2023 Colorado Revised Statutes › Title 12 - PROFESSIONS AND OCCUPATIONS (§§ 12-1-101 — 12-315-310) › BUSINESS PROFESSIONS AND OCCUPATIONS (§§ 12-100-101 — 12-165-113) › Article 100 - ACCOUNTANTS (§§ 12-100-101 — 12-100-130) › Section 12-100-114 - Partnerships, professional corporations, and limited liability companies composed of certified public accountants - registration - rules - definitions

(1)
Except as provided in section
12-100-117 (2)
, a partnership, professional corporation, or limited liability company engaged in this state in the practice of public accounting as certified public accountants shall register with the board as a partnership, professional corporation, or limited liability company of certified public accountants and must meet the following requirements; and, as used in this article 100, "partnership" includes a registered limited partnership, limited liability partnership, limited liability limited partnership, foreign limited partnership, foreign limited liability partnership, and foreign limited liability limited partnership:
(a)
At least one partner, shareholder, or member who shall also be a director or manager thereof must be a certified public accountant or registered firm of this state in good standing.
(b)
A simple majority of the ownership of a certified public accounting firm doing business as a public accounting firm in Colorado, in terms of financial interests and voting rights of all partners, officers, shareholders, members, or managers, shall be licensed certified public accountants in good standing in this state or another state.
(c)
Any other partner, shareholder, or member thereof may, but need not, be a certified public accountant of some state, in good standing, or a registered firm in this state who at all times owns the person's partnership interest, corporate share, or membership interest in the person's own right.
(d)
Each resident manager in charge of an office of the partnership, professional corporation, or limited liability company in this state must be a certified public accountant of this state in good standing.
(2)
(a)
(I)
Application for registration shall be made upon the affidavit of a partner of the partnership, of a shareholder of the professional corporation, or of a member of the limited liability company who is a certified public accountant of this state in good standing and shall provide:
(A)
The names and addresses of the persons who are practicing public accounting for the partnership, professional corporation, or limited liability company;
(B)
The names and addresses of the persons who are not certified public accountants, but who are partners of a partnership, shareholders of a professional corporation, or members of a limited liability company;
(C)
Disclosure of all of the states in which the partnership, professional corporation, or limited liability company is licensed, registered, or permitted to practice. The application shall also disclose all of the states in which licensure, registration, or permission to practice has been denied, suspended, or revoked.
(D)
Any other information the board may reasonably request; and
(E)
A registration fee, the amount of which shall be set by the board, to cover the board's administrative costs.
(II)
Each member of the partnership, professional corporation, or limited liability company may receive a copy of the application.
(III)
The partner, shareholder, or member designated by the firm shall notify the board in writing within thirty days after any change in the partnership, professional corporation, or limited liability company, including:
(A)
Identities and numbers of partners, shareholders, members, managers, or officers; and
(B)
Location of places of business of the partnership, professional corporation, or limited liability company.
(IV)
The board may suspend or revoke the registration of or impose any other discipline the board sees fit to administer to a partnership, professional corporation, or limited liability company that fails to notify the board of any changes outlined in subsection (2)(a)(III) of this section.
(b)
The board shall in each case determine whether the applicant is eligible for registration.
(3)
Each firm registration issued pursuant to this article 100 is subject to the renewal, expiration, reinstatement, and delinquency fee provisions specified in section
12-20-202 (1) and (2)
. A firm whose registration has expired shall be subject to the penalties provided in this article 100 or section
12-20-202 (1)
.
(4)
As used in subsection (5) of this section, "employee" includes a member of a limited liability company and a partner in a limited partnership, limited liability partnership, or limited liability limited partnership or foreign limited partnership, limited liability partnership, or limited liability limited partnership.
(5)
The corporation must be in compliance with the "Colorado Business Corporation Act", articles
101
to
117
of title
7
, and, to the extent applicable under section
7-117-103
, with the "Colorado Corporation Code", articles
1
to
10
of title
7
, as those articles existed prior to their repeal on July 1, 1994. The limited liability company must be in compliance with the "Colorado Limited Liability Company Act", article
80
of title
7
. The organizing documents of any partnership, the articles of incorporation of any corporation, or the articles of organization of any limited liability company shall contain provisions complying with the following requirements:
(a)
The partnership, corporation, or limited liability company shall be organized solely for the purpose of practicing accountancy and other activities as may from time to time be specifically found by the board to be activities suitable and proper to be performed by certified public accountants only through or under the supervision of at least one person who holds a certificate to practice public accounting as a certified public accountant.
(b)
Each partner who is personally engaged within this state in the practice of public accounting shall be a certified public accountant of this state in good standing, and each partner not personally engaged within this state in the practice of public accounting may, but need not, be a certified public accountant of some state in good standing. The president of any such corporation shall be a shareholder and a director, and one or more of the directors shall be certified public accountants of this state in good standing. The manager or managers of any such limited liability company shall be a member or members and one or more of the managers shall be certified public accountants of this state in good standing. Lay directors and officers and managers shall not exercise any authority whatsoever over professional matters.
