STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STEPHEN A. COHEN, )

)

Petitioner, )

)

vs. ) CASE NO. 80-2332

) STATE BOARD OF ACCOUNTANCY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for administrative hearing on April 20, 1981, at Tallahassee, Florida before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: George L. Waas, Esquire

1114 East Park Avenue Tallahassee, Florida 32301

For Respondent: John J. Rimes, III, Esquire

Assistant Attorney General Suite 1601, The Capitol Tallahassee, Florida 32301

The Petitioner has filed an application seeking licensure as a certified public accountant in Florida by endorsement based upon the fact that he is a licensed certified public accountant in Pennsylvania and thus seeks to be licensed in Florida without the necessity for taking an examination. The Petitioner was licensed in Pennsylvania in 1961. The Board of Accountancy reviewed the Petitioner's application and determined that he met the Florida requirements for education and experience in the field of public accounting but that he had failed to meet the examination requirement set forth in the Florida Rules and Statutes in effect at the time of his licensure in Pennsylvania in 1961. The Board determined that although the Petitioner was administered the same examination in Pennsylvania in 1961 that was administered in Florida in that year, that as to him the criteria for licensure in the State of Pennsylvania were not substantially equivalent to those prevailing and required in the State of Florida in that same year pursuant to Section 473.308(3), Florida Statutes. Having determined that the Petitioner failed to meet the examination requirements set forth in the Florida rules and statutes in effect at the time of his licensure in Pennsylvania, his request for licensure by endorsement was denied by a non-final order of the Board entered on December 8, 1980. The Petitioner was informed of and timely exercised his rights to file a proceeding and seek a hearing pursuant to Chapter 120, Florida Statutes, challenging the determination on the part of the Board that the criteria for licensure in the State of Pennsylvania at the time of his licensure in that

state was not substantially equivalent to those prevailing in the State of Florida in 1961.

During the course of the hearing the Petitioner presented two witnesses and two exhibits. The Respondent presented two exhibits. In addition the parties stipulated that, the evidence of record in Case No. 81-462R, the related rules challenge proceeding directed to the rules upon which the Board relied in entering its denial of licensure in the instant case, should be considered by the undersigned in this cause. The subject rules have been upheld by the hearing officer in that case. The hearing was conducted as scheduled, and the parties thereafter waived the 30-day time limitation imposed under Rule 28- 5.402, Florida Administrative Code, in order to have the benefit of the transcript of the evidence adduced at the final hearing and to have adequate time to prepare post-hearing pleadings.

Both parties have submitted Proposed Findings of Fact and Conclusions of Law. The Hearing Officer has considered all proposed findings of fact, conclusions and supporting arguments of the parties. To the extent that the Proposed Findings of Fact and Conclusions of Law submitted by the panties, and the arguments by them are in accordance with the findings, conclusions and views stated herein, they have been accepted, and to the extent that such proposed findings and conclusions of the parties, and such arguments made by the parties, are inconsistent therewith, they have been rejected. Certain proposed findings and conclusions have been omitted as not relevant, dispositive or as not necessary to a proper determination of the material issues presented. To the extent that the testimony of the witnesses is not in accord with the findings and conclusions herein, it is not credited.

The issue is thus whether the Board properly denied the Petitioner's request for licensure by endorsement and, concomitantly, whether the criteria for licensure in the State of Pennsylvania at the time of the Petitioner's licensure in that state in 1961 were substantially equivalent to those criteria for licensure prevailing and required in the State of Florida at that time.

FINDINGS OF FACT

1. The Petitioner is a certified public accountant licensed in the State of Pennsylvania, having been licensed in 1961. The Petitioner is seeking licensure as a certified public accountant in Florida pursuant to the provisions of Chapter 43.308(3)(b), Florida Statutes, and Rule 21A-29.01(1)(b), Florida Administrative Code, that is, he seeks licensure in Florida by endorsement based upon his Pennsylvania licensure without the necessity for taking the Florida examination. At the time of the Petitioner's initial licensing in the State of Pennsylvania in 1961 he met Florida's requirements in the areas of education and experience. The Petitioner currently holds a valid license in Pennsylvania and is licensed in other states.

