Louisiana Administrative Code › Title 46 - PROFESSIONAL AND OCCUPATIONAL STANDARDS › Part XIX - Certified Public Accountants › Chapter 17 - Rules of Professional Conduct › Section XIX-1707 - Other Responsibilities and Practices

Current through Register Vol. 50, No. 6, June 20, 2024
A. Acting through Others
1. A licensee or CPA firm shall not permit
				others to carry out on his behalf or on the firm's behalf, either with or
				without compensation, acts which, if carried out by the licensee or CPA firm,
				would place him or the CPA firm in violation of the rules of professional
				conduct, professional standards, or any provisions of the Act.
2.Acting through an affiliated entity.
a. Definition
i. Affiliated Entity. Affiliated entities for
				purpose of this rule refers to entities which share elements of ownership
				structure with a CPA firm and which offer to clients, or the public,
				professional services or products related to the skills associated with CPAs.
				Conversely, entities that offer services or products that do not relate to
				matters of accounting and financial reporting, tax, finance, investment advice
				or financial planning, management, or consultation are excluded.
ii. Similar Name. A similar name is one that
				contains one or more names, or initials of the names, or reference to
				that/those names that are included in a CPA firm applying for or currently
				holding a firm permit.
b.
				On and after January 1, 2008, a CPA firm shall not affiliate with an entity
				that has a similar name unless:
i. the
				affiliated entity is owned in accordance with
				§1707.A.2.d i;
				or
ii. has been issued a firm
				permit by the board pursuant to
				§1707.A.2.d ii;
				or
iii. the CPA firm has entered
				into a written agreement with the board pursuant to
				§1707.A.2.d
				ii.
c. a CPA firm seeking
				issuance, renewal, or reinstatement of a firm permit, to be effective on and
				after January 1, 2008 shall, as a condition thereof, satisfy the requirements
				of this Paragraph,
				§1707. A 2;
d. Repealed.
e.depending on the ownership structure, an
				affiliated entity may be required to obtain a firm permit in order to use a
				similar name which indicates that the C P A o r CPA firm is providing services
				through the affiliated entity.
i. affiliated
				entities wholly owned either by the owners of the CPA firm, on the same basis
				as the CPA firm is owned, or directly by the CPA firm may use a similar name
				and would not be required to obtain a firm permit;
ii. affiliated entities that are
				majority-owned (not wholly owned) by the owners of the CPA firm or by the CPA
				firm, or that are wholly owned but in different percentages are required to
				obtain a firm permit if the affiliated entity uses a similar name. If the
				affiliated entity does not qualify for a firm permit under
				R.S.
				37:77, the CPA firm (i.e., one that does hold
				a firm permit) must enter into a written agreement with and acceptable to the
				board that sets forth that the CPA firm is responsible to the board for the
				actions of the affiliated entity and its owners;
iii. if the CPA firm and/or its owners
				(whether individually CPA licensed or not) own 50 percent or less of the other
				affiliated entity, a similar name may not be used for the affiliated
				entity;
f. under
				R.S.
				37:77(C), a majority of the
				ownership of a CPA firm (in terms of financial interests and voting rights of
				all partners, officers, shareholder, members, or managers) must belong to
				holders of valid licenses. Thus an unlicensed "holding company" cannot own a
				majority or 100 percent of a CPA firm. Therefore, such a "holding company"
				would have to apply for a CPA firm permit and qualify as such. The holding
				company and the CPA firm must both be registered as firms with the board even
				though the holding company will not directly offer services to clients. If the
				holding company does not otherwise meet the requirements to be licensed (e.g.,
				the requirements that a majority ownership interest is held by licensees; the
				owners must be active in the firm or affiliates; and, the name must not be
				misleading) then such a firm structure would not be permissible.