commonwealth of kentucky state board of accountancy accountancy

COMMONWEALTH OF KENTUCKY

STATE BOARD OF ACCOUNTANCY

ACCOUNTANCY HANDBOOK

AS OF JANUARY 2016

FOR INFORMATIONAL PURPOSES

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The Kentucky State Board of Accountancy is responsible for administering the

public accounting law in Kentucky. The following manual consists of KRS Chapter

325 and the Kentucky Administrative Regulations governing the practice of public

accounting within the Commonwealth of Kentucky. This printing does not

constitute an official text of these sections from the Kentucky Revised Statutes and

is intended for informational purposes only. For the official text of the statutes and

for current supplementation, the user should consult an official edition of the

Kentucky Revised Statutes. Further, the user should consult the official edition of

the Kentucky Administrative Regulations and the Kentucky Administrative Register,

which supplements it. Copyright 2004 by the Legislative Research Commission.

Reprinted with permission; further reproduction is not authorized.

Questions about public accounting should be directed to the Kentucky State

Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202,

(502) 595-3037 between the hours of 8:30 a.m. and 4:30 p.m. Eastern Time.

Printed with State Funds

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INDEX

Page

Number Kentucky Revised Statutes Chapter 325

325.220

Definitions for chapter.

325.230

State Board of Accountancy -- Membership -- Appointment, qualifications, term, vacancies, removal,

compensation.

325.240

Officers of the board – Administrative regulations – Rules of Professional Conduct -- Quorum -- Seal

-- Records – Employees – Expenditure of funds for primary or secondary educational programs –

Professional liability insurance.

325.250

Revolving fund for board.

325.261

Qualifications for licensure as certified public accountant.

325.263

Submission of proof of educational requirements on and after April 1, 2007, by previously approved

candidates.

325.270

Examination for certified public accountant -- Fees -- Reevaluation -- Reciprocity.

325.280

Qualifications for licensure as certified public accountant by reciprocity and for foreign accountants.

325.282

Privilege to practice granted to out-of-state licensee meeting substantially equivalent licensure

requirements -- Qualifications -- Conditions agreed to -- When coordination with in-state firm

required.

325.285

Consent to jurisdiction of the board by unlicensed persons.

325.290

Use of title "certified public accountant.”

325.301

Firms required to obtain license to practice in Kentucky – Firms exempted from licensure

requirement – Criteria for license.

325.312

Designation as public accountant emeritus.

325.330

Application and issuance of license to practice -- Renewal -- Reinstatement.

325.340

Revocation, suspension, or refusal to renew or issue license.

325.350

Revocation or suspension of, or refusal to renew license of firm.

325.360

Proceedings for violations of this chapter.

325.370

Modification, suspension, or reissuance of license.

325.380

Restrictions on use of title.

325.400

Injunction against violations of KRS Chapter 325.

325.410

Evidence of unlawful holding out as licensed to practice.

325.420

Materials required to be furnished to client – Ownership of accountant’s working papers.

325.431

Evidentiary privilege for quality review committee materials -- Testimonial privilege – Exceptions.

325.440

Confidentiality of information obtained in practice.

325.445

Accountant or attorney may act as agent of client for specified activities.

325.990

Penalty – Prosecution by Attorney General.

201 KAR

Kentucky Administrative Regulations

1:015

Per diem compensation.

1:020

Members of board.

1:050

License application.

1:063

Certificate of experience.

1:065

Individual license renewal and fee.

1:081

Initial firm license, renewal, and reinstatement.

1:100

Continuing professional education requirements.

1:140

Procedures for the reinstatement and reissuance of a license.

1:150

Procedures for the dissemination of information relative to hearings held before the Kentucky State

Board of Accountancy.

1:160

Peer reviews.

1:180

Safe harbor language for nonlicensees to use in connection with a compilation of financial

information.

1:190

Examination sections, applications, and procedures.

1:300

Rules of professional conduct.

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Kentucky Revised Statute – Chapter 325

325.220 Definitions for chapter.

As used in this chapter, unless the context otherwise requires:

(1) "Board" means the State Board of Accountancy;

(2) "State" includes and means any state, territory, or insular possession of the United States, or the

District of Columbia;

(3) "Public accountant" means a public accountant issued a license to practice by the Commonwealth of

Kentucky under the Public Accounting Act of 1946 as amended;

(4) "Attest service" means providing the following financial statement services:

(a) Any audit or other engagement subject to and to be performed in accordance with the current versions

of the American Institute of Certified Public Accountants (AICPA) Statements on Auditing Standards

(SAS), and Government Auditing Standards issued by the United States Government Accountability

Office;

(b) Any review or compilation of a financial statement subject to and to be performed in accordance with

the current versions of the American Institute of Certified Public Accountants (AICPA) Statements on

Standards for Accounting and Review Services (SSARS);

accordance with the current versions of the American Institute of Certified Public Accountants (AICPA)

Statements on Standards for Attestation Engagements (SSAE); or

(d) Any engagement to be performed in accordance with the Public Company Accounting Oversight

Board Auditing Standards;

(5) "Regulated activities" means the offering to perform or the performance for a client or potential client

by a person or firm holding a license issued under this chapter of one (1) or more types of services

involving the use of accounting, attest, or compilation services, including the issuance of reports on

financial statements, or one (1) or more types of management advisory, financial advisory, or consulting

services, or the preparation of tax returns or the furnishing of advice on tax matters. This definition shall

not prohibit anyone who is not a certified public accountant from performing accounting services, such as

the preparation of tax returns or financial statements, for which attestation by the preparer is not required;

(6) "Firm" means a sole proprietorship, partnership, professional service corporation, or any other form of

business organization that is authorized to operate under the laws of this Commonwealth, complies with

the provisions of this chapter, and is issued a license to practice by the board or is exempt from having to

obtain a license pursuant to KRS 325.301;

(7) "Firm manager" means a licensee of this state or another state designated by a firm to be responsible

for the firm complying with the firm registration and firm licensing requirements contained in this chapter

and administrative regulations promulgated thereunder;

(8) "License" means a license as a certified public accountant or a firm issued pursuant to this chapter;

(9) "Licensee" means a certified public accountant, firm, or public accountant, holding a license to practice

issued under this chapter;

(10) "Peer review" means a practice monitoring process designed to promote quality in accounting and

auditing services, and protect the public interest. The process shall comply with standards that are

equivalent to or more stringent than the current version of the Standards for Performing and Reporting on

Peer Reviews issued by the American Institute of Certified Public Accountants (AICPA);

(11) "Peer review committee" means any person or persons administering a peer review program that is

equivalent to or more stringent than a program as outlined in the American Institute of Certified Public

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Accountants (AICPA)'s current version of the Standards for Performing and Reporting on Peer Reviews,

including provisions that provide guidance for administering peer reviews; and

(12) "Substantial equivalency" means a determination by the board or its designee that the education,

examination, and experience requirements in the statutes and administrative regulations of another state

for the licensing of a certified public accountant are comparable or better than those contained in the

Uniform Accountancy Act issued by the American Institute of Certified Public Accountants (AICPA) and

National Association of State Boards of Accountancy (NASBA), or that an individual certified public

accountant's education, examination, and experience qualifications are comparable or exceed these

national standards.

Effective: June 8, 2011 History: Amended 2011 Ky. Acts ch. 31, sec. 1, effective June 8, 2011. -- Amended 2008 Ky. Acts ch. 101,

sec. 1, effective July 15, 2008. -- Amended 2000 Ky. Acts ch. 99, sec. 1, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 248,

sec. 2, effective July 15, 1994. – Amended 1992 Ky. Acts ch. 18, sec. 2, effective July 14, 1992. -- Amended 1990 Ky. Acts ch. 285,

sec. 1, effective July 13, 1990. -- Amended 1984 Ky. Acts ch. 117, sec. 1, effective July 13, 1984. -- Amended 1968 Ky. Acts ch.

143, sec. 1. -- Created 1946 Ky. Acts ch. 210, sec. 21.

325.230 State Board of Accountancy -- Membership -- Appointment, qualifications, term,

vacancies, removal, compensation.

(1) There is hereby created a State Board of Accountancy. The board shall consist of seven (7) members,

appointed by the Governor. Six (6) of the members shall be certified public accountants. One (1) of the

members shall be a citizen at large who is not a certified public accountant. Members serving on the

board as of July 15, 1994, shall retain their appointments until their terms expire. Whenever an

appointment is to be made, the Kentucky Society of Certified Public Accountants shall submit to the

Governor the names of three (3) persons for each vacancy to be filled. All persons recommended shall be

qualified for membership on the board, and the Governor shall appoint one (1) of the three (3)

recommended. Members of the board shall be citizens of the United States and residents of this state and

the certified public accountant members shall hold licenses to practice issued under the provisions of this

chapter. Of the new members appointed to the board, as provided by this section, one (1) member shall

be appointed for a term of one (1) year and one (1) member shall be appointed for a term of four (4) years

from June 19, 1976. Succeeding appointments to the board shall be for a term of four (4) years.

Vacancies occurring during a term shall be filled by appointment for the unexpired term. Upon the

expiration of his term of office, a member shall continue to serve until his successor shall have been

appointed and shall have qualified. The Governor shall remove from the board any member whose

license to practice is not renewed or which has become void, revoked, or suspended, and may, after

hearing, remove any member of the board for neglect of duty or other just cause.

(2) Each member of the board shall be paid the amount established by an administrative regulation

promulgated by the board, not to exceed two hundred dollars ($200) for each day spent in the discharge

of his official duties, and shall be reimbursed for his actual and necessary expenses therein incurred.

Effective: July 12, 2006 - History: Amended 2006 Ky. Acts ch. 95, sec. 1, effective July 12, 2006. – Amended 2000 Ky. Acts ch.

99, sec. 2, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 248, sec. 3, effective July 15, 1994. -- Amended 1984 Ky. Acts ch.

117, sec. 2, effective July 13, 1984. -- Amended 1976 Ky. Acts ch. 116, sec. 1; and ch. 206, sec. 21, effective June 19, 1976. --

Amended 1968 Ky. Acts ch. 143, sec. 2. – Created 1946 Ky. Acts ch. 210, sec. 2(1) and 3.

325.240 Officers of the board -- Administrative regulations -- Rules of professional conduct --

Quorum -- Seal -- Records -- Employees -- Expenditure of funds for primary or secondary

educational programs -- Professional liability insurance.

(1) The board shall elect annually a president and such other officers as it deems necessary.

(2) The board may promulgate, and amend from time to time, administrative regulations, in accordance

with the provisions of KRS Chapter 13A, for the orderly conduct of its affairs, for the administration of this

chapter, and to establish and maintain a high standard of integrity and dignity in the profession of public

accounting.

(3) A majority of the board shall constitute a quorum for the transaction of business.

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(4) The board shall have a seal which shall be judicially noticed. The board shall keep records of its

proceedings, and in any proceeding in court, civil or criminal, arising out of or founded upon any provision

of this chapter, copies of said records certified as correct under the seal of the board shall be admissible

in evidence as tending to prove the content of said records.

(5) The board may employ an executive director and such other personnel as it deems necessary in its

administration and enforcement of this chapter. It may appoint such committees or persons, to advise or

assist it in the administration and enforcement, as it may see fit. It may retain its own counsel to advise

and assist it, in addition to such advice and assistance as is provided by the Attorney General of this

state.

(6) The board may join or participate in professional organizations and associations that promote

improvement of the practice of accounting for the protection of the public or to facilitate the activities of

the board.

(7) The board may expend funds from its account created by KRS 325.250 to assist with accounting

educational programs proposed or offered in the primary and secondary schools in this state. The amount

of the expenditure shall not interfere with the performance of the board's other responsibilities.

(8) The board may purchase professional liability insurance for its members, staff, and investigators. The

purchase of or failure to purchase insurance shall not be deemed a waiver of any immunity already

conferred on the board, its members, staff, and investigators.

Effective: June 26, 2007 - History: Amended 2007 Ky. Acts ch. 50, sec. 2, effective June 26, 2007. – Amended 2000 Ky. Acts ch.

99, sec. 3, effective July 14, 2000. -- Amended 1984 Ky. Acts ch. 117, sec. 3, effective July 13, 1984. -- Amended 1976 Ky. Acts ch.

116, sec. 2. --Amended 1968 Ky. Acts ch. 143, sec. 3. -- Created 1946 Ky. Acts ch. 210, sec. 2, (2).

325.250 Revolving fund for board.

All fees and other moneys received by the board pursuant to the provisions of this chapter shall be

deposited in the State Treasury to the credit of a revolving fund for the use of the board in carrying out the

provisions of this chapter. No part of this revolving fund shall revert to the general funds of this state. The

compensation provided by this chapter and all expenses incurred under this chapter shall be paid from

this revolving fund. No such compensation or expense shall be a charge against the general funds of this

state.

Effective: June 26, 2007 - History: Amended 2007 Ky. Acts ch. 50, sec. 3, effective June 26, 2007. – Amended 1984 Ky. Acts ch.

117, sec. 4, effective July 13, 1984. -- Created 1946 Ky. Acts ch. 210, sec. 2(4).

325.261 Qualifications for licensure as certified public accountant.

The license of "certified public accountant" shall be granted by the board to any person who satisfies the

following requirements:

(1) Is no less than eighteen (18) years of age;

(2) Is of good moral character;

(3) Has a baccalaureate degree or master's degree conferred by a college or university recognized by the

board with a major or concentration in accounting or its equivalent, as defined in administrative

regulations promulgated by the board;

(4) Passes a board-approved examination in accounting, auditing, and other related subjects as the board

deems appropriate. To be eligible to apply for the examination, a person shall first satisfy the requirement

of subsections (1) to (3) of this section;

(5) Completes one hundred fifty (150) college semester hours that include a baccalaureate or masters

degree conferred by a college or university recognized by the board with a major or concentration in

accounting or its equivalent, as defined in administrative regulations promulgated by the board;

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(6) Obtains one (1) year of accounting or attest experience while employed in an accounting or auditing

position in public practice, academia, industry, or government that shall be verified by a certified public

accountant who, during the time being verified, held an active license to practice from any state. The one

(1) year of experience required under this subsection shall be obtained:

(a) After the completion of the education requirements established in subsection (3) of this section; and

(b) Effective January 1, 2011, within five (5) years from the last day of the testing window during which

the candidate successfully completed the examination;

(7) At the time of applying for a license is a United States citizen, a citizen of a foreign country who is

legally residing in the United States, or is an employee of a public accounting firm, company, or an

institution of postsecondary education located outside the United States, but which has an office or

campus located in the United States; and

(8) Submits a complete application for a license to practice as a certified public accountant in accordance

with KRS 325.330.

Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 163, sec. 1, effective July 15, 2010. -- Amended 2006 Ky. Acts ch.

33, sec. 1, effective July 12, 2006. -- Amended 2002 Ky. Acts ch. 62, sec. 1, effective July 15, 2002. -- Amended 2000 Ky. Acts ch.

99, sec. 4, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 24, sec. 1, effective July 15, 1996. -- Amended 1994 Ky. Acts ch.

248, sec. 4, effective July 15, 1994. -- Amended 1990 Ky. Acts ch. 285, sec. 2, effective July 13, 1990. -- Amended 1984 Ky. Acts

ch. 117, sec. 5, effective July 13, 1984. -- Amended 1978 Ky. Acts ch. 155, sec. 156, effective June 17, 1978. -- Amended 1976 Ky.

Acts ch. 116, sec. 3. -- Amended 1970 Ky. Acts ch. 120, sec. 15. -- Created 1968 Ky. Acts ch. 143, sec. 4.

325.263 Submission of proof of educational requirements on and after April 1, 2007, by previously

approved candidates.

Effective April 1, 2007, any candidate who was approved to sit for the examination prior to January 1,

2000, and has not yet passed the examination shall be required to submit to the board prior to his or her

being licensed, proof that he or she meets the requirements of KRS 325.261(5).

Effective: July 12, 2006 - History: Created 2006 Ky. Acts ch. 33, sec. 2, effective July 12, 2006.

325.270 Examination for certified public accountant -- Fees -- Reciprocity -- Cancellation of

examination scores for failure to apply for license.

(1) Examinations provided for in this chapter shall be authorized by the board.

(2) The board may by administrative regulation adopt standards and fees governing the application and

all examination policies and procedures.

(3) The board may accept examination results from other states if:

(a) It is established that the examination is the same or substantially similar to the one adopted by the

board; and

(b) The candidate has met the prerequisite examination requirements of this chapter.

(4) An examination candidate who passes all sections of the examination after January 1, 2011, shall

apply for a license within five (5) years from the last day of the testing window during which the

examination candidate successfully completed the examination. Failure to apply for a license prior to the

expiration of the five (5) year period shall result in cancellation of the examination scores unless the

candidate completes the requirements to reinstate his or her scores, as established by administrative

regulations promulgated by the board.

Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 163, sec. 2, effective July 15, 2010. -- Amended 2002 Ky. Acts ch.

62, sec. 2, effective July 15, 2002. -- Amended 1990 Ky. Acts ch. 285, sec. 3, effective July 13, 1990. -- Amended 1984 Ky. Acts ch.

117, sec. 7, effective July 13, 1984. -- Amended 1976 Ky. Acts ch. 116, sec. 5. -- Amended 1968 Ky. Acts ch. 143, sec. 6. --

Amended 1960 Ky. Acts ch. 224, sec. 1. -- Created 1946 Ky. Acts ch. 210, sec. 3(5).

325.280 Qualifications for licensure as certified public accountant by reciprocity and for foreign

accountants.

(1) The board may issue a license to practice by reciprocity, if the applicant submits an application for a

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license to practice any regulated activity, upon forms approved by the board, that includes all required

fees, in the amounts as determined by administrative regulation promulgated by the board, and meets the

following requirements:

(a) The applicant received a grade on the Uniform Certified Public Accountants Examination in another

state that was equivalent to a passing grade at the time in this Commonwealth;

(b) The applicant holds a valid active license, and is in good standing as a certified public accountant,

issued under the laws of any other state; and

application is made; or

2. Within the ten (10) years immediately preceding the application, had four (4) years of experience in the

practice of the regulated activities acceptable to the board upon which the license was based.

(2) The board may issue a license to practice the regulated activities without examination to an applicant

who holds a valid license to engage in the practice of the regulated activities in good standing from a

foreign country if:

(a) The applicant's foreign country makes similar provisions to allow a person who holds a valid license to

practice the regulated activities issued by this Commonwealth to obtain that foreign country's comparable

designation;

(b) The authority of the foreign country that issued the designation regulates the practice of the regulated

activities, including the issuance of reports upon financial statements;

established by the foreign authority or law and were substantially equivalent to those in effect in this

Commonwealth at the time the foreign designation was granted;

(d) The applicant satisfies the applicable experience requirement contained in paragraph (c) of subsection

(1) of this section;

(e) The applicant has successfully passed a uniform qualifying examination on United States national

standards approved by the board; and

(f) The applicant submits an application for a license to practice the regulated activities, upon forms

approved by the board, that includes all required fees, in the amounts as determined by administrative

regulation promulgated by the board.

Effective: July 15, 2008 History: Amended 2008 Ky. Acts ch. 101, sec. 2, effective July 15, 2008. -- Amended 2004 Ky. Acts ch. 34, sec. 1,

effective July 13, 2004. -- Amended 2000 Ky. Acts ch. 99, sec. 5, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 248, sec. 5, effective

July 15, 1994. -- Amended 1990 Ky. Acts ch. 285, sec. 4, effective July 13, Page 2 of 2 1990. -- Amended 1984 Ky. Acts ch. 117, sec. 8,

effective July 13, 1984. -- Amended 1968 Ky. Acts ch. 143, sec. 7. -- Created 1946 Ky. Acts ch. 210, secs. 3 (7), (8) and 4.

325.282 Privilege to practice granted to out-of-state licensee meeting substantially equivalent

licensure requirements -- Qualifications -- Conditions agreed to -- When coordination with in-state

firm required.

(1) A person who:

(a) Does not have an office located in this state;

(b) Holds a valid and active license to practice as a certified public accountant from any state that the

board has determined to have licensure requirements substantially equivalent to those found in this

chapter and the accompanying administrative regulations promulgated thereunder; and

means in this state; shall have all the privileges granted to the holder of a license issued under this

chapter without having to obtain a license from the board.

(2) Notwithstanding any other provision of this chapter, a person who satisfies the requirements of

subsection (1) of this section:

(a) Is not required to provide notice of offering or providing such services to the board; and

(b) Is subject to the requirements listed in subsection (3) of this section.

(3) A person who offers to perform or performs a regulated activity in person or by mail, telephone, or

other electronic means in this state pursuant to this section agrees to:

(a) Submit to the personal and subject matter jurisdiction and disciplinary authority of the board;

(b) Comply with the provisions of this chapter and the administrative regulations of the board;

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person's principal place of business expires or is no longer valid;

(d) The appointment of the state board or agency where the person's principal place of business is

located and which issued the person's license as the agent upon whom process may be served in any

action or proceeding by the Kentucky State Board of Accountancy against that person;

(e) Notify the board prior to opening any office in this state and immediately apply for a license under KRS

325.280; and

(f) Notify the board immediately if the person's license in the state where his or her principal place of

business is located becomes inactive, lapses, or is subjected to any disciplinary action.

(4) The board may take disciplinary action against a person granted a privilege under this section for an

act committed by the person in another state if the act at the time of its commission is a violation of that

state's law or regulations and this chapter or administrative regulations promulgated pursuant to this

chapter.

(5) A person who qualifies for the practice privilege under this section and offers to perform or performs

one (1) or more of the following services for a client with its home office located in this state or for a

person who is a resident of this state shall perform the service or services through a firm which has

obtained a license issued under KRS 325.301:

(a) Any financial statement audit or other engagement to be performed in accordance with the Statements

on Auditing Standards;

(b) Any examination of prospective financial statements to be performed in accordance with the

Statements on Standards for Attestation Engagements; or

Board Auditing Standards.

Effective: July 15, 2008 History: Created 2008 Ky. Acts ch. 101, sec. 3, effective July 15, 2008.

325.285 Consent to jurisdiction of the board by unlicensed persons and firms.

(1) A person or firm that enters this state in person or by mail, telephone, or other electronic means;

represents himself, herself, or itself as a "certified public accountant," "CPA," or CPA firm; and performs

or offers to perform a regulated activity for a client whose home office is located in this state or a person

who is a resident of this state without first:

(a) Obtaining a license under this chapter;

(b) Complying with the practice privilege requirement in KRS 325.282; or

matter, and disciplinary jurisdiction of the board.

(2) The board may conduct investigations and hearings and impose sanctions against the person or firm

as if the person or firm held a license under this chapter.

Effective: July 15, 2008 History: Amended 2008 Ky. Acts ch. 101, sec. 4, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 50,

sec. 1, effective June 26, 2007.

325.290 Use of title "certified public accountant."

(1) Only an individual who has received a license to practice or qualifies for a practice privilege shall be

styled and known as a "certified public accountant." A certified public accountant may also use the

abbreviation "CPA" or "public accountant."

(2) Licensees granted a waiver from continuing professional education based on retirement may use

"certified public accountant," "public accountant," or "CPA," but shall not engage in regulated activities.

Effective: July 15, 2008 History: Amended 2008 Ky. Acts ch. 101, sec. 5, effective July 15, 2008. -- Amended 2000 Ky. Acts ch.

99, sec. 6, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 248, sec. 6, effective July 15, 1994. -- Amended 1990 Ky. Acts ch.

285, sec. 5, effective July 13, 1990. -- Created 1946 Ky. Acts ch. 210, sec. 3(6).

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325.301 Firms required to obtain license to practice in Kentucky -- Firms exempted from licensure

requirement -- Criteria for license.

(1) The following firms shall obtain a license to practice in this state:

(a) Any firm with an office located in this state performing attest services, as defined in KRS 325.220;

(b) Any firm with an office in this state that uses the title "CPA" or other phrase or abbreviation in any

manner described in KRS 325.410 to suggest it is a certified public accounting firm; and

KRS 325.220(4)(a), (c), or (d) for a client with his or her home office in this state or a client who is a

resident of this state.

(2) The following firms shall not be required to obtain a license to practice in this state and may use the

title "CPA" in the name of the firm:

(a) A firm which does not have an office in this state that performs services described in KRS

325.220(4)(b) for a client having its home office in this state or a client who is a resident of this state if:

1. The firm complies with the requirements contained in subsections (3)(a) and (12) of this section; and

2. All services provided by the firm are performed by an individual with a practice privilege granted under

KRS 325.282; and

(b) A firm which does not have an office in this state and does not provide attest services, as defined in

KRS 325.220, to a client having his or her home office located in this state or a client who is a resident of

this state may provide other services that are regulated activities, as defined in KRS 325.220, if:

1. The services are provided through an individual granted a practice privilege as described in KRS

325.282; and

2. The firm can legally provide the services in the state where the individual with a practice privilege has

his or her principal place of business.

(3) All firms seeking to obtain a license to practice in this Commonwealth shall meet the following

requirements:

(a) Certified public accountants shall hold fifty-one percent (51%) or more of the ownership of the firm in

terms of financial interests and voting rights of all partners, officers, shareholders, members, or managers

of the firm;

(b) All owners of the firm who are not certified public accountants shall be natural persons actively

engaged in the firm's operations and shall satisfy additional requirements established by the board

through promulgation of an administrative regulation;

(d) All certified public accountants who are sole proprietors, partners, shareholders, members, officers,

directors, or employees of a firm with an office located in this state, who regularly practice in this

Commonwealth, shall maintain current licenses to practice issued by the board;

(e) Any individual licensee and any individual qualifying for a practice privilege under this chapter who is

responsible for supervising attest services and signs or authorizes someone to sign the report on the

financial statements on behalf of the firm shall meet the competency requirements established by the

board through promulgation of an administrative regulation; and

(f) The firm shall comply with the provisions of this chapter, the administrative regulations promulgated by

the board, and all other laws of this Commonwealth applicable to the firm's particular form of business

organization.

(4) Before a firm may practice in this Commonwealth, the firm manager shall:

(a) Submit an initial application which contains information required by the board through promulgation of

an administrative regulation; and

(b) Pay a fee not to exceed two hundred dollars ($200) established by an administrative regulation

promulgated by the board.

(5) The firm license shall be renewed every two (2) years by the firm manager:

(a) Completing the renewal process according to the procedures as established in administrative

regulation promulgated by the board; and

(b) Paying the renewal fee, which shall not exceed two hundred dollars ($200), as established by

administrative regulation promulgated by the board.

(6) A firm license due to expire on July 1, 2011, shall:

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(a) Be renewed by the firm manager according to the procedures established by the board through

promulgation of an administrative regulation;

(b) Require payment of a fee not to exceed fifty dollars ($50) established by the board through

promulgation of an administrative regulation; and

(7) A firm license that expires on or after August 1, 2012, shall:

(a) Be renewed by the firm manager prior to August 1, 2012;

(b) Require payment of a fee not to exceed two hundred dollars ($200) established by the board through

promulgation of an administrative regulation;

(d) Be renewed by the firm manager on or before August 1 of each two (2) year period thereafter

according to the procedures contained in this subsection and as established by the board through

promulgation of an administrative regulation.

(8) If a firm license has been expired for a period of less than one (1) month and the firm has not violated

any other provision of this chapter or the accompanying administrative regulations promulgated

thereunder, the firm manager may renew the license by:

(a) Satisfying all the requirements of this subsection, including any requirements established by the board

through promulgation of an administrative regulation; and

(b) In addition to the renewal fee, paying a late fee not to exceed one hundred dollars ($100).

(9) A firm with a license expired for a period of longer than one (1) month after the date of expiration shall

cease operating immediately. The firm shall not operate until the board approves the issuance of a new

license to the firm.

(10) Effective August 1, 2012, sole proprietors shall comply with the licensing requirements for firms

under this section.

(11) The firm manager shall notify the board in accordance with procedures established in an

administrative regulation promulgated by the board, of any change in its licensing information within thirty

(30) days. Any change in the name of a firm shall require the filing of an initial application.

(12) All firms that perform audits, reviews, or compilations shall enroll in and complete on a regular basis

an approved peer review program with standards that are equivalent to or better than the peer review

program administered by the American Institute of Certified Public Accountants as determined by

administrative regulations promulgated by the board. Every firm shall comply with any requirements or

restrictions placed on its license as prescribed by the board in response to the results of peer reviews.

(13) Nothing contained in this chapter shall require a certified public accountant or firm of certified public

accountants licensed by another state to obtain a license to practice in this Commonwealth if the certified

public accountant or firm of certified public accountants enters this Commonwealth solely to:

(a) Conduct a peer review of a firm; or

(b) Perform attestation work, incidental to an engagement which was initiated with a client located outside

of the Commonwealth and has extended into the Commonwealth due to common ownership or existence

of a subsidiary, assets, or other operations located within the Commonwealth.

