Public accounting is a serious profession with strict regulations. A Certified Public Accountant (CPA) performs responsibilities critical for a company’s success, including handling taxes, preparing budgets, keeping financial records, and monitoring the business’s financial transactions. The job requires proper education, training, and licensing to perform various roles. The California Board of Accountancy (CBA) is the body responsible for issuing licenses to qualified public accountants, ensuring that only those who meet the public accounting profession’s high standards are allowed to provide services.
With individuals and organizations highly dependent on your services and skills, a small mistake can attract a complaint, putting your accreditation at risk. At San Francisco License Lawyer, we understand the consequences that an accusation or a criminal conviction related to your profession can have on your license. So, we offer CPAs legal representation and defend them against accusations in order to achieve a fair outcome.
CBA at a Glance
The CBA is a regulatory body that controls the licensure, professional behavior, and possible disciplinary actions of CPAs. The regulatory body derives its mandate from the Accountancy Act and several CBA regulations. The CBA sets many rules that CPAs must abide by, including oversight of compliance with the peer review system and the number of continuing education program hours a licensee must complete before a license renewal.
The core objective of CBA is to safeguard consumers of public accounting services. It achieves this objective by ensuring that only qualified applicants hold the license to practice as a certified public accountant. Also, the regulatory agency monitors licensees to ensure they provide services in accordance with the established public accounting standards.
The laws governing the CBA include:
- The Accountancy Act
- The Business and Profession Code (BPC)
- The California Code of Regulations
The CBA was established to regulate public accounting. The Accountancy Act gives the regulatory body the following mandate:
- It ensures that only individuals or organizations with certain qualifications can sit for the CPA test.
- It grants licenses to public accountants (PAs) and individual CPAs
- It issues and renews practicing permits for PAs and CPAs
- It registers accounting firms and partnerships
- It enforces disciplinary measures against licensees for various violations
- It oversees compliance with the peer review system and continuing education program requirements.
- It evaluates work products of all the parties it issues licenses to, including accounting firms, accounting corporations, accounting partnerships, and individual CPAs.
The regulatory body regulates public accounting and takes disciplinary measures against license holders accused of various violations. The common disciplinary measures the board can take against your certificate include suspension, revocation, or rejection of a renewal request.
The enforcement unit, with the assistance of the Enforcement Advisory Committee (EAC), receives complaints, investigates allegations with merit, and gathers evidence of the violation.
The disciplinary measures recommended after the administrative hearing or investigation are based on the CBA’s guidelines. Do not surrender your practicing certificate because you are under investigation or have received a statement of issues. Giving up does not prevent the administrative process or disciplinary measures. Therefore, it is recommended to hire an experienced license defense attorney early in the case to help you fight the accusations.
The Valuable Responsibilities of California CPAs
CPAs help California businesses and individuals to put their financial houses in order. As a CPA, some of your roles include:
Personal Financial Planning
As a CPA, your work is to provide financial planning services and help with financial management and retirement planning. Additionally, you have a duty to help your clients attain their future financial objectives.
Business Valuation
Another crucial role is to assist businesses in determining the value of their assets and liabilities to support financial decision-making.
Forensic Accounting
Some CPAs specialize in forensic accounting, a field that involves investigating financial fraud and other financial irregularities. You uncover alleged financial fraud in an organization and become an expert witness when the individuals responsible are charged with a crime in court. Your expert testimony helps strengthen the prosecutor’s case, ensuring those responsible are held accountable.
Financial Consulting
Another of your responsibilities as a CPA is to provide financial consulting. Additionally, you help businesses and individuals make informed financial decisions. You help prepare financial budgets, study and analyze financial data, and offer professional guidance, helping companies and individuals achieve their financial goals.
Tax Handling
Another one of your valuable roles as a CPA is to help clients prepare tax documents and plan their taxes. You are required to be updated with the latest changes in tax laws to help clients increase their tax savings and reduce tax liabilities.
Provide Audit and Assurance Services
You perform audits and assurance engagements on financial statements to ensure transparency within an organization and build investor trust.
Your roles include internal audits, forensic accounting, tax preparation, income tax handling, and financial planning. All these are crucial tools for the success of a business. The roles of CPAs are diverse because they are accountants. However, not all accounts are certified public accountants.
An accountant is any person who undertakes accounting duties, even when they do not hold a university degree. Nevertheless, a CPA is an individual who has undergone training and education and passed a uniform CPA exam to be issued a certificate or practicing permit. Only after securing the license can one practice.
Unfortunately, despite the time, energy, and resources you invest to become a CPA, losing your accreditation is very easy. Because your role involves managing finances, a simple, innocent mistake could be misinterpreted as a financial crime or a violation of the CBA rules, putting your license on the line.
So, it is advisable to consult with a CPA license defense attorney immediately after you receive a formal accusation or investigation notice. An attorney who has represented many CPAs understands the struggle to obtain a license and the pain of losing it due to a minor error or false accusation. Public accounting is a risky profession, and you need an attorney who understands this and is willing to put up a spirited fight to protect your career. With the right legal representative on your side, you can fight the charges for a fair verdict, including case dismissal or lenient disciplinary action.
Common Accusations that you could Face as a CPA
Your role in public accounting is critical, and sometimes, even when you give your best to the clients, you might still face accusations of contravening the CBA regulations. The common allegations you could face include:
- Incompetence and negligence
- False advertising
- Breach or violation of fiduciary duty
- Discrimination
- Disciplinary action from another regulatory agency, such as the IRS and Franchise Tax Board (FTB).
