BILL NUMBER: SB 1405	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 19, 2012
	AMENDED IN SENATE  APRIL 10, 2012

INTRODUCED BY   Senator De León

                        FEBRUARY 24, 2012

   An act to  amend, repeal, and add Sections 5072, 5096, 5096.1,
5096.2, 5096.3 5096.4, 5096.5, 5096.6, 5096.7, 5096.10, 5096.12,
5096.13, 5096.14, and 5096.15 of, to,  add Sections 5058.4 and
5070.2 to  , and to add and repeal Sections 5096.20 and 5096.21
of,  the Business and Professions Code, relating to accountancy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1405, as amended, De León. Accountancy: military service:
 inactive status   practice privilege  .

    Existing law provides for the licensure and regulation of the
practice of accountancy by the California Board of Accountancy within
the Department of Consumer Affairs. The department is under the
control of the Director of Consumer Affairs.  
   Existing 
    (1)     Existing  law provides for the
regulation of various professions and vocations by boards within the
Department of Consumer Affairs and for the licensure of individuals
in that regard. Existing law authorizes any licensee whose license
expired while he or she was on active duty as a member of the
California National Guard or the United States Armed Forces to
reinstate his or her license without examination or penalty if
certain requirements are met.  Existing law provides for the
licensure and regulation of the practice of accountancy by the
California Board of Accountancy.  A permit issued to a
certified public accountant or a public accountant is subject to a
biennial renewal fee. Existing law also imposes certain continuing
education and peer review requirements on persons licensed by the
board. Existing law makes violation of certain provisions governing
accountants a crime.
   This bill, beginning January 1, 2014, would authorize a certified
public accountant or a public accountant to apply to the board to
have his or her permit placed in a military inactive status while he
or she is engaged in active duty as a member of the California
National Guard or the United States Armed Forces, and would exempt a
person granted that status from paying the biennial renewal fee or
participating in continuing education and peer review activities. The
bill would prohibit a person in military exempt status from engaging
in the practice of public accountancy and would impose various other
requirements. The bill would thereby change the definition of a
crime and impose a state-mandated local program. The bill would
require a person in military exempt status to pay the biennial
renewal fee and to meet continuing education and peer review
requirements within a specified period after his or her discharge
from active duty. 
   (2) Existing law authorizes an individual whose principal place of
business is not in this state, and who has a valid and current
license, certificate, or permit, to practice public accountancy from
another state, and to engage in the practice of public accountancy in
this state under a practice privilege if a condition is satisfied.
Under existing law, if such a condition is met, the individual, in
order to obtain a practice privilege, is required to, among other
things, provide notice to the board by submitting a notification form
and pay fees, as specified. Existing law provides that an individual
with a practice privilege is subject to the personal and subject
matter jurisdiction and disciplinary authority of the board and the
state courts and is required to comply with the accountancy
provisions applicable to licensees. Under existing law, except as
otherwise specified, a practice privilege expires one year from the
date of the notice to the board. Existing law authorizes the board to
deny practice privileges using specified procedures. Existing law
prohibits an individual with a practice privilege from signing an
attest report unless he or she meets specified experience
requirements and completes any continuing education or other
conditions as required by the board. Existing law makes these
provisions operative only if there is a specified appropriation in
the annual Budget Act to fund the practice privilege provisions.
 
   This bill would, commencing July 1, 2013, and until January 1,
2019, eliminate the notification form and fee requirements and would
instead authorize an individual otherwise meeting a condition for a
practice privilege to perform certain audit and financial statement
review services only through a firm of certified public accountants
that is required to be registered with the board. The bill would
require the individual to cease practicing for a specified period of
time under the practice privilege in this state if the regulatory
agency in the state where the individual is licensed, among other
things, suspends or revokes the license or takes specified
disciplinary action against the individual or the individual is
convicted of a crime involving dishonesty. The bill would require an
individual who is required to cease practice to notify the board and
cease practice and would make an individual who violates these
requirements subject to specified discipline by the board. The bill
would require an individual, within a specified time period before he
or she wishes to practice in this state to notify the board and
shall not practice until the board provides the person with written
permission to do so if certain circumstances apply. The bill would
eliminate the expiration on a practice privilege and would also
eliminate the board's authority to deny a practice privilege, except
as specified, and would authorize the board to instead revoke such a
privilege. If the board revokes a practice privilege, the bill would
require the board to notify the regulatory agency of the state where
the individual is licenced and certain federal regulatory agencies.
With respect to the signing of attestation reports, the bill would
eliminate the continuing education or other conditions requirements
required by the board. The bill would also delete that provision
making these provisions contingent on a specified appropriation in
the annual Budget Act.  
   The bill would require the board, prior to July 1, 2013, to add
specified content to its Internet Web site in order to allow
consumers to obtain license information about individuals with a
practice privilege.  
   Commencing January 1, 2016, the bill would authorize the board to
make a determination based on specified factors about whether
allowing individuals from a particular state to practice pursuant to
a practice privilege violates the board's duty to protect the public.
If the board were to make such a determination, the bill would
require the board to require those individuals, except as specified,
to file the notification form and pay specified fees. The bill would
require the board to report to the relevant policy committees of the
Legislature and the director preliminary determinations made pursuant
to these provisions no later than July 1, 2015.  
   The bill would, by January 1, 2018, require the board to prepare a
report to be provided to the relevant policy committees of the
Legislature and the director detailing, among other things, how the
board has implemented these practice privilege provisions. 
    The bill would, by July 1, 2014, require the board to convene
a specified stakeholder group to consider whether the penalties
imposed pursuant to the practice privilege provisions are sufficient
to deter violations.  
   The bill would make other related conforming changes.  
   Existing law prohibits a person from engaging in the practice of
accountancy as a partnership unless the partnership is registered
with the board. Existing law requires a partnership to meet certain
requirements in order to be registered, including, that at least one
general partner holds a specified permit or is an applicant for a
specified certificate.  
   This bill would additionally authorize a partnership registered to
provides certain services, as described above, to meet those
requirements. 
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 5058.4 is added to the Business and Professions
Code, to read:
   5058.4.  The holder of a permit in a military inactive status
issued by the board pursuant to Section 5070.2, when lawfully using
the title "certified public accountant," the CPA designation, or any
other reference that would suggest that the person is licensed by the
board, on materials such as correspondence, Internet Web sites,
business cards, nameplates, or name plaques, shall place the term
"military inactive" immediately after that title, designation, or
reference.
  SEC. 2.  Section 5070.2 is added to the Business and Professions
Code, to read:
   5070.2.  (a) (1) Beginning January 1, 2014, a holder of a permit
may apply to have his or her permit placed in a military inactive
status if the holder of a permit is engaged in, and provides
sufficient evidence of, active duty as a member of the California
National Guard or the United States Armed Forces.
   (2) The board shall deny an applicant's application for a military
inactive status permit if the permit issued pursuant to Section 5070
is canceled or if it is suspended, revoked, or otherwise punitively
restricted by the board or subject to disciplinary action under this
chapter.
   (b) No holder of a permit in a military inactive status shall
engage in any activity for which a permit is required.
   (c) The holder of a permit in a military inactive status shall be
exempt from all of the following:
   (1) Payment of the biennial renewal fee described in subdivision
(f) of Section 5134.
   (2) The continuing education requirements of Section 5027.
   (3) The peer review requirements of Section 5076.
   (d) In order to convert a permit status from military inactive
status prior to discharge from active duty as a member of the
California National Guard or the United States Armed Forces, the
holder of a permit in a military inactive status shall comply with
all of the following requirements:
   (1) Pay the current biennial renewal fee described in subdivision
(f) of Section 5134.
   (2) Meet continuing education requirements as prescribed by the
board.
   (3) Meet the peer review requirements as prescribed by the board.
   (e) The holder of a permit in a military inactive status shall,
within one year from his or her discharge from active duty as a
member of the California National Guard or the United States Armed
Forces, comply with all of the following requirements:
   (1) Provide evidence to the board of the discharge date.
   (2) Pay the current biennial renewal fee described in subdivision
(f) of Section 5134.
   (3) Meet continuing education requirements as prescribed by the
board.
   (4) Meet the peer review requirements as prescribed by the board.
   (f) The board may adopt regulations as necessary to administer
this section.
   SEC. 3.    Section 5072 of the   Business
and Professions Code   is amended to read: 
   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. 
   (c) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 4.    Section 5072 is added to the  
Business and Professions Code   , to read:  
   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, or the
partnership shall be registered pursuant to subdivision (c) of
Section 5096.12.
   (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, except for a partner with practice privileges pursuant to
Section 5096.
   (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.
   (c) This section shall become operative on July 1, 2013.
   (d) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 5.    Section 5072 is added to the  
Business and Professions Code   , to read:  
   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.
   (c) This section shall become operative on January 1, 2019. 
   SEC. 6.    Section 5096 of the   Business
and Professions Code   is amended to read: 
   5096.  (a) An individual whose principal place of business is not
in this state and who has a valid and current license, certificate or
permit to practice public accountancy from another state may,
subject to the conditions and limitations in this article, engage in
the practice of public accountancy in this state under a practice
privilege without obtaining a certificate or license under this
chapter if the individual satisfies one of the following:
   (1) The individual has continually practiced public accountancy as
a certified public accountant under a valid license issued by any
state for at least four of the last ten years.
   (2) The individual has a license, certificate, or permit from a
state which has been determined by the board to have education,
examination, and experience qualifications for licensure
substantially equivalent to this state's qualifications under Section
5093.
   (3) The individual possesses education, examination, and
experience qualifications for licensure which have been determined by
the board to be substantially equivalent to this state's
qualifications under Section 5093.
   (b) The board may designate states as substantially equivalent
under paragraph (2) of subdivision (a) and may accept individual
qualification evaluations or appraisals conducted by designated
entities, as satisfying the requirements of paragraph (3) of
subdivision (a).
   (c) To obtain a practice privilege under this section, an
individual who meets the requirements of subdivision (a), shall do
the following:
   (1) In the manner prescribed by board regulation, notify the board
of the individual's intent to practice.
   (2) Pay a fee as provided in Article 8 (commencing with Section
5130).
   (d) Except as otherwise provided by this article or by board
regulation, the practice privilege commences when the individual
notifies the board, provided the fee is received by the board within
30 days of that date. The board shall permit the notification to be
provided electronically.
   (e) An individual who holds a practice privilege under this
article:
   (1) Is subject to the personal and subject matter jurisdiction and
disciplinary authority of the board and the courts of this state.
   (2) Shall comply with the provisions of this chapter, board
regulations, and other laws, regulations, and professional standards
applicable to the practice of public accountancy by the licensees of
this state and to any other laws and regulations applicable to
individuals practicing under practice privileges in this state except
the individual is deemed, solely for the purpose of this article, to
have met the continuing education requirements and ethics
examination requirements of this state when such individual has met
the examination and continuing education requirements of the state in
which the individual holds the valid license, certificate, or permit
on which the substantial equivalency is based.
   (3) Shall not provide public accountancy services in this state
from any office located in this state, except as an employee of a
firm registered in this state. This paragraph does not apply to
public accountancy services provided to a client at the client's
place of business or residence.
   (4) Is deemed to have appointed the regulatory agency of the state
that issued the individual's certificate, license, or permit upon
which substantial equivalency is based as the individual's agent on
whom notices, subpoenas or other process may be served in any action
or proceeding by the board against the individual.
   (5) Shall cooperate with any board investigation or inquiry and
shall timely respond to a board investigation, inquiry, request,
notice, demand or subpoena for information or documents and timely
provide to the board the identified information and documents.
   (f) A practice privilege expires one year from the date of the
notice, unless a shorter period is set by board regulation.
   (g) (1) No individual may practice under a practice privilege
without prior approval of the board if the individual has, or
acquires at any time during the term of the practice privilege, any
disqualifying condition under paragraph (2) of this subdivision.
   (2) Disqualifying conditions include:
   (A) Conviction of any crime other than a minor traffic violation.
   (B) Revocation, suspension, denial, surrender or other discipline
or sanctions involving any license, permit, registration, certificate
or other authority to practice any profession in this or any other
state or foreign country or to practice before any state, federal, or
local court or agency, or the Public Company Accounting Oversight
Board.
   (C) Pendency of any investigation, inquiry or proceeding by or
before any state, federal or local court or agency, including, but
not limited to, the Public Company Accounting Oversight Board,
involving the professional conduct of the individual.
   (D) Any judgment or arbitration award against the individual
involving the professional conduct of the individual in the amount of
thirty thousand dollars ($30,000) or greater.
   (E) Any other conditions as specified by the board in regulation.
   (3) The board may adopt regulations exempting specified minor
occurrences of the conditions listed in subparagraph (B) of paragraph
(2) from being disqualifying conditions under this subdivision. 

   (h) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 7.    Section 5096 is added to the  
Business and Professions Code   , to read:  
   5096.  (a) An individual whose principal place of business is not
in this state and who has a valid and current license, certificate or
permit to practice public accountancy from another state may,
subject to the conditions and limitations in this article, engage in
the practice of public accountancy in this state under a practice
privilege without obtaining a certificate or license under this
chapter if the individual satisfies one of the following:
   (1) The individual has continually practiced public accountancy as
a certified public accountant under a valid license issued by any
state for at least four of the last 10 years.
   (2) The individual has a license, certificate, or permit from a
state which has been determined by the board to have education,
examination, and experience qualifications for licensure
substantially equivalent to this state's qualifications under Section
5093.
   (3) The individual possesses education, examination, and
experience qualifications for licensure which have been determined by
the board to be substantially equivalent to this state's
qualifications under Section 5093.
   (b) The board may designate states as substantially equivalent
under paragraph (2) of subdivision (a) and may accept individual
qualification evaluations or appraisals conducted by designated
entities, as satisfying the requirements of paragraph (3) of
subdivision (a).
   (c) An individual who qualifies for the practice privilege under
this section may engage in the practice of public accountancy in this
state, and no notice, fee, or other requirement shall be imposed on
that individual by the board.
   (d) An individual who qualifies for the practice privilege under
this section may perform the following services only through a firm
of certified public accountants that has obtained a registration from
the board pursuant to Section 5096.12:
   (1) An audit or review of a financial statement for an entity
headquartered in California.
   (2) A compilation of a financial statement when that person
expects, or reasonably might expect, that a third party will use the
financial statement and the compilation report does not disclose a
lack of independence for an entity headquartered in California.
   (3) An examination of prospective financial information for an
entity headquartered in California.
   (e) An individual who holds a practice privilege under this
article:
   (1) Is subject to the personal and subject matter jurisdiction and
disciplinary authority of the board and the courts of this state.
   (2) Shall comply with the provisions of this chapter, board
regulations, and other laws, regulations, and professional standards
applicable to the practice of public accountancy by the licensees of
this state and to any other laws and regulations applicable to
individuals practicing under practice privileges in this state except
the individual is deemed, solely for the purpose of this article, to
have met the continuing education requirements and ethics
examination requirements of this state when such individual has met
the examination and continuing education requirements of the state in
which the individual holds the valid license, certificate, or permit
on which the substantial equivalency is based.
   (3) Shall not provide public accountancy services in this state
from any office located in this state, except as an employee of a
firm registered in this state. This paragraph does not apply to
public accountancy services provided to a client at the client's
place of business or residence.
   (4) Is deemed to have appointed the regulatory agency of the state
that issued the individual's certificate, license, or permit upon
which substantial equivalency is based as the individual's agent on
whom notices, subpoenas or other process may be served in any action
or proceeding by the board against the individual.
   (5) Shall cooperate with any board investigation or inquiry and
shall timely respond to a board investigation, inquiry, request,
notice, demand or subpoena for information or documents and timely
provide to the board the identified information and documents.
   (6) Shall cease exercising the practice privilege in this state if
the regulatory agency in the state in which the individual's
certificate, license, or permit was issued takes action resulting in
the suspension or revocation of the individual's certificate,
license, or permit, or takes other disciplinary action against the
individual's certificate, license, or permit that arises from any of
the following:
   (A) Gross negligence, recklessness, or intentional wrongdoing
relating to the practice of public accountancy.
    (B) Fraud or misappropriation of funds.
   (C) Preparation, publication, or dissemination of false,
fraudulent, or materially incomplete or misleading financial
statements, reports, or information.
   (7) Shall cease exercising the practice privilege in this state if
convicted in any jurisdiction of any crime involving dishonesty.
   (8) Shall cease exercising the practice privilege if the U.S.
Securities and Exchange Commission or the Public Company Accounting
Oversight Board bars the individual from practicing before them.
   (f) An individual who is required to cease practice pursuant to
paragraphs (6) to (8), inclusive, of subdivision (e) shall notify the
board within 15 calendar days, on a form prescribed by the board,
and shall not practice public accountancy in this state pursuant to
this section until he or she has received from the board written
permission to do so.
   (g) An individual who fails to cease practice as required by
subdivision (e) or that fails to provide the notice required by
subdivision (f) shall be subject to the personal and subject matter
jurisdiction and disciplinary authority of the board as if the
practice privilege were a license and the individual were a licensee.
An individual in violation of subdivision (e) or (f) shall, for a
minimum of one year from the date the board learns there has been a
violation of subdivision (e) or (f), not practice in this state and
shall not have the possibility of reinstatement during that period.
If the board determines that the failure to cease practice or provide
the notice was intentional, that individual's practice privilege
shall be revoked and there shall be no possibility of reinstatement
for a minimum of two years.
   (h) The board shall require an individual who provides notice to
the board pursuant subdivision (f) to cease the practice public
accountancy in this state until the board provides the individual
with written permission to resume the practice of public accountancy
in this state.
   (i) (1) An individual to whom who, within the last seven years
immediately preceding the date on which he or she wishes to practice
in this state shall notify the board, on a form prescribed by the
board, and shall not practice public accountancy in this state, any
of the following criteria apply pursuant to this section until the
board provides the individual with written permission to do:
   (A) He or she has been the subject of any final disciplinary
action by the licensing or disciplinary authority of any other
jurisdiction with respect to any professional license or has any
charges of professional misconduct pending against him or her in any
other jurisdiction.
   (B) He or she has had his or her license in another jurisdiction
reinstated after a suspension or revocation of the license.
   (C) He or she has been denied issuance or renewal of a
professional license or certificate in any other jurisdiction for any
reason other than an inadvertent administrative error.
   (D) He or she has been convicted of a crime or is subject to
pending criminal charges in any jurisdiction other than a minor
traffic violation.
   (E) He or she has otherwise acquired a disqualifying condition as
described in Section 5096.
   (2) An individual who fails to cease practice as required by
subdivision (e) or who fails to provide the notice required by
paragraph (1) shall be subject to the personal and subject matter
jurisdiction and disciplinary authority of the board as if the
practice privilege were a license and the individual were a licensee.
An individual in violation of subdivision (e) or paragraph (1)
shall, for a minimum of one year from the date the board knows there
has been a violation of subdivision (e) or paragraph (1), not
practice in this state and shall not have the possibility of
reinstatement during that period. If the board determines that the
failure to cease practice or provide the notice was intentional, that
individual shall be prohibited from practicing in this state in the
same manner as if a licensee has their practice privilege revoked and
there shall be no possibility of reinstatement for a minimum of two
years.
   (h) This section shall become operative on July 1, 2013.
   (i) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 8.    Section 5096 is added to the  
Business and Professions Code   , to read:  
   5096.  (a) An individual whose principal place of business is not
in this state and who has a valid and current license, certificate or
permit to practice public accountancy from another state may,
subject to the conditions and limitations in this article, engage in
the practice of public accountancy in this state under a practice
privilege without obtaining a certificate or license under this
chapter if the individual satisfies one of the following:
   (1) The individual has continually practiced public accountancy as
a certified public accountant under a valid license issued by any
state for at least four of the last 10 years.
   (2) The individual has a license, certificate, or permit from a
state which has been determined by the board to have education,
examination, and experience qualifications for licensure
substantially equivalent to this state's qualifications under Section
5093.
   (3) The individual possesses education, examination, and
experience qualifications for licensure which have been determined by
the board to be substantially equivalent to this state's
qualifications under Section 5093.
   (b) The board may designate states as substantially equivalent
under paragraph (2) of subdivision (a) and may accept individual
qualification evaluations or appraisals conducted by designated
entities, as satisfying the requirements of paragraph (3) of
subdivision (a).
   (c) To obtain a practice privilege under this section, an
individual who meets the requirements of subdivision (a), shall do
the following:
   (1) In the manner prescribed by board regulation, notify the board
of the individual's intent to practice.
   (2) Pay a fee as provided in Article 8 (commencing with Section
5130).
                                    (d) Except as otherwise provided
by this article or by board regulation, the practice privilege
commences when the individual notifies the board, provided the fee is
received by the board within 30 days of that date. The board shall
permit the notification to be provided electronically.
   (e) An individual who holds a practice privilege under this
article:
   (1) Is subject to the personal and subject matter jurisdiction and
disciplinary authority of the board and the courts of this state.
   (2) Shall comply with the provisions of this chapter, board
regulations, and other laws, regulations, and professional standards
applicable to the practice of public accountancy by the licensees of
this state and to any other laws and regulations applicable to
individuals practicing under practice privileges in this state except
the individual is deemed, solely for the purpose of this article, to
have met the continuing education requirements and ethics
examination requirements of this state when such individual has met
the examination and continuing education requirements of the state in
which the individual holds the valid license, certificate, or permit
on which the substantial equivalency is based.
   (3) Shall not provide public accountancy services in this state
from any office located in this state, except as an employee of a
firm registered in this state. This paragraph does not apply to
public accountancy services provided to a client at the client's
place of business or residence.
   (4) Is deemed to have appointed the regulatory agency of the state
that issued the individual's certificate, license, or permit upon
which substantial equivalency is based as the individual's agent on
whom notices, subpoenas or other process may be served in any action
or proceeding by the board against the individual.
   (5) Shall cooperate with any board investigation or inquiry and
shall timely respond to a board investigation, inquiry, request,
notice, demand or subpoena for information or documents and timely
provide to the board the identified information and documents.
   (f) A practice privilege expires one year from the date of the
notice, unless a shorter period is set by board regulation.
   (g) (1) No individual may practice under a practice privilege
without prior approval of the board if the individual has, or
acquires at any time during the term of the practice privilege, any
disqualifying condition under paragraph (2) of this subdivision.
   (2) Disqualifying conditions include:
   (A) Conviction of any crime other than a minor traffic violation.
   (B) Revocation, suspension, denial, surrender or other discipline
or sanctions involving any license, permit, registration, certificate
or other authority to practice any profession in this or any other
state or foreign country or to practice before any state, federal, or
local court or agency, or the Public Company Accounting Oversight
Board.
   (C) Pendency of any investigation, inquiry or proceeding by or
before any state, federal or local court or agency, including, but
not limited to, the Public Company Accounting Oversight Board,
involving the professional conduct of the individual.
   (D) Any judgment or arbitration award against the individual
involving the professional conduct of the individual in the amount of
thirty thousand dollars ($30,000) or greater.
   (E) Any other conditions as specified by the board in regulation.
   (3) The board may adopt regulations exempting specified minor
occurrences of the conditions listed in subparagraph (B) of paragraph
(2) from being disqualifying conditions under this subdivision.
   (h) This section shall become operative on January 1, 2019. 
   SEC. 9.    Section 5096.1 of the   Business
and Professions Code   is amended to read: 
   5096.1.  (a) Any individual, not a licensee of this state, who is
engaged in any act which is the practice of public accountancy in
this state, and who has not given notice of intent to practice under
practice privileges and paid the fee required pursuant to the
provisions of this article, and who has a license, certificate or
other authority to engage in the practice of public accountancy in
any other state, regardless of whether active, inactive, suspended,
or subject to renewal on payment of a fee or completion of an
educational or ethics requirement, is:
   (1) Deemed to be practicing public accountancy unlawfully in this
state.
   (2) Subject to the personal and subject matter jurisdiction and
disciplinary authority of the board and the courts of this state to
the same extent as a holder of a valid practice privilege.
   (3) Deemed to have appointed the regulatory agency of the state
that issued the individual's certificate or license as the individual'
s agent on whom notice, subpoenas, or other process may be served in
any action or proceeding by the board against the individual.
   (b) The board may prospectively deny a practice privilege to any
individual who has violated this section or implementing regulations
or committed any act which would be grounds for discipline against
the holder of a practice privilege. 
   (c) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 10.    Section 5096.1 is added to the  
Business and Professions Code   , to read:  
   5096.1.  (a) Any individual, not a licensee of this state, who is
engaged in any act which is the practice of public accountancy in
this state, and who does not qualify to practice pursuant to the
practice privilege described in Section 5096 and who has a license,
certificate, or other authority to engage in the practice of public
accountancy in any other state, regardless of whether active,
inactive, suspended, or subject to renewal on payment of a fee or
completion of an educational or ethics requirement, is:
   (1) Deemed to be practicing public accountancy unlawfully in this
state.
   (2) Subject to the personal and subject matter jurisdiction and
disciplinary authority of the board and the courts of this state to
the same extent as a holder of a valid practice privilege.
   (3) Deemed to have appointed the regulatory agency of the state
that issued the individual's certificate or license as the individual'
s agent on whom notice, subpoenas, or other process may be served in
any action or proceeding by the board against the individual.
   (b) The board may revoke a practice privilege from any individual
who has violated this section or implementing regulations or
committed any act which would be grounds for discipline against the
holder of a practice privilege.
   (c) This section shall become operative on July 1, 2013.
   (d) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 11.    Section 5096.1 is added to the  
Business and Professions Code   , to read:  
   5096.1.  (a) Any individual, not a licensee of this state, who is
engaged in any act which is the practice of public accountancy in
this state, and who has not given notice of intent to practice under
practice privileges and paid the fee required pursuant to the
provisions of this article, and who has a license, certificate or
other authority to engage in the practice of public accountancy in
any other state, regardless of whether active, inactive, suspended,
or subject to renewal on payment of a fee or completion of an
educational or ethics requirement, is:
   (1) Deemed to be practicing public accountancy unlawfully in this
state.
   (2) Subject to the personal and subject matter jurisdiction and
disciplinary authority of the board and the courts of this state to
the same extent as a holder of a valid practice privilege.
   (3) Deemed to have appointed the regulatory agency of the state
that issued the individual's certificate or license as the individual'
s agent on whom notice, subpoenas, or other process may be served in
any action or proceeding by the board against the individual.
   (b) The board may prospectively deny a practice privilege to any
individual who has violated this section or implementing regulations
or committed any act which would be grounds for discipline against
the holder of a practice privilege.
   (c) This section shall become operative on January 1, 2019. 
   SEC. 12.    Section 5096.2 of the   Business
and Professions Code   is amended to read: 
   5096.2.  (a) Practice privileges may be denied for failure to
qualify under or comply with the provisions of this article or
implementing regulations, or for any act that if committed by an
applicant for licensure would be grounds for denial of a license
under Section 480 or if committed by a licensee would be grounds for
discipline under Section 5100, or for any act committed outside of
this state that would be a violation if committed within this state.
   (b) The board may deny practice privileges using either of the
following procedures:
   (1) Notifying the individual in writing of all of the following:
   (A) That the practice privilege is denied.
   (B) The reasons for denial.
   (C) The earliest date on which the individual is eligible for a
practice privilege.
   (D) That the individual has a right to appeal the notice and
request a hearing under the provisions of the Administrative
Procedure Act if a written notice of appeal and request for hearing
is made within 60 days.
   (E) That, if the individual does not submit a notice of appeal and
request for hearing within 60 days, the board's action set forth in
the notice shall become final.
   (2) Filing a statement of issues under the Administrative
Procedure Act.
   (c) An individual who had been denied a practice privilege may
apply for a new practice privilege not less than one year after the
effective date of the notice or decision denying the practice
privilege unless a longer time period, not to exceed three years, is
specified in the notice or decision denying the practice privilege.

   (d) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 13.    Section 5096.2 is added to the  
Business and Professions Code   , to read:  
   5096.2.  (a) (1) Practice privileges may be revoked for any of the
following reasons:
   (A) If an individual no longer qualifies under, or complies with,
the provisions of this article or implementing regulations.
   (B) If an individual commits any act that if committed by an
applicant for licensure would be grounds for denial of a license
under Section 480.
   (C) If an individual commits any act that if committed by a
licensee would be grounds for discipline under Section 5100.
   (D) If an individual commits any act outside of this state that
would be a violation if committed within this state.
   (E) If an individual acquires at any time, while exercising the
practice privilege, any disqualifying condition under paragraph (2).
   (2) Disqualifying conditions include:
   (A) Conviction of any crime other than a minor traffic violation.
   (B) Revocation, suspension, denial, surrender, or other discipline
or sanctions involving any license, permit, registration,
certificate, or other authority to practice any profession in this or
any other state or foreign country or to practice before any state,
federal, or local court or agency, or the Public Company Accounting
Oversight Board.
   (C) Any judgment or arbitration award against the individual
involving the professional conduct of the individual in the amount of
thirty thousand dollars ($30,000) or greater.
   (D) Any other conditions as specified by the board in regulation.
   (3) The board may adopt regulations exempting specified minor
occurrences of the conditions listed in subparagraph (B) of paragraph
(2) from being disqualifying conditions under this subdivision.
   (b) The board may revoke practice privileges using either of the
following procedures:
   (1) Notifying the individual in writing of all of the following:
   (A) That the practice privilege is revoked.
   (B) The reasons for revocation.
   (C) The earliest date on which the individual may qualify for a
practice privilege.
   (D) That the individual has a right to appeal the notice and
request a hearing under the provisions of the Administrative
Procedure Act if a written notice of appeal and request for hearing
is made within 60 days.
   (E) That, if the individual does not submit a notice of appeal and
request for hearing within 60 days, the board's action set forth in
the notice shall become final.
   (2) Filing a statement of issues under the Administrative
Procedure Act.
   (c) An individual whose practice privilege has been revoked may
only subsequently exercise the practice privilege upon application to
the board for reinstatement of the practice privilege not less than
one year after the effective date of the notice or decision revoking
the practice privilege, unless a longer time period is specified in
the notice or decision revoking the practice privilege.
   (d) Holders of practice privileges are subject to suspension,
fines, or other disciplinary actions for any conduct that would be
grounds for discipline against a licensee of the board or for any
conduct in violation of this article or regulations adopted
thereunder.
   (e) The board may recover its costs pursuant to Section 5107 as
part of any disciplinary proceeding against the holder of a practice
privilege.
   (f) The provisions of the Administrative Procedure Act, including,
but not limited to, the commencement of a disciplinary proceeding by
the filing of an accusation by the board, shall apply under this
article.
   (g) If the board revokes or otherwise limits an individual's
practice privilege, the board shall promptly notify the regulatory
agency of the state or states in which the individual is licensed,
and the U.S. Securities and Exchange Commission, the Public Company
Accounting Oversight Board, and the National Association of State
Boards of Accountancy.
   (h) This section shall become operative on July 1, 2013.
   (i) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 14.    Section 5096.2 is added to the  
Business and Professions Code   , to read:  
   5096.2.  (a) Practice privileges may be denied for failure to
qualify under or comply with the provisions of this article or
implementing regulations, or for any act that if committed by an
applicant for licensure would be grounds for denial of a license
under Section 480 or if committed by a licensee would be grounds for
discipline under Section 5100, or for any act committed outside of
this state that would be a violation if committed within this state.
   (b) The board may deny practice privileges using either of the
following procedures:
   (1) Notifying the individual in writing of all of the following:
   (A) That the practice privilege is denied.
   (B) The reasons for denial.
   (C) The earliest date on which the individual is eligible for a
practice privilege.
   (D) That the individual has a right to appeal the notice and
request a hearing under the provisions of the Administrative
Procedure Act if a written notice of appeal and request for hearing
is made within 60 days.
   (E) That, if the individual does not submit a notice of appeal and
request for hearing within 60 days, the board's action set forth in
the notice shall become final.
   (2) Filing a statement of issues under the Administrative
Procedure Act.
   (c) An individual who had been denied a practice privilege may
apply for a new practice privilege not less than one year after the
effective date of the notice or decision denying the practice
privilege unless a longer time period, not to exceed three years, is
specified in the notice or decision denying the practice privilege.
   (d) This section shall become operative on January 1, 2019. 
   SEC. 15.    Section 5096.3 of the   Business
and Professions Code   is amended to read: 
   5096.3.  (a) Practice privileges are subject to revocation,
suspension, fines or other disciplinary sanctions for any conduct
that would be grounds for discipline against a licensee of the board
or for any conduct in violation of this article or regulations
implementing this article.
   (b) Practice privileges are subject to discipline during any time
period in which they are valid, under administrative suspension, or
expired.
   (c) The board may recover its costs pursuant to Section 5107 as
part of any disciplinary proceeding against the holder of a practice
privilege.
   (d) An individual whose practice privilege has been revoked may
apply for a new practice privilege not less than one year after the
effective date of the board's decision revoking the individual's
practice privilege unless a longer time period, not to exceed three
years, is specified in the board's decision revoking the practice
privilege.
   (e) The provisions of the Administrative Procedure Act, including,
but not limited to, the commencement of a disciplinary proceeding by
the filing of an accusation by the board shall apply under this
article. 
   (f) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 16.    Section 5096.3 is added to the  
Business and Professions Code   , to read:  
   5096.3.  (a) Practice privileges are subject to revocation,
suspension, fines or other disciplinary sanctions for any conduct
that would be grounds for discipline against a licensee of the board
or for any conduct in violation of this article or regulations
implementing this article.
   (b) Practice privileges are subject to discipline during any time
period in which they are valid, under administrative suspension, or
expired.
   (c) The board may recover its costs pursuant to Section 5107 as
part of any disciplinary proceeding against the holder of a practice
privilege.
   (d) An individual whose practice privilege has been revoked may
apply for a new practice privilege not less than one year after the
effective date of the board's decision revoking the individual's
practice privilege unless a longer time period, not to exceed three
years, is specified in the board's decision revoking the practice
privilege.
   (e) The provisions of the Administrative Procedure Act, including,
but not limited to, the commencement of a disciplinary proceeding by
the filing of an accusation by the board shall apply under this
article.
   (f) This section shall become operative on January 1, 2019.` 

