STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE BOARD OF ACCOUNTANCY, )

STATE OF FLORIDA, )

)

Petitioner, )

)

vs. ) CASE NO. 76-2002

)

THOMAS F. LUKEN, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-styled case, after due notice, at Fort Lauderdale, Florida, on August 17, 1977, before the undersigned Hearing Officer.

APPEARANCES

For Petitioner: James S. Quincey, Esquire

Post Office Box 1090 Gainesville, Florida 32602

For Respondent: David Hoines, Esquire

First National Bank Building Fort Lauderdale, Florida 33394

ISSUE PRESENTED

Whether the certificate of Respondent to practice public accounting in Florida should be revoked, annulled, withdrawn or suspended as indicated in the administrative complaint.

PRELIMINARY STATEMENT

The complaint herein alleges that the respondent has violated various provisions of Chapter 473, Florida Statutes, under which revocation of his certificate by the Board is authorized. The parties stipulated at the hearing that the sole issue for consideration was whether the petitioner should properly revoke respondent's reciprocal certificate as a certified public accountant because of his failure to engage in the full-time practice of public accounting for a period of three years after issuance of the certificate. The parties further stipulated that the respondent has been a full-time resident of the State of Florida for such a period but has not engaged in full-time practice of accountancy since May 1974.

The Board based one of its allegations in its administrative complaint on an alleged violation of Section 473.251(l)(g), which authorizes it to revoke or suspend a certificate to practice as a certified public accountant if the licensee is "guilty of a violation of the provisions of this chapter or of any

of the rules of the board." Although not specifically alleged in the administrative complaint, the Board's counsel announced at the hearing that this ground for revocation was based in part on respondent's alleged violation of Rule 21A-11.04(2), Florida Administrative Code, which purports to implement Section 473.201 concerning grounds for revocation of reciprocal certificates, such as is held by the respondent. The Hearing Officer thereupon permitted the Board to amend its complaint to allege a violation of the rule and offered the respondent the opportunity to request a continuance, if necessary, to enable him properly to defend against this charge. Respondent then contended that the rule is invalid as being in conflict with the statute. The Hearing Officer permitted him to file a separate petition under Section 120.56, seeking an administrative determination of the validity of the rule. Such a petition was thereafter filed in due course and a Final Order was issued thereon in the case of Thomas F. Luken, Petitioner, vs. State Board of Accountancy, State of Florida, Respondent, Case NO. 77-1588R, on November 15, 1977. By the aforesaid Final Order, the undersigned Hearing Officer determined that the Rule 21A-11.04(2) is an invalid exercise of delegated legislative authority.

FINDINGS OF FACT

The parties stipulated to certain facts, as follow:

1. That the Certificate Holder received an undergraduate degree in accounting from the University of Cincinnati in August of 1968.

   
   

2. That the Certificate Holder was employed by major CPA firms from August of 1968 to September of 1970 as an accountant.

   
   

3. That the Certificate Holder passed the uniform CPA exam in California in 1969, and was granted a CPA license by California upon completion of the necessary experience requirements in May of 1971.

   
   

4. That the Certificate Holder attended law school at the Ohio State University from September 1970 through December 1972. In December 1972 he was awarded a Juris Doctor Degree from that institution.

   
   

5. That prior to graduating from law school, the Certificate Holder made application to secure a position in accounting. He secured a position with the certified public accounting firm of Arthur Young and Co. in Cincinnati, Ohio, which position commenced on January 1, 1973.

   
   

6. That while employed as a certified public accountant by Arthur Young and Co., the Certificate Holder, in the summer of 1973, was offered a position with a certified public accounting firm in Miami, Florida.

   
   

7. That in July 1973 the Certificate Holder accepted that position with McClain and Co., CPA's of Miami, Florida, which position was to begin in August 1973.

   
   

8. That during the summer of 1973, the Certificate Holder requested the Florida State Board of Accountancy to forward him an application to apply for a reciprocal CPA certificate and the Board responded that an application would not be sent to anyone who was not a resident of the State of Florida.

   
   

9. That during the summer of 1973, the Certificate Holder made an application with the Florida Bar to become a member of the Florida Bar.

10. That the Certificate Holder moved his family from Cincinnati, Ohio, to Fort Lauderdale, Florida, in July 1973 and began working on a full-time basis for the Florida CPA firm of McClain and Co. in August of 1973. At that time he again requested an application for a reciprocal CPA certificate; said application being received by the Certificate Holder in late September of 1973.

    
    

11. That the Certificate Holder completed the application for a reciprocal CPA certificate and submitted the same to the Florida State Board of Accountancy in October 1973.

    
    

12. That in November 1973 the Certificate Holder took the Florida Bar examination in Tampa, Florida.

    
    

13. That the Certificate Holder was admitted to the Florida Bar in December 1973 and was granted a reciprocal CPA certificate by the Florida State Board of Accountancy in January 1974.

