Academic Course

The course shall be within the framework of a curriculum that leads to an academic degree in nursing or any academic course relevant to nursing practice/health care. [ ~~External nursing degree courses are acceptable as academic courses.~~ ]

External nursing degree courses are acceptable as academic courses. The individual must be enrolled in an educational institution to be awarded full academic credit. Five contact hours will be awarded for courses taken by passing of written proficiency examinations that will be credited toward a nursing degree. [ ~~Participants, upon audit by the Board shall be able to present an official transcript indicating completion of the course with a passing grade.~~ ]

Participants, upon audit by the Board shall be able to present an official transcript indicating completion of the course with a passing grade.

~~credit is awarded for initial certification only;]~~

[ C ] A maximum credit of one contact hour per renewal period may be obtained for certification in basic cardiopulmonary resuscitation.

(6)-(7)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 11, 1999.

TRD-9903451

For further information, please call: (512) 305-8100

Chapter 239. Contested Case Procedure

Subchapter A. Definitions

22 TAC §239.1

The Board of Vocational Nurse Examiners proposes to amend §239.1 relating to Definitions. The rule is amended to include a definition for Professional Boundary.

Mary M. Strange, Executive Director, has determined that for the first five years the rule is in effect, there will be no fiscal implication for state or local government as a result of enforcing the rule.

Mrs. Strange has also determined that for each of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be protection of the public. There will be no cost to small or large businesses and no fiscal impact to individuals.

Comments on the proposed amendment may be submitted to Mary M. Strange, R.N., BSN, CNA, Executive Director, Board of Vocational Nurse Examiners, 333 Guadalupe, Suite 3-400, Austin, Texas 78701 (512) 305-8100.

The amendment is proposed under Texas Civil Statutes, Article 4528c, §5(f), which provides the Board of Vocational Nurse Examiners with the authority to make such rules and regulations as may be necessary to carry in effect the purposes of the law.

No other statute, article or code will be affected by this proposal.

§239.1. Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1)-(17)

Professional Boundary - the spaces between the nurses power and the patient's vulnerability. The power of the nurse comes from the professional position and the access to private knowledge about the patient. Establishing boundaries allows the nurse to control this power differential and allows a safe connection to meet the patient's need.

(18)

(19)

[ ~~(18)~~ ] Reinstatement - the individual with a revoked or suspended license must demonstrate or supply evidence to the Board of their rehabilitation or current fitness to hold a license. Reinstatement petitions shall be considered no sooner than five years following a revocation order, one year following a voluntary surrender revocation order, or in the case of a suspension order, upon conclusion of the specified period of suspension.

(20)

[ ~~(19)~~ ] Reprimand - a public and formal censure against a license.

(21)

[ ~~(20)~~ ] Respondent - a person who has been made the subject of a formal or informal complaint alleging violation of the Vocational Nurse Act or rules, regulations, or Orders of the Board of Vocational Nurse Examiners.

(22)

[ ~~(21)~~ ] Revocation - the withdrawal or repeal of a license. Revocation is established for a minimum period of five years.

(23)

[ ~~(22)~~ ] Staff - the investigative staff of the Board of Vocational Nurse Examiners.

(24)

[ ~~(23)~~ ] Suspension - the temporary withdrawal of a license. The Board may suspend for one day or a designated number of years or until a specified event occurs.

(25)

[ ~~(24)~~ ] Universal Precautions - procedures for disinfection and sterilization of reusable medical devices and the appropriate use of infection control, including hand washing, the use of protective barriers, and the use and disposal of needles and other sharp instruments.

(26)

[ ~~(25)~~ ] Voluntary Surrender - the unprescribed relinquishment of a license, which results in revocation of a license without formal charges, notice, or a hearing. The licensee must execute a sworn statement to the Board that he or she no longer desires to be licensed. Voluntary surrender revocation is established for a minimum period of one year from the date of the endorsement of the Board Order.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 11, 1999.

TRD-9903452

For further information, please call: (512) 305-8100

Subchapter B. Enforcement

22 TAC §239.11

The Board of Vocational Nurse Examiners proposes to amend §239.11 relating to Unprofessional Conduct. The rule is amended specifically address professional boundary violations. The amendment will enhance the effectiveness of the Board in disciplining LVNs who endanger the appropriate professional relationship.

No other statute, article or code will be affected by this proposal.

§239.11. Unprofessional Conduct.

Unprofessional or dishonorable conduct, likely to deceive, defraud or injure the public, may include the following described acts or omissions:

(1)-(26)

failing to conform to the minimal standards of acceptable prevailing practice, regardless of whether or not actual injury to any person was sustained, including but not limited to:

(27)

(A)-(K)

failing to recognize and honor the professional interpersonal boundaries appropriate to any therapeutic relationship or health care setting.

(L)

(28)-(29)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 11, 1999.

TRD-9903453

For further information, please call: (512) 305-8100

Chapter 240. Peer Review and Reporting

22 TAC §240.11, §240.12

The Board of Vocational Nurse Examiners proposes to amend §240.11 relating to Minor Incidents and §240.12 relating to Mandatory Reporting.. On March 9, 1999, the Board reviewed Chapter 240 relating to Peer Review and Reporting as outlined in the Board's Review Plan and determined that §240.11 and §240.12 be amended for clarification.

Mary M. Strange, Executive Director, has determined that for the first five year period the amendment of these rules is in effect, there will be no fiscal implication for state or local government as a result of enforcing the rules.

Mrs. Strange has also determined that for the first five years the amendment of these rules is in effect the public benefits anticipated as a result of enforcing the rules will be clarification of the process. There will be no cost to small or large businesses and no fiscal impact to individuals.

Comments may be submitted to Mary M. Strange, Executive Director, Board of Vocational Nurse Examiners, 333 Guadalupe, Suite 3-400, Austin, Texas 78701.

The amendment if these rules is proposed under Texas Civil Statutes, Article 4528c, §4(f), which provides the Board of Vocational Nurse Examiners with the authority to make such rules and regulations as may be necessary to carry in effect the purposes of the law.

No other statute, article or code will be affected by this proposal.

§240.11. Minor Incidents.

(a)-(e)

Nothing in this rule is intended to prevent reporting alleged violations as described in §240.12 of this title (relating to Mandatory Reporting.) [ ~~Nothing in this rule is intended to prevent reporting of a potential violation directly to the Board.~~ ]

(f)

§240.12. Mandatory Reporting.

A licensed vocational nurse who has observed a violation of the Vocational or RN Nurse Act/Rules which exposed a patient or other person unnecessarily to a serious risk or harm resulting in further medical intervention and/or death shall report said violation to the appropriate supervisory individual and/or submit a written complaint to the appropriate board. The person in authority shall initiate an investigation and report the violation to the peer review committee as deemed appropriate. In facilities where there is no peer review committee, the individual in authority will report the violation the board office in a signed written document that includes the name of the nurse committing the alleged violation and any other pertinent information. [ Each vocational nurse having reasonable cause to suspect that another vocational nurse has exposed a patient or other person unnecessarily to a serious risk of harm, resulting in further medical intervention and/or death, because of unprofessional conduct, failure to adequately care for a patient, failure to conform to the minimum standards of acceptable vocational nursing practice, or impairment, shall report to the Board in a signed written document, the name of the vocational nurse committing the suspected violation and any other pertinent information within the vocational nurse's knowledge. A vocational nurse without personal knowledge of the suspected violation is not required to report under this Chapter if he or she has reasonable cause to believe the vocational nurse has already been reported. ]

Each employer of a vocational nurse who is believed to have exposed a patient or other person unnecessarily to serious risk of harm, resulting in further medical intervention and/or death, because of unprofessional conduct, failure to adequately care for a patient, failure to conform to the minimum standards of acceptable vocational nursing practice, or impairment, shall report to the Board in a signed, written document , the name of the vocational nurse committing the alleged [ ~~suspected~~ ] violation and any other pertinent information within the vocational nurse employer's knowledge.