      
   SEC. 17.    Section 5096.4 of the   Business
and Professions Code   is amended to read: 
   5096.4.  (a) The right of an individual to practice in this state
under a practice privilege may be administratively suspended at any
time by an order issued by the board or its executive officer,
without prior notice or hearing, for the purpose of conducting a
disciplinary investigation, proceeding, or inquiry concerning the
representations made in the notice, the individual's competence or
qualifications to practice under practice privileges, failure to
timely respond to a board inquiry or request for information or
documents, or under other conditions and circumstances provided for
by board regulation.
   (b) The administrative suspension order is immediately effective
when mailed to the individual's address of record or agent for notice
and service as provided for in this article.
   (c) The administrative suspension order shall contain the
following:
   (1) The reason for the suspension.
   (2) A statement that the individual has the right, within 30 days,
to appeal the administrative suspension order and request a hearing.

   (3) A statement that any appeal hearing will be conducted under
the provisions of the Administrative Procedure Act applicable to
individuals who are denied licensure, including the filing of a
statement of issues by the board setting forth the reasons for the
administrative suspension of practice privileges and specifying the
statutes and rules with which the individual must show compliance by
producing proof at the hearing and in addition any particular matters
that have come to the attention of the board and that would
authorize the administrative suspension, or the denial of practice
privileges.
   (d) The burden is on the holder of the suspended practice
privilege to establish both qualification and fitness to practice
under practice privileges.
   (e) The administrative suspension shall continue in effect until
terminated by an order of the board or the executive officer or
expiration of the practice privilege under administrative suspension.