Effective: June 8, 2011 History: Amended 2011 Ky. Acts ch. 31, sec. 2, effective June 8, 2011. -- Amended 2008 Ky. Acts ch. 101,

sec. 6, effective July 15, 2008. -- Amended 2000 Ky. Acts ch. 99, sec. 7, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 24,

sec. 2, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 248, sec. 1, effective July 15, 1994

325.312 Designation as public accountant emeritus.

Persons registered with the board as "public accountants" by July 1, 1946, shall receive the designation

of "Public Accountant Emeritus" and shall be exempt from the payment of licensing fees and the reporting

of continuing education hours. No persons shall assume or use the title or designation "Public Accountant

Emeritus" unless designated by the board under this section.

Effective: July 14, 2000 - History: Created 2000 Ky. Acts ch. 99, sec. 15, effective July 14, 2000.

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325.330 Application and issuance of license to practice -- Renewal -- Expiration -- Continuing

professional education -- Reinstatement.

(1) An applicant for an initial license to practice shall:

(a) Satisfy all the requirements of KRS 325.261 and the administrative regulations promulgated by the

board;

(b) Pay a fee not to exceed two hundred dollars ($200); and

board.

(2) Licenses shall be initially issued and renewed for a period of two (2) years, and shall expire on the first

day of July in the year of expiration.

(3) When an initial license to practice is granted, the board shall issue a nonrenewable document that

indicates that the licensee has satisfied all requirements to receive an initial license as a certified public

accountant.

(4) An applicant for renewal of a license to practice who is in good standing shall complete the renewal

procedure established in administrative regulations promulgated by the board that show that the applicant

has:

(a) Fulfilled the requirement of continuing professional education as defined by the board by

administrative regulation, but not to exceed eighty (80) hours during a two (2) year calendar period

ending December 31 preceding the July 1 renewal date. Certified public accountants not

employed by a firm licensed by the board shall be required to achieve continuing professional

education not to exceed sixty (60) hours during the two (2) year calendar period ending December

31 preceding the July 1 renewal date. The board shall provide for lesser, prorated requirements

for applicants whose initial permit was issued substantially less than two (2) years prior to the

renewal date;

(b) Paid a fee not to exceed two hundred dollars ($200) biennially;

(d) Designated as part of the renewal process whether the applicant is employed by a firm licensed

by the board.

(5) Any license not renewed by the expiration date shall automatically expire and the holder of the expired

license shall be prohibited from practicing public accounting or holding himself out as a certified public

accountant.

(6) (a) The holder of a license that from the date of renewal has been expired for a period shorter than

six (6) months, and who has not violated any other provision of this chapter, may renew the

license by meeting all of the requirements of this section and paying a late penalty fee not to

exceed one hundred dollars ($100).

(b) If the license has expired for a period longer than six (6) months, the applicant shall apply to the

board for reinstatement. The board shall determine the eligibility for license reissuance, including

a late penalty fee not to exceed two hundred dollars ($200) and additional continuing professional

education hours.

license to practice in a timely manner.

(7) (a) Effective January 1, 2011, licenses shall expire on August 1 of the year in which they are to be

renewed. Odd-numbered licenses shall expire on August 1 of every odd-numbered year and

even-numbered licenses shall expire on August 1 of every even-numbered year.

(b) An applicant for renewal of a license to practice who is in good standing shall complete the

renewal procedure, which shall be established by administrative regulation promulgated by the

board and shall require the applicant to:

1. Fulfill the continuing professional education requirements, as defined by the board by

promulgation of administrative regulation, in accordance with the following:

a. Certified public accountants employed by or operating a firm licensed by the board shall

be required to complete no more than eighty (80) hours of continuing professional

education during the two (2) year calendar period ending December 31 preceding the

August 1 renewal date;

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b. Certified public accountants not employed by a firm licensed by the board shall be

required to complete no more than sixty (60) hours during the two (2) year calendar

period ending December 31 preceding the August 1 renewal date; and

c. The board shall provide for lesser, prorated requirements for applicants whose initial

license was issued substantially less than two (2) years prior to the renewal date;

2. Pay a fee not to exceed two hundred dollars ($200) biennially;

3. Provide a permanent mailing address; and

4. Designate where the applicant is currently practicing.

expired license shall be prohibited from practicing public accounting or holding himself or

herself out as a certified public accountant.

(d) 1. The holder of a license that has been expired for a period of less than one (1) month, who

has not violated any other provision of this chapter, may renew the license by meeting all of

the requirements of this section and paying a late penalty fee not to exceed one hundred

dollars ($100).

2. If the license has expired for a period longer than one (1) month, the applicant shall apply to

the board for reinstatement. The board shall determine the eligibility for license reissuance,

including a late penalty fee not to exceed two hundred dollars ($200) and additional

continuing professional education hours.

(8) The board may reduce or waive the license to practice renewal requirements upon written request of

the licensee showing illness, extreme hardship, or age and complete retirement from practice as

prescribed by the board by administrative regulation.

(9) A licensee shall notify the board in writing of a change in his or her mailing address within twenty (20)

days following the effective date of the change in address.

Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 163, sec. 3, effective July 15, 2010. -- Amended 2007 Ky. Acts ch. 50,

sec. 4, effective June 26, 2007. -- Amended 2000 Ky. Acts ch. 99, sec. 8, effective July 14, 2000. -- Amended 1990 Ky. Acts ch.

285, sec. 8, effective July 13, 1990. -- Amended 1984 Ky. Acts ch. 117, sec. 10, effective July 13, 1984. -- Amended 1982 Ky. Acts

ch. 132, sec. 1, effective July 15, 1982. -- Amended 1976 Ky. Acts ch. 116, sec. 9. -- Amended 1960 Ky. Acts ch. 224, sec. 2,

effective July 1, 1960. -- Amended 1950 Ky. Acts ch. 152, sec. 1. -- Created 1946 Ky. Acts ch. 210, sec. 8.

Legislative Research Commission Note (6/26/2007). Under the authority of KRS 7.136(1), the Reviser of Statutes in codification

has changed the internal numbering system of subsection (6) of this statute. No words in the text were changed in the process.

325.340 Revocation, suspension, or refusal to renew or issue license.

(1) After notice and hearing as provided in KRS Chapter 13B, the board may revoke, suspend, impose a

fine not to exceed one thousand dollars ($1,000) for each violation of a provision of this chapter or

administrative regulations promulgated by the board under this chapter, refuse to issue or renew any

license, censure, or place on probation any person or firm, all with or without terms, for any one (1) or any

combination of the following causes:

(a) Fraud or deceit in obtaining a license issued under this chapter;

(b) Dishonesty, fraud, or negligence while performing any regulated activity, including fiscal dishonesty

or an intentional breach of fiduciary responsibility of any kind, and also including but not limited to

the following:

1. Knowing preparation, publication, or dissemination of false, fraudulent, or materially

misleading financial statements, reports, or information;

and

2. Embezzlement, theft, misappropriation of funds or property, or obtaining money, property, or

other valuable consideration by fraudulent means or false pretenses;

board under this chapter or violation of any order of the board;

(d) Violation of a rule of professional conduct promulgated by the board;

(e) Conviction of any felony, or of any crime in which dishonesty or fraud is an element, under the

Page 14 of 39

laws of any state or of the United States. Conviction includes, but is not limited to, pleading no

contest, entering an Alford plea, or entry of a court order suspending the imposition of a criminal

penalty to a crime;

(f) Cancellation, revocation, suspension, or refusal to renew the authority to practice as a certified

public accountant or a public accountant in any state;

(g) Suspension or revocation of the right to practice before any state or federal agency or the Public

Company Accounting Oversight Board or its successor;

(h) Conduct discreditable to the accounting profession; or

(i) Failure to respond to a board inquiry regarding any licensing or complaint matter.

(2) In any proceeding in which a remedy provided by subsection (1) of this section is imposed, the board

may also require the respondent to pay the costs of the investigation and all proceedings.

Effective: June 26, 2007 - History: Amended 2007 Ky. Acts ch. 50, sec. 5, effective June 26, 2007. – Amended 2000 Ky. Acts ch.

99, sec. 9, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 318, sec. 294, effective July 15, 1996. -- Amended 1994 Ky. Acts

ch. 248, sec. 7, effective July 15, 1994. -- Amended 1990 Ky. Acts ch. 285, sec. 9, effective July 13, 1990. -- Amended 1984 Ky.

Acts ch. 117, sec. 11, effective July 13, 1984. --Amended 1976 Ky. Acts ch. 116, sec. 10. -- Amended 1968 Ky. Acts ch. 143, sec. 8.

Page 1 of 2 -- Amended 1960 Ky. Acts ch. 233, sec. 1. -- Amended 1950 Ky. Acts ch. 152,sec. 2. -- Created 1946 Ky. Acts ch. 210,

sec. 9.

325.350 Revocation or suspension of, or refusal to renew license of firm.

(1) After notice and hearing as provided in KRS Chapter 13B, the board shall revoke the license to

practice of a firm if at any time it does not have all the qualifications prescribed by this chapter under

which it qualified for licensing.

(2) After notice and hearing as provided in KRS Chapter 13B, the board may revoke, suspend, or refuse

to renew the license to practice of a firm or may censure the licensee for any of the causes enumerated in

KRS 325.340, and for the following additional causes:

(a) The revocation, suspension, or refusal to renew the license to practice of any partner or shareholder,

or any other person with an ownership interest; or

(b) The cancellation, revocation, suspension, or refusal to renew the authority of the firm or any partner or

shareholder, or any other person with an ownership interest thereof to practice public accounting in any

other state.

Effective: July 14, 2000 - History: Amended 2000 Ky. Acts ch. 99, sec. 10, effective July 14, 2000. – Amended 1996 Ky. Acts ch.

318, sec. 295, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 248, sec. 8, effective July 15, 1994. -- Amended 1984 Ky. Acts

ch. 117, sec. 12, effective July 13, 1984. -- Amended 1978 Ky. Acts ch. 384, sec. 107, effective June 17, 1978. -- Amended 1976

Ky. Acts ch. 116, sec. 11. -- Created 1946 Ky. Acts ch. 210, sec. 10.

325.360 Proceedings for violations of this chapter.

(1) The board may conduct investigations of suspected violations of this chapter or the administrative

regulations promulgated by the board to determine whether there is probable cause to institute

proceedings against any person or firm for any violation under this chapter, but an investigation under this

section shall not be a prerequisite to proceedings. In aid of these investigations, the board or its designee

may issue subpoenas to compel witnesses to testify and to produce evidence. Subpoenas may be served

in person or by certified mail, return receipt requested.

(2) The board may designate a member, or any other person of appropriate competence, to serve as

investigating officer to conduct an investigation. Upon completion of an investigation, the investigating

officer shall report to the board. The board shall then find probable cause or lack of probable cause, or it

shall request that the investigating officer investigate further. Until there has been a determination of

probable cause, the findings of the investigating officer, the testimony and documents gathered in the

investigation, and the fact of pendency of the investigation shall be treated as confidential information and

shall not be disclosed to any person except law enforcement authorities and, to the extent deemed

necessary in order to conduct the investigation, the subject of the investigation, persons whose

complaints are being investigated, and witnesses questioned in the course of the investigation.

(3) Upon a finding of probable cause, the board shall direct that a complaint be issued pursuant to this

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section setting forth appropriate charges and a date for a hearing that shall be conducted in accordance

with KRS Chapter 13B. Upon a finding of a lack of probable cause, the board shall dismiss the matter

either with or without prejudice.

(4) In any case where probable cause has been determined pursuant to this section, the board may

request the affected party to informally resolve the matter through mediation or otherwise.

(5) A person or firm, after having been served with the notice of hearing and complaint as provided for in

subsection (3) of this section, shall file a written response within twenty (20) days from the date of service.

If the respondent licensee fails to file a timely response or fails to appear at the hearing, the board may

hear evidence against the respondent and may enter a final order as shall be justified by the evidence.

(6) In a hearing under this section, the respondent may appear in person or, in the case of a firm, through

a partner, shareholder, or other person with an ownership interest.

(7) The evidence supporting the complaint shall be presented by the investigating officer, by a board

member designated for that purpose, or by counsel. A board member who presents the evidence, or who

has conducted the investigation of the matter under this section, shall not participate in the board's

decision of the matter.

(8) In a hearing under this section before the board or in acting upon the recommended order of a hearing

officer, a vote of a majority of all members of the board then in office, other than a member disqualified by

reason of subsection (7) of this section, shall be required to sustain any charge and to impose any

penalty with respect thereto.

(9) Any person adversely affected by any order of the board may obtain a review thereof by filing a written

petition for review with the Franklin Circuit Court in accordance with KRS Chapter 13B.

(10) On rendering a final order, the board shall examine its records to determine whether the respondent

is authorized or licensed to practice as a certified public accountant in any other state. If the board

determines that the respondent is authorized or licensed to practice in any other state, the board shall

notify the board of accountancy of the other state of its action by mail within thirty (30) days of rendering

the final order.

(11) The board may exchange information relating to proceedings resulting in disciplinary action against

licensees with the boards of accountancy of other states and with other public authorities or private

organizations having an interest in the information.

Effective: June 26, 2007 - History: Amended 2007 Ky. Acts ch. 50, sec. 6, effective June 26, 2007. – Amended 2000 Ky. Acts ch.

99, sec. 11, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 318, sec. 296, effective July 15, 1996. -- Amended 1994 Ky. Acts

ch. 248, sec. 9, effective July 15, 1994. -- Amended 1990 Ky. Acts ch. 285, sec. 10, effective July 13, 1990. -- Amended 1984 Ky.

Acts ch. 117, sec. 13, effective July 13, 1984. -- Amended 1980 Ky. Acts ch. 114, sec. 85, effective July 15, 1980. -- Amended 1976

Ky. Acts ch. 116, sec. 12. -- Amended 1974 Ky. Acts ch. 315, sec. 65. – Created 1946 Ky. Acts ch. 210, sec. 11.

325.370 Modification, suspension, or reissuance of license.

(1) In any case where the board has suspended, revoked, or refused to renew a license, the board may,

upon application in writing by the person or firm affected and for good cause shown, modify the

suspension or reissue the license.

