Session of 1998
                   
HOUSE BILL No. 2766
         
By Committee on Business, Commerce and Labor
         
1-30
            9             AN ACT concerning certified public accountancy; providing for certifi-
10             cation of certain business associations and the imposition of civil fines;
11             amending K.S.A. 1997 Supp. 1-308 and 1-311 and repealing the exist-
12             ing sections.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           New Section 1. (a) The state board of accountancy, in addition to
16       any other penalty prescribed by chapter 1 of the Kansas Statutes Anno-
17       tated, may assess civil fines in an amount not to exceed $5,000 for each
18       violation, plus costs, including attorney fees, after proper notice and op-
19       portunity to be heard, against any person who does not hold a valid Kansas
20       certificate or permit to practice or any entity for a violation of the ac-
21       countancy statutes, rules and regulations or orders enforceable by the
22       board. Notice and hearing under this act shall be conducted in accordance
23       with the Kansas administrative procedure act. All costs assessed under
24       this section shall be remitted to the state treasurer at least monthly and
25       shall be deposited in the state treasury and credited to the board of ac-
26       countancy fee fund.
27           (b) In determining the amount of penalty to be assessed pursuant to
28       this section, the board may consider the following factors among others:
29       (1) Willfulness of the violation; (2) repetitions of the violation; and (3)
30       magnitude of the risk of harm caused by the violation.
31           Sec. 2. K.S.A. 1997 Supp. 1-308 is hereby amended to read as fol-
32       lows: 1-308. (a) A partnership, including a limited liability partnership,
33       may engage in practice in this state as certified public accountants, if it
34       registers annually with the board and meets the following requirements:
35           (1) At least one general partner thereof must be a certified public
36       accountant of this state holding a valid Kansas permit to practice;
37           (2) each partner thereof personally engaged within this state in a
38       practice of public accounting as a member thereof must be a certified
39       public accountant of this state holding a valid permit to practice;
40           (3) each partner thereof must be a certified public accountant in
41       some state in good standing; and
42           (4) each resident manager in charge of an office of the firm in this
43       state must be a certified public accountant of this state holding a valid

HB 2766

2

  1       permit to practice.
  2           (b) Nothing in this section shall prohibit a professional corporation
  3       from practicing in partnership with one or more corporations or individ-
  4       uals and being registered with the board as a partnership under this sec-
  5       tion if:
  6           (1) The professional corporation is duly organized under the profes-
  7       sional corporation law of Kansas and remains in good standing thereun-
  8       der;
  9           (2) all qualified shareholders hold valid permits to practice as certified
10       public accountants and, if engaged in the practice within this state, hold
11       a valid permit to practice issued by the board;
12           (3) each resident manager in charge of an office of the partnership
13       in this state is a certified public accountant of this state holding a valid
14       permit to practice issued by the board; and
15           (4) each individual practicing in partnership with the professional cor-
16       poration is a certified public accountant holding a valid permit to practice
17       and, if engaged in the practice within this state, holds a valid permit to
18       practice issued by the board.
19           (c) The term ``resident'' as used in this section, shall include a person
20       engaged in practice as a certified public accountant in this state, who
21       spends all or the greater part of such person's time during business hours
22       in this state, but who resides in another state.
23           (d) Application for registration under this section shall be made upon
24       the affidavit of a general partner of the partnership. If the general partner
25       making application is a professional corporation, the affidavit submitted
26       on its behalf shall be executed by the president or secretary of such cor-
27       poration. The board shall in each case determine whether the applicant
28       is eligible for registration. No fee shall be charged The board may charge
29       a fee for the registration of a partnership.
30           (e) A partnership which is so registered in accordance with this sec-
31       tion may use the words ``certified public accountants'' or the abbreviation
32       ``C.P.A.'' in connection with its partnership name. Notification shall be
33       given the board, within one month, after the admission or withdrawal of
34       a partner from any partnership so registered.
35           (f) A professional corporation, proprietorship, limited liability com-
36       pany or general corporation which was organized for the practice of cer-
37       tified public accountancy and which maintains an office in this state, may
38       engage in the practice in this state if it registers annually with the board
39       and if it is in compliance with requirements established by rules and
40       regulations adopted by the board for such registration, which require-
41       ments shall be similar to the requirements prescribed by this section for
42       the registration of partnerships. A professional corporation, proprietor-
43       ship, limited liability company or general corporation which is so regis-

