Texas Public Accountancy Act

From time to time TSCPA asks the Texas legislators to make improvements to the Texas Public Accountancy Act (the Act).  In 2009, TSCPA initiated legislation passed to transfer the fifth year accounting scholarship fund administration to the Texas State Board of Public Accountancy (TSBPA).  The scholarship fund for the benefit of fifth year accounting students planning to sit for the CPA exam was heretofore administered by the Higher Education Coordinating Board.  Transferring the administration to TSBPA will result in more accounting scholarships being available to deserving students.

During the 2007 Texas Legislative session, once again at TSCPA’s request, the Act was modified and Texas became the seventh state to adopt new mobility provisions designed to facilitate interstate practice by CPAs. The law now allows out-of-state CPAs with qualifications substantially equivalent to Texas CPAs to practice temporarily in Texas without notice or fees by granting a practice privilege based on the CPAs' credentials.

Subsequent to Texas action 38 additional states adopted similar provisions and now 45 states have mobility provisions in their state accounting statutes.

CPAs and CPA firms taking advantage of the practice privilege are explicitly subject to Texas laws and the jurisdiction of the Texas State Board of Public Accountancy. The law requires an out-of-state CPA firm that performs an audit for a Texas entity to be licensed in Texas. The law became effective Sept. 1, 2007.

Before 2007 the Accountancy Act was last updated as a result of the Sunset Review process. That law revision was effective Sept. 1, 2003. Most of the changes made in the law at that time increased the enforcement powers of the Texas State Board of Public Accountancy. The Board was given the following new authority to:

• Levy administrative fines up to $100,000 (up from $1,000 limit).
• Issue subpoenas.
• Require restitution (limited to the fees paid to the CPA).
• Suspend a CPA’s license in an emergency.
• Levy a fine up to $25,000 for practicing accounting without a license.
• Exchange investigation information with other state and law enforcement agencies (all such agencies are to maintain confidentiality of the shared information).

The new law also instituted felony penalties for those CPAs who participate in intentional fraud. Those penalties range from six months in jail to 20 years in prison, depending on the severity of the financial loss. It also protects whistle blowers from civil and criminal liability when reporting violations of the accountancy act.

In other changes, professional trade association officers, employees and executive board members are not eligible to appointment to the Board or as a volunteer to serve on a Board committee. Prior law excluded only association officers. Volunteers serving on State Board committees must now file financial disclosures with the Executive Director of the Board to avoid conflict of interest issues. These disclosures are not open to the public.