State Board of Certified Public Accountants of Louisiana v. Donnelly

Citations: 688 So. 2d 127; 96 La.App. 5 Cir. 822; 1997 La. App. LEXIS 540; 1997 WL 29283Docket: No. 96-CA-822

Court: Louisiana Court of Appeal; January 27, 1997; Louisiana; State Appellate Court

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Dennis Donnelly, a Certified Public Accountant (CPA), appeals a summary judgment granted to the State Board of Certified Public Accountants of Louisiana (the Board) regarding his refusal to pay costs associated with a working papers review. The Board conducted the review in November 1994, during which Donnelly submitted the required documents but disputed the review's validity and his obligation to pay its costs. Following the review, the Board determined that Donnelly was mostly compliant with CPA standards and issued an invoice for $50 in expenses. After multiple unsuccessful attempts to collect this amount, the Board reprimanded Donnelly on August 21, 1995, imposing a total financial obligation of $1,603.08, including a fine and various costs. Although Donnelly received notice of his right to appeal, he did not contest the Board's decision within the specified time frame, leading it to become final.

On November 8, 1995, the Board sought to enforce its decision in district court. Donnelly moved to dismiss the petition, alleging misrepresentation by the Board, but this motion was denied on June 6, 1996. The Board subsequently requested a summary judgment, asserting that there were no factual disputes since Donnelly did not appeal the earlier decision. Donnelly filed counter motions for discovery and summary judgment, claiming the Board failed to adhere to administrative procedures. After reviewing the motions, the trial judge granted the Board's summary judgment on July 16, 1996, ordering Donnelly to pay the total amount owed along with additional penalties and attorney's fees. Donnelly's appeal follows this judgment.

Defendant filed a pro se appeal, arguing that the Board did not demonstrate compliance with the Louisiana Administrative Code (LAC:46:XIX.2901) and failed to initiate charges properly by resolution. He claims that Louisiana Revised Statutes (R.S.) 37:84, which allows the Board to pursue summary judgment, assumes full compliance with the Administrative Code; thus, any noncompliance invalidates the Board's actions. He also asserted that the Board inadequately responded to his Requests for Production from June 10, 1996, despite a pending Motion to Compel, indicating genuine issues of material fact that should prevent summary judgment.

The record indicates that a review of defendant's working papers found him compliant and a competent CPA in good standing. Defendant refused to pay a $50 cost assessed by the Board, arguing he did not authorize the expenses. After several billing attempts, the Board warned him of potential formal proceedings if he did not pay. He responded by questioning the legitimacy of the Board's authority regarding the invoice and argued that formal proceedings could suppress legitimate dissent.

A Board member initiated a formal complaint against the defendant for his refusal to pay, claiming it demonstrated a disregard for the Board’s authority and negatively impacted his professional fitness. Following a hearing, the Board utilized a written form to document its findings and decisions, with options to take no action, revoke his CPA certificate, suspend his license, issue censure, impose costs and fines, or place him on probation.

The statute allows for both voluntary and involuntary peer reviews for CPAs, with all being subject to periodic reviews. Defendant did not participate in a voluntary review and was instead subject to an involuntary one. The Board may charge reasonable expenses for the review process and has the authority to adopt rules for the regular review of compliance with generally accepted standards for audit, review, and compilation reports. CPAs who undergo an approved professional peer review are exempt from the requirement for Board review during that period.

The board is authorized to hire a certified public accountant or firm to conduct reviews and report findings. It can establish rules for scheduled inspections and reviews of working papers related to audits, requiring reviews every three years or as determined by the board. CPAs and firms that undergo an approved professional peer review may be exempt from these requirements. 

Under R.S. 37:84, the board may refuse to issue, suspend, revoke, or impose restrictions on licenses or registrations for various reasons, including felony convictions, crimes involving fraud, deceit in obtaining licenses, false testimony, public deception, professional incompetence, and violations of board rules. 

Additionally, if violations occur, the board can impose fines covering investigation costs and additional penalties. If fines are not paid within 30 days, the board may seek enforcement through the courts, which will handle the case summarily and can impose further penalties and costs on the respondent.

Failure to comply with a court order constitutes contempt of court, allowing the board to seek legal relief. Revocation of any certificate, license, or registration requires four concurring votes from the board, while three votes are sufficient for suspension or fines exceeding $500. The defendant did not appeal the board's decision from August 21, 1995 within the required 30 days, rendering that decision final and necessitating the trial judge's affirmation of it. Under R.S. 37:84 B.(1), the trial judge is mandated to order payment of costs, reasonable attorney's fees incurred by the board, and a civil penalty of $500 to $1,000 determined by the court. The board demonstrated that there were no genuine issues of material fact by providing evidence of the decision and the notice sent to the defendant. Consequently, the board is entitled to enforce its decision and collect $1,603.08, plus a minimum fine of $500, costs, and reasonable attorney fees. The trial court's judgment from July 15, 1996, which enforced the board's decision, was affirmed, and the board was awarded an additional $500 in attorney fees for the appeal. The defendant is responsible for the costs of the appeal.