TITLE 22.EXAMINING BOARDS

Part 22. TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY

Chapter 501. RULES OF PROFESSIONAL CONDUCT

Subchapter A. GENERAL PROVISIONS

22 TAC §501.53

The Texas State Board of Public Accountancy adopts an amendment to §501.53 concerning Applicability of Rules of Professional Conduct with a slight grammatical change to the proposed text as published in the November 30, 2001 issue of the Texas Register (26 TexReg 9732). The change is in paragraph (5) in which a semicolon is added to the end of the sentence. Because this change is editorial rather than substantive, public action is not required.

The amendment allows the Board to remove language from Rule 501.53 that is no longer referenced by the Public Accountancy Act, due to amendments to the Act.

The amendment will function by allowing the Board to administer its rule properly in accordance with the provisions of the Public Accountancy Act as amended. As a result of enforcing this rule, extraneous language in the rule will have no further effect.

No comments were received regarding adoption of the rule.

The amendment is adopted under the Public Accountancy Act, Tex. Occupations Code, Section 901.151 (Vernon 2001) which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

§501.53.Applicability of Rules of Professional Conduct.

(a) All of the rules of professional conduct shall apply to and must be observed by a certificate or registration holder engaged in the client practice of public accountancy.

(b) No certificate or registration holder shall issue, or otherwise be associated with, financial statements that do not conform to the accounting principles described in Section 501.61 of this title (relating to Accounting Principles).

(c) The following rules of professional conduct shall apply to and be required to be observed by certificate or registration holders when not employed in the client practice of public accountancy:

(1) Section 501.73 of this title (relating to Integrity and Objectivity);

(2) Section 501.74 of this title (relating to Competence);

(3) Section 501.77 of this title (relating to Acting through Others);

(4) Section 501.90 of this title (relating to Discreditable Acts);

(5) Section 501.91 of this title (relating to Reportable Events);

(6) Section 501.92 of this title (relating to Frivolous Complaints);

(7) Section 501.93 of this title (relating to Responses); and

(8) Section 501.94 of this title (relating to Mandatory Continuing Education Reporting).

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 17, 2002.

TRD-200200257

William Treacy

Executive Director

Texas State Board of Public Accountancy

Effective date: February 6, 2002

Proposal publication date: November 30, 2001

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


Subchapter E. RESPONSIBILITIES TO THE BOARD/PROFESSION

22 TAC §501.93

The Texas State Board of Public Accountancy adopts an amendment to §501.93, concerning Responses with a change to the proposed text as published in the November 30, 2001, issue of the Texas Register (26 TexReg 9733). The change is in subsection (d) in which the following sentence should be added to the end of the sentence, "Any such party may seek a protective order concerning the place of deposition on grounds stated in Texas Rule of Civil Procedure 192.6." Because this change is more liberal than the rule proposed, the Board did not re-notice the rule.

The amendment allows and makes explicit the Board's authority to depose a party to a contested case at the Board's offices in Austin, Texas as set out in the Texas Rules of Civil Procedure for civil cases.

The amendment will function by allowing the Board to depose a party to a contested case at the Board's offices in Austin, Texas.

One comment was received regarding adoption of the rule. The commenter alleged that the Board's proposed amendment to Rule 501.93 directly contradicts Section 2001.096 of the Administrative Procedure Act ("APA"), which describes where depositions may be taken in a contested administrative case. In response, the Board notes that Section 2001.001 of the APA states that the APA sets minimum standards of procedure. The State Office of Administrative Hearings ("SOAH") promulgates its own set of procedural rules that supplement the APA and control in contested cases falling within its jurisdiction, as the Board's contested cases do. However, SOAH's rules are silent regarding deposition locations; therefore, the Board may itself supplement the APA's provisions regarding deposition locations.

In support of the Board's authority to supplement Section 2001.096 of the APA, Texas Rule of Civil Procedure 199.2(b)(2)(c) permits the deposition of a party to a civil case in the county of suit. The Board's contested cases are initiated and completed in Travis County in Austin, Texas. Where SOAH's Rules are silent, the Texas Rules of Civil Procedure are often used by SOAH to determine the proper procedural result in a contested case. Therefore, the Board's reliance on the Texas Rules of Civil Procedure in the adoption of the amendment to Rule 501.93 is in keeping with this custom.

The commenter also alleged that depositions of parties to contested cases taken in Austin, Texas would create undue financial hardship for licensees so deposed. In response, the Board notes that parties to civil litigation routinely bear such costs. In addition, the cost of a deposition, wherever the location, is a cost that must be shouldered by both parties to a case. Therefore, no undue financial hardship will be imposed against licensees by the Board's adoption of the amendment to Rule 501.93.

In considering the rule and this comment, the Board decided that it should also expressly incorporate the protections afforded litigants in Texas Rule of Civil Procedure 192.6. Therefore, a party who can show harassment, undue burden, or annoyance among other things, may not be subject to deposition in Austin.

The amendment is adopted under the Public Accountancy Act, Tex. Occupations Code, Section 901.151 (Vernon 2001) which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

§501.93.Responses.

(a) An applicant, certificate or registration holder shall substantively respond in writing to any communication from the board requesting a response, within 30 days of the mailing of such communication by registered or certified mail to the last address furnished to the board by the applicant, certificate or registration holder.

(b) Failure to respond substantively to written board communications, or failure to furnish requested documentation and/or working papers, constitutes conduct indicating lack of fitness to serve the public as a professional accountant.

(c) Each applicant, certificate holder and each person required to be registered with the board under the Act shall notify the board, in writing, of any and all changes in such person's mailing address and the effective date thereof within 30 days before or after such effective date.

(d) An applicant, certificate or registration holder who is a party to a contested case in a disciplinary action brought by the board may be deposed at the board's offices in Austin, Texas. Any such party may seek a protective order concerning the place of deposition on grounds stated in Texas Rule of Civil Procedure 192.6.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 17, 2002.

TRD-200200262

William Treacy

Executive Director

Texas State Board of Public Accountancy

Effective date: February 6, 2002

Proposal publication date: November 30, 2001

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