   
   

2. The Board of Accountancy reviewed the Petitioner's application and determined that he met the Florida requirements for education and experience and that he was administered the same examination in Pennsylvania in 1961 that was administered in Florida in 1961, the uniform certified public accountancy examination administered by the American Institute of Certified Public Accountants (AICPA). The Board determined, however, in its non-final order, that the Petitioner did not receive grades on that examination administered in Pennsylvania that would have constituted passing grades in Florida and denied his application. The rules of the Board require that an applicant for licensure as a certified public accountant receive a grade of 75 or above on all parts of

   an examination administered by the American Institute of Certified Public Accountants. See Rule 2IA-28.05(2)(3), Florida Administrative Code. The rules in effect in 1961 also required that a grade of 75 or above be received on all four subjects of the examination in order to achieve licensure in Florida. See Rules of the State Board of Accountancy Relative to Examinations and the Issuance and Revocation of Certificates, Rule 1(f). See also Section 473.10, Florida Statutes (1961). The requirement that applicants for licensure by endorsement receive grades on all four areas of the AICPA Exam of 75 or better has been enforced in Florida since the 1930's and has been a requirement embodied in the rules of the Board since 1949.

   
   

3. In February, 1961, the Pennsylvania Board of Accountancy, pursuant to a resolution enacted for insular reasons of its own, determined to accept as passing the Petitioner's and other candidates' scores in the Law and Practice portions of the AICPA licensure examination, even though those grades were below the score of 75. The Board thus deemed that the Petitioner passed the examination for purposes of licensure in Pennsylvania with a score of "75" by fiat, even though in fact the Petitioner did not receive an actual score of 75 in those two subject areas as determined by the AICPA which administered and graded the examination. The acceptance of the lower grade on the part of the Pennsylvania Board was not done pursuant to a regrading of the Petitioner's exam in an attempt to correct mistakes or errors in the AICPA's finding regarding his score, but was rather simply due to an arbitrary determination by the Pennsylvania Board that for the Petitioner and certain other Pennsylvania applicants the lower grade in that particular instance would be considered as passing.

   
   

4. The Petitioner had no knowledge that the Pennsylvania Board had taken this action in arbitrarily upgrading his scores on two portions of the exam so that he passed the entire exam until he began his application process with the Florida State Board of Accountancy in September, 1980. During its investigation of the Petitioner's application for licensure by endorsement, the Florida Board of Accountancy ascertained that the Petitioner had in fact received grades of 65 in the Law and Practice pertions of the Uniform AICPA Examination which were then subsequently arbitrarily raised by resolution of the Pennsylvania Board. The Florida Beard has at no time accepted as passing grades for a licensure examination those grades by applicants of less than 75 on the AICPA examination. It is true that prior to the Florida Board's becoming aware, in 1973, of the fact that Pennsylvania had arbitrarily raised some grades of its applicants, it did in fact accept some similarly situated candidates for licensure by endorsement in Florida. After becoming aware at that time of this arbitrary grade-raising process, the Board has consistently refused licensure to applicants from other states who actually received less than 75 on the AICPA Examination as determined by the AICPA. For considerations of equity and fairness the Board did, however, allow candidates who had already been licensed in Florida by endorsement prior to the Board's becoming aware of this anomaly to retain their licenses.

   
   

5. Since the Petitioner failed to meet the AICPA examination requirement of a grade of 75 or better on all portions of the examination which was set forth and adopted in the Florida rules and statutes in effect at the time of his licensure in Pennsylvania in 1961, his request for licensure by endorsement was denied by the Board's non-final order on December 8, 1980.

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Section 120.57(1), Florida Statutes.

