Arizona State Bd. of Accountancy v. Cole

• Decision Date: 19 July 1978
• Docket Number: No. 13567,13567
• Citation: 581 P.2d 1139,119 Ariz. 489
• Parties: The ARIZONA STATE BOARD OF ACCOUNTANCY, an administrative agency of the State of Arizona by Robert O. Baker, William G. Farrow, T. R. Pickett, D. Jay Ryan and Mike Marusich, Board Members, Appellant, v. Keith L. COLE, Applicant for a Certificate of Certified Public Accountant by Reciprocity, Appellee.
• Court: Arizona Supreme Court

Page 1139

581 P.2d 1139

119 Ariz. 489

The ARIZONA STATE BOARD OF ACCOUNTANCY, an administrative agency of the State of Arizona by Robert O. Baker, William G. Farrow, T. R. Pickett, D. Jay Ryan and Mike Marusich, Board Members, Appellant, v. Keith L. COLE, Applicant for a Certificate of Certified Public Accountant by Reciprocity, Appellee.

No. 13567.

Supreme Court of Arizona, In Banc.

July 19, 1978.

Bruce E. Babbitt, Former Atty. Gen., John A. LaSota, Jr., Atty. Gen., Gary L. Sheets, Asst. Atty. Gen., Phoenix, for appellant.

McGillicuddy & Rich by Joseph T. Rich, Jr., Phoenix, for appellee.

GORDON, Justice:

Appellee established his residence in the State of Arizona in 1967 and has, since, continuously resided in this state. Soon after moving to Phoenix, appellee decided that he would like to practice as a Certified Public Accountant in Arizona.

The qualifications required of an applicant for a C.P.A. certificate are set forth in A.R.S. § 32-721: ¹

"A. A certificate of certified public accountant shall be issued by the board to any person who:

"1. Has attained the age of eighteen years, is of good moral character, and who is a resident of this state.

"2. Has not been convicted of a violation of this chapter.

"3. Has met the requirements to take the examination provided in § 32-723.

"4. Has, within a period of time specified in the rules of the board, obtained a grade of seventy-five per cent in each subject of the examination for certified public accountant in this state, or in any state, territory or possession, which uses the questions and grading facilities of the American institute of certified public accountants.

"5. Has been employed as a full-time staff accountant, either before or after passing the examination for certified public accountant, for a minimum period of two years in the office of a certified public accountant or public accountant, within private industry or a government agency, which employment shall have exposed the applicant to and provided him with experience in the practice of accounting, including examinations of financial statements and reporting thereon, or has completed one year of the experience as set forth herein and holds a master's or more advanced degree in accounting or business administration from a college or university recognized by the board, provided that the academic transcript showing completion of the degree program shall include a minimum of thirty semester hours in accounting, business administration, economics and such related subjects as the board shall determine to be appropriate, of which a minimum of twelve semester hours of credit shall be in graduate-level accounting courses."

For purposes of this discussion, A.R.S. § 32-723, incorporated as a licensing condition by § 32-721 A(3) above, requires, as a prerequisite to taking the examination, that an applicant possess a college degree within 90 days after the examination provided for by § 32-721 A(4).

At the time appellee decided to become a C.P.A., he met the requirements of subsections (1), (2) and (5) of A.R.S. § 32-721 A. However, he did not possess a college degree. Throughout the late 1960's and early 1970's, the State of California apparently did not require either residency or college education of applicants for a C.P.A. certificate. Since appellee was not qualified to obtain a certificate under A.R.S. § 32-721, he decided to take advantage of what he perceived was a loophole in the licensing scheme by applying for a C.P.A. certificate from the State of California, and, if successful in obtaining one, applying for an Arizona certificate under the statutory reciprocity provision. A.R.S. § 32-727 A provides:

"Certified public accountant or public accountant; reciprocity; qualifications

"A. The board may waive the examination of and may issue a certificate of certified public accountant or public accountant to any person who is the holder of a valid and unrevoked certificate, from the state or foreign country of original issue, as a certified public accountant or public accountant issued by a state or foreign country which extends the same privilege of reciprocity to certified public accountants or public accountants of this state, provided that the applicant meets the requirements set forth in § 32-721, subsection A, paragraphs 1, 2 and 5."

While an applicant for a certificate by reciprocity must meet the requirements of subsections 1, 2 and 5 of A.R.S. § 32-721 A, it is crucial to note that the reciprocity provision does not require that an applicant meet the educational standards of A.R.S. § 32-723.

As does Arizona, California utilizes the uniform C.P.A. examination prepared by the American Institute of Certified Public Accountants to test its applicants. Furthermore, California apparently permits its applicants to take this uniform examination in another state and have the tests forwarded to California for grading. Appellee sat for the examination four times between May, 1970 and May, 1973, passing one portion of the examination each time. Although he traveled to California to take the first examination, he sat for the following three examinations in Phoenix, taking the test along with Arizona applicants.

After successfully passing the last portion of the examination, appellee applied for a C.P.A. certificate from the State of California, which certificate was issued to him in February, 1974. Armed with this foreign certificate, appellee, on May 29, 1975 filed with the Arizona Board of Accountancy an application for a certificate by reciprocity. The Board denied...