Each vocational nurse employer that regularly employs, hires or otherwise contracts for the services of ten or more vocational nurses shall develop a written plan for identifying and reporting vocational nurses in its service who expose patients or other persons unnecessarily to a serious risk of harm resulting in further medical intervention and/or death, because of unprofessional conduct, failure to adequately care for a patient, failure to conform to the minimum standards of acceptable vocational nursing practice, or impairment. The plan must include an appropriate process for the review of any incident reportable under this Chapter by a vocational nursing peer review committee established and operated under Rule 240.13 [ ~~241.11~~ ] and for the affected vocational nurse to submit rebuttal information to that committee. [ ~~Said written plan required by this Chapter shall be in operation by September 1, 1995.~~ ]

Each national or state association of vocational nurses that conducts a certification or accreditation program for vocational nurses that expels, decertifies, or takes any other substantive disciplinary action, as defined by the Board, against a vocational nurse as a result of the vocational nurse's failure to conform to the minimum standards of acceptable vocational nursing practice, shall report to the Board in writing the name of the vocational nurse committing the alleged [ ~~suspected~~ ] violation and any other pertinent information within the association's knowledge.

(e)

(f)-(w)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 11, 1999.

TRD-9903450

For further information, please call: (512) 305-8100

Part XXII. Texas State Board of Public Accountancy

Chapter 507. Employees of the Board

22 TAC §507.6

The Texas State Board of Public Accountancy (Board) proposes new §507.6 concerning Employee Training and Education Assistance Program.

The proposed new §507.6 will allow the Board to have an Employee Training and Education Assistance Program pursuant to Section 656 of the Government Code.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed new rule will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the new rule will be zero to local government because this rule affects only the Board. The additional estimated cost to the state will be less than $1,000 per year.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the new rule will be zero because the new rule is not intended to reduce costs.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the new rule will be zero because the new rule is not intended to affect revenue.

Mr. Treacy has determined that for the first five-year period the new rule is in effect the public benefits expected as a result of adoption of the proposed rule would be that some Board employees may be able to receive training or education assistance if it is work related. The probable economic cost to persons required to comply with the new rule will be zero because the new rule requires no one to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed new rule will not affect a local economy.

Mr. Treacy has determined that the proposed new rule will not have an adverse economic effect on small businesses because the rule affects only the Board and its employees. The Board specifically invites comments from the public on the issues of whether or not the proposed new rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

The Board requests comments on the proposed new rule from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas 78701 or faxed to her attention at (512) 305-7854.

The new rule is proposed under The Public Accountancy Act, Texas Revised Civil Statutes Annotated, Article 41a-1, §6(a)(Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act and the Public Employees Training Act Section 656 of the Government Code, which requires state agencies to adopt rules to permit reimbursement of Educational Expenses.

No other statute, code or article is affected by this proposed new rule.

§507.6. Employee Training and Education Assistance Program.

Pursuant to the State Employees Training Act, Section 656 of the Government Code, it is the policy and practice of the Board to encourage employee's professional development through training and education programs.

The Board may provide assistance for education and training for an employee if the Executive Director determines that the education or training will enhance the employee's ability to perform current or prospective job duties and will benefit both the Board and the employee.

Financial assistance may be awarded for some or all of the following expenses:

tuition, including correspondence courses that fulfill degree, professional or General Equivalence Diploma program (GED) plan requirements;

Degree Plan pertinent College Level Equivalency Program examinations if the employee receives college credit or waiver of course requirements;

Degree Plan pertinent Life Experience Assessments if the employee receives college credit; and

required fees, including lab fees, and books.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903400

For further information, please call: (512) 305-7848

22 TAC §507.7

The Texas State Board of Public Accountancy (Board) proposes new §507.7 concerning Eligibility.

The proposed new §507.7 will allow the board to have eligibility rules for its Employee Training and Education Assistance Program.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed new rule will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the new rule will be zero because this rule addresses only eligibility of board employees.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the new rule will be zero because this rule addresses only eligibility of board employees.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the new rule will be zero because this rule addresses only eligibility of board employees.

Mr. Treacy has determined that for the first five-year period the new rule is in effect the public benefits expected as a result of adoption of the proposed rule would be that some board employees may be able to receive training or education assistance if it is work related. The probable economic cost to persons required to comply with the new rule will be zero because this rule addresses only eligibility of board employees.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed new rule will not affect a local economy.

Mr. Treacy has determined that the proposed new rule will not have an adverse economic effect on small businesses because this rule addresses only eligibility of board employees. The Board specifically invites comments from the public on the issues of whether or not the proposed new rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other statute, code or article is affected by this proposed new rule.

§507.7. Eligibility.

To be eligible for consideration for training and education assistance, an employee must;

be in good standing with the Board;

meet and continue to meet all performance expectations;

have at least 12 months of service with the Board; and

seek enrollment and participation in a field of study that relates to assigned or prospective job duties, a professional development requirement, a GED program or a higher education degree plan.

To maintain eligibility in a degree program an employee must be enrolled in an institution of higher education in a course of instruction leading toward a degree and maintain a passing grade point average.

To maintain eligibility in a GED program an employee must be enrolled each semester in a GED program and maintain a passing grade point average.

The employee must attend and satisfactorily complete the education and training, including passing tests or other types of performance measure where required.

(e)

Each semester an employee must provide grade reports to verify that full credit was received for courses taken.

(f)

Employees must provide fee receipts for courses to be taken and must promptly report outside funds such as grants, scholarships of other financial aid received. The Executive Director may adjust the assistance provided to the employee at any time for any reason.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903401

For further information, please call: (512) 305-7848

22 TAC §507.8

The Texas State Board of Public Accountancy (Board) proposes new §507.8 concerning Procedures.

The proposed new §507.8 will allow the board to have procedural rules for its Employee Training and Education Assistance Program ("Program").

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed new rule will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the new rule will be zeros because this rule addresses only procedural rules for the Program.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the new rule will be zeros because this rule addresses only procedural rules for the Program.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the new rule will be zeros because this rule addresses only procedural rules for the Program.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed new rule will not affect a local economy.

Mr. Treacy has determined that the proposed new rule will not have an adverse economic effect on small businesses because the rule affects only the board and its employees. The Board specifically invites comments from the public on the issues of whether or not the proposed new rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other statute, code or article is affected by this proposed new rule.

§507.8. Procedures.

The Executive Director may require a written agreement between the Board and the employee describing the terms and conditions of the education or training assistance to be provided by the Board. The Board may impose such terms and conditions as may be reasonable and appropriate including but not limited to specifying the circumstances under which the assistance may be terminated and the employee may be required to repay the amount of assistance.

The Executive Director will reconsider each employee's participation in the Education Assistance Program each semester.

Reason. Assistance may be terminated and the employee may be required to repay all funds received from the institution:

withdraws from the institution;

is removed or prohibited from attending the institution;

fails to comply with one or more terms of the assistance agreement including but not limited to additional terms concerning termination and repayment of assistance; or

is terminated by the Board during the duration of the assistance agreement.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903402

For further information, please call: (512) 305-7848

Chapter 523. Continuing Professional Education

Subchapter A. Continuing Professional Education (CPE) Programs

22 TAC §523.1

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.1, concerning Continuing Professional Education Purpose and Definition. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.1 will restate the purpose of Continuing Professional Education ("CPE"), define a "formal group program", restate the definition of "self-study program", make some editorial changes and re-word the sponsor's responsibility to comply with the board's CPE program.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendments do not require the board or anyone to do anything differently.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendments do not require the board or anyone to do anything differently.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendments do not require the board or anyone to do anything differently.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a clearer rule on CPE.

The probable economic cost to persons required to comply with the rule will be zero because the amendments do not require the board or anyone to do anything differently.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the substance and effect of the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda G. Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendments do not require the board or anyone to do anything differently. The Board specifically invites comments from the public on the issues of whether or not the proposed rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is to be adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

The proposed amendment is proposed under the Public Accountancy Act, Texas Civil Statutes, Article 41a-1, 6(a) (Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by this proposed amendment.

§523.1.[ ~~Formal~~ ] Continuing Professional Education Purpose and Definition.

The purpose of continuing professional education is to [ To ] help insure that practitioners receive quality continuing education . [ ~~appropriate standards are needed.~~ ] With appropriate standards, programs are less likely to vary in quality of development, presentation, and measurement in reporting of credits. [ Moreover, the large number of programs available throughout the United States, the varying backgrounds of credentials of sponsoring organizations, and the mobility of participants in these programs, create measuring and reporting problems that suggest the need for nationally uniform standards. If a group program complies with the standards in this statement, it becomes a formal group program. ]

The following terms when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Formal group program" means a program that complies with the standards in this chapter.

