2005 California Business and Professions Code Sections 5070-5079 Article 4. Applications, Registrations, Permits Generally

5070.  Permits to engage in the practice of public accountancy in
this state shall be issued by the board only to holders of the
certificate of certified public accountant issued under this chapter
and to those partnerships, corporations, and other persons who, upon
application approved by the board, are registered with the board
under this chapter.  All applicants for registration shall furnish
satisfactory evidence that the applicant is entitled to registration
and shall pay the fee as provided in Article 8 (commencing with
Section 5130).  Every partnership, corporation, and other person to
whom a permit is issued after December 31, 1962, shall, in addition
to any other fee which may be payable, pay the initial permit fee
provided in Article 8 (commencing with Section 5130).
   Each partnership, corporation, and other person issued a permit by
the board to practice as a certified public accountant or as a
public accountant shall be furnished with a suitable certificate
evidencing such registration.
5070.5.  (a) A permit issued under this chapter to a certified
public accountant or a public accountant expires at 12 midnight on
the last day of the month of the legal birthday of the licensee
during the second year of a two-year term if not renewed.
   To renew an unexpired permit, a permitholder shall, before the
time at which the permit would otherwise expire, apply for renewal on
a form prescribed by the board, pay the renewal fee prescribed by
this chapter and give evidence satisfactory to the board that he or
she has complied with the continuing education provisions of this
chapter.
   (b) A permit to practice as an accountancy partnership or an
accountancy corporation expires at 12 midnight on the last day of the
month in which the permit was initially issued during the second
year of a two-year term if not renewed.  To renew an unexpired
permit, the permitholder shall, before the time at which the permit
would otherwise expire, apply for renewal on a form prescribed by the
board, pay the renewal fee prescribed by this chapter, and provide
evidence satisfactory to the board that the accountancy partnership
or accountancy corporation is in compliance with this chapter.
5070.6.  Except as otherwise provided in this chapter, an expired
permit may be renewed at any time within five years after its
expiration upon the filing of an application for renewal on a form
prescribed by the board, payment of all accrued and unpaid renewal
fees and providing evidence satisfactory to the board of compliance
as required by Section 5070.5.  If the permit is renewed after its
expiration, its holder, as a condition precedent to renewal, shall
also pay the delinquency fee prescribed by this chapter.  Renewal
under this section shall be effective on the date on which the
application is filed, on the date on which the accrued renewal fees
are paid, or on the date on which the delinquency fee, if any, is
paid, whichever last occurs.  If so renewed, the permit shall
continue in effect through the date provided in Section 5070.5 that
next occurs after the effective date of the renewal, when it shall
expire if it is not again renewed.
5070.7.  (a) A permit that is not renewed within five years
following its expiration may not be renewed, restored, or reinstated
thereafter, and the certificate of the holder of the permit shall be
canceled immediately upon expiration of the five-year period, except
as provided in subdivision (e).
   (b) A partnership or corporation whose certificate has been
canceled by operation of this section may obtain a new certificate
and permit only if it again meets the requirements set forth in this
chapter relating to registration and pays the registration fee and
initial permit fee.
   (c) A certified public accountant whose certificate is canceled by
operation of this section may apply for and obtain a new certificate
and permit if the applicant:
   (1) Is not subject to denial of a certificate and permit under
Section 480.
   (2)  Pays all of the fees that would be required of him or her if
he or she were then applying for the certificate and permit for the
first time.
   (3) Takes and passes the examination which would be required of
him or her if he or she were then applying for the certificate for
the first time. The examination may be waived in any case in which
the applicant establishes to the satisfaction of the board that, with
due regard for the public interest, he or she is qualified to engage
in practice as a certified public accountant.
   (d) The board may, by appropriate regulation, provide for the
waiver or refund of all or any part of the application fee in those
cases in which a certificate is issued without an examination under
this section.
   (e) Revoked permits may not be renewed, but may be reinstated by
the board, without regard to the length of time that has elapsed
since the permit was revoked, and with conditions and restrictions as
the board shall determine.
5070.8.  A permit which has been suspended is subject to expiration,
and shall be renewed as provided in this article, but such renewal
does not entitle the holder of the permit, while it remains
suspended, and until it is reinstated, to engage in the practice of
accountancy, or in any other activity or conduct in violation of the
order or judgment by which the permit was suspended.
