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(9) 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, and Executive Reorganization Order 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 338.5104, R 338.5110a, R 338.5111, R 338.5115, R 338.5116, R 338.5139, R 338.5140, R 338.5210, R 338.5211, R 338.5215, R 338.5230, R 338.5401, R 338.5405, R 338.5460, R 338.5465, R 338.5475, R 338.5501, and R 338.5503 of the Michigan Administrative Code are amended, 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) (a) "Board" means the
Michigan board of accountancy created under section 721 of the act, code,
MCL 339.721.
(b) "Code" means the occupational code, 1980 PA 299, MCL 339.101 to 339.2677.
(d) (c) "Continuing education
period" means all or part of a year beginning July 1 and ending June 30.
(e) (d) "Continuous instruction"
means education time not including breakfast, lunch, or dinner periods, coffee
breaks, or any other breaks in the program.
(f) (e) "Disclose" means to
provide a written communication from a Certified Public Accountant (CPA) or a
CPA firm informing the client, prior to before making a
recommendation or referral, that the CPA or CPA firm will receive a commission,
referral fee, or contingency fee from a third party third-party for
recommendations or referrals of products or services, or both.
(g) (f) "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.
(h) (g) "Financial statements"
means statements and related footnotes that show financial position, results of
operations, and cash flows on the basis of based on 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.
(i) (h) "Generally accepted
accounting principles" means accounting principles of professional
conduct, promulgated issued by the applicable nationally or
internationally recognized professional standard setting organization, organization
related to individual accounting engagements.
(j) (i) "Generally accepted auditing
standards" means the standards of professional conduct, promulgated
issued by the applicable nationally or internationally recognized
professional standard setting organization, related to individual audit
engagements.
(k) (j) “Individual with practice
privileges” means an individual who practices in this state under section 727a
of the act, code, MCL 339.727a.
(l) (k) “Nano-learning program” means a
tutorial program designed to permit allow a participant to learn
a given subject in a 10-minute time frame period through the
use of with electronic media and without interaction with a
real-time instructor.
(m) (l) “Out-of-state firm” means a firm
that is permitted to may 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 sections
728(4) and (5) of the act, code, MCL 339.728.
(n) (m) "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.
(o) (n) "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, under section 720 of the act, code, MCL 339.720.
(p) (o) "Qualifying hours" means
continuing education hours that satisfy part 3 of these rules.
(2) A term defined in the act code has the
same meaning when used in these rules.
R 338.5102 Standards of professional practice adopted by reference.
Rule 102. (1) The following standards are approved and 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, 2020, 2021,
and any statements issued as of the effective date of this rule, which are
available at a cost of $249.00 $255.00 from the institute’s
website at http://www.aicpa.org.
https://future.aicpa.org/cpe-learning/publication or at no cost from
the institute’s website at https://us.aicpa.org/research/standards.html.
(b) The standards issued by the Public Company
Accounting Oversight Board (PCAOB), 1666 K Street NW, Washington, District of
Columbia, 20006, set forth in the publication entitled “PCAOB Standards and Related
Rules” 2020 2021 edition, and any updates issued as of the
effective date of this rule, which are available at no a cost of
$205.00 from the AICPA AICPA’s website at http://www.aicpa.org.
https://future.aicpa.org/cpe-learning/publication or at no cost from
the AICPA’s website at https://pcaobus.org/oversight/standards.
(c) The auditing standards issued by the Government
Accountability Office, 441 G. St., NW, Washington, District of Columbia, 20548,
in the publication entitled "Government Auditing Standards 2018
Revision" issued updated on July 17, 2018, April
14, 2021, which are available at no cost on the Office’s website at https://www.gao.gov/assets/700/693136.pdf.
https://www.gao.gov/yellowbook.
(d) The auditing standards issued by the
International Auditing and Assurance Standards Board (IAASB), 529 5th
Avenue, New York, New York, 10017, in the publication entitled “2018 2020
Handbook of International Quality Control, Auditing, Review, Other
Assurance, and Related Services and Pronouncements” issued on December
17, 2018, September 14, 2021, 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 https://www.iaasb.org/publications/2018-handbook-international-quality-control-auditing-review-other-assurance-and-related-services-26.
https://www.iaasb.org/standards-pronouncements.
