With the high professional regulation in public accounting, you cannot operate in California without a valid professional license. It takes years of hard work and dedication to become a certified public accountant (CPA). These professionals perform huge responsibilities, including monitoring financial transactions. Many people rely on the accurate execution of your mandate as a CPA for the success of their businesses or organizations. A simple mistake in the profession can attract a lot of scrutiny and possibly jeopardize your license.
At San Luis Obispo License Attorney, we can help protect your livelihood and career when a complaint, formal allegation, or disciplinary action threatens your CPA license. Our professional license defense attorneys understand the sacrifices you have made to obtain the license and will work tirelessly for a favorable outcome.
California Board of Accountancy (CBA) Overview
The CBA is the regulatory entity that monitors the licensing, professional conduct, and potential disciplinary actions of CPAs. The agency issues various licenses, including:
- Accounting firm
- Certified public accountant
- Accounting corporation
- Accounting partnership
CPA licenses are issued to individual accountants who meet the requirements, while the other three licenses are issued to organizations with multiple accountants.
Apart from issuing licenses, CBA safeguards the public from dishonest public accountants who want to exploit their clients’ financial naivety. The agency’s focus is not to defend CPAs and accounting firms. Instead, its focus is on ensuring the public consumes quality and uncompromised accounting services. The CBA derives its mandate to protect the public from:
- The California Accountancy Act
- The Business and Professions Code (BPC)
- The California Code of Regulations
Other mandates of the CBA that are geared towards the protection of the public are:
- Ensures only persons with specific qualifications sit for the Uniform CPA test
- It certifies and renews licenses of accounting corporations, partnerships, firms, and CPAs
- It enlists accounting firms, corporations, and partnerships
- It enforces disciplinary measures against members who violate CBA regulations
- It oversees compliance with peer reviews and continuing education programs conditions
- It evaluates work programs for public accountants (PAs), CPAs, and accounting firms
The CBA achieves its mission by regulating the public accountancy practice. If you are accused of a violation, the regulatory entity assesses the complaint and conducts investigations when the claims are substantiated. When investigations show that you have engaged in a violation, they will take disciplinary action against your certificate or license, such as suspension, cancellation, or denial of your permit renewal application. The agency, through its Enforcement Advisory Committee (EAC):
- Receives complaints from the public
- Identifies claims that can be substantiated for further investigations
- Initiates investigations and administrative hearings
- Acquires evidence of the alleged misconduct
Valuable Roles of CPAs
CPAs play a crucial role in the financial success of a business or organization. Their roles include:
- They provide individuals with personal finance planning services, enabling better management of finances and retirement plans and helping achieve long-term financial objectives.
- CPAs help businesses evaluate their assets and liabilities, enabling them to make informed business decisions.
- CPAs perform forensic accounting, which involves investigating financial fraud to identify those involved and serve as expert witnesses in financial fraud cases.
- They offer financial consultancy services, like strategic business counsel, budget creation, budget review, and analysis of economic data. The consulting services help companies make informed decisions and achieve their financial objectives.
- They help individuals and companies to prepare and plan their taxes. Because they are up-to-date with the latest amendments in tax laws and policies, they guide clients to maximize tax savings and cut tax liabilities.
- CPAs promote the dependability and accuracy of financial reports and statements through audits.
A CPA is different from an accountant. Accountants are individuals who perform accounting tasks, regardless of their educational level. Nevertheless, a CPA is an individual with the education and training who meets all other qualifications set by the CBA. To be a CPA, you should undergo an accounting training program, amass the necessary experience, sit for, and pass the Uniform CPA exam. Once you meet these requirements, CBA issues you a license and confers on you the professional title of certified public accountant.
Unfortunately, despite all the requirements to earn this professional title, a trivial error can trigger an accusation, investigation, and in the worst-case scenario, license cancellation or withdrawal. Allegations in this profession are taken seriously because even a minor mistake can result in financial loss for a business or individual.
Common Violations that Trigger Disciplinary Action
The common violations or professional misconducts that attract the CBA’s disciplinary measures are:
- Offering services without a valid accounting permit
- Offering services outside the scope of your license
- Incompetence and ordinary or gross negligence
- Embezzling funds
- Participating in money laundering
- Committing financial fraud
- Bribery
- Misappropriation of funders
- Forgery
- Racketeering
- Adopting accounting practices that are not widely or generally accepted
- Aiding crimes, like tax evasion
- Having a criminal record or conviction with a substantial relationship to your accounting work, like insider trading, forgery, bribery, or misappropriation of funds.
Additionally, the regulatory entity can partner with the justice department to instigate criminal charges if their investigations reveal that the alleged misconduct constitutes a criminal act, such as tax evasion and other white-collar crimes. This means that apart from losing your professional license, you risk a criminal conviction and legal penalties.
Besides, when you are accused of negligence, you could attract a civil lawsuit on top of the CBA’s disciplinary measures. If found liable, you could be made to compensate the victim of the negligence for the financial losses incurred.
Thus, you should take every Complaint Notice or alleged claim with a lot of weight because it could affect not only your accounting career but also other aspects of your life. The appropriate action is to consult with a CPA license defense attorney. An attorney experienced in handling cases like yours understands the risks of your profession and works tirelessly to safeguard your livelihood and pride.
Criminal Charges and Their Effects on Your CPA License
As a CPA, you should take every criminal charge seriously by partnering with an experienced license defense attorney. Consulting with an attorney helps you understand the charges and the evidence against you to plan the next course of action. Many law enforcement entities partner with the DOJ and regulatory agencies, such as the CBA, to gather evidence in sting operations. Therefore, it is possible that when you face charges, CBA already has gathered overwhelming evidence against you.
