Chapter 4701-11 Ethics Standards

4701-11-01 Independence.

(A) An Ohio permit holder shall be independent in the performance of audits of public companies as required by applicable standards issued by the "Securities and Exchange Commission" and published on that agency's website (www.sec.gov).

(B) An Ohio permit holder shall be independent in the performance of professional services for government agencies and entities receiving significant federal financial assistance as required by applicable standards issued by the "Comptroller General of the United States" and published on the "Government Accountability Office" website (www.gao.gov).

(C) An Ohio permit holder shall be independent in the performance of professional services, excluding those referenced in paragraph (A) or (B) of this rule, as required by the "Code of Professional Conduct" issued by the "American Institute of Certified Public Accountants" and published on that organization's website (www.aicpa.org).

R.C. 119.032 review dates: 08/28/2013 and 08/28/2018
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 1/17/75, 9/19/94, 8/5/99, 10/22/04, 9/14/12

4701-11-02 Confidential client information.

(A) An Ohio permit holder shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of the client.

(B) This rule shall not be construed:

(1) To relieve an Ohio permit holder of the obligation to comply with Chapter 4701-9 of the Administrative Code,

(2) To affect in any way the compliance with a validly issued subpoena or summons enforceable by order of a court,

(3) To prohibit review of the professional practice of an Ohio permit holder as part of a peer review, or

(4) To preclude an Ohio permit holder from responding to any inquiry made by the professional ethics committee or trial board of a professional accounting organization of which the Ohio permit holder is a member, by a duly constituted investigative or disciplinary body of a state CPA society, or under state statutes.

(C) Members of the accountancy board, a professional accounting organization ethics committee or trial board described in paragraph (B)(4) of this rule, as well as professional practice reviewers, shall not disclose any confidential client information which comes to their attention in disciplinary proceedings or otherwise in carrying out their official responsibilities. However, this prohibition shall not restrict the exchange of information with an aforementioned duly constituted investigative or disciplinary body.

Effective: 04/28/2011
R.C. 119.032 review dates: 02/10/2011 and 04/28/2016
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 1/17/75, 9/22/93, 1/1/99, 8/5/99, 10/22/04

4701-11-03 Contingent fees.

(A) An Ohio permit holder or registered firm shall not:

(1) Practice public accounting for a contingent fee for, or receive such a fee from, a client for whom any of the following professional engagements are performed:

(a) An audit or review of a financial statement.

(b) A compilation of a financial statement when the Ohio permit holder expects, or reasonably might expect, that a third party may use the financial statement and if the Ohio permit holder's compilation report does not disclose a lack of independence.

(c) A report in accordance with the attestation standards defined in rule 4701-9-05 of the Administrative Code.

(2) Prepare an original or amended tax return or claim for a tax refund for a contingent fee.

(B) The prohibitions outlined in paragraph (A)(1) of this rule apply during the period in which the Ohio permit holder or the Ohio permit holder's registered firm is engaged to perform any of the services described in paragraph (A)(1)(a), (A)(1)(b), or (A)(1)(c) of this rule, as well as during any period covered by any historical financial statements associated with those services.

(C) A contingent fee is a fee established for the performance of any service pursuant to an 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 such service. However, an Ohio permit holder's fees may vary depending, for example, on the complexity of the services rendered.

(D) Fees are not regarded as being contingent if fixed by courts or other public authorities, or in tax matters if determined based on the results of judicial proceedings or the findings of governmental agencies.

Effective: 12/14/2012
R.C. 119.032 review dates: 09/25/2012 and 12/14/2017
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 1/17/75, 11/3/93, 8/5/99, 10/22/04

4701-11-04 Commissions and referral fees.

(A) An Ohio permit holder shall not, for a commission, recommend or refer to a client any product or service, nor shall the Ohio permit holder, for a commission, recommend or refer any product or service to be supplied by a client, nor shall the Ohio permit holder receive a commission when the Ohio permit holder or the Ohio permit holder's registered firm concurrently performs for that client any of the following professional services:

(1) An audit or review of a financial statement.

(2) A compilation of a financial statement when the Ohio permit holder expects, or reasonably might expect, that a third party may use the financial statement where the Ohio permit holder's compilation report does not disclose a lack of independence.

(3) An attestation engagement defined in rule 4701-9-05 of the Administrative Code.

