Criminal Convictions & Accountant Discipline in California

California accountants face professional discipline if they suffer a conviction for a crime that the California Board of Accountancy deems “substantially related” to the work of accountancy. “Substantially related” is determined on a case-by-case basis, but the Board usually imposes some form of discipline if a crime involved:

• dishonesty,
• fraud, and
• breach of fiduciary responsibility.

Depending on the seriousness of the crime committed, accountancy discipline may range from a reprimand to license revocation.

The CBA may also deny licenses to applicants for having been convicted of a crime within the last seven years if the crime is “substantially related” to accountancy. Also, aspiring accountants may be denied licenses for having a conviction of any age that was for either a:

• serious offense (such as murder, rape, or grand theft),
• sex offense that requires Tier II or Tier III registration, or
• financial felony that is related to accountancy work.

Note that the CBA normally holds a disciplinary hearing before taking disciplinary action. The convicted accountant and his/her attorney can attend the hearing.

During the hearing, the Board considers some of the following factors when assessing administrative penalties:

• the specific California code sections that the CPA violated,
• a clear description of the crime committed, and
• the CPA’s explanation of the offense.

If the CBA decides to suspend or revoke an accountant’s license, the CPA can file for reinstatement of his/her license.

The Board considers some of the following factors in determining whether or not to reinstate a license:

• the nature and severity of the past crime,
• whether the accountant committed any other offenses since the crime leading to disciplinary action, and
• the extent to which the accountant has complied with any terms of probation, parole, or restitution.

Our California criminal defense attorneys will highlight the following in this article:

• 1. Who regulates accountants in California?
• 2. Does a criminal charge trigger accountant discipline?
• 3. Can a person receive a CPA license with a criminal record?
• 4. Will a licensed accountant face investigation if convicted of a crime?
• 5. What disciplinary actions can the Board of Accountancy take?
• 6. Can suspended accountants file for reinstatement of a CPA license?
• 7. Can I fight for my license?
• Additional Resources

California accountants risk professional discipline by the California Board of Accountancy (CBA) following a conviction for a crime “substantially related” to the work of accountancy.

1. Who regulates accountants in California?

The California Board of Accountancy (CBA) is responsible for accountancy licensure and credentials in California. The Board is a state governmental agency within the California Department of Consumer Affairs.

The Board enforces the California Accountancy Act and implements regulations per its mission of public protection. 1

2. Does a criminal charge trigger accountant discipline?

No. The state Board of Accountancy will not initiate disciplinary actions or an investigation if an accountant is charged with a crime.

Rather, the Board will begin investigating an accountant if he/she is convicted of a criminal offense.

“Convictions” include felony, misdemeanor, and infraction convictions secured through:

• guilty pleas and verdicts (once the judgment is entered), and
• no contest pleas (once judgment is entered) 2

Generally speaking, the Board can act with respect to a conviction when:

• the time for appeal has passed,
• the judgment of conviction has been affirmed on appeal, or
• an order granting probation has been made suspending imposition of sentence. 3

3. Can a person receive a CPA license with a criminal record?

Maybe. The definitive answer depends on when the conviction occurred, and the severity of the offense convicted of.

If a person in the State of California has a criminal conviction that occurred seven or more years ago, the conviction is generally not grounds for denial of an accountancy license. This is true provided that the party has completed all sentencing terms.

However, the Accountancy Board can still disqualify applicants for a conviction, no matter how long ago it took place, if the conviction was for either:

• a crime that requires Tier II or Tier III sex offender registration,
• a felony financial crime that is directly and adversely related to the fiduciary qualifications, functions, or duties of accountancy, or
• a serious felony.

The term “serious felony” is defined in Section 1192.7 of the California Penal Code. Examples include:

• murder,
• mayhem,
• forced sodomy,
• assault with a deadly weapon,
• robbery, and
• kidnapping.

Suppose a person was convicted of a crime within seven years of applying for a CPA license. In that case, the person is still eligible to receive a license for the practice of public accountancy. This is true provided that the crime convicted of was not substantially related to the functions of being an accountant. 4

Note that applicants for a CPA license must disclose any conviction when applying for a license. This includes convictions for any felony, misdemeanor, or infraction (except minor traffic infractions).

