It takes hard work, dedication, and years of study to become a certified public accountant (CPA) in the state of California. Once you receive your accounting license, it becomes not only your livelihood but a source of pride in your life. If it is being threatened with suspension or revocation due to a complaint, formal accusation, or disciplinary action, then contact San Diego License Attorney today. We can potentially help you save your income and professional reputation.
What Is The California Board of Accountancy?
The regulatory agency that is responsible for overseeing the licensing, professional conduct and potential disciplinary punishments of all CPAs is The California Board of Accountancy (also known as the CBA). There are four (4) potential types of licenses that may be issued by the CBA:
- Accounting firm
- Accounting partnership
- Accounting corporation
- Certified public accountant (CPA)
The first three (3) are business entities, usually comprised of multiple accountants, while the last type of license is given to an individual who has passed the stringent tests and requirements needed in order to become a CPA.
Consequently, the CBA retains the mission and guiding principles of protecting members of the public from unsavory or dishonest CPAs who may take advantage of their financial naiveté. The Board takes these duties very seriously and is ultimately most concerned with defending the interests of the general public, not those of accountants or accounting firms.
In order to achieve this mission and set of guiding principles, the CBA will only issue accounting licenses to those entities or individuals whom they have determined are worthy, qualified, and likely to “serve the public good.”
What Are the Potential Disciplinary Actions Imposed by the CBA?
The CBA is granted its considerable power from a number of different sources, including Section 5000 of the California Business and Professions Code (BPC), the California Accountancy Act, and Title 16, Sections 1 through 99.1 of the California Code of Regulations (CCR). These various statutes have granted the CBA the lawful ability to create an Enforcement Division and an Enforcement Advisory Committee.
It is through these various statutorily established enforcement bodies that the CBA can oversee who may or may not practice public accountancy in the state of California as well as the issuance, suspension, or total revocation of accountancy licenses. Furthermore, the Enforcement Division and Enforcement Advisory Committee both receive a continuous stream of initial complaints as well as process instances in which a licensed accountant has been convicted of a crime.
Consequently, the CBA has a variety of disciplinary actions that it may impose on its constituent licensees, including:
- The denial of a new application that has been submitted for a license to practice accounting
- The issuance of a public letter, censure, and/or reprimand (posted online for the public to see)
- The issuance of a citation as well as an administrative fine (these are not the only financial penalties that you are potentially facing)
- The suspension or complete revocation of an accounting license
- The issuance of a stay of revocation (a temporary suspension) as well as the imposition of a probationary period
- If the misconduct is severe enough, then the ability to file criminal and/or civil charges (this is in addition to any kind of disciplinary action imposed by the CBA)
As you can see, even the less severe of these disciplinary actions can be potentially devastating to your good name, reputation, and potential income. For example, number (2), the issuance of a public reprimand that is posted online, is widely considered to be one of the milder punishments. However, due to the very public nature of this disciplinary action, you may find your income negatively impacted as you lose pre-existing clients or fail to secure new clients.
If you are facing any kind of disciplinary action, then it is always prudent to immediately retain the necessary legal representation. San Diego License Attorney has the know-how and experience to push back against the CBA’s aggressive imposition of these various disciplinary actions before it is too late and too much damage has been done to your reputation.
What Kind of Violations May Cause the CBA to Take Disciplinary Action?
Once an initial complaint has been made, then an investigation is initiated. The majority of complaints are deemed to be “unsubstantiated” and therefore dismissed, but you can never be too careful when dealing with something as important as your reputation and livelihood. Each and every complaint should be taken seriously, and legal representation should be sought out immediately.
If the initial complaint is not dismissed, then the overall process is followed by an administrative hearing that is overseen by an administrative law judge (also known as an ALJ). During this administrative hearing, the presiding judge and representatives from the CBA will require that the alleged violations committed by you, the licensee, be formally declared. There will also need to be clear descriptions of the violation or violations and, if you are present at the hearing, your explanation for this alleged misconduct.