(B) The prohibitions outlined in paragraph (A) of this rule apply during the period in which the Ohio permit holder is engaged to perform any of the services described in paragraph (A) of this rule as well as during any period covered by any historical financial statements involved with those services.

(C) An Ohio permit holder who is not prohibited by this rule from performing services for or receiving a commission from a client and who is paid or expects to be paid a commission by the client shall disclose that fact to any person or entity to whom the Ohio permit holder recommends or refers a product or service to which the commission relates.

(D) Any Ohio permit holder who accepts a referral fee for recommending or referring any services of an Ohio permit holder to any person or entity or who pays a referral fee to obtain a client shall disclose such acceptance or payment to the client.

(E) A commission is compensation for recommending or referring any product or service to be supplied by another person. A referral fee is compensation for recommending or referring any service of an Ohio permit holder to any person.

Effective: 04/28/2011
R.C. 119.032 review dates: 02/10/2011 and 04/28/2016
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 1/17/75, 11/3/93, 8/5/99, 10/22/04

4701-11-05 Form of practice and name.

(A) An Ohio permit holder may practice public accounting, whether as an owner or employee, only in the form of a sole proprietorship, a partnership, limited liability company, professional association, corporation, or other legal entity whose characteristics conform to the Revised Code and rules of the board.

(B) A firm name may not be used unless such name has been registered with the board.

(C) A misleading CPA firm name is one which:

(1) Contains any representation that would be likely to cause a reasonable person to misunderstand or be confused about the legal form of the firm, or about who are the owners or members of the firm, such as a reference to a type of organization or an abbreviation therof which does not accurately reflect the form under which the firm is organized, including, but not limited to the following:

(a) Implies the existence of a corporation when the firm is not a corporation such as through the use of the words "Corporation", "incorporated", "Ltd.", "professional corporation", or an abbreviation thereof as part of the firm name if the firm name is not incorporated or is not a professional corporation;

(b) Implies the existence of a partnership when there is not a partnership such as by use of the term "partnership" or "limited liability partnership" or the abbreviation "LLP" if the firm is not such an entity;

(c) Includes the name of an individual who is not a CPA if the title "CPAs" is included in the firm name;

(d) Includes information about or indicates an association wit persons who are not members of the firm, except as permitted pursuant to paragraph (D) of rule 4701-11-05 of the Administrative Code; or

(e) Includes the terms "& Company", "& Associate", or "Group", but the firm does not include, in addition to the named partner, shareholder, owner, member, or staff employee.

(2) Contains any representation that would be likely to cause a reasonable person to have a false or unjustified expectation of favorable results or capabilities, through the use of a false or unjustified statement of fact as to any material matter.

(3) Claims or implies the ability to influence a regulatory body or official;

(4) Includes the name of an owner whose license has been revoked for disciplinary reasons by the board, whereby the licensee has been prohibited from practicing public accountany or prohibited from using the title CPA or holding himself out as a certified public accountant.

(D) The following types of CPA Firm names are not in and of themselves misleading and are permissable so long as they do not violate the provisions of paragraph (C)(1)(a) of rule 4701-11-05 of the Administrative Code:

(1) A firm name that includes the names of one or more former or present owners;

(2) A firm name that excludes the names of one or more former or present owner;

(3) A firm name that uses the "CPA" title as part of the firm name when all named individuals are owners of the firm who hold such titles or are former owners who held such title at the time they ceased to be owners of the firm;

(4) A firm name that includes the name of a non-CPA owner if the "CPA" title is not a part of the firm name;

(E) A network firm as defined in the AICPA "Code of Professional Conduct" ("Code") in effect July 1, 2011 may use a common brand name or share common initials, as part of the firm name;

(F) A Network firm as defined in the AICPA "Code of Professional Conduct" ("Code") in effect July 1, 2011 may use the Network name as the firm's name, provided it also shares one or more of the following charactersitics with other firms in the network:

(1) Common control, as defined by generally accepted accounting principles in the United States, among the firms through ownership, management, or other means;

(2) Profits or costs, excluding costs operating the association, cossts of developing audit methodologies, manuals and training courses, and other costs that are immaterial to the firm;

(3) Common business strategy that involves ongoing collaboration amongst the firms whereby the firms are responsible for implementing the association's strategy and are held acountable for performance pursuant that strategy;

(4) Significant part of professional resources;

(5) Common quality control policies and procedures that participating firms are required to implement and that are monitored by the association.

