DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS
DIRECTOR'S OFFICE
ACCOUNTANCY – GENERAL RULES
Filed with the secretary of state on
These rules take effect immediately upon filing with the secretary of state unless adopted under section 33, 44, or 45a(6) of the administrative procedures act of 1969, 1969 PA 306, MCL 24.233, 24.244, or 24.245a. Rules adopted under these sections become effective 7 days after filing with the secretary of state.
(By authority conferred on the department of licensing
and regulatory affairs by sections 205, 308, 721, 725, 726, 728, and 729
of the occupational code, 1980 PA 299, MCL 339.205, 339.308, 339.721,
339.725, 339.726, 339.728, and 339.729, 339.729; and on the board of
accountancy by section 308 of 1980 PA 299, MCL 339.308; and by
Executive Reorganization Order No. Nos. 1991-9, 1996-2, 2003-1,
2008-4, and 2011-4, MCL 338.3501, 445.2001, 445.2011, 445.2025, and 445.2030.)
R 338.5101, R 338.5102, R 338.5110a, R 338.5115, R 338.5116, R 338.5210, R 338.5215, and R 338.5230 of the Michigan Administrative Code are amended, and R 338.5110 and R 338.5112 are rescinded, as follows:
PART 1. GENERAL PROVISIONS
R 338.5101 Definitions.
Rule 101. (1) As used in these rules:
(a) "Act" means the occupational code, 1980 PA 299, MCL 339.101 to 339.2677.
(b) "Audit" or "examination" means an examination applying generally accepted auditing standards, including any procedure undertaken to verify or test the reasonableness of financial information with a view of expressing an opinion or commenting on the fairness of the presentation.
(c) "Attest" means an audit, review,
examination, or agreed upon procedures engagement as defined in section 720 of
the act, MCL 339.720, performed in accordance with applicable professional
standards adopted in R 338.5102.
(d) (c) "Board" means the
Michigan board of accountancy. accountancy created under section 721
of the act, MCL 339.721.
(e) “Certified public accountant" or “CPA” means
a person holding a certificate of certified public accountant granted by the
department, or an individual with practice privileges.
(f) "Client" means the person or persons
or entity that retains an individual licensee, a firm licensee, individual with
practice privileges, or an out-of-state firm, for the performance of
professional services.
(g) (d) "Continuing education
period" means all or part of a year beginning July 1 and ending June 30.
(h) (e) "Continuous
instruction" means education time not including breakfast, lunch, or
dinner periods, coffee breaks, or any other breaks in the program.
(i) (f) "Disclose" means to
provide a written communication from a Certified Public Accountant (CPA) CPA
or a CPA firm informing the client, prior to making a recommendation or
referral, that the CPA or CPA firm will receive a commission, referral fee, or
contingency fee from a third party for recommendations or referrals of products
or services, or both.
(j) (g) "Enterprise" means a
person, persons, or entity for which an individual licensee, a firm licensee,
an individual with practice privileges, or an out-of-state firm performs
professional services.
(k) “Exam window” means the time in each calendar
quarter in which the uniform certified public accountant examination is
offered. There are 4 exam windows in each calendar year, the first 2 months of
each calendar quarter: January 1 to February 28 (or 29), April 1 to May 31,
July 1 to August 31, and October 1 to November 30.
(l) (h) "Financial statements"
means statements and related footnotes that show financial position, results of
operations, and cash flows on the basis of generally accepted accounting
principles or another comprehensive basis of accounting. The term does not
include incidental financial data included in management advisory services
reports to support recommendations to a client and does not include tax returns
and supporting schedules of tax returns.
(m) (i) "Generally accepted
accounting principles" means accounting principles of professional
conduct, promulgated by the applicable nationally or internationally recognized
professional standard setting organization, related to individual accounting
engagements.
(n) (j) "Generally accepted auditing
standards" means the standards of professional conduct, promulgated by the
applicable nationally or internationally recognized professional standard
setting organization, related to individual audit engagements.
