00;00;00;09 - 00;00;14;22 Speaker 1 Welcome to Episode four of the Accounting for California Podcast. My name is David Hemphill, an information and planning analyst here at the CBA, and I'm happy to be joined today by the CBA enforcement chief, Mr. Dominic friend Cella. Hi, Dominic. How are you today? 00;00;14;26 - 00;00;15;25 Speaker 2 I am well, thank you, David. 00;00;15;25 - 00;00;23;16 Speaker 1 It's good to be here. Well, thanks for coming in on the podcast. First of all, just tell us a little about yourself. How long have you been here at the Board of Accountancy? 00;00;23;27 - 00;00;46;29 Speaker 2 So there were the board coming on 17 years, actually, next month and this was my first day job. I've been throughout much of the board, starting as an office technician, working my way up through the licensing side of things, and then I've been running the boards enforcement program since late 2014. So about seven, five or so years. 00;00;47;04 - 00;00;54;08 Speaker 1 Working your way up. Tell us a little about the enforcement unit of the of the CBA. What are its overall responsibilities? 00;00;54;19 - 00;01;24;25 Speaker 2 The board's enforcement program, its primary responsibility is to oversee the enforcement of California laws, rules that govern the practice of accountancy. And some of the ways we accomplish this is by conducting various types of investigations, both complex and more administrative in nature. The complex investigations oftentimes requiring the technical expertize of license CPAs who we have on staff with the board, as well as some of the more administrative violations like continuing education completion, a peer review. 00;01;25;05 - 00;01;54;12 Speaker 2 And we have various enforcement analysts who who assist and perform those investigations. We also do a tremendous amount of investigations into unlicensed activity. Some of the other elements that we do is issue citations and fines for various violations and also file accusations and impose discipline when necessary and perform monitoring of licenses on probation. So those are some of the very key elements that enforcement performs within the board's overall consumer protection mission. 00;01;54;22 - 00;01;58;22 Speaker 1 So it sounds like a lot of responsibility. How big of a staff do you have? 00;01;58;22 - 00;02;07;14 Speaker 2 I believe enforcement is just under 50 staff. So a good portion of the board's staffing is dedicated to enforcement. Well, that's. 00;02;07;14 - 00;02;25;29 Speaker 1 Great. So for a lot of people, a lot of their interaction with the CBA is at the very beginning, right? When they're an applicant, pass the exam, get licensed, and then every couple of years when they have to renew. But the whole enforcement program is something that's just kind of there that maybe they don't know a whole lot about and hopefully don't want to really know a whole lot about. 00;02;25;29 - 00;02;32;15 Speaker 1 But why do you think it's important for the CBA to have this enforcement division and how does it fit in with the CBA's mission? 00;02;32;26 - 00;02;56;03 Speaker 2 So obviously, first and foremost, it just screams consumer protection, you know, so obviously California has, like you said, entry level standards necessary for individuals to complete and demonstrate minimum qualifications and expertize for obtaining a license and entering the practice. But just as important is the need to ensure continued compliance with standard of care and when appropriate, taking enforcement action is necessary. 00;02;56;14 - 00;03;06;04 Speaker 2 Enforcement ensures that laws and rules established by the Legislature and the CBA are adhered to, which then creates credibility and value for the CPA license. 00;03;06;06 - 00;03;15;23 Speaker 1 Right. So I know you gave an overview of the enforcement division, but can you talk about who exactly does the CBA regulate and who can the CBA investigate? 00;03;15;28 - 00;03;54;25 Speaker 2 So the CBA has influence and the regulatory environment stretches beyond California's borders. As a board, we regulate just over I want to say, I think last count was 114,000 licensees, both individuals and accounting firms. And many of these accounting firms have a national footprint. And as many of the listeners likely know, have worldwide footprints. As for who the CBA can investigate, the CBA's jurisdiction encompasses the whole of the practice of public accountancy, and we investigate both licensed and unlicensed visuals firms, both licensed and unlicensed, and those individuals and firms that might be holding out as CPAs are offering services. 00;03;54;27 - 00;04;08;16 Speaker 1 So that's a wide variety of enforcement from just the one man show to the the worldwide firm. That's our responsibility to do it all very much. Yeah, very good. So what are some of the most common enforcement actions that your program takes. 00;04;08;26 - 00;04;27;16 Speaker 2 When it comes to enforcement actions, I think it's important to maybe take a minute to provide a bit of context is the type of actions the CBA can take. Enforcement actions is a pretty broad term, but in general, the two most common types of enforcement actions the CBA takes are the issuance of citations and imposing formal discipline as it relates to citations. 00;04;27;16 - 00;04;53;20 Speaker 2 These are generally issued for administrative type violations, and the most common ones we're seeing right now are for the minimum yearly continuing education requirement, what's commonly known as the 2012 requirement, but also for failing to respond to a CBA inquiry and finally practice without a permit. When we issue citations, it generally has an administrative fine attached to it, and these fines can range anywhere from $100 up to $5,000. 