, vice president, and secretary-treasurer shall assume the duties

of their respective offices at the conclusion of the annual meeting at which they were

elected.

5006. Continuance in Office

The officers of the board shall continue in office until their successors are elected and

qualify.

5007. Duties

The president shall preside at all meetings of the board, and in the event of the

president’s absence or inability to act, the vice president shall preside. If both the

president and vice president are absent or unable to act, the secretary-treasurer shall

preside at meetings of the board. The president may designate a board member who is

not an officer to preside at a meeting of the board if all officers of the board are absent

or unable to act at that meeting. Other duties of the president, vice president, and the

duties of the secretary-treasurer, shall be such as the board may prescribe.

5008. Reports; Preparation and Distribution

The board shall, from time to time, but not less than twice each year, prepare and

distribute to all licensees, a report of the activities of the board, including amendments

to this chapter and regulations adopted by the board, and may likewise distribute

reports of other matters of interest to the public and to practitioners. The board may

meet this requirement by electronically distributing these materials via email or making

them available on the board’s internet website.

5009. Register

The board shall compile and maintain, or may have compiled and maintained on its

behalf, a register of licensees that contains information that the board determines is

necessary for the purposes for which the board was established. The board shall make

the register available to any licensee and to the public.

5009.5. Privacy of Applicants’ and Licensees’ Email Addresses

In the interest of protecting the privacy of applicants and licensees, an email address

provided by applicants or licensees to the board pursuant to this chapter shall not be

considered a public record and shall not be disclosed pursuant to Section 27 or

pursuant to a request under the California Public Records Act (Division 10 (commencing

with Section 7920.000) of Title 1 of the Government Code), unless required pursuant to

a court order by a court of competent jurisdiction.

5010. Adoption, Repeal and Amendment of Regulations

The board may adopt, repeal, or amend such regulations as may be reasonably

necessary and expedient for the orderly conduct of its affairs and for the administration

of this chapter. The regulations shall be adopted in accordance with Chapter 3.5

(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government

Code.

5011. Offices

The board shall designate the location of its principal office and may establish branch

offices in other locations.

5012. Seal

The board shall have a seal.

5013. Records; Admissibility in Evidence

The board shall keep records of all proceedings and actions by and before the board

and before its committees. In any proceeding in court, civil or criminal, copies of those

records certified as correct by the executive officer of the board under seal of the board

shall be admissible in evidence and shall be prima facie evidence of the correctness of

the contents thereof.

5015. Employees; Salaries and Expenses

The board may employ clerks, examiners and, except as provided by Section 159.5,

other assistants in the performance of its duties, and pay salaries and necessary

expenses.

5015.6. Executive Officer [Repealed Effective January 1, 2025]

The board may appoint a person exempt from civil service who shall be designated as

an executive officer and who shall exercise the powers and perform the duties

delegated by the board and vested in the executive officer by this chapter.

This section shall remain in effect only until January 1, 2025, and as of that date is

repealed.

5016. Quorum; Notice of Meetings; Waiver

A majority of the board shall constitute a quorum for the transaction of any business at

any meeting of the board. Notice of each meeting of the board shall be given in

accordance with the Bagley-Keene Open Meeting Act (Article 9 (commencing with

Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code).

The board shall meet at the call of the president and executive officer, but not less than

twice each year. Any two members of the board may request the executive officer to call

a special meeting, and the executive officer, upon receiving that notice, shall call a

meeting pursuant to the procedure prescribed herein.

5017. Board Meetings; Executive Sessions

All meetings of the board shall be open and public, except that the board may hold

executive sessions to deliberate on the decision to be reached upon the evidence

introduced in a proceeding conducted in accordance with Chapter 5 (commencing with

Section 11500), Part 1, Division 3, Title 2, of the Government Code.

The members of the board may hold executive sessions to prepare, approve, grade, or

administer examinations and shall have jurisdiction or vote over these functions of

preparing, approving, grading, or administering examinations in executive session as

provided for in Section 11126 of the Government Code.

5017.1. Posting of Board Meeting Minutes on Internet Website

The board shall post, within 10 days of board approval, the finalized minutes from

meetings of the board that are open and public pursuant to Section 5017 on the board’s

internet website. The minutes shall remain on the board’s internet website for at least

three years. Providing a link on the internet website to the minutes shall satisfy this

requirement.

5017.5. Posting of Live Audio or Video Broadcast on Internet Website of Open

and Public Meetings

(a) The board shall provide a live audio or video broadcast, on its internet website, of

each of its board meetings that are open and public.

(b) (1) If technical failure prevents the board from providing a live broadcast as specified

in subdivision (a), that failure shall not constitute a violation of this section if the board

exercised reasonable diligence in providing a live broadcast.

(2) Failure to provide a live broadcast of its board meetings due to technical failure shall

not prohibit the board from meeting and taking actions.

website for at least three years. Providing a link on the internet website to the recording

of the live audio or video broadcast shall satisfy this requirement.

5018. Rules and Standards of Professional Conduct

The board may by regulation, prescribe, amend, or repeal rules of professional conduct

appropriate to the establishment and maintenance of a high standard of integrity and

dignity in the profession. In addition to the requirements contained in Chapter 4

(commencing with Section 11370) of Part 1 of Division 3 of Title 2 of the Government

Code, a copy of the rules shall be mailed to every holder of a license under this chapter

at least 30 days prior to a date named for a public hearing held for the purpose of

receiving and considering objections to any of the proposed provisions. Every licensee

of the California Board of Accountancy in this state shall be governed and controlled by

the rules and standards adopted by the board.

5019. Rules of Professional Conduct

Every applicant, when subscribing to an application for certificate or registration, shall

acknowledge the fact that the applicant has read and understands the rules of

professional conduct adopted by the board.

5020. Enforcement Advisory Committee; Appointment; Authority

The board may, for the purpose of obtaining technical expertise, appoint an

enforcement advisory committee of not more than 13 licensees to provide advice and

assistance related to the functions specified in Section 5103. The committee shall act

only in an advisory capacity, shall have no authority to initiate any disciplinary action

against a licensee, and shall only be authorized to report its findings from any

investigation or hearing conducted pursuant to this section to the board, or upon

direction of the board, to the executive officer.

5021. Terms of Office of Committee Members

The members of the enforcement advisory and qualifications committees shall hold

office for two years.

5022. Recommendations and Report of Committee; Appeal; Examination by

Board

The qualifications committee shall make recommendations and forward its report to the

board for action on any matter on which it is authorized to act. An applicant for

registration as a certified public accountant who is aggrieved by any action taken by the

committee with respect to their qualifications may appeal to the board in accordance

with rules or regulations prescribed by the board. The board on the appeal may give an

oral or written examination as an aid in determining whether the applicant is qualified

under the terms of this chapter.

5023. Qualifications Committee to Examine and Recommend Applicants

The board may establish a qualifications committee of its own certified public

accountant members or other certified public accountants of the state in good standing,

to perform the following advisory duties:

(a) To examine the qualifications of all applicants for the license of certified public

accountant.

(b) To recommend to the board applicants for the certified public accountant license

who fulfill the requirements of this chapter.

5024. Other Advisory Committees

The board may create and appoint advisory committees, consisting solely of board

members or consisting of board members and other persons who are not board

members, for the purpose of making recommendations on matters as may be specified

by the board.

5025.1. Accountants as Consultants and Experts

(a) The board may contract with and employ certified public accountants and public

accountants as consultants and experts to assist in the investigation and prosecution of

judicial and administrative matters.

(b) Contracts made pursuant to this section are not subject to Article 4 (commencing

with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government

Code, except that the board shall apply the standards set forth in Section 19130 in

awarding personal service contracts under this section.

consultants and experts on a sole source basis.

(d) If a person, not a regular employee of the board, is hired or under contract to provide

expertise to the board in the evaluation of the conduct of a licensee, and that person is

named as a defendant in a civil action for defamation, tortious interference with

prospective business advantage, or other civil causes of action directly resulting from

opinions rendered, statements made, or testimony given to the board, its committees,

staff, legal counsel, or other representatives, or in any proceeding instituted by the

board or to which the board is a party, the board shall provide for representation

required to defend that person in that civil action and shall indemnify that person for any

judgment rendered against him or her. This right of defense and indemnification shall be

the same as, and no greater than, the right provided to a public employee pursuant to

Section 825 of the Government Code. Nothing herein shall be construed as expanding

or limiting any immunity from liability otherwise provided by law.

(e) On or before June 1 of each year, the board shall report to the appropriate policy

and fiscal committees of each house of the Legislature the terms of the contract or

contracts entered into each fiscal year pursuant to this section. The report shall include

the cost, services, terms and duration provided under each contract, the identity of the

firms or individuals awarded any contract, and data demonstrating the cost

effectiveness of the board’s sole-source contracting in the investigation and prosecution

of the board’s enforcement programs.

5025.2. Legislative Findings; Authorization of Additional Expenditures

(a) The Legislature finds that there are occasions when the California Board of

Accountancy urgently requires additional expenditure authority in order to fund

unanticipated enforcement and litigation activities. Without sufficient expenditure

authority to obtain the necessary additional resources for urgent litigation and

enforcement matters, the board is unable to adequately protect the public. Therefore, it

is the intent of the Legislature that, apart from, and in addition to, the expenditure

authority that may otherwise be established, the California Board of Accountancy shall

be given the increase in its expenditure authority in any given current fiscal year that is

authorized by the Department of Finance pursuant to the provisions of subdivision (b) of

this section, for costs and services in urgent litigation and enforcement matters,

including, but not limited to, costs for professional and consulting services and for the

services of the Attorney General and the office of Administrative Hearings.

(b) Notwithstanding Control Section 27.00 of the annual Budget Act, Section 11006 of

the Government Code, and the amount listed in the annual Budget Act for expenditure,

the Department of Finance shall authorize up to two million dollars ($2,000,000) in

additional expenditures for the California Board of Accountancy upon a showing by the

board that those funds are necessary for public protection and that the shortfall was not

anticipated. These additional expenditures shall be payable from the Accountancy Fund

for purposes of the board’s litigation or enforcement activities in any given current fiscal

year.

5025.3. Contracts for Litigation or Enforcement; Funds Encumbered

(a) Whenever the board enters into a contract for litigation or enforcement purposes,

including, but not limited to, contracts pursuant to Section 5025.1, funds may be

encumbered in the fiscal year the contract is executed and expended at any time during

the subsequent 24 months commencing with the last day of the fiscal year in which the

contract is executed.

(b) Notwithstanding Section 13340 of the Government Code, funds encumbered for a

contract pursuant to subdivision (a) of this section are continuously appropriated without

regard to fiscal year, however, the appropriation is limited to the period for which funds

are authorized to be encumbered under subdivision (a).

ARTICLE 1.5. Continuing Education

5026. Continuing Education Requirement

The Legislature has determined it is in the public interest to require that certified public

accountants and public accountants licensed under provisions of this chapter comply

with continuing education requirements adopted by the board as a prerequisite to the

renewal of public accountancy licenses on and after December 31, 1974.

5027. Rules Concerning Continuing Education; Standards Established

The board shall by regulation prescribe, amend, or repeal rules including, but not limited

to, all of the following:

(a) A definition of basic requirements for continuing education.

(b) A licensee who plans, directs, or approves any financial or compliance audit report

on any governmental agency shall complete a minimum of 24 hours of qualifying

continuing education in the area of governmental accounting and auditing or related

subjects during the two-year license renewal period.

financial statement reports shall, during the two-year license renewal period, complete a

minimum of 24 hours of qualifying continuing education in the area of accounting and

auditing related to reporting on financial statements.

(d) A licensee with a valid permit to practice public accountancy shall, within a six-year

period, complete a continuing education course on the provisions of this chapter and the

rules of professional conduct.

(e) A licensee on inactive status shall complete the continuing education course

required by subdivision (d) prior to reentering public practice.

(f) A delineation of qualifying programs for maintaining competency.

(g) A system of control and compliance reporting.

In exercising its power under this section for the interests of consumer protection, the

board shall establish standards which will assure reasonable currency of knowledge as

a basis for a high standard of practice by licensees. The standards shall be established

in a manner to assure that a variety of alternatives are available to licensees to comply

with the continuing education requirements for renewal of licenses and taking

cognizance of specialized areas of practice.

5028. Exceptions from Continuing Education Requirement

The board may, in accordance with the intent of this article, make exceptions from

continuing education requirements for licensees not engaged in public practice, or for

reasons of health, military service, or other good cause. If the licensee returns to the

practice of public accounting, they shall meet continuing education requirements as the

board may determine.

ARTICLE 2. General Powers and Definitions

5030. “Board”

“Board” means the California Board of Accountancy.

5031. “Committee”

“Committee” means any committee created under the provisions of Article 1

(commencing at Section 5000).

5032. “State”

“State” when not specifically referring to this State, means any state, territory or insular

possession of the United States, or the District of Columbia.

5033. “Certified Public Accountant”

“Certified public accountant” means any person who has received from the board a

certificate of certified public accountant and who holds a valid permit to practice under

the provisions of this chapter.

5033.1. “License” as Including “Certificate”

For purposes of this chapter, “license” shall also include “certificate.”

5034. “Public Accountant”

“Public accountant” means any person who has registered with the board as a public

accountant and who holds a valid permit for the practice of public accountancy.

5035. “Person”

“Person” includes individual, partnership, firm, association, limited liability company, or

corporation, unless otherwise provided.

5035.1. “Firm”

“Firm” means a sole proprietorship, a corporation, or a partnership.

5035.2. “Client”

“Client”, as used in any context in this chapter, means any person for whom public

accountancy services are performed or to whom financial products, financial services,

or securities are sold or provided at the licensee’s public accountancy practice or

through referral to any other location or business in which the certified public accountant

has a material interest.

5035.3. “Firm” Includes

For purposes of subdivision (b) of Section 5050 and Sections 5054 and 5096.12, “firm”

includes any entity that is authorized or permitted to practice public accountancy as a

firm under the laws of another state.

5036. Construction of Statute Requiring Preparation of Documents

Whenever any statute requires that any reports, financial statements, and other

documents for any department, division, board, commission, or agency of this state be

prepared by certified public accountants, the requirement shall be construed to mean a

licensee or licensees with a valid permit to practice public accountancy.

5037. Statements and Other Records as Property of Accountant; Access by

Client

(a) All statements, records, schedules, working papers and memoranda made by a

licensee or a partner, shareholder, officer, director, or employee of a licensee, incident

to, or in the course of, rendering services to a client in the practice of public

accountancy, except the reports submitted by the licensee to the client and except for

records that are part of the client’s records, shall be and remain the property of the

licensee in the absence of an express agreement between the licensee and the client to

the contrary. No such statement, record, schedule, working paper, or memoranda shall

be sold, transferred, or bequeathed, without the consent of the client or their personal

representative or assignee, to anyone other than one or more surviving partners or

stockholders or new partners or stockholders of the licensee, or any combined or

merged firm or successor in interest to the licensee.

(b) A licensee shall furnish to their client or former client, upon request and reasonable

notice:

(1) A copy of the licensee’s working papers, to the extent that those working papers

include records that would ordinarily constitute part of the client’s records and are not

otherwise available to the client.

(2) Any accounting or other records belonging to, or obtained from or on behalf of, the

client that the licensee removed from the client’s premises or received for the client’s

account. The licensee may make and retain copies of documents of the client when

they form the basis for work done by them.

5037.1. Construction of Section 5037

Nothing in subdivision (k) of Section 17406 of the Financial Code or subdivision (a) of

Section 17406.1 of the Financial Code shall be construed to impair or impede a

licensee’s rights, duties, and obligations under Section 5037.

5038. Severability of Provisions

If any provisions of this chapter or the application thereof to any person or

circumstances is held invalid, the remainder of the chapter and the application of such

provision to other persons or circumstances shall not be affected thereby.

5040. Informing Taxpayers of Voluntary Contributions

The Legislature finds and declares that it is important to inform taxpayers that they may

make voluntary contributions to certain funds or programs, as provided on the state

income tax return. The Legislature further finds and declares that many taxpayers

remain unaware of the voluntary contribution check-offs on the state income tax return.

Therefore, it is the intent of the Legislature to encourage all persons who prepare state

income tax returns, including accountants, to inform their clients in writing, prior to the

completion of any state income tax return, that they may make a contribution to any

voluntary contribution check-off on the state income tax return if they so choose.

ARTICLE 3. Application of Chapter

5050. Public Accountancy Not to be Practiced without Permit; Temporary

Practice

(a) Except as provided in subdivisions (b) and (c) of this section, in subdivision (a) of

Section 5054, and in Section 5096.12, no person shall engage in the practice of public

accountancy in this state unless the person is the holder of a valid permit to practice

public accountancy issued by the board or a holder of a practice privilege pursuant to

Article 5.1 (commencing with Section 5096).