(2) The board shall by administrative regulation, specify the manner in which:

(a) Applications shall be made;

(b) The times within which the applications shall be made, and the circumstances in which hearings, to be

conducted in accordance with KRS Chapter 13B, shall be held thereon; and

Effective: July 14, 2000 - History: Amended 2000 Ky. Acts ch. 99, sec. 12, effective July 14, 2000. – Amended 1996 Ky. Acts ch.

318, sec. 297, effective July 15, 1996. -- Amended 1990 Ky. Acts ch. 285, sec. 11, effective July 13, 1990. -- Amended 1984 Ky.

Acts ch. 117, sec. 14, effective July 13, 1984. -- Created 1946 Ky. Acts ch. 210, sec. 12.

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325.380 Restrictions on use of title.

(1) No person shall assume or use the title or designation "certified public accountant," "public

accountant," or the abbreviation "CPA" or any other title, designation, words, letters, abbreviation, sign,

card, or device tending to indicate that the person is a certified public accountant, unless the person holds

a license issued under this chapter or qualifies for a practice privilege under KRS 325.282.

(2) No firm shall assume or use the title or designation "certified public accountants," "public

accountants," or the abbreviation "CPA's" or any other title, designation, words, letters, abbreviation, sign,

card, or device tending to indicate that the firm is composed of certified public accountants, unless the

firm:

(a) Holds a license issued under this chapter which has not been revoked or suspended, and all offices of

the firm in this state are maintained as required under this chapter; or

(b) Is authorized to do so as provided for in KRS 325.301.

(3) No individuals or firm shall assume or use the title or designation "certified accountant," "chartered

accountant," "enrolled accountant," "licensed accountant," "registered accountant," "accredited auditor,"

"accounting practitioner," "accredited accountant," "expert accountant," "expert auditor," "certified auditor,"

or any other title or designation likely to be confused with "certified public accountant" and "public

accountant" or any of the abbreviations "CA," "AP," "PA," "RA," "LA," or "AA" or similar abbreviations

likely to be confused with "CPA."

(4) No person or firm shall sign or affix his name or a firm name to any document or prepare or issue any

document which indicates that the person or firm performed attest services or a compilation or that

includes any language which indicates that the person or the firm has expert knowledge in performing

attest services or a compilation, unless the person or firm holds a license to practice issued under this

chapter or is exempt from having to obtain a license pursuant to KRS 325.301. This prohibition shall be

applicable to issuance by any unlicensed person or firm of a report using any form of language

conventionally used by licensees with respect to a compilation of financial statements. The board shall

issue safe harbor language, to be defined by the promulgation of administrative regulations, that

nonlicensees may use in connection with a compilation of financial information. The provisions of this

subsection shall not prohibit any officer, employee, partner, or principal of any organization from affixing

his signature to any statement or report in reference to the financial affairs of the organization with any

wording designating the position, title, or office which he holds in the organization, nor shall the provisions

of this subsection prohibit any act of a public official or public employee in the performance of his duties.

(5) No person shall assume or use the title or designation "certified public accountant" or "public

accountant" in conjunction with names indicating or implying that there is a firm, or in conjunction with the

designation "and Company" or "and Associates" or a similar designation if there is in fact no bona fide

firm licensed under this chapter or exempted from licensure under KRS 325.301.

(6) No person or firm holding a license under this chapter shall use a professional or firm name or

designation which contains the names of any nonlicensees, is misleading as to the legal form of the firm,

or as to the persons who are partners, officers, shareholders, or any other owners of the firm, or as to any

other matters. If more than one (1) certified public accountant has an ownership interest in the firm, the

names of one (1) or more deceased, retired, or withdrawn partners, shareholders, or other certified public

accountants with an ownership interest may be included in the name of a firm or its successor.

(7) If the death or retirement of a certified public accountant results in a firm having only one (1) certified

public accountant with an ownership interest, the board may permit the firm to continue to use the firm

name for no more than two (2) years from the certified public accountant's respective death or retirement.

Effective: July 15, 2008 History: Amended 2008 Ky. Acts ch. 101, sec. 7, effective July 15, 2008. -- Amended 2002 Ky. Acts ch.

62, sec. 3, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 99, sec. 13, effective July 14, 2000. -- Amended 1996 Ky. Acts ch.

24, sec. 3, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 248, sec. 10, effective July 15, 1994. -- Amended 1990 Ky. Acts

ch. 285, sec. 12, effective July 13, 1990. --Amended 1984 Ky. Acts ch. 117, sec. 15, effective July 13, 1984. -- Amended 1976 Ky.

Acts ch. 116, sec. 13. -- Amended 1968 Ky. Acts ch. 143, sec. 9. -- Created 1946 Ky. Acts ch. 210, sec. 13.

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325.400 Injunction against violations of KRS Chapter 325.

Whenever in the judgment of the board any person or firm has engaged, or is about to engage, in any

acts or practices which constitute, or will constitute, a violation of this chapter, the board may make

application to the Franklin Circuit Court for an order enjoining such acts or practices, and upon a showing

by the board that such person or firm has engaged, or is about to engage, in any such acts or practices,

an injunction, restraining order, or such other order as may be appropriate shall be granted by such court.

The same shall be enforceable and shall be valid anywhere in this state and shall be reviewable as

provided in the Rules of Civil Procedure in the case of other injunctions and restraining orders.

Effective: July 13, 1984 - History: Amended 1984 Ky. Acts ch. 117, sec. 17, effective July 13, 1984. – Amended 1976 Ky. Acts ch.

116, sec. 15. -- Created 1946 Ky. Acts ch. 210, sec. 15.

325.410 Evidence of unlawful holding out as licensed to practice.

The display or uttering by a person of a card, sign, advertisement, or other printed, engraved, or written

instrument or device, bearing a person's name in conjunction with the words "certified public accountant"

or any abbreviation thereof, or "public accountant" shall be prima facie evidence in any action brought

under KRS 325.400 or 325.990 that the person whose name is so displayed, caused or procured the

display or uttering of such card, sign, advertisement, or other printed, engraved, or written instrument or

device, and that such person is holding himself or itself out to be a certified public accountant licensed to

practice under KRS 325.330. In any such action evidence of the commission of a single act prohibited by

this chapter shall be sufficient to justify an injunction or a conviction without evidence of a general course

of conduct.

Effective: July 14, 2000 - History: Amended 2000 Ky. Acts ch. 99, sec. 14, effective July 14, 2000. – Amended 1984 Ky. Acts ch.

117, sec. 18, effective July 13, 1984. -- Created 1946 Ky. Acts ch. 210, sec. 17.

325.420 Materials required to be furnished to client -- Ownership of accountant's working papers.

(1) Upon request and reasonable notice, the licensee shall furnish to his client or former client any

accounting or other records belonging to the client that were provided to the licensee by or on behalf of

the client.

(2) Upon request, reasonable notice, and payment for services previously provided, a licensee shall

furnish to his client or former client a copy of a tax return, report, or other document, any of which was

previously issued to or for the client or a copy of the licensee's working papers if the working papers

include records that would ordinarily constitute part of the client's records and are not otherwise available

to the client. These working papers shall include, but are not limited to, adjusting, closing, combining, or

consolidating journal entries and information normally contained in books of original entry and general

ledgers.

(3) Except as provided in subsection (1) of this section or pursuant to an agreement entered into between

a licensee and his client, all statements, records, schedules, working papers, and memoranda prepared

by a licensee to or in the course of providing services to a client shall be the property of the licensee.

Effective: July 15, 1994 - History: Amended 1994 Ky. Acts ch. 248, sec. 11, effective July 15, 1994. – Created 1946 Ky. Acts ch.

210, sec. 18.

325.431 Evidentiary privilege for peer review committee materials -- Testimonial privilege --

Exceptions.

(1) The proceedings, records, and workpapers of the peer review committee shall be privileged and not

subject to discovery, subpoena, or other means of legal process, or introduction into evidence in any civil

action, arbitration, administrative proceeding, or state accountancy board proceeding. No member of the

peer review committee or person involved in the quality review process shall testify in any civil action,

arbitration, administrative proceeding, or state accountancy board proceeding as to any matter produced,

presented, disclosed, or discussed during or in connection with the quality review process, or as to any

finding, recommendation, evaluation, opinion, or other action of the committee.

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(2) Information, documents, or records that are publicly available shall not be immune from discovery or

use in any civil action, arbitration, administrative proceeding, or state accountancy board proceeding

merely because they were presented or considered in connection with the quality review process.

(3) The privilege created in subsection (1) of this section shall not apply to:

(a) Materials prepared in connection with a particular engagement merely because they happen to

subsequently be presented or considered as part of the quality of review process.

(b) Disputes between peer review committees and persons or firms subject to a quality review arising

from the performance of the quality review.

seeking renewal or an individual or firm seeking to become licensed.

(d) A statement obtained by the board from a peer review committee to determine if a licensee seeking

renewal or an individual or firm seeking to become licensed is enrolled in or is not enrolled in a peer

review program.

Effective: June 8, 2011 History: Amended 2011 Ky. Acts ch. 31, sec. 3, effective June 8, 2011. -- Amended 2004 Ky. Acts ch. 34,

sec. 2, effective July 13, 2004. -- Created 1992 Ky. Acts ch. 18, sec. 1, effective July 14, 1992.

325.440 Confidentiality of information obtained in practice.

(1) A licensee shall not, without the consent of his client, disclose any confidential information pertaining

to his client obtained in the course of performing professional services.

(2) This section does not:

(a) Relieve a licensee of any obligations under the rules of professional conduct;

(b) Affect in any way a licensee's obligation to comply with a validly issued subpoena or summons

enforceable by order of a court;

(d) Preclude a licensee from responding to any inquiry made by the board or any investigative or

disciplinary body established by law or formally recognized by the board.

(3) Members of the board and professional practice reviewers shall not disclose any confidential client

information which comes to their attention from licensees in disciplinary proceedings or otherwise in

carrying out their responsibilities, except that they may furnish such information to an investigative or

disciplinary body of the kind referred to above.

Effective: July 13, 1984 - History: Amended 1984 Ky. Acts ch. 117, sec. 19, effective July 13, 1984. – Created 1946 Ky. Acts ch.

210, sec. 20.

325.445 Accountant or attorney may act as agent of client for specified activities.

A certified public accountant licensed in the Commonwealth under the provisions of this chapter, or an

attorney licensed to practice law in the Commonwealth of Kentucky, with express authorization of a client

may act as an agent of that client to:

(1) Complete, sign, and file an application for a seller's permit to do business as provided in KRS

139.240;

(2) Complete, sign, and file an application for a seller's permit for any out-of-state retailer who is not

required to file for the collection of use tax under KRS 139.340 but is seeking to do so on a voluntary

basis as provided by KRS 139.700;

(3) Complete, sign, and file an application for a certificate of registration to sever or process coal in this

state as required by KRS 143.030; and

(4) Complete, sign, and file an application for an employer's withholding, corporation income, and

corporation license tax registration numbers as may be required by KRS 131.130.

Effective: July 1, 2004 - History: Amended 2003 Ky. Acts ch. 124, sec. 33, effective July 1, 2004. – Created 2002 Ky. Acts ch. 44,

sec. 1, effective July 15, 2002.

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325.990 Penalty -- Prosecution by Attorney General.

Any person who violates any provision of KRS 325.380, shall be guilty of a misdemeanor, and upon

conviction thereof, shall be subject to a fine of not more than five hundred dollars ($500) or to

imprisonment for not more than one (1) year, or both such fine and imprisonment. Whenever the board

has reason to believe that any person is liable to punishment under this section it may certify the facts to

the Attorney General of this state, who may, in his discretion, cause appropriate proceedings to be

brought.

History: Created 1946 Ky. Acts ch. 210, sec. 16. - History for former KRS 325.990: Repealed 1946 Ky. Acts ch. 210, sec. 23. --

Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. sec. 3941e-13.

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Kentucky Administrative Regulations

201 KAR 1:015. Per diem compensation.

RELATES TO: 2006 Ky. Acts ch. 59, KRS 325.230, 325.240

STATUTORY AUTHORITY: KRS 325.240

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.230(2) requires the board to establish the

amount of per diem compensation to be paid to board members. 2005 Ky Acts Ch. 95 establishes the

maximum amount of per diem compensation that may be set by administrative regulation at $200. This

administrative regulation establishes the per diem amount to be received by board members.

Section 1. Each member of the board shall receive $150 for each day spent in the discharge of his or

her official duties.

History - (SBA-1-C; 1 Ky.R. 1009; eff. 6-11-75; Am. 3 Ky.R. 438; eff. 1-5-77; 18 Ky.R. 2972; eff. 6-7-92; 32 Ky.R. 2061; 33 Ky.R. 380;

eff. 9-1-2--6.)

201 KAR 1:020. Members of board.

RELATES TO: KRS 325.230, 325.240

STATUTORY AUTHORITY: KRS 325.240

NECESSITY, FUNCTION, AND CONFORMITY: To elect officers of the State Board of Accountancy of

Kentucky.

Section 1. The annual election of officers of the board shall be held at the meeting immediately

preceding July 1st of each year. All officers shall continue in office until new officers have been elected.

History - (SBA-1-E; 1 Ky.R. 1009; eff. 6-11-75; Am. 18 Ky.R. 2972; eff. 6-7-92.)

201 KAR 1:050. License application.

RELATES TO: 2006 Ky. Acts ch. 33, KRS 325.261, 325.280, 325.330

STATUTORY AUTHORITY: KRS 325.240

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.261 establishes the standards for licensure as

a certified public accountant. KRS 325.280 establishes the standards for licensure as a certified public

accountant by reciprocity. KRS 325.330 establishes the process for issuing a license. This administrative

regulation describes the procedure to obtain a license as a certified public accountant.

Section 1. (1) A person who has met the qualifications contained in KRS 325.261 shall submit the

"Application for Initial License as a Kentucky Certified Public Accountant".

(2) With his or her application, the person shall include:

(a) A check or money order, which is nonrefundable, made payable to the "Kentucky State Board of

Accountancy" for $100;

(b) The certificate of experience as described in 201 KAR 1:063;

contain the signature in ink of the applicant;

(d) A list of colleges and universities with graduation dates, degrees awarded, and the official transcript

described in 201 KAR 1:190, unless it is already in possession of the board;

(e) An official transcript as described in 201 KAR 1:190 from an accredited college or university as

described in 201 KAR 1:190 which verifies the candidate has satisfied the 150-hour requirement of KRS

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325.261;

(f) Proof of successful completion of the Uniform Certified Public Accountants Examination. If the

applicant successfully completed the examination in Kentucky, no documentation is required. If the

examination was successfully completed in another jurisdiction, the applicant shall have an "Authorization

of Interstate Exchange of Information" submitted to the board on his or her behalf; and

(g) If the applicant is not a citizen of the United States:

1. Documentation from the United States Citizenship and Immigration Services, or its successor, to verify

the person is legally residing in the United States; or

2. Documentation from the employer that verifies the person is an employee of a public accounting firm,

company, or institution of postsecondary education located outside the United States, but also has an

office or campus located in the United States.

