Rule 1DEFINITIONS1.1 ACT, BOARD, STATE, EXAMINATION, PRONOUNS Throughout these Rules, the "Public Accountancy Act of 1975, as amended," codified as A.C.A. § 17-12-101 et seq., may be referred to as "the Act" and the Board of Public Accountancy as "the Board;" "this State" refers to the State of Arkansas; "examination" means the examination required for a certificate as a Certified Public Accountant prescribed by A.C.A. § 17-12-301 et seq.; and masculine terms shall include the feminine and, when the context requires, shall include partnerships, limited liability companies and corporations.
1.2 CLIENT The person or entity which retains a licensee for the performance of professional services.
1.3 FINANCIAL STATEMENTS Financial statements are statements and footnotes related thereto that purport to show actual or anticipated financial position which relates to a point in time or changes in financial position which relate to a period of time, including statements which use a cash or other comprehensive basis of accounting. The term includes balance sheets, statements of income, statements of changes in comprehensive income, statements of retained earnings, statements of cash flows and statements of changes in owners' equity, but does not include incidental financial data included in management advisory services reports to support recommendations to a client, nor does it include tax returns and supporting schedules,
1.4 FIRM See A.C.A. § 17-12-103(a)(7)
1.5 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES "Generally accepted accounting principles" shall be deemed and construed to mean accounting principles or standards generally accepted in the United States. For purposes of these rules and regulations, generally accepted accounting principles are considered to be defined by pronouncements issued by the Financial Accounting Standards Board and its predecessor entities and similar pronouncements issued by other entities having similar generally recognized authority.
1.6 GENERALLY ACCEPTED AUDITING STANDARDS "Generally accepted auditing standards" shall be deemed and construed to mean the generally accepted auditing standards adopted by the Board. The Board shall take into consideration interpretations of Generally Accepted Auditing Standards as issued by the American Institute of Certified Public Accountants and other pronouncements having similar generally recognized authority.
1.7 LICENSEE See A.C.A. § 17-12-103(a)(9)
1.8 PRACTICE OF, OR PRACTICING PUBLIC ACCOUNTING See A.C.A. § 17-12-103(a) {12)1.9 PROFESSIONAL SERVICES See A.C.A. § 17-12-103(a)(13)1.10 PUBLIC COMMUNICATION A public communication is a communication made in identical form to multiple persons or to the world at large, as by television, radio, motion picture, newspaper, pamphlet, mass mailing, letterhead, business card, electronic transmission or directory.
1.11 CERTIFICATE SeeA.C.A. § 17-12-103(a)(5)1.12 PERMIT TO PRACTICE Permit to practice means a permit to practice public accountancy issued under prior provisions of the Act, or under corresponding provisions of the law of other states.
1.13 COMMISSION An allowance or consideration paid upon completion of the transaction for recommending or referring a product or service to be supplied by another person.
1.14 PEER REVIEW The process of reviewing the work product of a licensee by a qualified individual or firm, the purpose of which is to assure that professional services are performed consistent with applicable standards.
Rule 3EXAMINATIONS3.1 SEMESTER HOUR; ACCREDITED COLLEGES, UNIVERSITIES, SCHOOLS AND PROGRAMS; CREDIT FOR COURSES (a) As used in these Rules, a "semester hour" means the conventional college semester hour. Quarter hours may be converted to semester hours by multiplying them by two-thirds.(b) As used in these Rules, "accreditation" refers to the process of quality control of the education process. There are three different levels of accreditation referred to in these Rules and the degree to which the Board relies on accreditation differs according to the level at which the degree-granting institution is accredited. The three levels of accreditation are:1. Level 1 accreditation (accounting accreditation) is granted to a four-year, degree-granting college or university and its accounting program or department that have both business and accounting accreditation awarded by a national accreditation agency that is recognized by the Board, such as the AACSB INTERNATIONAL-The Association to Advance Collegiate Schools of Business. Accounting programs or departments accredited in this manner have met standards substantially higher and much more specific than those required for Level 2 or Level 3 accreditation. For Level 1 accreditation, the accounting program or department must meet a stringent set of standards that addresses faculty credentials, student quality, physical facilities, curricula and continuous improvement.2. Level 2 accreditation (business accreditation) is granted to a four-year degree-granting college or university that has business accreditation awarded by a national accreditation agency that is recognized by the Board such as the AACSB INTERNATIONAL - The Association to Advance Collegiate Schools of Business. Business accreditation awarded in this manner is based on a specific and comprehensive examination of the institution's strategic management, participants, and assurance of learning processes.3. Level 3 accreditation (regional accreditation of the educational institution) is granted to a four-year degree-granting college or university that is accredited by one or more recognized regional accrediting agencies (including their predecessor or successor agencies). In Level 3 accreditation, the institution is accredited, but neither the business school or program or its accounting program are separately accredited. The Board recognizes the following six (6) regional accrediting agencies, Middle States Association of Colleges and Schools;
New England Association of Schools and Colleges Commission on
Institutions of Higher Education;
North Central Association of Colleges and Schools The Higher Learning
Commission;
Northwest Commission on Colleges and Universities;
Southern Association of Colleges and Schools Commission on Colleges; and the
Western Association of Schools and Colleges Accrediting Commission for
Senior Colleges and Universities.
