Part 22.
TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY
Chapter 501.
RULES OF PROFESSIONAL CONDUCT
Subchapter C. RESPONSIBILITIES TO CLIENTS
22 TAC §501.72
The Texas State Board of Public Accountancy (Board) proposes
an amendment to §501.72, concerning Contingency Fees.
The amendment to §501.72 will define the term "testifying accounting
expert." By adoption of an interpretive comment, the amendment clarifies how
a "consulting accounting expert" may become a "testifying accounting expert"
and, further, that an accounting expert may not accept contingent fees for
part of an engagement and a set fee for part of the same engagement.
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.
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.
C. the estimated loss or increase in revenue to the state as a result of
enforcing or administering the amendment will be zero.
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 improvement in the public understanding of how
to determine whether an accounting expert is performing as a testifying accounting
expert or a consulting accounting expert; furthermore, that testifying accounting
experts are not permitted to accept contingent fee arrangements, either in
whole or in part for an engagement.
The probable economic cost to persons required to comply with the amendment
will be zero.
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 February 25, 2005. Comments should be addressed to Rande
Herrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe,
Tower 3, 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 determination of whether
an accounting expert is consulting or testifying is based on the factual circumstances
of that expert's activities and the procedural rules of the forum in which
the expert's conclusions are to be used. The proposed amendment places no
greater burden on the small business choosing to engage an accounting expert
but merely delineates when a consulting expert becomes a testifying expert.
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).
The amendment is proposed under the Public Accountancy Act ("Act"),
Texas Occupations Code, §901.151 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.
§501.72.Contingency Fees.
(a) - (b)
(No change.)
(c)
A certificate or registration holder shall not perform
an engagement as a testifying accounting expert for a contingent fee.
A testifying accounting expert is one that at any time during the preceding
becomes subject to disclosure and discovery under the procedural rules of
the forum where the matter for which his services were engaged is pending.
(d) - (e)
(No change.)
(f)
Interpretive Comment: A consulting accounting
expert may become a testifying accounting expert when the client for whom
he is working makes his work available to a testifying expert. A consulting
accounting expert who is working on a contingent fee basis should work closely
with his client to insure that he does not inadvertently become a testifying
expert through the actions of his client. An accounting expert may not accept
a contingent fee for part of an engagement and a set fee for part of the same
engagement. A consulting accounting expert who becomes a testifying expert
may not accept a contingent fee for the part of his work done as a consultant,
but must be compensated on a set fee basis for all of the work performed on
the same engagement. A consulting accounting expert who enters into a contingent
fee engagement should reach an agreement, preferably in writing, with the
client as to how he will be compensated should he become a testifying expert
prior to beginning the engagement.
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 January 12, 2005.
TRD-200500143
Rande Herrell
General Counsel
Texas State Board of Public Accountancy
Earliest possible date of adoption: February 27, 2005
For further information, please call: (512) 305-7848
22 TAC §505.10
The Texas State Board of Public Accountancy (Board) proposes
an amendment to §505.10 concerning Board Committees.
The amendment to §505.10 will clarify the status of each of the Board's
standing committees as either policy-making or working; further, that committees
designated as working committees serve to make recommendations to the board's
policy-making committees concerning changes in the rules, opinions, and policies
related to the functional area supervised by the working committee. The amendment
further clarifies that the Executive Committee shall also be the board's audit
committee; and that the technical standards review committee and the major
case enforcement committee are given the responsibility to make recommendations
to the Board's policy-making committees concerning proposal changes in Board
rules, opinions and policy related to technical standards and major case enforcement.
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.
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.
C. the estimated loss or increase in revenue to the state as a result of
enforcing or administering the amendment will be zero.
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: clarification of each standing committee's status
as either a working or policy-making committee; clarification that the technical
standards review committee and major case enforcement committee are given
the responsibility to make recommendations to the Board's policy-making committees
concerning proposal changes in Board rules, opinions and policy related to
technical standards and major case enforcement; and finally, this amendment
will further ensure that, in accordance with the Public Accountancy Act, only
Board members serve on policy-making committees.