(e) The accounting standards issued by the Financial Accounting Standards Board
(FASB), 401 Merritt 7, P.O. Box 5116, Norwalk, Connecticut,
06856, in the publication entitled “FASB Accounting Standards Codification” as
of July 20, 2020, June 24, 2021, 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), 407 401 Merritt 7, P.O. Box 5116,
Norwalk, Connecticut, 06856, in the publication entitled “GASB Codification” as
of June 30, 2019, December 31, 2020, and any pronouncements
published as of the effective date of this rule, which are available at a
no cost of $132.00 from the board’s website at http://gasb.org.
https://www.gasb.org/home.
(g) The accounting standards issued by the International Accounting Standards Board,
30 Cannon Street, London EC4M 6XH, United Kingdom, in the
publication entitled “2018 2021 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 £78.00 £79.00
from the board’s website at http://www.ifrs.org.
(h) The United States Securities and Exchange Commission (SEC) rules contained in 17 CFR chapter 2 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, Michigan, 48909.
(3) A licensee shall satisfy the applicable standards adopted in subrule (1) of this rule.
R 338.5104 Retention of documents. Rule 104. (1) With the exception of documents related to a peer review, all individual licensees, firm licensees, individuals with practice privileges, and out-of-state firms shall retain keep sufficient documentation, in any form, with regard to about services performed while engaged in the practice of public accounting, as well as evidence obtained and conclusions reached, for a period of not less than 5 years. (2) Documents related to a peer review shall must be retained kept in accordance with and satisfy the AICPA's professional standards and retention policies pursuant to under R 338.5102(1)(a) or until final adjudication of a complaint related to a peer review, whichever is later. (3) Documentation shall must be consistent with that required by professional standards or promulgated issued by the applicable nationally or internationally recognized professional standards setting organizations. PART 2. LICENSURE REQUIREMENTS
R 338.5110a Uniform CPA exam procedures.
Rule 110a. The following procedures 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 a rolling 18-month period beginning on the date that the first section is passed. If all sections are not passed within the rolling 18-month period, then credit for any section passed outside the 18-month period expires and the section must be retaken.
(c) The department may extend 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 or if the candidate provides the department with proof of verifying
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 within 90 days of the date of the exam. If extended,
an applicant’s exam does not count as a failure to write the exam.
(d) The department or the entity contracted with the
department to administer the exam may permit allow a candidate to
sit for the exam in another state if the candidate complies with satisfies
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
decides 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 earlier attempt of the same
exam section has been released.
R 338.5111 Exam scores. Rule 111. (1) The minimum passing grade for each subject is 75. (2) The department shall notify each candidate of his or her the applicant’s grades within a reasonable time, but not later than 120 days after completion of the exam. (3) A candidate shall may appeal the grading of any paper to the department, in writing, within 30 days after grades are released.
R 338.5115 Educational requirements for the uniform CPA exam; approved educational
institutions; adoption of accreditation standards by reference.
(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)
or (4) of this rule or considered substantially equivalent under subrule
(4) (5) of this rule.
(b) Completion of a concentration in accounting at a
higher education institution approved under subrule (3) or (4) of this
rule or considered substantially equivalent under subrule (4) (5) of
this rule, that which 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 which 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 34 CFR part 602, and the
policies and procedures for recognition of accrediting organizations of the
Council of Higher Education Accreditation (CHEA), effective June 28, 2019. The
federal recognition criteria may be obtained from the United States Department
of Education, Office of Postsecondary Education, 400 Maryland Avenue, SW,
Washington, 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.
The standards for recognition of accrediting organizations developed and
adopted by the Council for Higher Education Accreditation (CHEA), One Dupont
Circle NW, Suite 510, Washington, D.C. 20036, in the publication entitled “CHEA
Standards and Procedures for Recognition,” effective October 4, 2021, which are
available at no cost on the council’s website at https://www.chea.org,
are approved and adopted by reference. If a higher education institution is accredited
by the accrediting body of the region in which the institution is located and
the accrediting body satisfies the recognition standards of CHEA, then the
institution is approved.
(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). The criteria for recognition and the recognition process
for the secretary’s recognition of accrediting agencies of the United States
Department of Education, Office of Postsecondary Education, 400 Maryland
Avenue, S.W., Washington, D.C. 20202, in 34 CFR 602.10 to 602.39, effective
July 1, 2020, which are available at no cost on the department’s website at https://www2.ed.gov/about/offices/list/ope/index.html,
are approved and adopted by reference. If a higher education institution is accredited
by the accrediting body of the region in which the institution is located and
the accrediting body satisfies the recognition criteria and process of the
United States Department of Education, then the institution is approved.