Colleges and Universities accredited by these associations are listed in Accredited Institutions of Postsecondary Education published by the Council of Postsecondary Accreditation of the American Council on Education.
(c) A candidate is considered as graduating from an accredited educational institution if at the time the educational institution grants the applicant's degree, it is accredited at the appropriate level as outlined in these Rules.(d) If an educational institution was not accredited at the time an applicant's degree was received but is so accredited at the time the application is filed with the Board, the institution will be deemed to be accredited for the purpose of subsection (c), provided;(1) the educational institution certifies that the applicant's total educational program would qualify the applicant for graduation with a baccalaureate degree during the time the institution has been accredited; and(2) the educational institution furnishes the Board satisfactory proof, including college catalogue course numbers and descriptions, that the pre-accrediting courses used to qualify the applicant as an accounting major are substantially equivalent to post-accrediting courses, and(3) the applicant has met the educational requirements outlined in Section 3.2.(e) If an applicant's degree was received at an accredited educational institution pursuant to subsection (c) or (d), but the educational program which was used to qualify the applicant as an accounting major included courses taken at non-accredited institutions, either before or after graduation, such courses will be deemed to have been taken at the accredited institution from which applicant's degree was received, provided the accredited institution either-(1) has accepted such courses by including them in its official transcript; or(2) has certified to the Board that it will accept such courses for credit toward graduation.(f) A graduate of a four-year degree-granting college or university not accredited at the time applicant's degree was received or at the time the application was filed will be deemed to be a graduate of an accredited educational institution if - (1) a credentials evaluation service that is a member of the National Association of Credential Evaluation Services or one approved by the Board certifies that the applicant's degree is equivalent to a degree from an accredited educational institution defined in subsection (b); or(2)(A) an accredited educational institution as defined by subsection (b) accepts applicant's non-accredited baccalaureate degree for admission to a graduate business degree program;
(B) the applicant satisfactorily completes at least fifteen semester hours, or the equivalent, in post-baccalaureate education at the accredited institution, of which at least nine semester hours, or the equivalent, shall be in accounting; and(C) the accredited educational institution certifies that the applicant is in good standing for the continuation in the graduate program, or has maintained a grade point average in these courses that is necessary for graduation.(g) The advanced subjects completed to qualify under subsection (f)(2) may not be used to satisfy the requirements of section (h).(h) The accounting and business concentration or equivalent shall consist of the semester hours specified in Rule 3. 2 below.3.2 EDUCATION REQUIREMENT (a) Prior to January 2008, an applicant will be deemed to have met the education requirement if the applicant has met any one of the following four conditions:(i) Earned a graduate degree with a concentration in accounting from an accounting program or department that is accredited {Level 1 accreditation) by an accrediting agency recognized by the Board.(ii) Earned a graduate degree from a business school or college of business that is accredited (level two accreditation) by an accrediting agency recognized by the Board and completed 30 semester hours in accounting at the undergraduate (with a minimum grade of "C" in each course) or graduate level, including coverage of, but not necessarily separate courses in, the subjects of financial accounting, auditing, taxation, management accounting, and governmental/not-for-profit accounting.(iii) Earned at least 150 semester hours including a baccalaureate degree from a business school or college of business that is accredited (level two accreditation) by an accrediting agency recognized by the Board and completed 30 semester hours in accounting at the undergraduate (with a minimum grade of "C" in each course) or graduate level, including coverage of, but not necessarily separate courses in, the subjects of financial accounting, auditing, taxation, management accounting, and governmental/not-for-profit accounting.(iv) Earned at least 150 semester hours including a baccalaureate or higher degree from an accredited educational institution (Level 3 accreditation) including: (1) at least 30 semester hours of accounting at the undergraduate (with a minimum grade of "C" in each course) or graduate level, including coverage of, but not necessarily separate courses in, the subjects of financial accounting, auditing, taxation, management accounting, and governmental/not-for-profit accounting; and(2) at least 24 semester hours in business courses (other than accounting), with a minimum grade of "C" in each course, at the undergraduate or graduate level.(3) no more than six semester hours will be recognized for internships.(b) Effective for applicants who first sit for the examination on or after January 1, 2008, an applicant will be deemed to have met the education requirement if the applicant has met any one of the following four conditions, including the rules in sections (c) - (i) below: (1) Earned a graduate degree with a concentration in accounting from an accounting program or department that meets the criteria for Level 1 accreditation, defined in Section 3.1(b) as accounting accreditation. Applicants in this category are deemed to have satisfied both the business and accounting education requirements for the examination.(2) Earned a graduate degree with at least 30 upper-level or 20 graduate hours in accounting (or a combination thereof) as listed in Section 3.2(c) from a college or university that meets the criteria for Level 2 accreditation, defined in Section 3.1(b) as business accreditation. Applicants in this category are deemed to have satisfied the business education requirements for the examination.