Responding to an Inquiry and Investigation

If you received an Inquiry from the Board, this generally means the following has occurred: a complaint and evidence have been submitted to the Board which have been reviewed by staff and legal counsel in light of case precedents and informal guidelines established by the Board’s Professional Standards Committee.  An initial letter, along with a copy of the complaint will be sent to you requesting a response to the allegations.

In addition, the Board staff may initiate “staff-opened” cases where the staff has received information from various sources including certificate renewals, government agencies, and the news media. Upon receipt of the information, the staff will review the information in light of guidelines and precedents established by the Board’s Professional Standards Committee and determine whether a case should be opened.   In this case, you may receive a letter, summarizing the case along with additional materials the Board may have received, and requesting a response.

Initial Letter to Licensee and Consent to Ex Parte

In some cases, the staff and legal counsel may determine that additional information is needed before the matter is ever submitted to the Professional Standards Committee of the Board.  Here, a letter is sent to the licensee requesting information and any related documents.  With the initial letter, the licensee will be asked to sign a “Consent to Ex Parte.” The Consent allows Board staff and legal counsel to engage in ex parte communications (communications without the licensee present) with the Professional Standards Committee regarding evidentiary documentation related to the case. The signed Consent allows the licensee the right to see all information and documents gathered by the staff prior to the presentation to the Professional Standards Committee.

As a CPA, you are required to fully cooperate with the Board in connection with any inquiry the Board makes. The initial deadline to submit a written response is within 21 days of receipt of all inquiries of the Board.  Therefore, it is important that you know the date that the letter was received.  The Board may grant an initial extension of time to respond upon a timely request.

In drafting a response to an inquiry, it is important for you to include all information and documentation necessary to fairly and fully respond to the allegations.  However, it is equally important for you to include only the pertinent information and documentation.  We help our clients make these judgments and determinations from an objective standpoint and with knowledge of and experience with the process in defending Board matters.    We regularly assist clients with written responses and are flexible in working with clients in doing so, ranging from preparing and signing responses ourselves on clients’ behalf, to reviewing responses prepared by clients and having them submit the response in his or her own name. We also help shoulder the burden of defending against a complaint.  Our general explanation of board procedures has a more detailed discussion of how we may be able to assist you in informal proceedings.

After receiving the initial response, the Board may send your reply back to the Complainant for a response, if it is not a staff-opened case.  You should be aware before responding that the Complainant is likely to see your response.  The investigative process may require additional information or evidence from you, the Complainant or any related parties. Whether additional information and investigation is necessary and how much needs to be collected varies significantly depending on the type of case.  At this point, the Board may close the case without taking further action or submit the case to the Professional Standards Committee as discussed below.

Submission to Professional Standards Committee

If the staff believes that evidence and information received demonstrates a violation, staff and legal counsel will request guidance from the Professional Standards Committee. The Professional Standards Committee-three members of the Board-reviews the complaint and may recommend that additional information be gathered, recommend to the full Board that the case be closed, or recommend that the case continue forward.  The Committee does not determine guilt or innocence; it simply reviews the complaint to determine whether the allegations, if supported by competent evidence, would warrant a hearing.  Live testimony is not received at the Committee meeting, and you and your counsel are not permitted to attend.

Close the Case or Request Additional Information

If the Committee finds the information does not substantiate a violation, the Committee may recommend that the Board close the case with or without prejudice. The Committee may also request that the staff gather additional information.

Settlement

If the Committee does not recommend that the case be closed or require additional information, the Committee may offer the licensee a Consent Order in settlement of the case.  We help our clients evaluate and determine whether they should accept a proposed Consent Order, including whether to negotiate the terms, or in some cases request reconsideration of the Committee’s decision.  The Board has more flexibility regarding disciplinary actions in negotiating and entering into consent orders than it does after formal hearings because of the limited options in its statute.  This flexibility is one reason we attempt whenever possible to reach a consent order and avoid a formal hearing for CPA clients.

Public Hearing

If a settlement cannot be reached or if directed by the Professional Standards Committee, the case will be scheduled for a public hearing before the full Board.  The licensee or  his or her legal counsel have the right to present evidence in defense, including calling witnesses and introducing exhibits, to make objections, to cross-examine any witness called  by the Board, and to make a closing argument. If they have not done so already, many professionals decide that they need to retain a firm or attorney at the formal stage.

Possible Discipline and Outcomes of the Public Hearing

After a formal hearing, the Board may issue an Order determining that there has been a violation and imposing discipline.  N.C.G.S. 93-12(9) allows the Board the following actions in resolution of a hearing:

1. Revoke the licensee’s certificate permanently;
2. Revoke the licensee’s certificate for a specified period;
3. Censure the licensee’s certificate;
4. Assess a civil penalty not to exceed one thousand dollars ($1,000) for any one or combination of the following causes:
   1. Conviction of a felony under the laws of the U.S. or of any state of the U.S;
   2. Conviction of any crime, an essential element of which is dishonesty, deceit or fraud;
   3. Fraud or deceit in obtaining a certificate as a certified public accountant;
   4. Dishonesty, fraud or gross negligence in the public practice of accountancy;
   5. Violation of any rule of professional ethics and conduct adopted by the Board.

The Board publishes the disciplinary action against a CPA typically in its newsletter and on its website.  All Orders, Board Orders, and Consent Orders are made a part of the Board’s monthly minutes and typically are placed in the licensee’s file in the database and provided to the public upon request.

An Order issued by the Board may be appealed to Superior Court.  Generally, it is much more difficult for a licensee to prevail once the matter reaches the court system on an appeal, even if he or she retains legal counsel at that point.

Impact of Decision of Whether to Retain an Experienced Law Firm

If you have received a letter from the Board staff or have a pending formal hearing, you should consider retaining a firm like ours that has experience representing licensees before the CPA Board.  Disciplinary action could have a significant and permanent impact on your license(s) in NC and other states, which also can substantially affect you financially and personally.  Hiring an experienced law firm can be an investment in your professional future as a CPA.