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AN ACT

RELATING TO CERTIFIED PUBLIC ACCOUNTANTS; PERMITTING

CERTIFIED PUBLIC ACCOUNTANTS LICENSED IN ANOTHER STATE TO

PERFORM SERVICES IN NEW MEXICO; AMENDING AND REPEALING

SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 61-28B-3 NMSA 1978 (being Laws 1999,

Chapter 179, Section 3, as amended) is amended to read:

"61-28B-3. DEFINITIONS.--As used in the 1999 Public

Accountancy Act:

A. "attest" means to provide the following

financial statement services:

(1) an audit or other engagement performed

in accordance with the statements on auditing standards;

(2) a review of a financial statement

performed in accordance with the statement on standards for

accounting and review services;

(3) an examination of prospective financial

information performed in accordance with the statements on

standards for attestation engagements; and

(4) an engagement to be performed in

accordance with the auditing standards of the public company

accounting oversight board;

B. "board" means the New Mexico public accountancy

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board;

C. "certificate" means the legal recognition

issued to identify a certified public accountant or a

registered public accountant pursuant to the 1999 Public

Accountancy Act or prior law;

D. "certified public accountant" means a person

certified by this state or by another state to practice

public accountancy and use the designation;

E. "contingent fee" means a fee established for

the performance of a service pursuant to an arrangement in

which no fee will be charged unless a specific finding or

result is attained or upon which the amount of the fee is

dependent upon a finding or result. "Contingent fee" does

not mean a fee set by the court or a public authority on a

tax matter;

F. "director" means the executive director of the

board;

G. "firm" means a sole proprietorship,

professional corporation, partnership, limited liability

company, limited liability partnership or other legal

business entity that practices public accountancy;

H. "licensee" means a certified public accountant,

certified public accountant firm, registered public

accountant or registered public accountant firm;

I. "peer review" means a study, appraisal or

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review of one or more aspects of the professional work of a

firm by a certified public accountant who is not affiliated

with the firm being reviewed;

J. "permit" means the annual authority granted to

practice as a certified public accountant firm or a

registered public accountant firm;

K. "practice" means performing or offering to

perform public accountancy for a client or potential client

by a person who makes a representation to the public as being

a permit holder or registered firm;

L. "public accountancy" means the performance of

one or more kinds of services involving accounting or

auditing skills, including the issuance of reports on

financial statements, the performance of one or more kinds of

management, financial advisory or consulting services, the

preparation of tax returns or the furnishing of advice on tax

matters;

M. "registered public accountant" means a person

who is registered by the board to practice public accountancy

and use the designation;

N. "report" means an opinion or other writing

that:

(1) states or implies assurance as to the

reliability of any financial statements;

(2) includes or is accompanied by a

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statement or implication that the person issuing it has

special knowledge or competency in accounting or auditing

indicated by the use of names, titles or abbreviations likely

to be understood to identify the author of the report as a

licensee; and

(3) includes the following types of reports

as they are defined by board rule:

(a) a compilation report;

(b) a review report; or

O. "substantial equivalency" means a determination

by the board that the education, examination and experience

requirements for certification of another jurisdiction are

comparable to or exceed the requirements of Paragraph (1) of

Subsection A of Section 61-28B-26 NMSA 1978."

Section 2. Section 61-28B-8 NMSA 1978 (being Laws 1999,

Chapter 179, Section 8, as amended) is amended to read:

"61-28B-8. QUALIFICATIONS FOR A CERTIFICATE AS A

CERTIFIED PUBLIC ACCOUNTANT.--

A. An applicant for a certificate shall complete

the application form provided by the board and demonstrate to

the board's satisfaction that the applicant:

(1) is of good moral character and lacks a

history of dishonest or felonious acts; and

(2) meets the education, experience and

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examination requirements of the board.

B. The board may refuse to grant a certificate on

the ground that the applicant failed to satisfy the

requirement of good moral character.