(3) Earned an undergraduate degree, including 150 hours with at least 30 upper-level or 20 graduate hours in accounting (or a combination thereof) as listed in Section 3.2(c), from a college or university that meets the criteria for Level 1 accreditation or Levei 2 accreditation, defined in Section 3.1(b) as accounting and business accreditation respectively, Appiicants in this category are deemed to have satisfied the business education requirements for the examination.(4) Earned a graduate or an undergraduate degree either of which, includes 150 hours with at least 30 hours in business as listed in Section 3.2(e) and at least 30 upper-level or 20 graduate hours in accounting (or a combination thereof) as listed in Section 3.2(c), from a college or university that meets the criteria for Level 3 accreditation defined in Section 3.1(b) as regional accreditation. Applicants in this category must meet the accounting education requirements defined in Section 3.2(c) and the business education requirements defined in Section 3.2(e).(c) The accounting component of the applicant's educational program must include at least 30 semester credit hours (SCH) of undergraduate accounting courses above the principles level or 20 SCH of graduate-level accounting courses, or a combination thereof. The accounting component must include coverage of financial accounting, management accounting, governmental and not-for-profit accounting, federal taxation, auditing and attestation, and accounting information systems. The applicant must earn a grade of "C" or better in each course included in the accounting component.(d) The Board recognizes the essential need to include coverage of ethics and written communication in the accounting component and, therefore, encourages institutions to integrate coverage of both topics appropriately in the accounting component(e) The business component of the applicant's educational program must include at least 30 SCH of undergraduate courses in business, other than accounting, or 20 SCH of graduate business courses other than accounting (or a combination thereof). The applicant must earn a grade of "C" or better in each course included in the business component(f) The Board recognizes the essential need to include coverage of ethics and written communication in the business component and, therefore, encourages institutions to integrate coverage of both topics appropriately in the business component(g) Content areas specified in the accounting component may be covered in stand alone courses at some institutions or may be integrated or embedded within related courses at other institutions. Institutions that use an integrated approach that covers multiple subjects will be responsible for providing the Board with documentation to establish the courses within which each content area is covered.(h) Internship credit: The accounting component may Include a maximum of 3 SCH earned for an accounting internship. Internship credit may not be used to fulfill the subject matter requirements listed in 3.2(c). The business component may include a maximum of 3 SCH earned for a business internship, other than in accounting.(i) Independent study: The accounting component may include a maximum of 3 SCH earned for an independent study. When appropriately documented by the institution, these hours may be used to fulfill part of the subject matter requirements listed in 3.2(c).3.3 APPLICATIONS FOR EXAMINATION (a) Applications to take the Certified Public Accountant Examination must be made on a form provided by the Board and received by the Board on or before a date specified by the Board in the application form. See Rule 3.8(b) An application will not be considered filed until the applicable fees required by these Rules and all required supporting documents have been received, including proof of identity as determined by the Board, official transcripts, proof the educational requirement has been satisfied, and proof that the Candidate has received the applicable degree, or certification from the school on a form prescribed by the Board that the degree has, in fact, been earned, but will be conferred at a later date. In the case where the degree is to be conferred at a later date, the Applicant shall not be credited with any score(s) until the official transcript showing that the degree has been conferred is received by the Board. All transcripts and verification of receipt of degree must be sent from the appropriate school officials directly to the Board.(c) The candidate must cause official transcripts documenting the degree conferred to be received by the Board office within 30 days after the degree is conferred.(d) The Board or its designee will forward notification of eligibility for the computer-based examination to NASBA's National Candidate Database.3.4 TIME AND PLACE OF EXAMINATION A Notice to Schedule (NTS) will be sent to eligible candidates via the address indicated on the application form. The candidate will have six months from the date the NTS is issued to schedule and take the approved examination sections. Utilizing the NTS, candidates are required to contact the test delivery provider identified by the Board to schedule the time and place for the examination at an approved test site. If a candidate requires rescheduling, the candidate must contact the test delivery provider. Scheduling reexaminations must be made in accordance with Rule 3.7 below.
3.5 EXAMINATION CONTENT The examination required by A.C.A. § 17-12-301 shall test the knowledge and skills required for performance as an entry-level certified public accountant. The examination shall include the subject areas of accounting and auditing and related knowledge and skills as the Board may require.
3.6 DETERMINING AND REPORTING EXAMINATION GRADES A Candidate shall be required to pass all Test Sections of the Certified Public Accountant Examination in order to qualify for a certificate. The Candidate must attain the uniform passing grade established through a psychometrically acceptable standard-setting procedure and approved by the Board. Upon receipt of grades reported by the examination provider, the Board will review and may adopt the examination grades and will report the adopted grades to the qualified Candidate (one who has met all requirements of Rules 3. 2 and 3. 3 above).