(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, Michigan, 48909. An individual who attended an
unaccredited higher education institution shall establish that the applicant has
completed educational requirements at a higher education institution that
satisfies accreditation requirements substantially equivalent to those
recognized in subrule (3) or (4) 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 of the National Association of Credential Evaluation Services (NACES).
(6) Copies of the standards and criteria approved and adopted by reference in this rule are available for inspection and distribution at a cost of 10 cents per page from the Board of Accountancy, Department of Licensing and Regulatory Affairs, Bureau of Professional Licensing, 611 W. Ottawa Street, P.O. Box 30670, Lansing, Michigan, 48909.
R 338.5116 Educational requirements for certificate of certified
public accountant. CPA.
Rule 116. (1) To satisfy section 725(1)(e) of the act,
code, MCL 339.725, an individual shall supply provide proof
of verifying all the following to the department: requirements:
(a) Completion of at least not less than 150
semester hours at a higher education institution approved under R 338.5115(3) or
R 338.5115(4) or considered substantially equivalent under R
338.5115(4). R 338.5115(5).
(b) Completion of a baccalaureate degree or higher
degree from a higher education institution approved under R 338.5115(3) or R
338.5115(4) or considered substantially equivalent under R 338.5115(4).
R 338.5115(5).
(c) 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 R 338.5115(4) or considered substantially
equivalent under R 338.5115(4). R 338.5115(5).
R 338.5139 Practice privilege. Rule 139. An individual shall not, as a condition of qualification for the practice privilege granted under section 727a of the code, MCL 339.727a, be required to comply with satisfy the continuing professional education requirements of this state provided that the individual is in compliance with satisfies the continuing professional education requirements of the state of the individual’s principal place of business. R 338.5140 Permit for temporary practice. Rule 140. (1) An accountant who does not qualify for practice privileges under section 727a of the code, MCL 339.727a, nor hold holds a license to practice public accounting in this state state, shall obtain a permit and pay the appropriate fee for each engagement in this state by this accountant, or on behalf of his or her the accountant’s firm, who does not hold a license to practice public accountancy in this state. The applicant shall hold a license as a certified public accountant CPA of another state, or hold a title from a foreign country, recognized by the board as comparable to the Michigan certificate of certified public accountant CPA and shall be practicing public accountancy under the certificate or license in the grantor state or country. (2) If approved by the department, the term of the permit shall begin on the date approved unless otherwise specified and shall be for a specified period, but period but shall not be for more than 1 year. (3) The temporary practice shall be performed by, or under the direct supervision of, a licensed certified public accountant, CPA, an individual with practice privileges under to section 727a of the code, MCL 339.727a, or the holder of a title from a foreign country who is recognized under subrule (1) of this rule. (4) A temporary permit is not required if the work relates to a Michigan-based division or subsidiary of an entity, if the parent entity is located in another state or foreign country and is a client of the certified public accountant, CPA, firm, or foreign accountant, and if a separate presentation of financial statements with a related independent auditor's report or review report, or an attestation regarding the reliability of a representation or estimate, is not made for the division or subsidiary on a stand-alone basis. (5) A temporary permit is not required if the work is to be performed through the applicant's employer who presently holds the a license to practice public accountancy in this state. (6) A temporary permit issued to an accountant shall also constitute constitutes a temporary permit for his or her the accountant’s firm, if his or her the accountant’s firm is not presently licensed in this state. (7) If another jurisdiction charges a fee for providing an affidavit or certificate of professional standing for determining deciding whether the applicant is qualified to practice public accountancy temporarily in this state, then the applicant shall pay the fee. 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,
code, MCL 339.411 and 339.729. An applicant for renewal shall submit
provide the required fee and a completed application on a form provided
by the department. Both of the following standards apply:
(a) Under section 729(1) of the act, code, MCL
339.729, an applicant for renewal who is a nonresident licensee as that term
is defined under in section 720(1)(g) of the act, code,
MCL 339.720, is considered to have met the requirements under this part if he
or she the applicant satisfies all of the following
requirements:
(i) Submits Provides the required fee
and a completed application on a form provided by the department.
(ii) The state in which his or her the
applicant’s principal place of business is located requires continuing education
for renewal of that state’s accountancy license.
(iii) Has met Meets the continuing
education requirements of the state in which his or her the
applicant’s 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 the
applicant’s principal place of business is located.
