16.60.5 NMAC

TITLE 16 OCCUPATIONAL AND PROFESSIONAL LICENSING

CHAPTER 60 PUBLIC ACCOUNTANTS

PART 5 CODE OF PROFESSIONAL CONDUCT

16.60.5.1 ISSUING AGENCY: State of New Mexico Public Accountancy Board.

[16.60.5.1 NMAC - Rp 16 NMAC 60.7.1, 02-14-2002]

16.60.5.2 SCOPE: This part applies to the code of professional conduct as promulgated under the authority granted by applicable New Mexico statutes, which delegates to the State of New Mexico Public Accountancy Board the power and duty to prescribe rules of professional conduct for establishing and maintaining high standards of competence and integrity in the profession of public accountancy.

[16.60.5.2 NMAC - Rp 16 NMAC 60.7.2, 02-14-2002]

16.60.5.3 STATUTORY AUTHORITY: Public Accountancy Act, Sections 61-28B-1 to 61-28B-29 NMSA 1978.

[16.60.5.3 NMAC - Rp 16 NMAC 60.7.3, 02-14-2002]

16.60.5.4 DURATION: Permanent.

[16.60.5.4 NMAC - Rp 16 NMAC 60.7.4, 02-14-02]

16.60.5.5 EFFECTIVE DATE: February 14, 2002, unless a later date is cited at the end of a section.

[16.60.5.5 NMAC - Rp 16 NMAC 60.7.5, 02-14-2002]

16.60.5.6 OBJECTIVE: The code of professional conduct prescribes the obligation that persons engaged in the practice of public accountancy have to their clients and to the public to maintain independence of thought and action; to strive continuously to improve one’s thought and action; to strive continuously to improve one’s professional skills; to observe, where applicable, generally accepted accounting principles and generally accepted auditing standards; to promote sound and informative financial reporting; to hold the affairs of clients in confidence; to uphold the standards of the public accountancy profession; and to maintain high standards of personal conduct in all matters affecting one’s fitness to practice public accountancy.

[16.60.5.6 NMAC - Rp 16 NMAC 60.7.6, 2-14-2002]

16.60.5.7 DEFINITIONS: [RESERVED]

[16.60.5.7 NMAC - Rp 16NMAC 60.7.7, 02-14-2002]

16.60.5.8 DUTY TO ABIDE BY CODE OF PROFESSIONAL CONDUCT:

A. In addition to its own rules of conduct, the board adopts the American institute of certified public accountants’ (AICPA) professional standards: code of professional conduct. All certified public accountants and registered public accountants holding a current certificate and all holders of firm permits shall comply with the board’s rules of conduct and the AICPA code of professional conduct or any successor code of professional conduct promulgated by AICPA in meeting and maintaining their responsibilities and requirements of ethical and professional conduct in the practice of public accountancy. This code of professional conduct is on file and available for review at the offices of the board and is available from AICPA.

B. By accepting licensure to engage in the practice of public accountancy or to use titles which imply a particular competence so to engage, the licensee also accepts the obligations of the profession and the duty to abide by the board’s rules of conduct and the AICPA code of professional conduct.

C. Any departure from either the rules of conduct or the code of conduct must be justified, and individuals who do not adhere to them may be subject to board disciplinary action.

[16.60.5.8 NMAC - Rp 16 NMAC 60.7.6, 02-14-2002]

16.60.5.9 BOARD DISCIPLINARY ACTION:

A. Any licensee whose certificate or firm permit issued by the board is subsequently suspended or revoked shall promptly return such certificate/license to be board.

B. Decisions by the board following hearings under the Uniform Licensing Act and the Public Accountancy Act will, if a charge is sustained, be made public.

(1) Decisions that do not sustain a charge or are subject to agreement in lieu of a hearing may be made public at the board’s discretion.

(2) A list of all individuals whose licenses have been suspended or revoked will be published on quarterly basis in a newspaper of general circulation as well as in the newspaper of circulation closest to the individual’s place of business.

[16.60.5.9 NMAC - N, 02-14-2002; A, 01-15-2004]

16.60.5.10 BOARD AUTHORITY TO REVIEW DOCUMENTS: The board may solicit and receive publicly available reports and related financial statements from clients, public agencies, banks, and other users of financial statements of certificate holders/licensees and firm-permit holders and individuals with privileges under the act on a general and random basis without regard to whether an application for renewal of the particular licensee is then pending or whether there is any formal complaint or suspicion of impropriety on the part of any particular licensee or individual. The board may review such reports and otherwise proceed with respect to the results of any such review under provisions, authorities, and remedies of the act.

[16.60.5.10 NMAC - N, 02-14-2002]

16.60.5.11 RULES OF CONDUCT: In addition to abiding by the AICPA code of professional conduct, New Mexico CPA/RPA certificate/license holders shall abide by the following board rules:

A. Rule 901 - Responses to board communications. An individual certificate/license or firm permit holder shall, when requested, substantively respond in writing to any communications from the board requesting a response within 30 days of the mailing of such communications by registered or certified mail to the last address furnished the board by the applicant, certificate or registration holder.

(1) Failure to respond substantively to written board communications or failure to furnish requested documentation and/or working papers constitutes conduct indicating lack of fitness to serve the public as a professional accountant.

(2) Each applicant, certificate or firm permit holder and each person required to be registered with the board under the act shall notify the board, in writing, of any and all changes in such person's mailing address and the effective date thereof within 30 days before or after such effective date.