    
    

14. That the Certificate Holder was discharged by the Florida certified public accounting firm of McClain and Co. in may 1974.

    
    

15. That the Certificate Holder taught part-time in the Accounting Department of Florida International University beginning in January 1974 thru 1976. After his discharge from the public accounting firm of McClain and Co., he continued at Florida International University on a substantially full-time basis thru the summer of 1974 and into the fall of 1974.

    
    

16. That in August 1974 the Certificate Holder opened an office for the practice of law in Fort Lauderdale, Florida, but this office was staffed only on a part-time basis as the Certificate Holder was devoting the great bulk of his time to his teaching activities at Florida International University in Miami, Florida.

    
    

17. That in February, 1975, the Certificate Holder opened an office for the practice of law in Fort Lauderdale, Florida, (200 SE 6th Street, Suite 100- B), which office was from that time staffed on a full-time basis by the Certificate Holder.

    
    

18. That since February 1975 the Certificate Holder has been actively engaged in the full-time practice of law in the city of Fort Lauderdale, Florida; and

    
    

19. That the Certificate Holder has been a resident of and domiciled in the State of Florida from August 1973 thru and including the date of the Stipulation." (Exhibit 1).

    
    

20. The parties stipulated at the hearing that the respondent joined the Florida Institute of Certified Practicing Accountants on Jun 17, 1974, as an active member, and changed his status to that of a non-practicing member of the institute on August 22, 1975.

    
    

21. Respondent testified at the hearing that his purpose in attending law school in 1970 and eventually obtaining a law degree was predicated upon his desire to advance more rapidly in the tax department of an accounting firm. He had noted that most of the accountants doing tax work in accounting firms generally held law degrees and received higher salaries. Since he was interested in taxation, he did not obtain a master's degree in accounting which involves primarily audit work or preparation of financial statements.

    Respondent did tax work for an accounting firm in Cincinnati, Ohio, after graduation from law school in 1972 and secured a similar position with an accounting firm in Florida, McClain and Company, in the summer of 1973. He applied for admission to the Florida Bar the same summer because he believed his failure to do so might cause an adverse reaction by prospective employers in the accounting field. Prior to the Florida move, respondent did not seek employment with a law firm because he felt that the opportunities were much better in public accounting and he enjoyed that type of work. After passing the Florida Bar examination in October 1973, respondent did not seek employment in a law firm because he was well satisfied with his accounting position. After he was involuntarily discharged from his job with McClain and Company in May 1974, he sought employment with both accountant firms and law firms in the tax area.

    Although he began a graduate law program in taxation in January 1974, his purpose was to acquire greater knowledge and ability concerning tax matters for his work in accounting. Respondent testified that at the time he had applied for the Florida reciprocal license as a certified public accountant, he intended to practice public accounting in the State of Florida on a full-time year-round basis. He conceded that he has not been engaged in the full-time practice of accountancy since his termination with the accounting firm in the spring of 1974. (Testimony of Respondent, Exhibits 2, 3).

    
    

22. On December 30, 1975, respondent advised the petitioner by means of a "CPA information card" that he was not engaged in the practice of public accounting. By letter of June 21, 1976, petitioner requested respondent to return his certificate along with a stipulation and waiver of hearing. The practice of petitioner in such cases is to request that a registrant waive his right to a hearing on the question of whether or not his certificate should be revoked on the ground that he is not engaged in the full-time year-round practice of public accounting in Florida. In the event the registrant does not agree to waive such a hearing, petitioner normally proceeds to file an administrative complaint seeking revocation of the certificate. (Testimony of Respondent, Composite Exhibit 4).

    
    

    CONCLUSIONS OF LAW

    
    

23. Petitioner seeks to revoke the reciprocal certificate of the respondent for alleged violation of subsection 473.251(1)(e) and (g), Florida Statutes. These grounds for revocation provide pertinently as follow:

    
    

    "473.251 Suspension or revocation of certificates; forfeiture of privilege of special permits and agency relationships; grounds. --

    1. The certificate of any person to practice as a certified public accountant or as a public accountant may be revoked or suspended for a definite period not to exceed

       5 years when it shall appear to the board:

       * * *

       (e) That any reason exists which would have justified the refusal of the certificate in first instance; or

       * * *

       (g) That such person was guilty of a violation of the provisions of this chapter or of any of the rules of the board; . . ."