Section 2. License by Reciprocity. (1) An applicant for a license by reciprocity shall submit or cause to

have submitted:

(a) An "Application for License as a Kentucky Certified Public Accountant by Reciprocity";

(b) Payment of the fee and other documents required by Section 1(2) of this administrative regulation,

except for an official transcript; and

where the applicant holds a valid and active license to practice.

(2) If the applicant cannot provide the certificate of experience as required in Section 1 of this

administrative regulation; and:

(a) Is applying under the provisions of KRS 325.280(1)(c)1, the applicant shall have the licensing

jurisdiction where he or she holds a valid and active license send certified copies of experience

requirement documents from his or her license file; or

(b) Is applying under the provisions of KRS 325.280(1)(c)2, he or she shall submit or cause to have

submitted one (1) of the following documents which clearly reflects that the applicant has practiced public

accounting as a full-time profession for four (4) of the last ten (10) years:

1. Proof of public accounting errors and omissions insurance;

2. A letter from an attorney, client, or certified public accountant that has knowledge of the applicant's

practice;

3. Copies of firm license applications; or

4. Copies of personal tax returns.

Section 3. Incorporation by Reference. (1) The following material is incorporated by reference:

(a) "Application for Initial License as a Kentucky Certified Public Accountant (2006)";

(b) "Application for Licenses as a Kentucky Certified Public Accountant by Reciprocity (2005)"; and

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the State

Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through Friday,

8:30 a.m. to 4:30 p.m.

History - (SBA-2-E; 1 Ky.R. 1010; eff. 6-11-75; Am. 3 Ky.R. 441; eff. 1-5-75; 9 Ky.R. 594; eff. 12-1-82; 11 Ky.R. 1433; eff. 5-14-85;

18 Ky.R. 2975; eff. 6-7-92; 20 Ky.R. 3210; eff. 8-4-94; 27 Ky.R. 585; eff. 10-26-2000; 31 Ky.R. 1526; eff. 5-26-05; 32 Ky.R. 2062; 33

Ky.R. 380; eff. 9-1-06.)

201 KAR 1:063. Certificate of experience.

RELATES TO: KRS 325.261, 325.340(1)(h)

STATUTORY AUTHORITY: KRS 325.240(2)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.240(2) authorizes the Kentucky State Board of

Accountancy to promulgate administrative regulations for the administration of KRS Chapter 325. This

administrative regulation establishes requirements for documenting experience when applying to become

a certified public accountant.

Section 1. Definitions. (1) "One (1) year" means the completion of 2,000 hours of employment

obtained after the award of a baccalaureate degree during an employment period of not less than twelve

(12) months, excluding any leave or holiday time.

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(2) "Verification" means confirmation by a certified public accountant, as described in KRS

325.261(6), of the truth or accuracy of the applicant's accounting or attest experience.

Section 2. (1) An applicant for licensure shall submit a Certificate of Experience, which has been

provided by the certified public accountant for verification of experience.

(2) If the applicant has been employed by more than one (1) employer to meet the experience

requirement described in KRS 325.261 and this administrative regulation, a certificate shall be submitted

for each employment situation.

Section 3. Experience Verification. The certificate of experience shall include the following information

verified by a certified public accountant as described in KRS 325.261(6):

(1) The name and address of the employing public accounting firm, industry, or government agency;

(2) The month, day, and year the employment:

(a) Began; and

(b) Was terminated or the experience was completed;

(3) Total number of hours worked during the employment period, excluding holiday or leave time;

(4) A brief description of the applicant's job duties;

(5) The applicant's working titles during employment; and

(6) The signature of the verifying certified public accountant which attests to the truth and accuracy of

the statements made regarding the applicant's experience.

Section 4. Documentation and Verification of Applicant Experience. A false or misleading statement

made by a certified public accountant on a certificate of experience shall constitute a violation of KRS

325.340(1)(h).

Section 5. Incorporation by Reference. (1) "Certificate of Experience", August 2015, is incorporated by

reference.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the

State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through

Friday, 8 a.m. to 4:30 p.m.

History - (19 Ky.R. 1692; Am. 2025; eff. 2-19-1993; 20 Ky.R. 3212; eff. 8-4-1994; 27 Ky.R. 586; eff. 10-16-2000; 31 Ky.R. 1527;

1782; eff. 5-26-2005; TAm 10-27-2009; 42 Ky.R. 819; 1457; eff. 12-4-2015.)

201 KAR 1:065. Individual license renewal and fee.

RELATES TO: KRS 325.330

STATUTORY AUTHORITY: KRS 325.240(2), 325.330(7)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.330(7) requires the board to promulgate

administrative regulations establishing license renewal procedures for certified public accountants. This

administrative regulation establishes the procedures and fees for a certified public accountant to renew a

license.

Section 1. Except as provided in Section 2 of this administrative regulation, a certified public

accountant seeking to renew his or her license shall:

(1) Utilize the online License Renewal System offered by the board at www.cpa.ky.gov; and

(2) Pay a renewal fee in the amount of $100.

Section 2. If a certified public accountant is unable to utilize the online procedure, he or she shall:

(1) Submit a written request to obtain a paper copy of the License Renewal Form to the Kentucky

State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202;

(2) Complete and submit the application to the board; and

(3) Submit a check or money order made payable to the Kentucky State Board of Accountancy in the

amount of $100.

Section 3. The board shall notify a licensee that his or her license is due to expire in accordance with

Page 23 of 39

the renewal dates established in KRS 325.330(7)(a).

Section 4. Incorporation by Reference. (1) The following material is incorporated by reference:

(a) “License Renewal System”, January 2011; and

(b) “License Renewal Form”, January 2011.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the

State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through

Friday, 8 a.m. to 4:30 p.m.

History - (18 Ky.R. 3069; eff. 6-7-92; Am. 20 Ky.R. 2043; 2775; eff. 3-8-94; 28 Ky.R. 1671; 2189; eff. 4-15-2002; 37 Ky.R. 1507;

1969; eff. 3-4-2011.)

201 KAR 1:081. Firm license, renewal, and reinstatement.

RELATES TO: KRS 325.220(6), 325.301, 325.380

STATUTORY AUTHORITY: KRS 325.240(2), 325.301(4), (5), (6), (7), (8)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.240(2) authorizes the Kentucky State Board of

Accountancy to promulgate administrative regulations for the administration of KRS Chapter 325. KRS

325.301(4) through (8) require the board to promulgate administrative regulations concerning

applications, renewals, and related fees. This administrative regulation establishes the procedures for

firms to obtain and renew a license to practice as required by KRS 325.301.

Section 1. Definitions. (1) "Certified public accountant owner" means a certified public accountant with

a current and active license to practice issued by a state board of accountancy and who is operating a

public accounting firm as a:

(a) Shareholder in a corporation;

(b) Partner in a partnership or registered limited liability partnership;

(d) Sole proprietor.

(2) "Firm" is defined by KRS 325.220(3).

(3) "Firm manager" is defined by KRS 325.220(4).

(4) "Nonlicensed owner of the firm" means a person referred to in KRS 325.301(3)(b).

Section 2. To obtain an initial license to practice, the firm manager shall submit:

(1) A completed Instate Application form; and

(2) A check or money order made payable to the Kentucky State Board of Accountancy in the amount

of $100. This fee shall be nonrefundable.

Section 3. To obtain an initial license to practice, a sole proprietor shall submit:

(1) A completed Sole Proprietor Firm Application form; and

(2) The fee required by Section 2(2) of this administrative regulation.

Section 4. A certified public accountant shall:

(1) Have ultimate responsibility for all services provided by the firm;

(2) Have ultimate authority over any unit, division, or branch of the firm that performs attest services;

and

(3) Comply with the Statement on Quality Control Standards, January, 2012, issued by the American

Institute of Certified Public Accountants Auditing Standards Board, as incorporated by reference.

Section 5. A nonlicensed owner of the firm shall not sell or otherwise transfer any ownership interest

in the firm to any person who fails to satisfy the requirements of KRS 325.301(3).

Section 6. Renewal of a Firm License. (1) Except as provided in subsection (2) of this section, a firm

manager shall renew a firm license by:

(a) Using the online Firm License Renewal System offered by the board at www.cpa.ky.gov; and

(b) Paying a nonrefundable renewal fee in the amount of $100.

(2) If a firm manager is unable to use the online procedure, he or she shall:

Page 24 of 39

(a) Submit a written request to obtain a paper copy of the Firm License Renewal form to the

Kentucky State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202;

(b) Complete and submit the form to the board; and

amount of $100. This fee shall be nonrefundable.

(3) A sole proprietor shall renew his or her firm license according to the procedures contained in this

section.

Section 7. (1) A firm manager who fails to renew the firm license by the August 1 deadline shall renew

the license on or before September 1 by:

(a) Utilizing the online Firm License Renewal System offered by the board at www.cpa.ky.gov;

(b) Paying the nonrefundable $100 renewal fee; and

(2)

A firm manager shall correct any outdated or inaccurate information listed on the Firm License

Renewal System except for a change in the name of the firm.

Section 8. A firm is prohibited from operating and holding out as a CPA firm if the firm license is

expired for a period of more than one (1) month.

Section 9. Changes in firm information. A firm manager shall notify the board within thirty (30) days of

any changes to the licensing information on file with the board by submitting a Firm Change form.

Section 10. (1) Upon the death or retirement of a firm member which is composed of only two (2)

certified public accountant owners, the board shall authorize the continuation of the use of the firm name

by the surviving certified public accountant owner for a period of time not to exceed two (2) years from the

date of the certified public accountant owner's death or retirement.

(2) The remaining certified public accountant owner shall advise the board in writing of this change

within thirty (30) days of its occurrence.

Section 11. The firm name registered with the board shall be the firm name used in all circumstances.

Section 12. (1) The following material is incorporated by reference:

(a) "Instate Firm Application", August, 2015;

(b) "Firm Change Form" August, 2015;

(d) "Firm License Renewal", January, 2015;

(e) "Statement on Quality Control Standards", January 2012; and

(f) "Sole Proprietor Firm Application", August, 2015.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the

State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through

Friday, 8 a.m. to 4:30 p.m.

History: (20 Ky.R. 3343; Am. 21 Ky.R. 307; eff. 8-4-1994; 27 Ky.R. 589; eff. 10-16-2000; 38 Ky.R. 1465; 1834; eff. 6-1-2012; 42

Ky.R. 820; 1458; eff. 12-4-2015.)

201 KAR 1:100. Continuing professional education requirements.

RELATES TO KRS 325.330

STATUTORY AUTHORITY: KRS 325.240, 325.330(4)(a), (7)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.330(4) requires the board to promulgate

administrative regulations established continuing professional education requirements for certified public

accountants. This administrative regulation establishes the continuing professional education

requirements a certified public accountant shall satisfy to renew a license.

Section 1. Definition. "Continuing professional education hour or CPE hour" means a fifty (50) minute

period excluding meals, breaks and business sessions. Each unit of credit for a university or college

Page 25 of 39

course shall equal the following continuing professional education hours:

(1) One (1) semester hour equals fifteen (15) CPE hours; and

(2) One (1) quarter hour equals ten (10) CPE hours.

Section 2. Requirements for Continuing Professional Education Credit. (1) Each licensee who worked

3,000 hours or more in a public accounting firm registered with the board during the two (2) calendar

years prior to the renewal date of his or her license shall report to the board successful completion of

eighty (80) hours of continuing professional education. The eighty (80) hours shall be earned during the

preceding two (2) calendar years. All other licensees shall obtain sixty (60) hours.

(2) Effective with license renewal for July 1, 2010 and subsequent years, each licensee shall report to the

board successful completion of two (2) hours of continuing professional education in professional ethics.

These two (2) hours shall be included as part of the eighty (80) or sixty (60) hours a licensee is required

to complete to renew his or her license.

(3)(a) A certified public accountant who for the majority of the two (2) calendar years prior to renewal of

his or her license did not operate or work in an office in this state shall satisfy the requirements of this

section by complying with the continuing professional education requirements for renewal of his or her

license:

1. In the state in which the licensee's principal office is located; or

2. In the state in which the office is located where the licensee worked a majority of the time.

(b) If the state designated by paragraph (a) of this subsection does not have continuing professional

education requirements for renewal of a license, the licensee shall comply with all continuing professional

education requirements for renewal of a license in this state.

Section 3. Each licensee who held a license for less than a full two (2) calendar year period shall

obtain two (2) hours of continuing professional education for each full month a license was held not to

exceed the total number of required hours for the reporting period. The two (2) hours in professional

ethics shall not be required to be part of the hours completed in this time period.

Section 4. Waivers From Continuing Professional Education. (1) The request for a reduction in or

waiver of the continuing professional education requirements shall be submitted on a form prepared by

the board.

(2) A reduction or waiver may be granted by the board if the licensee:

(a) Establishes that he or she is physically or psychologically unable to complete the continuing

professional education requirements. The licensee shall submit with each request a statement from a

licensed physician or other appropriate licensed health care provider that substantiates the physical or

psychological claim of the licensee;

(b) Has encountered a severe personal hardship which made it extremely difficult or impossible to meet

the continuing professional education requirements. The hardship shall be described in writing on the

waiver form. The board may request the licensee to substantiate with documentation the hardship

described on the waiver form; or

completely retired, the licensee shall not perform accounting services in the practice of public accounting,

education, government or industry except for management of personal assets or investments.

(3) The board shall advise a licensee in writing whether the request is approved or denied.

(4) A licensee granted a waiver shall reaffirm the basis of the waiver when the license is next renewed.

(5) If the circumstances which form the basis of the waiver change, the licensee shall notify the board

within thirty (30) days from the date of the change and resume compliance with the continuing

professional education requirements from the date of the change.

Section 5. Exemption from Continuing Professional Education. (1) A licensee who at the time of

renewal is sixty-five (65) years of age or older and has been licensed continuously for twenty-five (25)

years or more shall be exempt from the continuing education requirements.

