HB2476 - Certified public accountants; certification; alternative.

House Engrossed certified public accountants; certification; alternative. State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026 HOUSE BILL 2476 AN ACT Amending sections 32-701, 32-703, 32-721, 32-723, 32-725, 32-729, 32-730, 32-730.02, 32-730.06, 32-731, 32-732, 32-741, 32-741.01, 32-741.02, 32-742, 32-743 and 32-749, Arizona Revised Statutes; relating to certified public accountants. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 32-701, Arizona Revised Statutes, is amended to read: START_STATUTE 32-701. Definitions In this chapter, unless the context otherwise requires: 1. "Accounting services" means services that are commonly and historically performed by accountants, including recording or summarizing financial transactions, bookkeeping, analyzing or verifying financial information, reporting financial results, financial planning or providing attest services, compilation services, tax services or consulting services. 2. "Accredited institution" means any public or private regionally or nationally accredited college or university that is accredited by an organization recognized by the council for higher education accreditation or its successor agency. 3. "Attest services" means the following services to be performed by the holder of a certificate issued by the board: (a) Audits or other engagements to be performed in accordance with the statements on auditing standards adopted by the American institute of certified public accountants. (b) Reviews of financial statements to be performed in accordance with the statements on standards for accounting and review services adopted by the American institute of certified public accountants. (c) Any examination of prospective financial information to be performed in accordance with the statements on standards for attestation engagements adopted by the American institute of certified public accountants. (d) Any engagement to be performed in accordance with the standards of the public company accounting oversight board or its successor. (e) Any examination, review or agreed on procedure engagement to be performed in accordance with the statements on standards for attestation engagements adopted by the American institute of certified public accountants, other than an examination described in subdivision (c) of this paragraph. 4. "Baccalaureate degree" means an academic undergraduate degree awarded by an accredited institution or by a college or university that maintains standards comparable to those of an accredited institution. 4. 5. "Board" means the Arizona state board of accountancy established by section 32-702. 5. 6. "Business organization" means a partnership, professional corporation, professional limited liability company, limited liability company or limited liability partnership or any other entity that is recognized by the board and that is established under the laws of any state or foreign country. 6. 7. "Certified public accountant" means an individual who has been issued a certificate of authority by the board to practice as a certified public accountant or who meets the limited reciprocity privilege requirements pursuant to section 32-725. 7. 8. "Client" means a person or entity, other than one's employer, for whom accounting services are provided. 8. 9. "Compilation services" means providing a service of any compilation engagement to be performed in accordance with the statements on standards for accounting and review services. 10. "Complaint" means a written statement from a member of the public or a matter identified by the board, the board's advisory committees or the BOARD'S staff that involves a person, a certified public accountant or a firm subject to this chapter regarding any potential violation of this chapter or rules adopted pursuant to this chapter. 9. 11. "Consulting services" includes management advisory services, litigation support services, valuation services and other services that require the use of technical skills, education, observation, experience and knowledge to develop an analytical approach to process and to present findings, conclusions or recommendations. 10. 12. "Conviction" means a judgment of conviction by any state or federal court of competent jurisdiction in a criminal cause, regardless of whether an appeal is pending or could be taken, and includes any judgment or order based on a plea of no contest. 11. 13. "CPA designation" means the title "certified public accountant" or any abbreviation or grammatical derivative of the term "certified public accountant". 12. 14. "Disciplinary action" means any other regulatory sanctions imposed by the board in combination with, or as an alternative to, relinquishment, revocation or suspension of a certificate or registration, including the imposition of: (a) An administrative penalty in an amount not to exceed $2,000 for each violation of this chapter or rules adopted pursuant to this chapter. (b) Restrictions on the scope of the registrant's practice of accounting. (c) Pre-issuance preissuance and post-issuance postissuance peer review. (d) Professional education requirements. (e) A decree of censure. (f) Probation requirements best adapted to protect the public welfare. (g) Reimbursement of the board's costs of investigations and disciplinary proceedings initiated under this chapter, including attorney fees. (h) A requirement for restitution payments to accounting services clients or to other persons suffering economic loss resulting from violations of this chapter or rules adopted pursuant to this chapter. 15. "Disciplinary proceeding" means a proceeding at which a hearing occurs before the board or the office of administrative hearings and at which the legal rights, duties or privileges of an individual or firm subject to this chapter are at issue. 13. 16. "Employer" means a person or entity that hires an individual to perform a service and that directs and controls the manner in which the service is performed. 14. 17. "Federal securities laws" means the securities act of 1933, the securities exchange act of 1934, the public utility holding company act of 1935 and the investment company act of 1940, as amended. 15. 18. "Financial statements": (a) Means statements and footnotes related to statements that purport to show a financial position or changes in a financial position in conformity with generally accepted accounting principles or other another comprehensive basis of accounting. (b) Includes balance sheets, statements of income, statements of retained earnings, statements of cash flows, statements of changes in equity and other commonly used or recognized summaries of financial information. (c) Does not include tax returns or information contained in tax returns. 16. 19. "Firm" means a business organization, a sole proprietorship or an individual who is registered pursuant to section 32-731. 17. 20. "Good cause" means factors that temporarily prevent a registrant from satisfying a particular requirement in a specific instance as determined by the board and may include: (a) A disability. (b) An illness. (c) A physical or mental condition. (d) Military service. (e) Financial hardship. (f) A natural disaster. (g) Any condition or circumstance that the board deems relevant. 21. "Investigation" means the processes undertaken during the period between receipt or initiation of a complaint or initiation of a continuing professional education audit and either a final disposition by the board or a disciplinary proceeding. 18. 22. "Jurisdiction" means, for the purposes of examination, certification, firm registration or limited reciprocity privilege, the fifty states of the United States, the District of Columbia, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands or the Commonwealth of Puerto Rico. 19. 23. "Letter of concern" means an advisory letter to notify a registrant that, while the evidence does not warrant disciplinary action, the board believes that the registrant should modify or eliminate certain practices and that continuation of the activities that led to the evidence being submitted to the board may result in board action against the registrant. A letter of concern is not a disciplinary action. 20. 24. "Limited reciprocity privilege" means the permission to practice as a certified public accountant in this state pursuant to section 32-725 for an individual or firm whose principal place of business is outside of this state. 21. 25. "Management advisory services" means advisory services consisting of the development of findings, conclusions or recommendations for the recipient's consideration and decision making decision-making . 22. 26. "Office", for the purposes of firm registration, limited reciprocity privilege and fees, means any physical location that is used in the practice of accounting in this state and that is owned, leased, licensed for use or maintained by the firm or someone under the firm's authority. 27. "Postbaccalaureate degree" means an academic degree awarded after a baccalaureate degree by an accredited institution or by a college or university that maintains standards comparable to those of an accredited institution. 23. 28. "Practice of accounting" means providing accounting services for a client or an employer. 24. 29. "Registrant" means any certified public accountant or firm that is registered with the board. 25. 30. "Related courses" means: (a) Business administration. (b) Statistics. (c) Computer science, information systems or data processing. (d) Economics. (e) Finance. (f) Management. (g) Business law. (h) College algebra or more advanced mathematics. (i) Advanced written communication. (j) Advanced oral communication. (k) General ethics. (l) Marketing. (m) Other courses that are closely related to the subject of accounting or that are satisfactory to the board. 26. 31. "Sole proprietor" means the owner of a sole proprietorship. 27. 32. "Sole proprietorship" means a business that is owned by one individual and that does not have a legal distinction between the owner and the business. END_STATUTE Sec. 2. Section 32-703, Arizona Revised Statutes, is amended to read: START_STATUTE 32-703. Powers and duties; rules; executive director; advisory committees and individuals A. The primary duty of the board is to protect the public from unlawful, incompetent, unqualified or unprofessional certified public accountants and firms through certification, regulation and rehabilitation. B. The board may: 1. Investigate complaints filed with the board or on its own motion to determine whether a certified public accountant registrant or limited reciprocity PRIVILEGE individual or firm has engaged in conduct in violation of this chapter or rules adopted pursuant to this chapter. 2. Establish and maintain high standards of competence, independence and integrity in the practice of accounting by a certified public accountant as required by generally accepted auditing standards and generally accepted accounting principles and, in the case of publicly held corporations or enterprises offering securities for sale, in accordance with state or federal securities agency accounting requirements. 3. Establish reporting requirements that require registrants to report: (a) The imposition of any discipline on the right to practice before the federal securities and exchange commission, the internal revenue service, any state board of accountancy, other government agencies or the public company accounting oversight board. (b) Any criminal conviction, any civil judgment involving negligence in the practice of accounting by a certified public accountant and any judgment or order as described in section 32-741, subsection A, paragraphs 7 and 8. 4. Establish basic requirements for continuing professional education of certified public accountants, except that the requirements shall not exceed eighty hours in any two-year registration renewal period. 5. Adopt procedures concerning disciplinary actions, administrative hearings and consent decisions. 6. Issue to qualified applicants certificates executed for and on behalf of the board by the signatures of the president and secretary of the board. 7. Adopt procedures and rules to administer this chapter. 8. Require peer review pursuant to rules adopted by the board on a general and random basis of the professional work of a registrant engaged in the practice of accounting. 9. Subject to title 41, chapter 4, article 4, employ an executive director and other personnel that it considers necessary to administer and enforce this chapter. 10. Appoint accounting and auditing, tax, peer review, law, certification, continuing professional education or other committees or individuals as it considers necessary to advise or assist the board or the board's executive director in administering and enforcing this chapter. These committees and individuals serve at the pleasure of the board. 11. Take all action that is necessary and proper to effectuate the purposes of this chapter. 12. Sue and be sued in its the board's official name as an agency of this state. 13. Adopt and amend rules concerning the definition of terms, the orderly conduct of the board's affairs and the effective administration of this chapter. 14. Delegate to the executive director the authority to: (a) Approve an applicant to take the uniform certified public accountant examination pursuant to section 32-723. (b) Issue a certificate of certified public accountant pursuant to section 32-721. (c) Approve an application for firm registration pursuant to section 32-731. (d) Approve a registrant's name change and reissue a certificate of certified public accountant due to the name change. (e) Approve a registrant's cancellation request pursuant to section 32-730.02. (f) Approve a request for retired status pursuant to section 32-730.04. (g) Approve reactivation from inactive status or retired status pursuant to section 32-732. (h) Approve compliance with peer review requirements pursuant to this section. (i) Approve compliance with continuing professional education audits. (j) Approve continuing professional education compliance with decisions and orders. (k) Terminate decisions and orders based on a registrant's successful completion of all order requirements. (l) Approve a request for continuing professional education reciprocity. ( m ) Approve a request for inactive status pursuant to section 32-730.01. ( n ) Approve reinstatement from canceled or expired status pursuant to section 32-732. C. The board or a [Text truncated for display. Full text available on LegiScan.]