SW Legal studies in Business

Court Upholds Revocation of CPA License
Description Appeals court upheld the decision of the State Board of Accountancy to revoke the CPA certificate of an accountant found by the Securities and Exchange Commission to have failed to perform due professional care in the audit of a public firm.
Topic Accountant’s Liability
Key Words Licenses; Due Professional Care; Discipline; Judicial Review
C A S E   S U M M A R Y
Facts Goldberger, a CPA, was a partner in the Pittsburgh office of Grant Thornton, a national public accounting firm. For several years Goldberger was the independent auditor for Chambers, a publicly-traded company. Chambers understated its expenses and overstated its earnings by engaging in fraudulent capitalization practices. After an investigation, the SEC issued an order denying Goldberger the privilege of appearing or practicing before the SEC as an accountant for failure to exercise due professional care in the performance of an audit. Later, after an investigation and hearing, which was based on the SEC’s findings, the Pennsylvania State Board of Accountancy revoked Goldberger’s CPA certificate. He appealed.
Decision

Affirmed. The revocation of this certificate of CPA was warranted as a disciplinary sanction for accounting negligence. The audit report endorsed financial statements falsely inflating company’s net earnings by $75 million. Unless the licensing board is accused of bad faith or fraud, the scope of appellate review of a board’s sanction is limited to the determination of whether there has been a manifest and flagrant abuse of discretion or a purely arbitrary execution of the board’s duties.

Citation Goldberger v. State Board of Accountancy, --- A.2d --- (2003 WL 22318015, Comm. Ct., Pa., 2003)

Back to Accountant's Liability Listings

©1997-2002  SW Legal Studies in Business. All Rights Reserved.