(2) This exemption shall end after the renewal of licenses in 2009.

Section 6. Programs which Qualify. (1) The overriding consideration in determining whether a specific

program qualifies as acceptable continuing professional education shall be whether it is a formal program

of learning which contributes directly to the professional competence of an individual licensed to practice

as a certified public accountant in this state.

(2) Continuing professional education programs may qualify only if:

Page 26 of 39

(a) An outline of the program is prepared in advance and preserved;

(b) The program is at least one (1) continuing professional education hour in length;

anyone whose background training, education or experience makes it appropriate for him or her to lead a

discussion on the subject matter of the particular program;

(d) A record of registration or attendance is maintained; and

(e) A course completion document is given to each attendee.

(3) Acceptable subject matter.

(a) The following general subject matters shall be considered acceptable if the programs satisfy all of the

criteria established by this administrative regulation:

1. Accounting and auditing;

2. Taxation;

3. Management services;

4. Information technology;

5. Communication arts;

6. Mathematics;

7. Statistics;

8. Ethics;

9. Economics;

10. Business law;

11. Finance;

12. Marketing;

13. Specialized areas of industry; and

14. Administrative procedures associated with the offering and performance of attest services.

(b) Areas other than those listed in paragraph (a) of this subsection may be acceptable if the licensee can

demonstrate that they contribute directly to his or her professional competence as a certified public

accountant. The responsibility for substantiating that a particular program is acceptable and meets the

requirements of this administrative regulation shall be the obligation of the licensee.

(4) Acceptable group programs. The following group programs qualify for credit if they meet the standards

specified in this administrative regulation:

(a) Professional education and development programs of national, state and local accounting

organizations;

(b) University or college courses (both credit and noncredit courses); and

operating matters shall not qualify.

(5) Formal individual study courses, Web casts, and online learning courses.

(a) The amount of credit allowed for any individual study course shall be recommended by the course

sponsor.

(b) A licensee claiming credit for an individual study course shall obtain evidence of satisfactory

completion of the course from the course sponsor.

completed.

(6) Service as lecturer, discussion leader, or speaker.

(a) Instructors, discussion leaders and speakers may claim continuing professional education credit for

both preparation and presentation time.

(b) Credit may be claimed for actual preparation time up to two (2) times the class contact hours.

would meet the requirements of Section 6 of this administrative regulation.

(d) Credit shall not be granted for repetitious presentations of group programs unless it can be

demonstrated that the program content was substantially changed and the change required significant

additional study or research.

(e) Maximum credit for preparation and teachings shall not exceed sixty (60) percent of the renewal

period requirement.

(7) Published articles and books.

(a) Credit may be awarded for published articles or books if they contribute directly to the professional

competence of the licensee.

(b) Credit for preparation of the publications may be given on a self-declaration basis up to twenty-five

(25) percent of the total education hours required.

Page 27 of 39

book to the board with an explanation of the circumstances which he or she believes justifies a greater

amount of credit.

(d) The board shall determine the amount of credit to be granted.

Section 7. Reporting and Controls. (1) Each licensee shall obtain the appropriate documentation to

establish that he or she completed the continuing professional education requirements.

(2) This documentation shall be retained by each licensee for a period of five (5) years.

(3) The board shall conduct annually a random audit to verify a certain percentage of licensees completed

the amount of continuing professional education hours required to renew his or her license.

(4) Course completion evidence shall consist of a document prepared by the course sponsor indicating

the licensee completed a formal program of learning. A document shall include the:

(a) Name of the program sponsor;

(b) Title and description of course content;

(d) Number of continuing professional education hours awarded.

(5) A licensee who completed continuing professional education courses that complied with the

requirements of this administrative regulation and were presented by or on behalf of his or her employer

may submit to the board a list of the courses completed if the list contains the:

(a) Information described in subsection (4) of this section; and

(b) Signature of the person at the licensee’s place of employment who verifies the accuracy of the

information for a third party.

Section 8. Continuing Professional Education Sponsors. (1) Sponsors shall not be required to register

with the board.

(2) Detailed records of each program shall be kept by the sponsor which shall include:

(a) The date of the program presentation;

(b) The name of each instructor or discussion leader;

(d) A written outline of the program presentation.

(3) Records shall be kept by the sponsor for a period of five (5) years following the date each program is

presented.

Section 9. Incorporation by Reference. (1) The following material is incorporated by reference:

(a) "Initial Request for Waiver of CPE Requirements", 2009;

(b) "License Renewal-CPE Waiver Due to Medical of Personal Hardship", 2009; and

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the State

Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through Friday,

8 a.m. to 4:30 p.m.

History - (10 Ky.R. 502; Am. 877; eff. 12-2-83; 17 Ky.R. 1528; eff. 11-29-90; 18 Ky.R. 2872; 3188; eff. 5-1-92; 28 Ky.R. 1669; 2187; eff.

4-15-2002; 35 Ky.R. 2782: 36 Ky.R. 319; eff. 9-4-2009.)

201 KAR 1:140. Procedures for the reinstatement or reissuance of a CPA license.

RELATES TO: KRS 325.330(6), 325.360, 325.370

STATUTORY AUTHORITY: KRS 325.240(2), 325.330(6), (7), 325.370(2)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.240(2) authorizes the Kentucky State Board of

Accountancy to promulgate administrative regulations for the administration of KRS Chapter 325. KRS

325.330(6) and (7) and 325.370 authorize the board to reinstate and reissue licenses that have expired,

been suspended, revoked or denied renewal. This administrative regulation establishes the procedures

for reinstating or reissuing a license.

Section 1. Definition. "Accounting or auditing course" means:

(1) A field of study dealing with pronouncements of authoritative accounting principles issued by the

standard setting bodies; and

(2)(a) Auditing subjects related to the examination of financial statements, operations, systems, and

Page 28 of 39

programs;

(b) The review of internal and management controls;

(d) Compilations;

(e) Reviews; and

(f) Other related subjects generally classified with the accounting discipline, except for courses in tax

and computer software training.

Section 2. A licensee who fails to renew his or her license by the August 1 renewal date shall be

allowed to renew his or her license by complying with the requirements of KRS 325.330(7), 201 KAR

1:100, 201 KAR 1:065, and paying a $100 late fee, if:

(1) The license is renewed online on or before September 1; or

(2) The renewal materials and payment are received at the board office on or before September 1.

Section 3. (1) A license expired for a period of more than one (1) month or voluntarily surrendered for

any reason, except if a complaint is pending before the board, may be considered by the board for

reinstatement if the applicant:

(a) Submits a completed License Reinstatement Application;

(b) Documents compliance with the continuing professional education requirements established in

subsection (2) of this section; and

of Accountancy.

(2) An applicant shall document successful completion of either sixty (60) or eighty (80) hours of

continuing professional education, based on the amount of hours the applicant was to have completed

when the applicant’s license expired or was voluntarily surrendered. The hours shall:

(a) Include accounting or auditing courses that comprise at least one-half of the total amount of hours

of continuing professional education required for the applicant;

(b) Include two (2) hours of coursework in professional ethics;

(d) Not have been previously used to satisfy Kentucky license renewal or reinstatement requirements.

(3) When submitting an application, an applicant who is actively licensed in another state that

maintains a continuing education requirement shall satisfy all of the requirements of this section, except

for the continuing education hours required by subsection (2) of this section.

Section 4. (1) If a license was revoked for reasons other than failure to satisfy the continuing

professional education requirements, it may be considered for reinstatement if the applicant for

reinstatement submits to the board, fifteen (15) days prior to the next scheduled meeting, a letter:

(a) Requesting reinstatement;

(b) Specifying the manner in which the applicant for reinstatement has complied with the terms of a

disciplinary order of the board; and

(2)(a) Except as provided in paragraph (b) of this subsection, the board shall:

1. Review the request for reinstatement, the findings of fact, conclusions of law, and board order;

2. Affirm or deny the request; and

3. If denied, state in writing the corrective or remedial education, training, or review required before

reinstatement shall be granted.

(b) The board shall not consider a request for reinstatement submitted to the board:

1. Prior to the date for resubmission that is specified in the disciplinary order of the board; or

2. If the CPA or CPA firm in a disciplinary order waived the ability to seek reinstatement.

(3)(a) If an applicant for reinstatement disagrees with the board's determination under this section, he

or she may file a written request for a hearing before the board.

(b) A hearing held pursuant to the provisions of this subsection shall be conducted in accordance with

KRS 325.360 and 201 KAR 1:150.

Section 5. Incorporation by Reference. (1) "License Reinstatement Application", August 2015, is

incorporated by reference.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the

State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through

Friday, 8 a.m. to 4:30 p.m.

Page 29 of 39

History - (18 Ky.R. 3069; eff. 6-7-1992; Am. 20 Ky.R. 2043; 2775; eff. 3-8-1994; 28 Ky.R. 1671; 2189; eff. 4-15-2002; 37 Ky.R.

1508; 1969; eff. 3-4-2011; 42 Ky.R. 822; 1459; eff. 12-4-2015.)

201 KAR 1:150. Procedures for the dissemination of information relative to hearings held before

the Kentucky State Board of Accountancy.

RELATES TO: KRS 325.360(10), (11)

STATUTORY AUTHORITY: KRS 325.240(2)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.240(2) authorizes the Kentucky State Board of

Accountancy to promulgate administrative regulations for the administration of KRS Chapter 325. This

administrative regulation establishes requirements for the dissemination of information.

Section 1. Following the board's adoption of a final order which concludes a disciplinary action, the

name of the licensee and a summary of the findings shall be published in the next edition of the board's

newsletter and a copy of the order shall be placed on the board’s Web site, www.cpa.ky.gov.

History - (18 Ky.R. 3070; eff. 6-7-1992; Am. 28 Ky.R. 1673; 2328; eff. 5-16-2002; 42 Ky.R. 823; 1460; eff. 12-4-2015.)

201 KAR 1:160. Peer reviews.

RELATES TO: KRS 325.301(12 )

STATUTORY AUTHORITY: KRS 325.240(2), 325.301(12 )

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.301(12 ) requires a firm that performs an audit,

review, or compilation to enroll in and complete an approved peer review program. This administrative

regulation establishes the standards and procedures that a CPA firm shall follow to comply with the

requirements of KRS 325.301(12).

Section 1. Definitions. (1) "Peer review Web site" means a web page operated and maintained by a

sponsoring organization on which documents associated with peer reviews performed by that

organization’s approved agent are posted and made available to the board.

(2) "Sponsoring organization" means an entity administering a peer review program whose standards

of review are equivalent to or better than the "Standards for Performing and Reporting on Peer Reviews"

of the American Institute of Certified Public Accountants.

Section 2. Initial Firm License and Renewal Applications. (1) If a firm applies to receive an initial

license or renew an existing license, it shall advise the board if it performs audits, reviews, or

compilations. A firm that indicates it is going to perform or is currently performing one of these services

shall submit with its license application:

(a) Proof from a sponsoring organization that it is currently enrolled in a peer review program; and

(b) A copy of the firm’s most recent peer review report and the sponsoring organization’s acceptance

letter received by the firm within three (3) years prior to submitting the application. If the firm has not

received a peer review report within the three (3) year time period, it shall notify the board of that fact.

(2) Failure to submit proof of enrollment, and, if applicable, a copy of the peer review report and the

sponsoring organization’s acceptance letter shall result in the:

(a) Application being ineligible for consideration until proof of enrollment, and, if applicable, the peer

review report and the sponsoring organization’s acceptance letter is received by the board; and

(b) The firm being prohibited from providing any audit, review, or compilation services.

(3)(a) A firm that is applying for an initial license or to renew an existing license that received a fail, or

second successive pass with deficiencies report within three (3) years prior to submitting the application

shall also submit with its license application a copy of:

1. The firm’s letter of response to any of the reports listed in this section that was sent to the

sponsoring organization;

2. A letter or letters signed by the firm indicating it agrees to take any remedial actions required

by the sponsoring organization as a condition of acceptance of the firm’s peer review; and

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3. A letter provided by the sponsoring organization notifying the firm that all required remedial actions

have been appropriately completed.

(b) Peer review documents required by subsection (1) of this section or paragraph (a)1. of this

subsection shall be made available to the board via a peer review Web site within thirty (30) days of the

date of the sponsoring organization’s acceptance letter.

the board via a peer review Web site within thirty (30) days of the date that the firm signs the letter.

(d) Peer review documents required by paragraph (a)3. of this subsection shall be made available to

the board via a peer review Web site within thirty (30) days of the date of the letter from the sponsoring

organization.

(e) If a sponsoring organization cannot provide access to the peer review documents required by

subsection (1) of this section or this subsection via a peer review Web site, the firm shall provide copies of

the documents by mail or facsimile within fifteen (15) days of receipt of the applicable document except

for the documents required by paragraph (a)2. of this subsection, which shall be submitted within fifteen

(15) days of the date the firm signs the letter.

(f) The board shall review and consider each of the reports listed in this section to determine if the firm

shall be issued a license.

(g) If the board decides to issue a license, it may impose restrictions on the firm after taking into

consideration the reported deficiencies and any remedial action since the issuance of any of the reports

listed in this section.

(h) If a firm, when initially applying for or renewing its license, advised the board that it does not

provide audits, reviews, or compilations but subsequently begins to provide those services prior to its next

license renewal date, the firm shall:

1. Immediately notify the board;

2. Immediately enroll in a board-approved peer review program;

3. Provide evidence of enrollment to the board within thirty (30) days;

4. Undergo a peer review within eighteen (18) months of the fiscal year end of the initial engagement

performed as described in the sponsoring organization’s peer review standards; and

5. Submit the peer review documents to the board for its consideration in the manner identified in this

section.

Section 3. Staff of the board shall review every peer review report and acceptance letter when they

are received in the board office. A report graded as pass, or as pass with deficiencies that is not the

second successive report with this finding shall be discarded according to the board’s record retention

schedule. A fail, or a second successive pass with deficiencies peer review report and the firm’s

responses to the report shall be presented to the board for review and determination of any action to be

taken against the firm after taking into consideration:

(1) The deficiencies described in the report;

(2) The firm’s written response to the report that was sent to the sponsoring organization;

(3) Any remedial actions required by the sponsoring organization; and

(4) The firm’s compliance with the required remedial actions.

Section 4. If a firm is granted an extension of time to complete the peer review process, the firm shall

immediately submit to the board a copy of a letter from the sponsoring organization that granted the

extension.

Section 5. (1) A sponsoring organization shall report to the board on a quarterly basis the name of

every firm enrolled in the peer review program and the name of every firm dropped or terminated from the

program since the last quarterly report was provided by the sponsoring organization. This information

may also be provided through a peer review Web site.

(2) A sponsoring organization shall bear the costs of verifying that it is operating the program in

compliance with the standards for performing peer reviews.

Section 6. Exclusion from Peer Review. (1) A proposal or other communication that describes the

work proposed by a firm or its employees that is a prerequisite to deciding whether to perform an audit,

review, or compilation of financial statements shall be excluded from the peer review process.

(2) The exclusion from the peer review process provided for in the "Standards for Performing and

Reporting on Peer Reviews" regarding compiled financial statement designated for management use only

shall not apply.

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Section 7. Incorporation by Reference. (1) "Standards for Performing and Reporting on Peer

Reviews," June 2011, is incorporated by reference.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright laws, at the

office of the State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202,

Monday through Friday, 8 a.m. to 4:30 p.m.

(3) These standards are also located on a Web site maintained by the American Institute of Certified

Public Accountants at www.aicpa.org.

History - (22 Ky.R. 2192; Am. 23 Ky.R. 122; eff. 7-5-96; 27 Ky.R. 590; eff. 10-16-2000; 35 Ky.R. 616; 1151; eff. 12-5-2008; 38 Ky.R.

814; 1117; eff. 1-6-12.)

201 KAR 1:180. Safe harbor language for nonlicensees to use in connection with a compilation of

financial information.

RELATES TO: KRS 325.380(4)

STATUTORY AUTHORITY: KRS 325.240, 325.380(4)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.380(4) requires Kentucky State Board of

Accountancy to issue an administrative regulation that contains language that a nonlicensee may use in

preparing a compilation of financial information.

Section 1. Definitions. "Compilation of financial information" means a presentation of financial data,

including accompanying notes, derived from accounting records and intended to communicate an entity’s

economic resources and obligations at a point in time or the changes therein for a period of time and

does not contain any reference to or language found in generally-accepted accounting standards and

generally-accepted accounting principles.

Section 2. Pursuant to KRS 320.380(4), nonlicensees may use the following language in connection

with a compilation of financial information and not be in violation of the provisions of KRS Chapter 325

and the accompanying administrative regulations: "The accompanying balance sheet (or _________) of

XYZ Company as of 20__ and the related statements of income, (or retained earnings, or cash flows) for

the year then ended have been prepared by me (us). The information presented in these financial

statements is the representation of management (owners)."

History - (28 Ky.R. 1724; eff. 4-15-2002.)

201 KAR 1:190. Examination sections, applications, and procedures.

RELATES TO: KRS 325.270, 325.261(4)

STATUTORY AUTHORITY: KRS 325.240(2), 325.270(1), (2)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 325.240(2) authorizes the board to promulgate

administrative regulations to administer KRS Chapter 325. KRS 325.270(1) and (2) require the board to

authorize examinations for individuals seeking to become certified public accountants, and permit the

board to, by administrative regulation, adopt standards and fees governing all examination policies and

procedures. KRS 325.261(4) requires passage of an examination prior to a person becoming licensed as

a certified public accountant and for the board to determine the subjects to be included on the

examination. This administrative regulation establishes the subjects, also referred to as sections, to be

included on the examination, the procedures, and fees associated with the administration of the

examination.

Section 1. Definitions. (1) "Accounting course" means the subject matter contained in the course

description or catalog issued by a college or university includes auditing, tax, accounting standards,

principles, or processes.

(2) "AICPA" means the American Institute of Certified Public Accountants, the entity that prepares and

grades the Uniform CPA Examination.

(3) "Business-related subjects" means courses that contain in the course prefix or title an indication

that the course subject matter is one (1) of the following: business, finance, marketing, management,

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economics, computers, statistics, or accounting.

(4) "CLEP credit" means credit granted by a university or college to a prospective student who obtains

a passing score on an exam administered through the College Level Examination Program.

(5) "DSST credit" means credit granted by a university or college to a prospective student who obtains

a passing score on an exam administered through the Dantes Subject Standardized Testing program.

(6) "Life assessment course" means a course where a student earns credit at a university or college

based upon the student’s personal life and work experiences.

(7) "Major or concentration in accounting" means a minimum of thirty-nine (39) semester hours in

business-related subjects of which twenty-seven (27) semester hours shall consist of accounting courses.

(8) "NASBA" means the National Association of State Boards of Accountancy, which operates a

nationwide computer data bank for candidates applying to sit for the Uniform CPA Examination.

(9) "Official transcript" means an official document issued by a college or university that specifies the

college course work completed, degrees awarded, the date the degree was awarded, and contains an

authorizing signature or seal.

(10) "Prometric or its successor" means the testing service in charge of administering the Uniform CPA

Examination.

(11) "Quarter hour" means 66/100ths of a semester hour.

(12) "Testing window" means the two (2) months out of each three (3) month period during a calendar

year when an exam candidate may sit for the Uniform CPA Examination.

(13) "Uniform CPA Examination" means the computer based version of the licensure examination

administered by the AICPA.

Section 2. Examination Sections. The board has adopted the Uniform CPA Examination prepared by

the AICPA as the examination every candidate seeking to receive a license shall sit for and obtain a

passing grade. The sections included on this examination shall be:

(1) Auditing and Attestation;

(2) Financial Accounting and Reporting;

(3) Regulation; and

(4) Business Environment and Concepts.

Section 3. Grading Procedures and Acquiring Credit for Obtaining a Passing Score. (1) An exam

candidate shall receive a passing score on all sections of the examination to be eligible to receive a

license.

(2) The passing score shall be seventy-five (75) on each section. An exam candidate may retain a

passing score on any section even though the candidate may have sat for and failed other sections of the

examination at the same sitting.

(3) Subject to the exception contained in subsection (4) of this section, an exam candidate may sit for

one (1) or any number of the four (4) sections of the examination at a time during a testing window.

(4) An exam candidate shall not sit more than once for the same section of the examination during a

testing window.

(5) When an exam candidate initially receives a passing score on a section of the Uniform CPA

Examination, the candidate shall have eighteen (18) months following the last day of the month of the

administration of that examination section to obtain a passing score on the remaining sections of the

examination.

(a) Failure to receive a passing score on the remaining sections of the examination within the

eighteen (18) months shall result in the expiration of the initial passing score but not other sections

passed during that eighteen (18) month period.

(b) All sections of the examination shall be passed during an eighteen (18) month time period for the

candidate to be considered to have passed the examination.

(6) One (1) request to extend the time to retain passing scores beyond the time restrictions contained

in this section shall be granted to a candidate who has sat for one (1) section of the exam during the

same testing window when the passing score was to expire. The time extension shall expire on the last

day of the testing window that immediately follows the month in which the score was scheduled to expire.

Section 4. Initial Examination Applicants. (1) Initial examination application process.

(a) An initial examination applicant shall submit a complete, notarized Application for the Uniform CPA

Examination.

(b) The applicant shall:

1. Indicate whether the applicant has been convicted, plead guilty, entered an Alford plea, or a plea of

no contest to a felony or misdemeanor, other than a minor traffic violation, and if so, submit with the

application:

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a. A copy of the judgment or sentence of conviction;

b. A criminal record check report from the Kentucky Administrative Office of the Courts, Courtnet

Disposition System that is dated within six (6) months of the date of the application, or a similar document

from the out of state agency where the conviction was entered; and

c. A letter of explanation;

2. Indicate whether the applicant has been denied admission to the Uniform CPA Examination, and if

so, attach to the application a letter explaining the reason, date, and jurisdiction of the denial;

3. Indicate whether the applicant has had disciplinary action taken against any professional license,

and if so, attach to the application:

a. A letter indicating the jurisdiction and date of action;

b. A copy of all records associated with the action; and

c. An explanation of the circumstances; and

4. Submit an official transcript from each college or university that evidences completion of the

educational requirements established in KRS 325.261, which includes a major or concentration in

accounting. Course credit hours that are based upon a quarter hour system shall be converted to

semester hours.

an Exam Applicant Special Accommodations Request Form supported by documentation no more than

three (3) years old from a qualified examiner that shall include:

1. A diagnosis of the disability; and

2. Recommendation for the specific accommodations.

(d) The board shall not be responsible for the costs associated with obtaining the required

documentation, but shall be responsible for the costs of reasonable accommodations that are provided to

the applicant.

(e) The applicant shall submit a fee with the Application for the Uniform CPA Examination in the

amount of:

1. Thirty (30) dollars for the application; and

2. Thirty (30) dollars for each section of the examination the applicant intends to take.

(f) Fees shall be nonrefundable and payment shall be in the form of a check or money order made

payable to the Kentucky State Board of Accountancy. If the institution the check or money order is drawn

on does not honor the check or money order, the application shall be incomplete and returned.

(2) Educational Requirements.

(a) Educational requirements shall have been completed at:

1. A college or university within the United States that was accredited by one (1) of the following

accrediting associations when the degree was granted:

a. Middle States Association of Colleges and Schools;

b. North Central Association of Colleges and Schools;

c. New England Association of Schools and Colleges;

d. Northwest Association of Schools, Colleges and Universities;

e. Southern Association of Colleges and Schools; or

f. Western Association of Schools and Colleges; or

2. A postsecondary educational institution outside the United States with course credits certified by a

credentialing agency that is a member of the National Association of Credential Evaluation Services, Inc.,

or NASBA.

(b) The certification required by paragraph (a)2. of this subsection shall indicate:

1. That the foreign degree is equivalent to a baccalaureate or master's degree earned in an

accredited United States college or university as described in KRS 325.261 and this administrative

regulation;

2. That the applicant had a major or concentration in accounting;

3. The title of all courses completed by the applicant outside of the United States; and

4. The amount of credit awarded to the applicant for each course.

for assistance in evaluating the hours earned and the accreditation of an educational institution under this

subsection.

(3)(a) Effective January 1, 2015, an applicant shall not receive credit toward satisfying the education

requirements in KRS 325.261 and this administrative regulation for any credit hours awarded through a

life assessment course or for DSST credit.

(b) Effective January 1, 2015, an applicant who received CLEP credit, or credit hours from a college

or university for completing an internship or co-op program may use a maximum of six (6) of those hours

Page 34 of 39

from each program for a total of twelve (12) hours solely toward satisfying the 150 hour requirement in

KRS 325.261(5).

Section 5. (1)(a) The executive director of the board shall review all applications.

(b) If the executive director determines the application satisfies the requirements of this administrative

regulation, the application shall be approved.

review and consideration at its next regularly scheduled meeting.

(2) Applications approved by the executive director or the board shall be entered into the data bank

operated by NASBA. NASBA shall then issue a payment coupon to the applicant that specifies the fees to

be paid to NASBA, the AICPA, and Prometric to sit for the exam.

(3) Following payment of the required fees, NASBA shall issue a notice to schedule to the candidate

which states the candidate is eligible to contact Prometric or its successor to schedule a date and time to

sit for the examination.

(4)(a) A candidate shall have six (6) months from the date of issuance by NASBA of a notice to

schedule to sit for the sections of the examination approved by the executive director or the board.

(b) The notice to schedule shall expire when the candidate has sat for the sections approved by the

executive director or the board or at the conclusion of the six (6) month period whichever comes first.

the extension is necessary due to an emergency or a serious illness that will prohibit the candidate from

sitting for a section of the exam prior to the conclusion of the six (6) month time period.

(d) To obtain approval to sit for additional sections of the examination, a candidate shall submit a

reexam application as described in Section 9 of this administrative regulation.

(5)(a) The exam candidate shall pay all costs associated with sitting for the Uniform CPA Examination

charged by NASBA, Prometric or its successor, and the AICPA.

(b) The costs shall be paid no later than ninety (90) days following the date of issuance of the

payment coupon from NASBA.

cancellation of the payment coupon and require the candidate to submit a reexam application

accompanied by the appropriate fees.

Section 6. Examination Rules of Conduct. (1) An examination candidate shall present two (2) forms of

current and valid identification at the Prometric or its successor examination center. One (1) of these

forms of identification shall be a state driver's license, a picture identification card issued by a state motor

vehicle licensing agency, or a passport.

(2) The license or picture identification card shall be currently in effect and shall contain a photograph

and signature.

(3) Failure to bring this identification to the examination center shall result in the candidate being

prohibited from sitting for the examination.

(4) An examination candidate shall comply with all directives of the staff at the Prometric or its

successor testing center and the rules of conduct in effect at the testing center.

(5) An examination candidate shall not:

(a) Use written materials or mechanical aids inside or outside the examination room during the course

of the examination;

(b) Communicate with any person, other than the testing center staff, inside or outside the

examination room, during the course of the examination;

(d) Substitute an individual in his or her place;

(e) Disclose in any manner any information concerning the examination questions or content;

(f) Falsify or misrepresent educational credentials or other information required for admission to the

examination; or

(g) Fail to follow written or announced examination administration procedures.

Section 7. Examination Misconduct Penalties. An examination candidate who violates any of the

provisions of this administrative regulation may be prohibited from:

(1) Further participation in that particular examination section;

(2) Receiving grades after sitting for any examination; or

(3) Sitting for subsequent examinations.

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Section 8. An exam applicant shall immediately notify the board of a change in his or her mailing

address.

Section 9. Reexam Applicants. (1) Upon request the board shall mail a Reexam Application for the

Uniform CPA Exam to every candidate who fails to pass the Uniform CPA Examination.

(2) The reexam application shall be mailed to the most recent address provided by the candidate.

(3) The board shall not be responsible if the reexam application is not delivered by the United States

Postal Service.

(4)(a) The applicant shall:

1. Indicate since the approval of the applicant's initial application whether the applicant has been

convicted, plead guilty, entered an Alford plea, or a plea of no contest to a felony or misdemeanor, other

than a minor traffic violation, and if so, submit with the reexam application:

a. A copy of the judgment or sentence of conviction;

b. A criminal record check report from the Kentucky Administrative Office of the Courts, Courtnet

Disposition System that is within six (6) months of the date of the application, or a similar document from

the out of state agency where the conviction was entered; and

c. A letter of explanation; and

2. If not previously submitted, and if the applicant is requesting reasonable accommodations in testing

due to a disability, complete an Exam Applicant Special Accommodations Request Form supported by

documentation no more than three (3) years old from a qualified examiner that shall include:

a. A diagnosis of the disability; and

b. Recommendation for the specific accommodations.