(o) (k) “Individual with practice
privileges” means an individual who practices in this state pursuant to under
section 727a of the act, MCL 339.727a.
(p) “Licensee” means the holder of an
individual license under section 727 of the act, MCL 339.727 or the holder of a
firm license under section 728 of the act, MCL 339.728.
(q) (l) “Nano-learning program” means a
tutorial program designed to permit a participant to learn a given subject in a
10-minute time frame through the use of electronic media and without
interaction with a real-time instructor.
(r) (m) “Out-of-state firm” means a firm
that is permitted to provide certain services and use the title “CPA firm”
without obtaining a Michigan firm license under section 728 of the act, MCL
339.728, under the conditions in section 728(4) and (5) of the act, MCL 339.728(4)
and (5).
(s) (n) "Professional
engagement" means an agreement between a client and an individual
licensee, a firm licensee, an individual with practice privileges, or an out-of-state
firm relative to the performance of professional services.
(t) (o) "Professional services"
means any services performed or offered to be performed by an individual
licensee, a firm licensee, an individual with practice privileges, or an out-of-state
firm for a client in the course of the practice of public accounting, pursuant
to under section 720 of the act, MCL 339.720.
(u) (p) "Qualifying hours"
means continuing education hours that comply with satisfy part 3
of these rules.
(2) Terms A term defined in the act have
has the same meanings meaning when used in these rules.
R 338.5102 Standards of professional practice adopted by reference.
Rule 102. (1) The following standards are adopted by reference:
(a) The standards issued by the American Institute of
CPAs (AICPA), 220 Leigh Farm Road, Durham, North Carolina, 27707, set forth in
the publication “AICPA Professional Standards” updated June 1, 2017, June
1, 2020, and any statements issued as of the effective date of this
rule, which are available at a cost of $249.00 from the
institute’s website at: http://www.aicpa.org.
(b) The standards issued by the Public Company
Accounting Oversight Board (PCAOB), 1666 K Street NW, Washington, DC District
of Columbia, 20006, set forth in the publication entitled “PCAOB Standards
and Related Rules” 2017 2020 edition, and any updates issued as
of the effective date of this rule, which are available at no cost from
the AICPA at http://www.aicpa.org.
(c) The auditing standards issued by the Government
Accountability Office, 441 G. St., NW, Washington, DC District of
Columbia, 20548, in the publication entitled "Government Auditing
Standards 2011 Revision, 2018 Revision" reissued issued
on January 20, 2012 July 17, 2018, which are available at no
cost on the Office’s website at http://gao.gov/products/GAO-12-331G.
https://www.gao.gov/assets/700/693136.pdf.
(d) The auditing standards issued by the International
Auditing and Assurance Standards Board (IAASB), 529 5th Avenue, New
York, NY New York, 10017, in the publication entitled “2018 Handbook
of International Quality Control, Auditing, Review, Other Assurance, and
Related Pronouncements” 2016-2017 issued on December 17, 2018, edition,
and any related pronouncements issued as of the effective date of this rule,
which are available at no cost from the IAASB's website at: http://www.ifac.org/publications-resources/2015-handbook-international-quality-control-auditing-review-other-assurance.
https://www.iaasb.org/publications/2018-handbook-international-quality-control-auditing-review-other-assurance-and-related-services-26.
(e) The accounting standards issued by the Financial Accounting Standards Board
(FASB), 401 Merritt 7, P.O. Box 5116, Norwalk, CT Connecticut,
06856, in the publication entitled “FASB Accounting Standards Codification”
as of October 31, 2016 July 20, 2020, and any updates published
as of the effective date of this rule, which are available at no cost
from the board’s website at https://asc.fasb.org.
(f) The accounting standards issued by the Governmental Accounting Standards Board
(GASB), 407 Merritt 7, P.O. Box 5116, Norwalk, CT Connecticut,
06856, in the publication entitled “GASB Codification” as of June 30, 2016
2019, and any pronouncements published as of the effective date of this
rule, which are available at a cost of $132.00 from the board’s
website at http://gasb.org.