(b) Nothing in this chapter shall prohibit a certified public accountant, a public

accountant, or a public accounting firm lawfully practicing in another state from

temporarily practicing in this state incident to practice in another state, provided that an

individual providing services under this subdivision may not solicit California clients,

may not assert or imply that the individual is licensed to practice public accountancy in

California, and may not engage in the development, implementation, or marketing to

California consumers of any abusive tax avoidance transaction, as defined in

subdivision (c) of Section 19753 of the Revenue and Taxation Code. A firm providing

services under this subdivision that is not registered to practice public accountancy in

California may not solicit California clients, may not assert or imply that the firm is

licensed to practice public accountancy in California, and may not engage in the

development, implementation, or marketing to California consumers of any abusive tax

avoidance transaction, as defined in subdivision (c) of Section 19753 of the Revenue

and Taxation Code. This subdivision shall become inoperative on January 1, 2011.

registration, certificate, permit, or other authority to practice public accountancy from a

foreign country, and lawfully practicing therein, from temporarily engaging in the practice

of public accountancy in this state incident to an engagement in that country, provided

that:

(1) The temporary practice is regulated by the foreign country and is performed under

accounting or auditing standards of that country.

(2) The person does not hold himself or herself out as being the holder of a valid

California permit to practice public accountancy or the holder of a practice privilege

pursuant to Article 5.1 (commencing with Section 5096).

5050.1. Practice of Foreign Entity within State Subject to Jurisdiction of Board

(a) Any person that engages in any act that is the practice of public accountancy in this

state consents to the personal, subject matter, and disciplinary jurisdiction of the board.

This subdivision is declarative of existing law.

(b) Any person engaged in the practice of public accountancy under subdivision (a) is

deemed to have appointed the regulatory authority of the state or foreign jurisdiction

that issued the person’s permit, certificate, license or other authorization to practice as

the person’s agent on whom notice, subpoenas, or other process may be served in any

action or proceeding by or before the board against or involving that person.

5050.2. Revocation, Suspension or Fine for Foreign Licensee Authorized

(a) The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing

with Section 5116), or otherwise restrict or discipline the holder of an authorization to

practice under subdivision (b) or (c) of Section 5050, subdivision (a) of Section 5054, or

Section 5096.12 for any act that would be a violation of this code or grounds for

discipline against a licensee or holder of a practice privilege, or grounds for denial of a

license or practice privilege under this code. The provisions of the Administrative

Procedure Act, including, but not limited to, the commencement of a disciplinary

proceeding by the filing of an accusation by the board shall apply to this section. Any

person whose authorization to practice under subdivision (b) or (c) of Section 5050,

subdivision (a) of Section 5054, or Section 5096.12 has been revoked may apply for

reinstatement of the authorization to practice under subdivision (b) or (c) of Section

5050, subdivision (b) of Section 5054, or Section 5096.12 not less than one year after

the effective date of the board’s decision revoking the authorization to practice unless a

longer time, not to exceed three years, is specified in the board’s decision revoking the

authorization to practice.

(b) The board may administratively suspend the authorization of any person to practice

under subdivision (b) or (c) of Section 5050, subdivision (a) of Section 5054, or Section

5096.12 for any act that would be grounds for administrative suspension under Section

5096.4 utilizing the procedures set forth in that section.

5051. Practice of Public Accountancy

Except as provided in Sections 5052 and 5053, a person shall be deemed to be

engaged in the practice of public accountancy within the meaning and intent of this

chapter if they do any of the following:

(a) Hold themselves out to the public in any manner as one skilled in the knowledge,

science, and practice of accounting, and as qualified and ready to render professional

service as a public accountant for compensation.

(b) Maintain an office for the transaction of business as a public accountant.

of clients for compensation, professional services that involve or require an audit,

examination, verification, investigation, certification, presentation, or review of financial

transactions and accounting records.

(d) Prepare or certify for clients reports on audits or examinations of books or records of

account, balance sheets, and other financial, accounting and related schedules,

exhibits, statements, or reports that are to be used for publication, for the purpose of

obtaining credit, for filing with a court of law or with any governmental agency, or for any

other purpose.

(e) In general or as an incident to that work, render professional services to clients for

compensation in any or all matters relating to accounting procedure and to the

recording, presentation, or certification of financial information or data.

(f) Keep books, make trial balances, prepare statements, make audits, or prepare

reports, all as a part of bookkeeping operations for clients.

(g) Prepare or sign, as the tax preparer, tax returns for clients.

(h) Prepare personal financial or investment plans or provide to clients products or

services of others in implementation of personal financial or investment plans.

(i) Prepare management consulting services to clients.

The activities set forth in subdivisions (f) to (i), inclusive, are “public accountancy” only

when performed by a certified public accountant or public accountant, as defined in this

chapter.

A person is not engaged in the practice of public accountancy if the only services they

engage in are those defined by subdivisions (f) to (i), inclusive, and they do not hold

themselves out, solicit, or advertise for clients using the certified public accountant or

public accountant designation. A person is not holding themselves out, soliciting, or

advertising for clients within the meaning of this section solely by reason of displaying a

CPA or PA certificate in their office or identifying themselves as a CPA or PA on other

than signs, advertisements, letterhead, business cards, publications directed to clients

or potential clients, or financial or tax documents of a client.

5052. Exemptions

Nothing in this chapter shall apply to any person who as an employee, independent

contractor, or otherwise, contracts with one or more persons, organizations, or entities,

for the purpose of keeping books, making trial balances, statements, making audits or

preparing reports, all as a part of bookkeeping operations, provided that such trial

balances, statements, or reports are not issued over the name of such person as having

been prepared or examined by a certified public accountant or public accountant.

Nothing contained in this chapter shall affect, limit or be construed as affecting or

limiting the rights of any public accountant who met the requirements of prior statutes

and who was registered with the board as a public accountant on or before December

31, 1955.

5053. Employee or Assistant Under Supervision of Certified Public Accountant or

Public Accountant; Attorney at Law

Nothing contained in this chapter precludes a person who is not a certified public

accountant or public accountant from serving as an employee of, or an assistant to, a

certified public accountant or public accountant or partnership or a corporation

composed of certified public accountants or public accountants holding a permit to

practice pursuant to this chapter if the employee or assistant works under the control

and supervision of a certified public accountant, or a public accountant authorized to

practice public accountancy pursuant to this chapter and if the employee or assistant

does not issue any statement over their name.

This section does not apply to an attorney at law in connection with the practice of law.

5054. Preparation of Tax Returns by Individuals and Firms Licensed Outside the

State

(a) Notwithstanding any other provision of this chapter, an individual or firm holding a

valid and current license, certificate, or permit to practice public accountancy from

another state may prepare tax returns for natural persons who are California residents

or estate tax returns for the estates of natural persons who were clients at the time of

death without obtaining a permit to practice public accountancy issued by the board

under this chapter or a practice privilege pursuant to Article 5.1 (commencing with

Section 5096) provided that the individual or firm does not physically enter California to

practice public accountancy pursuant to Section 5051, does not solicit California clients,

and does not assert or imply that the individual or firm is licensed or registered to

practice public accountancy in California.

(b) The board may, by regulation, limit the number of tax returns that may be prepared

pursuant to subdivision (a).

5055. Designation of Recipient of Certificate and Permit as Certified Public

Accountant

Any person who has received from the board a certificate of certified public accountant,

or who is authorized to practice public accountancy in this state pursuant to Article 5.1

(commencing with Section 5096), may, subject to Section 5051, be styled and known as

a “certified public accountant” and may also use the abbreviation “C.P.A.” No other

person, except a firm registered under this chapter, shall assume or use that title,

designation, or abbreviation or any other title, designation, sign, card, or device tending

to indicate that the person using it is a certified public accountant.

5056. Designation of Recipient of Certificate and Permit as Public Accountant

Any person who has received from the board a certificate of public accountant may,

subject to Section 5051, be styled and known as a “public accountant” and may also

use the abbreviation “P.A.” No other person, except a firm registered under this chapter,

shall assume or use that title, designation, or abbreviation or any other title, designation,

sign, card, or device tending to indicate that the person using it is a public accountant.

5057. Licensed Out of State Public Accountants Exempt from Permitting

Requirements; Conditions

Notwithstanding any other provision of law, an individual holding a valid and current

license, certificate, or permit to practice public accountancy from another state shall be

exempt from the requirement to obtain a permit to practice public accountancy issued

by the board under this chapter or to secure a practice privilege pursuant to Article 5.1

(commencing with Section 5096) if all of the following conditions are satisfied:

(a) The individual’s client is located in another state.

(b) The individual’s engagement with the client relates to work product to be delivered in

another state.

business in this state.

(d) The individual does not assert or imply that they are licensed to practice public

accountancy in California.

(e) The individual’s practice of public accountancy in this state on behalf of the client

located in another state is of a limited duration, not extending beyond the period

required to service the engagement for the client located in another state.

(f) The individual’s practice of public accountancy in this state specifically relates to

servicing the engagement for the client located in another state.

5058. Assumption or Use of Confusing Title

No person or partnership shall assume or use the title or designation “chartered

accountant,” “certified accountant,” “enrolled accountant,” “registered accountant” or

“licensed accountant,” or any other title or designation likely to be confused with

“certified public accountant” or “public accountant,” or any of the abbreviations “C.A.,”

“E.A.,” “R.A.,” or “L.A.,” or similar abbreviations likely to be confused with “C.P.A.” or

“P.A.”; provided, that any person qualified as a certified public accountant under this

chapter who also holds a comparable title granted under the laws of another country

may use such title in conjunction with the title of “certified public accountant” or “C.P.A.”

and provided, that any person enrolled to practice before the Internal Revenue Service

and recognized as an enrolled agent may use the abbreviation “E.A.”

5058.1. Misleading Accountant Designations

A person or firm may not use any title or designation in connection with the designation

“certified public accountant” or “public accountant” that is false or misleading.

The board may adopt regulations covering the use of titles or designations.

5058.2. Designation of Inactive Status

The holder of an inactive license issued by the board pursuant to Section 462, when

lawfully using the title “certified public accountant,” the CPA designation, or any other

reference that would suggest that the person is licensed by the board on materials such

as correspondence, internet websites, business cards, nameplates, or name plaques,

shall place the term “inactive” immediately after that designation.

5058.3. Holder of Retired License; Requirement

The holder of a retired license issued by the board pursuant to Section 5070.1, when

lawfully using the title “certified public accountant,” the CPA designation, or any other

reference that would suggest that the person is licensed by the board on materials such

as correspondence, internet websites, business cards, nameplates, or name plaques,

shall place the term “retired” immediately after that title, designation, or reference.

5058.4. Holder of Permit in Military Inactive Status; Requirement

The holder of a permit in a military inactive status issued by the board pursuant to

Section 5070.2, when lawfully using the title “certified public accountant,” the CPA

designation, or any other reference that would suggest that the person is licensed by

the board, on materials such as correspondence, internet websites, business cards,

nameplates, or name plaques, shall place the term “military inactive” immediately after

that title, designation, or reference.

ARTICLE 3.5. Standards of Professional Conduct

5060. Use of Individual Names

(a) No person or firm may practice public accountancy under any name which is false or

misleading.

(b) No person or firm may practice public accountancy under any name other than the

name under which the person or firm holds a valid permit to practice issued by the

board.

than the name set forth on their permit to practice, provided the name is registered by

the board, is in good standing, and complies with the requirements of subdivision (a).

(d) The board may adopt regulations to implement, interpret, and make specific the

provisions of this section including, but not limited to, regulations designating particular

forms of names as being false or misleading.

5061. Fees and Commissions

(a) Except as expressly permitted by this section, a person engaged in the practice of

public accountancy shall not: (1) pay a fee or commission to obtain a client or (2) accept

a fee or commission for referring a client to the products or services of a third party.

(b) A person engaged in the practice of public accountancy who is not performing any of

the services set forth in subdivision (c) and who complies with the disclosure

requirements of subdivision (d) may accept a fee or commission for providing a client

with the products or services of a third party where the products or services of a third

party are provided in conjunction with professional services provided to the client by the

person engaged in the practice of public accountancy. Nothing in this subdivision shall

be construed to permit the solicitation or acceptance of any fee or commission solely for

the referral of a client to a third party.

performing services for a client, or an officer or director of a client, or a client-sponsored

retirement plan, for a commission or from receiving a commission from a third party for

providing the products or services of that third party to a client, or an officer or director

of a client, or a client-sponsored retirement plan, during the period in which the person

also performs for that client, or officer or director of that client, or client-sponsored

retirement plan, any of the services listed below and during the period covered by any

historical financial statements involved in those listed services:

(1) An audit or review of a financial statement.

(2) A compilation of a financial statement when that person expects, or reasonably

might expect, that a third party will use the financial statement and the compilation

report does not disclose a lack of independence.

(3) An examination of prospective financial information.

For purposes of this subdivision, “director” means any person as defined under Section

164 of the Corporations Code and “officer” means any individual reported to a

regulatory agency as an officer of a corporation. However, “director” and “officer” does

not include a director or officer of a nonprofit corporation, or a corporation that meets

the board’s definition of small business, as specified by regulation.

(d) A person engaged in the practice of public accountancy who is not prohibited from

performing services for a commission, or from receiving a commission, and who is paid

or expects to be paid a commission, shall disclose that fact to any client or entity to

whom the person engaged in the practice of public accountancy recommends or refers

a product or service to which the commission relates.

(e) The board shall adopt regulations to implement, interpret, and make specific the

provisions of this section including, but not limited to, regulations specifying the terms of

any disclosure required by subdivision (d), the manner in which the disclosure shall be

made, and other matters regarding the disclosure that the board deems appropriate.

These regulations shall require, at a minimum, that a disclosure shall comply with all of

the following:

(1) Be in writing and be clear and conspicuous.

(2) Be signed by the recipient of the product or service.

(3) State the amount of the commission or the basis on which it will be computed.

(4) Identify the source of the payment and the relationship between the source of the

payment and the person receiving the payment.

(5) Be presented to the client at or prior to the time the recommendation of the product

or service is made.

(f) For purposes of this section, “fee” includes, but is not limited to, a commission,

rebate, preference, discount, or other consideration, whether in the form of money or

otherwise.

(g) This section shall not prohibit payments for the purchase of any accounting practice

or retirement payments to individuals presently or formerly engaged in the practice of

public accountancy or payments to their heirs or estates.

5062. Report Following Compilation, Review, or Audit of Financial Statements

A licensee shall issue a report which conforms to professional standards upon

completion of a compilation, review or audit of financial statements.

5062.2. Restrictions on Employment with Publicly Traded Company

A licensee shall not accept employment with a publicly traded corporation or its affiliate

within 12 months of the date of issuance of a financial statement report if both of the

following criteria are met:

(a) The licensee has participated in an audit engagement for the corporation and held

responsibility, with respect to the audit engagement, requiring the licensee to exercise

significant judgment in the audit process. Responsibilities meeting the requirements of

this subdivision include, but are not limited to, positions, however titled, where the

licensee was the person in charge of the fieldwork, up through positions where the

licensee was a partner on the engagement.

(b) The employment would permit the licensee to exercise significant authority over

accounting or financial reporting, including authority over the controls related to those

functions.

5063. Licensee Report

(a) A licensee shall report to the board in writing of the occurrence of any of the

following events occurring on or after January 1, 1997, within 30 days of the date the

licensee has knowledge of these events:

(1) The conviction of the licensee of any of the following:

(A) A felony.

(B) Any crime related to the qualifications, functions, or duties of a public accountant or

certified public accountant, or to acts or activities in the course and scope of the practice

of public accountancy.

breach of a fiduciary responsibility, or the preparation, publication, or dissemination of

false, fraudulent, or materially misleading financial statements, reports, or information.

As used in this section, a conviction includes the initial plea, verdict, or finding of guilt,

pleas of no contest, or pronouncement of sentence by a trial court even though that

conviction may not be final or sentence actually imposed until appeals are exhausted.

(2) The cancellation, revocation, or suspension of a certificate, other authority to

practice or refusal to renew a certificate or other authority to practice as a certified

public accountant or a public accountant, by any other state or foreign country.

(3) The cancellation, revocation, or suspension of the right to practice as a certified

public accountant or a public accountant before any governmental body or agency.

(b) A licensee shall report to the board in writing the occurrence of any of the following

events occurring on or after January 1, 2003, within 30 days of the date the licensee

has knowledge of the events:

(1) Any restatement of a financial statement and related disclosures by a client audited

by the licensee.

