Washington Administrative Code › Title 4 - Accountancy, Board of › Chapter 4-30 - General provisions › DEFINITIONS › Section 4-30-010 - Definitions

Current through Register Vol. 24-14, July 15, 2024
For purposes of these rules the following terms have the
				  meanings indicated unless a different meaning is otherwise clearly provided in
				  these rules:
"Act"
means the Public Accountancy Act codified
				  as chapter 18.04 RCW.
"Active individual participant"
means an
				  individual whose primary occupation is at the firm or affiliated entity's
				  business. An individual whose primary source of income from the business entity
				  is provided as a result of passive investment is not an active individual
				  participant.
"Applicant"
means an individual who has
				  applied:
(a) To take the national
				uniform CPA examination;
(b) For an
				initial individual license, an initial firm license, or initial registration as
				a resident nonlicensee owner;
(c)
				To renew an individual license, a CPA firm license, or registration as a
				resident nonlicensee firm owner;
(d) To reinstate an individual license or
				registration as a resident nonlicensee firm owner;
(e) To convert an inactive license to an
				active license.
"Attest"
means providing the following
				  services:
(a) Any audit or other
				engagement to be performed in accordance with the statements on auditing
				standards;
(b) Any review of a
				financial statement to be provided in accordance with the statements on
				standards for accounting and review services;
(c) Any engagement to be performed in
				accordance with the statements on standards for attestation engagements;
				and
(d) Any engagement to be
				performed in accordance with the public company accounting oversight board
				auditing standards.
"Audit," "review,"
and
"compilation"
are terms reserved for use by licensees, as defined
				  in this section.
"Board"
means the board of accountancy created
				  by RCW
				    18.04.035.
"Breach of fiduciary responsibilities/duties"
means when a person who has a fiduciary responsibility or duty acts in a manner
				  adverse or contrary to the interests of the person to whom they owe the
				  fiduciary responsibility or duty. Such actions would include profiting from
				  their relationship without the express informed consent of the beneficiary of
				  the fiduciary relationship, or engaging in activities that represent a conflict
				  of interest with the beneficiary of the fiduciary relationship.
"Certificate"
issued under this act means an
				  alternative license type previously issued by the board indicating that the
				  certificate holder had passed the CPA examination, but had no verified
				  experience, and was not fully licensed to practice public accounting.
				  Certificates remained valid until June 30, 2024, at which time they convert to
				  a CPA license in an inactive status. This definition does not include
				  certificates issued by other jurisdictions which may be substantially
				  equivalent to a Washington CPA license.
"Client"
means the person or entity that retains
				  a licensee, as defined in this section, a non-licensee firm owner of a licensed
				  firm or an entity affiliated with a licensed firm to perform professional
				  services through other than an employer/employee relationship.
"Compilation"
means providing a service to be
				  performed in accordance with statements on standards for accounting and review
				  services that is presenting in the form of financial statements, information
				  that is the representation of management (owners) without undertaking to
				  express any assurance on the statements.
"CPA"
or
"certified public
				  accountant"
means an individual holding a license to practice public
				  accounting under chapter 18.04 RCW or recognized by the board in the state of
				  Washington, including an individual exercising practice privileges pursuant to
				  RCW
				    18.04.350(2).
"CPE"
means continuing professional
				  education.
"Fiduciary responsibility/duty"
means a
				  relationship wherein one person agrees to act solely in another person's
				  interests. Persons having such a relationship are fiduciaries and the persons
				  to whom they owe the responsibility are principals. A person acting in a
				  fiduciary capacity is held to a high standard of honesty and disclosure in
				  regard to a principal. Examples of fiduciary relationships include those
				  between broker and client, trustee and beneficiary, executors or administrators
				  and the heirs of a decedent's estate, and an officer or director and the owners
				  of the entity.
"Firm"
means a sole proprietorship, a
				  corporation, or a partnership. "Firm" also means a limited liability company or
				  partnership formed under chapters 25.15 and 18.100 RCW and a professional
				  service corporation formed under chapters 23B.02 and 18.100 RCW.
"Firm mobility"
means an out-of-state firm that
				  is not licensed by the board and meets the requirements of
				  RCW
				    18.04.195 (1)(a)(iii)(A) through
				  (D)   exercising practice privileges in this
				  state.
"Generally accepted accounting principles"
(GAAP) is an accounting term that encompasses the conventions, rules, and
				  procedures necessary to define accepted accounting practice at a particular
				  time. It includes not only broad guidelines of general application, but also
				  detailed practices and procedures. Those conventions, rules, and procedures
				  provide a standard by which to measure financial presentations.
"Generally accepted auditing standards"
(GAAS)
				  are guidelines and procedures, promulgated by the AICPA, for conducting
				  individual audits of historical financial statements.