   
   

7. Chapter 473.308(3), Florida Statutes, provides:

   
   

   The Board shall certify as qualified for a license by endorsement an applicant who:

   1. Qualifies to take the examination set forth in Section 473.306, who has passed a national, regional, state or territorial licensing examination which is substantially equivalent to the examination required by Section 473.306, and who has satisfied the experience requirements set forth in Section 473.307; or

   2. Holds a valid license to practice public accounting issued by another state or territory of the United States, if the criteria for issuance of such license were substantially equivalent to the licensure criteria which existed in this state at the time the license was issued. (Emphasis supplied.)

      
      

8. Chapter 2lA-29.0l(1) Licensure by Endorsement states:

   
   

   1. The Department shall issue a license by endorsement to practice public accounting upon certification by the Board that an applicant for endorsement:

      1. Has qualified to take the examination requirements set forth in Section 473.306, Florida Statutes, and Rule 21A-28 and passed such examination and has satisfied the experience requirements set forth in Section 473.307, Florida Statutes, and Rules

         21A-27.03 and 21-27.04, or

      2. Holds a valid active license to practice as a certified public accountant issued by another state or territory of the United States, if the criteria for issuance of such out-of-state license were substantially equivalent to licensure criteria which existed in Florida at the time the out-of-state license was issued.

   
   

9. The Petitioner asserts that the Respondent Board should license him, contending that he meets the requirements of Section 473.308(3)(b) , Florida Statutes, and the rules promulgated pursuant thereto. The Legislature in enacting the licensure by endorsement provisions contained in this section has enunciated an intent that Florida should allow professional accountants from other states to become licensed in Florida only if the requirements for licensure in the other state of an applicant's licensure criteria are substantially equivalent to those of Florida in order to assure that all

   candidates for licensure in Florida, whether by examination in Florida or by endorsement of previously held licensure from other states, meet a certain threshold level of competency. Florida' s requirements for licensure include the completion and passing of the Uniform CPA Examination administered by the AICPA with a grade as determined by that association of at least 75 on each of its four parts. This has been a requirement embodied in the rules of the Florida Board of Accountancy since at least 1949 and the requirement of passing an examination for initial licensure in Florida has been a precondition to licensure since certified public accountants initially became regulated in 1931 pursuant to Chapter 15637, Laws of Florida.

   
   

10. In determining the question of substantial equivalency in licensing criteria, the rules and statutes in effect in Florida at the time the Petitioner was licensed under the rules and statutes of Pennsylvania are the only criteria which can be compared and considered, together with the question of whether each Board complied with its pertinent rules and statutes in force at that time.

    
    

11. Section 473.10, Florida Statutes, was the pertinent statutory examination requirement in effect in 1961:

    
    

    EXAMINATION OF APPLICANTS: SUBJECTS.

    The Board shall conduct examinations by the propounding of questions in writing. The method of conducting the examinations and all regulations concerning the same shall be prescribed by the Board in rules to be adopted in accordance with this chapter. The Board shall prescribe by such rules methods for grading papers, and shall prescribe what shall constitute a passing grade entitling the applicant to a certificate. The examination shall be in theory of accounts, practical accountancy, auditing, commercial law

    as affecting accountancy, and such other related subjects as shall be specified by the Board.

    
    

12. The rules promulgated pursuant to that statutory section are contained in Rule 1 (b) and (f) of the 1949 Rules of the State Board of Accountancy which provides:

    
    

    1. Examinations shall be held in the following subjects:

       1. Auditing,

       2. Commercial law,

       3. Theory of accounts, and

       4. Accounting practice.

    All question papers, stationary, etc. furnished by the Board shall remain its property and must be returned whether used or not.

    (f) A grade of not less than 75 is hereby prescribed as a passing grade for each subject. If a candidate shall receive a passing grade in all four subjects of the examination he shall upon approval by the

    Board be issued a certificate as a certified public accountant. . . .