3.7 RETAKE AND GRANTING OF CREDIT REQUIREMENTS(a) A Candidate shall be required to pass all Test Sections of the Certified Public Accountant Examination in order to qualify for a certificate. A Candidate may take the required Test Sections individually and in any order. Credit for any Test Section(s) passed shall be valid for eighteen months from the actual date the Candidate took that Test Section, without having to attain a minimum score on any failed Test Section(s) and without regard to whether the Candidate has taken other Test Sections.(1) Candidates must pass all four Test Sections of the Uniform CPA Examination within a rolling eighteen-month period, which begins on the date that the first Test Section(s) passed is taken.(2) Candidates cannot retake a failed Test Section(s) in the same examination window. An examination window refers to a three-month period in which Candidates have an opportunity to take the CPA examination (comprised of two months in which the examination is available to be taken and one month in which the examination will not be offered while routine maintenance is performed and the item bank is refreshed). Thus, Candidates will be able to test two out of the three months within an examination window.(3) In the event all four Test Sections of the Uniform CPA Examination are not passed within the rolling eighteen-month period, credit for any Test Section(s) passed outside the eighteen-month period will expire and that Test Section(s) must be retaken.(b) Candidates having earned conditional credits on the paper-and-pencil examination, as of the launch date of the computer-based Uniform CPA Examination, will retain conditional credits for the corresponding Test Sections of the computer-based CPA examination as follows: Paper-and-Pencil Examination | Computer-Based Examination |
Auditing | Auditing and Attestation |
Financial Accounting and Reporting (FARE) | Financial Accounting and Reporting |
Accounting and Reporting (ARE) | Regulation |
Business Law and Professional Responsibilities (LPR) | Business Environment and Concepts |
(1) Candidates who have attained conditional status as of the launch date of the computer-based Uniform CPA Examination will be allowed a transition period to complete any remaining Test Sections of the CPA examination. The transition is the maximum number of opportunities that Candidates who have conditioned under the paper-and-pencil examination have remaining, at the launch of the computer-based CPA examination, to complete all remaining Test Sections, or the number of remaining opportunities under the paper-and-pencil examination, multiplied by six months, whichever is first exhausted.(2) If a previously conditioned Candidate does not pass all remaining Test Sections during the transition period, conditional credits earned under the paper-and-pencll examination will expire and the Candidate will lose credit for the Test Sections earned under the paper-and-pencil examination. However, any Test Section(s) passed during the transition period is subject to the conditioning provisions of the computer-based examination as indicated in the aforementioned conditioning recommendation, except that a previously conditioned Candidate will not lose conditional credit for a Test Section of the computer-based examination that is passed during the transition period, even though more than eighteen months may have elapsed from the date the Test Section is passed, until the end of the transition period. A Candidate shall retain credit for any and all Test Sections of an examination passed in another state if such credit would have been given, under then applicable requirements, if the Candidate had taken the examination in this State.
(c) The Board may in particular cases extend the term of conditional credit validity notwithstanding the requirements of subsections (a), (b), (c) and (d), upon a showing that the credit was lost by reason of circumstances beyond the Candidate's control.(d) A Candidate shall be deemed to have passed the Uniform CPA Examination once the Candidate holds at the same time official credit for passing each of the four Test Sections of the examination. For purposes of this section, credit for passing a Test Section of the computer-based examination is valid from the actual date of the Testing Event for that Test Section, regardless of the date the Candidate actually receives official notice of the passing grade.3.8 CANDIDATE TESTING FEE (a) The Candidate shall, for each applicable Test Section pay to the Board or its designee fees charged by the AICPA, NASBA, and the Test Delivery Provider, as well as the application and section fees established by the State Board. The application and section fees are nonrefundable and nontransferable. The fees for AICPA, NASBA, and the Test Delivery Provider are collected by the Board and held for transfer to the entities. Those fees are nontransferable, but may be partially refunded if extreme hardship precludes the applicant from scheduling or taking the exam. Extreme hardship is defined as medical emergency of candidate or candidate's immediate family, or death in immediate family. Any other extreme hardship situation will be reviewed on a case-by-case basis by the Board. Documentation of such circumstances must be submitted along with written request as soon as possible, but no later than 30 days from the date the candidate was scheduled for the applicable section(s) or 30 days from the expiration of the NTS whichever occurs first. The fees to sit for the examination are enumerated in Rule 12.(b) A first-time applicant is defined as an applicant who has never sat for any section of the CPA examination as an Arkansas applicant, or has never received official scores as an Arkansas candidate.(c) A re-exam applicant is defined as an applicant taking any section of the CPA examination after sitting as a first-time Arkansas applicant.3.9 CHEATING (a) Cheating by a Candidate in applying for, taking or subsequent to the examination will be deemed to invalidate any grade otherwise earned by a Candidate on any Test Section of the examination, and may warrant summary expulsion from the test site and disqualification from taking the examination for a specified period of time.(b) For purposes of this Rule, the following actions or attempted activities, among others, may be considered cheating: (1) Falsifying or misrepresenting educational credentials or other information required for admission to the examination;(2) Communication between Candidates inside or outside the test site or copying another Candidate's answers while the examination is in progress;(3) Communication with others inside or outside the test site while the examination is in progress;(4) Substitution of another person to sit in the test site in the stead of a Candidate;(5) Reference to crib sheets, textbooks or other materia! or electronic media (other than that provided to the Candidate as part of the examination) inside or outside the test site while the examination is in progress.(6) Violating the nondisclosure prohibitions of the examination or aiding or abetting another in doing so.(7) Retaking or attempting to retake a Test Section by an individual holding a valid Certificate or by a Candidate who has unexpired credit for having already passed the same Test Section, unless the individual has been directed to retake a Test Section pursuant to Board order or unless the individual has been expressly authorized by the Board to participate in a "secret shopper" program.(c) In any case where it appears that cheating has occurred or is occurring, the Board or its representatives may either summarily expel the Candidate involved from the examination or move the Candidate to a position in the Test Center away from other examinees where the Candidate can be watched more closely.