Ohio § 4701.04

§ 4701.04.

(A) No public accounting firm located in this state shall engage in the practice of public

accounting in this state unless it registers with the accountancy board and pays a

registration fee set by the board. (B) Public accounting firms shall apply for initial registration within ninety days after

formation or within ninety days after the commencement of practicing public accounting

in this state.  All public accounting firms shall renew their registration triennially.  All public accounting firms shall submit with their initial and renewal registration

applications all of the following: (1) A list of the names, addresses, and certificate or registration numbers of all individuals

who hold an Ohio permit and who own an equity interest or shares in the public accounting

firm or are employed by the public accounting firm; (2) A list of the names and addresses of each person who does not hold an Ohio permit

or a foreign certificate and who owns an equity interest or shares in the public

accounting firm if the person's principal place of business is located in this state; (3) A statement that the public accounting firm and each person who owns an equity interest

or shares in the public accounting firm or is employed by the public accounting firm

and who does not hold an Ohio permit or a foreign certificate is in compliance with

divisions (C) and (D) of this section. (C) A public accounting firm shall satisfy all of the following requirements in order

to register: (1) Except as provided in division (C)(7) of this section, more than fifty per cent

of the total equity interest or shares in the public accounting firm shall be owned

by individuals who hold an Ohio permit or a foreign certificate. (2) If a public accounting firm has a board of directors, more than fifty per cent of

the directors shall hold an Ohio permit or a foreign certificate. (3) If a public accounting firm has an employee stock ownership plan, more than fifty

per cent of the trustees of the employee stock ownership plan shall hold an Ohio permit

or a foreign certificate. (4) The public accounting firm shall designate an individual who holds an Ohio permit

who shall be responsible for the proper registration of the firm.  The public accounting firm shall identify this individual to the board. (5) Each individual in a public accounting firm who signs any attest report issued from

an office of the public accounting firm located in this state shall hold an Ohio permit. (6) An individual who owns an equity interest or shares in the public accounting firm

or is employed by the public accounting firm and who holds an Ohio permit or a foreign

certificate, or a qualified firm that owns an equity interest or shares in the public

accounting firm, shall assume ultimate responsibility for any attest report issued

from an office of the public accounting firm located in this state. (7) Any person who does not hold an Ohio permit or a foreign certificate and who holds

an equity interest or shares in the public accounting firm shall satisfy the conditions

set forth in division (D) of this section. (8) The public accounting firm shall provide for the transfer of the equity interest

or shares owned by persons who do not hold an Ohio permit or a foreign certificate

to either the public accounting firm or to another person who owns an equity interest

or shares in the firm if a person who does not hold an Ohio permit or a foreign certificate

withdraws from or ceases to be employed by the public accounting firm.  The public accounting firm may make payments in connection with the person's withdrawal

from the firm to that person or, if that person is deceased or dissolved, to the person's

estate or successor in interest. (D) A person who does not hold an Ohio permit or a foreign certificate may own an equity

interest or shares in a public accounting firm if all of the following conditions

are met: (1) All of the individuals who hold an Ohio permit or a foreign certificate and who own

equity interests or shares in the public accounting firm, and qualified firms that

own equity interests or shares in the public accounting firm, own, in the aggregate,

a majority of the equity interests or shares in the public accounting firm and control

the public accounting firm. (2) The person does not assume or use any titles or designations specified in division (A) of section 4701.14 of the Revised Code .  The person may designate or refer to the person as a shareholder, partner, member,

principal, owner, or officer of the public accounting firm and also may use any other

title that the board authorizes by rule. (3) The person is not in violation of any standard regarding the character or conduct

of that person that the board establishes by rule. (4) The person's participation in the business of the public accounting firm is the person's

principal occupation and consists of providing services to or on behalf of the public

accounting firm, and the person is not functioning solely or predominately as a passive

investor in the public accounting firm. (5) The person meets or exceeds the continuing education requirements that the board

establishes by rule. (6) A person who holds a professional license, registration, or certification issued

by this state or another state complies with the requirements of that license, registration,

or certification. (7) The person abides by the code of conduct of the American institute of certified public

accountants or a comparable code of professional conduct that the board adopts by

rule. (8) The person complies with all applicable provisions of this chapter and the rules

adopted by the board. (E) A person who owns a voting equity interest or shares in a public accounting firm

may not delegate, by proxy or otherwise, the duty to exercise any voting rights to

a person that does not hold an Ohio permit or a foreign certificate or to a person

that is not a qualified firm. (F) As a condition for initial or renewal registration of a public accounting firm on

and after January 1, 1993, the board, by rule, shall require that each public accounting

firm undergo a peer review to determine the public accounting firm's degree of compliance

in the practice of public accounting with generally accepted accounting principles,

generally accepted auditing standards, and other generally accepted technical standards

as defined by the board in rule, unless the public accounting firm meets one of the

exceptions in division (J) of this section. (G) The board shall adopt rules establishing guidelines for peer reviews, and may authorize

an agent to administer all or part of the board's peer review program and to assess

a reasonable fee to firms to cover the costs incurred by the agent for program administration.  The rules shall do all of the following: (1) Designate a peer review committee consisting of accounting professionals to serve

as advisors to the board and to ensure that the board's guidelines are followed. (2) Require that the peer review be conducted by a reviewer that is both independent

of the public accounting firm reviewed and qualified pursuant to board rules; (3) Require that the standards and practices applied by the reviewer be at least as stringent

as those applied by the American institute of certified public accountants; (4) Prohibit the use or disclosure of information obtained by members of the board or

