When Accountants are Held Accountable
The most recent highly publicized case of accountant misconduct involves David Friehling, Bernie Madoff’s longtime accountant who faces 105 years in prison for his alleged fraud charges. And while most accountant misconduct doesn’t rise to this criminal level…or to this level of notoriety…it is, nonetheless, a frequent occurrence.
Criminal conduct subjects California accountants to professional discipline. That is, criminal conduct that is “substantially related to the qualifications, duties or function of accounting” subjects these professionals to discipline.
The problem is that California’s definition of “substantially related” is quite broad. It, not surprisingly, includes criminal offenses such as forgery, fraud and theft (which are all directly involved with the duties and functions of an accountant). However, California courts have also applied it, for example, to carjacking. This conclusion leads a reasonable person to ask, how is carjacking substantially related to the duties of an accountant? It also explains why accountant misconduct is a frequent occurrence.
It’s because of this type of this “personal conduct = professional conduct” illogical reasoning that it is important to retain skilled representation when trying to fight Board action. When the California Board of Accountancy…who obviously has wide discretion when it comes to disciplining its licensees…seeks to take action against your license for criminal conduct, it is critical to persuade the Board that your personal mistake in judgment should not affect your professional license. If you or your attorney can convince the Board that your indiscretion isn’t substantially related to your profession, you are entitled to maintain your license.
