3 Colo. Code Regs. § 705-1.15

Current through Register Vol. 47, No. 22, November 25, 2024

Section 3 CCR 705-1.15 - FIRM REQUIREMENTS

This Rule is promulgated pursuant to sections 12-20-204, 12-100-105(1)(b), and 12-100-114, C.R.S.

A.FIRM REGISTRATION

1. Any firm required to register under section 12-100-114, C.R.S., shall apply for a registration by submitting an application and fee in the manner prescribed by the Board.

2. Any firm registered under section 12-100-114, C.R.S., must comply with all provisions of the Act and these Rules.

3. Except as provided in section 12-100-117(2), C.R.S., a firm, including a firm consisting of a sole owner, shall not hold out or engage in this state in activities for which a valid registration is required under section 12-100-116(1), C.R.S., until its application for registration has been approved by the Board.

4. Each registrant must designate and submit to the Board the name and contact information of a responsible party who will be responsible for fulfilling all notice and reporting requirements under the Act and these Rules regarding the registrant.

5. No firm can hold out in this state as defined in Rule 1.4 unless that firm holds an active/valid registration pursuant to the Act, except that:

a. A firm actively registered in another state may use or assume the title or designation "certified public accountants" or "CPAs" or similar designation so long as the firm clearly and prominently discloses the state where it is registered by any reasonable means, such as "NM CPAs" or "New Mexico CPAs"; and

b. A firm actively registered in another state may use or assume the title or designation "certified public accountants" or "CPAs" or similar designation while practicing in this state under section 12-100-117(2), C.R.S., and Rule 1.14 (Practice Privilege/Mobility).

6. No firm, while holding out as defined in Rule 1.4, can engage in the practice of public accounting in this state unless that firm:

(1) holds an active/valid registration pursuant to the Act, or

(2) is authorized to provide such services pursuant to section 12-100-117(2), C.R.S., and Rule 1.14 (Practice Privilege/Mobility).

B.CPA FIRM NAMES

1. The name under which a firm holds out or engages in the practice of public accounting must not be misleading.

2. A registrant shall not use an assumed or trade name when holding out or when performing or offering to perform professional services unless:

a. The registrant has filed the assumed or trade name with the Colorado Secretary of State pursuant to section 7-71-101, C.R.S;

b. The registrant has provided the assumed or trade name to the Board in a manner prescribed by the Board;

c. The assumed or trade name clearly indicates that the firm is engaged in providing accounting services; and

d The assumed or trade name otherwise complies with these Rules.

3. Network Firms.

a. A firm that is a network firm may use the network name as the firm's name.

b. A firm that is a network firm may include the brand name or initials of the network as part of the firm name.

c. The following types of network firm names are not in and of themselves misleading and are permissible so long as they do not violate the provisions of this Rule 1.15(B):

(1) A firm name that uses a common brand name, or shares common initials, as part of the firm name, provided the firm is a network firm as defined in Rule 1.4; or

(2) A firm name that uses the network name if it shares one or more of the characteristics described in Rule 1.4(B)(29).

4. A registrant's name is deemed misleading if the name:

a. Of a corporation or professional corporation is not ended by words or abbreviations such as "Corporation," "Incorporated," "P.C.," "Corp.," or "Inc."

b. Of a partnership is not ended by words or abbreviations permitted pursuant to the law under which the partnership was organized such as "LP," "LLP," or "LLLP."

c. Of a limited liability company is not ended by the words "Limited Liability Company" or the abbreviation "LLC," provided that the word "limited" may be abbreviated as "Ltd.," and the word "company" may be abbreviated as "Co."

d. Includes the name of an owner who has withdrawn from the firm or otherwise terminated his association with the firm other than by retirement or by death. The name of the former owner must be removed from the firm's name and the name change reported to the Board within thirty days after the withdrawal or termination.