C. After July 1, 2008, the education requirement

for examination shall be a baccalaureate degree or its

equivalent conferred by a college or university acceptable to

the board, with thirty semester hours in accounting or the

equivalent as determined by the board. An applicant for a

certificate shall have at least one hundred fifty semester

hours of college education or its equivalent earned at a

college or university acceptable to the board.

D. The examination for certification shall be

offered via a computer-based testing system at least four

times per year at a designated testing center and shall test

an applicant's knowledge of the subjects of accounting and

auditing and other related subjects as prescribed by the

board. The board shall prescribe the method of applying for

the examination and the dissemination of scores, and it shall

rely on the American institute of certified public

accountants for the grading of the examination. The board

may use all or any part of the uniform certified public

accountant examination services of the national association

of state boards of accountancy to perform administrative

services with respect to the examination. The board or its

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designee shall report all eligibility and score data to the

national candidate database, and it shall, to the extent

possible, provide that the passing scores are uniform with

passing scores of other states.

E. An applicant must pass all sections of the

examination to qualify for a certificate. A passing scaled

score for each section shall be seventy-five. Sections may

be taken individually and in any order. An applicant may not

take a failed test section within the same three-month

examination window. Credit for any section passed shall be

valid for eighteen months from the actual date the applicant

took that section, without having to attain a minimum score

on any failed test section and without regard to whether the

applicant has taken other test sections. An applicant must

pass all four test sections within a continuous

eighteen-month period, which begins on the date that the

first section passed is taken. If all four test sections are

not passed within the continuous eighteen-month period,

credit for any test section passed outside the eighteen-month

period will expire, and that test section must be retaken.

F. An applicant who has passed at least two

sections of the paper and pencil examination, as of the

launch date of the computer-based examination, will retain

credit for the corresponding test sections of the

computer-based examination.

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G. An applicant who has passed at least two

sections of the paper and pencil examination, as of the

launch date of the computer-based examination, shall be given

a transition period to complete any remaining test sections

of the computer-based examination.

H. An applicant shall be given credit for

examination sections passed in another state if such credit

would have been given in New Mexico.

I. The board may waive or defer requirements of

this section regarding the circumstances in which sections of

the examination must be passed, upon a showing that, by

reason of circumstances beyond the applicant's control, the

applicant was unable to meet the requirement.

J. An applicant for initial issuance of a

certified public accountant certificate shall show that the

applicant has had at least one year of experience. This

experience shall include providing service or advice

involving the use of accounting, attest, management advisory,

financial advisory, tax or consulting skills as verified by a

certified public accountant who meets requirements prescribed

by the board. The experience is acceptable if it was gained

through employment in government, industry, academia or

public practice."

Section 3. Section 61-28B-11 NMSA 1978 (being Laws

1999, Chapter 179, Section 11) is amended to read:

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"61-28B-11. CERTIFICATES ISSUED TO HOLDERS OF A

CERTIFICATE, LICENSE OR PERMIT ISSUED BY ANOTHER STATE.--

A. The board may issue a certificate to a holder

of a certificate, license or permit issued by another state

upon a showing that the applicant:

(1) passed the examination required for

issuance of the applicant's certificate with grades that

would have been passing grades at the time in New Mexico;

(2) passed the examination upon which the

applicant's out-of-state certificate was based and has two

years of experience acceptable to the board or meets

equivalent requirements prescribed by board rule, within the

ten years immediately preceding the application; and

(3) if the applicant's certificate, license

or permit was issued more than four years prior to

application, has fulfilled the board's requirements of

continuing professional education.

B. A person licensed by another state who wishes

to establish a principal place of business in New Mexico

shall apply to the board for a certificate prior to

establishing the business. The board may issue a certificate

to the person if the person provides proof from a

board-approved national qualification appraisal service that

the person's certified public accountant qualifications are

substantially equivalent to the certified public accountant

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certification requirements of Paragraph (1) of Subsection A

of Section 61-28B-26 NMSA 1978.

