Simic v. Accountancy Bd. of Ohio

Citation: 2014 Ohio 3237Docket: 100618

Court: Ohio Court of Appeals; July 24, 2014; Ohio; State Appellate Court

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Michael Simic appealed the Cuyahoga County Court of Common Pleas' decision, which upheld the Accountancy Board of Ohio's revocation of his CPA certificate for one year. Simic, owner of an accounting firm, failed to renew the firm's registration by the July 31, 2011 deadline, receiving a cease and desist order from the Board on September 29, 2011, alongside an extension to October 28, 2011. He submitted the registration documents late, on November 28, 2011, after the Board had already rejected his payment and refused renewal on December 20, 2011. During the proceedings, Simic cited personal hardships, including his wife's death and his own hospitalization, as reasons for his delays. The Board focused on his non-compliance with the cease and desist order, ultimately revoking his CPA certificate on May 1, 2012. The trial court affirmed the Board’s decision, stating that sanctions were justified due to Simic's failure to cease advertising his unregistered firm. Simic's appeal raised two arguments regarding the legality of the Board’s decision, including the assertion of a one-year grace period for license renewal and procedural adherence, with the court finding merit in the latter claim. The appellate court reversed the trial court's judgment.

An appellate court's review of an administrative agency's order is limited compared to a trial court's review, which involves examining evidence, while the appellate court assesses whether there was an abuse of discretion. In this case, Simic's firm needed to renew its triennial registration by July 31, 2011, as mandated by R.C. 4701.04, which requires public accounting firms to register and pay a fee to practice in Ohio. The definition of public accounting includes any services using accounting or auditing skills, as outlined in R.C. 4701.01(A). The Ohio Administrative Code mandates that registration renewal documents must be submitted by the July 31 deadline, with failure to do so constituting a per se violation under R.C. 4701.16(A)(11). While Simic contended that R.C. 4701.10(F) allows for a grace period for renewing a CPA certificate, the court concluded that it does not apply to the firm’s registration. Consequently, the trial court correctly stated that the grace period does not extend to the firm’s registration process, leading to potential disciplinary actions and mandatory penalties for late renewal. The penalty escalates from $150 for firms with one to four permit holders to $300 after February 1 of the following year. Simic raised a due process claim based on the Board’s alleged failure to adhere to its own procedures regarding late registration; the firm was 30 days late. A November 2011 letter informed Simic of his right to request a hearing before sanctions were applied. Instead of seeking a hearing, Simic submitted the registration renewal documentation along with a late renewal application form, which allowed compliance before January 31, 2012, thus indicating the possibility for late submissions. The Board's guidelines also recognized that firms could achieve compliance following the issuance of cease and desist letters.

The Board denied a late renewal request for a firm due to pending disciplinary action, but lacked authority to do so without conducting a hearing as mandated by R.C. 4701.16(B). Effective December 20, 2012, this refusal effectively sanctioned the firm without a hearing. Although the firm attempted to comply with the late renewal process, the Board subjected Simic to a hearing and potential sanctions. The Board's policy manual indicated that firms could still be heard after a cease and desist order if non-compliance persisted. The Board's final adjudication should have focused on suspending Simic's CPA certificate personally due to the firm’s late renewal failure, rather than on prior cease and desist violations. The Board's decision to revoke Simic’s CPA certificate for one year is unenforceable, as R.C. 119.06 requires a hearing opportunity, which was not afforded. Additionally, R.C. 119.07 stipulates that notice of charges must be given before a hearing, but only the firm’s registration failure was mentioned, ignoring potential disciplinary actions against Simic for specific violations. The trial court erred by relying on evidence of Simic’s non-compliance with the cease and desist order to impose personal sanctions, as such conduct is a distinct violation under Ohio law. The Board failed to provide Simic with proper notice of violations before the hearing, and the focus should have solely been on the late submission of registration materials. Neither the Board nor the trial court adhered to this limitation in their inquiries.

The Board did not notify Simic of potential sanctions for failing to comply with cease and desist orders. Consequently, the one-year revocation of Simic’s CPA certificate, based solely on his advertising the firm with the CPA designation, is unenforceable as the Board lacked authority without prior notice. The trial court, assuming Simic's violation justified the sanction, erred in affirming the Board's decision. The sanction against Simic’s CPA certificate is void due to the lack of required notice regarding unregistered practice. The trial court’s decision is reversed, and it is established that there is no statutory grace period for automatic renewal of registration requirements. The appellant is entitled to recover costs, and a special mandate will direct the common pleas court to execute this judgment. A certified copy of this entry serves as the mandate according to appellate procedure rules.