"Holding out"
means any representation to the
				  public by the use of restricted titles as set forth in
				  RCW
				    18.04.345 by a person that the person holds a
				  license or practice privileges under the act and that the person offers to
				  perform any professional services to the public. "Holding out" shall not affect
				  or limit a person not required to hold a license under the act from engaging in
				  practices identified in
				  RCW
				    18.04.350.
"Inactive"
means a status of a license which
				  prohibits a licensee from practicing public accounting. A person holding an
				  inactive license may apply to the board to convert the license to an active
				  status through an approval process established by the board.
"Individual"
means a living, human being.
"Independence"
means an absence of relationships
				  that impair a licensee's impartiality and objectivity in rendering professional
				  services for which a report expressing assurance is prescribed by professional
				  standards.
"Interactive self-study program"
means a CPE
				  program that provides feedback throughout the course.
"IRS"
means Internal Revenue Service.
"License"
means a license to practice public
				  accounting issued to an individual or a firm under the act, or a license or
				  certificate to practice public accounting in another state or
				  jurisdiction.
"Licensee"
means an individual or firm holding a
				  valid license to practice public accounting issued under the act, and
				  individuals holding licenses or certificates to practice public accounting
				  granted by out-of-state jurisdiction who are allowed to exercise practice
				  privileges in this state under
				  RCW
				    18.04.350(2) and
				  out-of-state firms permitted to offer or render certain professional services
				  in this state under the conditions prescribed in
				  RCW
				    18.04.195 (1)(a) and
				  (b).
"Manager"
means a manager of a limited liability
				  company licensed as a firm under the act.
"Nano learning"
is a stand-alone continuing
				  professional education (CPE) course that is a minimum of 10 minutes (0.2 CPE
				  credit hours) consisting of electronic self-study with a stated learning
				  objective and a minimum of two final assessment questions.
"NASBA"
means the National Association of State
				  Boards of Accountancy.
"Nonlicensee firm owner"
means an individual,
				  not licensed in any state to practice public accounting, who holds an ownership
				  interest in a firm permitted to practice public accounting in this
				  state.
"PCAOB"
means Public Company Accounting
				  Oversight Board.
"Peer review"
means a study, appraisal, or
				  review of one or more aspects of the attest or compilation work of a licensee
				  or licensed firm in the practice of public accounting, by a person or persons
				  who hold licenses and who are not affiliated with the person or firm being
				  reviewed, including a peer review, or any internal review or inspection
				  intended to comply with quality control policies and procedures, but not
				  including the "quality assurance review" under this section.
"Person"
means any individual, nongovernmental
				  organization, or business entity regardless of legal form, including a sole
				  proprietorship, firm, partnership, corporation, limited liability company,
				  association, or not-for-profit organization, and including the sole proprietor,
				  partners, members, and, as applied to corporations, the officers.
"Practice privileges"
are the rights granted by
				  chapter 18.04 RCW to a person who:
(a)
				Has a principal place of business outside of Washington state;
(b) Is licensed to practice public accounting
				in another substantially equivalent state;
(c) Meets the statutory criteria for the
				exercise of privileges as set forth in
				RCW
				  18.04.350(2) for individuals
				or RCW
				  18.04.195 (1)(b) for
				firms;
(d) Exercises the right to
				practice public accounting in this state individually or on behalf of a
				firm;
(e) Is subject to the
				personal and subject matter jurisdiction and disciplinary authority of the
				board in this state;
(f) Must
				comply with the act and all board rules applicable to Washington state
				licensees to retain the privilege; and
(g) Consents to the appointment of the
				issuing state board of another state as agent for the service of process in any
				action or proceeding by this state's board against the certificate holder or
				licensee.
"Principal place of business"
means the office
				  location designated by the licensee for purposes of substantial equivalency and
				  reciprocity.
"Professional services"
include all services
				  requiring accountancy or related skills that are performed for a client, an
				  employer, or on a volunteer basis. These services include, but are not limited
				  to, accounting, audit and other attest services, tax, bookkeeping, management
				  consulting, financial management, corporate governance, personal financial
				  planning, business valuation, litigation support, educational, and those
				  services for which standards are promulgated by the appropriate body for each
				  services undertaken.
"Public practice"
or the
"practice of
				  public accounting"
means performing or offering to perform by a person
				  or firm holding itself out to the public as a licensee, or as an individual
				  exercising practice privileges, for a client or potential client, one or more
				  kinds of services involving the use of accounting or auditing skills, including
				  the issuance of "reports," or one or more kinds of management advisory, or
				  consulting services, or the preparation of tax returns, or the furnishing of
				  advice on tax matters. The "practice of public accounting" shall not include
				  practices that are permitted under the provisions of
				  RCW
				    18.04.350(10) by persons or
				  firms not required to be licensed under the act.
