In a time of increasing business regulation and ever-changing tax requirements, Certified Public Accountants (CPAs) play a critical role in financial reporting and planning. These finance professionals are the unsung heroes of many businesses, providing financial planning, leadership, reporting, and compliance. However, CPAs are vulnerable to discipline and license challenges because of their vital fiduciary role.
CPAs and CPA Firms may face professional discipline for several reasons, including:
- Issues of professional competence.
- Conviction of a felony.
- Filing of fraudulent paperwork or failure to file.
If you are a CPA in Kentucky facing a challenge to your license, you need experienced representation and advice. The Lento Law Firm is experienced in license defense and has represented many CPAs and financial professionals. The earlier in the process that the Lento Law Firm Professional License Defense Team is involved, the better. But wherever you are in the process, even if you have an initial adverse finding, the Lento Law Firm can help. Call the Lento Law Firm today at 888-535-3686 or provide your details online, and we will contact you.
Limitation on Use of “CPA” or “Public Accountant”
Section 325.380 of the Kentucky Code provides that no one may use the term “CPA” or “public accountant” or any other word or phrase suggesting these terms unless the Accountancy Board licenses them. Some disciplinary actions are taken each year related to failure to renew a license in a timely way and the continued use of the term “CPA” despite this failure.
Board Licensing and Discipline Powers
The Kentucky Board of Accountancy (“the Board”) is responsible for licensing CPAs and CPA Firms in the State of Kentucky. The Board has broad powers to license, regulate, and discipline CPAs and Firms in Kentucky.
Disciplinary Actions by the Board
The Board may take the following disciplinary actions against a CPA or a Firm:
- Revoke a license.
- Suspend a license.
- Impose a fine of up to $1,000 per violation.
- Refuse to issue a license.
- Refuse to renew a license.
- Censure a licensee.
- Place a licensee or a firm on probation.
Grounds for Sanctions Against CPAs in Kentucky
In Kentucky, the following are possible grounds for sanctions on Certified Public Accountants:
- “Fraud or deceit in obtaining a license.
- Dishonesty, fraud, or negligence while performing duties of the profession. This includes theft of client funds or other breach of fiduciary duty.
- Violation of the rules and regulations of the Board of Accountancy.
- Violation of a rule of Professional Conduct.
- Conviction of a felony or any crime involving dishonesty or fraud, including federal or US state crimes. This includes the entry of a guilty plea, entry of an Alford plea, or court order suspending the penalty.
- Cancelling, revoking, suspending, or failing to renew a CPA license in any state.
- Suspending the right to practice in any state.
- Conduct that “discredits” the profession.
- Failure to respond to the Board.”
Conviction of Felony or Crime Involving Dishonesty
The conviction of a felony or any crime involving dishonesty is grounds for sanctions against a Kentucky CPA, up to and including revocation of the license. If you are charged with any crime, you should discuss the issue with an attorney, but some crimes are of particular concern. These include:
- Serious Offenses, such as murder, rape, or aggravated assault.
- Financial felonies, especially those related to the profession, such as tax evasion, fraud, or securities fraud.
- Crimes involving dishonesty, including perjury or filing a false document.
- Tax crimes, including tax evasion, failure to file, or filing of a false return.
- Crimes that may show unfitness or serious drug or alcohol issues, such as controlled substance violations or DUI.
- Crimes punishable by more than a year in prison or any serious crime.
Any licensed CPA charged with a crime should consider the effect that charge may have on licensure. Considering the potential cost of losing your license and vocation, investing in an experienced licensed defense attorney is smart money. Do not take action concerning a criminal conviction without talking to an experienced license defense attorney. The Lento Law Firm can advise you and assist you in obtaining the best outcome possible. It's your future—make sure you are protecting it.
Complaint Process
Step One: Initial Complaint or Incident
Generally, the disciplinary process begins when an individual makes a complaint to the Board regarding a CPA or firm. Anyone may make such a complaint to the Board in Kentucky. Additionally, the Board may become aware of the filing of a criminal charge or other incident, which may lead to the investigation of the incident or charge.
Step Two: Investigation
The Board may conduct an investigation to determine if probable cause exists to begin disciplinary proceedings against an individual or a firm. The Board may subpoena witnesses and may order the production of evidence (i.e., they may order that documents or other evidence be turned over to the Board). The Board may designate a member or other person as the investigating officer, who shall report the investigation results to the Board. The Board will then find probable cause or lack of probable cause of a violation. The Board may also order the investigating officer to investigate further or to interview additional parties. Until a finding of probable cause, the investigation is confidential (except to law enforcement) and will not be disclosed.
Step Three: Probable Cause Finding (or Dismissal for Lack of)
Once the investigation is complete, the Board will consider whether there is probable cause that a violation occurred. If the Board finds probable cause, the Board will issue a complaint setting forth charges and a date for the Hearing under KRS Chapter 13B. If the Board finds a lack of probable cause, the Board will dismiss the matter. The dismissal may be with prejudice (i.e., the Board will not hear the matter again) or without prejudice (the matter may be refiled in the future). The Board may request that the parties mediate or informally resolve the issue after a probable cause finding.
Step Four: Complaint and Response
If the Board finds probable cause, a Complaint will be issued and served upon the licensee. After service, the licensee must file a response within twenty days of the date of service. This response is typically written and should be reviewed by counsel before its filing. If the licensee does not respond, the Board may enter a final order without it.
Step Five: Informal Resolution/Settlement Discussions
The Board and the licensee can negotiate an agreement on handling the complaint and charges. Many complaints can be handled through informal dispute resolution, such as mediation. In other instances, the Board may ask the licensee or firm to sign a consent agreement or order. The licensee should consult with an attorney before signing any consent order or agreement. These agreements involve the loss of appeal and due process rights and should be entered only with counsel's advice.
Step Six: Hearing
At the scheduled Hearing, the licensee may appear, or a partner or owner may represent a firm. The Board may be represented by an attorney or a member of the Board, who will present evidence collected during the investigation. If a Board member presents evidence this way, they may not vote on the case's final disposition.
The licensee or firm may present evidence, may examine and cross-examine witnesses, and may be represented by an attorney. After the presentation of evidence, the parties may present an argument. The Hearing Officer in the case will then prepare a recommended order to the Board.
Step Seven: Action of Board
After receiving the recommendation of the Hearing Officer, the Board will vote on the disposition of the case. A majority vote of all board members then in office (minus a member who presented evidence at the hearing, if applicable) is necessary to sustain a charge and penalty.
Step Eight: Appeal, if necessary
Any person adversely affected by a decision of the Board may appeal by filing a Petition for Review with the Franklin Circuit Court under KRS Chapter 13B.
Step Nine: Notice to Other States
If the Board takes action against a licensee, the Board must determine if the licensee is authorized to work in any other state and must notify that state of the sanctions. The Board may exchange information with licensing authorities of any other state interested in the action.
Step Ten: Compliance
Depending on the nature of the settlement or the Board's decision, you may have to submit to ongoing oversight of your compliance with the Board's order.
Order of Proceeding for 13B Hearing
A Hearing under Chapter 13B resembles a short trial in many ways, although portions of the hearing may take place telephonically or electronically. The Hearing Officer will act very much as a judge, determining the order and rules of the proceeding. The Board will either be represented by their attorney or by a member of the Board presenting evidence. Typically, this is the order of such a Hearing:
- Opening Statement: Counsel for the Board, or a Board member acting as the prosecuting officer, will make an opening statement.
- The CPA, firm representative, or attorney will make an opening statement outlining their defense of the complaint.
- The Board attorney or representative will present evidence and call witnesses.
- The Hearing Officer may question the witnesses presented by legal counsel.
- The CPA or their attorney will cross-examine the Board's witnesses.
- The CPA or their attorney will present evidence and testimony of witnesses.
- The Hearing Officer may question these witnesses.
- The Board attorney or representative may cross-examine witnesses the CPA or firm presented.
- The Board's legal counsel may present a rebuttal to this evidence.
- The CPA or firm may rebut any evidence the Board presents.
- Each side may make a closing statement.
- The Hearing Officer will make a recommendation to the full Board.
Why You Should Hire the Lento Law Firm
The Lento Law Firm Professional License Defense Team are some of the most experienced in the country. They have represented countless financial professionals, including CPAs and firms.
Whether you work in Louisville, Lexington, Bowling Green, or elsewhere in Kentucky, the Lento Law Firm can defend your CPA license.
How Does the Lento Law Firm Defend You?
The Lento Law Firm Professional License Defense Team will be with you every step of the way as we defend your license and reputation. The Lento Law Firm will:
- Begin representing you wherever you are in the process, even if it's an appeal.
- Review the allegations made against you in the complaint or charge and advise you on the challenges and risks of various options.
- Seek early dismissal of the case based on informal resolution.
- Represent your interests during the investigation of the complaint.
- Review your answer to the complaint or charge.
- Advise you when a consent order might be in your best interests and when it is not.
- Represent you at the Hearing, including opening and closing statements, examination of witnesses, cross-examining Board witnesses, and all other hearing tasks.
- Represent you on any appeals. Sometimes, the Lento Law Firm will commence representation after the Hearing. We represent CPAs in the appeal process even if we were not your attorneys during the investigation and hearing. The earlier we enter a representation in a case, the better, but we take our clients as they come. Don't fail to call for assistance because you should have called sooner—we can help with an appeal if necessary.
Even if you have come this far without counsel, the Lento Law Firm can help, but it is imperative to call and begin the process as quickly as possible. The Lento Law Firm Professional License Defense Team will lead the defense of your license. Call us today at 888-535-3686 or submit your details online, and we will contact you.
