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State Board Report

April 2015

In Tampa, the Executive Directors and Legal Counsel were alerted to several recent cases that have potential bearing on the Boards of Accountancy. Among the cases highlighted by Noel Allen, NASBA outside legal counsel, were:

Simic v. Accountancy Board of Ohio, 15 N.E.3d 1246 (Ohio Ct. App 2014) – The Ohio Board’s notice on a sole practitioner’s firm was not notice on the individual CPA. The court concluded the Board did not have the authority to discipline a CPA’s certificate for his firm’s failure to abide by a cease-and-desist order when the Board did not provide the required notice.

Commscope Credit Union v. Butler & Burke, LLP, 764 S.E. 2d 642 (2014) – This case is currently on appeal. The Credit Union sued the accounting firm stating a breach of fiduciary duty because the firm represented that it had special expertise in auditing credit unions and other nonprofits and the credit union had failed to file a Form 990 with the IRS every year from 2001-2009.

Jo Ann Howard & Assocs. P.C. v. Cassity, No. 4:09CV01252 ERW, (2014 U.S. Dist.) – A Missouri federal district court determined that whether the plaintiff’s CPA expert witness passed the licensing examination on his first try was irrelevant to his qualifications to testify as an accounting expert.

Welsco, Inc. v. Brace No. 4:12-cv-00394-KGB, (2014 U.S. Dist.) – The court determined testimony on damages from an Arkansas CPA with an inactive license on behalf of his employer would not be excluded.

Mr. Allen also outlined some cautions that State Boards can draw from the decision in N.C. State Board of Dental Examiners v. Federal Trade Commission, No. 13-534, 2015. These included

  • Discuss the Dental Examiners case with the Board’s legal counsel.
  • Do not call pre-litigation letters "cease-and-desist orders."
  • Use declaratory rulings.
  • Consider rule making.
  • Refuse to consider complaints regarding pricing.
  • Remove "competition" from the Board’s vocabulary.
  • Consider insurance.

Many good things have been accomplished through joint efforts of the State Boards of Accountancy and the CPA professional associations, Mr. Allen observed. His list included: inter-state mobility, the Uniform CPA Examination and common standards. He noted there is a difference between "cooperation and conspiracy."

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