Section 08.04.240. Application of partnerships, limited liability companies, corporations, and other legal entities for permits.

   (a) The board shall grant a permit to engage in the practice of public accounting as a partnership to a partnership that applies to the board as a partnership of certified public accountants if the partnership meets the following requirements:
        (1) more than one-half of the ownership of the partnership belongs to certified public accountants of this or another state in good standing;
        (2) an individual who is a certified public accountant or has a practice privilege, who is responsible for supervising attest functions or compilation services in the partnership, and who signs or authorizes another person to sign an accountant's report on financial statements on behalf of the partnership meets the competency requirements established by the board under AS 08.04.423;
        (3) an individual who signs or authorizes another person to sign an accountant's report on financial statements on behalf of the partnership meets the competency requirements established by the board under AS 08.04.423; and
        (4) each partner who is personally engaged in this state in the practice of public accounting as a member of that partnership and whose principal place of business is in this state is a certified public accountant of this state in good standing.
   (b) The board shall grant a permit to engage in the practice of public accounting as a corporation to a corporation organized for the practice of public accounting that applies to the board as a corporation of certified public accountants if the corporation meets the following requirements:
        (1) the sole purpose and business of the corporation are to furnish to the public services not inconsistent with this chapter or the regulations adopted under it by the board; however, the corporation may invest its funds in a manner not incompatible with the practice of public accounting;
        (2) at least a simple majority of the shares of the corporation are owned by certified public accountants of this or another state in good standing and the principal officer of the corporation and any officer having authority over the practice of public accounting by the corporation is a certified public accountant of this or another state in good standing;
        (3) an individual who is a certified public accountant or has a practice privilege, who is responsible for supervising attest functions or compilation services in the corporation, and who signs or authorizes another person to sign an accountant's report on financial statements on behalf of the corporation meets the competency requirements established by the board under AS 08.04.423;
        (4) an individual who signs or authorizes another person to sign an accountant's report on financial statements on behalf of the corporation meets the competency requirements established by the board under AS 08.04.423;
        (5) each shareholder or director personally engaged in this state in the practice of public accounting and whose principal place of business is located in this state is a certified public accountant of this state in good standing;
        (6) to facilitate compliance with the provisions of this section relating to the ownership of stock, there is a written agreement binding the corporation or the qualified shareholders to purchase shares offered for sale by, or not under the ownership or effective control of, a qualified shareholder and binding a holder not a qualified shareholder to sell these shares to the corporation or the qualified shareholders; the agreement must be noticed on each certificate of corporate stock; the corporation may purchase any amount of its stock for this purpose, notwithstanding any impairment of capital, so long as one share remains outstanding; and
        (7) the corporation is in compliance with those other regulations pertaining to corporations practicing public accounting in this state that the board may adopt.
   (c) Application for a permit under this section shall be made upon the affidavit of a general partner, member, or shareholder who is a certified public accountant of this state in good standing or an individual with a practice privilege. The board shall, in each case, determine whether the applicant is eligible for a permit under this section. A partnership, limited liability company, corporation, or other legal entity that is issued a permit under this section may use the words "certified public accountants" or the abbreviation "CPAs" in connection with the name of the partnership, limited liability company, corporation, or other legal entity. The board shall be notified within one month after the admission or withdrawal of a partner, member, or shareholder from a partnership, limited liability company, corporation, or other legal entity issued a permit under this section.
   (d) The board shall grant a permit to engage in the practice of public accounting as a limited liability company to a limited liability company engaged in this state in the practice of public accounting that applies to the board as a limited liability company of certified public accountants if
