Abstract
This is a legal case study of a Certified Public
Accountant (CPA) seeking to overturn the decision of the California Board of
Accountancy (Board) to revoke his CPA license; however, the Court of Appeal
affirmed the Board’s decision and the revocation became permanent. The Board
found that the CPA had not registered his firm’s name with the Board and had
violated independence rules. The Board also found that the CPA exhibited gross
negligence in his performance of 2 audits by committing 11 extreme violations
of Generally Accepted Auditing Standards, as follows: issuing an unqualified
opinion when the client’s income statement contained inaccurate revenue and
earnings figures; dating the audit reports before completion of field work;
failure to maintain work papers; failure to obtain evidence; failure to confirm
Accounts Receivable; failure to prepare a written audit plan; failure to
evaluate the client’s internal controls; failure to obtain legal representation
letters; failure to determine audit risk; failure to make fraud inquiries; and
failure to perform analytical procedures. However, the CPA’s most egregious
behavior was his dishonesty in communications with the Board.