[ ~~(b)~~ ] "Self-study program" [ ~~A self-study program~~ ] (correspondence) means [ is ] an educational process designed to permit a participant to learn a given subject without major interaction with an instructor. For a self-study program to be formal:

[ ~~(1)~~ ] the sponsor must provide a certificate based upon evidence of satisfactory completion, such as a completed workbook or examination; and

[ ~~(2)~~ ] it must comply with the standards in this chapter [ ~~statement~~ ].

[ ~~(c)~~ ] "Computer-based interactive format" shall mean a program designed to simulate a classroom learning process by employing structured software or technology-based systems that provide significant ongoing interactive feedback between the participant and the software regarding the learning process. These programs clearly define lesson objectives and manage the participant through the learning process by:

[ ~~(1)~~ ] requiring frequent response to questions that test for understanding of the material presented;

[ ~~(2)~~ ] providing evaluative feedback to incorrectly answered questions; and

[ ~~(3)~~ ] providing reinforcement feedback to correctly answered questions.

(D)

[ ~~(d)~~ ] Sponsors are the organizations responsible for presenting programs and ensuring [ ~~are not necessarily program developers; however, it is the sponsor's responsibility to see~~ ] that their programs comply with all the standards in this chapter [ ~~statement~~ ].

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903412

For further information, please call: (512) 305-7848

22 TAC §523.2

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.2, concerning Standards for Continuing Professional Education Program Development. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.2 will re-state the rule caption and clear up some language in the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the changes are cosmetic.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the changes are cosmetic.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the changes are cosmetic.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a clearer rule.

The probable economic cost to persons required to comply with the rule will be zero because the changes are cosmetic.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the changes are cosmetic. The Board specifically invites comments from the public on the issues of whether or not the proposed rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is to be adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other article, statute or code is affected by this proposed amendment.

§523.2.Standards for Continuing Professional Education Program [ ~~CPE Program~~ ] Development.

The fundamental purpose of continuing professional education is to increase the licensee's professional competence. A professional person is one characterized as conforming to the technical and ethical standards of the [ ~~his or her~~ ] profession. This characterization reflects the expectation that a person holding out to perform services of a professional quality needs to be knowledgeable within a broad range of related skills. This concept of professional competence needs to be broadly interpreted.

Courses which are considered by the board as increasing the licensee's professional competence include:

technical courses in areas such as accounting, audit, tax, management advisory services, and other technical areas of benefit to a licensee and a licensee's employer(s); and

non-technical courses such as communications, advanced courses in foreign languages relating to accounting, ethics, behavioral science, and practice management which are of benefit to a licensee or a licensee's employer(s). Refer to §523.30 of this title (relating to Limitation for Non-technical Courses).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903413

For further information, please call: (512) 305-7848

22 TAC §523.6

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.6, concerning Program Content. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.6 will remove a requirement that new accounting standards must be incorporated into the instructional material.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a rule on program content that states what the board wants.

The probable economic cost to persons required to comply with the rule will be zero because the amendment requires nothing of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment requires nothing of anyone. The Board specifically invites comments from the public on the issues of whether or not the proposed rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is to be adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other article, statute or code is affected by this proposed amendment.

§523.6.Program Content.

The program developer must review the course materials periodically to assure that they are accurate and consistent with currently accepted standards relating to the program's subject matter. Between these reviews, errata sheets should be issued where appropriate and obsolete materials should be deleted. However, between the time a new pronouncement is issued and the issuance of errata sheets or removal of obsolete materials, the instructor is responsible for informing participants of changes. [ If, for example, a new accounting standard is issued, a program will not be considered current unless the ramifications of the new standard have been incorporated into the materials or the instructor appropriately informs the participants of the new standard. ]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903414

For further information, please call: (512) 305-7848

Subchapter B. Continuing Professional Education Standards

22 TAC §523.24

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.24 concerning Learning Environment. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.24 will eliminate the reference to seating arrangements.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a crisper rule on learning environment.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require anything of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment does not require anything of anyone.

The Board specifically invites comments from the public on the issues of whether or not the proposed rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is to be adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other article, statute or code is affected by this proposed amendment.

§523.24.Learning Environment.

The number of participants and physical facilities should be consistent with the teaching method(s) [ ~~method (methods)~~ ] specified. The learning environment is affected by the number of participants and by the quality of the physical facilities. Sponsors have an obligation to pay serious attention to these two factors. The maximum number of participants for a case-oriented discussion program ~~, for example,~~ ] should be considerably less than for a lecture program. [ The seating arrangement is also very important. For a discussion presentation, learning is enhanced if seating is arranged so that participants can easily see and converse with each other. If small group sessions are an integral part of the program format, appropriate facilities should be available to encourage communications within a small group. In effect, ] Class [ ~~class~~ ] size, quality of facilities, and seating arrangements are integral and important aspects of the educational environment and should be carefully controlled.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903415

For further information, please call: (512) 305-7848

22 TAC §523.25

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.25 concerning Evaluation. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.25 will make the evaluation mandatory rather than optional.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment requires no additional services from the state.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment requires no additional services from anyone in state or local government.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment requires no additional services from the state.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be that CPE courses will have mandatory evaluations which should improve the CPE courses, to the benefit of consumers and CPAs.

The probable economic cost to persons required to comply with the rule will be about $5.00 per year based on typing and copying a one page course evaluation for those who are not already utilizing written course evaluations.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment will only cost about $5.00 per year based on typing and copying a one page course evaluation for those who are not already utilizing written course evaluations.

No other article, statute or code is affected by this proposed amendment.

§523.25.Evaluation.

All programs should include some means for evaluating quality by both participants and instructors to determine whether:

objectives have been met;

prerequisites were necessary or desirable;

facilities were satisfactory;

the instructor was effective;

advance preparation materials, if any, were satisfactory; and

the program content was timely and effective.

Evaluations should [ ~~might~~ ] take the form of:

pretests for advance preparation; and/or

post-tests for effectiveness of the program; and/or

other evaluation forms or questionnaires completed at the end of the program or later.

Instructors should be informed of their performance, and sponsors should perform a systematic [ ~~systematically~~ ] review of the evaluation process to ensure its effectiveness.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903416

For further information, please call: (512) 305-7848

22 TAC §523.26

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.26 concerning Program Measurement. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.26 will remove three unnecessary sentences from the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendments do not require anything of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendments do not require anything of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendments do not require anything of anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a more precise program measurement rule.

The probable economic cost to persons required to comply with the rule will be zero because the amendments do not require anything of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendments do not require anything of anyone.

No other article, statute or code is affected by this proposed amendment.

§523.26.Program Measurement.

All programs should be measured in terms of 50-minute contact hours. The shortest recognized program should consist of one contact hour. [ ~~The purpose of this standard is to develop uniformity in the measurement of continuing education activity.~~ ] A contact hour is 50 minutes of continuous participation in a group program. Under this standard, a credit hour is granted only for each contact hour. [ ~~For example, a group program lasting 100 minutes would count for two hours; however, one lasting between 50 and 100 minutes would count only one hour.~~ ]

For continuous conferences and conventions, when individual segments are less than 50 minutes, the sum of the segments should be considered one total program. For example, five 30-minute presentations would equal 150 minutes and should be counted as three contact hours.

For university or college courses, each semester hour credit should equal 15 hours toward the requirement. A quarter hour credit should equal 10 hours.

Self-study programs should be pretested to determine average completion time. One half of the average completion time is the recommended credit to be allowed. [ ~~For example, a self-study program that takes an average of 800 minutes to complete is recommended for eight contact hours of credit.~~ ]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903417

For further information, please call: (512) 305-7848

22 TAC §523.27

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.27 concerning Credits for Instructors and Discussion Leaders. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.27 will remove an unnecessary sentence from the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a crisper rule.

The probable economic cost to persons required to comply with the rule will be zero because the amendment requires nothing of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because zero because the amendment requires nothing of anyone.

