PART 22. TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY
CHAPTER 501. RULES OF PROFESSIONAL CONDUCT
SUBCHAPTER C. RESPONSIBILITIES TO CLIENTS
The Texas State Board of Public Accountancy (Board) proposes an amendment to §501.71, concerning Receipt of Commissions and Other Compensation.
The amendment to §501.71 will add language that permits CPAs to provide an estimate of the amount of the CPAs commission for services or products recommended or sold by him when the exact amount is unknown.
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 none.
B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be none.
C. the estimated loss or increase in revenue to the state as a result of enforcing or administering the amendment will be none.
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 better understanding of the CPAs required disclosure of commissions and other compensations.
The probable economic cost to persons required to comply with the amendment will be insignificant.
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 amendment does not impose any duties or obligations upon small businesses.
Mr. Treacy has determined that an Economic Impact Statement and a Regulatory Flexibility Analysis are not required because the proposed amendment will not adversely affect small or micro businesses.
The Board requests comments on the substance and effect of the proposed rule from any interested person. Comments must be received at the Board no later than noon on February 23, 2008. Comments should be addressed to J. Randel (Jerry) Hill, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower 3, Suite 900, Austin, Texas 78701 or faxed to his 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 businesses; if the proposed rule is believed to have an adverse effect on small businesses, estimate the number of small businesses believed to be impacted by the rule, describe and estimate the economic impact of the rule on small businesses, offer alternative methods of achieving the purpose of the rule; then explain how the Board may legally and feasibly reduce that adverse effect on small businesses considering the purpose of the statute under which the proposed rule is to be adopted; finally describe how the health, safety, environmental and economic welfare of the state will be impacted by the various proposed methods. 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.
§501.71.Receipt of Commissions and Other Compensation.
(a) A person shall not for a commission recommend or refer to a client any product or service or refer any product or service to be supplied to a client, or receive a commission, when the person also performs services for that client requiring independence under §501.70 of this chapter (relating to Independence).
(b) This prohibition applies during the period in which the person is engaged to perform any of the services requiring independence and during the period covered by any of the historical financial statements involved in such services requiring independence.
(c) A person who receives or agrees to receive, pays
or agrees to pay,[;] other compensation with
respect to services or products recommended, referred, or sold by
him shall, no later than the making of such recommendation, referral,
or sale, disclose [make the following disclosures]
in writing[:]
[(1)][if a client,] the nature,
source, and amount, or an estimate of the amount when the amount
is not known, of all such other compensation.[; or]
[(2) if not a client, the nature and
source of any such other compensation.]
(d) The disclosure shall be made regardless of the amount of other compensation involved.
(e) This section does not apply to payments received from the sale of all, or a material part, of an accounting practice, or to retirement payments.
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 8, 2009.
TRD-200900077
J. Randel (Jerry) Hill
General Counsel
Texas State Board of Public Accountancy
Earliest possible date of adoption: February 22, 2009
For further information, please call: (512) 305-7842
The Texas State Board of Public Accountancy (Board) proposes an amendment to §518.3, concerning Violation of a Cease and Desist Order.
The amendment to §518.3 will provide language in our rules to seek an injunction in court to expedite our efforts to stop the unlawful activity by those who violate cease and desist orders.
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 none.
B. the estimated reduction in costs to the state and to local governments as a result of enforcing or administering the amendment will be none.
C. the estimated loss or increase in revenue to the state as a result of enforcing or administering the amendment will be none.
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 expediting the enforcement of the Act by allowing the option of an injunction for the protection of the public.
The probable economic cost to persons required to comply with the amendment will be insignificant.
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 amendment does not impose any duties or obligations upon small businesses.
Mr. Treacy has determined that an Economic Impact Statement and a Regulatory Flexibility Analysis are not required because the proposed amendment will not adversely affect small or micro businesses.
The Board requests comments on the substance and effect of the proposed rule from any interested person. Comments must be received at the Board no later than noon on February 23, 2008. Comments should be addressed to J. Randel (Jerry) Hill, General Counsel, Texas State Board of Public Accountancy, 333 Guadalupe, Tower 3, Suite 900, Austin, Texas 78701 or faxed to his 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 businesses; if the proposed rule is believed to have an adverse effect on small businesses, estimate the number of small businesses believed to be impacted by the rule, describe and estimate the economic impact of the rule on small businesses, offer alternative methods of achieving the purpose of the rule; then explain how the Board may legally and feasibly reduce that adverse effect on small businesses considering the purpose of the statute under which the proposed rule is to be adopted;, finally describe how the health, safety, environmental and economic welfare of the state will be impacted by the various proposed methods. 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.
§518.3.Violation of a Cease and Desist Order.
(a) Whenever the board, through its Executive Director, determines that a person subject to a cease and desist order issued by the board has violated that order, the board, through its Executive Director, after notice and an opportunity for a hearing, may assess an administrative penalty, after consulting with the board's presiding officer, against the person in violation in accordance with the guidelines contained in §518.4 of this title (relating to Administrative Penalty Guidelines for Violations of Cease and Desist Orders) and Subchapter L of the Texas Public Accountancy Act, as amended.
(b) The board staff acting through the Executive Director will offer the person found in violation of a cease and desist order an agreed consent order.
(1) The agreed consent order will act as the preliminary report as required by §901.553 of the Act, including findings of fact to support the administrative penalty as well as the amount of the penalty to be imposed.
(2) Board staff will advise the person found in violation of a cease and desist order that he has 20 days to either sign the agreed consent order or to request a hearing in writing, as required by §901.554 of the Act.
(3) If the person found to be in violation of a cease and desist order signs the agreed consent order, then the agreed consent order will be presented to the board for its consideration. If the board ratifies the agreed consent order, then it will issue a board order.
(c) If the board, through its Executive Director, determines that a person subject to a cease and desist order issued by the board has violated that order, the board, through its Executive Director and after consulting with the board's presiding officer, may seek to enjoin the person in violation in state district court.
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 8, 2009.
TRD-200900078
J. Randel (Jerry) Hill
General Counsel
Texas State Board of Public Accountancy
Earliest possible date of adoption: February 22, 2009
For further information, please call: (512) 305-7842