44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999
RELATING TO PUBLIC ACCOUNTANCY; ENACTING THE 1999 PUBLIC ACCOUNTANCY ACT; CREATING A BOARD; PROVIDING POWERS AND DUTIES; PROVIDING FOR LICENSURE; CREATING A FUND; PRESCRIBING FEES; PRESCRIBING PENALTIES; REPEALING THE FORMER PUBLIC ACCOUNTANCY ACT; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the "1999 Public Accountancy Act".
Section 2. PURPOSE.--The purpose of the 1999 Public Accountancy Act is to protect the public interest by regulating the practice of public accountancy.
Section 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 or compilation of a financial statements performed in accordance with the statement on standards for accounting and review services; and
(3) an examination of prospective financial information performed in accordance with the statements on standards for attestation engagements;
B. "board" means the New Mexico public accountancy 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. "director" means the executive director of the board;
F. "firm" means a sole proprietorship, professional corporation, partnership, limited liability company or other legal business entity that practices public accountancy;
G. "licensee" means a certified public accountant, certified public accountant firm, registered public accountant or registered public accountant firm;
H. "peer review" means a study, appraisal or 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;
I. "permit" means the annual authority granted to practice as a certified public accountant firm or a registered public accountant firm;
J. "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;
K. "registered public accountant" means a person who is registered by the board to practice public accountancy and use the designation;
L. "report", when used with reference to financial statements, means an opinion, report or other form of language that states or implies assurance as to the reliability of a financial statement and that includes or is accompanied by a statement or implication that the person issuing it has special knowledge or competence in accounting or auditing. "Report" includes any form of language that disclaims an opinion when such form of language is conventionally understood to imply an assurance as to the reliability of the financial statements referred to or special competence of the person issuing the language, and includes any other form of language that is conventionally understood to imply such assurance or special knowledge or competence;
M. "specialty designation" means a designation indicating professional competence in a specialized area of practice; and
N. "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 corresponding requirements of the 1999 Public Accountancy Act.
Section 4. BOARD CREATED--TERMS--OFFICERS--MEETINGS-- REIMBURSEMENT.--
A. The "New Mexico public accountancy board" is created, composed of seven members appointed by the governor who are citizens of the United States and residents of New Mexico. Four members of the board shall be certified public accountants who have practiced for no fewer than three calendar years immediately preceding their appointment to the board. Three members shall represent the public and shall not have ever held a certificate or permit to practice public accountancy in any state and shall not have ever had a significant financial interest, direct or indirect, in the public accountancy profession or in a firm. Public members shall have professional or practical experience in the use of accounting services and financial statements, so as to be qualified to make judgments about the qualifications and conduct of persons subject to the provisions of the 1999 Public Accountancy Act.
B. Members of the board shall serve for terms of three years or less, staggered in such a manner that the terms of not more than three members expire on January 1 of each year; provided that members appointed and serving pursuant to prior law on the effective date of the 1999 Public Accountancy Act shall serve the remainder of their terms. A vacancy on the board shall be filled by appointment by the governor for the unexpired term. Upon the expiration of a member's term of office, he shall continue to serve until his successor has been appointed and qualified. A professional member of the board whose certificate is suspended or revoked shall automatically cease to be a member of the board. The governor may remove a member of the board for neglect of duty or other just cause.
C. The board shall elect annually from among its members a chairman and such other officers as the board determines. The board shall meet at such times and places as fixed by the board. A majority of the board constitutes a quorum.
D. Members of the board may receive per diem and travel expenses as provided in the Per Diem and Mileage Act, but shall receive no other compensation, perquisite or allowance.
Section 5. BOARD--POWERS AND DUTIES.--
A. The board may:
(1) employ an executive director and such other personnel as it deems necessary to carry out its duties;
(2) appoint committees or persons to advise or assist it in carrying out the provisions of the 1999 Public Accountancy Act;
(3) retain its own counsel to advise and assist it in addition to advice and assistance provided by the attorney general;
(4) contract, sue and be sued and have and use a seal;
(5) cooperate with the appropriate authorities in other states in investigation and enforcement concerning violations of the 1999 Public Accountancy Act and comparable acts of other states; and
(6) adopt and file in accordance with the Uniform Licensing Act and the State Rules Act rules to carry out the provisions of the 1999 Public Accountancy Act, including rules governing the administration and enforcement of the 1999 Public Accountancy Act and the conduct of certificate and permit holders.