(d) In any case where the Board believes that it has evidence that a Candidate has cheated on the examination, including those cases where the Candidate has been expelled from the examination, the Board shall conduct an investigation and may conduct a hearing consistent with the requirements of the state's Administrative Procedures Act following the examination session for the purpose of determining whether or not there was cheating, and if so what remedy should be applied. In such proceedings, the Board shall decide:(1) Whether the Candidate shall be given credit for any portion of the examination completed in that session; and(2) Whether the Candidate shall be barred from taking the examination and if so, for what period of time.(e) fn any case where the Board or its representative permits a Candidate to continue taking the examination, it may, depending on the circumstances; (1) Admonish the Candidate;(2) Seat the Candidate in a segregated location for the rest of the examination;(3) Keep a record of the Candidate's seat location and identifying information, and the names and identifying information of the Candidates In close proximity of the Candidate; and/or(4) Notify the National Candidate Database and the AICPA and/or the Test Center of the circumstances, so that the Candidate may be more closely monitored In future examination sessions.(f) In any case In which a Candidate is refused credit for any Test Section of an examination taken, disqualified from taking any Test Section, or barred from taking the examination in the future, the Board will provide to the Board of Accountancy of any other state to which the Candidate may apply for the examination information as to the Board's findings and actions taken.3.10 SECURITY AND IRREGULARITIES Notwithstanding any other provisions under these rules, the Board may postpone scheduled examinations, the release of grades, or the issuance of certificates due to a breach of examination security; unauthorized acquisition or disclosure of the contents of an examination; suspected or actual negligence, errors, onnissions, or irregularities in conducting an examination; or for any other reasonable cause or unforeseen circumstance.
Rule 12FEESThe fees for various services of the Board are as follows (must be paid in U. S. dollars):
CPA EXAMINATION:
* Application Fees - First-Time and Section Fees (non-refundable and non-transferable):
First-time application fee........................................................................... | $50 |
Applying for one section............................................................................ | $75 |
Applying for two sections.......................................................................... | $90 |
Applying for three sections........................................................................ | $105 |
Applying for four sections.......................................................................... | $120 |
* Other Costs:
Fees for the NASBA, AICPA, and Test Delivery Provider are also collected by the Board and held for the candidate for transfer to these entities. These entities set fees separate from the Board. The Board will display such fees on the examination application.
APPLICATION FEES (non refundable):
CPA/PA License.......................................................................................... | $50 |
Reciprocal Certificate.................................................................................. | $50 |
Registration as a Public Accountant............................................................ | $50 |
Registration of Partnership, Limited Liability Company or Corporation Composed of CPAs............................................................ | $110 |
Registration of Partnership, Limited Liability Company or Corporation Composed of PAs.............................................................. | $110 |
Reinstatement............................................................................. | $150 |
Duplicate or replacement certificate................................................... | $40 |
Transfer of Credits From Another Jurisdiction: |
Transfer Fee for Each Part.......................................................................... | $10 |
ANNUAL REGISTRATION FEES
License to Practice........................................................................... | $110 |
Inactive License Status................................................................. | $55 |
I nactive/Retired........................................................................... | $30 |
Notification of intent to practice under "Substantial Equivalency" (SE) Provision............................................................................. | $110 |
Partnership, Corporations and Limited Liability Company....................... | $110 |
Registration of each firm office in excess of one office......................... | $25 |
Late Fee - License to Practice/Firms/SE..............................per month | $25 |
Late Fee - Inactive License Status.........................................per month | $10 |
QUALITY REVIEW
Fee for First Report..................................................................... | $100 |
Fee for each additional type of report submitted................................ | $50 |
Fees are due at the time reports are submitted for review in response to QR Survey.
Rule 14QUALITY REVIEW PROGRAM14.1 There is hereby established a Quality Review Program (the "Program"). The purpose of the Program is to improve the quality of financial reporting and to assure that the public can rely on the fairness of presentation of financial information on which licensees issue reports. The Program emphasizes education and rehabilitation rather than disciplinary action. Appropriate educational programs or procedures will ordinarily be recommended or required where reporting does not comply with appropriate professional standards. However, when a licensee is unwilling or unable to comply with such standards, or a licensee's professional work is so egregious as to warrant disciplinary action, such action may be taken as the appropriate means of protecting the public interest.14.2 QUALITY REVIEW COMMITTEE (a) The Quality Review Committee (the Committee) will assist in the implementation and administration of the Program. The Committee's responsibilities will include: (1) Developing procedures for the internal operation of the Committee,(2) Developing criteria for assignment of reviewers to specific tasks,(3) Assisting the Board in the selection and training of reviewers of reports,(4) Evaluating the findings of the reviewers of reports and making reports and recommendations to the Board,(5) Compiling and reporting to the Board statistics on the impact and effect of the Program, and(6) Considering such other matters and performing such other duties regarding the Program as may be assigned to it by the Board from time to time.(b) The composition of the Committee: (1) The Committee shall be comprised of nine licensees appointed by the Board.(2) The President shall annually appoint one member of the Board who shall be chair.(3) The remaining members shall be selected at the Board's discretion from nominees submitted by professional accounting associations or from other qualified licensees identified by the Board. Their terms shall be three years and shall be staggered.(c) The qualifications for serving as a member are:(1) Licensed by and in good standing with the Board.(2) The licensee or firm with which he is associated has completed an acceptable peer review, pursuant to Rule 14.3(d), or has completed the Board's Quality Review, both including a minimum of one category of compilation, review, and/or audit with no substandard report within three years immediately preceding the appointment; and(3) The licensee or his firm has no pending investigations or disciplinary matters by the Board.(d) The chair shall vote only in case of a tie.14.3 QR SURVEY Quality Review (QR) is to be conducted annually on one third of the licensees on a rotating basis. QR may be required more frequently as provided herein.