00;04;53;29 - 00;05;23;00 Speaker 2 The other type of enforcement action is formal discipline, and this action involves the board actually filing formal administrative charges against a licensee, which could result in the license being revoked, suspended, discipline or otherwise restricted. And the most common issues we see that lead to discipline include gross and repeated acts of negligence, especially the area of attestation, engagements and licenses failing to comply with professional standards again, especially in the attestation environment. 00;05;23;14 - 00;05;34;12 Speaker 2 CBR also continues to impose discipline against those licensees who have been sanctioned by the Securities and Exchange Commission, the Public Company Accounting Oversight Board or other state boards of accountancy. 00;05;34;12 - 00;05;38;07 Speaker 1 So you'll jump in and California will have a say on top of the other things. 00;05;38;07 - 00;05;52;18 Speaker 2 Yeah, we we don't see it as piggybacking on them. We look at each particular action taken by those other regulators on a case by case basis, determine if enforcement is appropriate to ensure consumer protection within California. 00;05;52;23 - 00;06;09;09 Speaker 1 Got it. And of course, on the CBA website, you can always go and look up all the enforcement actions that have been taken. You can search by licensee or firm. And of course we print them in our update newsletter that comes out three times a year. So yeah, they're all out there if you want to see what actions have been taken. 00;06;09;17 - 00;06;21;23 Speaker 1 So the CBA recently created a simple way to file a complaint against a licensee or report unlicensed activity in the state on the website. So how do you think that new online tool is going to help? 00;06;22;05 - 00;06;45;04 Speaker 2 You're right. The new online complaint reporting tool was launched, I want to say, at the end of May. And this tool allows consumers to select from providing a complaint against the licensee or to report unlicensed activity. The unlicensed activity reporting model is a it's kind of a shorter form designed to provide like a quick tool to report potential individuals or firms that might be operating without a license. 00;06;45;25 - 00;07;12;15 Speaker 2 Whereas the more standard complaint form, though it's a bit longer, it's still incredibly user friendly and allows consumers to provide increased detail regarding their concerns and allegations against the licensee. But one of the most unique features that this online tool provided us was and really provided consumers was that complainants can now upload documents rather than file a complaint, wait for us to contact them and potentially supply the documents. 00;07;12;15 - 00;07;35;22 Speaker 2 Just extending the period of time of the complaint review. This is a much more expedited process for everybody involved. And so by uploading those documents, if they have them available, that help support their complaint, it gives a fuller picture at an earlier onset. So it's incredibly valuable there. And overall, I just think it's a very user friendly format for both the consumer, but then for staff in the office as well. 00;07;35;24 - 00;07;44;17 Speaker 1 Sure. Yeah, definitely. Being online is opposite fewer trips to the post office. Always a good, good thing in my book. So what types of unlicensed activity have people reported? 00;07;44;24 - 00;07;54;05 Speaker 2 The CBA receives basically three main types of unlicensed complaints. First are individuals who have who have no record of a license are truly unlicensed. 00;07;54;11 - 00;07;54;19 Speaker 1 Online. 00;07;54;19 - 00;08;21;27 Speaker 2 Unlicensed practice. What are you doing? And the same would go with firms. A lot of times when we say license in house, that could be both individuals and firms. Most people think of license and they think of an individual. But we receive complaints for both firms who are holding out in some capacity as well as individual licensees. The other the kind of the third bucket are really individuals who are actually licensed by the board or have had a license with the board. 00;08;22;02 - 00;08;32;15 Speaker 2 And that license may be inactive, retired, expired and canceled. So those are kind of the buckets that we generally see these unlicensed practice cases come in. 00;08;32;15 - 00;08;38;13 Speaker 1 Got it. And we're relying a lot on our fellow Californians to report this. If they see it right. That's important to you. 00;08;38;14 - 00;09;04;22 Speaker 2 Yeah, we actually really encourage it. We we want to get as much information about unlicensed activity because ultimately, as we talked about earlier, there's a value and a credibility to the license and enforcement is there to support that, both by addressing potential big air quotes, bad actors who might be providing services, but also those who are kind of writing the the bandwagon for free by saying they are a CPA. 00;09;04;23 - 00;09;28;11 Speaker 2 Right. In fact, they're not. And we do our best to address those particular elements by getting them to remove CPA from their designation, adjusting their website, potentially, if circumstances are very egregious, referring matters to local law enforcement so they can address it potentially. So we really try our best to make sure that the CPA license continues to have that value and that ability. 