Consequently, there are a number of common violations or instances of misconduct that the CBA most frequently takes disciplinary action against, including:
- Practicing without an accounting license
- Practicing accounting outside the bounds/limits of said license
- Incompetence, ordinary negligence, or gross negligence in the course of performing your duties as a licensed accountant
- Any number of violations and/or instances of unethical behavior that fall under the general terms of “professional misconduct” and/or “unprofessional conduct” (used interchangeably in most CBA proceedings)
- Using accounting practices that are not widely accepted or proven to be effective
- Breach of financial and/or fiduciary duty (in the state of California, a financial and/or fiduciary duty is a legal obligation to act in a person’s best interest based on your relationship with said person)
- Aiding and abetting the criminal act of tax evasion
- Any number of white-collar or financial crimes, including forgery, bribery, money laundering, fraud, misappropriation of funds, racketeering, insider trading, and/or embezzlement
- Having a criminal record and/or a conviction for a crime that is “substantially related” to the work of being an accountant (such as the various white-collar or financial crimes listed above as well as the crimes listed in the next section)
- Facing disciplinary action and/or probationary hearings by another state agency or licensing board, even if it is in a state other than California
Furthermore, it is crucial to remember that the CBA can work with the Department of Justice and its Attorney General to initiate criminal charges if your misconduct is deemed to be criminal in nature. This includes the scenarios listed in numbers (7) and (8): tax evasion and various white-collar or financial crimes. If you stand accused of these forms of misconduct, you will face the revocation of your accounting license and then criminal charges in the jurisdiction in which you broke the law. This means that in many cases, the charges will be federal in nature and may involve any number of law enforcement agencies.
Additionally, number (3) states that various types of negligence may be considered grounds for disciplinary action by the CBA. However, they may also result in the CBA initiating civil charges against you; this means that you may be found financially liable for your misconduct. This also means that criminal charges can be filed as well if the misconduct constitutes criminal negligence.
In essence, every Notice of Investigation or potential complaint must be treated with the utmost seriousness. These situations are best handled by the experts at San Diego License Attorney. They have experience in every type of case, including those which have escalated to civil liability or criminal charges. Your accounting license is your livelihood, so it is best to protect and treat it like the priceless commodity that it is.
How Will Criminal Charges Affect My Accounting License?
If you are facing criminal charges or allegations of criminal behavior, then it is absolutely vital that you immediately retain legal representation. You may not realize how serious the situation is, and an experienced license lawyer may need to analyze the allegations and evidence against you. Furthermore, various law enforcement agencies (either state or federal) frequently work with the Department of Justice and the CBA to conduct “sting” operations in order to gather evidence. In these scenarios, it is possible that they have amassed a large amount of proof to bolster their allegations.
The CBA will likely deny new applications for an accounting license if the applicant has a conviction for a crime within the past seven (7) years that is “substantially related” to the practice of accounting. These applicants will be outright denied their license if they have a prior conviction for:
- Any serious felony, as delineated in Section 1192.7 of the California Penal Code, like grand theft, mayhem, arson, serious forms of assault, rape, voluntary manslaughter, attempted murder, and/or murder
- Sexual assault offenses that require Tier II or Tier III registration on the Sex Offender Registry
- A white-collar or financial crime that is specifically related to the practice of accounting
Furthermore, if you are already a licensee, then a criminal conviction may also result in the temporary suspension or permanent revocation of your accounting license. Much like the outright denial of new licenses, the crime in question must also be “substantially related” to your accounting practice. Unfortunately, the CBA considers a wide variety of misdemeanors and felonies to be substantially related, including:
- Driving under the influence (DUI) and/or driving under the influence of drugs (DUID)
- Simple possession and/or possession with intent to sell (of a controlled substance)
- Any and all forms of fraud, including (but not limited to) mail fraud, bank fraud, and/or wire fraud
- Grand theft
- Tax evasion
- Sexual assault and/or domestic violence
- Failure to make proper disclosures of financial transactions and/or accountancy practices
The CBA considers misdemeanor and felony convictions that have been secured through guilty or no contest pleas and guilty verdicts to all be valid under their statutes and regulations. However, it is possible to have a conviction vacated under California Penal Code, Sections 1203.4 and 1203.4(a). This is frequently misrepresented as an “expungement” of your criminal record; in fact, it is more accurate to consider it a dismissal of your conviction. In order to achieve this, you will have to consult with a license lawyer who has experience in these types of complex cases.
Furthermore, under the conditions of your accounting license, it is compulsory that you report any criminal proceedings to the CBA. Under Section 5063 of the California Business and Professions Code (BPC), all licensed accountants must notify the CBA within thirty (30) days of a criminal conviction. It is always in your best interest that you volunteer this information; if you fail to report it, then the court will do so.
