What are potential violations under Texas law for which an accountant can be disciplined by the Board of Public Accountancy (the “Board”)?
- Conduct indicating lack of fitness to be a CPA.
- Fraud, dishonesty, or gross negligence in the performance of accounting services;
- Violating the rules governing the Practice of Accounting in Texas Occupations Code, Chapter 901 (the “Public Accountancy Act” or the “Act”);
- Violating the Rules of Professional Conduct; or
- Conviction of a felony, or a misdemeanor involving fraud or dishonesty.
What are the disciplinary actions that the Board can take against an Accountant?
The Board has the authority to reprimand, probate, suspend or revoke a license holder for any of the above violations. § 901.501 of the Act.
How do disciplinary proceedings against accountants commence?
The Board detects grounds for discipline principally by the following two methods: (a) the complaint and investigation process, and (b) peer review. Under the relevant provisions of the Texas Administrative Code, the firms that conduct audits, projections, forecasts, compilations and special reports are required to participating in the peer review process, under which their work product their work product is reviewed for compliance with accounting standards. Depending on the results of the review, the Board may refer the firm for discipline.
How are disciplinary proceedings conducted?
The Board files formal charges upon finding that grounds for discipline may exist. The accountant may then request a settlement conference to resolve the matter without the necessity of a formal hearing. If the case cannot be resolved informally, the certified public accountant is entitled to an administrative hearing at the State Office of Administrative Hearings, which is similar to a civil trial. Accountants have the right to representation in both settings and hiring competent legal counsel is strongly advised.
What is the standard applicable to accountants in negligence lawsuits.
Accountants generally owe their clients a duty to exercise the degree of care, skill and competence that reasonably competent members of their profession would exercise under similar circumstances.
What is the statute of limitations applicable to a lawsuit for accounting malpractice?
Generally, the statute of limitations for professional negligence in Texas it is two years from the event causing the “legal injury.” However, the “discovery rule” or that the “fraudulent concealment” doctrine may apply to lengthen the period following the legal injury during which a client can file suit.