Further, accountants renewing their license are also required to complete a Criminal Conviction Disclosure Form, where they too must also report any convictions of a crime.

Whether or not a conviction is “substantially related” is a factual determination made by the Board.

4. Will a licensed accountant face investigation if convicted of a crime?

Yes. The Board will generally investigate an accountant if he/she is convicted of a crime.

Note that the California Department of Justice (DOJ) notifies the Board of a CPA’s conviction within 30 days of the conviction’s occurrence. 5 The Board will typically begin an investigation once notified by the DOJ.

Notification will also require the convicted accountant to:

1. disclose the facts of the crime convicted of, and
2. provide court documents and police reports related to the offense.

After the Board completes its investigation, it will determine whether or not to initiate disciplinary proceedings/enforcement actions against the convicted CPA.

The Board normally will initiate such proceedings if it finds that the accountant was convicted of a crime substantially related to an accountant’s professional standards and functions. 6

A substantially related conviction is one that:

“evidences present or potential unfitness of a certified public accountant or public accountant to perform the functions authorized by his or her certificate or permit in a manner consistent with the public health, safety, or welfare.” 7

Whether or not a conviction is “substantially related” is a factual determination made by the Board.

Note, though, that California law states that an offense is generally substantially related to the practice of accountancy if it involves:

• dishonesty,
• breach of fiduciary responsibility,
• fraud or deceit in obtaining a certified public accountant’s certificate or a public accountant’s permit, and
• gross negligence in the practice of public accountancy. 8

According to Board newsletters (and related enforcement documents), the following kinds of convictions have netted disciplinary action against California accountants:

• forgery, 9
• mail fraud, 10
• bank fraud, 11
• grand theft, 12
• tax evasion, 13 and
• carjacking. 14

5. What disciplinary actions can the Board of Accountancy take?

The Board can take a variety of disciplinary actions, including:

• imposing sanctions,
• reprimanding the accountant,
• placing the subject accountant on probation,
• suspending the accountant’s license, or
• revocation of the CPA’s license. 15

The Board typically holds a disciplinary hearing to help reach a disciplinary determination. The hearing takes place before an Administrative Law Judge. The convicted accountant and his/her attorney appear at the hearing and the case is prosecuted by a lawyer from the criminal defense Attorney General’s office.

The Board considers some of the following factors when assessing administrative penalties:

• the specific California code sections that the CPA violated,
• a clear description of the violation,
• the CPA’s explanation of the crime committed,
• the nature and extent of actual harm caused to a client,
• the severity of the offense committed, and
• the specific role of the accountant in committing the crime. 16

Further, the Board considers the following as aggravating factors that suggest some form of disciplinary measures:

• the accountant knowingly committed a crime,
• the CPA has a history of prior discipline,
• the crime that was committed resulted in financial damage to the accountant’s client,
• the crime resulted in a failure to comply with a continuing professional education (CPE) requirement,
• the accountant failed to cooperate with the Board’s investigation, and
• the accountant misappropriated a client’s funds in the commission of his/her offense. 17

Similarly, the Board considers the following as mitigating factors that suggest no disciplinary action or an action of a low degree:

• the accountant cooperated with the Board’s investigation,
• the conviction was a one-time event and there is no other record of prior discipline,
• the CPA regrets committing a crime,
• the accountant took or is taking action to help prevent the commission of a similar offense (for example, by enrolling in a drug or alcohol class), and
• the crime did not lead to financial loss of a client. 18

6. Can suspended accountants file for reinstatement of a CPA license?

An accountant whose license is suspended or revoked following a criminal conviction can usually file for reinstatement.

The Board decides on reinstatement after conducting a reinstatement hearing, which the convicted accountant normally attends.