(2) Any civil action settlement or arbitration award against the licensee relating to the

practice of public accountancy where the amount or value of the settlement or

arbitration award is thirty thousand dollars ($30,000) or greater and where the licensee

is not insured for the full amount of the award.

(3) Any notice of the opening or initiation of a formal investigation of the licensee by the

Securities and Exchange Commission or its designee.

(4) Any notice from the Securities and Exchange Commission to a licensee requesting a

Wells Submission.

(5) Any notice of the opening or initiation of an investigation by the Public Company

Accounting Oversight Board or its designee, as defined pursuant to subdivision (g).

judgment, any judgment entered on or after January 1, 2003, against the licensee in any

civil action alleging any of the following:

(1) Dishonesty, fraud, gross negligence, or negligence.

(2) Breach of fiduciary responsibility.

(3) Preparation, publication, or dissemination of false, fraudulent, or materially

misleading financial statements, reports, or information.

(4) Embezzlement, theft, misappropriation of funds or property, or obtaining money,

property, or other valuable consideration by fraudulent means or false pretenses, or

other errors or omissions.

(5) Any actionable conduct by the licensee in the practice of public accountancy, the

performance of bookkeeping operations, or other professional practice.

(d) The report required by subdivisions (a), (b), and (c) shall be signed by the licensee

and set forth the facts which constitute the reportable event. If the reportable event

involves the action of an administrative agency or court, then the report shall set forth

the title of the matter, court or agency name, docket number, and dates of occurrence of

the reportable event.

(e) A licensee shall promptly respond to oral or written inquiries from the board

concerning the reportable events, including inquiries made by the board in conjunction

with license renewal.

(f) Nothing in this section shall impose a duty upon any licensee to report to the board

the occurrence of any of the events set forth in subdivision (a), (b), or (c) either by or

against any other licensee.

(g) The board may adopt regulations to further define the reporting requirements of this

section.

5063.1. Report by Court Rendering Certain Convictions or Judgments Involving

Licensee

Within 10 days of entry of a conviction described in paragraph (1) of subdivision (a) of

Section 5063 or a judgment described in subdivision (c) of Section 5063 by a court of

this state, the court that rendered the conviction or judgment shall report that fact to the

board and provide the board with a copy of the conviction or judgment and any orders

or opinions of the court accompanying or ordering the conviction or judgment.

5063.2. Report by Insurer on Certain Settlements or Arbitration Awards Involving

Licensee

Within 30 days of payment of all or any portion of any civil action settlement or

arbitration award against a licensee of the board in which the amount or value of the

settlement or arbitration award is thirty thousand dollars ($30,000) or greater, any

insurer or licensed surplus broker providing professional liability insurance to that

licensee shall report to the board the name of the licensee, the amount or value of the

settlement or arbitration award, the amount paid by the insurer or licensed surplus

broker, and the identity of the payee.

5063.3. Disclosure of Confidential Information Prohibited; Exceptions; Disclosure

to Persons and Entities Outside the United States

(a) No confidential information obtained by a licensee, in their professional capacity,

concerning a client or a prospective client shall be disclosed by the licensee without the

written permission of the client or prospective client, except the following:

(1) Disclosures made by a licensee in compliance with a subpoena or a summons

enforceable by order of a court.

(2) Disclosures made by a licensee regarding a client or prospective client to the extent

the licensee reasonably believes it is necessary to maintain or defend themselves in a

legal proceeding initiated by the client or prospective client.

(3) Disclosures made by a licensee in response to an official inquiry from a federal or

state government regulatory agency.

(4) Disclosures made by a licensee or a licensee’s duly authorized representative to

another licensee or person in connection with a proposed sale or merger of the

licensee’s professional practice, provided the parties enter into a written nondisclosure

agreement with regard to all client information shared between the parties.

(5) Disclosures made by a licensee to either of the following:

(A) Another licensee to the extent necessary for purposes of professional consultation.

(B) Organizations that provide professional standards review and ethics or quality

control peer review.

(6) Disclosures made when specifically required by law.

(7) Disclosures specified by the board in regulation.

(b) In the event that confidential client information may be disclosed to persons or

entities outside the United States of America in connection with the services provided,

the licensee shall inform the client in writing and obtain the client’s written permission for

the disclosure.

5063.10. Restatement of Financial Statement Included in Filed Report Exempt

from Certain Requirements

(a) Any restatement of a financial statement that is included in any report filed with the

United States Securities and Exchange Commission shall be exempt from the

requirement described in paragraph (1) of subdivision (b) of Section 5063.

(b) Nothing in this section shall be construed to require the reporting of any restatement

of a financial statement that is not required to be submitted to the board pursuant to the

regulations adopted by the board in effect on the date this section becomes operative.

ARTICLE 4. Applications, Registrations, Permits Generally

5070. Permits; Registration of Entity Authorized to Practice Public Accountancy

Under the Laws of Another State; Fees; Certificate of Registration

(a) Permits to engage in the practice of public accountancy in this state shall be issued

by the board only to holders of the certificate of certified public accountant issued under

this chapter and to those partnerships, corporations, and other persons who, upon

application approved by the board, are registered with the board under this chapter.

Notwithstanding any other law, the board may register an entity organized and

authorized to practice public accountancy under the laws of another state for the

purpose of allowing that entity to satisfy the registration requirement set forth in Section

5096.12, if (1) the certified public accountants providing services in California qualify for

the practice privilege, and (2) the entity satisfies all other requirements to register in this

state, other than its form of legal organization.

(b) All applicants for registration shall furnish satisfactory evidence that the applicant is

entitled to registration and shall pay the fee as provided in Article 8 (commencing with

Section 5130). Every partnership, corporation, and other person to whom a permit is

issued shall, in addition to any other fee that may be payable, pay the initial permit fee

provided in Article 8 (commencing with Section 5130).

address at the time of application or registration.

(d) Each partnership, corporation, and other person issued a permit by the board to

practice as a certified public accountant or as a public accountant shall be furnished

with a suitable certificate evidencing that registration.

5070.1. Establishment of System for Placement of License on Retired Status;

Duties of Board

(a) The board may establish, by regulation, a system for the placement of a license into

a retired status, upon application, for certified public accountants and public

accountants who are not actively engaged in the practice of public accountancy or any

activity that requires them to be licensed by the board.

(b) No licensee with a license in a retired status shall engage in any activity for which a

permit is required.

the permit is subject to an outstanding order of the board, is suspended, revoked, or

otherwise punitively restricted by the board, or is subject to disciplinary action under this

chapter.

(d) (1) The holder of a license that was canceled pursuant to Section 5070.7 may apply

for the placement of that license in a retired status pursuant to subdivision (a).

(2) Upon approval of an application made pursuant to paragraph (1), the board shall

reissue that license in a retired status.

(3) The holder of a canceled license that was placed in retired status between January

1, 1994, and January 1, 1999, inclusive, shall not be required to meet the qualifications

as established pursuant to subdivision (e), but shall be subject to all other requirements

of this section.

(e) The board shall establish minimum qualifications to place a license in retired status.

(f) The board may exempt the holder of a license in a retired status from the renewal

requirements described in Section 5070.5.

(g) The board shall establish minimum qualifications for the restoration of a license in a

retired status to an active status. These minimum qualifications shall include, but are not

limited to, continuing education and payment of a fee as provided in subdivision (h) of

Section 5134.

(h) The board shall not restore to active or inactive status a license that was canceled

by operation of law, pursuant to subdivision (a) of Section 5070.7, and then placed into

retired status pursuant to subdivision (d). The individual shall instead apply for a new

license, as described in subdivision (c) of Section 5070.7, in order to restore the

individual’s license.

(i) At the time of application, if the applicant has a valid email address, the applicant

shall provide that email address to the board.

5070.2. Application for Military Inactive Status Permit; Conversion of Permit

Status; Holder of Permit; Requirements; Adoption of Regulations

(a) (1) Beginning January 1, 2014, a holder of a permit may apply to have the holder’s

permit placed in a military inactive status if the holder of a permit is engaged in, and

provides sufficient evidence of, active duty as a member of the California National

Guard or the United States Armed Forces.

(2) The board shall deny an applicant’s application for a military inactive status permit if

the permit issued pursuant to Section 5070 is canceled or if it is suspended, revoked, or

otherwise punitively restricted by the board or subject to disciplinary action under this

chapter. At the time of application, if the applicant has a valid email address, the

applicant shall provide that email address to the board.

(b) No holder of a permit in a military inactive status shall engage in any activity for

which a permit is required.

following:

(1) Payment of the biennial renewal fee described in subdivision (f) of Section 5134.

(2) The continuing education requirements of Section 5027.

(3) The peer review requirements of Section 5076.

(d) In order to convert a permit status from military inactive status prior to discharge

from active duty as a member of the California National Guard or the United States

Armed Forces, the holder of a permit in a military inactive status shall comply with all of

the following requirements:

(1) Pay the current biennial renewal fee described in subdivision (f) of Section 5134.

(2) Meet continuing education requirements as prescribed by the board.

(3) Meet the peer review requirements as prescribed by the board.

(e) The holder of a permit in a military inactive status shall, within one year from

discharge from active duty as a member of the California National Guard or the United

States Armed Forces, comply with all of the following requirements:

(1) Provide evidence to the board of the discharge date.

(2) Pay the current biennial renewal fee described in subdivision (f) of Section 5134.

(3) Meet continuing education requirements as prescribed by the board.

(4) Meet the peer review requirements as prescribed by the board.

(f) The board may adopt regulations as necessary to administer this section.

5070.5. Expiration of Permits; Renewal of Unexpired Permits

(a) (1) A permit issued under this chapter to a certified public accountant or a public

accountant expires at 12 midnight on the last day of the month of the legal birthday of

the licensee during the second year of a two-year term if not renewed.

(2) To renew an unexpired permit, a permitholder shall, before the time at which the

permit would otherwise expire, apply for renewal on a form prescribed by the board, pay

the renewal fee prescribed by this chapter, and give evidence satisfactory to the board

that the permitholder has complied with the continuing education provisions of this

chapter.

(3) Each applicant for renewal who has a valid email address shall report that email

address to the board on the renewal form described in paragraph (1). In the interest of

protecting an applicant’s privacy, the electronic mail address shall not be considered a

public record and shall not be disclosed pursuant to Section 27 or pursuant to a request

under the California Public Records Act (Division 10 (commencing with Section

7920.000) of Title 1 of the Government Code), unless required pursuant to a court order

by a court of competent jurisdiction.

(b) A permit to practice as an accountancy partnership or an accountancy corporation

expires at 12 midnight on the last day of the month in which the permit was initially

issued during the second year of a two-year term if not renewed. To renew an

unexpired permit, the permitholder shall, before the time at which the permit would

otherwise expire, apply for renewal on a form prescribed by the board, pay the renewal

fee prescribed by this chapter, and provide evidence satisfactory to the board that the

accountancy partnership or accountancy corporation is in compliance with this chapter.

provide that email address to the board.

(d) A permitholder shall notify the board within 30 days of any change to their email

address on file with the board. The board may periodically, as it determines necessary,

require permitholders to confirm that their email address on file with the board is current.

5070.6. Prerequisites to Renewal of Expired Permits; Commencement and

Duration of Renewal

Except as otherwise provided in this chapter, an expired permit may be renewed at any

time within five years after its expiration upon the filing of an application for renewal on a

form prescribed by the board, payment of all accrued and unpaid renewal fees and

providing evidence satisfactory to the board of compliance as required by Section

5070.5. At the time of application, if the applicant has a valid email address, the

applicant shall provide that address to the board. If the permit is renewed after its

expiration, its holder, as a condition precedent to renewal, shall also pay the

delinquency fee prescribed by this chapter. Renewal under this section shall be

effective on the date on which the application is filed, on the date on which the accrued

renewal fees are paid, or on the date on which the delinquency fee, if any, is paid,

whichever last occurs. If so renewed, the permit shall continue in effect through the date

provided in Section 5070.5 that next occurs after the effective date of the renewal, when

it shall expire if it is not again renewed.

5070.7. Cancellation of Permit Not Renewed within Statutory Period; New

Certificate and Permit; Reinstatement

(a) A permit that is not renewed within five years following its expiration may not be

renewed, restored, or reinstated thereafter, and the certificate of the holder of the permit

shall be canceled immediately upon expiration of the five-year period, except as

provided in subdivision (e).

(b) A partnership or corporation whose certificate has been canceled by operation of

this section may obtain a new certificate and permit only if it again meets the

requirements set forth in this chapter relating to registration and pays the registration

fee and initial permit fee.

section may apply for and obtain a new certificate and permit if the applicant:

(1) Is not subject to denial of a certificate and permit under Section 480.

(2) Pays all of the fees that would be required of them if they were then applying for the

certificate and permit for the first time.

(3) Takes and passes the examination that would be required of them if they were then

applying for the certificate for the first time. The examination may be waived in any case

in which the applicant establishes to the satisfaction of the board that, with due regard

for the public interest, they are qualified to engage in practice as a certified public

accountant.

(d) The board may, by appropriate regulation, provide for the waiver or refund of all or

any part of the application fee in those cases in which a certificate is issued without an

examination under this section.

(e) Revoked permits may not be renewed, but may be reinstated by the board, without

regard to the length of time that has elapsed since the permit was revoked, and with

conditions and restrictions as the board shall determine.

5070.8. Expiration and Renewal of Suspended or Revoked Permit; Absence of

Right to Practice While Permit Suspended; Reinstatement Fee

A permit which has been suspended is subject to expiration, and shall be renewed as

provided in this article, but such renewal does not entitle the holder of the permit, while

it remains suspended, and until it is reinstated, to engage in the practice of

accountancy, or in any other activity or conduct in violation of the order or judgment by

which the permit was suspended.

A permit which has been revoked is subject to expiration, but it may not be renewed. If it

is reinstated after its expiration, the holder of the permit, as a condition precedent to its

reinstatement, shall pay a reinstatement fee which shall be in an amount equal to the

renewal fee in effect on the last regular renewal date before the date on which it is

reinstated, plus the delinquency fee, if any, accrued at the time of its revocation.

5072. Registration of Partnership of Certified Public Accountants; Requirements

(a) No persons shall engage in the practice of accountancy as a partnership unless the

partnership is registered by the board.

(b) A partnership, other than a limited partnership, may be registered by the board to

engage in the practice of public accountancy provided it meets the following

requirements:

(1) At least one general partner shall hold a valid permit to practice as a certified public

accountant, public accountant, or accountancy corporation, or shall be an applicant for a

certificate as a certified public accountant under Sections 5087 and 5088, or the

partnership shall be registered pursuant to subdivision (c) of Section 5096.12.

(2) Each partner engaged within this state in the practice of public accountancy as

defined by Section 5051 shall hold a valid permit to practice in this state or shall have

applied for a certificate as a certified public accountant under Sections 5087 and 5088,

except for a partner with practice privileges pursuant to Section 5096.

(3) Each partner not engaged in the practice of public accountancy within this state shall

be a certified public accountant in good standing of some state, except as permitted by

Section 5079.

(4) Each resident manager in charge of an office of the firm in this state shall be a

licensee in good standing of this state, or shall have applied for a certificate as a

certified public accountant under Sections 5087 and 5088.

5073. Application for Registration of Partnership as Certified Public Accountants;

Termination of Registration

(a) Application for registration of a partnership shall be made upon a form prescribed by

the board. At the time of registration, if the partnership has a valid email address, the

partnership shall provide that email address to the board. The board shall in each case

determine whether the applicant is eligible for registration.

(b) A partnership that is so registered and that holds a valid permit issued under this

article and that has at least one general partner who is licensed to practice using the

designation “certified public accountant” or the abbreviation “C.P.A.” and one additional

licensed person may use the words “certified public accountants” or the abbreviation

“C.P.A.s” in connection with its partnership name.

article and that has at least one general partner who is licensed to practice using the

designation “public accountant” or the abbreviation “P.A.” and one additional licensed

person may use the words “public accountants” or the abbreviation “P.A.s” in

connection with its partnership name.

(d) Notification shall be given to the board within one month after the admission to, or

withdrawal of, a partner from any partnership so registered.

(e) Any registration of a partnership under this section granted in reliance upon Sections

5087 and 5088 shall terminate forthwith if the board rejects the application under

Sections 5087 and 5088 of the general partner who signed the application for

registration as a partnership, or any partner personally engaged in the practice of public

accountancy in this state, or any resident manager of a partnership in charge of an

office in this state.

5076. Peer Review of Registration Renewal of Firm Providing Attest Services;

Frequency of Peer Review; Definitions; Peer Review Oversight Committee;

Review and Report on Programs; Peer Review Report with a Rating of Fail; Filing;

Requirements

(a) In order to renew its registration in an active status or convert to an active status, a

firm, as defined in Section 5035.1, shall have a peer review report of its accounting and

auditing practice accepted by a board-recognized peer review program no less

frequently than every three years.