Effective: 11/25/2013
R.C. 119.032 review dates: 08/28/2013 and 11/01/2018
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 1/1/75, 9/1/78, 9/19/94, 8/5/99, 10/22/04, 9/14/07

4701-11-06 Retention of client records.

(A) If a client makes a written request for records from a registered firm or Ohio permit holder, the registered firm or Ohio permit holder shall comply with the request within thirty days after receipt of the request. The thirty-day deadline may be extended by the board if the registered firm or Ohio permit holder requests an extension of time in accordance with paragraph (I) of this rule.

(B) A client's records are any accounting or other records belonging to the client that were provided to the registered firm or Ohio permit holder by or on behalf of the client, as well as records defined in paragraph (E) of this rule as client records.

(C) The workpapers of the registered firm or Ohio permit holder include, but are not limited to, the following:

(1) The registered firm's or Ohio permit holder's notes or memos regarding the engagement;

(2) Records kept by the registered firm or Ohio permit holder of procedures applied, tests performed, information obtained, and pertinent conclusions reached in the engagement;

(3) Analyses and schedules prepared by the client at the registered firm's or Ohio permit holder's request, and;

(4) Audit programs, audit analyses and memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries either prepared or obtained by the registered firm or Ohio permit holder.

(D) Workpapers may also be in the form of data stored on discs, tapes, films, or any media other than paper. Workpapers are considered to be the registered firm's or Ohio permit holder's property. In the event of a dispute between the registered firm or Ohio permit holder and the client concerning records, the board will determine whether or not a document may be classified either as a registered firm's or Ohio permit holder's workpaper, or as a client record.

(E) Workpapers may contain information that is not reflected in the client's books and records, with the result that the client's financial information is incomplete. These records are defined as client records, and may include but are not limited to:

(1) Adjusting, closing, combining or consolidating journal entries;

(2) Depreciation and amortization schedules, including tax carryforward information; and

(3) Information normally contained in books of original entry, as well as general ledgers and subsidiary ledgers.

(F) If the registered firm or Ohio permit holder has converted client information onto computer files for use with the registered firm's or Ohio permit holder's software and the registered firm or Ohio permit holder has not been paid for professional services rendered, then the registered firm or Ohio permit holder is under no obligation to provide the client with electronic files or a copy of any software. If the client has paid the registered firm or Ohio permit holder for professional services rendered, then the registered firm or Ohio permit holder must provide a copy of all relevant electronic data files to the client.

(G) If the registered firm or Ohio permit holder has provided the information described in paragraph (B) or (E) of this rule to the client, then the registered firm or Ohio permit holder need not comply with further client requests for the same information.

(H) The registered firm or Ohio permit holder may demand that agreed-upon fees be paid prior to providing any information described in paragraph (E) of this rule if there is an engagement letter or other documented understanding prepared prior to the engagement and communicated to the client that states the specific fee payment arrangements for providing such information.

(I) In the event of a dispute between the client and a registered firm or Ohio permit holder over the return of records described in paragraph (E) of this rule, the registered firm or Ohio permit holder may request an extension of the deadline specified in paragraph (A) of this rule in order to mediate the dispute. The request must be filed within thirty days of the date the records retention complaint is filed with the board. The mediation must be conducted before a mediator mutually agreeable to and selected by the parties, and must be completed within sixty days of the date the complaint is filed with the board. The mediator may be the executive director of the board or a designee if the parties agree. If either party is dissatisfied with the recommendations of the mediator, that party may request a hearing before the board.

R.C. 119.032 review dates: 02/07/2014 and 02/07/2019
Promulgated Under: 119.03
Statutory Authority: 4701.04
Rule Amplifies: 4701.04
Prior Effective Dates: 10/22/04, 07/31/2008

4701-11-07 Board communications.

(A) All official communications from the board are mailed to a person's last address of record as maintained by the board. If the mail is not returned to the board, the person will be considered by the board to have received such official communications, to be aware of the contents of such official communications, and to be responsible for any actions required of them by such official communications. If a person notifies the board in writing of a failure to receive the official communication, the board will resend the official communication to the person. The board will not extend any deadlines nor abate any penalties unless it feels appropriate circumstances exist.

(B) Any change in a person's name or address must be submitted to the board in writing.