(c)
All partners, shareholders of the corporation, or members of the limited liability company shall be jointly and severally liable for all acts, errors, and omissions of the employees of the partnership, corporation, or limited liability company except during periods of time when the partnership, corporation, or limited liability company maintains in good standing professional liability insurance, or designated or segregated money in lieu of the professional liability insurance, that meets the standards set forth in subsections (5)(c)(I) to (5)(c)(V) of this section:
(I)
The insurance shall insure the partnership, corporation, or limited liability company against liability imposed upon the partnership, corporation, or limited liability company by law for damages resulting from any claim made against the partnership, corporation, or limited liability company arising out of acts, errors, and omissions committed in the performance of professional services for others by those employees of the partnership, corporation, or limited liability company who hold certificates to practice public accounting as certified public accountants.
(II)
The policies shall insure the partnership, corporation, or limited liability company against liability imposed upon it by law for damages arising out of the acts, errors, and omissions of all other employees.
(III)
The insurance shall be in an amount for each claim of at least fifty thousand dollars multiplied by the number of certified public accountants employed by or members of the partnership, corporation, or limited liability company within this state, and the policy may provide for an aggregate top limit of liability per year for all claims of one hundred fifty thousand dollars also multiplied by the number of certified public accountants employed by or members of the partnership, corporation, or limited liability company within this state; except that no firm shall be required to carry insurance in excess of three hundred thousand dollars for each claim with an aggregate top limit of liability for all claims during the year of one million dollars and except that the board, in the public interest, may adopt rules increasing the minimum amounts of insurance coverage required by this subsection (5). A policy of insurance obtained in accordance with this subsection (5)(c)(III) may be issued on a claims-made or occurrence basis.
(IV)
(A)
The policy may provide that it does not apply to: Any dishonest, fraudulent, criminal, or malicious act or omission of the insured partnership, corporation, or limited liability company or any partner, stockholder, member, or employee thereof; the conduct of any business enterprise in which the insured partnership, corporation, or limited liability company under this article 100 is not permitted to engage but which nevertheless may be owned by the insured partnership, corporation, or limited liability company or in which the insured partnership, corporation, or limited liability company may be a partner or which may be controlled, operated, or managed by the insured partnership, corporation, or limited liability company in its own or in a fiduciary capacity including the ownership, maintenance, or use of any property in connection therewith; and bodily injury to, or sickness, disease, or death of, any person, or to injury to or destruction of any tangible property, including the loss of use thereof.
(B)
The policy may be of a type reasonably available in the commercial insurance market and may contain reasonable provisions with respect to policy periods, territory, claims, conditions, exclusions, and other usual matters.
(C)
The policy may provide for a deductible, or self-insured retained amount, and may provide for the payment of defense or other costs out of the stated limits of the policy, in either or both cases, all partners, shareholders of the corporation, or members of the limited liability company shall be jointly and severally liable for all acts, errors, and omissions of the employees of the partnership, corporation, or limited liability company to the extent of the amount of the deductible or retained self-insurance, and the amount, if any, by which the payment of defense costs reduces the insurance remaining available for the payment of claims below the minimum limit of insurance required by this subsection (5)(c).
(V)
A partnership, corporation, or limited liability company may maintain, in lieu of the insurance specified in subsection (5)(c)(III) of this section, money specifically designated and segregated as security for the payment of liabilities imposed by law against the partnership, corporation, or limited liability company, or its partners, shareholders, or members, arising out of claims of the type specified in subsections (5)(c)(I) and (5)(c)(II) of this section, in the amount of at least fifty thousand dollars multiplied by the number of certified public accountants employed by or members of the partnership, corporation, or limited liability company within this state; except that the amount is not required to exceed one million dollars and except that the board, in the public interest, may adopt rules increasing the minimum amount of designated and segregated money required by this subsection (5)(c)(V). The partnership, corporation, or limited liability company remains in compliance with this section notwithstanding amounts paid from the designated or segregated money in any one calendar year in settling or discharging the claims, so long as the amount of the designated and segregated money is increased to at least the minimum required amount as of the first business day of the next calendar year. A partnership, corporation, or limited liability company is in compliance with this subsection (5)(c)(V) if it maintains money in the required amount in trust or in bank escrow in the form of cash, bank certificates of deposit, or United States treasury obligations, or maintains in effect bank unconditional, irrevocable letters of credit in the required amount or insurance or surety company bonds in the required amount. The money or equivalency shall be maintained in or issued by a qualified United States financial institution as defined by section
10-1-102 (17)
.
(d)
A partnership name shall be ended by words or abbreviations permitted pursuant to the law under which the partnership is organized. The corporate name shall be ended by the word "Corporation" or "Incorporated" or by the words "Professional Corporation" or by the abbreviations "Corp.", "Inc.", or "P.C." The name of any limited liability company shall be ended by the words "Limited Liability Company" or the abbreviation "LLC" or the word limited may be abbreviated as "Ltd.", and the word company may be abbreviated as "Co." An assumed or trade name may be used if it is not misleading and clearly indicates that the firm is engaged in providing accounting services.
