SB-0723, As Passed House, December 6, 2005

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 723

     A bill to amend 1980 PA 299, entitled

"Occupational code,"

by amending sections 601, 602, 721, 723, 725, 729, 732, 734, and

735 (MCL 339.601, 339.602, 339.721, 339.723, 339.725, 339.729,

339.732, 339.734, and 339.735), section 601 as amended by 1998 PA

250, section 602 as amended by 1981 PA 83, sections 721, 723, 729,

732, 734, and 735 as added by 1997 PA 10, and section 725 as

amended by 1998 PA 380.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 601. (1) A person shall not engage in or attempt to

engage in the practice of an occupation regulated under this act or

use a title designated in this act unless the person possesses a

license or registration issued by the department for the

occupation.

     (2) A school, institution, or person shall not operate or

attempt to operate a barber college, school of cosmetology, or real

estate school unless the school, institution, or person is licensed

or approved by the department.

     (3) A person, school, or institution  which  that violates

subsection (1) or (2) is guilty of a misdemeanor, punishable by a

fine of not more than $500.00, or imprisonment for not more than 90

days, or both.

     (4) A person, school, or institution  which  that violates

subsection (1) or (2) a second or any subsequent time is guilty of

a misdemeanor, punishable, except as provided in section 735, by a

fine of not more than $1,000.00, or imprisonment for not more than

1 year, or both.

     (5) Notwithstanding the existence and pursuit of any other

remedy, an affected person may maintain injunctive action to

restrain or prevent a person from violating subsection (1) or (2).

If successful in obtaining injunctive relief, the affected person

shall be entitled to actual costs and attorney fees.

     (6)  Nothing in this  This act  shall  does not apply to a

person engaging in or practicing the following:

     (a) Interior design.

     (b) Building design.

     (c) Any activity for which the person is licensed under  1929

PA 266, MCL 338.901 to 338.917  the state plumbing act, 2002 PA

733, MCL 338.3511 to 338.3569.

     (d) Any activity for which the person is licensed under the

Forbes mechanical contractors act, 1984 PA 192, MCL 338.971 to

338.988.

     (e) Any activity for which the person is licensed under the

electrical administrative act, 1956 PA 217, MCL 338.881 to 338.892.

     (7) As used in subsection (5), "affected person" means a

person directly affected by the actions of a person suspected of

violating subsection (1) or (2) and includes, but is not limited

to, a licensee or registrant, a board established pursuant to this

act, a person who has utilized the services of the person engaging

in or attempting to engage in an occupation regulated under this

act or using a title designated by this act without being licensed

or registered by the department, or a private association composed

primarily of members of the occupation in which the person is

engaging in or attempting to engage in or in which the person is

using a title designated under this act without being registered or

licensed by the department.

     (8) An investigation may be conducted under article  6 5 to

enforce this section. A person who violates this section shall be

subject to  the strictures prescribed in this section and section

506.

     (9) The remedies under this section are independent and

cumulative. The use of 1 remedy by a person shall not bar the use

of other lawful remedies by that person or the use of a lawful

remedy by another person.

     (10) An interior designer may perform services in connection

with the design of interior spaces including preparation of

documents relative to finishes, systems furniture, furnishings,

fixtures, equipment, and interior partitions that do not affect the

building mechanical, structural, electrical, or fire safety

systems.

     Sec. 602. A person, school, or institution  which that

violates  a section of  this act or a rule or order promulgated or

issued under this act shall be assessed 1 or more of the following

penalties:

     (a) Placement of a limitation on a license or certificate of

registration for an occupation regulated under articles 8 to 25.

     (b) Suspension of a license or certificate of registration.

     (c) Denial of a license, certificate of registration, or

renewal of a license or certificate of registration.

     (d) Revocation of a license or certificate of registration.

     (e)  A civil An administrative fine to be paid to the

department, not to exceed $10,000.00.

     (f) Censure.

     (g) Probation.

     (h) A requirement that restitution be made.

     Sec. 721. (1) The state board of accountancy is created.

