Bd. of Accountancy v. Arthur Andersen

• Court: Colorado Supreme Court
• Writing for the Court: Vogt
• Citation: Bd. of Accountancy v. Arthur Andersen, 116 P.3d 1245 (Colo. 2005)
• Decision Date: 25 July 2005
• Docket Number: 03CA1872
• Parties: COLORADO STATE BOARD OF ACCOUNTANCY, Plaintiff-Appellee and Cross-Appellant, v. ARTHUR ANDERSEN LLP, a limited liability partnership, Defendant-Appellant and Cross-Appellee.

Page 1245

116 P.3d 1245

COLORADO STATE BOARD OF ACCOUNTANCY, Plaintiff-Appellee and Cross-Appellant, v. ARTHUR ANDERSEN LLP, a limited liability partnership, Defendant-Appellant and Cross-Appellee.

No. 03CA1872.

Colorado Court of Appeals, Division Five.

February 10, 2005.

Rehearing Denied March 17, 2005.

Certiorari Denied July 25, 2005.

John W. Suthers, Attorney General, Rebecca A. Connors, Assistant Attorney General, Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant.

Bartlit Beck Herman Palenchar & Scott LLP, Joseph C. Smith, Jr., Alison G. Wheeler, Denver, Colorado, for Defendant-Appellant and Cross-Appellee.

Opinion by: Judge VOGT.

In this proceeding to enforce an administrative subpoena, respondent, Arthur Andersen LLP (Andersen), appeals the trial court's order enforcing, with modifications, the subpoena served on Andersen by the Colorado State Board of Accountancy. The Board cross-appeals. We affirm.

Andersen, a national public accounting firm, was the outside auditor for Boston Chicken, Inc. (BCI), from 1992 through 1998. The BCI audits for the years 1994-1997 were conducted by Andersen's Denver office.

BCI declared bankruptcy in 1998. In February 2001, the bankruptcy trustee for BCI filed an action against Andersen and others in federal court in Arizona, alleging, among other things, that Andersen's audits were not conducted in accordance with generally accepted auditing standards.

After receiving a copy of the bankruptcy trustee's complaint, the Board commenced an investigation to determine whether Andersen or individuals employed by it had violated Colorado's Accountancy Act, § 12-2-101, et seq., C.R.S.2004.

Meanwhile, after having been convicted of obstruction of justice in connection with the bankruptcy of Enron Corporation, Andersen announced that it was ending its nationwide public accounting practice. In July 2002, Andersen advised the Board that it was voluntarily relinquishing its license to practice public accountancy in Colorado. The Board, however, declined to accept the relinquishment, explaining that it "felt it would not be wise because the Board is still dealing with complaints filed against [Andersen]."

In January 2003, the Board issued a subpoena duces tecum to Andersen. The subpoena sought documents that, according to the Board, related to the BCI complaint and to work performed by Andersen before it closed its offices in Colorado in August 2002. Andersen responded that the Board lacked jurisdiction to pursue the investigation giving rise to the subpoena because Andersen had voluntarily relinquished its Colorado license.

After the parties unsuccessfully attempted to negotiate a resolution of their dispute, the Board filed an ex parte petition in the trial court, pursuant to § 12-2-126(1)(a)(II), C.R.S.2004, for issuance of an order to enforce its subpoena. The court entered an order granting the petition. Andersen then sought relief from the order by moving to quash or modify the subpoena. After reviewing the parties' written submissions and hearing argument, the trial court expressed concerns about the wisdom and economic justification of the Board's investigation of Andersen, but concluded that the investigation was within the Board's statutory authority. It therefore entered an order that directed Andersen to comply with the subpoena but modified the subpoena by limiting certain of the Board's document requests. Andersen's motion for a stay pending appeal was granted.

I. Appeal

Andersen contends on appeal that the Board lacked jurisdiction to issue the subpoena duces tecum because (1) having voluntarily relinquished its license, it was no longer subject to discipline by the Board, and (2) the subpoena was not for a lawfully authorized purpose. We disagree.

Resolution of Andersen's contentions requires us to construe provisions of the Accountancy Act. In construing these statutes, our primary task is to ascertain and give effect to legislative intent. To determine intent, we look first to the statutory language, giving the words and phrases their plain and ordinary meaning. If the language of the statute is plain and unambiguous, we do not reach beyond that language to determine intent. See Colorado State Board of Accountancy v. Raisch, 960 P.2d 102 (Colo.1998).