B. The board shall maintain a registry of the names and addresses of all certificate and permit holders.
Section 6. FUND CREATED.--
A. The "public accountancy fund" is created in the state treasury. All money received by the board and interest earned on investment of the fund shall be credited to the fund.
B. Payments from the public accountancy fund shall be made upon warrants of the secretary of finance and administration pursuant to vouchers issued by the director in accordance with the budget approved by the department of finance and administration.
C. Money in the fund shall be used only to pay the expenses of carrying out the provisions of the 1999 Public Accountancy Act and rules adopted pursuant to that act.
Section 7. QUALIFICATIONS FOR A CERTIFICATE AS A CERTIFIED PUBLIC ACCOUNTANT.--
A. An applicant for a certified public accountant certificate shall complete the application form provided by the board and demonstrate to the board's satisfaction that he:
(1) is of good moral character and lacks a history of dishonest or felonious acts; and
(2) meets the education, experience and 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. The education requirement for a certificate, which must be met before an applicant is eligible to apply for examination, is:
(1) between July 1, 1999 and June 30, 2004, a baccalaureate or higher degree or its equivalent conferred by a college or university acceptable to the board, with thirty semester hours in accounting or equivalent as determined by the board; and
(2) after July 1, 2004, at least one hundred fifty semester hours of college education, including a baccalaureate or higher degree or its equivalent conferred by a college or university acceptable to the board, the total educational program to include an accounting concentration or equivalent as determined by the board.
D. The examination for certification shall be held at least twice a year and shall test the applicant's knowledge of the subjects of accounting and auditing and such other related subjects as prescribed by the board. The time for holding the examination shall be determined by the board and may be changed from time to time. The board shall prescribe the methods of applying for and conducting the examination, including methods for grading papers; provided, however, that the board shall to the extent possible provide that the examination, the grading of the examination and the passing grades are uniform with examinations of all other states. The board may use all or any part of the uniform certified public accountant examination and advisory grading service of the American institute of certified public accountants and may contract with third parties to perform administrative services with respect to the examination.
E. An applicant must pass all sections of the examination in order to qualify for a certificate. A passing grade for each section shall be seventy-five. If he passes two or more but not all sections in an examination sitting, he shall be given credit for those sections and need not sit for re-examination in those sections; provided that:
(1) at that sitting he wrote all sections of the examination for which he does not have credit;
(2) he made a minimum grade of fifty on each section taken at that sitting;
(3) he passes the remaining sections of the examination within six consecutive examinations given after the one at which the first sections were credited;
(4) at each subsequent sitting at which he seeks to pass an additional section, the applicant writes all sections for which he does not have credit; and
(5) in order to receive credit for passing additional sections in such subsequent sitting, the applicant makes a minimum grade of fifty on sections taken at that sitting.
F. An applicant shall be given credit for examination sections passed in another state if such credit would have been given in New Mexico.
G. 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, he was unable to meet the requirement.
H. An applicant for initial issuance of a certified public accountant certificate shall show that he 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 8. ISSUANCE AND RENEWAL OF CERTIFICATE--MAINTENANCE OF COMPETENCY.--
A. The board shall grant or renew a certificate upon application and demonstration that the applicant's qualifications are in accordance with the 1999 Public Accountancy Act or that they are eligible under the substantial equivalency standard provided in that act. The holder of a certificate issued pursuant to this section may only provide attest services in a certified public accountant firm that holds a permit issued pursuant to that act.
B. The board may establish by rule for the issuance of biennial certificates and permits, and may prescribe the expiration date of certificates and permits.
C. The board shall grant or deny an application for certification no later than one hundred twenty days after the complete application is filed.
