Few things can cause more professional stress to a Certified Public Accountant (CPA) than to have their license come under investigation over allegations of misconduct. You've worked very hard to get where you are today. Becoming licensed as a CPA required you to go through extensive schooling (or 10-15 years of work experience), take a grueling four-part exam, and spend at least a year gaining experience under another CPA. Your livelihood now depends on the integrity of that license, and if that license were revoked, your entire world could be upended.
If you've been notified by the state licensing board that you have a complaint filed against you and you are under investigation, you're probably overwhelmed with uncertainty. What will I do if my CPA license is suspended or revoked? What happens in an investigation or hearing? What can I do to protect my career? The more you know about what's coming, the better prepared you can be. The Lento Law Firm has compiled the following critical information for CPAs in New Jersey and New York who may be facing disciplinary action.
What agency will I be dealing with if someone files a complaint against me?
Every state has its own process for licensing and regulating accountants, and the oversight board that first issued your license will be whom you will answer to if you are facing misconduct allegations regarding that license. In New Jersey that board is called the State Board of Accountancy. In New York, it's the Public Accountancy Division of the Office of the Professions.
What could cause my CPA license to be revoked?
Accounting is a public trust. When you're a CPA, you're entrusted with the confidential financial information of individuals and/or companies, and you're expected to be professional, accurate, and honest. Most offenses that could cause you to lose your license will have something to do with breaking that trust or putting it in doubt. While each state sets its own behavioral rules and penalties, any of the following offenses may be grounds for losing a CPA license:
- Conviction of a felony (or fraud-related misdemeanor). Criminal convictions in most states can disqualify you from being an accountant, especially those related to fraud. (This is perhaps the most common reason for revoking a CPA license.)
- Gross negligence, dishonesty, or fraud in accounting practices. Examples might include filing fraudulent tax returns on behalf of your clients, failing to file returns, “fudging” numbers on a company's balance sheet, mishandling a client's personal information, etc.
- Violating the rules of professional conduct. Most states use the Code of Professional Conduct established by the American Institute of CPAs (AICPA) as the standard by which their licensed CPAs should conduct themselves. Failing to abide by these rules could be grounds for losing your license.
- Any other professional or ethical violation that suggests you are incapable of fulfilling your duties as a CPA.
Am I guaranteed to lose my license for any of the offenses above?
No. In fact, many investigations don't result in the loss of license. Your state licensing board may opt to invoke other penalties (or sanctions) that allow you to continue working as a licensed CPA. Examples may include:
- Suspended license. You may be prohibited from acting as a CPA temporarily without having your license revoked.
- Fines. You may receive a financial penalty.
- Probation. You may be put on probation for a period of time and allowed to continue operating as a CPA while being monitored.
- Restrictions on your license. The board may prohibit you from performing some functions while allowing you to do others.
- Formal/public reprimand. A citation may be placed on your public record.
Should I be concerned about these other disciplinary actions if I'm allowed to keep my license?
Yes, you should. Even if your license is not revoked, any of these other disciplinary actions may become a matter of public record. Any accounting firm, employer, or client can do a search to find out whether you've had any disciplinary measures taken against you. This may impact their decision as to whether to hire you.
What does the disciplinary process look like for licensed accountants?
You should check with your state licensing board to find out specifics of what the disciplinary process looks like. However, in most cases, it may follow a path similar to what we describe below:
- Complaint. Nearly every disciplinary action begins with a complaint filed against you with the licensing board in your state. The complaint may originate from a client, a colleague, an auditor, or anyone with whom you do business.
- Investigation. The licensing board is obligated to investigate the complaint against you to determine whether the accusations have merit and if there is any corroborating evidence. You may be asked to give a formal written response to the complaint and any allegations against you. The board may also subpoena records and documentation, interview witnesses, and ask further questions of the complainant.
- Consent order. If the board finds significant evidence of a violation, it may give you the opportunity to agree to a consent order as an alternative to filing a formal accusation and going into a hearing. With a consent order, you admit to the claims against you and voluntarily submit to the board's recommended disciplinary action.
- Formal hearing. If there is no agreement on a consent order, the board will formally accuse you and summon you to a formal hearing. Depending on the procedural rules in your state, this hearing may occur directly before the licensing board, or it may be held in court before an Administrative Law Judge.
- Final determination and disciplinary action. When the hearing concludes, a final determination is rendered as to whether you committed a violation, and the board determines an appropriate sanction.
- Appeal. You have the right to appeal an adverse decision to the appellate court system in your state. However, the appeals process doesn't re-hear the case and rarely overturns the decision, so it may not be cost-effective unless you have significant evidence that the board overstepped its bounds in its handling of the complaint.
Should I accept a consent order if it is offered?
It depends on the situation. On the downside, a consent order constitutes an admission of guilt, and any disciplinary action will appear on your public record. However, if the evidence against you is significant, agreeing to a consent order may either help you keep your license or give you a better chance at having your license reinstated. Our recommendation: don't agree to a consent order without getting the advice of an attorney with experience in professional license defense.
Is it necessary to hire an attorney to resolve a complaint? Can't I just approach the licensing board myself, especially for a minor offense?
You always have the right to represent your own interests to the licensing board without an attorney. But history shows that most accountants who do so don't receive the best possible outcome, and in some cases, it may work against you. Here's why it's important to have legal representation:
- The licensing board is not your friend. The board does not exist to protect you, but rather to protect the public against bad actors. Once a complaint is filed against you, the board's objective is to find evidence against you, not to clear your name. Any informal contact you make with the board, and anything you say during that contact, could actually work against you. A good attorney who knows how to interact with the board can protect you from doing damage to your case.
- You are at a disadvantage going into the process. Not that the board won't make an attempt to be impartial, but the fact is you don't have experience with the disciplinary process, and the board does. This puts you at a disadvantage by default. Having an attorney helps to level the playing field.
- A license investigation is a legal matter. Your public accountant license is a legal agreement with the state, so any alleged violation of it constitutes a breach of that agreement. This falls under the category of Administrative Law, and it's always best to hire a legal representative when dealing with legal issues.
- Even “minor” offenses can hurt your career. It's a mistake to assume you don't need an attorney because the offense “isn't that serious.” Not only can you potentially lose your license over so-called “minor offenses,” but even lesser disciplinary actions can hurt your public reputation. Hiring an attorney increases your chances of getting the complaint dismissed—or at least resolving the matter with the least amount of damage to your career.
Can I refuse to cooperate with an investigation into my license?
Not unless you intend to lose your CPA license on purpose. Being licensed as a CPA includes either an implied or expressed agreement to cooperate with any investigation. (In New Jersey, it's actually documented in law as the “Licensee Duty to Cooperate.”) If you refuse to do so, the board will rule summarily against you, most likely revoking your license in the process. You have the right not to incriminate yourself, and you're allowed to present your side of the story—but simply refusing to cooperate will result in the worst possible outcome.
How can a license defense attorney help me?
When you hire an experienced attorney to represent you when your CPA license is under investigation, it greatly increases your chances for a fair and positive outcome and greatly reduces the risk of losing your license. A good attorney can:
- Evaluate the complaint against you and make sure you understand what's at stake;
- Lay out your options for responding to the complaint in a way that will bring the desired result;
- Procure witnesses in your defense and gather supporting evidence;
- Represent you in a legal capacity in all interactions with the accountancy licensing board;
- Negotiate for dismissal of the complaint or reduced penalties, as the situation dictates; and
- Defend your license aggressively in a formal hearing, if needed.
My CPA license is already revoked. Can an attorney help me get it reinstated?
Yes. Each state has its own protocols and standards for eligibility for reinstatement. The process will typically involve the following:
- Formally requesting reinstatement in writing, along with a written explanation as to why you are requesting it
- Paying any applicable fees and outstanding fines
- Complying with any continuing education requirements
- Meeting all qualifications for reinstatement as required by the board and/or state law
- Submitting to any plan of action the board dictates as part of your reinstatement process.
When you make the decision to seek reinstatement of your CPA license, a good professional license attorney will act as your liaison with the licensing board, coordinate the filing of your paperwork and fees, following up on the status of your request, and as needed, negotiating with the board for the best possible terms for your reinstatement as a public accountant.
I just found out I am being investigated by the board. How soon should I hire an attorney to help me?
The sooner, the better - some people make the mistake of waiting until a formal hearing is called before hiring an attorney, but the board won't even bring a formal hearing unless it's relatively certain about your guilt—which means you're starting out on the defensive. Hiring an attorney early in the investigative process gives you more opportunities to resolve the matter outside of a formal hearing, improving your chances of saving your license from being suspended or revoked.
You've worked too hard to become a Certified Public Accountant to take unnecessary risks with your license—especially considering that any allegation has the potential to disrupt your career. Don't let a simple misunderstanding or a single lapse in judgment cost you your future as a CPA. Attorney Joseph D. Lento has successfully helped many licensed professionals fight back against unfair or untrue allegations, He knows how the licensing boards work, and he knows how to help you get to the positive resolution you deserve. If you are facing disciplinary action from licensing boards in New Jersey or New York, let the Lento Law Firm help you keep your license. Call us today at (888) 535-3686 to discuss the details of your case and explore your options.
