STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DWIGHT S. CENAC, )

)

Petitioner, )

)

vs. ) CASE NO. 78-2242RX

)

FLORIDA STATE BOARD )

OF ACCOUNTANCY, )

)

Respondent. )

)

ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a consolidated public hearing in the above styled case with Case No. 78-1607 on 28 February, 1979 at Gainesville, Florida.

APPEARANCES

For Petitioner: August Quesada, Esquire

Frederick R. Brock, Esquire 2320 Independent Square

One Independent Drive Jacksonville, Florida 32202

For Respondent: James S. Quincey, Esquire

Samuel Hankin, Esquire

226 South Main Street Gainesville, Florida 32602

By Petition received in the Division of Administrative Hearings November 23, 1978 Dwight S. Cenac, Petitioner herein, seeks a determination that Rule 21A-7.06, Florida Administrative Code, is inapplicable to the Administrative Complaint brought by the Florida State Board of Accountancy in Case No. 78-1607 against Cenac; and a determination that a note appearing in the May 1977 issue of Florida Accounting News, Vol. 1, No. 1, page 15 is a rule and invalid by reason of not having been validly adopted.

Although the rule challenge was consolidated for hearing with the hearing on the Administrative Complaint filed by the Board against Cenac in Case No. 78- 1607, separate orders are needed. The rule challenge order here issued is a final order and a Recommended Order will be submitted in Case 78-1607.

Four witnesses testified and 18 exhibits were offered into evidence; however, only one witness' testimony and a few of the exhibits were related to the rules challenge. With respect to this proceeding there was little, if any, dispute regarding the facts. while the Petition purports to challenge the applicability of Rule 21A-7.06 Florida Administrative Code to Case No. 78-1607, no evidence was presented to challenge the validity of this rule. Petitioner's

sole thrust in these proceedings was directed towards the NOTE in Florida Accounting News with the parties differing only on whether the NOTE constituted an Agency rule.

FINDINGS OF FACT

1. The Florida State Board of Accountancy authorized the publication of Florida Accounting News and in May 1977 the first issue appeared in newspaper format. The publication was intended to provide information of interest to the accounting profession and principally to those certified by the Board. The Executive Director of the Board served the general function of editor of this publication.

   
   

2. Among the items considered of interest to the profession and included in this edition of the paper were several Declaratory Statements of the Board promulgated pursuant to Section 120.565 Florida Statutes.

   
   

3. The Executive Director of the Board of Accountancy is a full-time employee who runs the day-to-day operations of the Agency, processing applications for certification and renewal of certification, responding to inquiries addressed to the Board, and in general maintaining the records required to be kept by the Agency. He has no authority to formulate Board policies or to make policy decisions on behalf of the Board.

   
   

4. Among the Declaratory Statements contained in the May 1977 issue of the News was D.S. 75-01 and D.S. 76-02. The former held that "a person who does not profess to the public that he is a certified public accountant, and thus is more qualified to render these services than unlicensed persons performing similar services, is not a person 'practicing as a certified public accountant or as a public accountant.'"

   
   

5. D.S. 76-02, on the other hand, and despite a disclaimer that a Petition for Declaratory Statement is not applicable, held that even though the Petitioner does not hold himself out to the public as a CPA, nor does his business card or letterhead reflect the fact that he is a CPA, and that financial statements are issued without certificate of expression or disclaimer of opinion, nevertheless the holding out as an accounting service available for accounting, bookkeeping and tax work in newspaper ads and in mailings to new and existing business notices constituted the practice as a CPA or as a public accountant.

   
   

6. The Executive Director, aware of the existence of D.S. 76-02 inserted a note following D.S. 75-01 reading as follows:

   
   

   NOTE: The interpretation that a person practicing as a certified public accountant must be construed to mean "a person who is holding himself out as a CPA and offering to perform, performing, etc." has been subse- quently reversed to later matters. The current position of the Board is a certified public accountant offering, on his own behalf or through a firm of which he has ownership interest, only services involving the use of accounting skills will be deemed to be engaging in the practice of public accounting and would be subject to all provisions of

   Chapter 473, Florida Statutes and Chapter 21A Florida Administrative Code, whether or not said person holds himself out as a certified public accountant.

   
   

7. It is this NOTE which petitioner claims is a rule and invalid because not adopted in accordance with the provisions of Chapter 120 Florida Statutes.