(b) For purposes of this article, the following definitions apply:

(1) “Peer review” means a study, appraisal, or review conducted in accordance with

professional standards of the professional work of a firm, and may include an evaluation

of other factors in accordance with the requirements specified by the board in

regulations. The peer review report shall be issued by an individual who has a valid and

current license, certificate, or permit to practice public accountancy from this state or

another state and is unaffiliated with the firm being reviewed.

(2) “Accounting and auditing practice” includes any services that were performed in the

prior three years using professional standards defined by the board in regulations.

specific the peer review requirements in this section, including, but not limited to,

regulations specifying the requirements for board recognition of a peer review program,

standards for administering a peer review, extensions of time for fulfilling the peer

review requirement, exclusions from the peer review program, and document

submission.

(d) Nothing in this section shall prohibit the board from initiating an investigation and

imposing discipline against a firm or licensee, either as the result of a complaint that

alleges violations of statutes, rules, or regulations, or from information contained in a

peer review report received by the board.

(e) A firm issued a peer reviewed report with a rating of “fail,” as defined by the board in

regulation, shall submit a copy of that report to the board. The board shall establish in

regulation the time period that a firm must submit the report to the board. This period

shall not exceed 60 days from the time the report is accepted by a board-recognized

peer review program provider to the date the report is submitted to the board.

(f) (1) A board-recognized peer review program provider shall file a copy with the board

of all peer review reports issued to California-licensed firms with a rating of “fail.” The

board shall establish in regulation the time period that a board-recognized peer review

program provider shall file the report with the board. This period shall not exceed 60

days from the time the report is accepted by a board-recognized peer review program

provider to the date the report is filed with the board. These reports may be filed with the

board electronically.

(2) Nothing in this subdivision shall require a board-recognized peer review program

provider, when administering peer reviews in another state, to violate the laws of that

state.

(g) The board shall define a peer review report rating of “fail” in regulation.

(h) Any requirements imposed by a board-recognized peer review program on a firm in

conjunction with the completion of a peer review shall be separate from, and in addition

to, any action by the board pursuant to this section.

(i) Any peer review report with a rating of “fail” submitted to the board in conjunction with

this section shall be collected for investigatory purposes.

(j) Nothing in this section affects the discovery or admissibility of evidence in a civil or

criminal action.

(k) Nothing in this section requires any firm to become a member of any professional

organization.

(l) A peer reviewer shall not disclose information concerning licensees or their clients

obtained during a peer review, unless specifically authorized pursuant to this section,

Section 5076.1, or regulations prescribed by the board.

5076.1. Peer Review Oversight Committee; Requests; Terms; Regulations

(a) The board shall appoint a peer review oversight committee of certified public

accountants of this state who maintain a license in good standing and who are

authorized to practice public accountancy to provide recommendations to the board on

any matter upon which it is authorized to act to ensure the effectiveness of mandatory

peer review.

(b) The committee may request any information from a board-recognized peer review

program provider deemed necessary to ensure the provider is administering peer

reviews in accordance with the standards adopted by the board in regulations. Failure of

a board-recognized peer review program provider to respond to the committee shall

result in referral by the committee of the provider to the board for further action. Any

information obtained by the board, its representatives, or the peer review oversight

committee in conjunction with its review of peer review program providers shall not be a

public record, and shall be exempt from public disclosure, provided, however, this

information may be disclosed under any of the following circumstances:

(1) In connection with disciplinary proceedings of the board.

(2) In connection with legal proceedings in which the board is a party.

(3) In response to an official inquiry by a federal or state governmental regulatory

agency.

(4) In compliance with a subpoena or summons enforceable by court order.

(5) As otherwise specifically required by law.

a maximum of four consecutive terms.

(d) The board may adopt, as necessary, regulations further defining the minimum

qualifications for appointment as a committee member and additional administrative

elements designed to ensure the effectiveness of mandatory peer review.

5078. Supervision by Accountant Required Where Office Not Under Management

of Accountant

In each office of a certified public accountant or public accountant in this state which is

not under the personal management of such an accountant, respectively, work shall be

supervised by a certified public accountant or public accountant.

5079. Nonlicensee Owners of Accounting Firms

(a) Notwithstanding any other provision of this chapter, any firm lawfully engaged in the

practice of public accountancy in this state may have owners who are not licensed as

certified public accountants or public accountants if the following conditions are met:

(1) Nonlicensee owners shall be natural persons or entities, such as partnerships,

professional corporations, or others, provided that each ultimate beneficial owner of an

equity interest in that entity shall be a natural person materially participating in the

business conducted by the firm or an entity controlled by the firm.

(2) Nonlicensee owners shall materially participate in the business of the firm, or an

entity controlled by the firm, and their ownership interest shall revert to the firm upon the

cessation of any material participation.

(3) Licensees shall in the aggregate, directly or beneficially, comprise a majority of

owners, except that firms with two owners may have one owner who is a nonlicensee.

(4) Licensees shall in the aggregate, directly or beneficially, hold more than half of the

equity capital and possess majority voting rights.

(5) Nonlicensee owners shall not hold themselves out as certified public accountants or

public accountants and each licensed firm shall disclose actual or potential involvement

of nonlicensee owners in the services provided.

(6) There shall be a certified public accountant or public accountant who has ultimate

responsibility for each financial statement attest and compilation service engagement.

(7) Except as permitted by the board in the exercise of its discretion, a person may not

become a nonlicensee owner or remain a nonlicensee owner if the person has done

either of the following:

(A) Been convicted of any crime, an element of which is dishonesty or fraud, under the

laws of any state, of the United States, or of any other jurisdiction.

(B) Had a professional license or the right to practice revoked or suspended for reasons

other than nonpayment of dues or fees, or has voluntarily surrendered a license or right

to practice with disciplinary charges or a disciplinary investigation pending, and not

reinstated by a licensing or regulatory agency of any state, or of the United States,

including, but not limited to, the Securities and Exchange Commission or Public

Company Accounting Oversight Board, or of any other jurisdiction.

(b) (1) A nonlicensee owner of a licensed firm shall report to the board in writing of the

occurrence of any of the events set forth in paragraph (7) of subdivision (a) within 30

days of the date the nonlicensee owner has knowledge of the event. A conviction

includes the initial plea, verdict, or finding of guilt, pleas of no contest, or

pronouncement of sentence by a trial court even though that conviction may not be final

or sentence actually imposed until appeals are exhausted.

(2) A California nonlicensee owner of a licensed firm shall report to the board in writing

the occurrence of any of the following events occurring on or after January 1, 2006,

within 30 days of the date the California nonlicensee owner has knowledge of the

events:

(A) Any notice of the opening or initiation of a formal investigation of the nonlicensee

owner by the Securities and Exchange Commission or its designee, or any notice from

the Securities and Exchange Commission to a nonlicensee owner requesting a Wells

submission.

(B) Any notice of the opening or initiation of an investigation of the nonlicensee owner

by the Public Company Accounting Oversight Board or its designee.

by another professional licensing agency.

(3) The report required by paragraphs (1) and (2) shall be signed by the nonlicensee

owner and set forth the facts that constitute the reportable event. If the reportable event

involves the action of an administrative agency or court, the report shall identify the

name of the agency or court, the title of the matter, and the date of occurrence of the

event.

(4) Notwithstanding any other provision of law, reports received by the board pursuant

to paragraph (2) shall not be disclosed to the public pursuant to the California Public

Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the

Government Code) other than (A) in the course of any disciplinary proceeding by the

board after the filing of a formal accusation, (B) in the course of an officially legal action

to which the board is a party, (C) in response to an official inquiry from a state or federal

agency, (D) in response to a subpoena or summons enforceable by order of a court, or

(E) when otherwise specifically required by law.

(5) Nothing in this subdivision shall impose a duty upon any licensee or nonlicensee

owner to report to the board the occurrence of any events set forth in paragraph (7) of

subdivision (a) or paragraph (2) of this subdivision either by or against any other

nonlicensee owner.

(1) “Licensee” means a certified public accountant or public accountant in this state or a

certified public accountant in good standing in another state.

(2) “Material participation” means an activity that is regular, continuous, and substantial.

(d) All firms with nonlicensee owners shall certify at the time of registration and renewal

that the firm is in compliance with this section.

(e) The board shall adopt regulations to implement, interpret, or make specific this

section.

ARTICLE 5. Certificates, Information and Records

5080. To Whom Certificate may be Granted

The “certified public accountant” license shall be granted by the board to any person

who meets the requirements of this article, has not committed acts or crimes

constituting grounds for denial of a license under Section 480, and files an application

for licensure on a form provided by the board.

5080.1. Personal Appearance of Applicant Before Board to Determine

Qualifications

The board may require an applicant for a certified public accountant license to appear in

person to determine if the applicant’s qualifications are as prescribed in this chapter and

in rules adopted by the board.

5081. Requirements of Applicant for Admission to Examination for Certified

Public Accountant Certificate

An applicant for an authorization to be admitted to the examination for a certified public

accountant license shall:

(a) Not have committed acts or crimes constituting grounds for denial of a license under

Section 480.

(b) File the application prescribed by the board. This application shall not be considered

filed unless all required supporting documents, fees, and the fully completed board-

approved application form are received in the board office or filed by mail in accordance

with Section 11003 of the Government Code on or before the specified final filing date.

5082. Examination; Subjects, Conduct and Grading

An applicant for a certified public accountant license shall have successfully passed an

examination in subjects the board deems appropriate, and in the form and manner that

the board deems appropriate. The board may, by regulation, prescribe the methods for

applying for and conducting the examination, including methods for grading and

determining a passing grade.

5082.1. Conduct of Examinations; Contract with Public or Private Organizations;

Uniform System

(a) The examination required by the board for the granting of a license as a certified

public accountant may be conducted by the board or by a public or private organization

specified by the board. The examination may be conducted under a uniform

examination system.

(b) The board may make arrangements with a public or private organization for the

conduct of the examination, as deemed necessary by the board. The board may

contract with a public or private organization for materials or services related to the

examination.

5082.2. Right to Reexamination

A candidate who fails an examination provided for in this article shall have the right to

reexamination pursuant to the provisions of this article and regulations adopted by the

board.

5082.3. Method of Satisfying Examination Requirements

An applicant for a license as a certified public accountant may be deemed by the board

to have met the examination requirements of Section 5082, 5092, or 5093 if the

applicant satisfies all of the following requirements:

(a) The applicant is licensed or has comparable authority under the laws of any country

to engage in the practice of public accountancy.

(b) The International Qualifications Appraisal Board jointly established by the National

Association of State Boards of Accountancy and the American Institute of Certified

Public Accountants has determined that the standards under which the applicant was

licensed or under which the applicant secured comparable authority meet its standards

for admission to the International Uniform Certified Public Accountant Qualification

Examination.

Accountant Qualification Examination referenced in subdivision (b).

5082.4. Canadian Examination to Fulfill Examination Requirement

A Canadian Chartered Accountant in good standing may be deemed by the board to

have met the examination requirements of Section 5082, 5092, or 5093 if they have

successfully passed the Canadian Chartered Accountant Uniform Certified Public

Accountant Qualification Examination of the American Institute of Certified Public

Accountants or the International Uniform Certified Public Accountant Qualification

Examination referenced in subdivision (b) Section 5082.3.

5082.5. Credit Given to Candidate Passing All or Part of Examination in Another

State or Territory

The board may give credit to a candidate who has passed all or part of the examination

in another state or territory, if the members of the board determine that the standards

under which the examination was held are as high as the standards established for the

examination in this chapter.

5086. Individuals Already Certified Not Required to Secure Additional Certificates

Individuals who, at the time of the enactment of this act, hold certified public accountant

licenses heretofore issued under the laws of this state shall not be required to secure

additional licenses under this chapter, but shall otherwise be subject to all the provisions

of this act; and such licenses heretofore issued shall, for all purposes, be considered

licenses under this chapter and subject to the provisions hereof.

5087. Reciprocity of License from Another State; Waiver of Examination

Requirements

(a) The board may issue a certified public accountant license to any applicant who is a

holder of a current, active, and unrestricted certified public accountant license issued

under the laws of any state, if the board determines that the standards under which the

applicant received the license are substantially equivalent to the standards of education,

examination, and experience established under this chapter and the applicant has not

committed acts or crimes constituting grounds for denial under Section 480. To be

authorized to sign reports on attest engagements, the applicant shall meet the

requirements of Section 5095.

(b) The board may in particular cases waive any of the requirements regarding the

circumstances in which the various parts of the examination were to be passed for an

applicant from another state.

5088. Temporary Practice of Applicant

(a) Any individual who is the holder of a current and valid license as a certified public

accountant issued under the laws of any state and who applies to the board for a

license as a certified public accountant under the provisions of Section 5087 may, until

the time the application for a license is granted or denied, practice public accountancy in

this state only under a practice privilege pursuant to the provisions of Article 5.1

(commencing with Section 5096), except that, for purposes of this section, the individual

is not disqualified from a practice privilege during the period the application is pending

by virtue of maintaining an office or principal place of business, or both, in this state.

The board may by regulation provide for exemption, credit, or proration of fees to avoid

duplication of fees.

(b) This section shall become operative on January 1, 2006.

5090. Compliance with Specified Requirements

An applicant for the certified public accountant license shall comply with the education,

examination, and experience requirements in either Section 5092 or 5093.

5092. Requirements to Qualify for License Under this Section

(a) To qualify for the certified public accountant license, an applicant who is applying

under this section shall meet the education, examination, and experience requirements

specified in subdivisions (b), (c), and (d), or otherwise prescribed pursuant to this article.

The board may adopt regulations as necessary to implement this section.

(b) An applicant for the certified public accountant license shall present satisfactory

evidence that the applicant has completed a baccalaureate or higher degree conferred

by a college or university, meeting, at a minimum, the standards described in Section

5094, the total educational program to include a minimum of 24 semester units in

accounting subjects and 24 semester units in business related subjects. This evidence

shall be provided prior to admission to the examination for the certified public

accountant license, except that an applicant who applied, qualified, and sat for at least

two subjects of the examination for the certified public accountant license before May

15, 2002, may provide this evidence at the time of application for licensure.

prescribed by the board pursuant to this article.

(d) The applicant shall show, to the satisfaction of the board, that the applicant has had

two years of qualifying experience. This experience may include providing any type of

service or advice involving the use of accounting, attest, compilation, management

advisory, financial advisory, tax, or consulting skills. To be qualifying under this section,

experience shall have been performed in accordance with applicable professional

standards. Experience in public accounting shall be completed under the supervision or

in the employ of a person licensed or otherwise having comparable authority under the

laws of any state or country to engage in the practice of public accountancy. Experience

in private or governmental accounting or auditing shall be completed under the

supervision of an individual licensed by a state to engage in the practice of public

accountancy.

(e) This section shall become inoperative on January 1, 2014, but shall become or

remain operative if the educational requirements in ethics study and accounting study

established by subdivision (b) of Section 5093, Section 5094.3, and Section 5094.6 are

reduced or eliminated.

(f) The amendment to subdivision (d) of Section 5094.3 made by the measure adding

this subdivision shall not be deemed to reduce or eliminate the educational

requirements of Section 5094.3 for purposes of subdivision (e) of this section.

5093. Conditions to Qualify for License Under this Section

(a) To qualify for the certified public accountant license, an applicant who is applying

under this section shall meet the education, examination, and experience requirements

specified in subdivisions (b), (c), and (d), or otherwise prescribed pursuant to this article.

The board may adopt regulations as necessary to implement this section.

(b) (1) An applicant for admission to the certified public accountant examination under

this section shall present satisfactory evidence that the applicant has completed a

baccalaureate or higher degree conferred by a degree-granting university, college, or

other institution of learning accredited by a regional or national accrediting agency

included in a list of these agencies published by the United States Secretary of

Education under the requirements of the federal Higher Education Act of 1965 as

amended (20 U.S.C. Sec. 1001 et seq.), or meeting, at a minimum, the standards

described in subdivision (c) of Section 5094. The total educational program shall include

a minimum of 24 semester units in accounting subjects and 24 semester units in

business-related subjects. This evidence shall be provided at the time of application for

admission to the examination, except that an applicant who applied, qualified, and sat

for at least two subjects of the examination for the certified public accountant license

before May 15, 2002, may provide this evidence at the time of application for licensure.

(A) An applicant enrolled in a program at an institution as described in this paragraph

that grants conferral of a baccalaureate degree upon completion of the 150 semester

units required by paragraph (2) of this subdivision may satisfy the requirements of this

paragraph if the applicant’s institution mails the applicant’s official transcript or its

equivalent together or separately with a letter signed by the institution’s registrar, or its

equivalent, directly to the board pursuant to subdivision (c) of Section 5094. The letter

shall include all of the following:

(i) A statement that the applicant is enrolled and in good standing in a program that will

result in the conferral of a baccalaureate degree upon completion of either a master’s

degree or the 150 semester units required by paragraph (2) of this subdivision.