- Professional misconduct
- Practicing accountancy while intoxicated by controlled substances or alcohol
- Practicing without a valid permit
- Forging continuing education program hours or reports to qualify for license renewal
- Disregarding the accounting profession standards
- Unlicensed practice or not fulfilling license renewal terms
- Accepting or giving kickbacks for referrals
- Preparing misleading financial reports, records, or statements
- Failing to adhere to the generally accepted accounting procedures
- Publicly displaying an invalid practicing certificate
- Breach of client confidentiality
- Engaging in deceit, fraud, embezzlement, misappropriation of funds, and forgery while practicing public accounting.
You should take all your allegations with the weight they deserve, because your licensing agency can partner with the Justice Department and the Attorney General to file criminal charges for various financial crimes, such as tax evasion, embezzlement, and fraud. Additionally, even what appears to be a minor violation can attract severe disciplinary action if it is proven to be true.
Partner with an attorney early in the case to understand your situation, including whether the civil matter could escalate to a criminal charge and the necessary action you should take to protect your reputation and livelihood.
The Effects of Crime on Your CPA Practicing Permit
When you face a criminal charge while practicing, you should consult a skilled license lawyer immediately. You might not have a clear picture of the situation you are in. Fortunately, a competent lawyer will evaluate the evidence against you and determine whether the charges have a substantial relationship with the profession. Based on the circumstances, your attorney can advise you to self-report to CBA before the relevant law enforcement agency does. Additionally, most of the charges stem from evidence gathered in sting operations between law enforcement and CBA, resulting in overwhelming evidence against you.
If the evidence is overwhelming, the chances of a guilty verdict or conviction are high. In addition to the criminal proceeding, CBA could initiate a disciplinary proceeding and take measures in response to your violation.
The regulatory agency will deny your application if you have been found guilty of a crime substantially related to public accounting within the last seven years. CBA will deny your license application if:
- The serious felony pursuant to PEN 1192.7, such as grand theft, arson, rape, murder, or attempted homicide.
- Sexual assault crime, with an obligation to enlist as a Tier II or III sex offender
- A financial or white-collar offense with a substantial relationship to CPA
If you are already a license holder, a criminal conviction could result in a license suspension or revocation. Misdemeanor or felony crimes substantially related to the CPA profession and that could result in disciplinary measures, including:
- Carjacking
- Grand theft
- All forms of fraud
- Simple possession or possession with intent to sell
- Forgery
- Domestic violence
- Tax evasion
- Sexual assault
- Drunk or drugged driving
- Failure to disclose crucial information
A criminal conviction can hurt your practicing license or CPA license application. Nevertheless, you can request an expunction. When granted, the judge will dismiss the conviction, enabling you to apply for a license reinstatement or make a fresh license application.
Defending your CPA Certificate
The process of defending your license against an accusation starts when the enforcement unit receives a complaint or allegation from law enforcement, the public, professional associations, clients, and other government entities. CBA can generate a claim itself through committees or the licensing division.
In addition to receiving complaints, the enforcement unit monitors the news to identify cases of unlicensed practice and violations of board regulations.
Upon receipt of the complaint, the board assigns the case to its investigators. Where a case involves unlicensed practice, the board refers the case to the Department of Consumer Affairs (DCA), and investigations may involve appearing before the EAC to give your account of the accusation. Also, you will answer questions from board members during the proceeding, so it is crucial to consult with your lawyer before appearing to avoid making statements that could be used as evidence against you.
Before any board investigation, they must send you a notice informing you of the allegations and the process you should follow to file an answer. Additionally, the regulatory agency can demand certain information or materials relating to the investigation in the notice. Engage a license defense lawyer immediately after you receive the notice so that they can explain the demands and help you file a written answer without jeopardizing your defense.
After the board inquiries, they can opt to dismiss the case for lack of or insufficient evidence. If your accusations are corroborated but involve a minor violation, the regulatory board can impose lenient disciplinary measures, such as a private citation or reprimand letter, along with fines. However, in serious cases where evidence points to wrongdoing, the board will send you a formal accusation notice or statement of issues and forward the case to the attorney general’s office, which should conduct an administrative hearing that will be presided over by an ALJ.
Typically, the formal accusation notice is accompanied by a defense notice. That way, if you want to challenge the allegations, you can file an answer within 15 days.
If you follow the instructions in the notice, you will have the chance to defend yourself. In the hearing, you enjoy several rights, including the right to:
- Legal counsel
- Subpoena witnesses
- Cross-examine CBA witnesses
- Make opening and closing statements
Once the hearing concludes, the ALJ will make recommendations in accordance with CBA guidelines. The verdict is not final as the board decides whether to adopt, modify, or reject the recommendations. The penalties you could face after an administrative proceeding include:
- A public reprimand
- Multilayer probation with a strict probationary term
- Reimbursing the costs incurred by the board
- License withdrawal or suspension
- License revocation or cancellation
If you are not satisfied with the decision, you can always discuss it with your lawyer to lodge a timely appeal.
Find a Skilled CPA License Defense Lawyer Near Me
Securing a certified public accountant license is a lengthy and costly process. Unfortunately, losing the certificate is easier than obtaining one. At San Francisco License Lawyer, we recognize that even a simple or false accusation can jeopardize your license, which is why we are here to help. Our lawyers will try to resolve the case at the investigation stage, negotiate a lenient disciplinary measure, or defend you in the administrative proceeding to secure a fair verdict. Call us today at (415) 496-2811 to arrange a no-obligation consultation.
