Texas State Board Report, Volume 109, November 2011 Page: 1
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NCOVEMEBER
2011
VOL. 109TEXAS STATE
BOARDREPORT
Unauthorized Practice of Public Accountancy by CPAs
he Texas State Board receives numerous complaints each year concerning Certified Public
Accountants who offer accounting services though unlicensed firms. Not all CPAs
recognize that when a licensed CPA offers accounting services to the public, those services
must be provided through a licensed CPAfirm. An exception to this rule is that a CPA may provide
non-attest work' through a non-licensed firm, but when doing so, it is important that there be no
assertion or offer of services in accounting or auditing [ 901.453(b) of the Public Accountancy
Act].
A variation of the rule on attest services being offered through a non-CPA firm is Board Rule 518.5.2
This rule permits an unlicensed firm to disclose a CPAownership affiliation with a licensed CPAfirm
and permits the non-licensed firm to reference auditing or attest services. This is permitted, however,
only when the non-licensed firm accompanies the reference of auditing and attest services with the
statement that auditing and attest services will be performed only by the licensed CPA firm owned
by the owners of the non-licensed firm.
1 Board Rule 501.52(4). "Attest Service" means:
(A) an audit or other engagement required by the board to be performed in accordance
with the auditing standards adopted by the AICPA, PCAOB, or another national or international
accountancy organization recognized by the board;
(B) a review, compilation or other engagement required by the board to be performed in
accordance with standards for accounting and review services adopted by the AICPA or
another national or international accountancy organization recognized by the board;
(C) an engagement required by the board to be performed in accordance with standards
for attestation engagements adopted by the AICPA or another national or international
accountancy organization recognized by the board; or
(D) any other assurance service required by the board to be performed in accordance with
professional standards adopted by the AICPA or another national or international accountancy
organization recognized by the board;
2 Board Rule 518.5(a). An unlicensed entity is permitted to state that it has an ownership
interest and a business affiliation with a registered CPA firm provided each such statement
complies with the following rules.
(b) In any letterhead, or in any advertising or promotional statements by an unlicensed
entity that refers to accounting, auditing or attest services or any derivative terms associated
with those services, there must be a statement that such services are only performed by the
affiliated registered CPA firm. This statement must be included in conspicuous proximity to
the name of the unlicensed entity and be printed in type not less bold than that contained in
the body of the letterhead, advertisement or promotional statement. If the advertisement is
in audio format, the statement must be clearly declared in each such presentation.
(c) An unlicensed entity performing attest services is in the unauthorized practice of public
accountancy and in violation of the Act and the board's rules.
(d) Interpretative Comment: This section clarifies that the mere mention of a business and
ownership affiliation with a registered CPA firm on the letterhead, or in advertising or
promotional statements, of an unlicensed entity does not violate the Act when done in
compliance with the provisions of this section. This section also clarifies that the letterhead,
advertising or promotional statements of the unlicensed entity may not refer to accounting,
auditing or attest services, or any derivative terms associated with those services, without
violating 901.453 of the Act. It also clarifies that all attest services must still be performed
exclusively by registered CPA firms in accordance with the Act and all board rules. The
definition of "attest services" is set forth in 501.52 of this title (relating to Definitions).2 CPE Sponsors
3 News You Can
4 In Memoriam
5 Enforcement
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Texas State Board of Public Accountancy. Texas State Board Report, Volume 109, November 2011, periodical, November 2011; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth653923/m1/1/: accessed July 18, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.