(a) The Board will mail a QR survey to one-third of its licensees annually. The recipient shall return the completed survey form within the time specified and submit reports, for QR purposes, when reports have been issued during the QR period as stated in the instructions in said survey form.(b) Failure to respond to the QR survey mailed by the Board or to submit reports for QR purposes, when reports were issued during the subject period, shall be a basis for the non-renewal of the license, after notice and hearing, as provided by Ark. Code Ann. § 17-12-507.(c) In response to the QR survey, the licensee shall submit an audit report, review report, governmental audit report, examination of prospective financial information, and compilation report with disclosures if any were issued and, if not, a compilation report without disclosures, issued by the licensee during the 12 month period identified in the QR survey.(d) Submission to the Board of an acceptable peer review report, performed by a CPA, PA or firm, licensed in this or another state, and the individual CPA or PA is qualified pursuant to the provisions of Rule 14.4-14.5(a)-(e), or 14.11,which is conducted consistent with a peer review program authorized by a professional accounting organization and approved by the Board, dated within the QR period or the twenty-four months immediately preceding the QR period, will exempt the licensee from QR on that type of report. For purposes of this paragraph, acceptable peer review reports shall be those classifications designated by the peer review program that are generally comparable to acceptable and marginal QR reports as defined in Rule 14.8, and which the Board identifies in its approval of the individual peer review program as comparable to acceptable and marginal QR reports.14.4 QR REVIEWERS The QR reviewers shall have the following qualifications:
(a) Licensed by and in good standing with the Board,(b) The licensee or firm in which he is associated has completed an acceptable peer review pursuant to Rule 14.3(d), or has completed the Board's Quality Review both including a minimum of one category of compilation, review, and/or audit with no substandard report within three years immediately preceding the appointment,(c) The licensee or his firm has no pending investigation or disciplinary matters by the Board, and(d) Shall have a minimum of 5 years experience in accounting and auditing, including experience in the type of report he will be reviewing.14.5 TEAM CAPTAINS Team captains shall have the following qualifications:
(a) Licensed by and in good standing with the Board,(b) The licensee or firm in which he is associated has completed an acceptable peer review pursuant to Rule 14.3(d), or has completed the Board's Quality Review both including a minimum of one category of compilation, review, and/or audit with no substandard report within three years immediately preceding the appointment,(c) The licensee or his firm has no pending investigation or disciplinary matters by the Board, and(d) Shall have a minimum of 5 years experience in accounting and auditing, including experience in the type of report he will be reviewing.(e) Shall have served as a quality reviewer for a minimum of one year, and(f) Shall be approved by the QR Consultant.14.6 QR CONSULTANT The QR consultant shall have the following qualifications:
(a) Licensed by and in good standing with the Board,(b) The licensee or firm in which he is associated has completed an acceptable peer review pursuant to Rule 14.3(d), or has completed the Board's Quality Review both including a minimum of one category of compilation, review, and/or audit with no substandard report within three years immediately preceding the appointment,(c) The licensee or his firm has no pending investigation or disciplinary matters by the Board, and(d) Shall have a minimum of 5 years experience in accounting and auditing, including experience in the type of reports he will be reviewing, and(e) Shall be approved by the Board.14.7 QR PROCEDURE (a) The QR process shall include: (1) Review and classification of the report and a statement of reasons for the classification by an assigned reviewer.(2) Review of that classification and reasons therefore by the QR team captain who may make appropriate changes after consulting with the assigned reviewer.(3) Review of that classification and reasons therefore by the Board's QR Consultant who may make appropriate changes after consulting with both the assigned reviewer and team captain.14.8 QR CLASSIFICATIONS The QR will result in a determination whether each report is acceptable, marginal, or substandard.
"Acceptable" means that the report contains no deficiencies or only minor deficiencies. "Marginal" means that the report contains more serious deficiencies, such as departures from the technical reporting or accounting standards set forth in Board Rule 8, but of the type that will not render the statement materially inaccurate or misleading. "Substandard" means that the report is materially inaccurate or misleading; such a report violates one or more significant reporting standards, seriously departs from Generally Accepted Accounting Principals, or does not include material disclosures necessary for a fair presentation.
"Deficiency" means a failure to comply with any provision in the Professional Standards identified in Board Rule 8.
