Guest Author Commentary: Fairness and the Rule of Law for Accountants


By Dan Jacobson

“Certain other societies respect the rule of force – we respect the rule of law.” President John F. Kennedy, May 18, 1963. While the current headlines highlight the nation’s efforts to apply the rule of law to police officers and to looters alike, it is incumbent to apply the rule of law to everyone, lest we be left to the whims of the brute rule of force.

The rule of law for accountants is not always applied to California’s accountants. I know this. I am a member of the California Board of Accountancy (“CBA”); and I see the rule of passion, not the rule of law, applied much too often. The rule of law has been subverted by the Department of Consumer Affairs (“DCA”), the department in which the CBA resides.

The CBA is composed of 15 members. Each of the 15 members is appointed either by the Governor, the Speaker of the Assembly, or the Senate Rules Committee. Business & Professions Code § 5000. The Board licenses and polices all of California’s Certified Public Accountants and Public Accountants. Business & Professions Code § 5100; and see B&P Code §§ 5033, 5034. The CBA located in the Department of Consumer Affairs (“DCA”), along with many other professional boards. See B&P Code § 108. Thus, the CBA is staffed by the DCA.

But, as should be apparent by the fact that Board members are appointed by some of the highest elected officers in our State, like other boards located in the DCA, the CBA is not a subsidiary agency to the DCA but rather, “exists as a separate unit,” with its own powers and legislatively mandated functions. B&P Code § 108.

“Substantially related [to the practice of accountancy]”

 The CBA can revoke, suspend, etc. an accountant’s license if the accountant has been convicted of a crime or if he/she commits an act of misconduct that is “substantially related [to the practice of accountancy].” Business & Professions Code §§ 5100(a) & 481.

Notwithstanding the rule of law requirement that accountant discipline must be based on a criminal conviction or a deed that is “substantially related [to the practice of accountancy],” it is not uncommon for the CBA to discipline accountants for doing things that the CBA just doesn’t like and reasonably doesn’t. Things like driving drunk. (And, in drunk driving cases, the CBA knows that the accountant was driving while drunk because staff brings such cases to the CBA when there has been a conviction.) But, a DUI conviction for drunk driving when the accountant was doing nothing related to accounting, let alone “substantially related” to accounting is not disciplinable by the CBA, under the rule of law. Rather, the CBA disciplines accountants for such not-substantially-related-to-accounting things under the rule of passion.

Please note. Things like DUI convictions have already been handled by the D.A.s, the courts, and the jails and prisons. The CBA, a legislative product of the Business & Professions Code, deals with the profession of accountancy. Is a DUI received when nothing to do with the profession was occurring, substantially related to the profession – or is the plain meaning of the legislature to allow the D.A.s, the courts, and the jails and prisons to handle such things, while the CBA only involves itself if the criminal conviction is for something like embezzlement.

2014 presentation to the Board re the meaning of “substantially related [to the practice of accountancy] – a presentation given by the prosecutor

 In 2014, the Deputy Attorney General who was at the time charged with prosecuting accountants before the CBA, gave the CBA a tutorial as to what “substantially related [to the practice of accountancy]” means. Please let that stew for a moment. The prosecutor tutored the judge/jury (the Board) about the relevant law.

Although I was appointed to the Board in September of 2017, the Deputy Attorney General gave me the substantive material that he used in his 2014 presentation. I strongly disagree with the presentation. Thus, I have tried in regular order to agendize the issue of what “substantially related [to the practice of accounting means]” Then I could present the statutes and the cases that appropriately define the plain meaning of “substantially related [to the practice of accountancy].” Everyone on the Board would fully and publicly participate in the discussion.

The Department of Consumer Affairs interference the CBA’s agenda

 At the Board’s January 17, 2019, meeting my request to agendize the issue of the meaning of “substantially related [to the practice of accountancy] was granted. It was agreed that I would write a memorandum on the subject, send it to staff, and staff would distribute it to the Board’s member in compliance with the Bagely-Keene Act.

So, I wrote an objective, detailed 19-page memo on the subject. I emailed that memo to staff on June 27, 2019, in accordance with the agreed-upon plan for compliance with the Bagely- Keene Act.