(g) The accounting standards issued by the International Accounting Standards Board,
30 Cannon Street, London EC4M 6XH, United Kingdom, in the
publication entitled “ 2017 2018 International Financial
Reporting Standards IFRS® (Red Book)” and any pronouncements issued as of the
effective date of this rule, which are available at a cost of Ł78.00 from
the board’s website at: http://www.ifrs.org.
(h) The United States Securities and Exchange
Commission (SEC) rules contained in Title 17 CFR Chapter chapter
2 of the United States Code of Federal Regulation and the SEC’s
Interpretative Releases and Policy Statements issued as of the effective date
of this rule. The SEC rules may be obtained free of charge at http://www.ecfr.gov.
The SEC’s Interpretative Releases and Policy Statements may be obtained free of
charge at https://www.sec.gov.
(2) Copies of the standards adopted in this rule are
available for inspection and distribution at the cost of 10 cents per
page from the Department of Licensing and Regulatory Affairs, Bureau of
Professional Licensing, 611 W. Ottawa Street, P.O. Box 30670, Lansing, MI
Michigan, 48909.
(3) A licensee shall comply with satisfy the
applicable standards adopted in subrule (1) of this rule.
R 338.5110 Uniform CPA exam generally. Rescinded.
Rule 110. (1) The department or its designee may permit a candidate to sit for the exam in another state if the candidate complies with all administrative rules.
(2) The department may excuse a candidate from an exam due to the sickness of the candidate or a member of the candidate’s immediate family if substantiated by a doctor’s certificate. A candidate may also be excused if the candidate provides the department with proof of a death in the candidate’s immediate family, temporary military service, or another good reason acceptable to the department. A candidate shall make a request to be excused within 90 days of the date of the exam. If excused, an applicant’s exam shall not count as a failure to write the exam.
(3) The department shall grant a candidate credit for exam grades of 75 or higher earned in another state if the candidate meets the educational requirements to sit for the exam and if the board determines the exam was equivalent to the exam provided by the department.
PART 2. LICENSURE REQUIREMENTS
R 338.5110a Uniform CPA exam procedures.
Rule 110a. The following procedures shall apply: apply to the uniform CPA exam:
(a) Applicants may take the required exam sections individually and in any order.
(b) Applicants shall pass all sections of the exam within the exam windows that fall within a rolling 18-month period beginning on the date that the first section is passed. If all sections are not passed within the exam windows that fall within the rolling 18-month period, then credit for any section passed outside the 18-month period shall expire expires and must be retaken.
(c) The department may extend an exam window the rolling 18-month period under subdivision (b) of this rule due to the sickness of the candidate or a member of the candidate’s immediate family if substantiated by a doctor’s certificate. certificate or An exam window may also be extended if the candidate provides the department with proof of a death in the candidate’s immediate family, temporary military service, or another good reason acceptable to the department. A candidate shall make a request for an extension to be excused within 90 days of the date of the exam. If extended extended, an applicant’s exam shall does not count as a failure to write the exam.
(d) Applicants shall not retake any sections of the exam within the same exam window. The department or the entity contracted with the department to administer the exam may permit a candidate to sit for the exam in another state if the candidate complies with all the requirements for sitting for the exam under these rules.
(e) The department grants a candidate credit for exam grades of 75 or higher earned in another state if the candidate satisfies the educational requirements to sit for the exam and if the board determines the exam was equivalent to the exam provided by the department.
(f) An applicant may retake an exam section once the applicant’s grade for any previous attempt of the same exam section has been released.
R 338.5112 Failure to write exam during specified period; reapplication required. Rescinded.
Rule 112. A candidate who fails to write an exam for a period of 6 successive exam windows shall apply as a new applicant, unless excused under R 338.5110(2) or R 338.5110a(c).
Rule 115. (1) Pursuant to To
satisfy section 725(1)(b) and (2) of the act, MCL 339.725(2),
an individual who has completed a curriculum required for a baccalaureate degree consisting of not less than 120
semester hours with a concentration in accounting at a higher education institution approved in subrule (3)
of this rule is eligible to take the uniform certified public accountant examination.
shall supply proof of both of the following:
(a) Completion of a curriculum required for a baccalaureate degree consisting of not less than 120 semester hours at a higher education institution approved under subrule (3) of this rule or considered substantially equivalent under subrule (4) of this rule.