(ii) A statement that the applicant has completed all requirements, including general

education and elective requirements, for a baccalaureate degree and the only reason

the college or university has yet to confer the degree is because the applicant is

enrolled in a program that confers a baccalaureate degree upon completion of either a

master’s degree or the 150 semester units required by paragraph (2) of this subdivision.

(iii) The date on which the applicant met all of the college’s or university’s requirements

for conferral of a baccalaureate degree.

(B) The total educational program for an applicant described in subparagraph (A) shall

include a minimum of 24 semester units in accounting subjects and 24 semester units in

business-related subjects. This evidence shall be provided at the time of application for

admission to the examination, except that an applicant who applied, qualified, and sat

for at least two subjects of the examination for the certified public accountant license

before May 15, 2002, may provide this evidence at the time of application for licensure.

(2) An applicant for issuance of the certified public accountant license under this section

shall present satisfactory evidence that the applicant has completed at least 150

semester units of college education, including a baccalaureate or higher degree

conferred by a college or university, meeting, at a minimum, the standards described in

Section 5094, the total educational program to include a minimum of 24 semester units

in accounting subjects, 24 semester units in business-related subjects, and, after

December 31, 2013, shall also include a minimum of 10 units of ethics study consistent

with the requirements set forth in Section 5094.3 and 20 units of accounting study

consistent with the regulations promulgated under subdivision (c) of Section 5094.6.

This evidence shall be presented at the time of application for the certified public

accountant license. Nothing in this paragraph shall be deemed inconsistent with Section

5094 or 5094.6. Nothing in this paragraph shall be construed to be inconsistent with

prevailing academic practice regarding the completion of units.

prescribed by the board.

(d) (1) The applicant shall show, to the satisfaction of the board, that the applicant has

had one year of qualifying experience. This experience may include providing any type

of service or advice involving the use of accounting, attest, compilation, management

advisory, financial advisory, tax, or consulting skills.

(2) To be qualifying under this section, experience shall have been performed in

accordance with applicable professional standards. Experience in public accounting

shall be completed under the supervision or in the employ of a person licensed or

otherwise having comparable authority under the laws of any state or country to engage

in the practice of public accountancy. Experience in private or governmental accounting

or auditing shall be completed under the supervision of an individual licensed by a state

to engage in the practice of public accountancy.

(3) Notwithstanding paragraph (2), the board may, by regulation, allow experience in

academia to be qualifying under this section.

(e) Applicants completing education at a college or university located outside of this

state, meeting, at a minimum, the standards described in Section 5094, shall be

deemed to meet the educational requirements of this section if the board determines

that the education is substantially equivalent to the standards of education specified

under this chapter.

(f) An applicant who has successfully passed the examination requirement specified

under Section 5082 on or before December 31, 2013, may qualify for the certified public

accountant license without satisfying the 10 semester units of study set forth in Section

5094.3 or 20 semester units of accounting study consistent with the regulations

promulgated under Section 5094.6, if the applicant completes all other requirements for

the issuance of a license on or before December 31, 2015.

5093.5. Student Admission to the CPA Exam

(a) Notwithstanding subdivision (b) of Section 5093, the board may admit an applicant

to the certified public accountant examination before the applicant completes the

education requirements set forth in Section 5093, if the applicant is enrolled in a degree-

granting university, college, or other institution of learning, as defined in Section 5094,

and is within 180 days of completing the educational requirements set forth in

paragraph (1) of subdivision (b) of Section 5093.

(b) Within 240 days of submitting an application pursuant to subdivision (a), the

applicant shall provide the board with satisfactory evidence that they have completed

the educational requirements set forth in paragraph (1) of subdivision (b) of Section

5093.

passage of any part of the certified public accountant examination before the

requirement described in subdivision (b) was met.

5094. Standards for Qualifying Education

(a) In order for education to be qualifying, it shall meet the standards described in

subdivision (b) or (c) of this section.

(b) At a minimum, education shall be from a degree-granting university, college, or other

institution of learning accredited by a regional or national accrediting agency included in

a list of these agencies published by the United States Secretary of Education under the

requirements of the Higher Education Act of 1965 as amended (20 U.S.C. Sec. 1001 et

seq.).

the United States may be qualifying provided it is deemed by the board to be equivalent

to education obtained under subdivision (b). The board may require an applicant to

submit documentation of their education to a credential evaluation service approved by

the board for evaluation and to cause the results of this evaluation to be reported to the

board in order to assess educational equivalency.

(d) The board shall adopt regulations specifying the criteria and procedures for approval

of credential evaluation services. These regulations shall, at a minimum, require that the

credential evaluation service (1) furnish evaluations directly to the board, (2) furnish

evaluations written in English, (3) be a member of the American Association of

Collegiate Registrars and Admissions Officers, NAFSA: Association of International

Educators, or the National Association of Credential Evaluation Services, (4) be used by

accredited colleges and universities, (5) be reevaluated by the board every five years,

(6) maintain a complete set of reference materials as specified by the board, (7) base

evaluations only upon authentic, original transcripts and degrees and have a written

procedure for identifying fraudulent transcripts, (8) include in the evaluation report, for

each degree held by the applicant, the equivalent degree offered in the United States,

the date the degree was granted, the institution granting the degree, an English

translation of the course titles, and the semester unit equivalence for each of the

courses, (9) have an appeal procedure for applicants, and (10) furnish the board with

information concerning the credential evaluation service that includes biographical

information on evaluators and translators, three letters of references from public or

private agencies, statistical information on the number of applications processed

annually for the past five years, and any additional information the board may require in

order to ascertain that the credential evaluation service meets the standards set forth in

this subdivision and in any regulations adopted by the board.

5094.3. Certified Public Accountant License; Coursework; Ethics Study;

Examination Exemption

(a) An applicant for licensure as a certified public accountant shall, to the satisfaction of

the board, provide documentation of the completion of 10 semester units or 15 quarter

units of ethics study, as set forth in paragraph (2) of subdivision (b) of Section 5093, in

the manner prescribed in this section.

(b) Beginning January 1, 2017, an applicant shall complete 10 semester units or 15

quarter units in courses described in subdivisions (c), (d), (e), and (f).

division level or higher devoted to accounting ethics, accountants’ professional

responsibilities, auditing, or fraud unless the course was completed at a community

college, in which case it need not be completed at the upper division level or higher.

(d) A maximum of 7 semester units or 11 quarter units, in the following subjects relating

to ethics:

(1) Business, government, and society.

(2) Business law.

(3) Corporate governance.

(4) Corporate social responsibility.

(5) Ethics.

(6) Fraud.

(7) Human resources management.

(8) Business leadership.

(9) Legal environment of business.

(10) Management of organizations.

(11) Morals.

(12) Organizational behavior.

(13) Professional responsibilities.

(14) Auditing.

(e) (1) A maximum of three semester units or four quarter units in courses taken in the

following disciplines:

(A) Philosophy.

(B) Religion.

(2) To qualify under this subdivision, the course title shall contain one or more of the

terms “introduction,” “introductory,” “general,” “fundamentals of,” “principles,” “foundation

of,” or “survey of,” or have the name of the discipline as the sole name of the course

title.

(f) A maximum of one semester unit of ethics study for completion of a course specific

to financial statement audits.

(g) An applicant who has successfully passed the examination requirement specified

under Section 5082 on or before December 31, 2013, is exempt from this section unless

the applicant fails to obtain the qualifying experience as specified in Section 5092 or

5093 on or before December 31, 2015.

5094.6. Accounting Study Guidelines

(a) The board shall, by regulation, adopt guidelines for accounting study to be included

as part of the education required under Section 5093.

(b) For purposes of this section, “accounting study” means independent study or other

academic work in accounting, business, ethics, business law, or other academic work

relevant to accounting and business, so as to enhance the competency of students as

practitioners.

5095. Minimum Number of Attest Services Hours; Attest Experience

(a) To be authorized to sign reports on attest engagements, a licensee shall complete a

minimum of 500 hours of experience, satisfactory to the board, in attest services.

(b) To qualify under this section, attest experience shall have been performed in

accordance with applicable professional standards. Experience in public accounting

shall be completed under the supervision or in the employ of a person licensed or

otherwise having comparable authority under the laws of any state or country to engage

in the practice of public accountancy and provide attest services, and this experience

shall be verified. Experience in private or governmental accounting or auditing shall be

completed under the supervision of an individual licensed by a state to engage in the

practice of public accountancy and perform attest services, and this experience shall be

verified. An applicant may be required to present work papers or other evidence

substantiating that the applicant has met the requirements of this section and any

applicable regulations.

to, a procedure for applicants under Section 5092 or Section 5093 to qualify under this

section.

ARTICLE 5.1. Practice Privileges

5096. Requirements of Out-of-State Practitioners; Responsibilities of Individual

Qualifying or With Practice Privilege; Failure to Cease Practice or Provide Notice;

Disqualifying Conditions

(a) An individual whose principal place of business is not in this state and who has a

valid and current license, certificate, or permit to practice public accountancy from

another state may, subject to the conditions and limitations in this article, engage in the

practice of public accountancy in this state under a practice privilege without obtaining a

certificate or license under this chapter if the individual satisfies one of the following:

(1) The individual has continually practiced public accountancy as a certified public

accountant under a valid license issued by any state for at least 4 of the last 10 years.

(2) The individual has a license, certificate, or permit from a state that has been

determined by the board to have education, examination, and experience qualifications

for licensure substantially equivalent to this state’s qualifications under Section 5093.

(3) The individual possesses education, examination, and experience qualifications for

licensure that have been determined by the board to be substantially equivalent to this

state’s qualifications under Section 5093.

(b) The board may designate states as substantially equivalent under paragraph (2) of

subdivision (a) and may accept individual qualification evaluations or appraisals

conducted by designated entities, as satisfying the requirements of paragraph (3) of

subdivision (a).

in the practice of public accountancy in this state, and a notice, fee, or other

requirement shall not be imposed on that individual by the board.

(d) An individual who qualifies for the practice privilege under this section may perform

the following services only through a firm of certified public accountants that has

obtained a registration from the board pursuant to Section 5096.12:

(1) An audit or review of a financial statement for an entity headquartered in California.

(2) A compilation of a financial statement when that person expects, or reasonably

might expect, that a third party will use the financial statement and the compilation

report does not disclose a lack of independence for an entity headquartered in

California.

(3) An examination of prospective financial information for an entity headquartered in

California.

(e) An individual who holds a practice privilege under this article, and is exercising the

practice privilege in California:

(1) Is subject to the personal and subject matter jurisdiction and disciplinary authority of

the board and the courts of this state.

(2) Shall comply with the provisions of this chapter, board regulations, and other laws,

regulations, and professional standards applicable to the practice of public accountancy

by the licensees of this state and to any other laws and regulations applicable to

individuals practicing under practice privileges in this state, except the individual is

deemed, solely for the purpose of this article, to have met the continuing education

requirements and ethics examination requirements of this state when the individual has

met the examination and continuing education requirements of the state in which the

individual holds the valid license, certificate, or permit on which the substantial

equivalency is based.

(3) Shall not provide public accountancy services in this state from any office located in

this state, except as an employee of a firm registered in this state. This paragraph does

not apply to public accountancy services provided to a client at the client’s place of

business or residence.

(4) Is deemed to have appointed the regulatory agency of the state that issued the

individual’s certificate, license, or permit upon which substantial equivalency is based as

the individual’s agent on whom notices, subpoenas, or other process may be served in

any action or proceeding by the board against the individual.

(5) Shall cooperate with any board investigation or inquiry and shall timely respond to a

board investigation, inquiry, request, notice, demand, or subpoena for information or

documents and timely provide to the board the identified information and documents.

(6) Shall cease exercising the practice privilege in this state if the regulatory agency in

the state in which the individual’s certificate, license, or permit was issued takes

disciplinary action resulting in the suspension or revocation, including stayed

suspension, stayed revocation, or probation of the individual’s certificate, license, or

permit, or takes other disciplinary action against the individual’s certificate, license, or

permit that arises from any of the following:

(A) Gross negligence, recklessness, or intentional wrongdoing relating to the practice of

public accountancy.

(B) Fraud or misappropriation of funds.

incomplete or misleading financial statements, reports, or information.

(7) Shall cease exercising the practice privilege in this state if convicted in any

jurisdiction of any crime involving dishonesty, including, but not limited to,

embezzlement, theft, misappropriation of funds or property, or obtaining money,

property, or other valuable consideration by fraudulent means or false pretenses.

(8) Shall cease exercising the practice privilege if the United States Securities and

Exchange Commission or the Public Company Accounting Oversight Board bars the

individual from practicing before them.

(9) Shall cease exercising the practice privilege if any governmental body or agency

suspends the right of the individual to practice before the body or agency.

(10) Shall report to the board in writing any pending criminal charges, other than for a

minor traffic violation, in any jurisdiction within 30 days of the date the individual has

knowledge of those charges.

(f) An individual who is required to cease practice pursuant to paragraphs (6) to (9),

inclusive, of subdivision (e) shall notify the board within 15 calendar days, on a form

prescribed by the board, and shall not practice public accountancy in this state pursuant

to this section until the individual has received from the board written permission to do

so.

(g) An individual who fails to cease practice as required by subdivision (e) or who fails to

provide the notice required by subdivision (f) shall be subject to the personal and

subject matter jurisdiction and disciplinary authority of the board as if the practice

privilege were a license and the individual were a licensee. An individual in violation of

subdivision (e) or (f) shall, for a minimum of one year from the date the board learns

there has been a violation of subdivision (e) or (f), not practice in this state and shall not

have the possibility of reinstatement during that period. If the board determines that the

failure to cease practice or provide the notice was intentional, that individual’s practice

privilege shall be revoked and there shall be no possibility of reinstatement for a

minimum of two years.

(h) The board shall require an individual who provides notice to the board pursuant to

subdivision (f) to cease the practice of public accountancy in this state until the board

provides the individual with written permission to resume the practice of public

accountancy in this state.

(i) (1) An individual to whom, within the last seven years immediately preceding the date

on which the individual wishes to practice in this state, any of the following criteria apply,

shall notify the board, on a form prescribed by the board, and shall not practice public

accountancy in this state pursuant to this section until the board provides the individual

with written permission to do so:

(A) The individual has been the subject of any final disciplinary action by the licensing or

disciplinary authority of any other jurisdiction with respect to any professional license or

has any charges of professional misconduct pending against that individual in any other

jurisdiction.

(B) The individual has had their license in another jurisdiction reinstated after a

suspension or revocation of the license.

certificate in any other jurisdiction for any reason other than an inadvertent

administrative error.

(D) The individual has been convicted of a crime or is subject to pending criminal

charges in any jurisdiction other than a minor traffic violation.

(E) The individual has otherwise acquired a disqualifying condition as described in

subdivision (a) of Section 5096.2.

(2) An individual who fails to cease practice as required by subdivision (e) or who fails to

provide the notice required by paragraph (1) shall be subject to the personal and subject

matter jurisdiction and disciplinary authority of the board as if the practice privilege were

a license and the individual were a licensee. An individual in violation of subdivision (e)

or paragraph (1) shall, for a minimum of one year from the date the board knows there

has been a violation of subdivision (e) or paragraph (1), not practice in this state and

shall not have the possibility of reinstatement during that period. If the board determines

that the failure to cease practice or provide the notice was intentional, that individual

shall be prohibited from practicing in this state in the same manner as if a licensee has

that licensee’s practice privilege revoked and there shall be no possibility of

reinstatement for a minimum of two years.

(j) At the time of notification pursuant to subdivision (f) or (i), if the individual has a valid

email address, that individual shall provide that email address to the board.

5096.1. Practice by Out-of-State Practitioner Unqualified to Practice Privilege;

Violation; Grounds for Discipline

(a) Any individual, not a licensee of this state, who is engaged in any act which is the

practice of public accountancy in this state, and who does not qualify to practice

pursuant to the practice privilege described in Section 5096 and who has a license,

certificate, or other authority to engage in the practice of public accountancy in any

other state, regardless of whether active, inactive, suspended, or subject to renewal on

payment of a fee or completion of an educational or ethics requirement, is:

(1) Deemed to be practicing public accountancy unlawfully in this state.

(2) Subject to the personal and subject matter jurisdiction and disciplinary authority of

the board and the courts of this state to the same extent as a holder of a valid practice

privilege.