"Quality assurance review or QAR"
is the
				  process, established by and conducted at the direction of the board, to study,
				  appraise, or review one or more aspects of the audit, compilation, review, and
				  other professional services for which a report expressing assurance is
				  prescribed by professional standards of a licensee or licensed firm in the
				  practice of public accounting, by a person or persons who hold licenses and who
				  are not affiliated with the person or firm being reviewed.
"Reciprocity"
means board recognition of
				  licenses, permits, certificates or other public accounting credentials of
				  another jurisdiction that the board will rely upon in full or partial
				  satisfaction of licensing requirements.
"Report,"
when used with reference to any attest
				  or compilation service, means an opinion, report, or other form of language
				  that states or implies assurance as to the reliability of the attested
				  information or compiled financial statements and that also includes or is
				  accompanied by any statement or implication that the person or firm issuing it
				  has special knowledge or competence in the practice of public accounting. Such
				  a statement or implication of special knowledge or competence may arise from
				  use by the issuer of the report of names or titles indicating that the person
				  or firm is involved in the practice of public accounting, or from the language
				  of the report itself. "Report" includes any form of language which disclaims an
				  opinion when such form of language is conventionally understood to imply any
				  positive assurance as to the reliability of the attested information or
				  compiled financial statements referred to and/or special competence of the part
				  of the person or firm issuing such language; and it includes any other form of
				  language that is conventionally understood to imply such assurance and/or such
				  special knowledge or competence. "Report" does not include services referenced
				  in RCW
				    18.04.350 (10) or (11)  
				  provided by persons not holding a license under this chapter as provided in
				  RCW
				    18.04.350(14).
"Representing oneself"
means having a license,
				  practice privilege, or registration that entitles the holder to use the title
				  "CPA," "CPA-Inactive," or be a nonlicensee firm owner.
"Rules of professional conduct"
means rules
				  adopted by the board to govern the conduct of licensees, as defined in this
				  section, while representing themselves to others as licensees. These rules also
				  govern the conduct of licensees with an inactive status, nonlicensee firm
				  owners, and persons exercising practice privileges pursuant to
				  RCW
				    18.04.350(2).
"SEC"
means the Securities and Exchange
				  Commission.
"Sole proprietorship"
means a legal form of
				  organization owned by one person meeting the requirements of
				  RCW
				    18.04.195.
"State"
includes the states and territories of
				  the United States, including the District of Columbia, Puerto Rico, Guam, and
				  the United States Virgin Islands, and the Commonwealth of the Northern Mariana
				  Islands at such time as the board determines that the Commonwealth of the
				  Northern Mariana Islands is issuing licenses under the substantially equivalent
				  standards of
				  RCW
				    18.04.350 (2)(a).
"Statements on auditing standards (SAS)"
are
				  interpretations of the generally accepted auditing standards and are issued by
				  the Auditing Standards Board of the AICPA. Licensees are required to adhere to
				  these standards in the performance of audits of financial statements.
"Statements on standards for accounting and review
				  services (SSARS)"
are standards, promulgated by the AICPA, to give
				  guidance to licensees who are associated with the financial statements of
				  nonpublic companies and issue compilation or review reports.
"Statements on standards for attestation engagements
				  (SSAE)"
are guidelines, promulgated by the AICPA, for use by licensees
				  in attesting to assertions involving matters other than historical financial
				  statements and for which no other standards exist.
"Substantial equivalency"
or
"substantially equivalent"
means a determination by the board or
				  its designee that the education, examination, and experience requirements
				  contained in the statutes and administrative rules of another jurisdiction are
				  comparable to or exceed those listed in this chapter.
Statutory Authority: 18.04.055, 18.04.025, 18.04.350.
					 10-24-009, amended and recodified as §
											4-30-010, filed 11/18/10, effective
					 12/19/10. Statutory Authority:
					 RCW
					   18.04.055,
					 18.04.025. 08-18-016, §
					 4-25-410, filed 8/25/08, effective 9/25/08. Statutory Authority:
					 RCW
					   18.04.055. 05-01-137, § 4-25-410, filed
					 12/16/04, effective 1/31/05; 03-24-033, § 4-25-410, filed 11/25/03,
					 effective 12/31/03. Statutory Authority:
					 RCW
					   18.04.055(16). 02-04-064,
					 § 4-25-410, filed 1/31/02, effective 3/15/02. Statutory Authority:
					 RCW
					   18.04.055(11). 01-11-124,
					 § 4-25-410, filed 5/22/01, effective 6/30/01; 98-12-020, § 4-25-410,
					 filed 5/27/98, effective 6/27/98; 94-23-071, § 4-25-410, filed 11/15/94,
					 effective 12/16/94.