(b) Completion of a concentration in accounting at a higher education institution approved under subrule (3) of this rule or considered substantially equivalent under subrule (4) of this rule, that includes all the accounting and general business subjects under subrule (2) of this rule.
(2) A concentration in accounting must include all the following accounting and general business subjects:
(a) Auditing: 3 semester hours.
(b) Twenty-four semester hours of general business subjects, other than accounting, that may include study in any of the following subjects:
(i) Business communications.
(ii) Business ethics.
(iii) Business law.
(iv) Economics.
(v) Finance.
(vi) Management.
(vii) Marketing.
(viii) Information systems or technology.
(ix) Quantitative methods.
(x) Statistics.
(xi) Other subjects approved by the department.
(c) Twenty-one semester hours of accounting principles that must include study in each of the following areas:
(i) Financial accounting and accounting theory.
(ii) Managerial accounting, including cost accounting.
(iii) Accounting systems and controls.
(iv) Taxation.
(v) Governmental/fund accounting.
(3) The board adopts by reference the procedures and
criteria for recognizing accrediting agencies of the United States Department
of Education, effective July 1, 2010, as contained in Title 34, 34 CFR
Part part 602 602, of the Code of Federal Regulation,
and the policies and procedures for recognition of accrediting organizations of
the Council of Higher Education Accreditation (CHEA), effective June 28, 2010.
2019. The federal recognition criteria may be obtained from the United
States Department of Education, Office of Postsecondary Education, 400 Maryland
Avenue, SW, Washington, DC District of Columbia, 20202 and are
available at no cost at http://www.ecfr.gov.
The policies and procedures may be obtained from CHEA, One Dupont Circle NW,
Suite 510, Washington, DC 20036 and are available at no cost at http://www.chea.org.
(4) An individual who attended an unaccredited higher education institution shall establish that he or she has completed educational requirements at a higher education institution that satisfies accreditation requirements substantially equivalent to those recognized in subrule (3) of this rule by providing a credential evaluation completed by either the National Association of State Boards of Accountancy (NASBA) or a credential evaluation organization that is a current member organization of the National Association of Credential Evaluation Services (NACES).
(4) (5) Copies of the standards and criteria
adopted by reference in this rule are available for inspection and distribution
at the cost of 10 cents per page from the Department of Licensing
and Regulatory Affairs, Bureau of Professional Licensing, 611 W. Ottawa Street,
P.O. Box 30670, Lansing, MI Michigan, 48909.
R 338.5116 Educational requirements for Certificate
certificate of certified public accountant; accountant. credit
hour requirements for concentration in accounting.
Rule 116. (1) The department shall consider a person
as having met the concentration in accounting requirements of To satisfy
section 725(1)(e) of the act, MCL 339.725(1)(e), if the person
provides proof of having completed 150 semester hours of academic credit an
accredited college or university, including any of the following: an individual
shall supply proof of all the following to the department:
(a) A master's degree in accounting. Completion
of at least 150 semester hours at a higher education institution approved under
R 338.5115(3) or considered substantially equivalent under R 338.5115(4).
(b) A master’s degree in business administration
that includes not less than 12 semester hours of graduate level accounting
courses. The 12 semester hours of accounting courses does not include tax or information
systems courses. Completion of a baccalaureate degree or higher degree
from a higher education institution approved under R 338.5115(3) or considered
substantially equivalent under R 338.5115(4).
(c) An academic program consisting of both of the
following: Completion of a concentration in accounting under R
338.5115(1)(b) and R 338.5115(2) at a higher education institution approved under
R 338.5113(3) or considered substantially equivalent under R 338.5115(4).
(i) Thirty semester hours of accounting subjects,
including not more than 6 semester hours of taxation. Additional semester
hours in accounting subjects may be applied toward the general business subject
requirements of subdivision (c)(ii) of this subrule.