C. The board may issue a certificate to a holder

of a substantially equivalent foreign designation; provided

that:

(1) the foreign authority that granted the

designation makes similar provision to allow a person who

holds a valid certificate issued by New Mexico to obtain such

foreign authority's comparable designation;

(2) the foreign designation:

(a) was duly issued by a foreign

authority that regulates the practice of public accountancy

and the foreign designation has not expired or been revoked

or suspended;

(b) entitles the holder to issue

reports upon financial statements; and

educational, examination and experience requirements

established by the foreign authority or by law; and

(3) the applicant:

(a) received the designation based on

educational and examination standards substantially

equivalent to those in effect in New Mexico at the time the

foreign designation was granted;

(b) completed an experience requirement

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in the jurisdiction that granted the foreign designation that

is substantially equivalent to the requirement provided for

in the 1999 Public Accountancy Act or has completed four

years of professional experience in New Mexico or meets

equivalent requirements prescribed by the board within the

ten years immediately preceding the application; and

examination on national standards and an examination on the

laws, rules and code of ethical conduct in effect in New

Mexico that is acceptable to the board.

D. An applicant for initial issuance or renewal of

a certificate pursuant to this section shall list all foreign

and domestic jurisdictions in which the applicant has applied

for or holds a designation to practice public accountancy.

The applicant shall also list any past denial, revocation or

suspension of a certificate, license or permit. An applicant

or certificate holder shall notify the board in writing,

within thirty days of the occurrence of any issuance, denial,

revocation or suspension of a designation or commencement of

a disciplinary or enforcement action by any jurisdiction.

E. The board has the sole authority to interpret

the application of the provisions of this section."

Section 4. Section 61-28B-13 NMSA 1978 (being Laws

1999, Chapter 179, Section 13, as amended) is amended to

read:

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"61-28B-13. FIRM PERMITS TO PRACTICE, ATTEST

EXPERIENCE, PEER REVIEW.--

A. The board may grant or renew a permit to

practice as a certified public accountant firm to an

applicant that demonstrates its qualifications in accordance

with this section.

B. A permit issued pursuant to this section shall

be required for the following:

(1) a firm with an office in New Mexico

performing attest services as defined by the 1999 Public

Accountancy Act;

(2) a firm with an office in New Mexico that

uses the title "CPA" or "CPA firm"; or

(3) a firm that does not have an office in

New Mexico but performs attest services for a client whose

principal place of business is in New Mexico.

C. A firm without an office in New Mexico may

perform services described in Paragraph (2) of Subsection A

of Section 61-28B-3 NMSA 1978 for a client whose principal

place of business is in New Mexico and may use the title

"CPA" or "CPA firm" without a permit issued pursuant to this

section only if:

(1) it performs services through a person

with practice privileges under Section 61-28B-26 NMSA 1978;

(2) a simple majority of the ownership of

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the firm belongs to holders of a certificate who are licensed

in some state pursuant to Paragraph (1) of Subsection H of

this section; and

(3) the firm has undergone a peer review

pursuant to Subsection L of this section.

D. A firm not subject to the requirements of

Subsection B or C of this section may perform other

professional services while using the title "CPA" or "CPA

firm" in New Mexico without a permit issued pursuant to this

section only if:

(1) the firm performs services through a

person with practice privileges pursuant to Section 61-28B-26

NMSA 1978; and

(2) the firm can lawfully perform services

in the state that is the firm's principal place of business.

E. Permits shall be issued and renewed for periods

of not more than two years, expiring on June 30 of the year

of expiration. Failure to pay the renewal fee shall be cause

for the board to withhold renewal of a permit without prior

hearing pursuant to the provisions of the Uniform Licensing

Act. If the renewal fee and delinquency fee are not paid

within ninety days after the expiration of the permit, the

permit shall be subject to cancellation. A firm whose permit

has been canceled for failure to pay the annual renewal fee

may secure reinstatement of the permit upon application and

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payment of the renewal fee and upon approval by the board.