     (2) Six members of the board shall be certified public

accountants who hold a certificate as a certified public

accountant, who are licensed under section 727, and who have

practiced in this state as certified public accountants for not

less than 5 years. Three members shall be representative of the

general public, 1 of whom shall be an attorney who is a member in

good standing in the bar of this state. One of the 9 members of the

board shall be a full-time instructor of accounting above the

elementary level at an accredited college or university.

     (3) The director may promulgate the following rules:

     (a) Rules of professional conduct for establishing and

maintaining high standards of competence and integrity in the

practice of public accounting.

     (b) Rules governing corporations practicing public accounting,

consistent with the professional service corporation act, 1962 PA

192, MCL 450.221 to 450.235.

     (c) Rules governing educational and experience requirements

for the issuance of a certificate as a certified public accountant.

     (d) Rules of procedure governing the conduct of matters before

the board.

     (e) Rules governing the recognition of educational

institutions by the board.

     (f) Rules governing continuing education as required by

section 729.

     (g) Any other rules considered necessary by the director to

implement and enforce this article.

     Sec. 723. (1) Each licensed or registered individual holder of

a certificate as a certified public accountant shall be known as a

certified public accountant and a person shall not use that title

or the abbreviation "CPA" or any other word, words, letters, or

figures to indicate that the person using them is a certified

public accountant unless the use is specifically approved by the

board. Use of the terms "certified accountant", "chartered

accountant", "public accountant", and "registered accountant" and

the abbreviations "C.A.", "P.A.", and "R.A." is specifically

prohibited as being prima facie misleading to the public.

     (2) Except as provided in section 724, a person shall not

engage in the practice of public accounting either in the person's

own name, under an assumed name, or as a member of a firm or as an

employee, unless the person holds a certificate as a certified

public accountant and a license as a certified public accountant

issued under this article.

     (3) Unless use of a term is specifically approved by the

board, the display or uttering by a person of a card, sign,

advertisement, directory listing, or other printed, engraved, or

written instrument or device bearing a person's name in conjunction

with a title described in subsection (1) shall be prima facie

evidence that the person whose name is so displayed caused or

procured the display or uttering of the card, sign, advertisement,

directory listing, or other printed, engraved, or written

instrument or device. Evidence of the commission of a single act

prohibited by this  article  section is sufficient to justify an

injunction or a conviction without evidence of a general course of

conduct.

     (4) Each licensed firm may use the designation "certified

public accountants" in connection with the firm name, except that a

licensed firm having only 1 member may use only the designation

"certified public accountant". An unlicensed firm shall not use the

designation "certified public accountants", "certified

accountants", "chartered accountants", "public accountants", or

"registered accountants" or the abbreviation "C.P.A.", "CPA",

"CPAs", "C.A.", "P.A.", or "R.A." in connection with the firm name.

(5) A person that violates this section or a rule or order

promulgated or issued under or related to this section is liable

for an administrative fine payable to the department of not more

than $25,000.00 per violation.

     (6) The department may conduct an investigation and proceed

under article 5 to enforce this section.

     Sec. 725. (1) The department shall issue a certificate as a

certified public accountant to an individual who meets all of the

following requirements:

     (a) Is of good moral character.

     (b) Has complied with the education requirements of subsection

(2).

     (c) Has passed an examination meeting the requirements of

subsection (3).

     (d) Has complied with the experience requirements of

subsection (4).

     (e)  After July 1, 2003, shall have  Has completed at least

150 semester hours of college education, including a baccalaureate

degree or higher degree with a concentration in accounting, at an

educational institution approved by the board.

     (2)  Except as otherwise provided in this subsection, an  An

individual who has completed a curriculum required for a

baccalaureate degree with a concentration in accounting at an

educational institution approved by the board may sit for the

examination required under subsection (3).  An individual shall be

considered to have fulfilled the educational requirements of this

subsection if he or she is scheduled to receive his or her

baccalaureate degree with a concentration in accounting from an

educational institution approved by the board, within 30 days after

the date of the examination required under subsection (3), as

certified by the chief academic officer of the educational

institution. If an individual fails to fulfill the educational

requirements of the educational institution within 30 days of the

examination, then the board shall not credit the examination

results to the applicant.

