Florida Regulations 61H1-26.002: Minimum Capitalization or Adequate Public Liability Insurance for Florida Firms with the Exception of a Sole Proprietorship
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A Florida firm, with the exception of a sole proprietorship, 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 to a maximum of $2,000,000 or
(2) It has an irrevocable letter of credit of at least equal to $50,000 per shareholder, officer, member, or partner and any Florida licensed certified public accountant to a maximum of $2,000,000, 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 firm, its owners, or any entity affiliated with the Florida 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 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 Chapters 621, 608, and 620, F.S. (2009).
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 ____, 20___.
Terms Used In Florida Regulations 61H1-26.002
- Allegation: something that someone says happened.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fraud: Intentional deception resulting in injury to another.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
(2) It has an irrevocable letter of credit of at least equal to $50,000 per shareholder, officer, member, or partner and any Florida licensed certified public accountant to a maximum of $2,000,000, 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 firm, its owners, or any entity affiliated with the Florida 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 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 Chapters 621, 608, and 620, F.S. (2009).
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 ____, 20___.