(6)
No limited liability company, limited liability partnership, limited partnership, or limited liability limited partnership, or foreign limited partnership, limited liability partnership, or limited liability limited partnership engaged in the practice of public accounting in this state and in one or more other jurisdictions shall be required to include a provision in its articles of organization or organizing documents as otherwise required by subsection (5) of this section, but shall be subject, with respect to the practice of public accounting within this state, to the requirements of subsections (5)(a) to (5)(d) of this section.
(7)
The board shall not renew the registration of a firm that issues attest or compilation reports unless the registered partnership, professional corporation, or limited liability company has undergone a peer review conducted according to rules promulgated by the board that meet the standards for performing and reporting on a peer review of the American Institute of Certified Public Accountants or an equivalent standard.
(8)
The partnership, corporation, or limited liability company may exercise the powers and privileges conferred upon partnerships, corporations, and limited liability companies by the laws of Colorado in furtherance of and subject to its partnership, corporate, or limited liability company purposes and may invest its funds in a manner not incompatible with the practice of public accounting as certified public accountants. Any stock purchased by the corporation, or membership interest purchased by the limited liability company or partnership interest purchased by the partnership, may be made out of capital as well as surplus without regard to the impairment of the partnership capital, corporation capital, or limited liability company capital.
(9)
The partnership, corporation, or limited liability company shall do nothing in this state that, if done by a person who holds a certificate as a certified public accountant within this state and employed by it, would violate the provisions of this article 100. Any violation by the partnership, corporation, or limited liability company of this article 100 shall be grounds for the board, in accordance with section
12-20-404
, to deny, revoke, suspend, or refuse to renew the registration, or the board may fine, issue a confidential letter of concern to, issue a letter of admonition to, or place on probation the registrant.
(10)
Nothing in this section shall diminish or change the obligation of each person who holds a certificate of certified public accountant employed by the partnership, corporation, or limited liability company within this state to conduct the person's practice in accordance with the provisions of this article 100. Any person who holds a certificate to practice public accounting as a certified public accountant who, by act or omission, causes the partnership, corporation, or limited liability company to act or fail to act in a way that violates this article 100 is personally responsible for the act or omission and subject to discipline therefor.
(11)
Foreign partnerships, corporations, limited partnerships, limited liability limited partnerships, or limited liability companies may engage in the practice of public accounting in this state as certified public accountants so long as their organizing documents, articles of incorporation, or articles of organization provide that the partnership, corporation, limited partnership, limited liability limited partnership, or limited liability company is organized solely for the purpose of practicing accountancy and such other activities as may from time to time be specifically found by the board to be activities suitable and proper to be performed by certified public accountants and comply with and meet the requirements of subsection (5) of this section.
(12)
Except as provided in this section, partnerships, professional corporations, and limited liability companies shall not practice public accounting as certified public accountants.
(13)
Nothing in this section shall modify the accountant-client privilege specified in section
13-90-107 (1)(f)
.
(14)
When any law of this state or any rule of any agency or other authority established under the constitution or laws of this state requires or authorizes any audit, financial report, or statement to be made, approved, or certified by a certified public accountant, the audit, report, or statement may be made, approved, or certified by a partnership, professional corporation, or limited liability company registered in this state.
Renumbered from C.R.S. §
12-2-117
and amended by 2019 Ch. 136, § 1, eff. 10/1/2019.
L. 59: p. 136, § 14. CRS 53: § 2-2-14. C.R.S. 1963: § 2-1-14. L. 70: p. 90, § 2. L. 90: IP(1), (1)(b), (1)(c), (1)(e), and (2) amended, (1)(d) repealed, and (3) to (10) added, pp. 748, 757, §§ 14, 30, effective July 1. L. 93: Entire section amended, p. 24, § 2, effective July 1; IP(3) amended, p. 862, § 31, effective 7/1/1994. L. 94: Entire section amended, p. 1082, § 1, effective May 4. L. 95: IP(1) amended and (2.5) and (3.5) added, p. 808, § 25, effective May 24. L. 97: (3)(c) and (3.5) amended, p. 1522, § 22, effective June 3. L. 2000: (1), (2), (2.5), (3.5), and (7) amended, p. 1583, § 5, effective July 1. L. 2001: IP(3) and (3)(b) amended, p. 1268, § 8, effective June 5. L. 2003: (3)(c)(V) amended, p. 619, § 22, effective July 1. L. 2005: (1)(b) amended, p. 240, § 1, effective July 1. L. 2008: IP(1) amended, p. 692, § 5, effective August 5. L. 2010: IP(1), (2)(b), and (5) amended and (2.2) and (3.7) added, (HB 10 -1236), ch. 146, p. 499, § 11, effective July 1.
This section is similar to former § 12-2-117 as it existed prior to 2019.