No other article, statute or code is affected by this proposed amendment.

§523.27.Credits for Instructors and Discussion Leaders.

When an instructor or discussion leader serves at a program for which participants receive credit and at a level that contributes to the instructor's or discussion leader's professional competence, credit may be given for preparation and presentation time measured in terms of credit hours. [ ~~Instructors and discussion leaders could receive credit for both preparation and presentation but not as a participant.~~ ] For the first time they present a program, they may receive credit for actual preparation hours up to two times the recommended credit hours. For repetitious presentations, the instructor may receive credit only if it can be demonstrated that the subject matter involved was changed sufficiently to require significant additional study or research. The maximum credit for preparation and presentation cannot exceed 20 hours in the reporting period.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903418

For further information, please call: (512) 305-7848

22 TAC §523.28

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.28 concerning Credits for Published Articles and Books. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.28 will remove the 20 credit hour limitation for publications, which allows the Continuing Professional Education (CPE) committee to exercise its discretion.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be that there is no limit on the amount of CPE credit hours which are potentially available for publications.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require anything of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the substance and effect of the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda G. Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendments does not require anything of anyone.

No other article, statute or code is affected by this proposed amendment.

§523.28.Credits for Published Articles and Books.

Continuing Professional Education [ ~~(CPE)~~ ] credit hours may be claimed for published articles and books provided they contribute to the professional competence of the licensee. Credit hours for preparation of such publications may be claimed up to 10 hours in any continuing professional education [ ~~CPE~~ ] reporting period. In exceptional circumstances, a licensee may submit a request to the board for additional credit not to exceed a total of 20 credit hours in the reporting period . The request should be accompanied by a copy of the article(s) or book(s) and an explanation justifying the request for additional continuing professional education [ ~~CPE~~ ] hours.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903419

For further information, please call: (512) 305-7848

22 TAC §523.29

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.29 concerning Minimum Hours Required as a Participant. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.29 will require that a maximum number of continuing professional education (CPE) hours be completed in a classroom or self-study environment.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the state is not required to do anything.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because state and local governments are not required to do anything.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the state is not required to do anything.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a rule has a maximum number of hours from classroom and self-study for participants.

The probable economic cost to persons required to comply with the rule will be zero because no one is required to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the substance and effect of the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1 1999. Comments should be addressed to Amanda G. Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because no one is required to do anything.

No other article, statute or code is affected by this proposed amendment.

Maximum [ ~~Minimum~~ ] Hours Allowed [ ~~Required~~ ] as a Participant.

A maximum [ ~~minimum~~ ] of 20 credit hours per year [ ~~50%~~ ] of the requirement provided for in §523.27 and §523.28 of this title (relating to Credits for Instructors and Discussion Leaders and Credits for Published Articles and Books ) may [ ~~must~~ ] be received from a qualified continuing professional education program in classroom instruction and/or self-study.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903420

For further information, please call: (512) 305-7848

§523.29.22 TAC §523.30

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.30 concerning Limitation for Non Technical Courses. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.30 will limit non-technical courses to a maximum of 20 hours.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require any additional services from anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment does not require any additional services from anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require any additional services from anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a rule that limits the number of non-technical continuing professional education (CPE) hours.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require any additional services from anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the substance and effect of the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda G. Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment does not require any additional services from anyone.

No other article, statute or code is affected by this proposed amendment.

§523.30.Limitation for Non-Technical [ ~~Nontechnical~~ ] Courses.

Continuing professional education (CPE) credit hours may be claimed for non-technical [ ~~nontechnical~~ ] courses limited to not more than 20 credit hours in the reporting period [ ~~50% of the annual requirement~~ ].

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903421

William Treacy

Executive Director

Texas State Board of Public Accountancy

Earliest possible date of adoption: July 25, 1999

For further information, please call: (512) 305-7848

Subchapter C. Continuing Professional Education Reporting

22 TAC §523.41

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.41 concerning Standards for Continuing Professional Education Reporting. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.41 will use more precise language.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the substance and effect of the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda G. Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment does not require anyone to do anything.

No other article, statute or code is affected by this proposed amendment.

§523.41.Standards for Continuing Professional Education [ ~~CPE~~ ] Reporting.

These standards are designed to encourage participants to document their attendance at group programs or participation in self-study programs. Evidence of completion would normally be the certificate supplied by the sponsor. Documentation by the licensee must be retained for the three current [ ~~most recent full~~ ] reporting periods.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903422

For further information, please call: (512) 305-7848

Subchapter D. Mandatory Continuing Professional Education (CPE) Program

22 TAC §523.61

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.61 concerning Establishment of Mandatory Continuing Professional Education Program. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.61 will remove an unnecessary sentence and add the Ethics course to the list of items for which a licensee is responsible.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a clearer rule.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment does not require anyone to do anything. The Board specifically invites comments from the public on the issues of whether or not the proposed rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is to be adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

The proposed amendment is proposed under the Public Accountancy Act, Texas Civil Statutes, Article 41a-1, §6(a) (Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by this proposed amendment.

§523.61. Establishment of Mandatory Continuing Professional Education [ ~~CPE~~ ] Program.

A mandatory CPE program was established pursuant to the Public Accountancy Act of 1979, Texas Civil Statutes, Article 41a-1, §6(a), which provided the board with authority to adopt a system of required continuing professional education for licensees.]

A licensee shall be responsible for ensuring that continuing professional education [ ~~CPE~~ ] credit hours claimed conform to the board's standards as outlined in §§523.21- 523.32 [ ~~523.31~~ ] of this title (relating to Program Presentation Standards; Instructors; Program Sponsors; Learning Environment; Evaluation; Program Measurement; Credits for Instructors and Discussion Leaders; Credits for Published Articles and Books; Maximum [ ~~Minimum~~ ] Hours Required as a Participant; Limitation for Non-Technical [ ~~Nontechnical~~ ] Courses; [ ~~and~~ ] Alternative Sources of Continuing Professional Education ; and Ethics Course).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903423

For further information, please call: (512) 305-7848

22 TAC §523.62

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.62 concerning Mandatory Continuing Professional Education Reporting. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.62 will change the rule caption and remove unnecessary language from the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a clearer rule.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

No other article, statute or code is affected by this proposed amendment.

§523.62. Mandatory Continuing Professional Education [ ~~CPE~~ ] Reporting.

To receive a license, a licensee shall report at a minimum, the mandatory continuing professional education [ ~~CPE~~ ] credit hours under §523.32 and §523.63 of this title (relating to Ethics Course and Mandatory Continuing Professional Education [ ~~CPE~~ ] Attendance) those credits which were accrued during the [ ~~applicable~~ ] reporting period.

A licensee shall report continuing professional education [ ~~CPE~~ ] credit hours accrued during the reporting period on the license renewal form. Appropriate instructions shall accompany the license renewal form.

The board may not grant exemptions from the requirement to report continuing professional education [ ~~CPE~~ ] credit hours accrued. A licensee must report continuing professional education [ ~~CPE~~ ] credit hours on the license renewal form, even if the number reported is zero. [ ~~A blank on the reporting form will be interpreted as a zero.~~ ]

A licensee who fails to report the minimum mandatory continuing professional education [ ~~CPE~~ ] credit hours accrued during the [ ~~applicable~~ ] reporting period will be subject to disciplinary action under §523.64 of this title (relating to Disciplinary Actions Relating to Continuing Professional Education [ ~~CPE~~ ]).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903424

For further information, please call: (512) 305-7848

22 TAC §523.63

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.63 concerning Mandatory Continuing Professional Education Attendance. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.63 will clear up and clarify some language and change the CPE exemption for CPAs who reside out of state.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anything of anyone.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be zero because the amendment does not require anything of anyone.

The probable economic cost to persons required to comply with the rule will be a clearer rule.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment does not require anything of anyone. The Board specifically invites comments from the public on the issues of whether or not the proposed rule will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is to be adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other article, statute or code is affected by this proposed amendment.

§523.63. Mandatory Continuing Professional Education [ ~~CPE~~ ] Attendance.

A licensee shall complete at least 120 hours of continuing professional education every three years. The individual shall complete at least 20 hours of continuing professional education each year.