The DCA telephone call, and resulting “tabling” (apparently forever) of the subject

 A lawyer from the DCA called me; we spoke on 08/08/19. The Department attorney said, amongst other things – that attorneys for accountants haven’t yet figured out the concepts that I present in my memo – and, he doesn’t want accountants’ attorneys to learn such concepts. Eight days after this phone call, staff emailed me that the agendizing of this important subject had been tabled. Since then I’ve continued to demand that the matter be agendized. Crickets.

To review

 The DCA staffs the CBA, not the other way around. See B&P Code § 108. In fact, the legislature has vested the powers of the CBA in the appointees of the Speaker of the Assembly, the Governor, and the Senate Rules Committee. B&P Code § 5000(b). Regular order calls for Members to request the agendizing of a matter at a public meeting, in accordance with the Bagely-Keene Open meetings law. See generally The Bagley-Keene Open Meeting Act, Gov. Code §§ 11120, et seq.

Whether things like an accountant’s conviction for DUI while doing nothing at all related to accountancy was “explained” by the prosecutor, in a presentation to the Board in 2014 as being “substantially related [to the practice of accountancy].” After there was an understanding that this issue would be agendized for public discussion, and after I wrote the agreed-upon memorandum re the subject – a lawyer from the DCA explicitly told me that attorneys for accountants haven’t yet figured out the concepts that I present in my memo – and, he doesn’t want accountants’ attorneys to learn such concepts. Eight days after this phone call, staff emailed me that the agendizing of this important subject had been tabled.

That’s interference defined!

The Pelican Brief

 In 1992 John Grisham wrote The Pelican Brief. The “pelican brief” was a paper written by a law student that was deemed dangerous to some powerful interests. I feel like I wrote “an accountant’s pelican brief. But, its only danger is the promotion of the rule of law over the rule of passion.

Here’s a sample of what the DCA doesn’t want accountants’ lawyers to learn.

The plain meaning rule:

Under the “‘plain meaning rule’ . . . the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.” Berry v. State of California, 2 Cal.App.4th 688, 691 (1992). [italics added.] The late Justice David Sills of Div. Three of the Fourth Dist. explained, “It is the language of the statute itself that has successfully braved the legislative gauntlet. It is that language which has been lobbied for, lobbied against, studied, proposed, drafted, restudied, redrafted, voted on in committee, amended, re-amended, analyzed, reanalyzed, voted on by two houses of the Legislature, sent to a conference committee, and after perhaps more lobbying, debate and analysis, finally signed ‘into law’ by the Governor.” Halbert’s Lumber v. Lucky Stores, Inc., 6 Cal.App.4th 1233, 1238 (1992).

In order to derive the “plain meaning” the words in a statute one must “give effect to the usual and ordinary import of those.” Abernathy v. Superior Court (The People),157 Cal.App.4th 642, 648 (2007). The law tells us that “the ‘ordinary’ sense of a word is to be found in its dictionary definition.” Scott v. Continental Insurance Company, 44 Cal.App.4th 24, 29-30 (1996). “[C]ourts . . . turn to general dictionaries when they seek to ascertain the ‘ordinary’ meaning of words used in a statute.” Stamm Theatres v. Hartford Casualty, 93 Cal.App.4th 531, 540 (2001). The law doesn’t require or even allow the use of a law dictionary or any other sort of specialized dictionary. See PG&E v. Hart-High Voltage, 18 Cal.App.5th 415, 429 (2017).

Because “substantially related” is a phrase, each word in that phrase must be defined. “Substantially” is an adverb, which means, “solidly; firmly; with strength.” Webster’s New Twentieth Century Dictionary, Second Edition, p. 1817. [“in a substantial manner” omitted.] Related” is a past participle, which means, “connected.” Webster’s New Twentieth Century Dictionary, Second Edition, p. 1525. [2nd definition; “associated” omitted therefrom. 1st definition is “narrated, recounted; told.”]

So, the definition of “substantially related to the practice of accountancy” has to be “solidly, firmly, or with strength connected to the practice of accountancy,” or some equivalent of that.

The “pelican brief” goes into case law, further legal doctrine, and the like. The rule of law, not the rule of passion.

About the author:

Dan Jacobson is a Member of California’s Board of Accountancy, the 15‐member Board that polices all of California’s CPAs. Mr. Jacobson speaks for himself as an individual member of that Board, and not for the Board as a whole. Mr. Jacobson also practices business law in Tustin, is a member of the adjunct faculty at Pacific West College of Law in Orange, is an expert witness in insurance bad faith cases, and is the immediate past Chair of the Democratic Foundation of Orange County.


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