(3) Deemed to have appointed the regulatory agency of the state that issued the

individual’s certificate or license as the individual’s agent on whom notice, subpoenas,

or other process may be served in any action or proceeding by the board against the

individual.

(b) The board may revoke a practice privilege from any individual who has violated this

section or implementing regulations or committed any act which would be grounds for

discipline against the holder of a practice privilege.

5096.2. Revocation; Procedures; Reinstatement of Practice; Disciplinary Actions;

Costs

(a) (1) Practice privileges may be revoked for any of the following reasons:

(A) If an individual no longer qualifies under, or complies with, the provisions of this

article, including, but not limited to, Section 5096, or implementing regulations.

(B) If an individual commits any act that if committed by an applicant for licensure would

be grounds for denial of a license under Section 480.

discipline under Section 5100.

(D) If an individual commits any act outside of this state that would be a violation if

committed within this state.

(E) If an individual acquires at any time, while exercising the practice privilege, any

disqualifying condition under paragraph (2).

(2) Disqualifying conditions include:

(A) Conviction of any crime other than a minor traffic violation.

(B) Revocation, suspension, denial, surrender, or other discipline or sanctions involving

any license, permit, registration, certificate, or other authority to practice any profession

in this or any other state or foreign country or to practice before any state, federal, or

local court or agency, or the Public Company Accounting Oversight Board.

conduct of the individual in the amount of thirty thousand dollars ($30,000) or greater.

(D) Any other conditions as specified by the board in regulation.

(3) The board may adopt regulations exempting specified minor occurrences of the

conditions listed in subparagraph (B) of paragraph (2) from being disqualifying

conditions under this subdivision.

(b) The board may revoke practice privileges using either of the following procedures:

(1) Notifying the individual in writing of all of the following:

(A) That the practice privilege is revoked.

(B) The reasons for revocation.

(D) That the individual has a right to appeal the notice and request a hearing under the

provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section

11340) of Part 1 of Division 3 of Title 2 of the Government Code) if a written notice of

appeal and request for hearing is made within 60 days.

(E) That, if the individual does not submit a notice of appeal and request for hearing

within 60 days, the board’s action set forth in the notice shall become final.

(2) Filing a statement of issues under the Administrative Procedure Act (Chapter 3.5

(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government

Code).

exercise the practice privilege upon application to the board for reinstatement of the

practice privilege not less than one year after the effective date of the notice or decision

revoking the practice privilege, unless a longer time period is specified in the notice or

decision revoking the practice privilege.

(d) Holders of practice privileges are subject to suspension, citations, fines, or other

disciplinary actions for any conduct that would be grounds for discipline against a

licensee of the board or for any conduct in violation of this article or regulations adopted

thereunder.

(e) The board may recover its costs pursuant to Section 5107 as part of any disciplinary

proceeding against the holder of a practice privilege.

(f) The provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with

Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), including, but

not limited to, the commencement of a disciplinary proceeding by the filing of an

accusation by the board, shall apply under this article.

(g) If the board revokes or otherwise limits an individual’s practice privilege, the board

shall promptly notify the regulatory agency of the state or states in which the individual

is licensed, and the United States Securities and Exchange Commission, the Public

Company Accounting Oversight Board, and the National Association of State Boards of

Accountancy.

5096.4. Administrative Suspension

(a) The right of an individual to practice in this state under a practice privilege may be

administratively suspended at any time by an order issued by the board or its executive

officer, without prior notice or hearing, for the purpose of conducting a disciplinary

investigation, proceeding, or inquiry concerning the individual’s competence or

qualifications to practice under practice privileges, failure to timely respond to a board

inquiry or request for information or documents, or under other conditions and

circumstances provided for by board regulation. The board shall consult the Public

Company Accounting Oversight Board and the United States Securities and Exchange

Commission at least once every six months to identify out-of-state licensees who may

have disqualifying conditions or who may be obliged to cease practice, and shall

disclose, pursuant to this subdivision, whether those out-of-state licensees are lawfully

permitted to exercise the privilege. Disclosure of this information shall not be considered

discipline.

(b) The administrative suspension order is immediately effective when mailed to the

individual’s address of record or agent for notice and service as provided for in this

article.

(1) The reason for the suspension.

(2) A statement that the individual has the right, within 30 days, to appeal the

administrative suspension order and request a hearing.

(3) A statement that any appeal hearing will be conducted under the provisions of the

Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1

of Division 3 of Title 2 of the Government Code) applicable to individuals who are

denied licensure, including the filing of a statement of issues by the board setting forth

the reasons for the administrative suspension of practice privileges and specifying the

statutes and rules with which the individual must show compliance by producing proof at

the hearing and in addition any particular matters that have come to the attention of the

board and that would authorize the administrative suspension, or the revocation of

practice privileges.

(d) The burden is on the holder of the suspended practice privilege to establish both

qualification and fitness to practice under practice privileges.

(e) The administrative suspension shall continue in effect until terminated by an order of

the board or the executive officer.

(f) Administrative suspension is not discipline and shall not preclude any individual from

applying for a license to practice public accountancy in this state.

(g) Proceedings to appeal an administrative suspension order may be combined or

coordinated with proceedings for revocation or discipline of a practice privilege.

5096.5. Experience Requirement for Signing Attest Report

Notwithstanding any other provision of this article, an individual may not sign any attest

report pursuant to a practice privilege unless the individual meets the experience

requirements of Section 5095.

5096.6. Delegation of Authority to Executive Officer

In addition to the authority otherwise provided for by this code, the board may delegate

to the executive officer the authority to issue any notice or order provided for in this

article and to act on behalf of the board, including, but not limited to, issuing an interim

suspension order, subject to the right of the individual to timely appeal and request a

hearing as provided for in this article.

5096.7. Definitions

(a) Anywhere the term “license,” “licensee,” “permit,” or “certificate” is used in this

chapter or Division 1.5 (commencing with Section 475), it shall include persons holding

practice privileges under this article, unless otherwise inconsistent with the provisions of

the article.

(b) Anywhere the term “employee” is used in this article it shall include, but is not limited

to, partners, shareholders, and other owners.

5096.8. Additional Authority Applicable to Investigations and Implementing

Regulations

In addition to the authority otherwise provided by this code, all investigative powers of

the board, including those delegated to the executive officer, shall apply to

investigations concerning compliance with, or actual or potential violations of, the

provisions of this article or implementing regulations, including, but not limited to, the

power to conduct investigations and hearings by the executive officer under Section

5103 and to issuance of subpoenas under Section 5108.

5096.9. Authority to Adopt Regulations

(a) The board is authorized to adopt regulations to implement, interpret, or make

specific the provisions of this article.

(b) The board may adopt emergency regulations in accordance with the Administrative

Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of

Title 2 of the Government Code) to establish policies, guidelines, and procedures to

initially implement this article as it goes into effect on July 1, 2013. The adoption of the

regulations shall be considered by the office of Administrative Law to be necessary for

the immediate preservation of the public peace, health and safety, or general welfare.

The emergency regulations shall be submitted to the office of Administrative Law for

filing with the Secretary of State in accordance with the Administrative Procedure Act.

article, the board may adopt or amend regulations consistent with Section 100 of Title 1

of the California Code of Regulations to remove or extend the inoperative date of its

regulations in Article 3 (commencing with Section 18) of Division 1 of Title 16 of the

California Code of Regulations, or to remove the inoperative dates for the regulations in

Article 4 (commencing with Section 26) of Division 1 of Title 16 of the California Code of

Regulations.

(2) Notwithstanding any other law, the office of Administrative Law shall consider the

board’s action to remove or extend the inoperative dates of these regulations as a

change without regulatory effect as described in Section 100 of Title 1 of the California

Code of Regulations that exempts the board from complying with the rulemaking

procedure specified in the Administrative Procedure Act (Article 5 (commencing with

Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government

Code).

5096.12. Practice of Public Accountancy by Firm from Another State

(a) A certified public accounting firm that is authorized to practice in another state and

that does not have an office in this state may engage in the practice of public

accountancy in this state through the holder of a practice privilege provided that:

(1) The practice of public accountancy by the firm is limited to authorized practice by the

holder of the practice privilege.

(2) A firm that engages in practice under this section is deemed to consent to the

personal, subject matter, and disciplinary jurisdiction of the board with respect to any

practice under this section.

(b) The board may revoke, suspend, issue a fine pursuant to Article 6.5 (commencing

with Section 5116), issue a citation and fine pursuant to Section 125.9, or otherwise

restrict or discipline the firm for any act that would be grounds for discipline against a

holder of a practice privilege through which the firm practices.

obtain a registration from the board. At the time of registration, if the firm has a valid

email address, it shall provide that email address to the board.

5096.20. Information on Out-of-State Licensees with Disqualifying Conditions;

Maintenance of Internet Website; Features; Disclaimers

(a) To ensure that Californians are protected from out-of-state licensees with

disqualifying conditions who may unlawfully attempt to practice in this state under a

practice privilege, prior to July 1, 2013, the board shall add an out-of-state licensee

feature to its license lookup tab of the home page of its internet website that allows

consumers to obtain information about an individual whose principal place of business

is not in this state and who seeks to exercise a practice privilege in this state, that is at

least equal to the information that was available to consumers through its home page

prior to January 1, 2013, through the practice privilege form previously filed by out-of-

state licensees pursuant to Section 5096, as added by Chapter 921 of the Statutes of

2004, and the regulations adopted thereunder. At minimum, these features shall include

all of the following:

(1) The ability of the consumer to search by name and state of licensure.

(2) The disclosure of information in the possession of the board, which the board is

otherwise authorized to publicly disclose, about an individual exercising a practice

privilege in this state, including, but not limited to, whether the board has taken action of

any form against that individual and, if so, what the action was or is.

(3) A disclaimer that the consumer must click through prior to being referred to any

other internet website, which in plain language explains that the consumer is being

referred to an internet website that is maintained by a regulatory agency or other entity

that is not affiliated with the board. This disclaimer shall include a link to relevant

sections of this article that set forth disqualifying conditions, including, but not limited to,

Section 5096.2.

(4) A statement in plain language that notifies consumers that they are permitted to file

complaints against such individuals with the board.

(5) A link to the internet website or sites that the board determines, in its discretion,

provides the consumer the most complete and reliable information available about the

individual’s status as a licenseholder, permitholder, or certificate holder.

(6) If the board of another state does not maintain an internet website that allows a

consumer to obtain information about its licensees including, but not limited to,

disciplinary history, and that information is not available through a link to an internet

website maintained by another entity, a link to contact information for that board, which

contains a disclaimer in plain language that explains that the consumer is being referred

to a board that does not permit the consumer to obtain information, including, but not

limited to, disciplinary history, about individuals through the internet website, and that

the out-of-state board is not affiliated with the board.

(b) The board shall biennially survey the internet websites and disclosure policies of

other boards to ensure that its disclaimers are accurate.

5096.21. Determinations Regarding Out-of-State Practitioners; Redetermination;

Factors to be Considered; Stakeholder Group

(a) (1) On and after January 1, 2016, if the board determines, through a majority vote of

the board at a regularly scheduled meeting, that allowing individuals from a particular

state to practice in this state pursuant to a practice privilege as described in Section

5096, violates the board’s duty to protect the public, pursuant to Section 5000.1, the

board shall require out-of-state individuals licensed from that state, as a condition to

exercising a practice privilege in this state, to file the notification form and pay the

applicable fees as required by Section 5096.22.

(2) A state for which the board has made a determination pursuant to paragraph (1) to

require individuals licensed from that state to file a notification form and pay the

applicable fees may subsequently be redetermined by the board, by majority vote of the

board at a regularly scheduled meeting, to allow individuals from that state to practice in

this state pursuant to a practice privilege as described in Section 5096.

(b) The board shall, at minimum, consider the following factors when making a

determination or redetermination pursuant to subdivision (a):

(1) Whether the state timely and adequately addresses enforcement referrals made by

the board to the accountancy regulatory board of that state, or otherwise fails to

respond to requests the board deems necessary to meet its obligations under this

article.

(2) Whether the state makes the disciplinary history of its licensees publicly available

through the Internet in a manner that allows the board to adequately link consumers to

an internet website to obtain information that was previously made available to

consumers about individuals from the state prior to January 1, 2013, through the

notification form.

(3) Whether the state imposes discipline against licensees that is appropriate in light of

the nature of the alleged misconduct.

(4) Whether the state has in place and is operating pursuant to enforcement practices

substantially equivalent to the current best practices guidelines adopted by the National

Association of State Boards of Accountancy provided those guidelines have been

determined by the board to meet or exceed the board’s own enforcement practices.

members of the board, board enforcement staff, and representatives of the accounting

profession and consumer representatives to consider whether the provisions of this

article are consistent with the board’s duty to protect the public consistent with Section

5000.1, and whether the provisions of this article satisfy the objectives of stakeholders

of the accounting profession in this state, including consumers. The group, at its first

meeting, shall adopt policies and procedures relative to how it will conduct its business,

including, but not limited to, policies and procedures addressing periodic reporting of its

findings to the board. The group shall provide recommendations to the board on any

matter upon which it is authorized to act.

5096.22. Notification Form and Fee by Out-of-State Practitioner; Commencement

of Practice Privilege; Failure to Comply as Violation

(a) An individual whose principal place of business is in a state subject to an action of

the board pursuant to Section 5096.21 shall do both of the following:

(1) Prior to practicing, submit a notification form to the board in a manner prescribed by

board regulation.

(2) Pay a fee equal to the reasonable administrative costs, as established by the board.

(b) Except as otherwise provided by this article or by board regulation, a practice

privilege subject to this section shall commence when the individual submits a properly

completed notification form to the board, provided that the fee is received by the board

within 30 days of that date. The board shall permit the notification to be provided

electronically.

or she begins the practice of public accounting in California prior to notifying the board

as indicated in subdivision (a), provided the notice is given within five business days of

the date practice begins. An individual who properly notifies the board within the five-

day period provided for in this subdivision shall be deemed to have a practice privilege

from the first day of practice in California unless the individual fails to timely submit the

required fee. Failure to comply with this section means that the individual is practicing

public accountancy unlawfully in this state and is in violation of Section 5120. In addition

to any other available remedy, the board may issue a fine equal to reasonable

enforcement costs if an individual notifies the board more than five business days after

beginning practice in California.

(d) An individual whose principal place of business is in a state subject to an action by

the board pursuant to Section 5096.21 shall not be deemed in violation of the notice and

fee requirements of this section if the failure to comply occurs within 60 days of the date

of the board action.

ARTICLE 5.5. Audit Documentation

5097. Contents; Presumptions Raised by Improper Documentation; Retention

and Destruction of Documentation

(a) Audit documentation shall be a licensee’s records of the procedures applied, the

tests performed, the information obtained, and the pertinent conclusions reached in an

audit engagement. Audit documentation shall include, but is not limited to, programs,

analyses, memoranda, letters of confirmation and representation, copies or abstracts of

company documents, and schedules or commentaries prepared or obtained by the

licensee.

(b) Audit documentation shall contain sufficient documentation to enable a reviewer with

relevant knowledge and experience, having no previous connection with the audit

engagement, to understand the nature, timing, extent, and results of the auditing or

other procedures performed, evidence obtained, and conclusions reached, and to

determine the identity of the persons who performed and reviewed the work.

performed, evidence obtained, and relevant conclusions reached in an engagement

shall raise a presumption that the procedures were not applied, tests were not

performed, information was not obtained, and relevant conclusions were not reached.

This presumption shall be a rebuttable presumption affecting the burden of proof

relative to those portions of the audit that are not documented as required in subdivision

(b). The burden may be met by a preponderance of the evidence.

(d) Audit documentation shall be maintained by a licensee for the longer of the

following:

(1) The minimum period of retention provided in subdivision (e).

(2) A period sufficient to satisfy professional standards and to comply with applicable

laws and regulations.

(e) Audit documentation shall be maintained for a minimum of seven years which shall

be extended during the pendency of any board investigation, disciplinary action, or legal

action involving the licensee or the licensee’s firm. The board may adopt regulations to

establish a different retention period for specific categories of audit documentation

where the board finds that the nature of the documentation warrants it.

(f) Licensees shall maintain a written documentation retention and destruction policy

that shall set forth the licensee’s practices and procedures complying with this article.

5098. Adoption of Regulations by Board

The board may adopt regulations to implement, interpret, and make specific provisions

relating to the following:

(a) Requirements for licensees maintaining an audit documentation retention policy and

procedures for review and approval of audit documentation destruction.

(b) Procedures for the identification, dating, and retention of audit documentation.