Typically, your regulatory agency will decline your license renewal application if you have been convicted of a crime substantially related to public accountancy within the last seven years. The CBA will outrightly reject your license application if you have a criminal record for a serious felony, a sexual assault crime with an obligation to enlist as a tier II or III offender, or a financial crime.
Additionally, if you are already a CBA licensee, a guilty verdict will attract an interim suspension or permanent cancellation of your accounting permit. The direct denial of a CPA permit application is due to a crime with a substantial relationship to accounting. Misdemeanor or felony offenses deemed to have a significant relationship to accounting are:
- Domestic violence or sexual assault
- Carjacking
- Grand theft
- Tax evasion
- Drunk or drugged driving
- Simple possession or possession of drugs for sale
- All fraud crimes
- Forgery
- Not properly disclosing financial transactions
Any conviction in a trial or a no-contest plea in court for these crimes is deemed valid by the CBA. However, you can petition for conviction expungement with the help of your attorney for the judge vacating the sentence.
BPC § 5063 requires CPAs to report all criminal convictions, misdemeanor or felony, to the CBA within thirty days of the verdict. You should volunteer to provide this information because even if you withhold it, the court will share the details of the conviction with the CBA.
Defending Your CPA License
The process of defending your professional license commences when the CBA receives a complaint. The complaint can be from an aggrieved party, law enforcement, another government entity, a fellow accountant, or a professional society. Not all complaints come from external sources. Some originate internally from the EAC, the licensing division, or other CBA committees.
Besides, the enforcement division follows up on any news of accounting organizations or CPAs operating without permits. They investigate whether the alleged entities have contravened the CBA’s or CAA’s regulations. The regulatory agency also receives information on violations through the self-reporting obligation imposed on all CBA licensees by the law.
The CBA has various enforcement units that investigate complaints and determine their merit or substantiation. If the case has merit, you will receive a notice of investigation, after which the case will be assigned to the enforcement division for investigation. The units have internal investigators who employ both technical and non-technical approaches to various cases, depending on the circumstances. When necessary, the CBA can involve external experts in their investigations.
When the alleged complaints concern CPAs operating without permits, the CBA’s Department of Consumer Affairs (DCA) is responsible. Sometimes, investigations entail appearing before the EAC for an informal hearing, where you disclose your side of the story and answer questions from the committee members.
The CBA cannot start an investigation without formally notifying you. The notice contains details of the alleged accusation, explains the due process, and requests that you submit an answer to the allegations within a specified timeframe. In the notification, the regulatory agency can also list the materials and information it needs to aid in investigations. It takes around five months from the initial complaint to the verdict and possible disciplinary measures.
Balancing the need to defend your license with the desire to make a livelihood can be challenging. It may increase the chances of an unfavorable outcome, such as license revocation or suspension. So, whenever you receive an investigation notice from your regulatory entity, you must contact an experienced accounting license defense attorney immediately. The attorney will review the notice and file a response without divulging any self-incriminating information. Do not respond to the notice without consulting a legal expert. As an individual or entity with a CBA license, you have rights, including the right to defend your professional license from any threats. You can exercise this right by enlisting the services of a competent license defense attorney.
Upon conclusion of the investigation, your regulatory agency can take several actions depending on its findings, including:
- Closing the claim
- Imposing monetary fines or issuing a citation
- Handing over the case to the attorney general (AG) to instigate a formal hearing
The CBA lodges a formal allegation on behalf of the aggrieved party when investigations reveal a violation of the law. A formal accusation is made public for everyone to see, including your current and prospective clients. What is even worse is that your CPA permit could be placed under interim suspension pending the conclusion of the matter.
The attorney general will lodge a formal accusation if you are already a CBA licensee. If you are an applicant, the AG will submit a statement of issues. Any of these actions by the AG triggers a formal administrative proceeding, which is conducted in accordance with the provisions of the Administrative Procedure Act.
Depending on your situation, you will receive an issue statement or a formal accusation from the CBA. Additionally, they will issue you a defense notice, which you must respond to within fifteen days—failure to submit a response within the timeline results in automatic license suspension.
However, when you respond to the defense notice, the CBA will schedule an administrative hearing to be adjudicated by an administrative law judge (ALJ).
You are entitled to have legal representation in this hearing. Having a competent attorney on your side increases your chances of a favorable verdict. Your attorney will subpoena witnesses, make an opening statement, enter evidence, cross-examine witnesses, and make closing statements on your behalf.
Once the opposing sides have had their opportunity to present their case before the ALJ, a verdict will be issued. However, the judge’s ruling is not final. It is considered a recommendation to the regulatory agency that has the authority to adopt it, make adjustments, or reject it. The standard outcomes of a formal administrative process are:
- Licenses suspension or revocation
- Hefty administrative penalties
- Multilayer probation with stringent probationary terms
- Public reproval
- Reimbursing the CBA costs associated with the administrative process
If you are unhappy with the board’s decision, you can always file a petition.
Find a Competent CPA License Defense Attorney Near Me
If you are a certified public accountant and your license is under threat because of a complaint or ongoing investigation against you by the CBA, you should turn to an experienced license attorney for help. At San Luis Obispo License Attorney, we will work diligently to resolve the investigations before any disciplinary measures are taken. If this fails, we will submit mitigating factors to compel the board to reduce your penalties. Additionally, we will defend you in the administrative proceeding for a fair verdict. Call us at 805-764-9771 to discuss your case.