HB 2766

3

  1       tered may use the words ``certified public accountants'' or the abbrevia-
  2       tion ``C.P.A.'' in connection with its name. A firm with only one permit
  3       holder may use the words ``certified public account'' or the abbreviation
  4       ``C.P.A.'' in connection with its name. No fee shall be charged The board
  5       may charge a fee for the registration of these firms.
  6           (g) For the purposes of chapter 1 of the Kansas Statutes Annotated,
  7       ``registered firm'' means any entity registered in accordance with K.S.A.
  8       1-308 and amendments thereto.
  9           Sec. 3. K.S.A. 1997 Supp. 1-311 is hereby amended to read as fol-
10       lows: 1-311. (a) The board may deny an application for a certificate, re-
11       voke or suspend any certificate issued under the laws of this state includ-
12       ing a Kansas certificate, or any registration granted under K.S.A. 1-308,
13       and amendments thereto, or may deny an application for a permit, re-
14       voke, suspend or refuse to renew any permit issued under K.S.A. 1-310
15       and amendments thereto, may censure the holder of any such permit,
16       limit the scope of practice of any permit holder, and may impose an
17       administrative fine not exceeding $1,000 $5,000 plus costs, including at-
18       torney fees, for any one or any combination each of the following causes:
19           (1) Fraud or deceit in obtaining a Kansas certificate, in obtaining
20       registration with the board under any law of this state, or in obtaining a
21       permit to practice as a certified public accountant, or renewal thereof,
22       under K.S.A. 1-310 and amendments thereto;
23           (2) dishonesty, fraud or gross negligence in the practice as a of public
24       ;a/ccountant accountancy;
25           (3) violation of any of the provisions of subpart (2)(B) of subsection
26       (b) of K.S.A. 1-302b or 1-316 and amendments thereto or any rule or
27       regulation of the board or any order of the board;
28           (4) willful violation of a rule of professional conduct promulgated by
29       the board under the authority granted by K.S.A. 1-202, and amendments
30       thereto;
31           (5) conviction of a felony under the laws of any state or of the United
32       States;
33           (6) conviction of any crime, an essential element of which is dishon-
34       esty or fraud, under the laws of any state or of the United States;
35           (5) the certificate or permit holder has been convicted of any state or
36       federal crime that is substantially related to the qualifications, functions
37       and duties of a certified public accountant or any crime punishable as a
38       felony under any state or federal statute. A conviction means a plea of
39       guilty, a plea of nolo contendere or a verdict of guilty. The board may
40       take disciplinary action pursuant to this section when the time for appeal
41       has elapsed, or the judgment of conviction has been affirmed on appeal
42       or when an order granting probation is made suspending the imposition
43       of sentence;

HB 2766

4

  1           (7) (6) cancellation, revocation, suspension or refusal to renew the
  2       authority to practice as a certified public accountant or a public account-
  3       ant ;n by any other state or foreign country for any reason other than
  4       failure to pay an appropriate registration fee in such other state or foreign
  5       county; or
  6           (8) (7) failure to comply with the quality peer review program re-
  7       quired by K.S.A. 1-310, and amendments thereto.
  8           (b) All administrative proceedings pursuant to this section shall be
  9       conducted in accordance with the provisions of the Kansas administrative
10       procedure act and the act for judicial review and civil enforcement of
11       agency actions.
12           Sec. 4. K.S.A. 1997 Supp. 1-308 and 1-311 are hereby repealed.
13           Sec. 5. This act shall take effect and be in force from and after its
14       publication in the statute book.
15      
16