J. Feng v. BPOA, State Board of Accountancy (Majority Opinion)

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IN THE COMMONWEALTH COURT OF PENNSYLVANIA Jianghua Feng, Petitioner v. Bureau of Professional and Occupational Affairs, State Board of Accountancy, Respondent BEFORE: : : : : : : : : No. 2063 C.D. 2007 Submitted: March 14, 2008 HONORABLE DORIS A. SMITH-RIBNER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JIM FLAHERTY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE SIMPSON FILED: May 13, 2008 Jianghua Feng (Licensee), representing himself, petitions for review of an order of the State Board of Accountancy (Board) holding Licensee violated 49 Pa. Code §11.56 by submitting a verification-of-experience form (verification form) with inaccurate information regarding the status of his licensure as a certified public accountant (CPA). Pursuant to Section 16(c) of the CPA Law,1 the Board imposed the maximum civil penalty of $1,000 on Licensee to impress upon him and other CPAs the importance of not misrepresenting their licensure credentials to the Board or to anyone else. Licensee contends the Board erred in imposing a civil penalty even though it did not find he knowingly submitted a false or inaccurate verification form. Licensee further contends the penalty was excessive because his mistake, immediately corrected, was innocent and 1 Act of May 26, 1947, P.L. 318, as amended, 63 P.S. §9.16(c). unintentional, and did not cause a material impact. For the following reasons, we affirm. I. Licensee worked for ACE INA Holdings, Inc. (Employer) as a manager in its internal audit department. In July 2003, the Board issued Licensee a CPA certificate and a current license to practice public accounting. From April 2003 to April 2005, Licensee directly supervised Matthew J. Cozza (Applicant), who also worked in Employer s internal audit department. In October 2005, Applicant submitted an application to the Board for a CPA certificate. In connection with the application, Licensee submitted a verification form regarding his supervision of Applicant. Licensee s verification form indicated the two-year period he supervised Applicant ran from April 7, 2003 to April 15, 2005. See Certified Record (C.R.), Cmwlth. Ex-1 (Order to Show Cause, Ex. 1). Licensee signed his name below a pre-printed statement at the bottom of the verification form that read (with emphasis added): I certify under the penalty of perjury that the applicant has been under my supervision and has obtained the experience as indicated and that I was currently licensed to practice as a CPA/PA during supervision. ¦ I am aware that the statements made may affect my license ¦. Id. In February 2006, the Bureau of Professional and Occupational Affairs (Bureau) notified Licensee by letter that Board records indicated he did not become a licensed CPA until July 9, 2003. The Bureau letter also requested 2 Licensee provide either a summary of his accountancy activities from April 7-July 8, 2003 or a verification of non-practice form. Licensee responded by letter advising the Bureau that he completed the verification form for Applicant in error. He enclosed a revised verification form that modified the supervision period to July 9, 2003-April 15, 2005. He also submitted a verification of non-practice form. Thereafter, the Bureau filed an order to show cause charging Licensee with a violation of Section 12(q) of the CPA Law2 by engaging in the practice of public accounting by supervising a candidate for certificate and license, and certifying such supervision under penalty of perjury, while not a licensee. The Bureau also charged Licensee with a violation of 49 Pa. Code §11.563 because he failed to properly and accurately verify the dates of supervision of a CPA candidate. Licensee filed an answer. 2 Section 12(q) of the CPA Law provides, [i]t is unlawful for any person not a licensee to engage in the practice of public accounting in this Commonwealth. 63 P.S. §9.12(q). 3 Prior to its July 2007 amendment and relevant for purposes here, Section 11.56 of the Board s regulations, 49 Pa. Code §11.56, titled, Verification of experience, provided: (a) The supervisor shall submit a verified statement to the Board on the form provided by the Board which specifies the dates of supervision, the types of experience obtained and the number of hours. (b) The supervisor who submits the statement shall be responsible for its accuracy. Failure to properly verify may result in disciplinary action. 3 Following an evidentiary hearing, the Board issued an adjudication and order holding Licensee did not violate Section 12(q) of the CPA Law (unlicensed practice of public accounting). However, the Board determined Licensee violated 49 Pa. Code §11.56, which at that time provided, [f]ailure to properly verify may result in disciplinary action. Pursuant to Section 16(c) of the CPA Law, 63 P.S. §9.16(c), the Board imposed the maximum civil penalty of $1,000.4 In so doing, the Board reasoned: The Board does not consider [Licensee s] violation to be of a magnitude that warrants the suspension or revocation of his professional credentials, especially since he promptly submitted a corrected verification-ofexperience form for [Applicant] after he was contacted by the [Bureau] regarding his licensure status during the period of supervision. However, the Board is dismayed by [Licensee s] carelessness in signing the original verification-of-experience form without realizing that as required by Section 4.1(a)(4) of the [CPA Law, 63 P.S. §9.4a(a)(4)] and as plainly stated on the form he could only do so if he had been a licensed [CPA] or licensed public accountant during the reported period of supervision. The Board is of the view that imposition of the maximum $1,000 civil penalty is appropriate to impress upon [Licensee] and other [CPAs] the importance of not misrepresenting their licensure credentials, to the Board or to anyone else. (Bd. Op. at 11.) Licensee appealed here. Our review is limited to determining whether the Board s findings of fact were supported by substantial evidence, whether an 4 We note the Board granted a stay pending this appeal. 4 error of law was committed and whether constitutional rights were violated. Shapiro v. State Bd. of Accountancy, 856 A.2d 864 (Pa. Cmwlth. 