     (3) An applicant for a certificate as a certified public

accountant shall pass an examination in accounting, auditing, and

other related subjects, acceptable to the department and the board,

that is given reciprocal status in the plurality of states as

compared to other examinations.

     (4)  Subject to subsections (5) and (6) and until July 1,

2003, an  An applicant for a certificate as a certified public

accountant shall have 2 years of qualifying experience, and  ,

after July 1, 2003,  an applicant for a certificate as a certified

public accountant shall have 1 year of qualifying experience under

the direction and supervision of a licensed certified public

accountant of this or another state in either of the following:

     (a) The practice of public accounting with experience obtained

in 1 financial audit and in all of the following areas  which  that

may be performed under the direction and supervision of a licensed

certified public accountant while the applicant was meeting the

education requirements of subsection (2):

     (i) The application of a variety of auditing procedures and

techniques to the usual and customary financial transactions

recorded in accounting records.

     (ii) The preparation of working papers covering the examination

of the accounts usually found in accounting records for audit,

review, and compilation.

     (iii) The participation in the planning of the program of work

including the selection of the procedures to be followed for audit,

review, and compilation.

     (iv) The participation in the preparation of reports, including

written explanations and comments on the findings of the

examinations and on the content of the accounting records.

     (v) The participation in the preparation and analysis of

financial statements together with explanations and notes.

     (b) The practice of public accounting with a governmental

agency involving either of the following:

     (i) The auditing of the books and accounts or financial

activities of persons engaged in 3 or more distinct lines of

commercial or industrial business in accordance with generally

accepted auditing standards or generally accepted government

auditing standards.

     (ii) The auditing of the books and accounts of financial

activities of 3 or more distinct governmental agencies or

independent organizational units other than an employer of the

applicant in accordance with generally accepted auditing standards

or generally accepted government auditing standards, and in which

the results of the auditing are reported to a third party.

     (5) Until July 1, 2003, an individual who has done both of the

following is considered to have received the equivalent of 1 year

of qualifying experience under subsection (4):

     (a) Has earned a graduate degree in accounting or its

equivalent at an educational institution approved by the board.

     (b) Has completed a curriculum in public accounting as

prescribed in rules promulgated by the director.

     (6) Until July 1, 2003, an individual who has done all of the

following is considered to have received the equivalent of 2 years

of qualifying experience under subsection (4):

     (a) Has earned a graduate degree in accounting or its

equivalent at an educational institution approved by the board and

has completed a curriculum in public accounting as prescribed in

rules promulgated by the director.

     (b) Has completed at least 2 years as a full-time instructor

of accounting in subjects above the elementary level prescribed in

rules promulgated by the director.

(5)  (7) In complying with the requirement of subsection (4)

that an applicant shall have performed 1 financial audit, an

applicant may submit an audit performed under the direction and

supervision of a licensed certified public accountant who is not

the applicant's employer or an audit performed while the applicant

was meeting the educational requirements of subsection (2).

     Sec. 729. (1)  In order to renew As a condition of license

renewal, an individual  license, a  licensee shall complete at

least 40 hours of continuing education for each year since the

issuance of the original license or the last renewal. Of the 40

hours of continuing education credits, the board shall not require

more than 8 of those hours to be in the areas of auditing and

accounting.  (2)  The board may make exceptions from the continuing

education requirements of this subsection  (1)  for reasons of

health, military service, or other good cause.

(2) Beginning March 1, 2007, each licensed firm and sole

practitioner that performs attest services, including audits,

reviews, and compilations that are relied upon by third parties,

shall participate in a peer review program established by rule of

the department and approved by the board. An applicant for renewal

or relicensure shall submit to the department at the time of

renewal or relicensure proof of peer review obtained within the 3

years immediately preceding the application. A firm or sole

practitioner required to participate in a peer review program under

this subsection shall notify the department within 30 days after

receipt of an adverse report or second modified peer review report.

Verbal testimony or documents, or both, pertaining to a peer review

shall be considered confidential and shall be exempt from

disclosure to the department, except in the case of an adverse or

second consecutive modified opinion.