   (f) Administrative suspension is not discipline and shall not
preclude any individual from applying for a license to practice
public accountancy in this state or from applying for a new practice
privilege upon expiration of the one under administrative suspension,
except that the new practice privilege shall not be effective until
approved by the board.
   (g) Notwithstanding any administrative suspension, a practice
privilege expires one year from the date of notice unless a shorter
period is set by board regulation.
   (h) Proceedings to appeal an administrative suspension order may
be combined or coordinated with proceedings for denial or discipline
of a practice privilege. 
   (i) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 18.    Section 5096.4 is added to the  
Business and Professions Code   , to read:  
   5096.4.  (a) The right of an individual to practice in this state
under a practice privilege may be administratively suspended at any
time by an order issued by the board or its executive officer,
without prior notice or hearing, for the purpose of conducting a
disciplinary investigation, proceeding, or inquiry concerning the
individual's competence or qualifications to practice under practice
privileges, failure to timely respond to a board inquiry or request
for information or documents, or under other conditions and
circumstances provided for by board regulation.
   (b) The administrative suspension order is immediately effective
when mailed to the individual's address of record or agent for notice
and service as provided for in this article.
   (c) The administrative suspension order shall contain the
following:
   (1) The reason for the suspension.
   (2) A statement that the individual has the right, within 30 days,
to appeal the administrative suspension order and request a hearing.

   (3) A statement that any appeal hearing will be conducted under
the provisions of the Administrative Procedure Act applicable to
individuals who are denied licensure, including the filing of a
statement of issues by the board setting forth the reasons for the
administrative suspension of practice privileges and specifying the
statutes and rules with which the individual must show compliance by
producing proof at the hearing and in addition any particular matters
that have come to the attention of the board and that would
authorize the administrative suspension, or the revocation of
practice privileges.
   (d) The burden is on the holder of the suspended practice
privilege to establish both qualification and fitness to practice
under practice privileges.

(e) The administrative suspension shall continue in effect until
terminated by an order of the board or the executive officer.
   (f) Administrative suspension is not discipline and shall not
preclude any individual from applying for a license to practice
public accountancy in this state.
   (g) Proceedings to appeal an administrative suspension order may
be combined or coordinated with proceedings for revocation or
discipline of a practice privilege.
   (h) This section shall become operative on July 1, 2013.
   (i) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 19.    Section 5096.4 is added to the  
Business and Professions Code   , to read: 
    5096.4.    (a) The right of an individual to
practice in this state under a practice privilege may be
administratively suspended at any time by an order issued by the
board or its executive officer, without prior notice or hearing, for
the purpose of conducting a disciplinary investigation, proceeding,
or inquiry concerning the representations made in the notice, the
individual's competence or qualifications to practice under practice
privileges, failure to timely respond to a board inquiry or request
for information or documents, or under other conditions and
circumstances provided for by board regulation.  
   (b) The administrative suspension order is immediately effective
when mailed to the individual's address of record or agent for notice
and service as provided for in this article.  
   (c) The administrative suspension order shall contain the
following:  
   (1) The reason for the suspension.  
   (2) A statement that the individual has the right, within 30 days,
to appeal the administrative suspension order and request a hearing.
 
   (3) A statement that any appeal hearing will be conducted under
the provisions of the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code) applicable to individuals who are denied
licensure, including the filing of a statement of issues by the board
setting forth the reasons for the administrative suspension of
practice privileges and specifying the statutes and rules with which
the individual must show compliance by producing proof at the hearing
and in addition any particular matters that have come to the
attention of the board and that would authorize the administrative
suspension, or the denial of practice privileges.  
   (d) The burden is on the holder of the suspended practice
privilege to establish both qualification and fitness to practice
under practice privileges.  
   (e) The administrative suspension shall continue in effect until
terminated by an order of the board or the executive officer or
expiration of the practice privilege under administrative suspension.
 