D. If an applicant appeals the decision of the board to deny a certificate, the board may issue a provisional certificate for no longer than ninety days while the board reconsiders its decision.
E. To renew a certificate, a certificate holder shall provide satisfactory proof to the board of continuing professional education that is designed to maintain competency. Continuing professional education courses shall comply with board rules. The board may create an exception to the requirement to maintain continuing professional education for certificate holders who do not provide services to the public. A certificate holder granted such an exception must place the word "inactive" or "retired" adjacent to his certified public accountant title or registered public accountant title on a business card, letterhead or other document or device, except for a board-issued certificate.
F. 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.
Section 9. SPECIALTY DESIGNATIONS.--The board shall adopt rules allowing the use of specialty designations by certificate holders. Specialty designations shall be consistent with designations prescribed by national or regional accreditation bodies offering the designations pursuant to a prescribed course of study, experience or examination.
Section 10. CERTIFICATES ISSUED TO HOLDERS OF A CERTIFICATE, LICENSE OR PERMIT ISSUED BY ANOTHER STATE.--
A. If an applicant does not qualify for reciprocity pursuant to the substantial equivalency standard, 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 his certificate with grades that would have been passing grades at the time in New Mexico;
(2) passed the examination upon which his out-of-state certificate was based and has four 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, he has fulfilled the board's requirements of continuing professional education.
B. A person licensed by another state who wishes to establish his 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 he provides proof from a board-approved national qualification appraisal service that his certified public accountant qualifications are substantially equivalent to the certified public accountant certification requirements of the 1999 Public Accountancy Act.
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
(c) was issued upon the basis of 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 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
(c) passed a uniform qualifying 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 11. REGISTERED PUBLIC ACCOUNTANTS AND FIRMS OF REGISTERED PUBLIC ACCOUNTANTS.--
A. A person who on July 1, 1999 holds a certificate as a registered public accountant issued pursuant to prior New Mexico law shall be entitled to have his certificate renewed upon fulfillment of the continuing professional education requirements, application and payment of fees prescribed for certificate renewal.
B. A registered public accountant firm holding a permit issued pursuant to prior New Mexico law shall be entitled to have its permit renewed pursuant to the requirements for permit renewal for a certified public accountant firm in the 1999 Public Accountancy Act.
C. As long as a registered public accountant and a registered public accountant firm hold a valid certificate and permit, they shall be entitled to perform attest services to the same extent as a certified public accountant and certified public accountant firm. In addition, they shall be entitled to use the titles "registered public accountant" and "registered public accountants", but no other title.
Section 12. FIRM PERMITS TO PRACTICE, ATTEST EXPERIENCE, PEER REVIEW.--
A. The board may grant or renew a permit to practice as a firm to an applicant that demonstrates its qualification for the permit. A firm must hold a permit issued pursuant to the provisions of the 1999 Public Accountancy Act in order to provide attest services or use the title "certified public accountant", "CPA", "certified public accountant firm", "CPA firm", "registered public accountant", "RPA", "registered public accountant firm" or "RPA firm".
B. Permits shall be issued and renewed for periods not more than two years, expiring on June 30.
C. The board shall grant or deny an application for a permit no later than ninety days after the complete application is filed.
D. 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.
E. An applicant for initial issuance or renewal of a permit shall demonstrate that:
(1) a minimum of sixty percent 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. Such partners, officers, shareholders, members or managers, whose principal place of business is in New Mexico, and who perform professional services in New Mexico, must hold a valid certificate. The firm and all owners must comply with the 1999 Public Accountancy Act. A firm may include owners who are not certificate holders; provided that:
(a) the firm designates a New Mexico certificate holder who is responsible for the proper registration of the firm and identifies that individual to the board;
(b) all owners who are not certificate holders are active individual participants in the certified public accountant firm or registered public accountant firm or affiliated entities; and
(c) the firm complies with the 1999 Public Accountancy Act; and
(2) an individual certificate holder 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.
F. 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 the 1999 Public Accountancy Act or the corresponding provision of prior law or by some other state.
