Criminal Convictions & Accountant Discipline in California

California accountants face professional discipline if they suffer a conviction for a crime that the California Board of Accountancy deems “substantially related” to the work of accountancy. “Substantially related” is determined on a case-by-case basis. The Board usually imposes some form of discipline if a crime involves dishonesty, fraud, and breach of fiduciary responsibility.

Depending on the seriousness of the crime committed, accountancy discipline may range from a reprimand to license revocation.

The CBA may also deny licenses to applicants for having been convicted of a crime within the last seven years if the crime is “substantially related” to accountancy. Also, aspiring accountants may be denied licenses for having a conviction of any age that was for either a:

• serious offense (such as murder, rape, or grand theft),
• sex offense that requires Tier II or Tier III registration, or
• financial felony that is related to accountancy work.

Note that the CBA normally holds a disciplinary hearing before taking disciplinary action. The convicted accountant and their attorney can attend the hearing.

During the hearing, the Board considers some of the following factors when assessing administrative penalties:

• the specific California code sections that the CPA violated,
• a clear description of the crime committed, and
• the CPA’s explanation of the offense.

If the CBA decides to suspend or revoke an accountant’s license, the CPA can file for reinstatement of their license.

The Board considers some of the following factors in determining whether or not to reinstate a license:

• the nature and severity of the past crime,
• whether the accountant committed any other offenses since the crime leading to disciplinary action, and
• the extent to which the accountant has complied with any terms of probation, parole, or restitution.

In this article, our Los Angeles criminal defense attorneys will address how criminal records can affect California accountancy licenses:

• 1. CBA
• 2. Criminal Charges
• 3. Criminal Convictions
• 4. Investigations
• 5. Disciplinary Actions
• 6. Reinstatement
• 7. Fighting Back
• Frequently Asked Questions
• Additional Resources

1. CBA

The California Board of Accountancy (CBA) is responsible for accountancy licensure and credentials in California. The Board is a state governmental agency within the California Department of Consumer Affairs.

The Board enforces the California Accountancy Act and implements regulations per its mission of public protection.¹

2. Criminal Charges

The State Board of Accountancy will not initiate disciplinary actions or an investigation if an accountant is charged with a crime.

Rather, the Board will begin investigating an accountant if they are convicted of a criminal offense.

“Convictions” include felony, misdemeanor, and infraction convictions secured through:

• guilty pleas and verdicts (once the judgment is entered), and
• no contest pleas (once judgment is entered)²

Generally speaking, the Board can act with respect to a conviction when:

• the time for appeal has passed,
• the judgment of conviction has been affirmed on appeal, or
• an order granting probation has been made suspending imposition of sentence.³

3. Criminal Convictions

If a person in the State of California has a criminal conviction that occurred seven or more years ago, the conviction is generally not grounds for denial of an accountancy license. This is true provided that the party has completed all sentencing terms.

However, the Accountancy Board can still disqualify applicants for a conviction, no matter how long ago it took place, if the conviction was for either:

• a crime that requires Tier II or Tier III sex offender registration,
• a felony financial crime that is directly and adversely related to the fiduciary qualifications, functions, or duties of accountancy, or
• a serious felony.

The term “serious felony” is defined in Section 1192.7 of the California Penal Code. Examples include:

• murder,
• mayhem,
• forced sodomy,
• assault with a deadly weapon,
• robbery, and
• kidnapping.

Suppose a person was convicted of a crime within seven years of applying for a CPA license. In that case, the person is still eligible to receive a license for the practice of public accountancy. This is true provided that the crime convicted of was not substantially related to the functions of being an accountant.⁴

Accountants renewing their license are required to complete a Criminal Conviction Disclosure Form, where they must report any convictions of a crime.

4. Investigations

The Board will investigate an accountant if they are convicted of a crime, and you have a strict legal duty to self-report.

Under Business and Professions Code 5063, a licensed CPA is legally required to report a conviction to the CBA in writing within 30 days of the conviction’s occurrence.⁵ This mandate applies to any felony, or any crime related to the qualifications, functions, or duties of a CPA.

Failing to self-report a conviction within 30 days constitutes “unprofessional conduct” and is a separate, independent ground for the Board to suspend or revoke your license.

Do not assume the Board will simply find out on its own. While the California Department of Justice (DOJ) may notify the Board of a CPA’s conviction, relying on the DOJ notification does not absolve you of your personal, mandatory duty to report the conviction yourself.

Your notification to the Board will also require you to:

1. disclose the facts of the crime convicted of, and
2. provide court documents and police reports related to the offense.

After the Board completes its investigation, it will determine whether or not to initiate disciplinary proceedings/enforcement actions against the convicted CPA.

The Board normally will initiate such proceedings if it finds that the accountant was convicted of a crime substantially related to an accountant’s professional standards and functions.⁶

A substantially related conviction is one that:

“evidences present or potential unfitness of a certified public accountant or public accountant to perform the functions authorized by his or her certificate or permit in a manner consistent with the public health, safety, or welfare.”⁷

Whether or not a conviction is “substantially related” is a factual determination made by the Board.

