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The David Volin litigation in Massachusetts.

The name of Bonnie Moore is legendary among unlicensed NSPA members. For the benefit of members who joined NSPA since July, 1992, Bonnie Moore is the NSPA member and unlicensed California accountant who was threatened with a contempt action and arrest by the California State Board of Accountancy, not because she called herself an accountant, but because she incorporated and operated a business called "the Accounting Center." Moore has several college degrees (her baccalaureate is a major in accounting) and she met educational eligibility requirements to take the CPA examination in California.

Bonnie Moore sued the California State Board of Accountancy for declaratory relief and a permanent injunction against the Board's harassment and threats of penalties. Subsequently, NSPA's California affiliate, the California Association of Independent Accountants (CAIA), joined the litigation as party plaintiffs. After six years of litigation and the filing of numerous memoranda and briefs, the Supreme Court of California vindicated Bonnie Moore and CAIA, in a sharply divided 4-3 opinion, by holding that California unlicensed accountants could practice their profession and use the (up-to-now forbidden) "A" word, provided that a caveat or disclaimer is also used. Thus, the Moore case enlarged the area of permissibility of the use of the "A" word by unlicensed accountants, where state law or regulation had imposed an absolute prohibition.

As Bonnie Moore's name fades into legal history, a new individual emerges to keep up the visibility of the unlicensed accountant's struggle against unjust restrictions, prohibitions and violation of First Amendment rights. In the future we shall hear a great deal about the David Volin case. Who is David Volin and what is the David Volin case about?

David R. Volin is an unlicensed accountant and sole practitioner from Pittsfield, Massachusetts. He was informed by the Massachusetts Board of Accountancy that he was in violation of the accountancy law and the Board's regulations by offering to perform accounting services using the title "accountant" (the use of the "A" word). Also, he was alleged to have violated the accounting law because he provided a transmittal to a client describing the accounting services he performed.

In efforts to reach a settlement of the allegations, the Board informed Volin that according to its interpretation of the Massachusetts accountancy law, no person not licensed as a CPA or a PA may use the terms "accountant," "auditor" or "accounting." The Board did not recognize a generic use of those terms. According to the Board, any use of those terms implies that the person is licensed. Hence, the Board's position was that unlicensed persons are prohibited from (1) using the designation "accountant," (2) offering to provide "accounting" services or (3) listing membership in a society or organization that would lead the public to believe that such person is a licensed accountant.

Moreover, the Board informed Volin that it has consistently ruled that unlicensed individuals are prohibited from providing a cover letter or transmittal regarding the preparation of financial statements. Unlicensed individuals may prepare financial statements only on the client's stationery with the term "FOR INTERNAL USE ONLY" clearly stamped on each page and absent any cover or transmittal letter.

The Board requested that Volin enter into a Consent Agreement that would prohibit him from engaging in practices that the Board said were prohibited. If Volin executed the Consent Agreement, the Board would not initiate criminal prosecution against him for violation of the accountancy law. Volin declined to execute the Consent Agreement and filed a complaint for declaratory relief and summary judgment. Subsequently, he was joined by the Massachusetts Society of Independent Accountants (MSIA), whose membership consists largely of unlicensed accountants.

In his complaint for declaratory relief, Volin stated that he is engaged in providing certain business and accounting services to his clients in the Pittsfield area. His services consists of tax return preparation, unaudited financial statement preparation, bookkeeping services and other services requiring accounting skills. Volin advertised himself and his business as providing "accounting and financial services to individuals and business" and included the fact of his NSPA membership.

The Massachusetts accountancy law is based on the joint AICPA/NASBA Model Accountancy Bill of 1984 (now the AICPA/NASBA Uniform Accountancy Act, the 1992 UAA). In fact, Massachusetts and Connecticut have adopted more sections of the UAA word for word than any other state. Many sections of the 1984 model and the 1992 UAA are identical. Thus, the Court's decision is a construction of the applicable provisions of the UAA.

While the drafters of the UAA declare that the Act does not specifically prohibit the use of the title "accountant" by unlicensed persons, it is the interpretation of the Massachusetts Board (as well as many other state accountancy boards) that the UAA prohibits the use of the "A" word. State boards take the position that any use of the "A" word by an unlicensed individual is inherently confusing to the public and tends to indicate that the person or firm is licensed.

The Court held that under the applicable section of the UAA, the unmodified use of the "A" word is not prohibited. Thus, the Court refused to uphold the Board's position that any use of the title "accountant" or "auditor" or the term "accounting" by an unlicensed individual is inherently confusing to the public and tends to indicate that the individual is licensed. However, the unlicensed accountant's use of the "A" word must be without modifiers. The Court implied that any embellishment of the "A" word title might imply licensure or special competence, a term used in the Uniform Accountancy Act section that was construed by the Court.

With regard to Volin's listing his affiliation with national accounting and tax professionals on his letterhead together with the occupational title "accountant" or the notation that he performs "accounting services," such listing would appear to be prohibited unless he also included a statement of limitation as to his ability to perform accounting services. While it is not absolutely clear, the Court seems to suggest that if Volin used a caveat or disclaimer, he could list his affiliation with national accounting professional associations and still use the unadorned or unmodified "A" word.

The Court further held that the Massachusetts accountancy law does not prohibit unlicensed accountants from preparing financial statements for clients. What the law does prohibit is the issuance of reports (as reports are defined in the law) and the use of the "A" word in connection with the language of a report, which implies licensure or special competence as an accountant. Unlicensed accountants may not use any form of language conventionally used by licensees with respect to a compilation or a review of financial statements in their transmittal of financial statements to clients.

The Volin decision is significant because it represents the first occasion than any trial court has interpreted applicable sections of the UAA. It is also recognized that many state accountancy boards have adopted, by regulation, various sections of the UAA (and its predecessor model), especially those sections relating to definitions and prohibited actions. The Volin decision is a clear message to those boards that they are limited in how far they may go to restrict and prohibit the activities of unlicensed accountants under the UAA. The courts will not sustain a board's interpretation if it is too restrictive.

So far as unlicensed accountants in Massachusetts are concerned, the Volin decision is clear recognition that they have a scope of practice available to them under the accounting law and that unlicensed individuals may use the unembellished title "accountant" under the UAA. This is far more professional recognition for unlicensed accountants than they possessed in pre- Volin decision times.

NSPA's Board of Governors and its State Regulation and Oversight Committee provided Volin with technical and financial assistance both prior to and during the litigation.

Will the trial court's decision in Volin be appealed to the Supreme Judicial Court of Massachusetts? At the time this column is being prepared, it is too early to say. Under applicable Massachusetts procedures, either party has 30 days from August 12, 1994 (the date of the memorandum decision) in which to note an appeal. There is little need to speculate. By the time this column appears in the NPA, we will know the answer. We do know that in the Superior Court proceedings, the Massachusetts Society of CPAs filed a brief in support of the Board of Accountancy, which apparently made no impression on the Court.

Affiliated state organizations, through their presidents or Legislative Committee chairpersons, may request a copy of the Volin decision by writing to NSPA's Legal Counsel.
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Title Annotation:unlicensed accounting practice
Author:Sager, William H.
Publication:The National Public Accountant
Date:Nov 1, 1994
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