The underlying purpose of the Accountancy Act is to protect the public by ensuring that persons who hold themselves out as certified public accountants are qualified to render professional accounting services. The Act contains provisions that seek to maintain high standards of professional conduct by licensees. It regulates both individuals who practice or wish to practice public accounting and accounting firms. See § 12-2-101; Colorado State Board of Accountancy v. Paroske, 39 P.3d 1283 (Colo.App.2001).

The Board is responsible for administering the Act. Among other matters, it has the power and duty to issue, renew, revoke, or suspend certificates. In addition, the Board has the power, on its own motion or on the complaint of any person, to investigate those accused of violating the Act. That investigatory authority includes the power to issue subpoenas duces tecum. See Colorado State Board of Accountancy v. Raisch, supra; Cartwright v. State Board of Accountancy, 796 P.2d 51 (Colo.App.1990). However, the Board may not act in excess of its statutory authority. See Raisch, supra; Cartwright, supra.

A.

In support of its argument that the Board was without jurisdiction to discipline "a former licensee," Andersen cites provisions of the Act that, it contends, demonstrate the General Assembly's intent that the Board would have authority to discipline only current licensees. See § 12-2-101(1), C.R.S.2004 (declaring it to be in interest of state to provide for regulation of "certified public accountants"); § 12-2-101(2), C.R.S.2004 (Board may "invoke discipline proactively with regard to certified public accountants ... when required for the protection of the public health, safety, and welfare"); § 12-2-123(1), C.R.S.2004 (Board may "deny the issuance of, refuse to renew, revoke, or suspend any certificate of a certified public accountant ... or may fine, censure, issue a letter of admonition to, or place on probation the holder of any certificate").

We note initially that, contrary to Andersen's contention, there is language in these provisions indicating that the Board may also take action against parties who are not current licensees. See, e.g., § 12-2-123(1) (Board may "deny the issuance of" a certificate).

More important, however, even assuming the Board's disciplinary authority is largely limited to current licensees, its investigative authority is not so limited.

Section 12-2-126(1)(a)(I), C.R.S.2004, states:

The board, on its own motion based on reasonable grounds or on the signed, written complaint of any person, may investigate any person who has engaged, is engaging, or threatens to engage in any act or practice that constitutes a violation of any provision of this article. The board ... may ... issue subpoenas to compel ... the production of all relevant papers, books, records, documentary evidence, and materials in any hearing, investigation, accusation, or other matter coming before the board.

(Emphasis supplied.)

Thus, under the plain language of § 12-2-126(1)(a)(I), the Board has the power to investigate "any person" who has violated, is violating, or threatens to violate any provision of the Act. Had the General Assembly intended to limit the Board's investigatory power to investigation of any "licensee," or any "certified public accountant," it could have so stated, but it did not.

That "person" in § 12-2-126(1)(a)(I) was intended to mean something different from, not synonymous with, "licensee" is made clear in the next subsection. Section 12-2-126(1)(a)(II) permits the Board to seek a court order requiring any "person or licensee" to comply with the Board's subpoena (emphasis added).

Our conclusion that the legislature's use of "any person" permits the Board to investigate complaints against persons or entities other than current licensees is consistent with the analysis in a case on which Andersen relies, Haggerty v. Department of Business & Professional Regulation, 716 So.2d 873 (Fla.Dist.Ct.App.1998). In holding that a Florida agency did not have authority to discipline a licensee whose license had expired prior to the filing of the administrative complaint against it, the court relied on a Florida statute that enumerated grounds for disciplinary action "against a licensee." The court distinguished that statute from other professional disciplinary statutes that prescribed penalties for prohibited acts committed by "any person." Use of the latter phrase, the court noted, "permits the discipline of a former licensee for conduct committed while the license was active." Haggerty, supra, 716 So.2d at 874.

We also note that the construction urged by Andersen would allow a licensee to thwart an investigation by simply relinquishing its license — which, in turn, could adversely affect the Board's ability to fulfill its obligation to protect the public. See Paroske, supra; see also Cross v. Colorado State Board of Dental Examiners, 37 Colo.App. 504, 552 P.2d 38 (1976)(to effectuate purpose of Dental Practice Law, dentist would not be permitted to surrender his license as of right during pendency of disciplinary proceedings and thereby divest Board of Dental Examiners of jurisdiction).

The Cross division reasoned that the dentist could reapply for licensure, and that the dental board therefore needed to be able, in the event of such reapplication, to review the reasons and circumstances under which the license originally had been surrendered. Notwithstanding Andersen's contention that it is now "legally ineligible" for relicensure, we perceive no basis for reading the Accountancy Act as precluding the Board from undertaking a similar inquiry when a license is surrendered....