        (1) the sole purpose and the sole business of the company are to furnish to the public services that are consistent with this chapter or the regulations adopted under this chapter, except that the company may invest its money in a manner that is compatible with the practice of public accounting;
        (2) more than one-half of the ownership of the limited liability company belongs to certified public accountants of this or another state in good standing;
        (3) an individual who is a certified public accountant or has a practice privilege, who is responsible for supervising attest functions or compilation services in the company, and who signs or authorizes another person to sign an accountant's report on financial statements on behalf of the company meets the competency requirements established by the board under AS 08.04.423;
        (4) an individual who signs or authorizes another person to sign an accountant's report on financial statements on behalf of the company meets the competency requirements established by the board under AS 08.04.423; and
        (5) each member personally engaged in this state in the practice of public accounting and whose principal place of business is located in this state is a certified public accountant of this state in good standing.
   (e) The board may grant a permit to engage in the practice of public accounting to a legal entity, other than a partnership, corporation, or limited liability company, if the legal entity applies to the board on a form provided by the board and satisfies other application requirements and conditions for the legal entity that are established by the board by regulation to protect the public interest.
   (f) An initial permit issued under (a), (b), (d), or (e) of this section lasts for the remainder of the biennial licensing period during which the initial permit was granted.
   (g) The board shall renew a permit granted under (a), (b), (d), or (e) of this section or a renewal issued under this subsection if
        (1) the permittee maintains all of the licensee's offices that are located in this state as required by AS 08.04.360 - 08.04.380;
        (2) each individual who is required by (a), (b), (d), or (e) of this section to be a certified public accountant of this state complies with the continuing education requirements of AS 08.04.425 and the quality review requirements of AS 08.04.426; and
        (3) the permittee complies with the requirements of this chapter, including the competency requirement of (a)(2) and (3), (b)(3) and (4), and (d)(3) and (4) of this section.
   (h) A partnership holding a permit issued under former AS 08.04.330 - 08.04.340 on June 29, 1980, qualifies for a permit under this section as long as each partner personally engaged in the practice of public accounting in this state holds a license or permit under AS 08.04.661.
   (i) For the purposes of issuing a permit under this section, a partnership, limited liability company, corporation, or other legal entity may include owners who are not certified public accountants if
        (1) the partnership, corporation, limited liability company, or other legal entity designates a certified public accountant or an individual with practice privileges to be responsible for the proper registration of the entity and identifies the certified public accountant or individual to the board;
        (2) all of the owners of the partnership, corporation, limited liability company, or other legal entity who are not certified public accountants are active individual participants in the partnership, corporation, limited liability company, or other legal entity, or in an entity affiliated with the partnership, corporation, limited liability company, or other legal entity; and
        (3) the partnership, corporation, limited liability company, or other legal entity complies with the other requirements that the board may adopt by regulation to protect the public interest as described under AS 08.04.005.
   (j) If the ownership of a partnership, limited liability company, corporation, or other legal entity, after it has received or renewed a permit, does not comply with (i) of this section, the partnership, limited liability company, corporation, or other legal entity shall take corrective action to comply with (i) of this section within a reasonable time after the noncompliance begins. The board shall establish by regulation the criteria to determine what is a reasonable time and may base the regulation on national standards.

Authorities

8.04.380; 8.04.450; 8.04.510; 8.04.680

Notes

Implemented As

12 AAC 04.250
12 AAC 04.255
12 AAC 04.280
12 AAC 04.930

References

12 AAC 04.250
12 AAC 04.255
12 AAC 04.280
12 AAC 04.930
12 AAC 04.990
AS 8.04.380 .380">Sec. 08.04.380. Waiver of requirements.
AS 8.04.450 .450">Sec. 08.04.450. Revocation or suspension of license, practice privilege, permit, or out-of-state exemption.
AS 8.04.510 .510">Sec. 08.04.510. Partnership, limited liability company, corporation, or other legal entity posing as a certified public accountant.
AS 8.04.680 .680">Sec. 08.04.680. Definitions.

History

(Sec. 5(1), 10(3) ch 187 SLA 1960; Sec. 3 ch 147 SLA 1976; am Sec. 2, 3 ch 29 SLA 1996; am Sec. 18, 19 ch 16 SLA 2006; am Sec. 7 - 12 ch 67 SLA 2010)