(2) Submission of an application for renewal constitutes the applicant’s certification of compliance with the requirements of this rule. Both of the following standards apply:
(a) An applicant shall retain keep documentation
required by R 338.5215 as proof verifying of satisfying satisfaction
of the requirements under this rule for 4 years from after the
date of applying for license renewal.
(b) A licensee is subject to audit under this part and
may be required have to submit provide the
documentation as described by R 338.5215 upon request of the department.
(3) A request for a continuing education waiver under
section 204(2) of the act, code, MCL 339.204, must be received by
the department before the expiration date of the license.
R 338.5211 Renewal of license with insufficient qualifying hours permitted allowedunder certain circumstances; waiver of requirement for additional hours.
Rule 211. (1) A licensee who does not earn sufficient qualifying hours during the continuing education period may be allowed to renew a license upon reporting 80 qualifying hours and an additional 4 hours of continuing education credit for each month of time needed to remove the deficiency. The additional 4 hours of continuing education credit for each month of time needed to remove the deficiency shall not apply toward the qualifying hours of continuing education credit required in a continuing education period for the renewal of a license. (2) The department may waive the requirement for additional hours upon a showing by the licensee that the additional hours would present an undue hardship on the licensee.
R 338.5215 Acceptable continuing education; requirements; limitations.
Rule 215. (1) The continuing education hours required for renewal must satisfy the following requirements:
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Activity and |
Number of |
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(a) |
Attendance in a group program that satisfies all the following requirements:
- The subject matter of the program - The program is conducted by an instructor or discussion
leader whose background, training, education, or experience makes it appropriate
for - The sponsor of the program takes individual attendance. - The sponsor of the program issues to each attendee a program outline and a written certification of the attendee’s hours of attendance. - The sponsor of the program
If audited, a licensee shall |
Fifty minutes of continuous instruction equals 1 continuing education hour.
Additional credit is granted after the first 50 minutes for continuous instruction in the following amounts:
One-half credit (0.5 credit) for every additional 25 minutes. One-fifth credit (0.2 credit) for every additional 10 minutes.
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Completion of an individual nano-learning program that satisfies all the following requirements:
- The subject matter of the program - The program is an educational course designed for nano-learning delivery. - The program uses instructional methods that define a minimum of 1 learning objective. - The program guides the participant through a
program of learning and provides proof verifying - The sponsor requires the participant to successfully complete a qualified assessment with a passing grade of 100% before issuing credit for the course. - The sponsor of the program issues the participants a written certification of the participants’ completion of the program and a program outline. - The sponsor of the program
If audited, the licensee shall |
Credit is awarded as 1/5 credit (0.2 credit) for each nano-learning program completed.
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.
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(c) |
Passing a noncredit academic course that satisfies both of the following requirements:
- The subject matter of the course - The course is offered by an educational
institution that
If audited, the licensee shall |
Each 50 minutes of continuous instruction equals 1 continuing education hour.
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(d) |
Passing a for-credit academic course that satisfies both of the following requirements:
- The subject matter of the course - The course is offered by an educational
institution that
If audited, the licensee shall |
Fifteen continuing education hours are granted for each academic credit hour.
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Classroom work as a teacher, instructor, speaker, or
lecturer that is part of an academic course of which the subject matter
If audited, the licensee shall |
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.
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(f) |
Completion of an individual self-study program that satisfies all the following requirements:
- The subject matter of the program - The program is an educational course designed for self-study. - The sponsor of the program issues the participants a written certification of the participant’s completion of the program and a program outline. - The sponsor of the program
If audited, the licensee shall |
Twenty-five minutes of continuous instruction equals ½ (0.5 credit) of 1 continuing education hour.
One-fifth (0.2 credit) of 1 continuing education hour is granted for every additional 10 minutes of continuous instruction after the first 25 minutes of continuous instruction.
A combined maximum of 20 continuing education hours may be earned under this activity and activity (b) during each continuing education period. |
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(g) |
If audited, the licensee shall |
Continuing education hours are granted in an amount allowed under the type of activity for which the course qualifies. |
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(h) |
Completion of a course in Michigan statutes and
- The content of the course is created by the Michigan Association of Certified Public Accountants. - The course provider issues the participants a written certification of the participant’s completion of the course and a course outline. - The sponsor of the program
If audited, the licensee shall |
Fifty minutes of continuous instruction equals 1 continuing education hour.