(ii) Thirty-nine additional semester hours with a
minimum of 3 semester hours, but not more than 12 semester hours, in not less
than 5 of the following areas:
(A) Business law.
(B) Economics.
(C) Professional ethics.
(D) Finance.
(E) Management.
(F) Marketing.
(G) Taxation.
(H) Statistics.
(I) Business policy.
(3) Academic credit earned during an internship shall
apply toward the total 150 semester hour requirement; however, shall not apply
to the required 30 semester hours of accounting subjects or the required 39
semester hours in subrule (1)(c)(ii) of this rule.
PART 3. CONTINUING EDUCATION
R 338.5210 License renewals; continuing education requirements; applicability; continuing education waiver; reciprocity.
Rule 210. (1) This part applies to applications for
renewal of an accountancy license under sections 411 and 729 of the act, MCL
339.411 and 339.729. An applicant for renewal must shall submit
the required fee and a completed application on a form provided by the
department. Both of the following apply:
(a) Pursuant to Under section 729(1) of
the act, MCL 339.729(1), an applicant for renewal who is a nonresident licensee
as defined under section 720(1)(g) of the act, MCL 339.720(1)(g), is
considered to have met the requirements under this part if he or she satisfies
all of the following requirements:
(i) Submits the required fee and a completed application on a form provided by the department.
(ii) The state in which his or her principal place of business is located requires continuing education for renewal of that state’s accountancy license.
(iii) Has met the continuing education requirements of the state in which his or her principal place of business is located.
(b) If audited, the applicant shall provide a copy of the license that was renewed by the state in which his or her principal place of business is located.
(2) Submission of an application for renewal shall
constitute constitutes the applicant’s certification of compliance
with the requirements of this rule. Both of the following apply:
(a) An applicant shall retain documentation required by
R 338.5215 as evidence proof of meeting satisfying the
requirements under this rule for 4 years from the date of applying for license
renewal.
(b) A licensee is subject to audit under this part and may be required to submit the documentation as described by R 338.5215 upon request of the department.
(3) A request for a continuing education waiver pursuant
to under section 204(2) of the act, MCL 339.204(2), must be
received by the department before the expiration date of the license.
R 338.5215 Acceptable continuing education; requirements; limitations.
Rule 215. (1) The board shall consider the following
as acceptable continuing education: The continuing education hours
required for renewal must satisfy the following requirements:
Acceptable Continuing Education |
||
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Activity and proof of completion |
Number of
continuing education hours earned for the |
(a) |
Attendance in a group program that
If audited, a licensee shall submit a copy of a letter or certificate of completion showing the licensee’s name, total continuing education hours earned, sponsor name and contact information, course title, course field of study, date offered or completed, and type of instruction or delivery method used. |
Fifty minutes of continuous instruction equals 1 continuing education hour.
Additional credit
|
Completion of an individual nano-learning program that
If audited, the licensee shall submit a copy of a letter or certificate of completion provided by the program sponsor verifying the licensee’s name, number of continuing education hours earned, sponsor name and contact information, course title, course field of study, date completed, and type of instruction or delivery method used. |
Credit
A nano-learning course cannot be combined with another nano-learning course.
A combined maximum of 20 continuing education hours may be earned under this activity and activity (f) during each continuing education period.
|
|
(c) |
Passing a noncredit academic course that
If audited, the licensee shall submit a letter from the institution confirming the name and course number of the course completed, number of classroom hours attended, and the date of satisfactory course completion. |
Each
|
(d) |
Passing a for-credit academic course that
If audited, the licensee shall submit a copy of an official transcript or a letter from the institution confirming the name and course number of the course completed, credit hours earned, and date of satisfactory course completion. |
Fifteen continuing education hours
|
Classroom work as a teacher, instructor, speaker, or
lecturer that is part of an academic course of which the subject matter
complies with R 338.5255 and is offered at an educational institution that
complies with R 338.5115 or
If audited, the licensee shall submit a copy of the confirmation letter provided by the program sponsor or the institution verifying the licensee’s name, number of hours of classroom work or hours spent conducting the group program, course title, course field of study, and dates of the presentation or instruction. |
Three continuing education hours are granted for every 50 minutes of continuous instruction.