24. Petitioner's basis for alleging the above grounds for revocation is respondent's failure to engage in the full-time year-round practice of public accounting in the state for a continuous period of three years immediately after issuance of his certificate in allege violation of subsections 473.201(1)(d) and 473.201(2). Section 473.201 deals with the qualifications for issuance of a reciprocal certificate and the pertinent provisions read as follows:

    
    

    "473.201 Certificates granted to holders from other states. --

    1. Upon application, the board shall issue a reciprocal certificate to the holder of a valid, unrevoked certificate issued by, or under the authority of, another state or political subdivision of the United States only if:

       * * *

       1. The applicant is a resident of and domiciled in the state; . . .

       2. The applicant intends to enter into the full-time year-round practice of public accounting in the state; . . .

       * * *

    2. Failure of the holder of a certificate issued under this section to be domiciled in and practice public accounting on a substantially full-time basis in the state for a continuous period of 3 years immediately after issuance of such certificate shall be prima facie evidence of the lack of the requisite intent and sufficient grounds for revocation of the reciprocal certificate issued by the board."

       
       

       Accordingly, by respondent's admitted failure to practice public accounting on a full-time basis in Florida for the requisite period of three years after receiving his reciprocal certificate, petitioner contends that such fact establishes he never intended to do so at the time of the application.

       Petitioner claims that a ground for revocation thereby is established under subsection 473.251(1)(e) as an existing reason that would have justified the refusal of the certificate in the first instance, and under subsection (1)(g) as a violation of Section 473.201.

       
       

25. At the outset, it is not considered that Section 473.201 is susceptible of a "violation" because its provisions are not proscriptive in nature, but merely establish criteria for issuance of a reciprocal certificate. Further, it is not believed that subsection 473.201(2) is a separate basis in itself for revocation, but merely an evidentiary standard which enables petitioner, under certain circumstances, to establish a prima facie case for revocation under subsection 473.251(1)(e). Such a standard, however, cannot be applied in the instant case because respondent has continued to be domiciled in the State of Florida, although he has not practiced for the period of three years. The statute by its terms requires that both the failure to be domiciled in and practice on a full-time basis for three years exist before the prima facie rule can apply. Even if it had been applicable, the evidentiary "assist" to petitioner is designed simply to establish without further proof the fact that an applicant did not meet the qualifications for original certification because he did not intend to enter the full-time practice of public accounting

    in Florida at the time of application, as required by 473.201(d). However, if a certificate holder is able to counter such a prima facie case by showing that he did, in fact, at the time intend to so practice, there can be no basis for revocation of his certificate even if he fails to practice for three years.

    Otherwise, an accountant would be in dire straights if, although he had fully intended to pursue public accounting indefinitely, became stricken with an illness shortly after certification which prevented the same. Any number of such situations can be visualized in which the state would not be justified in claiming that later circumstances negated the original intent.

    
    

26. In this case, even though considered unnecessary, respondent has successfully overcome any prima facie case by showing that his intent at the time of application was indeed to enter the full-time practice of public accounting in Florida. This is not only evidenced by his testimony and his sworn statement in the application to that effect, but also by the objective facts surrounding his career. His prior employment record consisted almost exclusively of accountancy work, and he was so engaged at the time he made the Florida application. Even after he was admitted to the Florida Bar in December 1973, he remained employed with an accountancy firm in Florida, and so remained for a period of approximately six months until he was involuntarily discharged. It is true that after that period of employment, he no longer practiced accountancy on a full-time basis; however, the statute does not so require. The three-year period mentioned in subsection 473.201(2) merely bears on whether or not he lacks the requisite intent at the time he applied. It is therefore concluded that petitioner has failed to establish sufficient grounds for revocation of respondent's certificate under either of the cited disciplinary provisions of Section 473.251(1) that are based on purported "violations" of Section 473.201.

    
    

27. As another ground for revocation under subsection 473.251(1)(g), petitioner asserts that respondent violated its Rule 21A-11.04(2), Florida Administrative Code. That provision provides as follows:

"21A-11.04 Reciprocal Certificates

* * *

(2) In the event a recipient of a reciprocal certificate, within three (3) years after issuance of a certificate, ceases to be a resident of and domiciled in the state or ceases to practice public accounting on a substantially full-time basis in the state,

he shall properly notify the board and surrender his reciprocal certificate."

Respondent conceded at the hearing that, although he had ceased to practice public accounting on a substantially full-time basis in the state, he had not surrendered his reciprocal certificate as required by the aforesaid rule.

However, in view of the fact that Rule 21A-11.04(2) was determined to be an invalid exercise of delegated legislative authority, pursuant to Section 120.56, Florida Statutes, in Lukens v. State Board of Accountancy, DOAH No. 77-1588R on November 15, 1977, the rule can no longer provide a basis for revocation of a certificate.

RECOMMENDATION

That petitioner's administrative complaint against respondent Thomas F. Luken be dismissed.

DONE AND ENTERED this 16th day of November 1977 in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida (904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of November 1977.

COPIES FURNISHED:

James S. Quincey, Esquire Post Office Box 1090 Gainesville, Florida 32602

David Hoines, Esquire

First National Bank Building Fort Lauderdale, Florida 33394

Docket for Case No: 76-002002

Orders for Case No: 76-002002