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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, code, MCL
339.411(3), MCL 339.411, if the applicant satisfies both of the
following requirements:
(a) Submits Provides the required fee and
a completed application on a form provided by the department.
(b) Submits Provides proof verifying 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 provided
with the application are deficient, the application will be held by the
department and the applicant shall provide proof verifying of
completing the completion of the deficient hours within 1 year of
the date of filing the relicensure application. The 40 hours must satisfy all
the following requirements:
(i) 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, code, MCL 339.411(4), MCL
339.411, if the applicant satisfies all of the following
requirements:
(a) Submits Provides the required fee and
a completed application on a form provided by the department.
(b) Establishes that he or she the applicant holds
a valid and unrevoked certificate as a certified public accountant CPA
that was issued under section 725 or 726 of the act, code, MCL
339.725 and or 339.726.
(c) Submits Provides proof verifying 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 provided
with the application are deficient, the applicant has 1 year from the date
of filing the application to provide proof verifying of completing
the completion of the deficient hours. The 40 hours must satisfy all
the following requirements:
(i) 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 is in professional ethics that satisfies the requirements under R 338.5215(1)(h).
(3) The continuing education hours required for the continuing education period of the year in which the license is granted under this rule 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.
PART 4. PROFESSIONAL CONDUCT R 338.5401 Responsibility for conduct of supervised persons. Rule 401. (1) The department may hold a an individual licensee, a firm licensee, an individual with practice privileges, or an out-of-state firm responsible for compliance with the rules of professional conduct by all persons under their supervision. If the licensee is a firm, then the department shall hold the firm, and shall hold an out-of-state firm, responsible for compliance with the rules of professional conduct by all of its the firm’s officers, employees. employees, partners, and principals. (2) An individual licensee, a firm licensee, and individual with practice privileges, or an out-of-state firm, shall not permit allow others to carry out conduct on its behalf acts which, if carried out conducted by the individual licensee, firm licensee, individual with practice privileges, or out-of-state firm, would constitute a violation of the rules of professional conduct.
R 338.5405 Independence rule; adoption by reference.
Rule 405. An
individual licensee, a firm licensee, an individual with practice privileges,
or an out-of-state firm may express an opinion on financial statements perform
attest services as that term is defined in section 720 of the code, MCL
339.720, of an enterprise only if the individual licensee, firm licensee,
individual with practice privileges, or out of-state firm is independent from
the enterprise. The standards adopted in R 338.5102(1) shall be used to determine
decide if the individual or firm is independent from the enterprise.
R 338.5460 Contingent fees. Rule 460. (1) As provided in section 730 of the act, a A contingent fee is a fee paid by a client to an individual licensee, a firm licensee, an individual with practice privileges, or an out-of-state firm. firm, as defined under section 730(4) of the code, MCL 339.730. (2) An individual licensee, firm licensee, an individual with practice privileges, or an out-of-state firm who is paid or expects to be paid a contingent fee by a client shall disclose that fact to the client. (3) As used in section 730(4) of the act, code, MCL 339.730, the term "tax matters" relates to the preparation of an original or amended tax return or claim for tax refund and includes giving advice on events that occurred before the time the advice is given if the advice is directly relevant to determining the existence, character, or amount of a schedule, entry, or other portion of a return of claim for refund. (4) As provided in section 730(4) of the act, code, MCL 339.730, a fee is considered determined, based on the findings of a governmental agency, if the individual licensee, firm licensee, individual with practice privileges, or out-of-state firm can demonstrate show a reasonable expectation at the time of a fee arrangement of substantive consideration by the agency with respect to the client. An expectation of substantive consideration is deemed not considered reasonable for preparation of original tax returns. R 338.5465 Acts constituting discreditable conduct. Rule 465. Any of the following acts by an individual licensee, firm licensee, an individual with practice privileges, or an out-of-state firm, constitutes conduct that is discreditable to the accounting profession: (a) Using deceptive representations in connection with services performed. (b) Representing that services are of a particular standard when they are not. (c) Failing to perform, on a timely prompt basis, services in accordance with the conditions, terms, or prerequisites of a public communication or any quotation. (d) Misrepresenting facts or failing to disclose not disclosing relevant facts. (e) Creating false or unjustified expectations of favorable results. (f) Implying abilities not supported by valid educational or professional attainments or licensing recognition. (g) Implying the ability to influence improperly any court, tribunal, or other public body or official. (h) Making any other representation or implication that is