Helping Members Respond to a TSBPA Complaint Notice

February 2010

Texas CPAsare subject to the authority and oversight of theTexas State Board of Public Accountancy (TSBPA). The State Board has the responsibility and authority to regulate the public practice of accounting in Texas. Its major functions include licensing and CPE, qualifications/examination, peer review, public education, sponsor review, and enforcement. In the area of enforcement, TSBPA has the responsibility to investigate complaints against CPAs and to take appropriate disciplinary action against a CPA who is proven to have violated the Texas Public Accountancy Act (TPAA) or rules adopted by TSBPA.

Complaints to TSBPA can come from various sources, including clients, government agencies, other CPAs, and the general public. The process TSBPA uses to investigate complaints against CPAs is structured and authorized within the Texas Administrative Procedure Act, as well as the TPAA. licensed CPAs have certain rights under the investigative/disciplinary process and are afforded due process in the conduct of an investigation by TSBPA.

The Texas Society of CPAs is available to assist members who have questions about theState Board'senforcement process. If members are contacted by TSBPA or receive an inquiry letter and wish to discuss their options and rights under the law, they can contact TSCPA for assistance at 800-428-0272. TSCPA Executive Director/CEO John Sharbaugh, CAE, and TSCPA Managing Director of Regulation and Legislation, Bob Owen, CPA-Dallas, are the primary contacts to assist TSCPA members with questions in this area. Members can also contact Chairman Jeff Gregg, CPA-Wichita Falls at 940-888-5539.

Below are some frequently asked questions about the TSBPA enforcement process to assist members in understanding how it works and their rights under the process.

Frequently Asked Questions About State Board Inquiries/Investigations

What should a CPA do if he/she receives an inquiry letter from TSBPA?

When a CPA receives an inquiry letter from TSBPA, it can be an unnerving experience; nevertheless, it is important to remember that most complaints are dismissed by TSBPA. The best course of action is to take the matter seriously and cooperate fully with a prompt response to the inquiry. Failure to respond to the inquiry is a major mistake, as it may subject the CPA to additional violation charges. TSBPA cannot dismiss a complaint unless it has sufficient information to evaluate the matter and reach a conclusion. Providing TSBPA, on a timely basis, with the information that may enable it to do so is critical. TSBPA follows confidentiality rules during its investigations and cannot acknowledge the existence of a pending complaint until its final resolution. If the matter is dismissed, it never becomes public knowledge.

What if the CPA really has committed a violation?

If a CPA has committed a violation, acknowledging it, providing restitution, if appropriate, and correcting the circumstances leading to that violation are the best steps to take. TSBPA is generally looking to rehabilitate CPAs rather than punish them. Very few licenses are revoked or suspended for matters other than non-payment of licensing fees or failure to take CPE. Most disciplinary cases are resolved with some type of reprimand, required CPE, payment of TSBPA expenses to investigate the matter, and possibly a fine depending on the circumstances. This usually happens through an “Agreed Consent Order” between TSBPA and the CPA, where the CPA agrees to accept the action of TSBPA as a means of disposing of the case.

Should the CPA be represented by legal counsel?

CPAs certainly have the right to be represented by legal counsel in any investigation before TSBPA. Each CPA will have to make that decision based on the individual situation. In a very complex case, it probably makes sense. But in the vast majority of enforcement cases before TSBPA, CPAs are not represented by an attorney. CPAs who carry liability insurance should consider contacting their carrier if they receive an inquiry letter from TSBPA, and often the insurance carrier will provide assistance and advice through its legal counsel.

Should the CPA appear before TSBPA to provide input?

Again, this would depend on the nature of the matter under investigation. Many complaints are routine and can probably be handled by responding and providing your side of the story in writing. However, if TSBPA proposes to take disciplinary action against a CPA, the CPA may request an informal conference before the committee investigating the complaint. If an informal conference is conducted, the CPA can choose to be represented by legal counsel if he/she wishes. Also, sometimes TSBPA asks the CPA to appear before the committee investigating the complaint to help them gain a better understanding of the situation and to discuss the matter with the CPA before reaching a conclusion. While the CPA is not required to appear at the request of TSBPA, it is often in his/her best interest to do so to help resolve the matter.

What if TSBPA takes action against a CPA that the CPA doesn’t agree with?

If TSBPA proposes to take disciplinary action against a CPA and the CPA does not concur, the matter is referred to the State Office of Administrative Hearings (SOAH) where the case is presented to an Administrative Law judge. This is true for all licensing boards in Texas, not just CPAs. SOAH is the system established under the Texas Administrative Procedure Act to hear such cases. The SOAH judge actually serves as “finder of fact,” receiving information from each party – TSBPA and the licensee – and then renders what is called a “Proposal for Decision.” The CPA can be represented by legal counsel at a SOAH hearing and can also call witnesses to present his/her side of the case. In some circumstances, TSBPA is permitted under the law to not accept the “Proposal for Decision” issued by the SOAH judge and can choose to take a different action, although in most cases TSBPA does adhere to the SOAH decision.

What happens if the CPA still doesn’t agree with the proposed disciplinary action after the Board’s decision?

The next step would be to appeal the case to State District Court. In this scenario, a CPA cannot argue the case in its entirety again. Rather, he/she is limited to proving that TSBPA acted inappropriately or exceeded its authority in some way. A State District Court decision can be appealed to the appellate courts in accordance with state law.