     Sec. 732. (1) Except by written permission of the client or

the heir, successor, or personal representative of the client to

whom the information pertains, a licensee, or a person employed by

a licensee, shall not disclose or divulge and shall not be required

to disclose or divulge information relative to and in connection

with an examination or audit of, or report on, books, records, or

accounts that the licensee or a person employed by the licensee was

employed to make. Except as otherwise provided in this section, the

information derived from or as the result of professional service

rendered by a certified public accountant is confidential and

privileged.

     (2) Subsection (1) does not prohibit  a any of the following:

     (a) A certified public accountant, whose professional

competence has been challenged in a court of law or before an

administrative agency, from disclosing information otherwise

confidential and privileged as part of a defense in the court

action or administrative hearing.

(b)  (3) Subsection (1) does not prohibit the The disclosure

of information required to be disclosed in the course of practice

monitoring programs and ethical investigations conducted by a

licensed certified public accountant. In such cases, the

information disclosed to another licensed certified public

accountant in the course of practice monitoring programs and

ethical investigations is confidential and privileged to the same

degree and in the same manner as provided for in subsection (1).

(c) A licensee, or a person employed by a licensee, from

disclosing information otherwise privileged and confidential to

appropriate law enforcement or governmental agencies when the

licensee, or person employed by the licensee, has knowledge that

forms a reasonable basis to believe that a client has committed a

violation of federal or state law or a local governmental

ordinance.

(3) Documents or records in the possession of the department

pertaining to a review, an investigation, or disciplinary actions

under this article are exempt from disclosure under the freedom of

information act, 1976 PA 442, MCL 15.231 to 15.246, unless the

records or documents are used for either or both of the following

purposes:

     (a) As evidence in a contested case held by the department.

     (b) As a basis for formal action by the department and until

the action is resolved by a final order issued by the board.

     Sec. 734. (1) A holder of a certificate as a certified public

accountant, a registration, or a license is subject to the

penalties of section 602 for 1 or more of the following:

     (a) Fraud or deceit in obtaining a certificate as a certified

public accountant, a license to practice public accounting, or a

registration under this article.

     (b) Dishonesty, fraud, or negligence in the practice of public

accounting.

     (c) Violation of a rule of professional conduct promulgated

under this article.

     (d) Conviction of a felony under the laws of this or another

state or the United States or conviction of a crime, an element of

which is dishonesty, fraud, or negligence, under the laws of this

or another state or of the United States, including, but not

limited to, the failure to file a personal federal, state, or local

income tax return.

     (e) Cancellation, revocation, suspension, or refusal to renew

authority to practice as a certified public accountant by another

state for a cause other than failure to pay a licensure or other

required fee in that state.

     (f) Suspension or revocation for cause of the right to engage

in the practice of public accounting before a state or federal

agency.

     (g) Conduct discreditable to the public accounting profession.

     (h) Determination of mental incompetency by a court of law.

     (i) A violation of this article or a rule promulgated under

this article.

     (j) A violation of the provisions of section 604.

     (k) A violation of professional standards regarding the

issuance of reports on financial statements; 1 or more kinds of

management advisory, financial advisory, or consulting services;

the preparation of tax returns; or the furnishing of advice on tax

matters.

(2) Notwithstanding section 602(e), a person that violates

this article or a rule or order promulgated or issued under or

related to this article is liable for an administrative fine

payable to the department of not more than $25,000.00 per

violation.

     (3) Within 30 days after a final determination rendered by a

federal or state administrative agency or a judgment or conviction

issued by a federal court, a state court, or any other court of

record, a licensee or registrant shall report to the department in

writing or electronically a determination, order, judgment, or

conviction regarding a violation in which dishonesty, fraud, or

negligence is an element of that determination, order, judgment, or

conviction.

     Sec. 735. (1) A person who violates section  723  723(1)

through (4) is guilty of a  misdemeanor, felony punishable by a

fine of not more than  $5,000.00 $25,000.00, or imprisonment for

not more than  1 year 5 years, or both.

     (2) The attorney general or the prosecuting attorney of a

county may bring an action in a court of competent jurisdiction to

enforce this section and section 601.