a committee of peer reviewers during or in connection with the peer review process

for purposes other than those related to determining the degree of compliance by the

public accounting firm with generally accepted accounting principles, generally accepted

auditing standards, and other generally accepted technical standards as defined by

the board in rule.  Division (G)(4) of this section does not apply to the use or disclosure of information

that is described in division (K)(3) of this section or that is necessary to comply

with any provision of law. (H)(1) If a peer review report indicates that a public accounting firm does not comply with

standards and practices set forth in the rules adopted by the board, the board, in

its discretion, may review the results of the peer review report.  If the board, or its authorized peer review program administrator, determines that

the public accounting firm does not comply with the standards and practices, it may

require both of the following: (a) Remedial action, which may include any of the following: (i) Requiring employees of the public accounting firm to complete general or specific

continuing professional education courses; (ii) Requiring the public accounting firm to undergo peer review more frequently than

triennially and peer review that is conducted in whole or part under the direct supervision

of the board or its designee; (iii) Any other remedial action specified by the board. (b) An affidavit and supporting documentation from the public accounting firm submitted

within the time specified by the board indicating completion of required remedial

actions. (2) If the board, or its authorized peer review program administrator, determines that

a public accounting firm has not complied with any requirement ordered under division

(H) of this section, or if the board determines, after the review of a peer review

report, that the public accounting firm has a history of noncompliance with standards

and practices set forth in board rules, the board may hold a hearing to determine

the extent of the firm's noncompliance.  If the board, after conducting the hearing, determines that the public accounting

firm does not comply with appropriate standards and practices, the board may issue

an order that imposes any disciplinary measure set forth in division (B) of section 4701.16 of the Revised Code . (3) Notwithstanding divisions (K)(1) and (2) of this section, all matters relating to

the procedures for determining compliance with the standards and practices under division

(H)(2) of this section are subject to Chapter 119. of the Revised Code, including

the notice and conduct of any hearing and the issuance and appeal of any order.  Remedial orders made under division (H)(1) of this section are not subject to Chapter

119. of the Revised Code. (I) The public accounting firm reviewed shall pay for any peer review performed. (J) The board may exempt a public accounting firm from the requirement to undergo a peer

review if the public accounting firm submits to the board a written and notarized

statement that the public accounting firm meets at least one of the following grounds

for exemption identified in the statement: (1) Within three years of the date of application for initial or renewal registration,

the public accounting firm has completed a peer review acceptable to the board and

conducted pursuant to standards not less stringent than the peer review standards

promulgated by the American institute of certified public accountants.  A peer review that does not comply with standards and practices set forth in the

rules adopted by the board and that may subject a public accounting firm to remedial

or disciplinary action pursuant to division (H) of this section, does not qualify

as an acceptable peer review.  The public accounting firm shall submit to the board a copy of the results of the

peer review and any additional documentation required by the board.  The board shall not require submittal of the working papers related to the peer

review process. (2) Within three years of the date of application for initial or renewal registration,

the public accounting firm has completed a peer review acceptable to the board that

was conducted in another state or foreign country.  The public accounting firm shall submit to the board a copy of the results of the

peer review and any additional documentation required by the board, including a detailed

report of the procedures and standards applied by the reviewer. (3) The public accounting firm has never practiced public accounting in this state or

any other state or foreign country, will complete a peer review acceptable to the

board within eighteen months of initial registration, and will review its registration

with the board two years after initial registration as specified in rules the board

adopts. (4) The public accounting firm, on a schedule as required by rule adopted by the board,

submits a report to the board that states all of the following: (a) The public accounting firm does not undertake any engagement that will result in

the issuance of an attest report or other engagement that is subject to peer review

in accordance with division (F) of this section. (b) The public accounting firm agrees to notify the board within ninety days after accepting

any engagement that will result in the issuance of any attest report or other engagement

that is subject to peer review in accordance with division (F) of this section and

will complete a peer review acceptable to the board within one year after the acceptance

of an engagement of that nature. (5) Subject to the board's approval and for good cause as defined in rules the board

adopts, the public accounting firm is entitled to an exemption. (K) In any civil action, arbitration, or administrative proceeding involving a public

accounting firm, all of the following shall apply: (1) The proceedings, records, and work papers of any reviewer, including board members

and review committee members, involved in the peer review process are privileged and

not subject to discovery, subpoena, or other means of legal process and may not be

introduced into evidence. (2) No reviewer, including board members and review committee members, involved in the

peer review process shall be permitted or required to testify as to any matters produced,

presented, disclosed, or discussed during or in connection with the peer review process

or shall be required to testify to any finding, recommendation, evaluation, opinion,

or other actions of those committees or their members. (3) No privilege exists under this section for either of the following: (a) Information presented or considered in the peer review process that was otherwise

available to the public; (b) Materials prepared in connection with a particular engagement merely because they

subsequently are presented or considered as part of the peer review process. (L)(1) If a peer review report indicates that a public accounting firm complies with standards

and practices set forth in rules adopted by the board, the board shall destroy all

documents and reports related to the peer review within thirty days after the board

completes its review of the report. (2) If a peer review report indicates that a public accounting firm does not comply with

those standards and practices set forth in rules adopted by the board, the board shall

retain all documents and reports related to the peer review until completion of the

next peer review that complies with standards and practices set forth in rules adopted

by the board pursuant to division (G) of this section.  The board also may use these documents to determine a history of noncompliance with

standards and practices in any proceeding held under division (H)(2) of this section.