2004). II. Citing the current version of 49 Pa. Code §11.56,5 which did not become effective until July 28, 2007, Licensee asserts the Board did not conclude 5 The current version of 49 Pa. Code §11.56 provides (with emphasis added): (a) To receive credit for experience under §11.55 (relating to experience requirements for CPA certification), a candidate for CPA certification shall acquire the experience under the supervision of an individual who meets the following conditions at the time the experience is acquired: (1) Holds a current license to practice as a CPA or public accountant in this Commonwealth or another jurisdiction. (2) Either employs the candidate or is employed by the same employer as the candidate. The supervisor may not be a member of a public accounting firm that is independent of the entity that employs the candidate. (3) Is responsible for and personally evaluates the candidate s work. (b) A supervisor shall submit a verified statement regarding the candidate s experience on a form provided by the Board, specifying the dates of supervision and the types and hours of experience acquired. (c) A supervisor who submits a verified statement shall be responsible for its accuracy. A supervisor who knowingly submits a false or inaccurate verified statement or who refuses to submit a verified statement when qualified experience has been acquired shall be subject to disciplinary action under section 9.1 of the act (63 P.S. §9.9a). 5 he knowingly submitted a false or inaccurate verification form. Essentially, Licensee concedes he did not know the CPA Law required that he be a licensed CPA during the entire period of time he supervised Applicant. He further asserts the design and format of the verification form, in which the sign-off statement is set forth in much smaller font, did not adequately explain this requirement to him. Therefore Licensee asserts his misrepresentation was unintentional. The Board counters that Licensee s conduct was actionable under either the former or present version of 49 Pa. Code §11.56. The former version, effective from May 1993 to July 2007, provided (with emphasis added): The supervisor who submits the statement shall be responsible for its accuracy. Failure to properly verify may result in disciplinary action. (Former 49 Pa. Code §11.56(b)) Applying this language to the facts here, we discern no error in the Board s determination that Licensee was subject to disciplinary action as a result of his carelessness or negligence in misrepresenting to the Board that he was a licensed CPA during the period of April 7-July 8, 2003. In other words, the Board need not establish Licensee intentionally misrepresented his licensure status. Further, Licensee, a licensed CPA, was charged with constructive knowledge of the CPA Law. See Heckert v. Dep t of State, Bureau of Prof l & Occupational Affairs, 476 A.2d 481 (Pa. Cmwlth. 1984) (individuals owning property are charged with knowledge of statutes affecting that property). Section 6 4.1 of the CPA Law6 requires that a CPA applicant s qualifying experience be obtained under the supervision of a licensed CPA. 63 P.S. §9.4a. At the time he signed the verification form, Licensee was a licensed CPA. Moreover, the pre-printed statement on the verification form which Licensee signed states, I certify under the penalty of perjury ¦ that I was currently licensed to practice as a CPA/PA during supervision. ¦ I am aware that the statements made may affect my license ¦. C.R., Cmwlth. Ex 1 (Order to Show Cause, Ex. 1). Even though the Board accepted Licensee s explanation that he did not have actual knowledge that his verification form contained a misrepresentation as to his licensure status during his supervision of Applicant, he was charged with constructive knowledge of Section 4.1 of the CPA Law. Heckert. For these reasons, we discern no error in the Board s conclusion that Licensee misrepresentation, although unintentional, constituted a violation of 49 Pa. Code §11.56. As a licensed CPA, Licensee was charged with constructive knowledge of the CPA Law and the Board regulations at the time he signed the verification form. Heckert. Licensee further asserts his unintentional mistake caused no damage, was immediately corrected, and thus did not warrant imposition of the maximum civil penalty of $1,000. 6 Added by the Act of December 4, 1996, P.L. 851. 7 The Board counters that in the absence of any averments of bad faith, fraud, capricious action or an abuse of power in its disciplinary sanction, this Court may not substitute its judgment as to the appropriateness of the Board s sanction. See Zook v. State Bd. of Dentistry, 683 A.2d 713 (Pa. Cmwlth. 1996) (although imposition of maximum penalty appears harsh, this Court s review is limited to a determination of whether the penalty is in accord with the law, not whether it is reasonable). We agree. Pursuant to Section 9.1(a)(4) of the CPA Law,7 a violation of a Board regulation is considered a violation of the CPA Law. 63 P.S. §9.9a(a)(4). Pursuant to Section 16(c) of the CPA Law, a maximum civil penalty of $1,000 may be imposed for any violation of the CPA Law. 63 P.S. §9.16(c). Thus, the Board s penalty is in accord with the law.8 Zook. Discerning no error or abuse of discretion in the Board s adjudication and order, we affirm. ROBERT SIMPSON, Judge 7 Added by the Act of September 2, 1961, P.L. 1165. 8 Further, as the Board asserts, Licensee s misrepresentation regarding his licensure status did not occur as a result of a mere typographical or clerical error. Rather, he wrongly assumed that the supervisor of a CPA applicant s qualifying experience need only be licensed at the time he or she signed the verification form. Such an interpretation, the Board argues, would render Section 4.1 of the CPA Law meaningless. We also agree with the Board that it is in the public interest that CPAs provide accurate information about their licensure status to the Board, on behalf of clients, and to the general public. 8 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Jianghua Feng, Petitioner v. Bureau of Professional and Occupational Affairs, State Board of Accountancy, Respondent : : : : : : : : : No. 2063 C.D. 2007 ORDER AND NOW, this 13th day of May, 2008, the order of the State Board of Accountancy is AFFIRMED. ROBERT SIMPSON, Judge

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