ARTICLE 6. Disciplinary Proceedings

5100. Revocation or Suspension of Permit or Certificate; Refusal to Renew;

Censure of Holder; Grounds

After notice and hearing the board may revoke, suspend, or refuse to renew any permit

or certificate granted under Article 4 (commencing with Section 5070) and Article 5

(commencing with Section 5080), or may censure the holder of that permit or certificate

for unprofessional conduct that includes, but is not limited to, one or any combination of

the following causes:

(a) Conviction of any crime substantially related to the qualifications, functions and

duties of a certified public accountant or a public accountant.

(b) A violation of Section 478, 498, or 499 dealing with false statements or omissions in

the application for a license, in obtaining a certificate as a certified public accountant, in

obtaining registration under this chapter, or in obtaining a permit to practice public

accountancy under this chapter.

same or different engagements, for the same or different clients, or any combination of

engagements or clients, each resulting in a violation of applicable professional

standards that indicate a lack of competency in the practice of public accountancy or in

the performance of the bookkeeping operations described in Section 5052.

(d) Cancellation, revocation, or suspension of a certificate or other authority to practice

as a certified public accountant or a public accountant, refusal to renew the certificate or

other authority to practice as a certified public accountant or a public accountant, or any

other discipline by any other state or foreign country.

(e) Violation of Section 5097.

(f) Violation of Section 5120.

(g) Willful violation of this chapter or any rule or regulation promulgated by the board

under the authority granted under this chapter.

(h) Suspension or revocation of the right to practice before any governmental body or

agency.

(i) Fiscal dishonesty or breach of fiduciary responsibility of any kind.

(j) Knowing preparation, publication, or dissemination of false, fraudulent, or materially

misleading financial statements, reports, or information.

(k) Embezzlement, theft, misappropriation of funds or property, or obtaining money,

property, or other valuable consideration by fraudulent means or false pretenses.

(l) The imposition of any discipline, penalty, or sanction on a registered public

accounting firm or any associated person of such firm, or both, or on any other holder of

a permit, certificate, license, or other authority to practice in this state, by the Public

Company Accounting Oversight Board or the United States Securities and Exchange

Commission, or their designees under the Sarbanes-Oxley Act of 2002 or other federal

legislation.

(m) Unlawfully engaging in the practice of public accountancy in another state.

5100.1. Copy of Disciplinary or Other Action as Evidence

Notwithstanding any other law, in causes for discipline against a licensee under

subdivisions (d), (h), or (l) of Section 5100, the board shall rely on the findings or events

stated in a certified or true and correct copy of the disciplinary or other action as

conclusive evidence for the purpose of determining discipline.

5100.2. Denial of License for Financial Crime or Disciplinary Action by Other

Jurisdiction

(a) In addition to the grounds for the denial of a license pursuant to Section 480, the

board may deny an applicant for a license if either of the following conditions are met:

(1) The applicant was convicted of a financial crime currently classified as a felony that

is directly and adversely related to the qualifications, functions, or duties of a certified

public accountant, pursuant to regulations adopted by the board. The seven-year

limitation as described in paragraph (1) of subdivision (a) of Section 480 shall not apply.

(2) The applicant, within the preceding seven years from the date of application, was

subjected to a disciplinary action taken by an agency of the federal government, the

Public Company Accounting Oversight Board, or another country for any act

substantially related to the functions, qualifications, or duties of a certified public

accountant.

(b) Notwithstanding any other law, in causes for denial of an application for licensure

pursuant to paragraph (2) of subdivision (a) of this section, the board shall rely on the

findings or events stated in a certified or true and correct copy of the disciplinary or

other action as conclusive evidence for purposes of determining whether to deny the

application.

5100.5. Restricted Practice of a Licensee; Petition for Reduction in Penalty

(a) After notice and hearing the board may, for unprofessional conduct, permanently

restrict or limit the practice of a licensee or impose a probationary term or condition on a

license, which prohibits the licensee from performing or engaging in any of the acts or

services described in Section 5051.

(b) A licensee may petition the board pursuant to Section 5115 for reduction of penalty

or reinstatement of the privilege to engage in the service or act restricted or limited by

the board.

criminal, or administrative penalties or sanctions provided by law, and do not supplant,

but are cumulative to, other disciplinary authority, penalties, or sanctions.

(d) Failure to comply with any restriction or limitation imposed by the board pursuant to

this section is grounds for revocation of the license.

(e) For purposes of this section, both of the following shall apply:

(1) “Unprofessional conduct” includes, but is not limited to, those grounds for discipline

or denial listed in Section 5100.

(2) “Permanently restrict or limit the practice of” includes, but is not limited to, the

prohibition on engaging in or performing any attestation engagement, audits, or

compilations.

5101. Revocation, Suspension or Refusal to Renew Permit of Partnership;

Censure; Grounds

After notice and hearing the board shall revoke the registration and permit to practice of

a partnership if at any time it does not have all the qualifications prescribed by the

section of this chapter under which it qualified for registration. After notice and hearing

the board may revoke, suspend or refuse to renew the permit to practice of a

partnership or may censure the holder of such permit for any of the causes enumerated

in Section 5100 and for the following additional causes:

(a) The revocation or suspension of the certificate or registration or the revocation or

suspension of or refusal to renew the permit to practice of any partner.

(b) The cancellation, revocation or suspension of certificate or other authority to practice

or refusal to renew the certificate or other authority of the partnership of any partner

thereof to practice public accountancy in any other state.

5102. Conduct of Proceedings; Powers of Board

The proceedings under this article shall be conducted in accordance with Chapter 5

(commencing at Section 11500) of Part 1 of Division 3 of Title 2 of the Government

Code, and the board shall have all the powers granted therein.

5103. Authority of Board to Investigate Complaints

(a) Notwithstanding any other provision of law, the board may inquire into any alleged

violation of this chapter or any other state or federal law, regulation, or rule relevant to

the practice of accountancy.

(b) The board, or its executive officer pursuant to a delegation of authority from the

board, is authorized to perform the following functions:

(1) To receive and investigate complaints and to conduct investigations or hearings,

with or without the filing of any complaint, and to obtain information and evidence

relating to any matter involving the conduct of licensees, as directed by the board, or as

directed by the executive officer pursuant to a delegation of authority from the board.

(2) To receive and investigate complaints and to conduct investigations or hearings,

with or without the filing of any complaint, and to obtain information and evidence

relating to any matter involving any violation or alleged violation of this chapter by

licensees, as directed by the board, or as directed by the executive officer pursuant to a

delegation of authority from the board.

5103.5. Notice of Formal Accusations Posted on Internet Website; Statement that

Accusations are not Final Determinations of Wrongdoing

(a) The board shall post on its internet website, in an easily marked and identifiable

location, notice of all formal accusations. The notice of any formal accusation shall

contain a link to where a person may request and have sent to them a copy of the

formal accusation, and the basis for the accusation and alleged violations filed by the

board against a licensee.

(b) The link to where a person may request and have sent to them a copy of the formal

accusation shall be clearly and conspicuously located on the same internet website

page on which the notice is posted and shall authorize a person to request and receive

the information described in subdivision (a) by regular mail or electronic mail.

formal accusation and any person receiving a copy of a formal accusation that any

allegations contained in the accusation are not a final determination of wrongdoing and

are subject to adjudication and final review by the board pursuant to the Administrative

Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of

Title 2 of the Government Code). This statement shall be provided to a person

requesting and receiving a copy of a formal accusation in a manner to be determined by

the board.

5104. Relinquishment of Revoked, Etc., Certificate or Permit; Return of Certificate

or Permit on Expiration of Period of Suspension

Any certified public accountant or public accountant whose certificate, registration, or

permit has been revoked or suspended shall, upon request of the board, relinquish their

certificate or permit. However, upon the expiration of the period of suspension, the

board shall immediately return any suspended certificate or permit that has been

relinquished.

5105. Relinquishment of Certificate and Permit Where Payment of Renewal Fee

Delinquent; Reissuance; Conditions

Any certified public accountant or public accountant who is delinquent in the payment of

his renewal fee shall upon request of the board relinquish his certificate and permit;

provided, however, the board shall reissue any certificate and permit which has been

relinquished for nonpayment of renewal fees if the permit is renewed as provided in

Section 5070.6.

5106. Plea or Verdict of Guilty or Conviction Following Plea of Nolo Contendere

as Conviction Within Meaning of Article; Effect of Record of Conviction;

Suspension or Revocation of Certificate or Permit, Declining to Issue Certificate

or Permit

A plea or verdict of guilty or a conviction following a plea of nolo contendere is deemed

to be a conviction within the meaning of this article. The record of the conviction shall be

conclusive evidence thereof. The board may order the certificate or permit suspended

or revoked, or may decline to issue a certificate or permit, when the time for appeal has

elapsed, or the judgment of conviction has been affirmed on appeal or when an order

granting probation is made, suspending the imposition of sentence, irrespective of a

subsequent order under the provisions of Section 1203.4 of the Penal Code allowing

such person to withdraw his plea of guilty and to enter a plea of not guilty, or setting

aside the verdict of guilty or dismissing the accusation, information or indictment.

5107. Payment to Board of Costs of Investigation and Prosecution of Certain

Disciplinary Cases

(a) The executive officer of the board may request the administrative law judge, as part

of the proposed decision in a disciplinary proceeding, to direct any holder of a permit or

certificate found to have committed a violation or violations of this chapter to pay to the

board all reasonable costs of investigation and prosecution of the case, including, but

not limited to, attorney’s fees. The board shall not recover costs incurred at the

administrative hearing.

(b) A certified copy of the actual costs, or a good faith estimate of costs where actual

costs are not available, signed by the executive officer, shall be prima facie evidence of

reasonable costs of investigation and prosecution of the case.

reasonable costs of investigation and prosecution of the case when requested to do so

by the executive officer pursuant to subdivision (a). Costs are payable 120 days after

the board’s decision is final, unless otherwise provided for by the administrative law

judge or if the time for payment is extended by the board.

(d) The finding of the administrative law judge with regard to cost shall not be

reviewable by the board to increase the cost award. The board may reduce or eliminate

the cost award, or remand to the administrative law judge where the proposed decision

fails to make a finding on costs requested by the executive officer pursuant to

subdivision (a).

(e) The administrative law judge may make a further finding that the amount of

reasonable costs awarded shall be reduced or eliminated upon a finding that

respondent has demonstrated that they cannot pay all or a portion of the costs or that

payment of the costs would cause an unreasonable financial hardship that cannot be

remedied through a payment plan.

(f) When an administrative law judge makes a finding that costs be waived or reduced,

they shall set forth the factual basis for their finding in the proposed decision.

(g) Where an order for recovery of costs is made and timely payment is not made as

directed by the board’s decision, the board may enforce the order for payment in any

appropriate court. This right of enforcement shall be in addition to any other rights the

board may have as to any holder of a permit or certificate directed to pay costs.

(h) In a judicial action for the recovery of costs, proof of the board’s decision shall be

conclusive proof of the validity of the order of payment and the terms of payment.

(i) All costs recovered under this section shall be deposited in the Accountancy Fund.

(j) (1) Except as provided in paragraph (2), the board shall not renew or reinstate the

permit or certificate of a holder who has failed to pay all of the costs ordered under this

section.

(2) Notwithstanding paragraph (1) or paragraph (2) of subdivision (g) of Section 125.3,

the board may, in its discretion, conditionally renew or reinstate for a maximum of three

years the permit or certificate of a holder who demonstrates financial hardship and who

enters into a formal agreement with the board to reimburse the board within that three-

year period for those unpaid costs.

(k) Nothing in this section shall preclude the board from seeking recovery of costs in an

order or decision made pursuant to an agreement entered into between the board and

the holder of a permit or certificate.

(l) (1) Costs may not be recovered under this section as a result of a citation issued

pursuant to Section 125.9 and its implementing language if the licensee complies with

the citation.

(2) The Legislature hereby finds and declares that this subdivision is declaratory of

existing law.

5108. Authority of Board to Issue Subpoenas

In connection with any investigation or action authorized by this chapter, the board may

issue subpoenas for the attendance of witnesses and the production of papers, books,

accounts, documents and testimony pertinent or material to its inquiry, investigation,

hearing, proceeding, or action conducted in any part of the state.

5109. Jurisdiction of Board not Affected by Change in Status of Licensee

The expiration, cancellation, forfeiture, or suspension of a license, practice privilege, or

other authority to practice public accountancy by operation of law or by order or decision

of the board or a court of law, the placement of a license on a retired status, or the

voluntary surrender of a license by a licensee shall not deprive the board of jurisdiction

to commence or proceed with any investigation of or action or disciplinary proceeding

against the licensee, or to render a decision suspending or revoking the license.

5110. Acts Constituting Cause for Board’s Denial of Exam Application or

Admission, Voidance of Grades, or Denial of License Application or Registration;

Powers of Board

(a) After notice and an opportunity for a hearing, the board may deny an application to

take the licensing examination, deny admission to current and future licensing

examinations, void examination grades, and deny an application for a license or

registration to any individual who has committed any of the following acts:

(1) Made any false, fraudulent, or materially misleading statement or a material

omission in any application for a license, examination, or registration.

(2) Cheated or subverted or attempted to subvert any licensing examination.

(3) Aided, abetted, or conspired with any other person to violate paragraph (1) or (2).

(4) Any act that if committed by an applicant for licensure would be grounds for denial of

a license or registration under Section 480 or if committed by a licensee or a registrant

would be grounds for discipline under Section 5100.

(5) Any act committed outside of this state that would be a violation of this article if

committed within this state.

(b) Neither the withdrawal of an application for examination, licensure, or registration,

nor the expulsion or voluntary departure from an examination shall deprive the board of

its authority to deny an application for, or admittance to, current or future licensing

examinations, or to commence or continue a proceeding based on a violation of this

article.

admittance to or to remove from the licensing examination, any person suspected of

cheating or failing to comply with examination procedures or requirements.

(d) The term “licensing examination” includes the Uniform Certified Public Accountant

examination, ethics examination, and any other professional or vocational licensing

examination offered or administered by, or through, the board or other agencies within

or outside of this state, for professional or vocational licensing purposes.

(e) The board may take any of the actions described in subdivision (a) based upon any

determination, decision, ruling, or finding made by any state or other governmental

entity, foreign or domestic, that any individual has committed any of the actions

described in paragraphs (1) to (5), inclusive, of subdivision (a).

(f) The provisions of this section are in addition to any other remedies that may be

available under other provisions of law including, but not limited to, those set forth in

Sections 123, 480, and 496.

5111. Acts Constituting Cheating, Subverting or Attempting to Subvert Licensing

Examination

Cheating on, or subverting or attempting to subvert any licensing examination includes,

but is not limited to, engaging in, soliciting, or procuring any of the following:

(a) Any communication between one or more examinees and any person, other than a

proctor or examination official, while the examination is in progress.

(b) Any communication between one or more examinees and any other person at any

time concerning the content of the examination including, but not limited to, any

examination question or answer, unless the examination has been publicly released by

the examining authority or jurisdiction.

(d) Possession or use at any time during the examination or while the examinee is on

the examination premises of any device, material, or document that is not expressly

authorized for use by examinees during the examination including, but not limited to,

notes, crib sheets, textbooks, and electronic devices.

(e) Failure to follow any examination instruction or rule related to examination security.

(f) Providing false, fraudulent, or materially misleading information concerning

education, experience, or other qualifications as part of, or in support of, any application

for admission to any professional or vocational examination.

5112. Procedures for Denial of Exam Application or Admittance, or Voidance of

Grades; Notice

(a) The board may deny an application to take the licensing examination, deny

admittance to current and future licensing examinations, and void examination grades

on the grounds set forth in Section 5110 using either of the following procedures:

(1) Notifying the individual in writing of all of the following:

(A) The action the board has taken.

(B) The reasons the action was taken.

examination.

(D) The individual’s right to a hearing under the provisions of Chapter 5 (commencing

with Section 11500) of Division 3 of Title 2 of the Government Code if a written request

for a hearing is made within 60 days from the date of the board’s notice. If the individual

does not request a hearing, the board’s action shall become final at the expiration of this

60-day period.

(2) Filing and serving a statement of issues in accordance with Section 11504 of the

Government Code.

(b) The board shall issue the notice of action under paragraph (1) of subdivision (a) or

file and serve the statement of issues under paragraph (2) of subdivision (a) within five

years of the last day of the examination with respect to which the alleged prohibited act

was committed or within three years of the discovery of the commission of the alleged

prohibited act, whichever occurs later.

5113. Rights After Denial of Admission to Licensing Examination

An individual who has been denied admission to the licensing examination under

Section 5110 may petition the board for admission to the Certified Public Accountant

examination not less than one year after the effective date of the decision issued by the

board following a hearing held pursuant to the provisions of Chapter 5 (commencing

with Section 11500) of Division 3 of Title 2 of the Government Code or, if there was no

hearing, may petition the board not less than one year after the decision or action

pursuant to the notice of action issued by the board becomes final as provided in

subparagraph (D) of paragraph (1) of subdivision (a) of Section 5112, unless the

decision or notice of action issued by the board specifies a different timeframe within

which this petition may be filed. However, in no event shall the timeframe specified by

the board be more than three years from the effective date of the board’s decision or

from the date that the board’s action pursuant to the notice of action becomes final.