The probable economic cost to persons required to comply with the amendment
will be zero in that persons serving on the affected committees will suffer
no increased costs.
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 February 25, 2005. Comments should be addressed to Rande
Herrell, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe,
Tower 3, 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 proposed amendment
does not have any adverse economic effects.
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).
The amendment is proposed under the Public Accountancy Act ("Act"),
Texas Occupations Code, §901.151 which authorizes the Board to adopt
rules deemed necessary or advisable to effectuate the Act and §901.1525
of the Public Accountancy Act which authorizes the Board to have working committees
and policy-making committees.
No other article, statute or code is affected by this proposed amendment.
§505.10.Board Committees.
(a) - (d)
(No change.)
(e)
Standing committee structure and charge to committees.
The standing committees shall consist of
policy-making committees and
working committees comprised of
the following individuals and shall
be charged with the following responsibilities.
(1)
The executive committee shall be
a policy-making committee
comprised of the board's presiding officer, assistant presiding officer,
secretary, treasurer, immediate past presiding officer of the board if still
serving on the board, and at least one other officer elected by the board.
The Executive Committee shall also be the board's audit committee.
The
executive committee may act on behalf of the full board in matters of urgency,
or when a meeting of the full board is not feasible; the executive committee's
actions are subject to full board ratification at its next regularly scheduled
meeting. The functions of the executive committee shall be to advise, consult
with, and make recommendations to the board concerning matters requested by
the board's presiding officer, including:
(A) - (H)
(No change.)
(2)
The continuing professional education committee shall be
a working committee
comprised of at least two board members, one of
whom shall serve as chair, assisted by at least two non-board members who
shall serve in an advisory capacity. The committee shall make recommendations
to the board regarding:
(A)
(No change.)
[(B)
proposed changes in board rules, opinions,
and policies related to the mandatory continuing professional education program
as it relates to licensees and to relations with sponsors of continuing professional
education;]
(B)
[
(C)
[
(D)
[
(E)
make recommendations to the board's policy-making
committees (the executive committee and the rules committee) concerning proposed
changes in board rules, opinions, and policies related to the mandatory continuing
professional education program as it relates to licensees and to relations
with sponsors of continuing professional education.
(3)
The qualifications committee shall be
a working committee
comprised of at least two board members, one of whom shall serve as
chair, assisted by at least two non-board members who shall serve in an advisory
capacity. The committee shall make recommendations to the board regarding:
(A) - (D)
(No change.)
(E)
make recommendations to the board's policy-making
committees (the executive committee and the rules committee) concerning
proposed
changes in board rules, opinions, and policies relating to the qualifications
process.
(4)
The licensing committee shall be
a working committee
comprised of at least two board members, one of whom shall serve as
chair, assisted by at least two non-board members who shall serve in an advisory
capacity. The committee shall make recommendations to the board regarding:
(A) - (B)
(No change.)
(C)
make recommendations to the board's policy-making
committees (the executive committee and the rules committee) concerning
proposed
changes in board rules, opinions, and policies as they relate to the licensing
process.
(5)
The behavioral enforcement committee shall be
a working
committee
comprised of at least two board members, one of whom shall
serve as chair, assisted by at least two non-board members who shall serve
in an advisory capacity. The committee shall:
(A) - (B)
(No change.)
(C)
make recommendations to the
board's policy-making
committees (the executive committee and the rules committee)
[
(6)
The technical standards review committee shall be
a working committee
comprised of at least two board members, one of
whom shall serve as chair, assisted by at least three non-board members who
shall serve in an advisory capacity. The committee shall:
(A)
study complaints from any source involving suspected violations
of the technical standards included in the rules and shall make recommendations
to the board as appropriate; [
(B)
follow up on board orders to insure that certificate or
registration holders and others adhere to sanctions prescribed by or agreements
with the board
; and
[
(C)
make recommendations to the board's policy-making
committees (the executive committee and the rules committee) concerning proposed
changes in board rules, opinions, and policies related to enforcement of technical
standards.