F. The board shall grant or deny an application

for a permit no later than ninety days after the complete

application is filed.

G. If an applicant appeals the decision of the

board to deny a permit, the board may issue a provisional

permit for no longer than ninety days while the board

reconsiders its decision.

H. An applicant for initial issuance or renewal of

a permit shall demonstrate that:

(1) a simple majority of the ownership of

the firm, in terms of financial interests, profits, losses,

dividends, distributions, options, redemptions and voting

rights of all partners, officers, shareholders, members or

managers, belongs to holders of a certificate who are

licensed in some state. A partner, officer, shareholder,

member or manager, whose principal place of business is in

New Mexico, and who performs professional services in New

Mexico, must hold a valid certificate. The firm and all

owners must comply with the 1999 Public Accountancy Act. A

person with practice privileges pursuant to Section 61-28B-26

NMSA 1978 who performs services for which a permit is

required pursuant to this section shall not be required to

obtain a certificate from New Mexico pursuant to Section

61-28B-9 NMSA 1978. A firm may include owners who are not

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certificate holders; provided that:

(a) the firm designates a New Mexico

certificate holder, or in the case of a firm that must have a

permit, a licensee of another state who meets the

requirements of Subsection A of Section 61-28B-26 NMSA 1978,

who is responsible for the proper registration of the firm

and identifies that person to the board;

(b) all owners who are not certificate

holders are active participants in the certified public

accountant firm or registered public accountant firm or

affiliated entities; and

Public Accountancy Act; and

(2) a certificate holder, or a person

qualifying for practice privileges pursuant to Section

61-28B-26 NMSA 1978, who is responsible for supervising

attest services or signs or authorizes someone to sign the

accountant's report on the financial statements on behalf of

the firm meets the experience requirements set out in the

professional standards for such services.

I. An applicant for initial issuance or renewal of

a permit shall be required to register each office of the

firm within New Mexico with the board and to show that all

attest services rendered in this state are under the charge

of a person holding a valid certificate issued pursuant to

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the 1999 Public Accountancy Act or the corresponding

provision of prior law or by some other state.

J. An applicant for initial issuance or renewal of

a permit shall list all foreign and domestic jurisdictions in

which it has applied for or holds permits as a certified

public accountant firm and list any past denial, revocation

or suspension of a permit by any jurisdiction. Each permit

holder or applicant shall notify the board in writing, within

thirty days of the occurrence of a change in the identities

of partners, officers, shareholders, members or managers

whose principal place of business is in this state, a change

in the number or location of offices within this state, a

change in the identity of the persons in charge of such

offices and any issuance, denial, revocation or suspension of

a permit by another jurisdiction.

K. A firm that falls out of compliance with the

provisions of the 1999 Public Accountancy Act due to changes

in firm ownership or personnel shall take corrective action

to bring the firm back into compliance as quickly as

possible. The board may grant a six-month period for a firm

to take the corrective action. Failure to bring the firm

back into compliance within six months shall result in the

suspension or revocation of the firm permit.

L. As a condition to permit renewal, the board

shall require the applicant to undergo a peer review

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conducted in accordance with board rules. The review shall

include a verification that a person in the firm, or a person

qualifying for practice privileges pursuant to Section

61-28B-26 NMSA 1978, who is responsible for supervising

attest services and signs or authorizes someone to sign the

accountant's report on the financial statements on behalf of

the firm meets the experience requirements set out in the

professional standards for the services as required by the

board.

M. If a partner, shareholder or member is a legal

business entity, that legal business entity must be a firm.

N. Attest services may only be provided by a

certificate holder or a member of a firm that satisfies the

requirements of this section. Attest services may not be

performed by a certificate holder who is a member of a firm

that does not meet the certificate holder's ownership

requirements set forth in this section."