5115. Revocation or Surrender of License

(a) A person whose license has been revoked or surrendered may petition the board for

reinstatement or reduction of penalty after a period of not less than one year has

elapsed from the effective date of the decision or from the date of the denial of a similar

petition, unless a longer period, not to exceed three years, is specified by the board in

any decision revoking the license, accepting the surrender of the license, or denying

reinstatement of the license.

(b) A person whose license has not been revoked or surrendered but who has been

disciplined by imposition of a suspension or otherwise disciplined may petition the board

for reinstatement or reduction of penalty after a period of not less than one year has

elapsed from the effective date of the decision.

the Attorney General and the petitioner shall be afforded an opportunity to present

either oral or written argument before the board itself. The board itself shall rule on the

petition, and the decision shall include the reasons therefor and any terms and

conditions that the board reasonably deems appropriate to impose as a condition of

reinstatement or reduction of penalty, including, but not limited to, restrictions on the

petitioner’s scope of professional practice.

ARTICLE 6.5. Administrative Penalties

5116. Notice and Hearing Opportunity Required; Penalties Assessed Under More

Than One Section of Article; Regulations; Penalties Additional to Other

Sanctions; Money to be Deposited into Accountancy Fund

(a) The board, after appropriate notice and an opportunity for hearing, may order any

licensee or applicant for licensure or examination to pay an administrative penalty as

provided in this article as part of any disciplinary proceeding or other proceeding

provided for in this chapter.

(b) The board may assess administrative penalties under one or more provisions of this

article. However, the total administrative penalty to be paid by the licensee shall not

exceed the amount of the highest administrative penalty authorized by this article.

penalties based upon factors, including, but not limited to, actual and potential

consumer harm, nature and severity of the violation, the role of the person in the

violation, the person’s ability to pay the administrative penalty, and the level of

administrative penalty necessary to deter future violations of this chapter.

(d) Administrative penalties assessed under this article shall be in addition to any other

penalties or sanctions imposed on the licensee or other person, including, but not

limited to, license revocation, license suspension, denial of the application for licensure,

denial of the petition for reinstatement, or denial of admission to the licensing

examination. Payment of these administrative penalties may be included as a condition

of probation when probation is ordered.

(e) All administrative penalties collected under this article shall be deposited in the

Accountancy Fund.

5116.1. Penalty Amounts for Violation of Provisions of Chapter

In accordance with Section 5116 and applicable regulations, except as provided in

Section 5116.2, any licensee who violates any provision of this chapter may be

assessed an administrative penalty of not more than five thousand dollars ($5,000) for

the first violation and not more than ten thousand dollars ($10,000) for each subsequent

violation.

5116.2. Penalty Amounts for Violation of Specified Subdivisions of § 5100

In accordance with Section 5116 and applicable regulations, any licensee who violates

subdivision (a), (c), (i), (j) or (k) of Section 5100 may be assessed an administrative

penalty of not more than one million dollars ($1,000,000) for the first violation and not

more than five million dollars ($5,000,000) for any subsequent violation, except that a

licensee who is a natural person may be assessed an administrative penalty of not

more than fifty thousand dollars ($50,000) for the first violation and not more than one

hundred thousand dollars ($100,000) for any subsequent violation.

5116.3. Penalty Amounts for Specified Prohibited Acts

In accordance with Section 5116 and applicable regulations, any person who is found to

have cheated or subverted or attempted to subvert or cheat on any licensing

examination or who conspired with or aided or abetted any other person to cheat,

subvert or attempt to subvert any examination may be assessed an administrative

penalty of not more than five thousand dollars ($5,000) for the first violation and not

more than ten thousand dollars ($10,000) for each subsequent violation.

5116.4. Penalties in Conjunction with Disciplinary Proceedings or Notice

(a) The board’s executive officer may request assessment of an administrative penalty

in any disciplinary or other proceeding provided in this chapter or in any notice to an

applicant pursuant to Section 5112.

(b) The administrative penalty pursuant to subdivision (a) shall become final unless

contested within the time period provided for the filing of a notice of appeal, for the filing

of a notice of defense, or for requesting a hearing in the proceeding.

final contested or default decision of the board or in a notice issued pursuant to Section

5112 once the time period for requesting a hearing has expired.

5116.5. Where Judgment Obtainable

The board may obtain a judgment in any court of competent jurisdiction ordering the

payment of any final administrative penalty assessed by the board pursuant to this

article upon the filing of a certified copy of the board’s final decision or notice issued

pursuant to Section 5112.

5116.6. “Licensee”

Anywhere the term “licensee” is used in the article it shall include certified public

accountants, public accountants, partnerships, corporations, holders of practice

privileges, other persons licensed, registered, or otherwise authorized to practice public

accountancy under this chapter, and persons who are in violation of any provision of

Article 5.1 (commencing with Section 5096).

ARTICLE 7. Prohibitions and Offenses Against the Chapter Generally

5120. Misdemeanors; Punishment; Certification of Facts to Enforcement Officer;

Proceedings

Any person who violates Article 3 (commencing with Section 5050) is guilty of a

misdemeanor, punishable by imprisonment for not more than six months, or by a fine of

not more than one thousand dollars ($1,000), or both.

Whenever the board has reason to believe that any person is liable to punishment

under this article, the board or with its approval the enforcement advisory committee,

may certify the facts to the appropriate enforcement officer of the city or county where

the alleged violation had taken place and the officer may cause appropriate proceedings

to be brought.

5121. Use of Words “Certified Public Accountants”; Evidentiary Effect; Evidence

of Single Act

The display or uttering by a person of a card, sign, advertisement or other printed,

engraved or written instrument or device, bearing a person’s name in conjunction with

the words “certified public accountant” or any abbreviation thereof or the words “public

accountant” or any abbreviation thereof shall be prima facie evidence in any

prosecution, proceeding or hearing brought under this article that the person whose

name is so displayed caused or procured the display or uttering of such card, sign,

advertisement or other printed, engraved or written instrument or device. Any such

display or uttering shall be prima facie evidence that the person whose name is so

displayed holds themselves out as a certified public accountant, or a public accountant

holding a permit to practice public accountancy in this state under the provisions of this

chapter. In any prosecution or hearing under this chapter, evidence of the commission

of a single act prohibited by this chapter shall be sufficient to justify a conviction without

evidence of a general course of conduct.

5122. Application for Order Enjoining Illegal Acts or Practices

Whenever in the judgment of the board, or with its approval the enforcement advisory

committee, any person has engaged, or is about to engage, in any acts or practices that

constitute, or will constitute, an offense against this chapter, the board may make

application to the appropriate court for an order enjoining the acts or practices, and

upon showing by the board that the person has engaged, or is about to engage, in any

such acts or practices, an injunction, restraining order, or other order that may be

appropriate shall be granted by the court.

ARTICLE 8. Revenue

5130. Applicant’s Fees; Application Form

The board shall charge and collect a fee from each applicant for the certificate of

certified public accountant. The fee shall accompany the application, which must be

made on a form provided by the board.

5131. Application Fee and Examination Fees

(a) The board may charge and collect an application fee and an examination fee from

each applicant. The applicable fees shall accompany the application which shall be

made on a form provided by the board.

(b) Notwithstanding any other provision of this chapter, the board may authorize an

organization specified by the board pursuant to Section 5082.1 to receive directly from

applicants payment of the examination fees charged by that organization as payment

for examination materials and services.

5132. Disposition of Moneys Received by Board

(a) All moneys received by the board under this chapter from any source and for any

purpose and from a temporary license issued under Section 115.6 shall be accounted

for and reported monthly by the board to the Controller and at the same time the

moneys shall be remitted to the State Treasury to the credit of the Accountancy Fund.

(b) The secretary-treasurer of the board shall, from time to time, but not less than once

each fiscal year, prepare or have prepared on their behalf, a financial report of the

Accountancy Fund that contains information that the board determines is necessary for

the purposes for which the board was established.

5008, shall include the revenues and the related costs from examination, initial

licensing, license renewal, citation and fine authority, and cost recovery from

enforcement actions and case settlements.

5133. Appropriation of Money in Accountancy Fund; Per Diem and Expenses of

Members

All money in the Accountancy Fund is hereby appropriated to the California Board of

Accountancy to carry out the provisions of this chapter. Each member of the board and

each member of a committee shall receive a per diem and expenses as provided in

Section 103.

5134. Schedule of Fees

The amount of fees prescribed by this chapter is as follows:

(a) The fee to be charged to each applicant for the certified public accountant

examination shall be fixed by the board at an amount not to exceed six hundred dollars

($600). The board may charge a reexamination fee not to exceed seventy-five dollars

($75) for each part that is subject to reexamination.

(b) The application fee to be charged to each applicant for issuance of a certified public

accountant certificate shall be fixed by the board at an amount not to exceed seven

hundred dollars ($700).

partnership or professional corporation shall not be less than two hundred fifty dollars

($250) and shall not exceed two thousand dollars ($2,000).

(d) (1) The biennial renewal fee for a certified public accountant to engage in the

practice of public accountancy, as specified in Section 5070, shall be three hundred

forty dollars ($340) for permits expiring after June 30, 2024.

(2) The biennial renewal fee for a certified public accountant to engage in the practice of

public accountancy, as specified in Section 5070, shall be four hundred dollars ($400)

for permits expiring after June 30, 2026.

(e) (1) The biennial renewal fee for a partnership or professional corporation shall be

four hundred dollars ($400) for permits expiring after June 30, 2024.

(2) The biennial renewal fee for a partnership or professional corporation shall be five

hundred twenty dollars ($520) for permits expiring after June 30, 2026.

(f) If the board has unencumbered funds in an amount that is equal to more than the

board’s operating budget for the next two fiscal years, the board may fix the biennial

renewal fees by regulation at an amount less than those identified in subdivision (d) for

certified public accountants and subdivision (e) for partnerships and professional

corporations.

(g) The application fee to be charged to each applicant for a retired status license, as

described in Section 5070.1, shall be fixed by the board at an amount not to exceed two

hundred fifty dollars ($250).

(h) The application fee to be charged to each applicant for restoration of a license in a

retired status to an active status pursuant to subdivision (f) of Section 5070.1 shall be

fixed by the board at an amount not to exceed one thousand dollars ($1,000).

(i) The delinquency fee shall be 50 percent of the accrued renewal fee.

(j) The initial permit fee is an amount equal to the renewal fee in effect on the last

regular renewal date before the date on which the permit is issued, except that, if the

permit is issued one year or less before it will expire, then the initial permit fee is an

amount equal to 50 percent of the renewal fee in effect on the last regular renewal date

before the date on which the permit is issued. The board may, by regulation, provide for

the waiver or refund of the initial permit fee where the permit is issued less than 45 days

before the date on which it will expire.

(k) The fee to be charged for the certification of documents evidencing passage of the

certified public accountant examination, the certification of documents evidencing the

grades received on the certified public accountant examination, or the certification of

documents evidencing licensure shall be twenty-five dollars ($25).

(l) The board shall fix the fees in accordance with the limits of this section and any

increase in a fee fixed by the board shall be pursuant to regulation duly adopted by the

board in accordance with the limits of this section.

(m) It is the intent of the Legislature that, to ease entry into the public accounting

profession in California, any administrative cost to the board related to the certified

public accountant examination or issuance of the certified public accountant certificate

that exceeds the maximum fees authorized by this section shall be covered by the fees

charged for the biennial renewal of the permit to practice.

ARTICLE 9. Accountancy Corporations

5150. “Accountancy Corporation”; Right to Practice Accountancy; California

Board of Accountancy as Governmental Agency Under Moscone-Knox

Professional Corporation Act

An accountancy corporation is a corporation which is registered with the California

Board of Accountancy and has a currently effective certificate of registration from the

board pursuant to the Moscone-Knox Professional Corporation Act, as contained in Part

4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code,

and this article. Subject to all applicable statutes, rules and regulations, an accountancy

corporation is entitled to practice accountancy. With respect to an accountancy

corporation, the governmental agency referred to in the Moscone-Knox Professional

Corporation Act is the California Board of Accountancy.

5151. Application for Registration; Documents and Information Required; Form

An applicant for registration as an accountancy corporation shall supply to the board all

necessary and pertinent documents and information requested by the board concerning

the applicant’s plan of operation. The board may provide forms of application. If the

board finds that the corporation is duly organized and existing under the General

Corporation Law or the foreign corporation is duly qualified for the transaction of

intrastate business pursuant to the General Corporation Law, that, except as otherwise

permitted under Section 5053 or 5079, each officer, director, shareholder, or employee

who will render professional services is a licensed person as defined in the Moscone-

Knox Professional Corporation Act, or a person licensed to render the same

professional services in the jurisdiction or jurisdictions in which the person practices,

and that from the application it appears that the affairs of the corporation will be

conducted in compliance with law and the rules and regulations of the board, the board

shall upon payment of the registration fee in the amount as it may determine, issue a

certificate of registration. The applicant shall include with the application for each

shareholder of the corporation licensed in a foreign country but not in this state or in any

other state, territory, or possession of the United States, a certificate from the authority

in the foreign country currently having final jurisdiction over the practice of accounting,

which shall verify the shareholder’s admission to practice in the foreign country, the date

thereof, and the fact that the shareholder is currently in good standing as the equivalent

of a certified public accountant or public accountant. If the certificate is not in English,

there shall be included with the certificate a duly authenticated English translation

thereof. The application shall be signed and verified by an officer of the corporation. At

the time of application, if the corporation has a valid email address, it shall provide that

email address to the board.

5152. Reports by Corporations; Signature and Verification

Each accountancy corporation shall file with the board at the times the board may

require a report containing information pertaining to qualification and compliance with

the statutes, rules and regulations of the board as the board may determine. All reports

shall be signed and verified by an officer of the corporation.

5152.1 Renewal by Accountancy Corporation Biennially; Fee

Each accountancy corporation shall renew its permit to practice biennially and shall pay

the renewal fee fixed by the board in accordance with Section 5134. At the time of

renewal, if the corporation has a valid email address, it shall provide that email address

to the board.

5154. Directors, Shareholders, and Officers; License Requirements

Except as provided in Section 5079 of this code and in Section 13403 of the

Corporations Code, each director, shareholder, and officer of an accountancy

corporation shall be a licensed person as defined in the Moscone-Knox Professional

Corporation Act, or a person licensed to render the same professional services in the

jurisdiction or jurisdictions in which the person practices.

5155. Prohibition Against Accrual of Income to Benefit of Disqualified

Shareholders

The income of an accountancy corporation attributable to professional services

rendered while a shareholder is a disqualified person (as defined in the Moscone-Knox

Professional Corporation Act) shall not in any manner accrue to the benefit of such

shareholder or his shares in the accountancy corporation.

5156. Prohibition Against Unprofessional Conduct; Binding Effect of Statutes,

Rules, and Regulations; Provisions Governing Disciplinary Proceedings

An accountancy corporation shall not do or fail to do any act the doing of which or the

failure to do which would constitute unprofessional conduct under any statute, rule or

regulation now or hereafter in effect. In the conduct of its practice, it shall observe and

be bound by such statutes, rules and regulations to the same extent as a person

holding a permit under Section 5070 of this code. The board shall have the same

powers of suspension, revocation and discipline against an accountancy corporation as

are now or hereafter authorized by Section 5100 of this code, or by any other similar

statute against individual licensees, provided, however, that proceedings against an

accountancy corporation shall be conducted in accordance with Chapter 5

(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government

Code, and the board shall have all the powers granted therein.

5157. Rules and Regulations; Formulation and Enforcement; Provisions

Authorized

The board may formulate and enforce rules and regulations to carry out the purposes

and objectives of this article, including rules and regulations requiring (a) that the

articles of incorporation or bylaws of an accountancy corporation shall include a

provision whereby the capital stock of such corporation owned by a disqualified person

(as defined in the Moscone-Knox Professional Corporation Act), or a deceased person,

shall be sold to the corporation or to the remaining shareholders of such corporation

within such time as such rules and regulations may provide, and (b) that an

accountancy corporation as a condition of obtaining a certificate pursuant to the

Moscone-Knox Professional Corporation Act and this article shall provide adequate

security by insurance or otherwise for claims against it by its clients arising out of the

rendering of professional services.

5158. Management of Accountancy Corporation

Each office of an accountancy corporation engaged in the practice of public

accountancy in this state shall be managed by a certified public accountant or public

accountant.