(7)
The peer review committee shall be
a working committee
comprised of at least two board members, one of whom shall serve as
chair, assisted by at least two non-board members who shall serve in an advisory
capacity. The committee shall:
(A) - (B)
(No change.)
(C)
make recommendations to the
board's policy-making
committees (the executive committee and the rules committee) concerning
[
(8)
The board rules committee shall be
a policy-making
committee
comprised of at least three board members, one of whom shall
serve as chair. The committee shall make recommendations to the board
concerning the board's rules, opinions and policies
[
(9)
The major case enforcement committee shall be
a working
committee
comprised of at least two board members, one of whom shall
serve as chair, assisted by at least two non-board members who shall serve
in an advisory capacity. At least one committee member shall be a public member
of the board. The committee shall make recommendations to the board regarding
legal matters on litigation or potential litigation, and other major cases
to which the board is a party.
The committee shall make recommendations
to the board's policy-making committees (the executive committee and the rules
committee) concerning proposed changes in board rules, opinions, and policies
related to major case enforcement.
The committee shall have the authority
to act on behalf of the board in instances where disclosure of facts to the
full board could cause the board's objectivity to be jeopardized, subject
to final approval by the board. The board shall have [
(10)
The peer assistance oversight committee shall be
a working committee
comprised of at least two board members, one of
whom shall serve as chair, assisted by at least two non-board members who
shall serve in an advisory capacity. The committee shall oversee the peer
assistance program administered by the Texas Society of Certified Public Accountants
as required under the Texas Health and Safety Code, Chapter 467.001(B), and
insure that the minimum criteria as set out by the Texas Commission on Alcohol
and Drug Abuse are met. It shall make recommendations to the board and the
TSCPA regarding modifications to the program and, if warranted, refer cases
to other board committees for consideration of disciplinary or remedial action
by the board. The committee shall report to the board on a quarterly basis,
by case number, on the status of the program.
(11)
The constructive enforcement committee shall be
a working committee
comprised of at least two board members, one of
whom shall serve as chair, assisted by non-board CPA members who shall also
serve as investigators. At least one Committee member shall be a public member
of the board. The committee shall approve the constructive enforcement program,
coordinate its activities with board committees and staff, and supervise the
training of committee members. A staff attorney of the board shall supervise
the day to day administration of the constructive enforcement program and
activities of the committee's non-board members on behalf of the committee
chairman. The committee shall:
(A) - (D)
(No change.)
(E)
make recommendations to the
board's policy-making
committees (the executive committee and the rules committee)
[
(f) - (h)
(No change.)
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 January 12, 2005.
TRD-200500144
Rande Herrell
General Counsel
Texas State Board of Public Accountancy
Earliest possible date of adoption: February 27, 2005
For further information, please call: (512) 305-7848
Chapter 505.
THE BOARD
(C)
] investigations of sponsor compliance
with the terms of the sponsor agreements, including the related recordkeeping
requirements;
(D)
] the results of monitoring continuing
professional education courses for the purpose of evaluating the facilities,
course content as presented, and the adequacy of the course presenter(s);
[
and
]
(E)
] any significant deficiencies
observed in carrying out subparagraphs
(B)
[
(C)
] and
(C)
[
(D)
] of this paragraph
; and
[
.
]
board
] concerning proposed changes in board rules, opinions, and policies
related to the behavioral restraints of the rules and the Act.
and
]
.
]
board with regard to
] proposed changes in board rules, opinions, and
policies relating to the
peer
[
quality
] review program.
and propose
changes regarding board rules
]. All
working
committees shall
refer
[
endeavor to consult with the board rules committee concerning
] proposed
changes to the board's rules, opinions and policies
to the rules committee for consideration for recommendation to the board
[
rules
].
sole
] authority
to determine whether cases shall be heard by the major case enforcement committee
or other enforcement committee.
board
] concerning proposed changes in board rules, opinions, and policies
relating to the constructive enforcement program.