    
    

13. There is no question based upon the evidence of record that at the time the Petitioner sat for the CPA examination in Pennsylvania, and obtained licensure in that state, that a grade of 75 was required on all portions of the Uniform AICPA Examination in order to obtain licensure in the State of Florida. There is no question that the evidence in the record (Exhibit 1) establishes that in fact the Petitioner did not receive a grade of 75 or higher on all portions of the Uniform AICPA Examination as was required in Florida in 1961 and at all times pertinent hereto, but rather was arbitrarily, by fiat of the Pennsylvania, Board, given a grade of 75 on those two portions of the examination upon which he was accorded a grade of 65 by the AICPA, as depicted in the grade certification from the State Board of Pennsylvania. The record demonstrates that the State of Florida has never knowingly accepted licensure from another state which was predicated on passage of the examination by this manner of grading and, since 1974, when it became aware of this type grading procedure in Pennsylvania, Florida has routinely and consistently denied licensure by endorsement to applicants from the State of Pennsylvania who had their examination grades so arbitrarily changed. The Florida Board has given the Uniform Examination since the 1930's and has specifically designated the Uniform AICPA Examination as being that required for licensing in Florida. See Rule 21A-28.0l(1), Florida Administrative Code, and Rule 28A-28.O5(2)(b), Florida Administrative Code. If an examination is administered uniformly throughout all 54 jurisdictions of the United States, and a grade of 75 is required for passage of the examination for licensing in Florida and in Pennsylvania at the time pertinent hereto (1961), and then Pennsylvania, for reasons peculiar to itself, decides to alter its acceptable grade level on that examination, then at that point the criteria for licensure in the two states are no longer substantially equivalent, or even similar.

    
    

14. The case of Joshua A. Freedman vs. State Board of Accounting, DOAH 76- 2136, affirmed on other grounds as Freedman vs. State Board of Accountancy, 370 So.2d 1168 (Fla. 4th DCA 1979), involved a like situation wherein the hearing officer found:

    
    

    In 1949-50 Florida required its applicants for CPA certification to pass examination subjects including auditing, commercial law, theory of accounts and accounting principles with a minimum grade of 75 in each subject [1949-50 rules and statutes were not materially changed in 1961] Florida has always required a passing grade of not less than 75 on CPA examinations given.

    
    

    As a result of difficulties in obtaining information from certain states regarding the examination and grades from those seeking CPA certificates in Florida, the Florida State Board of Accountancy stopped accepting applications from these states for reciprocal CPA certifications. This led to a meeting between the Pennsylvania Board and the Florida Board in 1974 at which the former agreed to provide all requested information to Florida and Florida agreed

    to accept the examination grades in which a mark of at least 75 was received as equivalent to the Florida examination even though the same subjects were not covered by the examination. . . .

    
    

    With respect to the issue regarding the Petitioner not making a grade of at least 75 on the AICPA Examination he took in 1949 [here 1960], the statute above quoted [Florida Statutes 473.201 (1969) amending former Section 473.19 pertaining to certificates granted to holders from other states] is clean that in order to obtain a reciprocal certificate the original certificate must have been secured as a result of a written examination equivalent to the Florida examination given concurrently therewith. In order for an applicant to pass the Florida examination in 1949 a grade of at least 75 was required.

    Since Petitioner failed to obtain this grade he did not pass an examination equivalent to the Florida examination. (Emphasis supplied.)

    
    

15. The Petitioner in the instant case has contended that the term "substantially equivalent" expressed in 473.308(3)(b), Florida Statutes, differs somehow from the term "equivalent" as depicted in Section 473.201, Florida Statutes (1977), and Section 473.19, Florida Statutes (1961). The case of Sutto vs. Board of Medical Registration and Examiners, 180 Northwest. 2nd 533 (Ind. 1962), provides a holding directly contrary to the Petitioner's position in that the Court therein, when interpreting a statute like that in the instant case, held that " substantially equivalent" means "that which is equal in value in essential and material elements." (Emphasis supplied.) It is concluded therefore that there has been no change in the statutory standard required from 1961 to the present time.