G. 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.
H. 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 reasonable period of time for a firm to take the corrective action. Failure to bring the firm back into compliance within a reasonable period shall result in the suspension or revocation of the firm permit.
I. As a condition to permit renewal, the board shall require the applicant to undergo a peer review conducted in accordance with board rules. The review shall include a verification that a person in the firm 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.
J. If a partner, shareholder or member is a legal business entity, that legal business entity must be a firm.
Section 13. APPOINTMENT OF SECRETARY OF STATE AS AGENT.--Application for a certificate or permit by a person or firm that is domiciled outside of New Mexico shall constitute appointment of the secretary of state as the applicant's agent, upon whom process may be served in an action or proceeding against the applicant or certificate holder arising out of a transaction or operation connected with or incidental to services performed within New Mexico.
Section 14. ENFORCEMENT AGAINST HOLDERS OF CERTIFICATES AND PERMITS.--
A. After providing a person due process in accordance with the Uniform Licensing Act, the board may take corrective action following a finding that an applicant, certificate holder or permit holder has violated the 1999 Public Accountancy Act.
B. The board may deny an application for a certificate or permit or revoke a certificate or permit issued pursuant to the 1999 Public Accountancy Act or corresponding provisions of prior law; suspend a certificate or permit, or refuse to renew a certificate or permit for a period of not more than five years; reprimand, censure or limit the scope of practice of any licensee; impose an administrative fine not to exceed two thousand dollars ($2,000); or place a certificate or permit holder on probation, all with or without terms, conditions and limitations for:
(1) fraud or deceit in obtaining a certificate or permit;
(2) cancellation, revocation, suspension or refusal to renew a license or practice rights for disciplinary reasons in any other state;
(3) failure on the part of a certificate or permit holder to comply with the requirements for issuance or renewal of the certificate or permit or to report changes to the board;
(4) revocation or suspension of the right to practice before any state or federal agency;
(5) dishonesty, fraud or gross negligence in the performance of a service as a certificate or permit holder or in the filing or failure to file the certificate or permit holder's own income tax returns;
(6) violation of a provision of 1999 Public Accountancy Act or professional standards;
(7) violation of a rule of professional conduct;
(8) conviction of a felony or of a crime, an element of which is dishonesty or fraud, pursuant to the laws of the United States, New Mexico or of another state if the acts involved would have constituted a crime pursuant to the laws of New Mexico;
(9) conduct reflecting adversely upon the certificate or permit holder's fitness to perform services; or
(10) making a false or misleading statement or verification in support of an application for a certificate or permit filed by another.
C. The board may require of a certificate or permit holder:
(1) a peer review conducted in such fashion as the board may specify; or
(2) satisfactory completion of such continuing professional education programs as the board may specify.
Section 15. ENFORCEMENT PROCEDURES--INVESTIGATIONS.--
A. Upon receipt of a complaint or other information suggesting a violation of the 1999 Public Accountancy Act, the board may conduct an investigation to determine whether there is probable cause to institute a proceeding against a person or firm. An investigation is not required when a determination of probable cause can be made without investigation. To aid the investigation, the board or the board's chairman may issue a subpoena to compel a witness to testify or to produce evidence.
B. The board may designate a person to serve as investigating officer to conduct an investigation. The investigating officer shall file a report with the board upon completion of an investigation. The board shall find probable cause or lack of probable cause upon the basis of the report or shall return the report to the investigating officer for further investigation.
C. Upon a finding of probable cause, if the subject of the investigation is a certificate or permit holder, the board shall direct that a complaint be issued in accordance with the 1999 Public Accountancy Act. If the subject of the investigation is not a certificate or permit holder, the board shall take appropriate action as provided in that act. Upon a finding of no probable cause, the board shall close the matter.
D. The board may review the publicly available professional work of a certificate or permit holder without any requirement of a formal complaint or suspicion of impropriety on the part of a particular certificate or permit holder. In the event that such review reveals reasonable grounds for a more specific investigation, the board may proceed pursuant to the 1999 Public Accountancy Act.