An initial licensee, one who is paying the license fee during the first 12-month period, shall be exempt from the requirement for the period during which the applicant is first licensed.

A former licensee whose certificate or registration has [ ~~shall have~~ ] been revoked for failure to pay the license fee and who makes application for reinstatement must [ ~~shall~~ ] pay the required fees and penalties and must [ ~~shall~~ ] accrue the [ ~~minimum~~ ] continuing professional education [ ~~(CPE)~~ ] credit hours missed.

The board may [ ~~will~~ ] consider granting an exemption from the continuing professional education requirement on a case-by-case basis if:

a licensee completes and forwards to the board a sworn affidavit indicating that the licensee will not be employed during the period for which the exemption is requested. A licensee who has been granted this exemption and who re-enters the workforce shall be required to accrue continuing professional education hours missed as a result of the exemption subject to a maximum of 200 hours. Such continuing professional education hours shall be accrued from the technical area [ ~~only~~ ] as described in §523.2 and §523.32 of this title (relating to Standards for Continuing Professional Education [ ~~CPE~~ ] Program Development and Ethics Course );

a licensee completes and forwards to the board a sworn affidavit indicating no association with accounting work. The affidavit shall include, as a minimum, a brief description of the duties performed, job title, and verification by the licensee's immediate supervisor ; [ . ]

(i)

For purposes of this section, the term "association with accounting work" shall include the following:

(I)

working or supervising work performed in the areas of financial accounting and reporting; tax compliance, planning, or advice; management advisory services; data processing; treasury, finance, or audit; or

(II)

representing to the public, including an employer, that the licensee is a CPA or public accountant in connection with the sale of any services or products, including such designation on a business card, letterhead, promotional brochure, advertisement, or office; or

(III)

offering testimony in a court of law purporting to have expertise in accounting and reporting, auditing, tax, or management services; or

(IV)

for purposes of making a determination as to whether the licensee fits one of the categories listed in this subclause and subclauses (I)-(III) of this clause, the questions shall be resolved in favor of inclusion of the work as "association with accounting work."

(ii)

A licensee who has been granted this exemption and who loses the exemption shall accrue continuing professional education hours missed as a result of the exemption subject to a maximum of 200 hours. Such continuing professional education hours shall be accrued from the technical area [ ~~only~~ ] as described in §523.2 and §523.32 of this title (relating to Standards for Continuing Professional Education [ ~~CPE~~ ] Program Development and Ethics Course );

a licensee not residing in Texas [ ~~who~~ ] submits a sworn statement to the board that the licensee does not serve Texas clients from out of state. [ ~~the continuing professional education requirements for a resident of the resident jurisdiction have been met;~~ ]

(D)

a licensee shows reasons of health, certified by a medical doctor, that prevent compliance with the continuing professional education [ ~~CPE~~ ] requirement. A licensee must petition the board for the exemption and provide documentation that clearly establishes the period of disability and the resulting physical limitations;

(E)

a licensee is on extended active military duty during the period for which the exemption is requested and files a copy of orders to active military duty with the board; or

(F)

a licensee shows reason which prevents compliance that is acceptable to the board.

A licensee who has been granted the retired or disabled status under §515.8 of this title (relating to Retirement Status or Permanent Disability) is not required to accrue continuing professional education.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903425

For further information, please call: (512) 305-7848

22 TAC §523.64

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.64 concerning Disciplinary Actions Relating to Continuing Professional Education. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.64 will add the Ethics course as a part of the mandatory compliance, and clarify some language.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the amendment will be zero because the amendment does not require anyone to do anything.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendment does not require anyone to do anything.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the amendment will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be that the Ethics course is added as a part of the mandatory compliance.

The probable economic cost to persons required to comply with the amendment will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the rule does not require anyone to do anything. The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small business; if the amendment is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the amendment is to be adopted; and if the amendment is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the amendment under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other article, statute or code is affected by this proposed amendment.

§523.64. Disciplinary Actions Relating to Continuing Professional Education [ ~~CPE~~ ].

A licensee who fails to comply with the provisions of type-name="italic">§523.32 of this title (relating to Ethics Course), §523.62 of this title (relating to Mandatory Continuing Professional Education [ ~~CPE~~ ] Reporting) or §523.63 of this title (relating to Mandatory Continuing Professional Education [ ~~CPE~~ ] Attendance) may be subject to disciplinary action under the Public Accountancy Act, §§901.501-901.558, Occupations Code [ ~~of 1991, §21 (Texas Civil Statutes, Article 41a-1)~~ ], for violation of the Rules of Professional Conduct; §501.25 of this title (relating to Mandatory Continuing Professional Education), which requires compliance with §523.32 of this title (relating to Ethics Course), §523.62 of this title (relating to Mandatory Continuing Professional Education Reporting) and §523.63 of this title (relating to Mandatory Continuing Professional Education Attendance).

A licensee shall retain documents or other evidence supporting continuing professional education [ ~~CPE~~ ] credit hours claimed for the three current [ ~~most recent full~~ ] reporting periods to the date the credit hours are reported to the board, but shall submit the supporting evidence to the board [ ~~only~~ ] if such data is specifically requested.

The board may, as deemed appropriate, audit continuing professional education [ ~~CPE data~~ ] supplied by a licensee and request that all documentation [ ~~evidence supporting CPE credit hours claimed~~ ] be provided to the board within a reasonable period of time [ ~~as prescribed by the board~~ ].

Evidence of falsification, fraud, or deceit in the continuing professional education [ ~~CPE information or~~ ] documentation [ ~~supplied~~ ] may necessitate disciplinary action as authorized in the Public Accountancy Act [ ~~of 1991, §21 (Texas Civil Statutes, Article 41a-1)~~ ].

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903426

For further information, please call: (512) 305-7848

Subchapter E. Registered Continuing Education Sponsors

22 TAC §523.71

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.71 concerning Application as a Sponsor. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.71 will delete "initially".

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be a clearer rule.

The probable economic cost to persons required to comply with the rule will be zero because the amendment does not require anyone to do anything.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment does not require anyone to do anything.

No other article, statute or code is affected by this proposed amendment.

§523.71.Application as a Sponsor.

Each organization desiring to [ ~~initially~~ ] register as a provider of continuing professional education shall submit an application on forms provided by the board. This application must be complete in all respects.

The board's staff will review each application for registration and notify the applicant of its acceptance or rejection. Accepted sponsors will be assigned a sponsor number. Rejected applicants will be notified of the reason for rejection.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903427

For further information, please call: (512) 305-7848

22 TAC §523.73

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.73 concerning Obligations of the Sponsor. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.73 only adds quotation marks to the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

The probable economic cost to persons required to comply with the rule will be zero because the amendment requires nothing of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment requires nothing of anyone.

No other article, statute or code is affected by this proposed amendment.

§523.73.Obligations of the Sponsor.

In consideration for registration as a sponsor of continuing professional education, every organization shall agree, in writing, to the following : [ . ]

" We understand that after acceptance of the application or reapplication by the board we may advise prospective attendees of the program sponsor agreement, our sponsor number, and the number of credit hours recommended. We further agree that if we notify licensees of this agreement we shall do so by use of the following language. ' [ " ] We have entered into an agreement with the Texas State Board of Public Accountancy to meet the requirements of continuing professional education rules covering maintenance of attendance records, retention of program outlines, qualifications of instructors, program content, physical facilities, and length of class hours. This agreement does not constitute an endorsement by the board as to the quality of the program or its contribution to the professional competence of the licensee. ' "

" We understand that our advertising shall not be false or misleading, nor contain words such as ' [ " ] accredited ' [ " ] or ' [ " ]approved ' [ " ] or any terms which may imply that a determination has been made by the board regarding the merits or quality of the program. "

" We agree that board members, board staff, or its official designees may inspect our facilities, examine our records, attend our courses or seminars at no charge, and audit our program to determine compliance with the sponsor agreement and the continuing professional education standards of the board. "

" We understand and agree that if we fail to comply with this agreement or fail to meet acceptable standards in our programs, our sponsor agreement may be terminated at any time by the board, our sponsor agreement renewal application denied, and notice of such termination or denial may be provided to licensees by the board. "

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903428

For further information, please call: (512) 305-7848

22 TAC §523.74

The Texas State Board of Public Accountancy (Board) proposes an amendment to §523.74 concerning National Registry of Continuing Professional Education Sponsors. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The amendment to §523.74 will change "CPE" to "Continuing Professional Education" in the rule caption and in the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. The additional estimated cost to the state expected as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

B. The estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

C. The estimated loss or increase in revenue to the state as a result of enforcing or administering the rule will be zero because the amendment requires nothing of anyone.