5. A firm name, including a registrant's name, is considered misleading if the name:

a. Implies the existence of a corporation by the use of words or abbreviations such as "Corporation," "Incorporated," "P.C.," "Corp.," or "Inc.," if the firm is not incorporated or is not a professional corporation.

b. Implies the existence of a partnership by the use of a designation such as "Smith & Jones," "C.P.A.'s," "Partnership," "Ltd.," "LP," "LLP," or "LLLP" if the firm is not such an entity.

c. Implies the existence of a limited liability company by the use of the abbreviations such as "Ltd.," "L.L.C.," "LLC" or "LC" if the firm is not a limited liability company.

d. Implies that the firm is comprised of more than one person by the use of terms such as "& Company," "& Associates," or "Group," if, in addition to the owner, the firm is not comprised of at least one other owner or person employed, professionally associated, or contractually related on a regular and continuous basis with the firm.

e. Implies that more than one individual in the firm is a CPA by the use of terms such as "CPAs" or "Certified Public Accountants" if no more than one CPA is an owner or is employed by, or professionally associated, or contractually related to the firm on a regular and continuous basis.

f. Includes the name of a person who is not a CPA in any state or is not a CPA or its legal equivalent in a foreign country if the title "CPA" is included in the firm's name.

g. Indicates or implies an association with persons who are not members of the firm, unless the firm is a network firm as defined in Rule 1.4 and the associated persons are members of the network.

h. Contains any representation that would likely cause a reasonable person to be misled or confused about the firm's legal entity type, e.g., corporation, partnership, or limited liability company, or about the ownership or membership of the firm.

i. Contains any representation that would likely cause a reasonable person to have a false or unjustified expectation of favorable results or capabilities.

j. Claims or implies the ability to influence a regulatory body or official.

k. Includes the name of any licensee whose license or registration has been revoked or disciplined, whereby the licensee is prohibited from practicing public accounting or prohibited from using the title CPA or similar designation or holding out if the firm's name includes the designation "CPA" or any other language or device tending to indicate the disciplined CPA or Firm possesses an active certificate, license, or registration.

l. Contains other representations or implications that in reasonable probability would cause a reasonable person to misunderstand or be deceived.

6. A firm name must not be formulated in such a manner that the initials or parts of the name form a term, phrase, or imply an association that is misleading.

7. A registrant engaged in the practice of public accounting may not hold out, perform or offer to perform professional services using a name that is not stated in its firm registration.

C.NOTIFICATIONS

1. A registrant must notify the Board, in a manner prescribed by the Board, within thirty days of any of the following changes to the registrant (individuals and firms must provide separate notices under this Rule. Information provided to the Board in an individual's initial or renewal application for his certificate and changes reported under Rule 1.9 do not fulfill the firm notice requirements under this Rule 1.15(C):

a. Location or addition/deletion of offices;

b. Dissolution or other termination of the firm;

c. Legal entity type of the firm, e.g., partnership, professional corporation, or limited liability company;

d. Name of the firm registered with the Office of the Secretary of State of Colorado or equivalent authority if registered in another state;

e. Assumed or trade name of the firm;

f. Responsible party for the firm;

g. Change in ownership including addition or withdrawal of any partner, principal, shareholder, member, or equivalent, only if the identity of the majority owner is changed, or if the change causes the firm to be non-compliant with section 12-100-114, C.R.S.; and

h Identities and numbers of partners, shareholders, members, managers, or officers.

D.RENEWAL

1. A registrant must complete the renewal process according to the schedule established by the Division of Professions and Occupations pursuant to section 12-20-202, C.R.S., to remain active/valid.

2. Renewal Notices.

a. The Board sends notices for renewal of firm registrations according to a schedule established and in a manner prescribed by the Division of Professions and Occupations pursuant to section 12-20-202, C.R.S., to the last address furnished to the Board.

b. There is a sixty-day grace period from the expiration date of the firm registration within which to pay the renewal fee, plus a late fee. A registrant will not be disciplined for holding out or practicing public accounting with an expired registration during the grace period.

c. Failure to receive a renewal notice does not relieve the registrant of the obligation to renew its registration.

d. A registrant's failure to properly notify the Board of any change of contact information does not excuse that registrant of the obligation to respond to Board communications or to timely renew its registration.

3. The Board cannot renew the registration of a registrant that issues attest or compilation reports unless it has attested to having undergone a peer review as provided in Rule 1.11.

E.GENERAL INFORMATION CONCERNING FIRM REGISTRATIONS

Every certificate of registration, while it remains in the possession of the registrant, must be preserved by the registrant, but the certificate remains the property of the Board. In the event that a firm's registration is suspended or revoked, its certificate of registration must be promptly returned to the Board.