false, deceptive, or misleading. (i) Employing or engaging a person to perform a discreditable act. (j) Engaging in a trade practice prohibited by law. (k) Retaining documents constituting the original books and records of a client after a demand has been made for their return. (l) Failing to respond, within a reasonable time, to inquiries of the board or its the board’s authorized representatives relative to the administration of the act. code. (m) Providing false or misleading information on the qualifying experience of an applicant for certified public accountant. CPA. (n) Stating or implying that the individual licensee, firm licensee, individual with practice privileges, or out-of-state firm has received formal recognition as a specialist in any aspect of the practice of public accountancy if the individual licensee, firm licensee, individual with practice privileges, or out-of-state firm has not received the recognition. (o) Representing that professional services can or will be competently performed for a stated fee when this is not the case, or making representations with respect to fees for professional services that do not disclose all variables which may reasonably be expected to affect the fees that will in fact be charged. R 338.5475 Payment or acceptance of commissions; "commission" defined. Rule 475. (1) As used in section 731 of the act, code, MCL 339.731, "commission" means any remuneration consideration paid to an individual licensee, a firm licensee, an individual with practice privileges, or an out-of-state firm by a third party third-party in connection with a recommendation or referral of a person to the third party. third-party. (2) As provided in section 731(3) of the act, code, MCL 339.731, a referral fee is not a commission when received or paid by an individual licensee, a firm licensee, an individual with practice privileges, or an out-of-state firm for recommending or referring a client to another individual licensee, firm licensee, individual with practice privileges, or out-of-state firm for a service involving the practice of public accounting. (3) An individual licensee, a firm licensee, an individual with practice privileges, or an out-of-state firm who is paid or expects to be paid a commission or a referral fee shall disclose that fact to the client. R 338.5501 Peer review. Rule 501. (1) Each firm or sole practitioner required to participate take part in a peer review program, program pursuant to under section 729(2) of the code, MCL 339.729(2), 339.729, shall enroll in the program of a qualified sponsoring organization within 1 year of the earlier of the following: (a) Its The firm or solo practitioner’s initial licensing date. (b) The performance of services that require a peer review. (2) Proof verifying of a peer review shall not be required have to be submitted provided to the department until the second renewal following initial licensure or the performance of services requiring a peer review. (3) The department shall accept, as proof verifying of compliance with section 729(2) of the code, MCL 339.729(2), MCL 339.729, the electronic submission of information from the facilitated state board access (FSBA) website. (4) Qualified sponsoring organizations shall include the center for public company audit firms (CPCAF) peer review program, the American institute of certified public accountants (AICPA) AICPA peer review program, national conference of CPA practitioners (NCCPAP) peer review program, and such other entities that adhere to the peer review standards defined in R 338.5102(1)(a) as determined decided by the board. With respect to an out-of-state firm required to obtain a license under section 728 of the code, MCL 339.728(1)(b), MCL 339.728, a peer review sponsoring organization approved by another state in which that firm is licensed is presumed to be qualified in this state, with respect to that firm. (5) A licensee subject to peer review shall not be required to become a member of any sponsoring organization. (6) Out-of-state firms required to obtain a peer review under section 728(5) of the code, MCL 339.728(5) MCL 339.728, may, in lieu instead of enrolling in a program sponsored by an organization described in subrule (3) of this rule, comply with satisfy the peer review requirement applicable in the state where that firm is licensed, verified proof of which shall be furnished given to the department upon the department’s request. R 338.5503 Peer review standards; change in sponsoring organization; deficient peer review reports; documentation. Rule 503. (1) If a firm is merged, otherwise combined, dissolved, or separated, the sponsoring organization shall determine decide which firm is considered the succeeding firm. The succeeding firm shall retain keep its peer review status and the review due date. (2) A firm choosing to change to another sponsoring organization may do so provided that the firm authorizes the previous sponsoring organization to communicate to the succeeding sponsoring organization any outstanding corrective actions related to the firm's most recent review. (3) The department may rely on a fail failed peer review report or a second consecutive pass with deficiencies peer review report as prima facie evidence of a violation of professional standards. (4) Each peer review and reviewer must comply with satisfy the applicable review standards in place at the time of the review. The following standards apply: (a) Documents related to a peer review shall must be retained kept in accordance with and satisfy the AICPA's retention policies pursuant to under R 338.5102(1)(a), or until final adjudication of a complaint related to a peer review, whichever is later. (b) The documents described in subdivision (a) of this subrule shall be available for inspection by the department during regular business hours with reasonable notice.