Section 5. Section 61-28B-17 NMSA 1978 (being Laws

1999, Chapter 179, Section 17, as amended) is amended to

read:

"61-28B-17. ENFORCEMENT--UNLAWFUL ACTS.--

A. Except as otherwise provided in the 1999 Public

Accountancy Act, it is unlawful for a person to engage in

practice in New Mexico unless the person is a licensee.

B. Except as otherwise provided in the 1999 Public

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Accountancy Act, no person shall issue a report or financial

statement for a person or a governmental unit or issue a

report using any form of language conventionally used

respecting an audit or review of financial statements, unless

the person holds a current license or permit. The state

auditor and the state auditor's auditing staff are considered

to be in the practice of public accountancy.

C. With the exception of persons cited in Section

61-28B-18 NMSA 1978, a person who prepares a financial

accounting and related statements and who is not the holder

of a certificate or a permit under the provisions of that act

shall use the following statement in the transmittal letter:

"I (we) have prepared the accompanying financial statements

of (name of entity) as of (time period) and for the (time

period) ending (date). This presentation is limited to

preparing in the form of financial statements information

that is the representation of management (owners). I (we)

have not audited or reviewed the accompanying financial

statements and accordingly do not express an opinion or any

other form of assurance on them.".

D. No person shall indicate by title, designation,

abbreviation, sign, card or device that the person is a

certified public accountant or a registered public accountant

unless the person is currently certified by the board

pursuant to the 1999 Public Accountancy Act or is a firm

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currently permitted by the board pursuant to that act.

Unless the person is a holder of a current certificate or

permit, no person shall use any title, initials or

designation intended to or substantially likely to indicate

to the public that the person is a certified public

accountant or registered public accountant.

E. No person shall engage in practice unless:

(1) the person holds a valid certificate or

current permit; or

(2) the person is an employee supervised by

a licensee pursuant to Section 61-28B-18 NMSA 1978 and not a

partner, officer, shareholder or member of a firm.

F. No person or firm holding a certificate or

permit shall engage in practice using a professional or firm

name or designation that is misleading about the legal form

of the firm; provided, however, that names of one or more

former partners, shareholders or members may be included in

the name of a firm or its successors.

G. No person shall sell, offer to sell or

fraudulently obtain or furnish any certificate or permit nor

shall the person fraudulently register as a certified public

accountant or registered public accountant or practice in

this state without being granted a certificate or permit as

provided in the 1999 Public Accountancy Act.

H. A licensee or the licensee's firm shall not

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receive a commission to recommend or refer a product or

service to a client or to recommend to anyone else a product

or service to be supplied by a client during the period the

licensee or the licensee's firm is engaged to perform the

following services for that client and during the period

covered by any historical financial statements involved in

the services:

(1) an audit or review of a financial

statement;

(2) a compilation of a financial statement

when the licensee expects or might reasonably expect that a

third party will use the financial statement, and the

compilation report does not disclose the lack of independence

by the licensee; or

(3) an examination of prospective financial

information.

I. A licensee or the licensee's firm that is not

prohibited from receiving a commission by Subsection H of

this section and that is paid or expects to be paid a

commission shall disclose that fact in writing to the person

for whom the licensee or the licensee's firm performs a

service or refers or recommends a product or service. A

licensee or firm that accepts or pays a referral fee for a

service or to obtain a client shall disclose such acceptance

or payment to the client in writing.

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J. A licensee or the licensee's firm shall not

charge or receive a contingent fee for a client for whom the

licensee or the licensee's firm performs the following

services:

(1) an audit or review of a financial

statement;

(2) a compilation of a financial statement

when the licensee 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; or

(4) preparation of an original or amended

tax return or claim for tax refund, except in the case of

federal, state or other taxes in which the findings are those

of the tax authorities and not those of the licensee or in

the case of professional services for which fees are to be

fixed by courts or other public authorities and that are

therefore indeterminate in amount at the time the

professional services are undertaken.

K. No licensee shall sign or certify any financial

statements if the licensee knows the same to be materially

false or fraudulent.