B. Rule 902 - Reportable events.

(1) A licensee shall report in writing to the board the occurrence of any of the following events within 30 days of the date the licensee had knowledge of these events:

(a) conviction or imposition of deferred adjudication of the licensee of any of the following: felony or any crime of which fraud or dishonesty is an element; and any crime related to the qualifications, functions, or duties of a RPA or CPA or to acts or activities in the course and scope of the practice of public accountancy or as a fiduciary;

(b) the cancellation, revocation, or suspension of a certificate; other authority to practice or refusal to renew a certificate or other authority to practice as a RPA or CPA by any state, foreign country or other jurisdiction; or

(c) the cancellation, revocation or suspension of the right to practice as a CPA or RPA before any governmental body, agency or other licensing agency.

(2) The required report shall be signed by the licensee and shall set forth the facts which constitute the reportable event. If the reportable event involves the action of an administrative agency or court, then the report shall set forth the title of the matter, court or agency name, docket number, and dates of occurrence of the reportable event. As used in this rule, a conviction includes the initial plea, verdict, or finding of guilt, plea of no contest, or pronouncement of sentence by a trial court even though that conviction may not be final or sentence may not actually imposed until all appeals are exhausted. Nothing in this rule imposes a duty upon any licensee to report to the board the occurrence of any events set forth either by or against any other licensee.

C. Rule 903 - Frivolous complaints. An individual certificate/license or firm permit holder who, in writing to the board, accuses another certificate/license or firm permit holder of violating the act or board rules shall assist the board in any investigation and/or prosecution resulting from the written accusation. Failure to do so, such as not appearing to testify at a hearing or to produce requested documents necessary to the investigation or prosecution, without good cause, is a violation of this rule.

D. Rule 904 - Compliance with the Parental Responsibility Act. If an applicant for a certificate/license or a CPA or RPA certificate/license or firm permit holder is identified by the state of New Mexico human services department (HSD) as not in compliance with a judgment and order for support, the board or its legally authorized designee shall: deny an application for a license; deny the renewal of a license; have grounds for suspension or revocation of a license; and shall initiate a notice of contemplated action under provisions of the Uniform Licensing Act.

(1) If an applicant or licensee disagrees with the determination of non-compliance, or wishes to come into compliance, the applicant or licensee should contact the HSD child support enforcement division. An applicant or licensee can provide the board with a subsequent statement of compliance, which shall preclude the board from taking any action based solely on the prior statement of non-compliance from HSD.

(2) When a disciplinary action is taken under this section solely because the applicant or licensee is not in compliance with a judgment and order for support, the order shall state that the application or license shall be reinstated upon presentation of a subsequent statement of compliance. The board may also include any other conditions necessary to comply with board requirements for reapplications or reinstatement of lapsed licenses.

E. Rule 905 - Specialty designations. A CPA/RPA certificate/license holder may only represent a claim of special expertise through the use of "specialty designations" in conjunction with the CPA/RPA designation if the specialty designation is:

(1) consistent with designations prescribed by national or regional accreditation bodies offering the designations pursuant to a prescribed course of study, experience, or examination, and

(2) cannot be construed by the public or clients of the CPA/RPA practitioner to be a false fraudulent, misleading, or deceptive claim unsubstantiated by fact.

[16.60.5.11 - Rp 16 NMAC 60.7, 16 NMAC 60.9, and 16 NMAC 60.10, 02-14-2002; A, 06-30-2008; A, 01-01-2011]

16.60.5.12 CONFLICT OF INTEREST PROVISIONS:

A. A licensee shall not perform services for a client if the performance of such services will be directly or substantially adverse to another client unless:

(1) the licensee reasonably believes the performance of such services for one client will not adversely affect the relationship with the other client; and

(2) after consultation, each client consents in writing to allow the licensee to provide services to the other client.

B. Divorce proceedings, business dissolutions, and similar transactions are deemed to be directly or substantially adverse to a client.

C. A licensee shall not perform services for a client if the licensee’s ability to perform such services may be materially limited by his responsibilities to another client or a third person or by his own interests unless:

(1) the licensee reasonably believes the performance of services will not adversely affect the relationship with the client;

(2) the relationship is disclosed to the client; and

(3) the client consents in writing after consultation.

D. A licensee shall not enter into a business transaction with a client for services other than public accountancy or knowingly acquire an ownership, security or other pecuniary interest adverse to a client unless:

(1) the transaction and terms on which the licensee acquires the interest are fair and reasonable to the client;

(2) the terms are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client;

(3) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and

(4) the client consents in writing thereto.

E. A licensee shall not use information relating to the performance of services for a client to the disadvantage of the client.

F. A licensee who performs services for two or more clients involved in a dispute shall not participate in making an aggregate settlement of the claims of or against the clients unless each client consents in writing after consultation. Consultation shall include disclosure of the existence and nature of all the claims or pleas involved and of the participation of each party involved in the settlement.

[16.60.5.12 NMAC - N, 05-15-2006; A, 1-1-2007]

HISTORY OF 16.60.5 NMAC:

Pre-NMAC History: Material in the part was derived from that previously filed with the Commission of Public Records-State Records Center and Archives;

BPA 84-1, Code of Professional Conduct, filed 07-09-84.

BPA 95-1, Board; Powers and Duties, filed 04-21-95.

History of Repealed Material:

16 NMAC 60.7, Code of Professional Conduct, filed 09-27-95; 16 NMAC 60.9, Specialty Designations, filed 09-27-95; and 16 NMAC 60.10, Parental Responsibility Act, filed 09-27-95, repealed effective 02-14-2002.

Other History: