By Charles S. McCowan, Jr.

The declared purpose of the Louisiana Accountancy Law, is to promote the reliability of information that is used for guidance in financial transactions or for accounting for or assessing the financial status of private and public clients. To that end, the Louisiana Legislature has decided that it is in the public interest to regulate the qualifications and conduct of those with special competency and skill in the field of accounting and has created the State Board of Certified Public Accountants of Louisiana and given it the responsibility to regulate entry into the practice, the continuum of practice and enforce the provisions of the law with respect to violations of the various prohibitory provisions. In addition to the statutory grants of authority, in carrying out its duties, the Board has promulgated an extensive set of regulations.

The Accountancy Act statutorily fixes the qualifications for a certificate as a certified public accountant in Louisiana, which include provisions to ensure that only those with the proper education, experience and moral character be admitted to the profession.  However, the law expressly links the examination into the moral character requirement of a certificate holder to a “substantial connection” between the lack of moral character and the professional responsibilities of the certificate holder and has an exacting evidentiary standard of “clear and convincing” evidence.

Enforcement powers with regard to holders of certificates and permits also are within the jurisdiction of the Board.  The Board is entitled to revoke a certificate, permit or privileges, following notice and a hearing, for any one or more of the following reasons:

(1) Fraud, perjury, or deceit in obtaining or in renewing a certificate, permit, or privilege.

(2) Cancellation, revocation, suspension, or refusal to issue or renew a certificate, license, or privileges for disciplinary reasons in any other state for any cause, including other restrictions imposed by such licensing authority.

(3) Revocation or suspension of, or a voluntary consent decree concerning, the right to practice
before any state or federal agency.  Unlike attorney disciplinary proceedings, where the Supreme Court has exclusive original jurisdiction concerning a member of the bar, review of decisions of the Board and appeals are tried by a district court of proper jurisdiction and venue.

(4) Dishonesty, fraud, or gross negligence in the performance of services while holding a certificate, license, or privilege in the filing or failure to file that individual’s own income tax returns.

(5) Violation of any provision of this Part or rule adopted by the board in accordance with the provisions of this Part or violation of professional standards or rules of professional conduct adopted by the Board.

(6) Entry of a plea of guilty or nolo contendere or conviction of a felony, or of any crime an element of which is dishonesty or fraud, under the laws of the United States, this state, or any other state.

(7) Performance of any fraudulent act while holding a certificate, permit, or privilege.

(8) Conduct reflecting adversely upon the licensee’s or privilege holder’s fitness to perform services while a licensee.

(9) Making a false or misleading statement or verification in support of an application for a certificate, permit, or privilege filed by another person.

(10) Providing false testimony before the board.

(11) Engaging in efforts to deceive or defraud the public.

(12) Professional incompetency.

(13) Rendering, submitting, subscribing, or verifying false, deceptive, misleading, or unfounded opinions, reports, or audits.

Pursuant to its rule making authority, the Board has adopted Rules of Professional Conduct, which supplement the statutory enforcement provisions. These rules generally cover “Independence” obligations, “Integrity and Objectivity” requirements, “Competence and Professional Standards” and responsibilities to clients.  There are also provisions spelling out other responsibilities and practices, including general conduct, the use of the “CPA” designation, firm names, and advertising.

The investigatory and hearing requirements and procedures are also provided by statute2 and supplemented by administrative rules.3 The Board is authorized to appoint, or engage an investigative officer and investigators and experts, and the investigative officer may informally settle matters that are deemed not to rise to the level requiring a formal disposition. However, if the investigating officer determines that there is “probable cause” that a violation exists and warrants further action, the respondent is notified, given an opportunity to respond.  In the event that formal charges are filed, the Board then conducts an administrative hearing in closed session.  There is limited pre-hearing discovery, subpoena power, motion practice and an actual hearing, with witnesses testifying under oath.  Significantly, “The board shall not be bound by technical rules of evidence in such hearing.”

Unlike attorney disciplinary proceedings, where the Supreme Court has exclusive original jurisdiction concerning a member of the bar, review of decisions of the Board and appeals are tried by a district court of proper jurisdiction and venue.  In interpreting these provisions, the courts have found that an agency which attempts to control the behavior of individuals who are members, must be governed by standards for decision which are stated in advance and that there is no violation in the Board’s rules for conduct not proscribed.  The Board is afforded broad discretion in the imposition of an administrative sanction, as it is in the nature of a disciplinary measure.  In deciding what, if any, discipline to impose, the Board may be strict, moderate or lenient.  The findings of the Board are given great weight by a reviewing court.
 

This is the second of a three part article related to Louisiana law and regulations pertaining to the accounting profession. This part focuses on the Louisiana law and regulations pertaining to licensing and enforcement by the State of Louisiana.  To read the first part of the article, click here.