   
   

8. One other significant difference between the facts in D.S. 75-01 and 76-02 was that in the former one principal function performed by the association, in addition to accounting work, was the sale of insurance while in the latter the party performed only those services generally performed by accountants, such as accounting, bookkeeping and tax work.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings, including the power to determine if the challenged action is a rule. Department of Administration v. Stevens, 344 So.2d 290 (Fla. 1st DCA 1977).

10. Section 120.52(14) Florida Statutes provides in pertinent part: "Rule" means each agency statement of

    general applicability that implements,

    interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule."

    
    

11. In publishing the NOTE the Executive Director had no authority to establish policy for the Board. Even if the NOTE could be considered to be agency action, it is merely pointing out the differences in the two Declaratory Statements contained on consecutive pages in the Florida Accounting News, namely, that in D.S. 76-02 only services involving accounting skills were being offered, while in D.S. 75-01 a substantial part of the services involved the sale of insurance.

    
    

12. Declaratory Statements are orders, State Department of Health and Rehabilitative Services v. Barr, 359 So.2d 503 (Fla. 1st DCA 1978) and not law or policy. The NOTE contained a fair interpretation of the distinction between D.S. 75-01 and D.S. 76-02.

    
    

13. This case clearly demonstrates the paradox that arises from the broad definition of rule above quoted. If we assume arguendo that the NOTE was a statement of the agency and not the personal opinion of the Executive Director, it could fit into the definition of rule if found to be an interpretation of the policy of the agency as established by D.S. 75-01 and D.S. 76-02. As such, the NOTE fits the definition of a rule but, as acknowledged by all parties, it was not promulgated in accordance with Chapter 120. Accordingly, as a rule it would be invalid. However, the NOTE is a reasonable, logical and practical explanation of the two Declaratory Statements, and, if the agency followed the doctrine of stare decisis, it would rule as indicated by the NOTE in a subsequent case. Holding the NOTE a rule and invalid because not properly

    promulgated while at the same time recognizing that the NOTE accurately reflects the contents of orders previously issued by the Board reaches reductio and absurdum. Regardless of the existence of the NOTE the two orders have been entered in D.S. 75-01 and D.S. 76-02 and their contents are self-explanatory.

    
    

14. This problem was recognized and dealt with in McDonald v. Department of Banking and Finance, 346 So.2d 569, 581 (Fla. 1 DCA 1977) where the court stated:

    
    

    While the Florida APA thus requires rulemaking for policy statements of general applicability, it also recognizes the inevitability and desirability of refining incipient agency policy through adjudication of individual cases. There are quantitative limits to the detail of policy that can effectively be promulgated as rules, or assimilated; and even the agency that knows its policy may wisely sharpen its purposes through adjudication before casting rules.

    
    

15. This is what the Board did in entering the orders in D.S. 75-01 and

    D.S. 76-02. Even if the NOTE had been promulgated by Board rather than the Executive Director, it would not have been classified as a rule because it had no general applicability and merely pointed out the limitation on the applicability of the language of D.S. 75-01 imposed by the order entered in D.S. 76-02. These orders constitute the "incipient agency policy" that is best developed by orders and not rules.

    
    

16. The explanation of these orders contained in the NOTE does not "purport in and of itself to create certain rights and adversely affect others," Department of Administration v. Stevens, supra at p. 296, or serve "by [its] own effect to create rights or require compliance, or otherwise to have the direct and consistent effect of law." McDonald, supra at p. 569.

    
    

17. Here the NOTE was authored by the Executive Director of the Board and not by the Board, and does not reach the definition of rule.

From the foregoing it is concluded that the NOTE published in the May 1977 issue of Florida Accounting News, Vol. 1, No. 1, page 15, is not a rule. It is further concluded that no evidence was presented regarding the invalidity of Rule 21A-7.06, Florida Administrative Code. It is therefore

ORDERED that the petition be dismissed. Entered this 30th day of March, 1979.

K. N. AYERS Hearing Officer

Division of Administrative Hearings Room 101, Collins Building

MAILING ADDRESS: Room 530, Carlton Building

Tallahassee, Florida 32304

COPIES FURNISHED:

August Quesada, Esquire and

Frederick R. Brock, Esquire 2320 Independent Square

One Independent Drive Jacksonville, Florida 32202

James S. Quincey, Esquire and

Samuel Hankin, Esquire

226 South Main Street Gainesville, Florida 32602

Docket for Case No: 78-002242RX

Orders for Case No: 78-002242RX