The CBA will typically reinstate a CPA’s license if the accountant provides evidence that he/she has rehabilitated him-/herself. 19

The Board considers some of the following factors in determining whether or not to reinstate a license:

• the nature and severity of the past crime,
• whether the accountant committed any other offenses since the crime leading to disciplinary action,
• the extent to which the accountant has complied with any terms of probation, parole, or restitution,
• the CPA’s attitude towards the crime committed,
• the extent of actual harm caused to a client, and
• whether the accountant has completed the sentence for his/her offense.

7. Can I fight for my license?

Yes. If you are a California accountant and you receive an Accusation notifying you that the Board seeks to discipline you by suspending or revoking your license, you can negotiate with the Board, or appear before it, to try and reach a favorable settlement.

Note that accountants subject to a disciplinary hearing have the right to consult and hire a defense attorney for assistance.

CPAs also have the right to:

• discover any relevant evidence before the Board in preparation for the hearing, and
• introduce evidence and cross-examine witnesses at the hearing.

If an accountant does lose his/her license, the party can always try to petition the Board for reinstatement.

Additional Resources

For more information, refer to the following:

• CalCPA – a professional organization representing certified public accountants in California, providing education, advocacy, and resources to support its members and the accounting profession.
• California Society of Municipal Finance Officers (CSMFO) – a professional organization dedicated to promoting excellence in municipal financial management through training, sharing of information, and active participation in the municipal financial community within California.
• Accounting & Financial Women’s Alliance (AFWA) – a professional organization that champions the professional growth and advancement of women in accounting and finance through networking, education, leadership opportunities, and advocacy.
• Association of International Certified Professional Accountants – global organization formed by the merger of the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA), representing the accounting profession worldwide and providing resources, education, and certifications for CPAs and management accountants.
• American Accounting Association – organization dedicated to promoting worldwide excellence in accounting education, research, and practice through publications, teaching, research, and networking opportunities for accounting professionals and academics.

Legal References:

1. See California Business and Professions Code Section 5000 et seq; California Code of Regulations Title 16, Division 1 (State Board of Accountancy); and, California Business and Professions Code Section 5000.1.
2. See California Business and Professions Code Section 5106.
3. See same. See also California Business and Professions Code Section 7.5.
4. California Business and Professions Code Section 480. See also Assembly Bill 2138.
5. Note that accountants in California also have a duty to report certain criminal convictions within 30 days of their occurrence. See Business and Professions Code 5063.
6. California Business and Professions Code Section 5100.
7. California Code of Regulations Title 16, Division 1, Section 99.
8. See same.
9. In the Matter of the Accusation Against Susan Rachele (CPA) Case No. AC-2009-35 [default decision revoking license after conviction of 107 counts of forgery].
10. In the Matter of the Accusation Against William Russell Murray (CPA) Case No. AC-2010-26 [default decision revoking license after guilty plea in federal mail fraud and interfering with tax administration case]; and, In the Matter of the Accusation Against Mamie Tang (CPA) Case No. AC-2004-10 [stipulated settlement and disciplinary order revoking license after conviction for mail fraud].
11. In the Matter of the Accusation Against Alejandro Sady-Kennedy (CPA) AC-2007-26 [stipulated settlement and disciplinary order revoking license after conviction for bank fraud, wire fraud and money laundering].
12. In the Matter of the Accusation Against Jerold J. Werner (CPA) Case No. AC-2004-18 [default decision revoking license after conviction on no contest plea for grand theft]; and, In the Matter of the Accusation Against Michael Alan Feldman (CPA) Case No. AC-2005-36 [default decision revoking license after conviction for grand theft by embezzlement].
13. In the Matter of the Amended Accusation Against Wade Vincent Shang (CPA) Case No. AC-2004-20 [license revoked after conviction by jury verdict for tax evasion].
14. In the Matter of the Accusation Against Michael D. Stava (CPA) Case No. AC-96-35 [license revoked by stipulated settlement after conviction by jury verdict for carjacking and robbery].
15. See California Business and Professions Code Sections 5000 et seq., and Title 16 California Code of Regulations (CCR) Sections 1 through 99.1.
16. See California Board of Accountancy, Disciplinary Guidelines and Model Orders 10 th Edition, 2019.
17. See same.
18. See same.
19. See same.