The probable economic cost to persons required to comply with the rule will be zero because the amendment requires nothing of anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed rule will not have an adverse economic effect on small businesses because the amendment requires nothing of anyone.

No other article, statute or code is affected by this proposed amendment.

§523.74.National Registry of Continuing Professional Education [ ~~CPE~~ ] Sponsors.

The board shall accept courses offered by sponsors shown as being in good standing on the National Association of State Boards of Accountancy's National Registry of Continuing Professional Education [ ~~CPE~~ ] Sponsors; however, organizations are not required to register with the National Association of State Boards of Accountancy.

Organizations that elect to register with this board shall adhere to the obligations of the sponsor identified in §523.73 of this title (relating to Obligations of the Sponsor), and to the standards promulgated by this board.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903429

For further information, please call: (512) 305-7848

Chapter 527. Quality Review

22 TAC §527.2

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.2 concerning Purpose. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.2 will remove unnecessary and dated language from the rule.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendment will be zero because the amendment only clears up the rule's language, does not make substantive changes, and it does not require anyone to perform any additional services.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendment only clears up the rule's language, and it does not require anyone to perform any additional services.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the amendment will be zero because the amendment only clears up the rule's language, and it does not require anyone to perform any additional services.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be a rule that has clearer, more accurate language. The probable economic cost to persons required to comply with the amendment will be zero because the amendment only clears up the rule's language, and it does not require anyone to perform any additional services.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the amendment only clears up the rule's language, and it does not require anyone to perform any additional services. The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

The amendment is proposed under The Public Accountancy Act, Texas Revised Civil Statutes Annotated, Article 41a-1, §6(a)(Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act.

No other statute, code or article is affected by this proposed amendment.

§527.2.Purpose.

The purpose of the program is to monitor compliance with applicable accounting and auditing standards adopted by generally recognized standard-setting bodies. The program shall emphasize education, including appropriate [ ~~education programs or~~ ] remedial procedures which may be recommended or required where reporting does not comply with [ ~~appropriate~~ ] professional standards. In the event a firm does not [ ~~practice unit is unwilling or unable to~~ ] comply with established standards, or a firm's [ ~~practice-unit's~~ ] professional work is so inadequate [ ~~egregious~~ ] as to warrant disciplinary action, the board shall take appropriate action to protect the public interest.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903403

For further information, please call: (512) 305-7848

22 TAC §527.4

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.4 concerning Quality Review Program. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendments to §527.4 will remove some unnecessary and incorrect terms, re-word and combine the substance of two former paragraphs into one paragraph, and remove the 180 day time limit on extensions to perform the quality review.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendment will be zero because the amendments are non-substantive and do not require anyone to perform any additional activities.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendments are non-substantive and do not require anyone to perform any additional activities.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the amendment will be zero because the amendments are non-substantive and do not require anyone to perform any additional activities.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be a rule with clearer, more concise language that has no time limit on extensions. The probable economic cost to persons required to comply with the amendment will be zero because the amendments are non-substantive and do not require anyone to perform any additional activities.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the amendments are non-substantive and do not require anyone to perform any additional activities. The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other statute, code or article is affected by this proposed amendment.

§527.4.Quality Review Program.

The following operations of the program shall be conducted by the board. This section shall not require any firm to become a member of any sponsoring organization.

Applicability. Participation in the program is required of each firm [ ~~practice unit~~ ] licensed or registered with the board that [ ~~who~~ ] performs accounting and/or auditing engagements, including, but not limited to, audits, reviews, compilations, forecasts, projections, or other special reports.

Operation.

Each firm [ ~~practice unit~~ ] registered with the board shall enroll in the program of an approved sponsoring organization in accordance with paragraph (6) of this section within one year from its initial licensing date or the performance of services that require a review. The firm [ ~~practice unit~~ ] shall adopt the review due date assigned by the sponsoring organization, and must notify the board of the date within 30 days of its assignment.

It is the responsibility of the firm [ ~~practice unit~~ ] to anticipate its needs for review services in sufficient time to enable the reviewer to complete the review by [ ~~within six months after~~ ] the assigned review due [ ~~report~~ ] date.

Minimum standards. The board hereby adopts "Standards for Performing and Reporting on Peer Reviews" promulgated by the American Institute of Certified Public Accountants, Inc., as its minimum standards for review of firm [ ~~practice unit~~ ].

Oversight. The board shall appoint a Quality Review Oversight Board (QROB) whose function shall be the oversight and monitoring of sponsoring organizations for compliance and implementation of the minimum standards for performing and reporting on reviews. Oversight procedures to be followed by the QROB shall be provided for by rules promulgated by the board. Information concerning a specific firm or reviewer obtained by the QROB during oversight activities shall be confidential, and the firm's or reviewer's identity shall not be reported to the board. The QROB shall consist of three members, none of whom are current members of the board. The QROB's membership shall consist of:

one non-licensee member who shall have significant experience in the preparation and/or use of financial statements; and

two certificate or registration holders with extensive current experience in accounting and auditing services.

Compensation. Compensation of QROB members shall be set by the board.

Sponsoring organizations. Qualified sponsoring organizations shall be the SEC Practice Section (SECPS); American Institute of Certified Public Accountants (AICPA) Peer Review Program, state CPA societies fully involved in the administration of the AICPA Peer Review Program, National Conference of CPA Practitioners (NCCPAP), and such other entities which [ ~~register with and~~ ] are approved by the board [ ~~on their adherence to the quality review minimum standards~~ ].

(7)

Mergers, combinations, dissolution's, or separations. In the event that a firm is merged, otherwise combined, dissolved, or separated, the sponsoring organization shall determine which firm is considered the succeeding firm. Generally, the succeeding firm (the firm with the largest accounting and auditing practice) shall retain their peer review status and the review due date.

~~[ ~~(A)~~~~

Mergers or combinations. In the event that two or more firms are merged or sold and combined, the surviving firm shall retain the quality review and the year of the firm with the largest accounting and auditing practice.]

~~[ ~~(B)~~~~

Dissolutions or separations. In the event that a firm is divided, the new practice unit(s) shall retain the review year of the former firm. In the event that such period is less than 12 months, a review year shall be assigned so that the review occurs within 18 months of the commencement of the new firm.]

(8)

The board will [ ~~may~~ ] accept extensions [ ~~an extension, not to exceed 180 days, as~~ ] granted by the sponsoring organization to conduct a review, provided the board is notified by the firm [ ~~practice unit~~ ] within 20 days of the date that [ ~~of such~~ ] an extension is granted .

(9)

A firm that has been rejected by a sponsoring organization for whatever reason must make an application to the board and receive authorization to enroll in a program of another sponsoring organization.

(10)

A firm choosing to change to another sponsoring organization may do so provided that the firm authorizes the previous sponsoring organization to communicate to the succeeding sponsoring organization any outstanding corrective actions related to the firm's most recent review. Any outstanding actions must be cleared prior to transfer between sponsoring organizations.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903404

For further information, please call: (512) 305-7848

22 TAC §527.5

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.5 concerning Exemptions. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.5 will allow for substitution of "firm" for "practice unit" which is the correct term and requires firms to notify the Board that they have become eligible for quality review within 30 days of reaching eligibility.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendment will be zero because the amendments do not require anyone in state or local government to perform any additional services.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendments do not require anyone in state or local government to perform any additional services.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the amendment will be zero because the amendments do not require anyone in state or local government to perform any additional services.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be that the rule will have correct terms and CPA firms will inform the Board of their eligibility for quality review within 30 days of reaching eligibility. The probable economic cost to persons required to comply with the amendment will be the one-time cost to prepare and mail a letter to the Board stating their eligibility, which the Board estimates to be about $5.00.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the anticipated expense will be a one-time charge of preparing and mailing a letter to the Board, about $5.00. The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other statute, code or article is affected by this proposed amendment.