    
    

16. The Hearing Officer in the Freedman case, supra, noted the well- settled principle that the construction placed on a statute by an administrative agency charged with enforcing the statute is entitled to great weight insofar as that construction does not do violence to the intent, purpose and meaning of the statute being construed and interpreted. Hayes vs. Bowman, 91 So.2d 795 (Fla. 1957); Varholy vs. Sweat, 15 So.2d 67 (Fla. 1953). The action of an administrative agency when within the powers validly conferred upon it is, in the absence of proof to the contrary, presumed to be valid and correct and all reasonable presumptions should be indulged in favor of the validity of the agency's actions. It is concluded that the Respondent's interpretation of the statute and rules pertinent hereto do not do violence to the plain meaning and intent of the Legislature enunciated in Section 473.308(3)(b).

    
    

17. Petitioner apparently contends additionally that grades should be averaged to determine a passing score and that "grading on a curve" is proper, citing State ex rel. Glaser vs. Pepper, 155 So.2d 383 (Fla. 1st DCA 1963); State ex rel. Toop vs. Board of Electrical Examiners, 101. So.2d 583 (Fla. 1st DCA 1958), and Civil Service Board of Miami vs. Fonner, 181 So.2d 595 (Fla. 3rd DCA 1965). The testimony clearly establishes, however, that the manner in which

Florida graded its examinations in 1961 is identical to that accepted today, i.e., accepting the passing grade established by the testing service (AICPA). Since Pennsylvania used the same examination as Florida in 1961, the failure on its part to grade in the same manner can in no way constitute "substantial equivalence" to the licensure criteria of the Florida Board. Similarly, the issue raised by the Petitioner regarding the relative difficulty of the examinations administered by the two states is meaningless and irrelevant since it is obvious from the record that both states used the same examination in 1961, with Florida accepting the national testing service`s passing score and Pennsylvania capriciously determining that a lower grade would be acceptable for its candidates for subjective reasons of its own.

Accordingly, it is concluded that the Petitioner's qualifications established by the State of Pennsylvania would not have entitled him to licensure under the Florida statutes and rules in force in 1961. The fact that the Pennsylvania Board of Accountancy determined for its own subjective reasons to assist certain of its examination and licensure candidates by arbitrarily raising grades attributable to them by the AICPA for the identical examination administered by Florida in 1961 renders the conclusion inescapable that the Pennsylvania Board's qualifications and licensure criteria became at that point not "substantially equivalent" to those in existence in Florida at that time.

This arbitrary action by the Pennsylvania Board cannot now be used to bind the Florida Board to accept as a licensee one who Pennsylvania admitted to practice as a certified public accountant on that basis. It would be unfair to allow the Petitioner to be admitted for licensure by endorsement in Florida based upon his passage of the Pennsylvania examination in that fashion when Florida applicants have, in fact, been required to actually receive a grade of 75 or better as determined by the AICPA examination service. Such a policy would also potentially require the State to accept individuals who might not meet minimum standards of competency as determined by the Florida Legislature and would thus result in a failure of the Board's duty, like that of other state regulatory boards, to preserve the public health, welfare and safety. Accordingly, it is concluded that the petition should be denied.

RECOMMENDATION

Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, the candor and demeanor of the witnesses and the pleadings and arguments of counsel, it is

RECOMMENDED that the denial of the Petitioner's application for licensure by endorsement by the Board of Accountancy of the State of Florida be upheld and that the petition be denied.

DONE AND ENTERED this 22nd day of June, 1981 in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 1981.

COPIES FURNISHED:

George L. Waas, Esquire 1114 East Park Avenue Tallahassee, Florida 32301

John J. Rimes, III, Esquire Assistant Attorney General Suite 1601, The Capitol Tallahassee, Florida 32301

Docket for Case No: 80-002332

Orders for Case No: 80-002332