61H1-26.002: Minimum Capitalization or Adequate Public Liability Insurance for Public Accounting Corporations, Limited Liability Companies (LLCs) and Partnerships (LLPs)
PURPOSE AND EFFECT: The Board proposes the rule amendment in order to clarify language concerning the certified public accountant and Florida CPA firms.
SUBJECT AREA TO BE ADDRESSED: Minimum Capitalization or Adequate Public Liability Insurance for Florida Firms with the Exception of a Sole Proprietorship.
SPECIFIC AUTHORITY: 473.304, 473.309 FS.
LAW IMPLEMENTED: 473.309 FS.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE NOTICED IN THE NEXT AVAILABLE FLORIDA ADMINISTRATIVE WEEKLY.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Veloria Kelly, Division Director, Board of Accountancy, 240 N.W. 76th Dr., Suite A, Gainesville, Florida 32607
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
61H1-26.002 Minimum Capitalization or Adequate Public Liability Insurance for Public Accounting Corporations, Limited Liability Companies (LLCs) and Partnerships (LLPs) Florida Firms with the Exception of a Sole Proprietorship.
A Florida firm, with the exception of a sole proprietorship, public accounting corporation, LLC, or LLP shall not engage in the practice of public accounting in this state unless:
(1) Assets in excess of liabilities and professional liability insurance combined are at least equal to $50,000 per shareholder, officer, member, or partner and any Florida licensed certified public accountant CPA to a maximum of $2,000,000 or
(2) It has an irrevocable letter of credit which meets the following criteria:
(a) The responsibility for repayment of any sums disbursed under the letter of credit is not an obligation of the Florida CPA firm, its owners, or any entity affiliated with the Florida CPA firm;
(b) The letter of credit contains an “evergreen clause,” which automatically renews the letter of credit unless the issuer of the letter of credit notifies the Florida CPA firm and the Board within sixty (60) days of the decision not to renew; and
(c) The letter of credit is issued by a financial institution authorized to do so under applicable state or federal banking laws; or
(3) The corporation, each shareholder, and each officer who has authority over the practice of public accountancy, the LLC or the limited liability company and each member of the LLC, or the LLP and each partner have executed the waiver of limitation on liability approved by the Board which must be set forth as follows:
WAIVER ON LIMITATION
OF LIABILITY
The shareholders, officers, members, or partners of ______ (Name of Firm), do jointly and severally convenant and agree that they will pay any award or judgment arising out of any claim the basis of which is grounded upon an allegation of negligence, incompetence, misconduct, fraud or deceit in the firm’s or its owners’, officers’, members’, or employees’ practice of public accounting as soon as the same shall become payable regardless of any limitation on liability provided by Chapter 621 and Chapter 608, and Chapter 620, F.S. (2009 1985).
Unless executed by a partnership and its partners, the members intend this agreement as a mutual covenant of assumption and not as a partnership, but should any court of competent jurisdiction construe same to be a partnership then it is the intention of the parties that such partnership be limited in scope to the uses for which this contract is executed and no other.
Any individual who, subsequent to the date of this instrument, becomes a shareholder, officer, member, or partner in _______ (Name of Firm), shall immediately become a party to this waiver and be bound to the conditions thereof. Said shareholder, officer, member, or partner shall execute an amended Waiver on Limitation of Liability which shall become a part of the original Waiver on Limitation of Liability.
We the undersigned shareholders, officers, members, or partners in ________ (Name of Firm), do hereunto set our hands and seals to certify our acceptance of the Waiver on Limitation of Liability dated this ____ day of ____, 2019__.
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(Signatures of all shareholders, officers, members, or partners)
(4) No change.
Rulemaking Specific Authority 473.304, 473.309 FS. Law Implemented 473.309 FS. History–New 12-4-79, Formerly 21A-26.02, Amended 10-20-86, Formerly 21A-26.002, Amended 11-30-93, 5-23-94, 6-10-96, 10-6-96, 12-30-97, 9-21-00,_________.