14.9 NOTIFICATION AND RESPONSE (a) The licensee will be notified in writing of the QR classification of each report. Notice of marginal and substandard reports shall be by certified mail, return receipt requested. No response is necessary for an "acceptable" or "marginal" classification, and QR will be closed. If the licensee who has received a marginal classification disagrees, he should notify the Board in writing within 30 days. The notification will instruct the licensee who has received a substandard classification to reply to the Board in writing within 30 days.(b) Marginal Classification. If the licensee agrees with the marginal classification, no reply is necessary and the QR is complete. However, if the licensee disagrees with the classification, he may, but is not required to file a notice including an explanation of his objection, citations to applicable professional standards, and any relevant documentation supporting his objection to the classification for consideration by QR Consultant. This notice must be written and filed with the Board within 30 days. After reconsideration of the Summary of Deficiencies and Comments, original documents from the licensee, and any supplemental information from the licensee that may have been requested by the QR Team, the QR Consultant will affirm the classification of or reclassify the licensee's report. The licensee will be notified of this result in writing for informational purposes. The QR will be closed and the licensee will remain in the same QR cycle.(c) Substandard Classification. (1) First substandard classification. (A) Within 30 days the licensee shall respond in writing to the Board's notification of a first substandard classification stating whether he agrees or disagrees with that classification.(B) If the licensee agrees with the substandard classification, the Board shall request that the licensee obtain 16 hours of CPE in specific subjects. In the event there is another substandard classification on a different type of report in the same QR cycle, additional CPE may be requested. Said CPE is intended to be educational, for the purpose of improving the quality of the licensee's reports, rather than disciplinary in nature, shall not be self-study, and shall be approved in advance by the Board's Executive Director. The licensee shall complete said CPE hours and deliver acceptable documentation thereof to the Board on or before June 30 of the following year. (C) If the licensee disagrees with the substandard classification, he may deliver written notice to the Board within 30 days explaining the objection to the classification, citation to applicable professional standards and any relevant documentation supporting the licensee's objection to the classification. The QR Consultant shall review the Summary of Deficiencies and Comments, original documents from the licensee, and any supplemental information from the licensee that may have been requested by the QR Team, and will affirm the classification of, or reclassify the licensee's report. The licensee will be provided written notice of the QR Consultant's review of the report by certified mail, return receipt requested.(D) The licensee can request that the QR Committee review the QR Consultant's reconsideration of the classification of the licensee's report. Said request shall be filed with the Board in writing within 30 days.(E) The QR Committee will consider the classification based upon all records considered by the QR Consultant as described by paragraph (b) and determine the appropriate classification for the report. The licensee will be notified of the Committee's classification of the report in writing by certified mail, return receipt requested.(F) The licensee can appeal the QR Committee's decision on the classification, and obtain a hearing by the Board by filing a written notice of appeal with the Board within 30 days. The Board shall notify the licensee of the time and place of the hearing and shall consider the classification of the report based solely upon the record considered by the QR Consultant and QR Committee, as per paragraph (b). When the evidence of record that the report is substandard is considered, the Board will consider all relevant facts. Should the facts show convincingly that the report is substandard, the Board will consider the report substandard. If the evidence of record is equally balanced, or the Board cannot find that the facts are convincing, the Board shall determine that the report is not substandard. Should the Board find that the report is substandard, it may require appropriate action by the licensee that is designed to assure that the licensee's professional services are performed consistent with applicable professional standards as provided under these procedures.(G) Following any first substandard classification of the report that becomes final prior to appeal to the Board, the licensee will be requested to obtain the 16 hours of CPE as stated in paragraph 14.9(c)(1)(B) above. Upon request of the licensee, or should the licensee not agree to obtain CPE described above, fail to complete said CPE, or fail to timely deliver satisfactory documentation thereof to the Board, the Board shall conduct a hearing to determine whether the licensee has failed to comply with the Code of Professional Conduct and the Public Accountancy Act of 1975, Ark. Code Ann. § 17-12-101 etseq. and, if so, the necessary corrective action to betaken to improve the quality of the licensee's reports or to otherwise protect the public interest.(2) Second consecutive substandard report. (A) Within 30 days the licensee shall respond in writing to the Board's notification of a second substandard classification stating whether he agrees or disagrees with that classification.(B) If he agrees with the classification, the licensee will be requested to submit ali of the types of reports classified as substandard to a licensee approved by the Board for pre-issuance review pursuant to the Board's current Pre-lssuance Review Procedures that shall be provided to the licensee.(C) If the licensee disagrees with the substandard classification, he will be instructed to file notice including an explanation of his objection to the classification, citation to applicable professional standards, and any relevant documentation supporting his position for reconsideration by QR Consultant. The provisions set forth in subparagraph 14.9(c)(1)(D-G) for reconsideration by the QR Consultant, for review by the QR Committee and appeal to the Board are also applicable to second consecutive substandard reports.