F.OFFERING SERVICES VIA THE INTERNET

Any registrant, offering or performing professional services via the internet must include the following information on the internet site:

1. Name of the registrant;

2. Mailing and physical address of the principal location where the registrant offers or provides professional services;

3. Business telephone number; and

4. Colorado certificate number of the responsible party and Colorado firm registration number.

G.DISCLOSURES

1. A licensee must notify the Board in a manner prescribed by the Board within thirty days of any of the following events relating to the licensee:

a. Imposition of Discipline by:

(1) The SEC, the PCAOB, or the IRS.

(2) Another board of accountancy for any cause other than failure to pay a registration fee by the due date.

(3) Any other federal or state agency or any professional association or entity regarding the registrant's conduct in providing professional services.

(4) Any federal or state taxing, insurance, or securities regulatory authority.

(5) Any non-U.S. authority or credentialing body that regulates the practice of accountancy for any cause other than failure to pay a registration fee by the due date.

b. Notice of disciplinary charges concerning the practice of accountancy filed by the SEC, PCAOB, IRS, or another board of accountancy, or a federal or state agency, or a non-U.S. authority or credentialing body that regulates the practice of accountancy.

c. Initiation of a civil proceeding or an alternative dispute resolution proceeding by a governmental entity relating to an audit report for a public or non-public company.

d. Judgment, settlement, or resolution of a civil proceeding or an alternative dispute resolution proceeding by a governmental entity relating to an audit report for a public or non-public company.

e. Initiation of an administrative proceeding or disciplinary proceeding by any federal, State, or non-U.S. agency, board, or administrative or registration authority, or any professional association or entity regarding an audit report for a public or non-public company.

f. Decision, judgment, settlement, or resolution of an administrative proceeding or disciplinary proceeding by any federal, state, or non-U.S. agency, board, or administrative or registration authority, or any professional association or entity regarding an audit report for a public or non-public company.

g. Any judgment, award, or settlement of a civil action or arbitration proceeding of $150,000 or more in which the licensee was a party if the action or proceeding included any allegation of gross negligence, violation of a specific standard of practice, fraud, or misappropriation of funds in the practice of public accounting or during an engagement.

h. A criminal charge against or a conviction of the licensee, deferred prosecution, or a plea of guilty or nolo contendere to a crime by the licensee if:

(1) The crime is a felony under the laws of any state, or of the United States or of any territory or insular possession of the United States, or the District of Columbia or any non-U.S. jurisdiction; or

(2) An element of the crime is dishonesty or fraud.

i. Occurrence of any matter that must be reported by the licensee to the PCAOB pursuant to the Sarbanes-Oxley Act of 2002, U.S.C. sec. 7201 et seq., and PCAOB Rules and forms adopted pursuant thereto.

2. The notice to the Board must include the following information regarding the reportable event:

a. If the reportable event is a disciplinary proceeding, alternative dispute resolution proceeding, administrative proceeding, or civil action by any governmental entity or professional association or entity, the name of the agency, its jurisdiction, the case name, the docket or proceeding or case number by which it is designated, a description of the matter, or a copy of the document initiating the action or proceeding, and, if the matter has been adjudicated or settled, a copy of the consent decree, order, or decision.

b. If the reportable event is a criminal conviction, charge, or plea, the court, its jurisdiction, the case name, the case number, and a description of the matter or a copy of the indictment or charges, and, if the matter has been adjudicated, a copy of the judgment of conviction.

c. If the reportable event concerns a civil action or arbitration proceeding, the court or arbiter, the jurisdiction, the case name, the case number, a description of the matter, or a copy of the complaint, and a copy of the verdict, the court or arbitration decision, or, if settled, the court's order of dismissal.

3. The licensee may submit a written explanatory statement to be included in the Board's records.

4. Documents provided to the Board shall be closed to public inspection if federal or state statute, rule, or regulation so provides.

5. This Rule shall apply to any reportable event that occurs on or after the Rule's effective date.

3 CCR 705-1.15

44 CR 03, February 10, 2021, effective 3/2/2021

44 CR 20, October 25, 2021, effective 11/14/2021

45 CR 11, June 10, 2022, effective 6/30/2022

45 CR 17, September 10, 2022, effective 9/30/2022

45 CR 20, October 25, 2022, effective 11/14/2022