201 KAR 1:081. Firm license.

      RELATES TO: KRS 325.220, 325.301, 325.380

      STATUTORY AUTHORITY: KRS 325.240

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.220 defines peer review. KRS 325.301 establishes the standards for licensure of a certified public accounting firm. KRS 325.380 establishes the standards for certified public accounting firm names and usage. This administrative regulation establishes the procedures for firms to obtain a license to practice as required by KRS 325.301.

      Section 1. Definitions. (1) A "certified public accountant owner" means a certified public accountant with a current license to practice issued by a state board of accountancy and is a shareholder in a professional service corporation or corporation; a partner in a partnership or registered limited liability partnership; or a member of a limited liability company.

      (2) A "nonlicensed owner of the firm" means a person referred to in KRS 325.301(1)(b).

      Section 2. In order to obtain a license to practice, a firm except a firm operating as a sole proprietorship, shall submit:

      (1) A completed "Initial Firm Registration"; and

      (2) A check made payable to the "Kentucky State Board of Accountancy" in the amount of $100 for the initial firm registration fee.

      Section 3. A certified public accountant shall:

      (1) Have ultimate responsibility for all services provided by the firm;

      (2) Have ultimate authority over any unit, division, or branch of the firm that performs attest services; and

      (3) Comply with the "Statement on Quality Control Standards", June 2000, issued by the American Institute of Certified Public Accountants Auditing Standards Board, as incorporated by reference.

      Section 4. A nonlicensed owner of the firm shall not sell or otherwise transfer any ownership interest in the firm to any person who fails to satisfy the requirements of KRS 325.301(1).

      Section 5. (1) A certified public accountant seeking to engage in a regulated activity as a sole proprietor shall register the firm by writing a letter to the board stating the firm office address, phone number, and indicating whether he is engaging in a regulated activity on a full-time or part-time basis; or

      (2) If he is establishing the firm within thirty (30) days of his individual permit renewal date, he may submit this information when he renews his individual permit to practice.

      (3) A fee shall not be assessed for this registration.

      Section 6. In May of the firm's renewal year, the board shall send the firm a computer generated notice containing current firm registration information. The firm CPA manager shall renew the firm license to practice by submitting:

      (1) The notice with corrections, deletions, or additions as appropriate; and

      (2) A check made payable to the "Kentucky State Board of Accountancy" in the amount of $100 for the firm license.

      (3) A sole proprietor shall renew his license by providing the information required in Section 3(1) of this administrative regulation when he renews his individual license. A fee shall not be charged for this firm license renewal.

      (4) Failure to receive a notice to renew shall not constitute an adequate excuse for failing to renew the firm license.

      Section 7. If any of the information on the firm registration form submitted by the firm's certified public accountant manager changes, he shall indicate the changes on the "Firm Registration Changes" form.

      Section 8. (1) Upon the death or retirement of a firm member which is composed of only two (2) certified public accountant owners, the board shall authorize the continuation of the use of the firm name by the surviving certified public accountant owner for a period of time not to exceed two (2) years from the date of the certified public accountant owner's death or retirement.

      (2) The remaining certified public accountant owner shall advise the board in writing of this change within thirty (30) days of its occurrence.

      Section 9. The firm name registered with the board shall be the firm name used in all circumstances.

      Section 10. (1) The following material is incorporated by reference:

      (a) "Initial Firm Registration (2000)";

      (b) "Firm Registration Changes (2000)"; and

      (c) "Statement on Quality Control Standards, January (2000)".

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through Friday, between 8 a.m. and 4:30 p.m. (20 Ky.R. 3343; Am. 21 Ky.R. 307; eff. 8-4-94; 27 Ky.R. 589; eff. 10-16-2000.)