(b) The reexam application shall be received in the board's office prior to the reexam candidate being

considered eligible to sit for any section of the exam.

(5)(a) The candidate shall return the completed reexam application with the reexam fee.

(b) The reexam fee shall be thirty (30) dollars per section. The reexam fee shall be nonrefundable and

paid by check or money order made payable to the Kentucky State Board of Accountancy. If the

institution the check or money order is drawn on does not honor the check or money order, the

application shall be incomplete and returned.

(6) A reexam candidate who fails to comply with the requirements of this section shall not be

permitted to sit for reexam.

(7) The procedures and policies in Section 5 of this administrative regulation shall be applicable to a

reexam application.

(8) The reexam candidate shall comply with the requirements of Sections 6, 7, and 8 of this

administrative regulation.

Section 10. Examination grades received from NASBA shall be:

(1) Posted on the board’s Web site; and

(2) A copy mailed to each affected candidate.

Section 11. Incorporation by Reference. (1) The following material is incorporated by reference:

(a) "Application for the Uniform CPA Examination", October 2014;

(b) "Reexam Application for the Uniform CPA Examination", 2014; and

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the

State Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through

Friday, 8 a.m. to 4:30 p.m.

History - (30 Ky.R. 507; Am. 844; eff. 10-15-2003; 31 Ky.R. 1529; 1782; eff. 5-26-2005; 32 Ky.R. 2063; eff. 9-1-2006; TAm eff. 10-

27-2009; 41 Ky.R. 548; 1036; eff. 12-5-2014.)

201 KAR 1:300. Rules of professional conduct.

RELATES TO: KRS 325.240, 325.340

STATUTORY AUTHORITY: KRS 325.240

NECESSITY, FUNCTION, AND CONFORMITY: Pursuant to KRS 325.240, the Kentucky State Board of

Accountancy may promulgate rules of professional conduct. This administrative regulation is necessary to

establish the Kentucky State Board of Accountancy Rules of Professional Conduct that are patterned

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after the Code of Professional Conduct adopted by the American Institute of Certified Public Accountants

(AICPA). The function of this administrative regulation is to adopt appropriate rules of professional

conduct to establish and maintain a high standard of integrity and dignity in the public accounting

profession. The Kentucky State Board of Accountancy may review the AICPA's interpretations of its code

of professional conduct for guidance when applying the provisions of this administrative regulation.

Section 1. Definitions. (1) "AICPA" means the American Institute of Certified Public Accountants.

(2) "Audit" means an examination of financial statements of an entity in accordance with standards

promulgated by the American Institute of Certified Public Accountants (AICPA), including generally

accepted auditing standards (GAAS) and upon which an opinion is expressed or disclaimed regarding

whether the financial statements conform to generally accepted accounting principles (GAAP) or other

comprehensive basis of accounting.

(3) "Board" is defined in KRS 325.220(1).

(4) "Client" means a person or entity which retains a licensee to provide public accounting services.

(5) "Commission" means any item of value given or received by a licensee to or from any third party in

return for suggesting the purchase of any product or service.

(6) "Compilation" means presenting in the form of financial statements information that is the

representation of management or owners without undertaking to express any assurance on the

statements.

(7) "Contingent fee" means a fee established for the performance of any public accounting service

pursuant to a written or oral agreement in which no fee will be charged unless a specified finding or result

is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of the

service.

(8) "Financial statement" means a presentation of financial data, including accompanying notes, derived

from accounting records and intended to communicate an entity's economic resources and obligations at

a point in time, or the changes therein for a period of time, in accordance with generally accepted

accounting principles (GAAP) or a comprehensive basis of accounting other than generally accepted

accounting principles (GAAP).

(a) General use financial statements, financial forecasts, projections and similar presentations are

considered financial statements.

(b) Financial presentations included in tax returns are not financial statements.

(9) "Generally accepted accounting principles (GAAP)" means the conventions, rules, and procedures

which describe accepted accounting practices at a particular time and include broad guidelines of general

applications and detailed practices and procedures that provide a standard by which to measure financial

presentations.

(10) "Review" means performing inquiry and analytical procedures that provide the licensee with a

reasonable basis for expressing limited assurance that there are no material modifications that should be

made to the financial statements for them to be in conformity with generally accepted accounting

principles (GAAP) or, if applicable, with another comprehensive basis of accounting.

Section 2. Independence. (1) A licensee or a firm shall not express an opinion on financial statements

of an entity unless he and the firm are independent with respect to the entity.

(2) Prior to expressing an opinion on financial statements, the licensee shall assess his relationship with

the entity to determine whether his opinion will be considered independent, objective and unbiased by a

third party having knowledge of all facts referring to the relationship between the licensee and the entity.

(3) A licensee shall not be considered to be independent if during the period:

(a) Of the engagement or at the time of expressing his opinion, the licensee or his firm:

1. Had or was committed to acquire any direct or material indirect financial interest in the entity;

2. Was a trustee of any trust or executor or administrator of any estate if the trust or estate had or was

committed to acquire any direct or material indirect financial interest in the entity;

3. Had any joint, closely held business investment with the entity or any officer, director or principal

stockholder which was material in relation to the licensee's or his firm's net worth;

4. Had any loan to or from the entity or to or from any officer, director or principal stockholder of the entity.

(b) Covered by the financial statements, the period of the professional engagement or at the time of

expressing an opinion, the licensee or his firm served as a:

1. Promoter, underwriter, voting trustee, director, officer or in any capacity equivalent to that of a member

of management or an employee of the entity; or

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2. Trustee for a pension or profit sharing trust of the entity.

(4) The restriction found in subsection (3)(a)4 of this section shall not apply to the following loans

obtained from a financial institution prior to January 1, 1992, which are current as to all terms of the loan,

were made under normal lending procedures, terms and requirements, and have not been renegotiated:

(a) Loans obtained by a licensee or his firm which are not material in relation to the net worth of the

borrower;

(b) Home mortgages; and

Section 3. Integrity and Objectivity. A licensee engaged in the practice of public accounting shall

maintain objectivity, integrity, and be free of conflicts of interest. The licensee shall not subordinate his

judgment to others.

Section 4. Competence. A licensee or a firm engaged in the practice of public accounting shall:

(1) Perform, or offer to perform, only those professional services that he or his firm may reasonably

expect to complete with professional competence;

(2) Exercise due professional care in the performance of professional services;

(3) Adequately plan and supervise the performance of professional services; and

(4) Obtain sufficient relevant data to afford a reasonable basis for conclusions or recommendations in

relation to any professional services performed.

Section 5. Standards of Practice. When performing an audit, review, compilation, or any other

professional service within the practice of public accounting, the licensee and his firm shall comply with

the following appropriate practice standards and all revisions promulgated after these dates:

(1) Generally accepted auditing standards (GAAS) as reflected in the following documents:

(a) "AICPA Professional Standards", Volume 1, U.S. Auditing Standards, Section AU, as of June 1, 2001;

(b) Government Auditing Standards, "Yellow Book", General Accounting Office, 1994 revision;

General Accounting Office, April, 1991; and

(2) Other applicable standards:

(a) "AICPA Professional Standards", Volume 1, Attestation Engagements, Section AT, as of June 1,

2001;

(b) "AICPA Professional Standards", Volume 2, Accounting and Review Services, Section AR, as of June

1, 2001;

(d) "AICPA Professional Standards", Volume 2, Tax Practice, Section TX, as of June 1, 2001;

(e) "AICPA Professional Standards", Volume 2, Quality Control, Section QC, as of June 1, 2001; or

(f) "AICPA Professional Standards", Volume 2, Personal Financial Planning, Section PFP, as of June 1,

2001.

Section 6. Accounting Principles. (1) A licensee who is aware that the financial statement or financial

data of any entity contains a departure from GAAP that has a material effect on the financial statement or

financial data taken as a whole shall not:

(a) Express an opinion or state affirmatively that the financial statement or financial data are presented in

conformity with GAAP or another comprehensive basis of accounting; or

(b) State that he is unaware of any material modifications that should be made to the statements in order

for them to be in conformity with GAAP.

(2) Notwithstanding subsection (1) of this section, financial statements may depart from GAAP, if the

licensee:

(a) Demonstrates that due to unusual circumstances the financial statements or data would otherwise

have been misleading;

(b) Describes the departure;

(d) Explains the reasons why compliance with GAAP would result in a misleading statement.

(3) GAAP is established by principles, practices, or guidance provided in statements, interpretations,

bulletins, guides, and other documents identified in "AICPA Professional Standards", Volume 1, U.S.

Auditing Standards, Section AU 411, as of June 1, 2001.

Section 7. Confidential Client Information. A licensee shall comply with the requirements of KRS

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325.440 relating to the disclosure of confidential client information.

Section 8. Client Records. (1) A licensee shall comply with the requirements of KRS 325.420 relating

to the ownership of accountant's working papers - client records.

(2) The licensee shall not have a lien on these accounting or other records.

Section 9. Advertising and Other Forms of Solicitation. A licensee shall not seek to obtain clients

by:

(1) Advertising or other forms of solicitation that are false, misleading, or deceptive; or

(2) The use of coercion, overreaching or harassing conduct.

Section 10. Commissions. (1) A licensee shall not recommend or refer to a client any product or

service in exchange for a commission, recommend any product or service to be supplied by his client to a

third party, or receive a commission when the licensee or the licensee's firm also performs for that client:

(a) An audit or review of a financial statement;

(b) A compilation of a financial statement when the licensee expects or reasonably might expect that a

third party will use the financial statement and the licensee's report does not disclose a lack of

independence; or

(2) The prohibition of subsection (1) of this section applies during the period in which the licensee is

engaged to perform any of the services listed in subsection (1)(a), (b), and (c) of this section and the

period covered by any historical financial statements involved in the listed services.

(3) A licensee who is not prohibited from receiving a commission and who is paid or expects to be paid a

commission shall disclose that fact in writing to any person or entity to whom the licensee recommends or

refers a product or service to which the commission relates.

(4) A licensee who accepts a fee for recommending or referring any service of another licensee to any

person or entity or who pays a fee to obtain a client shall disclose the receipt or payment of the fee to the

client.

(5) This rule shall not prohibit:

(a) Payments for the purchase of an accounting practice; or

(b) Retirement payments to individuals, and their heirs or estates, who were formerly engaged in the

practice of public accounting.

Section 11. Contingent Fees. (1) A licensee shall not accept or perform any public accounting

services for a contingent fee or receive a contingent fee from a client for whom the licensee or the

licensee's firm performs:

(a) An audit;

(b) A review;

third party will use the financial statement and the licensee's report does not disclose a lack of

independence; or

(d) An examination of prospective financial information.

(2) The prohibition of subsection (1) of this section applies during the period of time in which the licensee

is engaged to perform those services and the period covered by any historical financial statements

involved in those services.

(3) A licensee in public practice shall not prepare for a contingent fee:

(a) An original or amended tax return or claim for a tax refund. Preparation of an original or amended tax

return or claim for tax refund includes giving advice on events which have occurred at the time the advice

is given if that advice is directly relevant to determining the existence, character, or amount of a schedule,

entry, or other portion of a return or claim for refund; or

(b) An amended federal or state income tax return for a client claiming a refund of taxes because a

deduction was inadvertently omitted from the return originally filed when there is no question as to the

propriety of the deduction, rather the claim is filed to correct an omission.

(4) The following are examples of circumstances where a contingent fee would be permitted regardless of

whether the licensee or licensee's firm is performing the services specified in subsection (1) of this

section:

(a) Representing a client in an examination by a revenue agent of the client's federal or state income tax

return;

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(b) Filing an amended federal or state income tax return claiming a tax refund based on a tax issue that

is either the subject of a test case by a different taxpayer or with respect to which the taxing authority is

developing a position;

amount greater than the threshold for review by the Joint Committee on Internal Revenue Taxation

($1,000,000 at March, 1991) or state taxing authority;

(d) Requesting a refund of either overpayments of interest or penalties charged to a client's account or

deposits of taxes improperly accounted for by the federal or state taxing authority in circumstances where

the taxing authority has established procedures for the substantive review of such refund requests;

(e) Requesting, by means of protest or similar document, consideration by the state or local taxing

authority of a reduction in the assessed value of property under an established taxing authority review

process for hearing all taxpayer arguments relating to assessed value; or

(f) Representing a client to obtain a private letter ruling or influencing the drafting of an administrative

regulation or statute.

(5) Fees shall not be considered as contingent:

(a) If fixed by courts or other public authorities; or

(b) In tax matters if determined based on the results of judicial proceedings or the findings of

governmental agencies. A fee is considered determined based on the findings of governmental agencies,

if the licensee can demonstrate a reasonable expectation at the time of the fee arrangement, of

substantive consideration by an agency with respect to the licensee's client. The expectation is deemed

not reasonable in the case of preparation of original tax returns.

(6) Fees may vary depending on the complexity of services rendered.

Section 12. Incorporation by Reference. (1) The following material is incorporated by reference:

(a) "AICPA Professional Standards", Volume 1, U.S. Auditing Standards, Section AU, as of June 1, 2001;

(b) Government Auditing Standards, "Yellow Book", General Accounting Office, 1994 revision;

General Accounting Office, April, 1991;

(d) "AICPA Professional Standards", Volume 1, Attestation Engagements, Section AT, as of June 1,

2001;

(e) "AICPA Professional Standards", Volume 2, Accounting and Review Services, Section AR, as of June

1, 2001;

(f) "AICPA Professional Standards", Volume 2, Consulting Services, Section CS, as of June 1, 2001;

(g) "AICPA Professional Standards", Volume 2, Tax Practice, Section TX, as of June 1, 2001;

(h) "AICPA Professional Standards", Volume 2, Quality Control, Section QC, as of June 1, 2001;

(i) "AICPA Professional Standards", Volume 2, Personal Financial Planning, Section PFP, as of June 1,

2001; and

(j) "GAAP" as established in "AICPA Professional Standards", Volume 1, U.S. Auditing Standards,

Section AU 411, as of June 1, 2001.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the State

Board of Accountancy, 332 W. Broadway, Suite 310, Louisville, Kentucky 40202, Monday through Friday,

8:30 a.m. to 4:30 p.m.

History - (20 Ky.R. 668; eff. 10-8-93; Am. 21 Ky.R. 3061; 22 Ky.R. 275; eff. 8-10-95; 24 Ky.R. 2406; eff. 7-13-98; 28 Ky.R. 1674;

2190; eff. 4-15-2002.)