BILL NUMBER: SB 773	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Negrete McLeod

                        FEBRUARY 18, 2011

   An act to amend Section 5063 of the Business and Professions Code,
relating to accountants.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 773, as introduced, Negrete McLeod. Accountants.
   Existing law provides for the licensure and regulation of
accountants by the California Board of Accountancy in the Department
of Consumer Affairs. Existing law requires a licensee to report to
the board in writing the occurrence of certain events within 30 days
of the time the licensee has knowledge of those events, including any
restatement of a financial statement and related disclosures by a
client audited by the licensee.
   This bill would exempt from the reporting requirement a
restatement or related disclosure if included in any report filed and
furnished to the Securities and Exchange Commission, or if the
restatement or disclosure was made solely due to a change in law,
rules and regulations, or standards.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 5063 of the Business and Professions Code is
amended to read:
   5063.  (a) A licensee shall report to the board in writing of the
occurrence of any of the following events occurring on or after
January 1, 1997, within 30 days of the date the licensee has
knowledge of these events:
   (1) The conviction of the licensee of any of the following:
   (A) A felony.
   (B) Any crime related to the qualifications, functions, or duties
of a public accountant or certified public accountant, or to acts or
activities in the course and scope of the practice of public
accountancy.
   (C) Any crime involving theft, embezzlement, misappropriation of
funds or property, breach of a fiduciary responsibility, or the
preparation, publication, or dissemination of false, fraudulent, or
materially misleading financial statements, reports, or information.
   As used in this section, a conviction includes the initial plea,
verdict, or finding of guilt, pleas of no contest, or  a 
pronouncement of sentence by a trial court even though that
conviction may not be final or sentence  is not  actually
imposed until  all  appeals are exhausted.
   (2) The cancellation, revocation, or suspension of a certificate
 ,   or  other authority to practice  ,
 or refusal to renew a certificate or other authority to
practice as a certified public accountant or a public accountant, by
any other state or foreign country.
   (3) The cancellation, revocation, or suspension of the right to
practice as a certified public accountant or a public accountant
before any governmental body or agency.
   (b) A licensee shall report to the board in writing the occurrence
of any of the following events occurring on or after January 1,
2003, within 30 days of the date the licensee has knowledge of the
events:
   (1) Any restatement of a financial statement and related
disclosures by a client audited by the licensee  that is not
included in any report filed and furnished to the Securities and
Exchange Commission, or that is not solely due to a change in law,
rules   and regulations   , or standards  .
   (2) Any civil action settlement or arbitration award against the
licensee relating to the practice of public accountancy where the
amount or value of the settlement or arbitration award is thirty
thousand dollars ($30,000) or greater and where the licensee is not
insured for the full amount of the award.
   (3) Any notice of the opening or initiation of a formal
investigation of the licensee by the Securities and Exchange
Commission or its designee.
   (4) Any notice from the Securities and Exchange Commission to a
licensee requesting a Wells Submission.
   (5) Any notice of the opening or initiation of an investigation by
the Public Company Accounting Oversight Board or its designee, as
defined pursuant to subdivision (g).
   (c) A licensee shall report to the board in writing, within 30
days of the entry of the judgment, any judgment entered on or after
January 1, 2003, against the licensee in any civil action alleging
any of the following:
   (1) Dishonesty, fraud, gross negligence, or negligence.
   (2) Breach of fiduciary responsibility.
   (3) Preparation, publication, or dissemination of false,
fraudulent, or materially misleading financial statements, reports,
or information.
   (4) Embezzlement, theft, misappropriation of funds or property, or
obtaining money, property, or other valuable consideration by
fraudulent means or false pretenses, or other errors or omissions.
   (5) Any actionable conduct by the licensee in the practice of
public accountancy, the performance of bookkeeping operations, or
other professional practice.
   (d) The report required by subdivisions (a), (b), and (c) shall be
signed by the licensee and set forth the facts  which
  that  constitute the reportable event. If the
reportable event involves the action of an administrative agency or
court, then the report shall set forth the title of the matter, court
or agency name, docket number, and dates of occurrence of the
reportable event.
   (e) A licensee shall promptly respond to oral or written inquiries
from the board concerning the reportable events, including inquiries
made by the board in conjunction with license renewal.
   (f) Nothing in this section shall impose a duty upon any licensee
to report to the board the occurrence of any of the events set forth
in subdivision (a), (b), or (c) either by or against any other
licensee.
   (g) The board may adopt regulations to further define the
reporting requirements of this section.