A maximum of 20 continuing education hours may be earned during each continuing education period.
|
|
(f) |
Completion of an individual self-study program that
If audited, the licensee shall submit a copy of a letter or certificate of completion provided by the program sponsor verifying the licensee’s name, number of continuing education hours earned, sponsor name and contact information, course title, course field of study, date completed, and type of instruction or delivery method used. |
Twenty-five minutes of continuous instruction equals ˝ (0.5 credit) of 1 continuing education hour.
One-fifth (0.2 credit) of 1 continuing education
hour
A combined maximum of 20 continuing education hours may be earned under this activity and activity (b) during each continuing education period.
|
(g) |
If audited, the licensee shall submit a copy of a letter or certificate of completion provided by the program sponsor verifying the licensee’s name, number of continuing education hours earned, sponsor name and contact information, course title, course field of study, date completed, and type of instruction or delivery method used. |
Continuing education hours |
(h) |
Completion of a course in Michigan statutes and
administrative rules applicable to public accountancy that
If audited, the licensee shall submit a copy of a letter or certificate of completion provided by the program sponsor verifying the licensee’s name, number of continuing education hours earned, sponsor name and contact information, course title, course field of study, date completed, and type of instruction or delivery method used. |
Fifty minutes of continuous instruction equals 1 continuing education hour.
|
R 338.5230 Relicensure; continuing education.
Rule 230. (1) An applicant for relicensure whose license has lapsed for less than 3 years after the expiration date of the last license may be relicensed under section 411(3) of the act, MCL 339.411(3), if the applicant satisfies both of the following requirements:
(a) Submits the required fee and a completed application on a form provided by the department.
(b) Submits proof to the department of the completion of
40 hours of continuing education within the 12 months immediately preceding the
date of filing the relicensure application. However, if the
continuing education hours submitted with the application are deficient, the
application will be held by the department and the applicant shall provide
proof of completing the deficient hours within 1 year of the date of filing the
relicensure application. The 40 hours must comply with satisfy all
the following requirements:
(i) Meet Satisfy the requirements of R
338.5215.
(ii) Eight of the 40 hours are in auditing and accounting.
(iii) Two of the 40 hours are in professional ethics.
(2) An applicant whose license has been lapsed for 3 or more years after the expiration date of the last license may be relicensed under section 411(4) of the act, MCL 339.411(4), if the applicant satisfies all of the following requirements:
(a) Submits the required fee and a completed application on a form provided by the department.
(b) Establishes that he or she holds a valid and
unrevoked certificate as a certified public accountant that was issued pursuant
to under section 725 or 726 of the act, MCL 339.725 or and
339.726.
(c) Submits proof to the department of the completion
of 40 hours of continuing education within the 12 months immediately preceding
the date of filing the relicensure application. However, if the
continuing education hours submitted with the application are deficient, the
applicant has 1 year from the date of filing the application to provide proof
of completing the deficient hours. The 40 hours must comply with satisfy
all the following requirements:
(i) Meet Satisfy the requirements of R
338.5215.
(ii) Eight of the 40 hours are in auditing and accounting.
(iii) Two of the 40 hours are in professional ethics.
(iv) One of the 2 hours of is in professional
ethics that satisfies the requirements under R 338.5215(1)(h). are
in Michigan statutes and administrative rules applicable to public accountancy.
(2) (3) The continuing education hours
required for the continuing education period of the year in which the license
is granted under this rule shall be are prorated starting with
the month following the date of relicensure.
(4) The department shall not calculate the period of a lapsed license based on a current or lapsed registration. A registrant whose license has lapsed for less than 3 years shall satisfy the requirements under subrule (1) of this rule. A registrant whose license has lapsed for 3 years or more shall satisfy the requirements under subrule (2) of this rule.