(D) Upon appeal, should the Board find that the report is substandard, it may require that the licensee take action deemed appropriate by the Board to assure the licensee's professional services are performed consistent with applicable professional standards or to otherwise protect the public interest.(E) If at any stage of the QR procedure in this subparagraph 14.9(c)(2) pertaining to second consecutive substandard reports, the licensee fails to respond to the notice of the classification of the report as substandard in the original review or upon reconsideration by the QR Consultant or review by the QR Committee, the Board will determine whether to schedule a hearing to find whether the licensee's report is substandard and whether the Board shall require the licensee to obtain pre-issuance review and subsequent QR pursuant to the Board's current Pre-lssuance Review Procedures or take other action appropriate to protect the public interest.(3) Third consecutive substandard report. (A) Within 30 days the licensee shall respond in writing to the Board's notification of third substandard classification stating whether he agrees or disagrees with that classification.(B) If the licensee agrees with the classification, the Board will determine whether to conduct a hearing to consider whether the licensee's report violates the Board's Code of Professional Conduct and the Public Accountancy Act of 1975, Ark. Code Ann. § 17-12-101 et seq.(C) If the licensee disagrees with the substandard classification, he will be instructed to file notice including an explanation of the objection to the classification, citation to applicable professional standards and any relevant documentation supporting his position for consideration by QR Consultant.(D) The procedure set forth in subparagraph 14.9(c)(1)(D-G) for reconsideration by the QR Consultant, for review by the QR Committee and appeal to the Board are also applicable to third consecutive substandard reports.(E) Upon appeal, should the Board find that the report is in violation of the Code of Professional Conduct or the Public Accountancy Act of 1975, Ark. Code Ann. § 17-12-101 et seq., it may take appropriate action to protect the public interest.(F) If at any stage of the QR procedure in this paragraph 14.9(c)(3), the licensee fails to respond to the notice of the classification of the report as substandard in the original review or upon review by the QR Consultant or review by the QR Committee, the Board will determine whether to schedule a hearing to determine whether the licensee has violated the Board's Code of Professional Conduct or the Public Accountancy Act of 1975, Ark. Code Ann. § 17-12-101 etseq., and the appropriate action to be taken as a result of the violations found. (G) Consent orders. At any stage in the QR process, when a licensee will agree not to perform any further reports that have been classified as substandard or to other appropriate action to protect the public interest, the Board may resolve the controversy by an appropriate Consent Order.14.10 PRE-ISSUANCE REVIEW PROCEDURES (a) Pre-lssuance Reviewer (Reviewer) shall be a CPA or PA currently holding an Arkansas license to practice public accountancy, who has undergone quality or peer review within the past 3 years with reports thereon determined to be acceptable pursuant to Rule 14.3(d), and approved by the Board prior to performing pre-issuance reviews for the subject Accountant (Respondent). Prior to performing any pre-issuance review services, the Reviewer shall deliver a written confirmation to the Board to provide pre-issuance review of each financial statement or related attestation report (cumulatively "Report") prepared by the subject respondent for the period of the engagement. The Respondent whose Reports are being reviewed shall be solely responsible for any expense for the pre-issuance review.(b) Reviewer shall review, prior to release to Respondent's client, each Report as identified above to determine compliance with professional standards identified in Board Rule 8 or otherwise applicable to the particular type of Report and shall authorize the release of a Report only after making a written determination that the Report complies with said standards. In the event a submitted Report does not comply with said standards, the reviewer shall provide written comments or instructions for the Respondent to revise the Report in compliance with applicable professional standards.(c) Reviewer shall maintain a pre-issuance review file on each Report review performed. The file shall contain each original Report submitted to reviewer, the reviewer's written comments or instructions in any form regarding necessary revisions for the Report to comply with professional standards, any revised Report(s) and the Report approved for release to the client. Reports reviewed and found acceptable with no change shall be clearly noted on the file Report, "Accepted-No Change Required".(d) Reviewer shall maintain the pre-issuance review files for a minimum of five years after each pre-issuance review engagement is completed and shall make said records available to the Board upon request.(e) Reviewer shall submit a written report to the Arkansas Board of Public Accountancy every ninety (90) days following the date of the Reviewer's confirmation to the Board. The report shall contain a summary of the number and type of Reports reviewed, number of Reports with no change required, and number of Reports requiring amendment. For Reports requiring change, a copy of each original Report submitted by Licensee, Reviewer notations, and/or comment sheet(s) and the revised and approved Report(s) must accompany the report.(f) Reviewer may recommend in writing with accompanying supporting documentation that the Respondent be released from continuing pre-issuance review. Should the Board determine that the Respondent appears to have demonstrated an ability to issue Reports in compliance with applicable professional standards without the necessity of continuing pre-issuance review, it shall terminate the pre-issuance review, but may require the Respondent to participate in annual quality review for a specific or indefinite term.14.11 PEER REVIEWER STANDARDS (a) In order to qualify to perform peer review for the exemption from Quality Review requirements of 14.3, an individual licensee must have the applicable qualifications for reviewers set forth in Rules 14.4, or supervisors set forth in Rules 14.5, except 14.5(f) for team captains.(b) An individual peer reviewer not licensed or registered in Arkansas under Ark. Code Ann. § 17-12-301 etseq., shall register with the Board pursuant to Ark. Code Ann § 17-12-311. (c)The individual CPA or PA and firm shall register with the Board and obtain documentation of Board approval of the peer review registration prior to performing peer review services in Arkansas.