Section 16. ENFORCEMENT PROCEDURES--HEARINGS BY THE BOARD.--
A. Hearings by the board shall be conducted in accordance with the provisions of the Uniform Licensing Act.
B. In a case when the board renders a decision imposing discipline against a certificate or permit holder pursuant to the 1999 Public Accountancy Act, the board shall examine its records to determine whether the certificate or permit holder holds a certificate or permit in any other state; and, if so, the board shall notify the board of accountancy of the other state of its decision, by mail, within forty-five days of rendering the decision. The board may also furnish information relating to a proceeding resulting in disciplinary action to another public authority and to private professional organizations having a disciplinary interest in the certificate or permit holder. When an appeal pursuant to New Mexico law is in progress, the notification and furnishing of information to a disciplinary authority shall await the resolution of such appeal. If resolution is in favor of the certificate or permit holder, no automatic notification or furnishing of information shall be made.
Section 17. REINSTATEMENT.--
A. When the board has suspended or revoked a certificate or permit, or refused to renew a certificate or permit, the board may modify the suspension or reissue the certificate or permit. The board shall specify the manner in which the application shall be made, the time within which it shall be made and the circumstance in which a hearing will be held.
B. Before reissuing or terminating the suspension of a certificate or permit, the board may require that the applicant complete specified continuing professional education, and the board may make the reinstatement of a certificate or permit conditional and subject to satisfactory completion of a peer review conducted in such fashion as the board may specify.
Section 18. UNLAWFUL ACTS.--
A. Except as provided in Subsection H of this section, only a certificate and permit holder may issue a report on financial statements of any other person, firm, organization or governmental unit or otherwise offer to render or render any attest service. This restriction does not prohibit an act of a public official or public employee in the performance of that person's duties as such.
B. A certificate and permit holder who performs a service shall do so pursuant to the standards related to that service, such as the statements on auditing standards, the statement on standards for accounting and review services, the statements on standards for attestation engagements and other such standards adopted by the board or developed for general application by a recognized national accountancy organization such as the American institute of certified public accountants.
C. Only a valid certificate holder shall use or assume the title "certified public accountant" or the abbreviation "CPA" or any other title, designation, word, letter, abbreviation, sign, card or device tending to indicate that the person is a certified public accountant.
D. A firm shall not provide an attest service or assume or use the title "certified public accountant", or the abbreviation "CPA" or any other title, designation, words, letter, abbreviation, sign, card or device tending to indicate that the firm is a certified public accountant firm unless the firm holds a valid permit issued pursuant to the 1999 Public Accountancy Act, and ownership of the firm is in accord with the provisions of that act.
E. A person shall not assume or use the title "registered public accountant" or the abbreviation "RPA" or any other title, designation, word, letter, abbreviation, sign, card or device tending to indicate that the person is a registered public accountant unless that person holds a valid certificate issued pursuant to the 1999 Public Accountancy Act.
F. A firm shall not provide attest services or assume or use the title "registered public accountant" or the abbreviation "RPA" or any other title, designation, word, letter, abbreviation, sign, card or device tending to indicate that the firm is a registered public accountant firm unless the firm holds a valid permit issued pursuant to the 1999 Public Accountancy Act, and ownership of the firm is in accord with the provisions of that act.
G. A person or firm not holding a valid certificate or permit issued pursuant to the 1999 Public Accountancy Act shall not assume or use the title "certified accountant", "public accountant", "chartered accountant", "enrolled accountant", "licensed accountant", "registered accountant", "accredited accountant" or any other title or designation likely to be confused with the titles "certified public accountant" or "registered public accountant", or use any of the abbreviations "CA", "PA", "LA", "RA", "AA" or similar abbreviation likely to be confused with the abbreviations "CPA" or "RPA". The title "enrolled agent" or "EA" may only be used by persons so designated by the internal revenue service.