   A permit which has been revoked is subject to expiration, but it
may not be renewed.  If it is reinstated after its expiration, the
holder of the permit, as a condition precedent to its reinstatement,
shall pay a reinstatement fee which shall be in an amount equal to
the renewal fee in effect on the last regular renewal date before the
date on which it is reinstated, plus the delinquency fee, if any,
accrued at the time of its revocation.
5072.  (a) No persons shall engage in the practice of accountancy as
a partnership unless the partnership is registered by the board.
   (b) A partnership, other than a limited partnership, may be
registered by the board to engage in the practice of public
accountancy provided it meets the following requirements:
   (1) At least one general partner shall hold a valid permit to
practice as a certified public accountant, public accountant, or
accountancy corporation, or shall be an applicant for a certificate
as a certified public accountant under Sections 5087 and 5088.
   (2) Each partner personally engaged within this state in the
practice of public accountancy as defined by Section 5051 shall hold
a valid permit to practice in this state or shall have applied for a
certificate as a certified public accountant under Sections 5087 and
5088.
   (3) Each partner not personally engaged in the practice of public
accountancy within this state shall be a certified public accountant
in good standing of some state, except as permitted by Section 5079.
   (4) Each resident manager in charge of an office of the firm in
this state shall be a licensee in good standing of this state, or
shall have applied for a certificate as a certified public accountant
under Sections 5087 and 5088.
5073.  (a) Application for registration of a partnership shall be
made upon a form prescribed by the board.  The board shall in each
case determine whether the applicant is eligible for registration.
   (b) A partnership that is so registered and that holds a valid
permit issued under this article and that has at least one general
partner who is licensed to practice using the designation "certified
public accountant" or the abbreviation "C.P.A." and one additional
licensed person may use the words "certified public accountants" or
the abbreviation"C.P.A.s" in connection with its partnership name.
   (c)  A partnership that is so registered and that holds a valid
permit issued under this article and that has at least one general
partner who is licensed to practice using the designation "public
accountant" or the abbreviation "P.A." and one additional licensed
person may use the words "public accountants" or the abbreviation
"P.A.s" in connection with its partnership name.
   (d) Notification shall be given to the board within one month
after the admission to, or withdrawal of, a partner from any
partnership so registered.
   (e) Any registration of a partnership under this section granted
in reliance upon Sections 5087 and 5088 shall terminate forthwith if
the board rejects the application under Sections 5087 and 5088 of the
general partner who signed the application for registration as a
partnership, or any partner personally engaged in the practice of
public accountancy in this state, or any resident manager of a
partnership in charge of an office in this state.
5076.  (a) In order to renew its registration, a firm providing
attest services, other than a sole proprietor or a small firm as
defined in Section 5000, shall complete a peer review prior to the
first registration expiration date after July 1, 2008, and no less
frequently than every three years thereafter.
   (b) For purposes of this article, the following definitions apply:
   (1) "Peer review" means a study, appraisal, or review conducted in
accordance with professional standards of the professional work of a
licensee or registered firm by another licensee unaffiliated with
the licensee or registered firm being reviewed.  The peer review
shall include, but not be limited to, a review of at least one attest
engagement representing the highest level of service performed by
the firm and may include an evaluation of other factors in accordance
with requirements specified by the board in regulations.
   (2) "Attest services" include an audit, a review of financial
statements, or an examination of prospective financial information,
provided, however, "attest services" shall not include the issuance
of compiled financial statements.
   (c) The board shall adopt regulations as necessary to implement,
interpret, and make specific the peer review requirements in this
section, including, but not limited to, regulations specifying the
requirements for the approval of peer review providers, and
regulations establishing a peer review oversight committee.
   (d) The board shall review whether to implement the program
specified in this section in light of the changes in federal and
state law or regulations or professional standards, and shall report
its findings to the Legislature and the department by September 1,
2005.
5078.  In each office of a certified public accountant or public
accountant in this state which is not under the personal management
of such an accountant, respectively, work shall be supervised by a
certified public accountant or public accountant.