L. For the purposes of this section, a person with

practice privileges pursuant to Section 61-28B-26 NMSA 1978

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shall be substantially equivalent to a certificate holder

pursuant to Section 61-28B-9 NMSA 1978. Terms or references

that refer to a certificate holder pursuant to

Section 61-28B-9 NMSA 1978 shall include a person with

practice privileges pursuant to Section 61-28B-26 NMSA 1978.

M. For the purposes of this section, a firm

practicing under Subsection C or D of Section 61-28B-13 NMSA

1978 may perform the services specified by the applicable

provisions of the 1999 Public Accountancy Act and may use the

terms "CPA" or "CPA firm" without obtaining a permit. Terms

or references that refer to a firm holding a permit pursuant

to Subsection B of Section 61-28B-13 NMSA 1978 shall include

a firm practicing pursuant to Subsection C or D of Section

61-28B-13 NMSA 1978."

Section 6. Section 61-28B-26 NMSA 1978 (being Laws

1999, Chapter 179, Section 26) is amended to read:

"61-28B-26. PRACTICE PRIVILEGE AND DISCIPLINE FOR A

CERTIFICATE HOLDER FROM A STATE WHOSE ACCOUNTANCY STATUTE IS

SUBSTANTIALLY EQUIVALENT.--

A. A person whose principal place of business is

not in New Mexico shall be presumed to have qualifications

substantially similar to New Mexico's requirements and may

exercise all the practice privileges of certificate holders

of New Mexico without the need to obtain a certificate

pursuant to Section 61-28B-9 NMSA 1978 if the person:

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(1) holds a valid license as a certified

public accountant from any state that requires, as a

condition of licensure, that a person:

(a) have at least one hundred fifty

semester hours of college education, including a

baccalaureate or higher degree conferred by a college or

university acceptable to the board;

(b) achieve a passing grade on the

uniform certified public accountant examination; and

experience, including providing any type of service or advice

involving the use of accounting, attest, compilation,

management advisory, financial advisory, tax or consulting

skills, which may be obtained through government, industry,

academic or public practice, all of which can be verified by

a licensee; or

(2) holds a valid license as a certified

public accountant from any state that does not meet the

requirements of Paragraph (1) of Subsection A of this

section, but the person's certified public accountant

qualifications are substantially equivalent to those

requirements. A person who passed the uniform certified

public accountant examination and holds a valid license

issued by any other state prior to January 1, 2012 may be

exempt from the education requirement in Subparagraph (a) of

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Paragraph (1) of this subsection.

B. Notwithstanding any other provision of law, a

person who qualifies for the practice privilege pursuant to

this section may offer or render professional services

whether in person or by mail, telephone or electronic means,

and no notice, fee or other submission shall be required of

the person.

C. A person licensed in another state exercising

the practice privilege afforded pursuant to this section and

the firm that employs the licensee simultaneously shall

consent, as a condition of exercising the practice privilege:

(1) to submit to the personal and

subject-matter jurisdiction and disciplinary authority of the

board;

(2) to comply with the 1999 Public

Accountancy Act and the rules adopted by the board;

(3) to cease offering or rendering

professional attest services in New Mexico in the event the

license from the state of the person's principal place of

business is no longer valid; and

(4) to the appointment of the state board

that issued the license as agent upon whom process may be

served in any action or proceeding by the New Mexico public

accountancy board against the licensee.

D. A certificate or permit holder of New Mexico

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that offers or renders an attest service or uses its

certified public accountant title in another state shall be

subject to disciplinary action in New Mexico for an act

committed in another state for which it would be subject to

discipline in the other state. Notwithstanding the

provisions of Sections 61-28B-15 and 61-28B-16 NMSA 1978, the

board shall investigate any complaint made by the board of

accountancy in another state."

Section 7. REPEAL.--Section 61-28B-10 NMSA 1978 (being

Laws 1999, Chapter 179, Section 10) is repealed.