§527.5.Exemptions.

A firm [ ~~practice unit~~ ] which does not perform services as set out in §527.4(1) of this title (relating to Quality Review Program) is exempt from review and shall annually notify the board as to this status. A firm claiming an exemption shall submit a request for the exemption in writing to the board with an explanation of the services offered by the firm. A firm [ ~~practice unit~~ ] which begins providing services as set out in §527.4(1) of this title shall notify the Board of the change in status within 30 days and provide the Board with enrollment information within 12 months of the date the services were first provided and have a review within 18 months of the date the services were first provided.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903405

For further information, please call: (512) 305-7848

22 TAC §527.6

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.6 concerning exemptions. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.6 clears up some of the language, deletes subsection (c), and replaces "practice unit" with "firm."

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendment will be zero because the amendments clear up language, are not substantive and do not require anyone in state or local government to perform any services.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendments clear up language, are not substantive and do not require anyone in state or local government to perform any services.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the amendment will be zero because the amendments clear up language, are not substantive and do not require anyone in state or local government to perform any services.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be a rule with clearer, more precise language. The probable economic cost to persons required to comply with the amendment will be zero because the amendments are not substantive and do not require any additional services to be performed by anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the amendments are not substantive and do not require any additional services to be performed by anyone. The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

No other statute, code or article is affected by this proposed amendment.

§527.6.Reporting to the Board.

A firm [ ~~practice unit~~ ] which is a member of the American Institute of Certified Public Accountants (AICPA) Division for CPA Firms and [ ~~which~~ ] has had a peer review performed by [ ~~under the auspices of~~ ] the SEC Practice Section (SECPS) shall submit to the board a copy of the peer review report (the reviewer's opinion letter), letter of comments (LOC), letter of response (LOR), the conditional letter of acceptance (CLOA) if corrective action is required, and final letter of acceptance (FLOA) [ ~~(LOA)~~ ].

For all peer reviews [ ~~the first quality review~~ ] covering a peer [ ~~quality~~ ] review year, a firm [ ~~practice unit~~ ] shall submit to the board:

a copy of the report and the letter of acceptance from the sponsoring organization, if such report is unqualified; or

a copy of the report, LOC, LOR, CLOA, and FLOA [ ~~LOA~~ ] if the report is modified [ ~~qualified~~ ] in any respect or adverse.

~~[ ~~(c)~~~~

For a practice unit's second and subsequent reviews, including any review carried out on an accelerated basis as part of the corrective action taken as a result of the previous quality review, a practice unit shall submit to the board a copy of that review report LOC, LOR, and LOA.]

[ ~~(d)~~ ] If corrective action is required by the sponsoring organization after a qualified or adverse review, the firm [ ~~practice unit~~ ] shall submit to the board a copy of the final letter of acceptance (FLOA) received from the sponsoring organization. If [ ~~following corrective action~~ ] a second adverse opinion [ ~~review~~ ] is issued, the firm and the licensees involved may be subject to a hearing under the Public Accountancy Act [ ~~of 1991~~ ], Sections 21 and 22.

[ ~~(e)~~ ] Any report or document required to be submitted under subsection (b)[ , ] or (c)[ ~~, or (d)~~ ] of this section shall be filed with the board within ten days of receipt of the notice of acceptance by the sponsoring organization.

(e)

[ ~~(f)~~ ] Any document submitted to the board under subsection (b)[ , ] or (c) [ ~~, or (d)~~ ] of this section is confidential pursuant to the Public Accountancy Act [ ~~of 1991~~ ], Section 15B(c), and after review by the Quality Review Committee shall either be promptly destroyed by the board's staff, or at the instruction of the committee submitted to the enforcement staff for opening an investigation [ ~~a complaint~~ ] file relative to such submission.

(f)

[ ~~(g)~~ ] The reviewed firm or [ ~~and~~ ] sponsoring organization shall complete the Texas State Board of Public Accountancy Quality Review Compliance Reporting Form. The form shall be filed with the state board upon final acceptance of the review by the sponsoring organization. All the information requested on the form shall be provided. The firm shall complete the appropriate [ ~~Firm Information and Form Certification portion~~ ] portions of the form. The form and all required letters shall be filed with the board within ten days of receipt of the final letter of acceptance (FLOA) .[ ~~of the review, including the completion of any correction action assigned the firm.~~ ]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903406

For further information, please call: (512) 305-7848

22 TAC §527.7

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.7 concerning Retention of Documents Relating to Peer Reviews. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.7 will replace "practice unit" with "firm" and will rewrite subsection (b) for clarity.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendments will be zero because the amendments do not require anyone in state or local government to perform any additional services.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be a rule with clearer, more precise language. The probable economic cost to persons required to comply with the amendment will be zero because the amendments are not substantive and do not require any additional services to be performed by anyone.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

No other statute, code or article is affected by this proposed amendment.

§527.7.Retention of Documents Relating to Peer [ ~~Quality~~ ] Reviews.

Each reviewer shall maintain in the files all documentation necessary to establish that each review conformed to the review standards of the relevant review program, including the review working papers, copies of the review report, any comment letters, and any correspondence indicating the firm's [ ~~practice unit's~~ ] concurrence, non-concurrence, and any proposed remedial actions and any related implementation.

The documents described in subsection (a) of this section shall be retained in the reviewer's office for a period of time corresponding to the retention period of the [ ~~relevant~~ ] sponsoring organization , and[ , ] upon request of the Quality Review Oversight Board, shall be made available[ ~~to it~~ ]. In no event shall the retention period be less than 90 days from the date of acceptance of the review by the sponsoring organization.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 1999.

TRD-9903407

For further information, please call: (512) 305-7848

22 TAC §527.8

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.8 concerning Oversight Procedures to be Followed by the Quality Review Oversight Board. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.8 will use the correct American Institute of Certified Public Accountants ("AICPA") program's name, replace "quality" review with "peer" review and identify the Public Oversight Board as being an AICPA program.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendment will be zero because the amendments are not substantive and do not require anyone in state or local government to perform any additional services.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendments are not substantive and do not require anyone in state or local government to perform any additional services.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the amendment will be zero because the amendments are not substantive and do not require anyone in state or local government to perform any additional services.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be a rule that is clearer and has the correct names for the AICPA's programs. The probable economic cost to persons required to comply with the amendment will be zero because the amendments are not substantive and do not require anyone to perform any services.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small business; if the rule is believed to have such an effect, then how may the Board legally and feasibly reduce that effect considering the purpose of the statute under which the rule is adopted; and if the rule is believed to have such an effect, how the cost of compliance for a small business compares with the cost of compliance for the largest business affected by the rule under any of the following standards: (a) cost per employee; (b) cost for each hour of labor; or (c) cost for each $100 of sales. See Texas Government Code, §2006.002(c).

The amendment is proposed under The Public Accountancy Act, Texas Revised Civil Statutes Annotated, Article 41a-1, §6(a) (Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act.

No other statute, code or article is affected by this proposed amendment.

§527.8.Oversight Procedures to be Followed by the Quality Review Oversight Board.

The purpose of the quality Review Oversight Board (QROB) shall consist of the following:

monitoring sponsoring organizations to provide reasonable assurance that peer [ ~~quality~~ ] reviews are being conducted and reported on in accordance with peer [ ~~quality~~ ] review minimum standards;

reviewing the policies and procedures of sponsoring organization applicants as to their conformity with the peer [ ~~quality~~ ] review minimum standards; and

The oversight procedures to be performed by the QROB in monitoring of sponsoring organizations shall consist of the following.

Where the sponsoring organization is the AICPA Peer [ ~~Quality~~ ] Review Program or other approved sponsoring organizations other than the SEC Practice Section (SECPS), the QROB shall perform the following functions.