5079.  (a) Notwithstanding any other provision of this chapter, any
firm lawfully engaged in the practice of public accountancy in this
state may have owners who are not licensed as certified public
accountants or public accountants if the following conditions are
met:
   (1) Nonlicensee owners shall be natural persons or entities, such
as partnerships, professional corporations, or others, provided that
each ultimate beneficial owner of an equity interest in that entity
shall be a natural person materially participating in the business
conducted by the firm or an entity controlled by the firm.
   (2) Nonlicensee owners shall materially participate in the
business of the firm, or an entity controlled by the firm, and their
ownership interest shall revert to the firm upon the cessation of any
material participation.
   (3) Licensees shall in the aggregate, directly or beneficially,
comprise a majority of owners, except that firms with two owners may
have one owner who is a nonlicensee.
   (4) Licensees shall in the aggregate, directly or beneficially,
hold more than half of the equity capital and possess majority voting
rights.
   (5) Nonlicensee owners shall not hold themselves out as certified
public accountants or public accountants and each licensed firm shall
disclose actual or potential involvement of nonlicensee owners in
the services provided.
   (6) There shall be a certified public accountant or public
accountant who has ultimate responsibility for each financial
statement attest and compilation service engagement.
   (7) Except as permitted by the board in the exercise of its
discretion, a person may not become a nonlicensee owner or remain a
nonlicensee owner if the person has done either of the following:
   (A) Been convicted of any crime, an element of which is dishonesty
or fraud, under the laws of any state, of the United States, or of
any other jurisdiction.
   (B) Had a professional license or the right to practice revoked or
suspended for reasons other than nonpayment of dues or fees, or has
voluntarily surrendered a license or right to practice with
disciplinary charges or a disciplinary investigation pending, and not
reinstated by a licensing or regulatory agency of any state, or of
the United States, including, but not limited to, the Securities and
Exchange Commission or Public Company Accounting Oversight Board, or
of any other jurisdiction.
   (b) (1) A nonlicensee owner of a licensed firm shall report to the
board in writing of the occurrence of any of the events set forth in
paragraph (7) of subdivision (a) within 30 days of the date the
nonlicensee owner has knowledge of the event. A conviction includes
the initial plea, verdict, or finding of guilt, pleas of no contest,
or pronouncement of sentence by a trial court even though that
conviction may not be final or sentence actually imposed until
appeals are exhausted.
   (2) A California nonlicensee owner of a licensed firm shall report
to the board in writing the occurrence of any of the following
events occurring on or after January 1, 2006, within 30 days of the
date the California nonlicensee owner has knowledge of the events:
   (A) Any notice of the opening or initiation of a formal
investigation of the nonlicensee owner by the Securities and Exchange
Commission or its designee, or any notice from the Securities and
Exchange Commission to a nonlicensee owner requesting a Wells
submission.
   (B) Any notice of the opening or initiation of an investigation of
the nonlicensee owner by the Public Company Accounting Oversight
Board or its designee.
   (C) Any notice of the opening or initiation of an investigation of
the nonlicensee owner by another professional licensing agency.
   (3) The report required by paragraphs (1) and (2) shall be signed
by the nonlicensee owner and set forth the facts that constitute the
reportable event. If the reportable event involves the action of an
administrative agency or court, the report shall identify the name of
the agency or court, the title of the matter, and the date of
occurrence of the event.
   (4) Notwithstanding any other provision of law, reports received
by the board pursuant to paragraph (2) shall not be disclosed to the
public pursuant to the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code) other than (A) in the course of any disciplinary
proceeding by the board after the filing of a formal accusation, (B)
in the course of any legal action to which the board is a party, (C)
in response to an official inquiry from a state or federal agency,
(D) in response to a subpoena or summons enforceable by order of a
court, or (E) when otherwise specifically required by law.
   (5) Nothing in this subdivision shall impose a duty upon any
licensee or nonlicensee owner to report to the board the occurrence
of any events set forth in paragraph (7) of subdivision (a) or
paragraph (2) of this subdivision either by or against any other
nonlicensee owner.
   (c) For purposes of this section, the following definitions apply:
   (1) "Licensee" means a certified public accountant or public
accountant in this state or a certified public accountant in good
standing in another state.
   (2) "Material participation" means an activity that is regular,
continuous, and substantial.
   (d) All firms with nonlicensee owners shall certify at the time of
registration and renewal that the firm is in compliance with this
section.
   (e) The board shall adopt regulations to implement, interpret, or
make specific this section.