00;09;28;11 - 00;09;34;05 Speaker 1 That is so important. Good. So out of all the reports that you do receive, does the CBA follow up on each and every one? 00;09;34;12 - 00;09;57;16 Speaker 2 Yeah, the CBA opens an investigation on all complaints. The only complaints that kind of get somewhat triaged at an early stage are fee disputes. And the only reason why that exists is because the board doesn't actually have jurisdiction over fee disputes. Aside from that other complaint, even those types of complaints get opened and evaluated to make sure it's just about a fee dispute as opposed to something maybe larger. 00;09;58;06 - 00;10;07;12 Speaker 2 And the fee dispute is just a small element of it. But yeah, the board takes every complaint, serious looks at each one, evaluates it and makes determinations on how best to investigate. 00;10;07;21 - 00;10;15;09 Speaker 1 So knowing all of this, what are some steps that you would recommend consumers can take before using the services of a CPA or accounting firm? 00;10;15;25 - 00;10;48;03 Speaker 2 So the CPA actually on its website has a very helpful handbook called the Consumer Assistance Handbook, which provides excellent information regarding selecting a CPA. I'll highlight some of the tips that are included in there because I think they bear repeating and are those elements that people should take before they use a CPA. So first and foremost, obtain a recommendation from individuals or maybe business or clients that you can trust, especially if those individuals who have similar accounting needs is your own. 00;10;48;03 - 00;11;16;02 Speaker 2 And after you've kind of collected that potential list, this is the really important piece that I think consumers really need to take advantage of is visiting the CBA's website, more specifically, the CBA's license lookup feature. This lookup feature will allow consumers to see if the if the CPA or the accounting firms are active on their licenses in good standing, if there have been any disciplinary actions or some restrictions to their license, consumers really need to avail themselves of that step. 00;11;16;16 - 00;11;38;00 Speaker 2 Consumers should also take time to meet the CPA. There's a lot less face to face going on. But take the time, have a call, set up a web zoom or something of that nature. Take time to learn that individual, see if you have a good relationship with them prior to engaging them. Lastly, prior to having CFPB perform any services, I can't stress this enough. 00;11;38;08 - 00;11;50;12 Speaker 2 Consumers should obtain an engagement letter. The engagement letter should detail out the scope of work we'll be performing the work. What that client's responsibilities are, cost of services, and when that work will be completed. 00;11;50;19 - 00;12;02;11 Speaker 1 That's great advice. Thank you for that. Out of all of your experience in your time as enforcement chief, do you have anything else you could share that can benefit licensees and is in sync with our consumer protection mission? 00;12;02;22 - 00;12;26;19 Speaker 2 So yes, in sync with our consumer protection mission, the CPA profession is very dynamic. It's ever changing. Rules, regulations, professional standards are always being updated and revised. So it's paramount that CPAs stay on top of their continuing education, select see that benefits their practice and their clients to make sure they're staying up to date on those professional standards. 00;12;26;26 - 00;12;51;06 Speaker 2 It's also important that CPAs take time to review the board's website or stay informed via social media or E news or any of its other ways of getting our message out. Because that allows you to stay up to date on any rules and regulations that may be California specific, because while California follows a lot of the professional standards nationwide, we do have various differences. 00;12;51;06 - 00;13;14;21 Speaker 2 And it's important that you maintain your currency of knowledge in that as well. Also, as we kind of talked about earlier citations, one of the more common citations is failing to respond to a board inquiry. If you get a letter from the board, be it from my division or from the licensing division or anywhere within the board of accountancy, it is important that you treat that, review it and respond to it. 00;13;14;21 - 00;13;29;28 Speaker 2 Often there's a lot of different ways we will let you to respond to that. Whether or not it's respond you want to respond back by mail, that's fine. Oftentimes there's an email included on where to provide a response. Call the board, take that letter seriously and take time to respond to it. 00;13;30;00 - 00;13;48;22 Speaker 1 We want to help you. A lot of times it could be an honest mistake. Yeah, right. So get back to us. Okay. Well, that's great, my friends. I have very good advice for everything. And the enforcement division, it's not. Shouldn't be scary, right? It's good people here that they're looking out to protect the consumers and really keep the integrity of the of the CPA license. 00;13;48;22 - 00;14;03;05 Speaker 1 That, in essence, is is what your job is. So a great thank you for taking the time to share all that with us. That's that's fascinating. Like I said, part of the CBA that a lot of people don't really know or or maybe don't want to know, but it's a it's an important part. So thanks for joining us on the podcast today. 00;14;03;05 - 00;14;04;16 Speaker 2 Thank you for having me. I really had a good time.