Note, though, that California law states that an offense is generally substantially related to the practice of accountancy if it involves:

• dishonesty,
• breach of fiduciary responsibility,
• fraud or deceit in obtaining a certified public accountant’s certificate or a public accountant’s permit, and
• gross negligence in the practice of public accountancy.⁸

According to Board newsletters (and related enforcement documents), the following kinds of convictions have netted disciplinary action against California accountants:

• forgery,⁹
• mail fraud,¹⁰
• bank fraud,¹¹
• grand theft,¹²
• tax evasion,¹³ and
• carjacking.¹⁴

5. Disciplinary Actions

The Board can take a variety of disciplinary actions, including:

• imposing sanctions,
• reprimanding the accountant,
• placing the subject accountant on probation,
• suspending the accountant’s license, or
• revocation of the CPA’s license.¹⁵

The Board typically holds a disciplinary hearing to help reach a disciplinary determination. The hearing takes place before an Administrative Law Judge. The convicted accountant and their attorney appear at the hearing and the case is prosecuted by a lawyer from the criminal defense Attorney General’s office.

The Board considers some of the following factors when assessing administrative penalties:

• the specific California code sections that the CPA violated,
• a clear description of the violation,
• the CPA’s explanation of the crime committed,
• the nature and extent of actual harm caused to a client,
• the severity of the offense committed, and
• the specific role of the accountant in committing the crime.¹⁶

Further, the Board considers the following as aggravating factors that suggest some form of disciplinary measures:

• the accountant knowingly committed a crime,
• the CPA has a history of prior discipline,
• the crime that was committed resulted in financial damage to the accountant’s client,
• the crime resulted in a failure to comply with a continuing professional education (CPE) requirement,
• the accountant failed to cooperate with the Board’s investigation, and
• the accountant misappropriated a client’s funds in the commission of their offense.¹⁷

Similarly, the Board considers the following as mitigating factors that suggest no disciplinary action or an action of a low degree:

• the accountant cooperated with the Board’s investigation,
• the conviction was a one-time event and there is no other record of prior discipline,
• the CPA regrets committing a crime,
• the accountant took or is taking action to help prevent the commission of a similar offense (for example, by enrolling in a drug or alcohol class), and
• the crime did not lead to financial loss of a client.¹⁸

6. Reinstatement

An accountant whose license is suspended or revoked following a criminal conviction can usually file for reinstatement.

The Board decides on reinstatement after conducting a reinstatement hearing, which the convicted accountant normally attends.

The CBA will typically reinstate a CPA’s license if the accountant provides evidence that they have rehabilitated themself.¹⁹

The Board considers some of the following factors in determining whether or not to reinstate a license:

• the nature and severity of the past crime,
• whether the accountant committed any other offenses since the crime leading to disciplinary action,
• the extent to which the accountant has complied with any terms of probation, parole, or restitution,
• the CPA’s attitude towards the crime committed,
• the extent of actual harm caused to a client, and
• whether the accountant has completed the sentence for their offense.

7. Fighting Back

If you are a California accountant and you receive an Accusation notifying you that the Board seeks to discipline you by suspending or revoking your license, you can negotiate with the Board, or appear before it, to try and reach a favorable settlement.

Note that accountants subject to a disciplinary hearing have the right to consult and hire a defense attorney for assistance.

CPAs also have the right to:

• discover any relevant evidence before the Board in preparation for the hearing, and
• introduce evidence and cross-examine witnesses at the hearing.

If an accountant does lose their license, the party can always try to petition the Board for reinstatement.

Frequently Asked Questions

What is a “crime of moral turpitude” and why does it matter for my CPA license?

In California, licensing boards have broad authority to discipline professionals for convictions involving “moral turpitude.” A crime of moral turpitude is generally defined as an act involving dishonesty, fraud, or conduct that is considered vile, base, or “shocks the conscience.”

Because an accountant’s entire career is built on trust and fiduciary duty, the California Board of Accountancy treats convictions involving moral turpitude very strictly. Even if the crime had nothing to do with accounting (such as certain theft offenses or extreme reckless behavior), the Board may view it as evidence that you are unfit to safely serve the public.

Can I lose my accounting license for a domestic violence conviction?

Yes, it is possible. Many accountants mistakenly believe that because domestic violence has nothing to do with finances or professional practice, their CPA license is perfectly safe.

However, California courts have repeatedly ruled that domestic violence is a crime of “moral turpitude.” Because it falls into this category, a domestic violence conviction can absolutely trigger an investigation and subsequent disciplinary action by the Board of Accountancy.

Will completing a “Deferred Entry of Judgment” (DEJ) or diversion program save my CPA license?

It often can. Under California law, a “conviction” for licensing purposes generally requires a guilty plea, a no-contest plea, or a guilty verdict where a judgment is actually entered. If your criminal defense attorney successfully negotiates a Deferred Entry of Judgment (DEJ) or a pretrial diversion program, you typically enter a plea, but the judge holds off on entering the judgment.

If you successfully complete the program’s requirements, the charges are dismissed. Thanks to reforms under Assembly Bill 2138, a successfully completed and dismissed DEJ program usually does not constitute a “conviction” that the Board can use to discipline your license.

Additional Resources

For more information, refer to the following:

• CalCPA – a professional organization representing certified public accountants in California, providing education, advocacy, and resources to support its members and the accounting profession.
• California Society of Municipal Finance Officers (CSMFO) – a professional organization dedicated to promoting excellence in municipal financial management through training, sharing of information, and active participation in the municipal financial community within California.
• Accounting & Financial Women’s Alliance (AFWA) – a professional organization that champions the professional growth and advancement of women in accounting and finance through networking, education, leadership opportunities, and advocacy.
• Association of International Certified Professional Accountants – global organization formed by the merger of the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA), representing the accounting profession worldwide and providing resources, education, and certifications for CPAs and management accountants.
• American Accounting Association – organization dedicated to promoting worldwide excellence in accounting education, research, and practice through publications, teaching, research, and networking opportunities for accounting professionals and academics.

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