(C) Official communications that require a response, unless otherwise specifically designated by the board, shall require a response within fifteen business days. A business day is defined as any day, Monday through Friday excluding state holidays, that the board office is open.

(D) The board will not be responsible for any delays in communications or in the filing of any other documents or fees submitted by or on behalf of a person which are caused by any third party, whether it be an individual or an organization.

(E) For purposes of this rule, "person" shall have the same meaning as in division (T) of section 4701.01 of the Revised Code.

Effective: 04/28/2011
R.C. 119.032 review dates: 02/10/2011 and 04/28/2016
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 4/27/92, 8/5/99, 10/22/04

4701-11-08 Incompatible occupations. [Rescinded].

Rescinded eff 10-22-04

4701-11-09 Acts discreditable.

(A) Section 4701.03 of the Revised Code provides that the board may promulgate rules consistent with the goal of maintaining a high standard of integrity and dignity in the accounting profession.

(B) This rule applies to acts by a person holding an Ohio permit, Ohio registration, CPA certificate, PA registration, or firm registration, by a person holding a foreign certificate whose activities are regulated by the board, or by an owner of a public accounting firm equity interest who does not hold an Ohio permit, Ohio registration, CPA certificate, PA registration, foreign certificate, or firm registration.

(C) The following acts by any person defined in paragraph (B) of this rule are determined by the board as conduct discreditable to the accounting profession as stated in division (A)(10) of section 4701.16 of the Revised Code:

(1) Using deceptive representations in connection with the performance of services.

(2) Representing that services are of a particular standard when they are not.

(3) Promoting one's professional services or registered firm in any manner which is inconsistent with upholding a high standard of integrity and dignity in the accounting profession, including, but not limited to:

(a) Misrepresenting facts or failing to disclose relevant facts.

(b) Creating false or unjustified expectation of favorable results.

(c) Implying abilities not supported by valid educational background, professional attainments, or licensing recognition.

(d) Implying the ability to influence improperly any court, tribunal or other public body or official.

(4) Engaging in any deceptive trade practice prohibited by law.

(5) Committing fraud or deceit in the act of verifying a CPA candidate's experience in accordance with paragraph (C) of rule 4701-7-05 of the Administrative Code, or making any false statement with respect to such verification.

(6) Holding out to the public that an accounting credential issued in a foreign country is in good standing if that credential has been suspended or revoked under the laws of the foreign country.

(7) Being convicted of a felony or any crime involving dishonesty or fraud under the laws of a foreign country.

(8) Failing to follow specialized professional engagement requirements of governmental bodies, commissions, or regulatory agencies.

(9) Assuming responsibility for, associating with, or preparing materially false and misleading financial statements, associated financial data, or accounting entries.

(10) Failing to file a tax return or failing to remit taxes collected on behalf of others in a timely manner.

(D) The acts by a certified public accountant or public accountant outlined in the provisions of paragraph (C) of this rule are not intended to limit the scope of division (A)(10) of section 4701.16 of the Revised Code with respect to investigations concerning alleged discreditable conduct.

Effective: 04/28/2011
R.C. 119.032 review dates: 02/10/2011 and 04/28/2016
Promulgated Under: 119.03
Statutory Authority: 4701.03
Rule Amplifies: 4701.03
Prior Effective Dates: 8/15/77, 7/19/90, 11/5/92, 12/13/94, 8/3/98, 8/5/99, 10/22/04

4701-11-10 Application of ethics rules to non-CPA owners.

(A) Pursuant to division (D)(8) of section 4701.04 of the Revised Code, a person who holds an equity interest in a public accounting firm, but does not hold an Ohio permit or a foreign certificate, shall be subject to either the "Code of Professional Conduct" issued by the "American Institute of Certified Public Accountants" and published on that organization's website (www.aicpa.org), or a comparable code of conduct applicable to the person's profession.

(B) The person described in paragraph (A) of this rule shall also be subject to the provisions of Chapter 4701-9 and Chapter 4701-11 of the Administrative Code as though the person held an Ohio permit or a foreign certificate.

Replaces: 4701-11-10

Effective: 04/28/2011
R.C. 119.032 review dates: 04/28/2016
Promulgated Under: 119.03
Statutory Authority: 4701.04
Rule Amplifies: 4701.04
Prior Effective Dates: 8/5/99, 10/22/04