H. The 1999 Public Accountancy Act does not prohibit:
(1) an officer, partner, shareholder, member or employee of any firm or organization from affixing his own signature to any statement or report in reference to the financial affairs of his firm or organization with any wording designating the position, title or office that he holds within the firm or organization;
(2) an act of a public official or employee in the performance of his duties; except that the state auditor and his auditing staff are considered to be in the practice of public accounting; or
(3) the performance by a person of another service, including management, financial advisory or consulting services, the preparation of a tax return or the furnishing of advice on a tax matter and the preparation of a financial statement without the issuance of a report.
I. A person or accountant who prepares a financial accounting and related statements and who is not the holder of a certificate or a permit or registration issued pursuant to the provisions of the 1999 Public Accountancy Act shall include the following statement prominently on each page of any financial accounting, related statement and accompanying compilation or review transmittal letter: "The preparer of this statement is not the holder of a certificate or of a permit or registration issued under the Public Accountancy Act.".
J. A person holding a certificate or firm holding a permit issued pursuant to the 1999 Public Accountancy Act shall not use a professional or firm name or designation that is misleading about the legal form of the firm or about a person who is a partner, officer, member, manager or shareholder of the firm or about any other matter. The name of one or more former partner, member, manager or shareholder may be included in the name of a firm or its successor.
K. The provisions of this section do not apply to a person or firm holding a certification, designation, degree or license granted in a foreign country entitling the holder to engage in the practice of public accountancy or its equivalent in such country, whose activities in New Mexico are limited to the provision of professional services to a person or firm who is a resident of, government of or business entity of the country in which the person holds the entitlement, who performs no attest service and who issues no report with respect to the financial statement of another person, firm or governmental unit in New Mexico, and who does not use in New Mexico a title or designation other than the one under which the person practices in the other country, followed by a translation of the title or designation into English, if it is in a different language, and by the name of the other country.
L. A holder of a certificate or permit issued pursuant to the 1999 Public Accountancy Act shall not perform an attest service in a firm that does not hold a valid permit issued pursuant to that act.
M. Nothing in this section shall prohibit a practicing attorney or firm of attorneys from preparing or presenting records or documents customarily prepared by an attorney or firm of attorneys in connection with the attorney's professional work in the practice of law.
N. A certificate or permit holder shall not recommend or refer to a client a product or service for a commission during the period he is engaged to perform an attest service for that client or during the time period of the financial statements represented in such attest service. This provision does not apply to a compilation when the compilation report discloses the lack of independence.
O. A certificate or permit holder that is not prohibited by the provisions of Subsection N of this section from performing a service for or receiving a commission and that is paid or expects to be paid a commission shall disclose, in writing, that fact to a person or entity to whom the licensee recommends or refers a product or service to which the commission relates.
P. A certificate or permit holder that accepts a fee for recommending or referring a service of a certificate or permit holder to a person or entity or that pays a referral fee to obtain a client shall disclose that fact to the client in writing.
Q. A contingent fee is a fee established for the performance of a service pursuant to an arrangement in which no fee will be charged unless a specified finding or result is attained or in which the amount of the fee is otherwise dependent upon the finding or result of such service. A certificate or permit holder shall not pay or receive from a client a contingent fee for a professional service performed during the period he is engaged to perform an attest service for that client or during the time period of the financial statements represented in such attest service. This provision does not apply to a compilation when the compilation report discloses a lack of independence.
R. A certificate or permit holder shall not prepare an original or amended tax return or claim for a tax refund for a contingent fee for a client.
S. A fee is not regarded as being contingent if fixed by courts or another public authority, or, in a tax matter, if determined based on the result of judicial proceeding or the finding of a governmental agency. A certificate or permit holder's fee may vary depending on the complexity of services rendered.
T. A prohibition set forth in this section does not apply to any transaction in which there is no disclosure of financial statements prepared by the licensee and the acceptance of the commission or contingent fee does not impair the independence of the licensee.
Section 19. CRIMINAL PENALTIES.--
A. When the board has reason to believe that a person or firm has knowingly engaged in an act or practice that violates the provisions of the 1999 Public Accountancy Act, the board may bring its information to the attention of the district attorney or other appropriate law enforcement officer of any jurisdiction who may bring a criminal proceeding.