   (f) Administrative suspension is not discipline and shall not
preclude any individual from applying for a license to practice
public accountancy in this state or from applying for a new practice
privilege upon expiration of the one under administrative suspension,
except that the new practice privilege shall not be effective until
approved by the board.  
   (g) Notwithstanding any administrative suspension, a practice
privilege expires one year from the date of notice unless a shorter
period is set by board regulation.  
   (h) Proceedings to appeal an administrative suspension order may
be combined or coordinated with proceedings for denial or discipline
of a practice privilege.  
   (i) This section shall become operative on January 1, 2019. 
   SEC. 20.    Section 5096.5 of the   Business
and Professions Code   is amended to read: 
   5096.5.   (a)    Notwithstanding any other
provision of this article, an individual may not sign any attest
report pursuant to a practice privilege unless the individual meets
the experience requirements of Section 5095 and completes any
continuing education or other conditions required by the board
regulations implementing this article. 
   (b) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 21.    Section 5096.5 is added to the  
Business and Professions Code   , to read:  
   5096.5.  (a) Notwithstanding any other provision of this article,
an individual may not sign any attest report pursuant to a practice
privilege unless the individual meets the experience requirements of
Section 5095.
   (b) This section shall become operative on July 1, 2013.
   (c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 22.    Section 5096.5 is added to the  
Business and Professions Code   , to read:  
   5096.5.  (a) Notwithstanding any other provision of this article,
an individual may not sign any attest report pursuant to a practice
privilege unless the individual meets the experience requirements of
Section 5095 and completes any continuing education or other
conditions required by the board regulations implementing this
article.
   (b) This section shall become operative on January 1, 2019. 
   SEC. 23.    Section 5096.6 of the   Business
and Professions Code   is amended to read: 
   5096.6.   (a)    In addition to the authority
otherwise provided for by this code, the board may delegate to the
executive officer the authority to issue any notice or order provided
for in this article and to act on behalf of the board, including,
but not limited to, issuing a notice of denial of a practice
privilege and an interim suspension order, subject to the right of
the individual to timely appeal and request a hearing as provided for
in this article. 
   (b) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 24.    Section 5096.6 is added to the  
Business and Professions Code   , to read:  
   5096.6.  (a) In addition to the authority otherwise provided for
by this code, the board may delegate to the executive officer the
authority to issue any notice or order provided for in this article
and to act on behalf of the board, including, but not limited to,
issuing an interim suspension order, subject to the right of the
individual to timely appeal and request a hearing as provided for in
this article.
   (b) This section shall become operative on July 1, 2013.
   (c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 25.    Section 5096.6 is added to the  
Business and Professions Code   , to read:  
   5096.6.  (a) In addition to the authority otherwise provided for
by this code, the board may delegate to the executive officer the
authority to issue any notice or order provided for in this article
and to act on behalf of the board, including, but not limited to,
issuing a notice of denial of a practice privilege and an interim
suspension order, subject to the right of the individual to timely
appeal and request a hearing as provided for in this article.
   (b) This section shall become operative on January 1, 2019. 
   SEC. 26.    Section 5096.7 of the   Business
and Professions Code   is amended to read: 
   5096.7.  Except as otherwise provided in this article, the
following definitions apply:
   (a) Anywhere the term "license," "licensee," "permit," or
"certificate" is used in this chapter or Division 1.5 (commencing
with Section 475), it shall include persons holding practice
privileges under this article, unless otherwise inconsistent with the
provisions of the article.
   (b) Any notice of practice privileges under this article and
supporting documents is deemed an application for licensure for
purposes of the provisions of this code, including, but not limited
to, the provisions of this chapter and the provisions of Division 1.5
(commencing with Section 475) related to the denial, suspension and
revocation of licenses.
   (c) Anywhere the term "employee" is used in this article it shall
include, but is not limited to, partners, shareholders, and other
owners. 
   (d) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 27.    Section 5096.7 is added to the 
Business and Professions Code   , to read:  
   5096.7.  (a) Anywhere the term "license," "licensee," "permit," or
"certificate" is used in this chapter or Division 1.5 (commencing
with Section 475), it shall include persons holding practice
privileges under this article, unless otherwise inconsistent with the
provisions of the article.
   (b) Anywhere the term "employee" is used in this article it shall
include, but is not limited to, partners, shareholders, and other
owners.
   (c) For purposes of this article, the term "license" includes
certificate or permit.
   (d) This section shall become operative on July 1, 2013.
   (e) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 28.    Section 5096.7 is added to the  
Business and Professions Code   , to read:  
   5096.7.  Except as otherwise provided in this article, the
following definitions apply:
   (a) Anywhere the term "license," "licensee," "permit," or
"certificate" is used in this chapter or Division 1.5 (commencing
with Section 475), it shall include persons holding practice
privileges under this article, unless otherwise inconsistent with the
provisions of the article.
   (b) Any notice of practice privileges under this article and
supporting documents is deemed an application for licensure for
purposes of the provisions of this code, including, but not limited
to, the provisions of this chapter and the provisions of Division 1.5
(commencing with Section 475) related to the denial, suspension and
revocation of licenses.
   (c) Anywhere the term "employee" is used in this article it shall
include, but is not limited to, partners, shareholders, and other
owners.
   (d) This section shall become operative on January 1, 2019. 
   SEC. 29.    Section 5096.10 of the  
Business and Professions Code   is amended to read: 
   5096.10.   (a)    The provisions of this article
shall only be operative if commencing July 1, 2005, and continuing
during the period provided in Section 5096.11, there is an
appropriation from the Accountancy Fund in the annual Budget Act to
fund the activities in the article and sufficient hiring authority is
granted pursuant to a budget change proposal to the board to provide
staffing to implement this article. 
   (b) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2013, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2013, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 30.    Section 5096.10 is added to the 
 Business and Professions Code   , to read:  
   5096.10.  (a) The provisions of this article shall only be
operative if commencing July 1, 2005, and continuing during the
period provided in Section 5096.11, there is an appropriation from
the Accountancy Fund in the annual Budget Act to fund the activities
in the article and sufficient hiring authority is granted pursuant to
a budget change proposal to the board to provide staffing to
implement this article.
   (b) This section shall become operative on January 1, 2019. 
   SEC. 31.    Section 5096.12 of the  
Business and Professions Code   is amended to read: 
   5096.12.  (a) A certified public accounting firm that is
authorized to practice in another state and that does not have an
office in this state may engage in the practice of public accountancy
in this state through the holder of a practice privilege provided
that:
   (1) The practice of public accountancy by the firm is limited to
authorized practice by the holder of the practice privilege.
   (2) A firm that engages in practice under this section is deemed
to consent to the personal, subject matter, and disciplinary
jurisdiction of the board with respect to any practice under this
section.
   (b) The board may revoke, suspend, issue a fine pursuant to
Article 6.5 (commencing with Section 5116), or otherwise restrict or
discipline the firm for any act that would be grounds for discipline
against a holder of a practice privilege through which the firm
practices. 
   (c) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 32.    Section 5096.12 is added to the 
 Business and Professions Code   , to read:  
   5096.12.  (a) A certified public accounting firm that is
authorized to practice in another state and that does not have an
office in this state may engage in the practice of public accountancy
in this state through the holder of a practice privilege provided
that:
   (1) The practice of public accountancy by the firm is limited to
authorized practice by the holder of the practice privilege.
   (2) A firm that engages in practice under this section is deemed
to consent to the personal, subject matter, and disciplinary
jurisdiction of the board with respect to any practice under this
section.
   (b) The board may revoke, suspend, issue a fine pursuant to
Article 6.5 (commencing with Section 5116), or otherwise restrict or
discipline the firm for any act that would be grounds for discipline
against a holder of a practice privilege through which the firm
practices.
   (c) A firm that provides the services described in subdivision (d)
of Section 5096 shall obtain a registration from the board.
   (d) This section shall become operative on July 1, 2013.
   (e) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 33.    Section 5096.12 is added to the 
 Business and Professions Code   , to read:  
   5096.12.  (a) A certified public accounting firm that is
authorized to practice in another state and that does not have an
office in this state may engage in the practice of public accountancy
in this state through the holder of a practice privilege provided
that:
   (1) The practice of public accountancy by the firm is limited to
authorized practice by the holder of the practice privilege.
   (2) A firm that engages in practice under this section is deemed
to consent to the personal, subject matter, and disciplinary
jurisdiction of the board with respect to any practice under this
section.
   (b) The board may revoke, suspend, issue a fine pursuant to
Article 6.5 (commencing with Section 5116), or otherwise restrict or
discipline the firm for any act that would be grounds for discipline
against a holder of a practice privilege through which the firm
practices.
   (c) This section shall become operative on January 1, 2019. 
   SEC. 34.    Section 5096.13 of the  
Business and Professions Code   is amended to read: 
   5096.13.   (a)    The notification of intent to
practice under a practice privilege pursuant to Section 5096 shall
include the name of the firm, its address and telephone number, and
its federal taxpayer identification number. 
   (b) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 35.    Section 5096.13 is added to the 
Business and Professions Code   , to read:  
   5096.13.  (a) The notification of intent to practice under a
practice privilege pursuant to Section 5096 shall include the name of
the firm, its address and telephone number, and its federal taxpayer
identification number.
   (b) This section shall become operative on January 1, 2019. 
   SEC. 36.    Section 5096.14 of the  
Business and Professions Code   is amended to read: 
   5096.14.  (a) An individual shall not be deemed to be in violation
of this article solely because he or she begins the practice of
public accounting in California prior to notifying the board as
indicated in subdivision (c) of Section 5096, provided the notice is
given within five business days of the date practice begins. An
individual who properly notifies the board within the five-day period
provided for in this section shall be deemed to have a practice
privilege from the first day of practice in California unless the
individual fails to timely submit the required fee pursuant to
subdivision (c) of Section 5096.
   (b) Subdivision (a) does not apply in those instances in which
prior approval by the board is required pursuant to subdivision (g)
of Section 5096.
   (c) In addition to any other applicable sanction, the board may
issue a fine pursuant to Section 5096.3 for notifying the board more
than five business days after beginning practice in California. 
   (d) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 37.    Section 5096.14 is added to the 
 Business and Professions Code   , to read:  
   5096.14.  (a) An individual shall not be deemed to be in violation
of this article solely because he or she begins the practice of
public accounting in California prior to notifying the board as
indicated in subdivision (c) of Section 5096, provided the notice is
given within five business days of the date practice begins. An
individual who properly notifies the board within the five-day period
provided for in this section shall be deemed to have a practice
privilege from the first day of practice in California unless the
individual fails to timely submit the required fee pursuant to
subdivision (c) of Section 5096.
   (b) Subdivision (a) does not apply in those instances in which
prior approval by the board is required pursuant to subdivision (g)
of Section 5096.
   (c) In addition to any other applicable sanction, the board may
issue a fine pursuant to Section 5096.3 for notifying the board more
than five business days after beginning practice in California.
   (d) This section shall become operative on January 1, 2019. 
   SEC. 38.    Section 5096.15 of the  
Business and Professions Code   is amended to read: 
   5096.15.   (a)    It is the intent of the
Legislature that the board adopt regulations providing for a lower
fee or no fee for out-of-state accountants who do not sign attest
reports for California clients under the practice privilege. These
regulations shall ensure that the practice privilege program is
adequately funded. These regulations shall be adopted as emergency
regulations in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code and,
for purposes of that chapter, the adoption of the regulations shall
be considered by the Office of Administrative Law to be necessary for
the immediate preservation of the public peace, health and safety,
and general welfare. 
   (b) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2014, deletes or
extends the dates on which it becomes inoperative and is repealed.