During such visits, the QROB shall:

(i)

meet with the organization's peer [ ~~quality~~ ] review committee during the committee's consideration of peer [ ~~quality~~ ] review documents;

(ii)

review the organization's procedures for administering the peer [ ~~quality~~ ] review program;

(iii)

review, on the basis of a random selection, a number of on-site and off-site reviews performed by the organization to include, at a minimum, a review of the report on the peer [ ~~quality~~ ] review, the letter of comments (if any), the firm's response to the matters discussed in the letter of comments, the sponsoring organization's letter of acceptance outlining any additional corrective or monitoring procedures, and the working papers on the selected reviews; the purpose of review by the QROB is to determine whether the reviews are being conducted and reported on in accordance with the peer [ ~~quality~~ ] review minimum standards; and

(iv)

expand the review of peer [ ~~quality~~ ] review documents if significant deficiencies, problems, or inconsistencies are encountered during the review of the materials.

Where the sponsoring organization is the SECPS, the QROB shall review the published annual report of the Public Oversight Board of the AICPA and conclude whether the procedures carried out by the Public Oversight Board of the AICPA and the disclosures contained in the annual report are indicative of an acceptable level of oversight. Based on the results of its review, the QROB shall make an annual recommendation to the board as to the continuing qualifications of the SECPS as an approved sponsoring organization.

In the reviewing of policies and procedures of sponsoring organization applicants, the QROB shall perform the following procedures:

review the policies as drafted by the applicant to determine that they will provide reasonable assurance of conforming with the minimum standards for peer [ ~~quality~~ ] reviews;

review the procedures as proposed by the applicant to determine that they will insure the following:

(A)-(D)

applicant has provided for an independent report acceptance body that meets the standards for peer [ ~~quality~~ ] review; the report acceptance body shall consider and accept the results of the review; the report acceptance body should also require corrective actions of firms with significant deficiencies noted in the review process;

(E)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903408

For further information, please call: (512) 305-7848

22 TAC §527.9

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.9 concerning Procedures for a Sponsoring Organization. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.9 replaces "quality" review with "peer" review.

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

A. the additional estimated cost to the state and to local governments expected as a result of enforcing or administering the amendment will be zero because the amendment does not require anyone in state or local government to perform any services.

B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be zero because the amendment does not require anyone in state or local government to perform any services.

C. the estimated loss or increase in revenue to the state or to local governments as a result of enforcing or administering the amendment will be zero because the amendment does not require anyone in state or local government to perform any services.

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be that the rule will use peer review, which is the correct term. The probable economic cost to persons required to comply with the amendment will be zero because the amendment does not require anyone to perform any additional services.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the amendment does not require anyone in state or local government to perform any services.

The amendment is proposed under The Public Accountancy Act, Texas Revised Civil Statutes Annotated, Article 41a-1, §6(a) (Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act.

No other statute, code or article is affected by this proposed amendment.

§527.9.Procedures for a Sponsoring Organization.

To qualify as a sponsoring organization, an entity must submit a peer [ ~~quality~~ ] review administration plan to the board for review and approval by the Quality Review Oversight Board (QROB). The plan of administration must:

establish a peer [ ~~quality~~ ] review report committee (PRRC) [ ~~(QRRC)~~ ] and subcommittees as needed, and provide professional staff as needed for the operation of the peer [ ~~quality~~ ] review program;

establish a program to communicate to firms participating in the peer [ ~~quality~~ ] review program the latest developments in peer [ ~~quality~~ ] review standards and the most common findings in the peer [ ~~quality~~ ] reviews conducted by the sponsoring organization;

establish procedures for resolving any disagreement, which may arise out of the performance of a peer [ ~~quality~~ ] review;

establish procedures to resolve matters which may lead to the dismissal of a firm from the peer [ ~~quality~~ ] review program, and conduct hearings pursuant to those procedures;

require the maintenance of records of peer [ ~~quality~~ ] reviews conducted under the program in accordance with the records retention rules of the AICPA; and

(7)

provide for periodic reports to the QROB on the results of the peer [ ~~quality~~ ] review program.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903409

For further information, please call: (512) 305-7848

22 TAC §527.10

The Texas State Board of Public Accountancy (Board) proposes an amendment to §527.10 concerning Peer Review Report Committee. This amendment is the result of the Rule Review required by Rider 167 of the General Appropriations Act of 1997.

The proposed amendment to §527.10 replaces "quality" review with "peer" review, replaces "his" state with "any" state, makes a couple of language corrections, and removes the prohibition that a person who serves on the ethic's committee of a state accountancy board or a state society could not also serve on the Board's Peer Review Report Committee ("PRRC").

William Treacy, Executive Director of the Board, has determined that for the first five-year period the proposed amendment will be in effect:

Mr. Treacy has determined that for the first five-year period the amendment is in effect the public benefits expected as a result of adoption of the proposed rule will be that the rule will be easier to understand and a class of persons will now be eligible for consideration for being on the PRRC. The probable economic cost to persons required to comply with the amendment will be zero because the amendments do not require anyone to perform any services.

Mr. Treacy has determined that a Local Employment Impact Statement is not required because the proposed amendment will not affect a local economy.

The Board requests comments on the proposed amendment from any interested person. Comments must be received at the Board no later than noon on July 1, 1999. Comments should be addressed to Amanda Birrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701 or faxed to her attention at (512) 305-7854.

Mr. Treacy has determined that the proposed amendment will not have an adverse economic effect on small businesses because the amendments do not require anyone to perform any services.

The amendment is proposed under The Public Accountancy Act, Texas Revised Civil Statutes Annotated, Article 41a-1, §6(a) (Vernon Supp. 1998), which authorizes the Board to adopt rules deemed necessary or advisable to effectuate the Act.

No other statute, code or article is affected by this proposed amendment.

Peer [ ~~Quality~~ ] Review Report Committee.

A peer [ ~~quality~~ ] review report committee (PRRC) [ ~~(QRRC)~~ ] is comprised of CPAs practicing public accountancy and formed by a sponsoring organization for the purpose of accepting peer [ ~~quality~~ ] review reports submitted by firms on peer [ ~~quality~~ ] review engagements.

Each member of a PRRC [ ~~QRRC~~ ] must be active in the practice of public accountancy at a supervisory level in the accounting or auditing function while serving on the committee. The member's firm must be enrolled in an approved practice-monitoring program and have received an unqualified report on its most recently completed peer [ ~~recent quality~~ ] review. A majority of the committee members must satisfy the qualifications required of on-site peer review team captains as established and reported in the AICPA Standards for Performing and Reporting on Peer Reviews, paragraph 92 [ 76 ].

Each member of the PRRC [ ~~QRRC~~ ] must be approved for appointment by the governing body of the sponsoring organization.

In determining the size of the PRRC [ ~~QRRC~~ ], the requirement for broad industry experience, and the likelihood of some members needing to recuse themselves during the consideration of some reviews as a result of the members' close association to the firm or having performed the review, shall be considered.

No more than one PRRC [ ~~QRRC~~ ] member may be from the same firm.

The PRRC [ ~~QRRC~~ ] members' terms shall be staggered to provide for continuity and should not exceed three years, subject to annual review, except for the governing body's appointment of the committee's chair or for filling a vacancy on the committee.

A PRRC [ ~~QRRC~~ ] member may not concurrently serve as:

a member of any [ ~~his~~ ] state's board of accountancy; or

a member of any [ ~~his~~ ] state's CPA society's ethics committee.

(7)

A PRRC [ ~~QRRC~~ ] member may not participate in any discussion or have any vote with respect to a reviewed firm when the committee member lacks independence as defined in §501.11 of this title (relating to Independence) or has a conflict of interest. Examples of conflicts of interest include, but are not limited to:

the member's firm has performed the most recent peer [ ~~quality~~ ] review of the reviewed firm's accounting and auditing practice;

the member served on the review team, which performed the current or the immediately preceding review of the enrolled firm;

~~[(C)~~

~~the member serves on the state board of accountancy or state society ethics committee of any state in which any office of the enrolled firm is located; and]~~

[ ~~(D)~~ ] the member believes he cannot be impartial or objective.

(8)

Each PRRC [ ~~QRRC~~ ] member must comply with the confidentiality requirements of §15B(c) of the Public Accountancy Act [ ~~of 1991~~ ]. The sponsoring organization may annually require its PRRC [ ~~QRRC~~ ] members to sign a statement acknowledging their appointments and the responsibilities and obligations of their appointments.

(9)

A PRRC [ ~~QRRC~~ ] decision to accept a report must be made by not fewer than three members who satisfy the above criteria.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 9, 1999.

TRD-9903410