What Happens After the Initial Complaint?
An initial complaint can be made for any number of reasons and from any number of sources. However, they will usually come from an aggrieved client who has felt taken advantage of. Remember that the CBA maintains its high standards of professionalism in order to protect the general public from unsavory and bad faith accountants who fail in their fiduciary duties and take advantage of their clients.
If the CBA, and its various enforcement bodies, determine that an initial complaint has some merit, then they will serve you with a Notice of Investigation. Usually, it takes about five (5) months from the initial complaint until a final decision has been made and potential disciplinary action has been imposed. It is crucial that you retain legal representation the moment you are served with the Notice of Investigation or know of a complaint having been made, to give you the best likelihood of securing a favorable outcome in your case.
If you are proactive and contact San Diego License Attorney as soon as possible, we may succeed in having the initial complaint dismissed by challenging it immediately. At this juncture in time, none of the proceedings have been made public, so you will not suffer any deleterious effects to your good name and/or reputation.
However, if the CBA determines that an initial complaint is substantial enough, then they will file a formal accusation on behalf of the party who filed the initial complaint. This is when the stakes significantly rise because this formal accusation will be posted online for the public to see and you may face temporary suspension of your license. We will counter with a Notice of Defense to argue against the allegations made, and we may be able to lift the temporary suspension on your license so that you can continue to earn a living.
Following these various proceedings, if the CBA has still not dismissed the formal accusation, then your case will move on to a “formal administrative hearing” that is presided over by the judge (in this case, an ALJ). These hearings resemble proceedings in civil court, including the practice of:
- Presenting evidence
- Expert testimony
- Eyewitness testimony
- Cross-examination of other witnesses
As you can see, each of these actions should be conducted by an experienced legal team who knows how to handle this area of law and the suspension or revocation of professional licenses.
What Are Mitigating and Aggravating Factors?
As delineated in the California Code of Regulations (CCR) under Section 99.1, Title 16, the presiding judge will hear “mitigating factors” from your defense team and “aggravating factors” from the CBA’s appointed counselors.
Consequently, your legal team at San Diego License Attorney can present a number of these mitigating factors to lessen the severity of your disciplinary action. This legal strategy is only implemented if it is absolutely impossible to secure a dismissal. These factors include:
- No harm was done to a member of the general public (like a consumer and/or client)
- If any harm was done, it was minimal and reversible
- There was no intent or malicious intent when committing the violation
- The violations were impulsively committed while under intense pressure to perform
- The breach of fiduciary and financial duty was not considered serious
- The underlying motive for the misconduct was not greed; in other words, the licensee did not make any money from the actions
- The licensee gave their full cooperation with the CBA and its investigators
- There is evidence that the licensee underwent rehabilitation and has displayed remorse
- The licensee took the initiative to make financial restitution to their victims
- If there were multiple parties involved, the licensee in question was the least culpable
- A significant amount of time has elapsed since the offenses and/or misconduct were committed
On the other hand, the CBA and its appointed counselors (effectively “the prosecution” in these administrative hearings) may present to the judge various aggravating factors that will increase the severity of the disciplinary action, including:
- The licensee acted willfully and with premeditation
- The licensee has faced similar disciplinary action in the past, thereby establishing a pattern of misconduct
- Serious financial harm was done to a member of the public
- The licensee was motivated by greed and made significant money due to their violations
- The licensee acted in this manner even if they knew that their violations would harm the other person (especially if that person is considered “vulnerable,” like the elderly or disabled)
- The licensee was criminally negligent, misappropriated funds, or seriously breached their fiduciary duties
- The licensee did not cooperate with the CBA and its investigators
If you fail to secure a dismissal and are then found guilty of the violations, then these factors can make a huge difference in the type and severity of your disciplinary action.
It is also important to note that once the proceedings are finished and you are served with your punishment, probation, and/or sanctions, you will be required under Section 5107 of the BPC to reimburse the CBA for all costs associated with the investigation and prosecution. If you are unable to immediately fulfill this financial duty (for example, due to loss of income because of license suspension or revocation), then San Diego License Attorney can also help you secure a payment plant.
Find a License Lawyer Located Near Me
If you need to secure a dismissal or develop a defense strategy against a CBA investigation, then contact San Diego CPA license defense attorney today. We are always available at 888-959-0068 to give you a free consultation and begin the process of defending your CPA license immediately.