B. A person or firm that knowingly violates a provision of the 1999 Public Accountancy Act is guilty of a misdemeanor and upon conviction shall be subject to a fine of not more than one thousand dollars ($1,000) or by a definite term of imprisonment not to exceed six months or both.
Section 20. SINGLE ACT EVIDENCE OF PRACTICE.--In an action brought pursuant to the provisions of the 1999 Public Accountancy Act, evidence of the commission of a single act prohibited by that act shall be sufficient to justify a penalty, injunction, restraining order or conviction, respectively, without evidence of a general course of conduct. Section 21. CONFIDENTIAL COMMUNICATIONS.--Except by permission of the client for whom a certificate or permit holder performs a service or the heir, successor or personal representative of the client, a certificate holder shall not voluntarily disclose information communicated to him by the client relating to and in connection with a service rendered to the client by him. Such information shall be deemed confidential; provided that nothing in this section shall prohibit the disclosure of information required to be disclosed by a standard of the public accounting profession in reporting on the examination of a financial statement or prohibit disclosure in a court proceeding, in an investigation or proceeding pursuant to the 1999 Public Accountancy Act, in an ethical investigation conducted by a private professional organization or in the course of a peer review, or to another person active in the organization performing a service for that client on a need-to-know basis or to a person in the entity who needs this information for the sole purpose of assuring quality control.
Section 22. WORKING PAPERS--CLIENT RECORDS.--
A. A statement, record, schedule, working paper or memorandum made by a certificate or permit holder incident to rendering a service to a client shall be the property of the certificate or permit holder in the absence of an express agreement between him and the client to the contrary, except the report submitted by him to the client and except for a record that is part of the client's records. No such item shall be sold, transferred or bequeathed without the consent of the client or the client's personal representative, except to a partner, stockholder or member of the firm or any combined or merged firm or successor in interest to the certificate or permit holder. Nothing in this section shall prohibit any temporary transfer of a work paper or other material necessary in the course of carrying out a peer review or as otherwise interfering with the disclosure of information pursuant to the 1999 Public Accountancy Act.
B. A certificate or permit holder shall furnish to a client or former client, upon request and reasonable notice:
(1) a copy of his working paper, to the extent that such working paper includes a record that would ordinarily constitute part of the client's record and is not otherwise available to the client; and
(2) an accounting or other record belonging to, or obtained from or on behalf of, the client that he removed from the client's premises or received for the client's account; he may make and retain a copy of a document of the client when they form the basis for work done by him.
Section 23. 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 and who has a valid certificate or license as a certified public accountant from a state that the board-approved qualification appraisal service has verified to be in substantial equivalence with the certified public accountant requirements of the New Mexico 1999 Public Accountancy Act shall be presumed to have qualifications substantially equivalent to New Mexico's requirements. A person may also obtain from the board-approved qualification appraisal service verification that his certified public accountant qualifications are substantially equivalent to New Mexico's certified public accountant licensure requirements. The person shall have all the privileges of certificate holders of New Mexico without the need to obtain a New Mexico certificate or permit; provided, however, the person shall notify the board of his intent to enter the state under this provision.
B. A certificate or permit holder of another state exercising the privilege afforded by the provisions of this section consents, as a condition of the grant of this privilege:
(1) to the personal and subject matter jurisdiction of the board;
(2) to comply with the provisions of the 1999 Public Accountancy Act; and
(3) to the appointment of the state board that issued its certificate or license as its agent, upon whom process may be served in an action or proceeding by the New Mexico public accountancy board against it.
C. A certificate or permit holder of New Mexico that offers or renders a 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 for an act committed in the other state. The board shall investigate any complaint made by the board of accountancy of another state.
Section 24. FEES.--The board may collect or provide for a third party to collect from certificate holders, permit holders, applicants and others:
A. for examination, a fee not to exceed three hundred fifty dollars ($350) per examination application;
B. for certificate issuance or renewal, a fee not to exceed three hundred fifty dollars ($350) per year; provided, however, the board may charge a biennial fee of not more than twice the annual fee;
C. for firm permits, a fee not to exceed two hundred fifty dollars ($250) per year; provided, however, the board may charge a biennial fee of not more than twice the annual fee;
D. for incomplete or delinquent continuing education reports, certificate or permit renewals, a fee not to exceed one hundred fifty dollars ($150) each;
E. for preparing and providing licensure and examination information to others, a fee not to exceed one hundred dollars ($100) per report;
F. reasonable administrative fees for such services as research, record copies, duplicate or replacement certificates or permits;
G. for certificate reinstatement, a fee not to exceed three hundred fifty dollars ($350), plus past due fees and penalties;
H. for waiver to comply with continuing professional education requirements and to enter retired or inactive status, a fee not to exceed seventy-five dollars ($75.00) per application; and
I. for reentry into active certificate status and to comply with continuing education, a fee not to exceed seventy-five dollars ($75.00) per application.
Section 25. ACCOUNTING SCHOLARSHIPS.--
A. The board may establish a scholarship program to assist students attending New Mexico colleges and universities with emphasis on assistance to students in their fifth year of attendance who are specifically pursuing a one- hundred-fifty-hour program for certified public accountants.
B. Accounting scholarships shall be awarded without regard to race, creed, color or economic circumstances.
C. The accounting scholarship program:
(1) may be funded by an amount or percentage of the fee of each certificate or permit issued;
(2) shall include criteria and guidelines for granting assistance to students;
(3) may designate an agency, committee, group or organization to administer, advertise, operate or review the program; and
(4) may be established in a manner consistent with Section 501 of the Internal Revenue Code of 1986 to facilitate direct contributions to the public accountancy fund.
D. Money held to the benefit of the accounting scholarship program shall be placed in a depository designated by the board.
Section 26. CRIMINAL OFFENDER ELIGIBILITY.--Except as otherwise provided in the 1999 Public Accountancy Act, the provisions of the Criminal Offender Employment Act shall govern any consideration or criminal records required or permitted by the 1999 Public Accountancy Act.
Section 27. TERMINATION OF AGENCY LIFE--DELAYED REPEAL.--The New Mexico public accountancy board is terminated on July 1, 2005 pursuant to the provisions of the Sunset Act. The board shall continue to operate according to the provisions of the 1999 Public Accountancy Act until July 1, 2006. Effective July 1, 2006, the 1999 Public Accountancy Act is repealed.
Section 28. TEMPORARY PROVISION--TRANSFER OF PERSONNEL, MONEY, APPROPRIATIONS, PROPERTY, RECORDS, CONTRACTS AND STATUTORY REFERENCES.--
A. On July 1, 1999, all personnel, money, appropriations, property, records and other things of value belonging to the New Mexico state board of public accountancy shall be transferred to the New Mexico public accountancy board. All contracts, including certificates and registrations, in effect for the New Mexico state board of public accountancy shall be binding on the New Mexico public accountancy board. All references in law to the New Mexico state board of public accountancy shall be construed as references to the New Mexico public accountancy board.
B. Nothing in the 1999 Public Accountancy Act shall invalidate or affect any action taken or any proceeding instituted pursuant to a law in effect prior to the effective date of that act. A disciplinary action taken by the board and any delinquency fee or penalty owed pursuant to the Public Accountancy Act shall remain in effect and due unless reviewed and rescinded by the board pursuant to procedures provided in the Uniform Licensing Act and the 1999 Public Accountancy Act.
C. A certificate, permit or firm registration issued pursuant to the Public Accountancy Act that is current on the effective date of the 1999 Public Accountancy Act shall remain current until June 30, 2000.
D. A rule in effect as of June 30, 1999, and not in direct conflict with the 1999 Public Accountancy Act, shall remain in effect until amended or repealed by the New Mexico public accountary board.
Section 29. REPEAL.--Sections 61-28A-1 through 61-28A-28 NMSA 1978 (being Laws 1992, Chapter 10, Sections 1 through 26 and 28 and Laws 1993, Chapter 83, Section 6, as amended) are repealed.
Section 30. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 1999.