   SEC. 39.    Section 5096.15 is added to the 
 Business and Professions Code   , to read:  
   5096.15.  (a) It is the intent of the Legislature that the board
adopt regulations providing for a lower fee or no fee for
out-of-state accountants who do not sign attest reports for
California clients under the practice privilege. These regulations
shall ensure that the practice privilege program is adequately
funded. These regulations shall be adopted as emergency regulations
in accordance with Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code and, for
purposes of that chapter, the adoption of the regulations shall be
considered by the Office of Administrative Law to be necessary for
the immediate preservation of the public peace, health and safety,
and general welfare.
   (b) This section shall become operative on January 1, 2019. 
   SEC. 40.    Section 5096.20 is added to the 
 Business and Professions Code   , to read:  
   5096.20.  (a) To ensure that Californians are protected from
out-of-state licensees with disqualifying conditions who may
unlawfully attempt to practice in this state under a practice
privilege, prior to July 1, 2013, the board, on or before July 1,
2013, shall add features to the out-of-state licensee tab of the home
page of its Internet Web site that allow consumers to obtain
information about an individual whose principal place of business is
not in this state and who seeks to exercise a practice privilege in
this state, that is at least equal to the information that was
available to consumers through its home page prior to January 1,
2013, through the practice privilege form previously filed by
out-of-state licensees pursuant to Section 5096, as added by Chapter
921 of the Statutes of 2004, and the regulations adopted thereunder.
At minimum, these features shall include all of the following:
   (1) The ability of the consumer to search by name and state of
licensure.
   (2) The disclosure of information in the possession of the board,
which the board is otherwise authorized to publicly disclose, about
an individual exercising a practice privilege in this state,
including, but not limited to, whether the board has taken action of
any form against that individual and, if so, what the action was or
is.
   (3) A disclaimer that the consumer must click through prior to
being referred to any other board Internet Web site, which in plain
language explains that the consumer is being referred to an Internet
Web site that is maintained by a regulatory agency or other entity
that is not affiliated with the board. This disclaimer shall include
a link to relevant sections of this article that set forth
disqualifying conditions, including, but not limited to, Section
5096.2.
   (4) A statement in plain language that notifies consumers that
they are permitted to file complaints against such individuals with
the board.
   (5) A link to the Internet Web site or web sites that the board
determines, in its discretion, provides the consumer the most
complete and reliable information available about the individual's
status as a licenseholder, permitholder, or certificate holder.
   (6) If the board of another state does not maintain an Internet
Web site that allows a consumer to obtain information about its
licensees including, but not limited to, disciplinary history, and
that information is not available through a link to an Internet Web
site maintained by another entity, a link to contact
                                    information for that board, which
contains a disclaimer in plain language that explains that the
consumer is being referred to a board that does not permit the
consumer to obtain information, including, but not limited to,
disciplinary history, about individuals through the Internet Web
site, and that the out-of-state board is not affiliated with the
board.
   (b) The board shall biannually survey the Internet Web sites and
disclosure policies of other boards to ensure that its disclaimers
are accurate.
   (e) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 41.    Section 5096.21 is added to the 
 Business and Professions Code   , to read:  
   5096.21.  (a) On and after January 1, 2016, if the board
determines, through a majority vote of the board at a regularly
scheduled meeting at which a quorum is present, that allowing
individuals from a particular state to practice in this state
pursuant to a practice privilege as described in Section 5096,
violates the board's duty to protect the public, the board shall
require out-of-state individuals licensed from that state, as a
condition to exercising a practice privilege in this state, to file
the notification form and pay the applicable fees as required by
former Section 5096, as added by Chapter 921 of the Statutes of 2004,
and regulations adopted thereunder.
   (b) The board shall, at minimum, consider the following factors in
making the determination required by subdivision (a):
   (1) Whether the state investigates complaints and referrals from
the board in a timely manner.
   (2) Whether the state makes the disciplinary history of its
licensees publicly available through the Internet in a manner that
allows the board to adequately link consumers to an Internet Web site
to obtain information that was previously made available to
consumers about individuals from the state prior to January 1, 2013,
through the notification form.
   (3) Whether the state imposes discipline against licensees that is
appropriate in light of the nature of the alleged misconduct.
   (4) Whether the state adequately addresses enforcement referrals
made by the board to the accountancy regulatory board of that state,
or otherwise fails to respond to requests the board deems necessary
to meet its obligations under this article.
   (c) Notwithstanding subdivision (a), if (1) the National
Association of State Boards of Accountancy (NASBA) adopts enforcement
best practices guidelines, (2) the board issues a finding after a
public hearing that those practices meet or exceed the board's own
enforcement practices, (3) a state has in place and is operating
pursuant to enforcement practices substantially equivalent to the
best practices guidelines, and (4) disciplinary history of a state's
licensees is publicly available through the Internet in a manner that
allows the board to link consumers to an Internet Web site to obtain
information comparable to the information that was previously
available to consumers through the practice privilege form filed by
out-of-state licensees pursuant to former Section 5096, as added by
Chapter 921 of the Statutes of 2004, no practice privilege form shall
be required to be filed by any licensee of that state as required by
subdivision (a), nor shall the board be required to report on that
state to the Legislature as required by subdivision (d).
   (d) (1) The board shall report to the relevant policy committees
of the Legislature, the director, and the public, upon request,
preliminary determinations made pursuant to this section no later
than July 1, 2015. The board shall, prior to January 1, 2016, and
thereafter as it deems appropriate, review its determinations made
pursuant to subdivision (b) to ensure that it is in compliance with
this section.
   (2) This subdivision shall become inoperative on July 1, 2017,
pursuant to Section 10231.5 of the Government Code.
   (e) On or before July 1, 2014, the board shall convene a
stakeholder group consisting of members of the board, board
enforcement staff, and representatives of the accounting profession
and consumer representatives to consider whether the penalties set
forth in this article are sufficient to deter violations of the
self-reporting requirements of Section 5096.
   (f) On or before January 1, 2018, the board shall prepare a report
to be provided to the relevant policy committees of the Legislature,
the director, and the public, upon request, that, at minimum,
explains in detail all of the following:
   (1) How the board has implemented this article and whether
implementation is complete.
   (2) Whether this article is, in the opinion of the board, more,
less, or equivalent in the protection it affords the public than its
predecessor article.
   (3) Describes how other state boards of accountancy have addressed
referrals to those boards from the board, the timeframe in which
those referrals were addressed, and the outcome of investigations
conducted by those boards.
   (g) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date. 
   SEC. 3.   SEC. 42.   No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.