Comprehensive Accounting Service Co. v. Maryland State Bd. of Public Accountancy

• Decision Date: 22 February 1979
• Docket Number: No. 51,51
• Citation: 284 Md. 474,397 A.2d 1019
• Parties: , 4 A.L.R.4th 1188 COMPREHENSIVE ACCOUNTING SERVICE COMPANY v. The MARYLAND STATE BOARD OF PUBLIC ACCOUNTANCY.
• Court: Maryland Court of Appeals

Page 474

284 Md. 474

397 A.2d 1019, 4 A.L.R.4th 1188

COMPREHENSIVE ACCOUNTING SERVICE COMPANY v. The MARYLAND STATE BOARD OF PUBLIC ACCOUNTANCY.

No. 51.

Court of Appeals of Maryland.

Feb. 22, 1979.

Thomas A. Mass, Chicago, Ill., and Joseph S. Kaufman, Baltimore, for appellant.

F. Todd Taylor, Jr., Asst. Atty. Gen., Baltimore (Francis B. Burch, Atty. Gen., Baltimore, on brief), for appellee.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE, ORTH and COLE, JJ.

MURPHY, Chief Judge.

We granted certiorari in this case prior to decision by the Court of Special Appeals primarily to consider the constitutionality under the first and fourteenth amendments to the federal constitution of a statute which prohibits a non-certified accountant from holding itself out to the public as an "accountant" or describing the services it performs as "accounting" services.

(1)

The practice of public accountancy in Maryland is regulated by the State Board of Public Accountancy (the Board) pursuant to the provisions of Maryland Code (1957, 1975 Repl. Vol.), Art. 75A. The Board is authorized by § 2 to issue the certificate of "certified public accountant" to those who meet the stringent educational, experience and other eligibility requirements of the statute. Under § 7 persons or partnerships, who registered with the Board prior to January 1, 1925 as "public accountants," and who received certificates as such, are entitled to style themselves as "public accountants."

Section 11(a) provides that the Board "shall on application enroll to engage in the practice of public accounting in this State . . . all holders of certificates as Maryland certified public accountants or registered public accountants . . . ." Section 11(c) provides that failure of a certificate holder or registrant to obtain an enrollment certificate "shall deprive him of the right to engage or continue in the practice of public accounting . . . ." Section 22(d) defines the term "enrollment certificate" to mean "a certificate which has been issued by the Board under § 11 as evidence that the person or partnership named therein has been enrolled to practice public accounting . . . ." The practice of public accounting is not defined by the statute.

Section 14(a) prohibits any person, not a "certified public accountant," from using that title, or the abbreviation "C.P.A." or any other word or title "likely to be confused with 'certified public accountant' or 'C.P.A.' " Section 14(b) prohibits any person, not holding a certificate under § 7 as a "public accountant," or a C.P.A., from using the title "public accountant" or any other title, designation or words, "or any abbreviation, tending to indicate that such person is a public accountant." Sections 14(c) and (d) prohibit persons and firms from engaging in or holding themselves out to the public as engaged in the practice of public accountancy either as a "certified public accountant" or a "public accountant" unless an enrollment certificate has been issued under § 11.

Section 14(e) provides that no person, partnership or corporation not holding an enrollment certificate:

"shall practice or hold himself or itself out to the public as 'accountant' or 'auditor' in connection with his own or any other name, nor describe or designate the services offered or performed by him or it as 'accounting' or 'auditing,' with or without any other designation or description . . . ."

Section 15(e) provides that nothing in the statute shall be construed to prohibit any person from:

"Offering or rendering to the public bookkeeping and tax services, including devising and installing systems, recording and presentation of financial information or data, preparing financial statements, schedules, reports and exhibits, or similar services; provided that persons who offer or perform the above-mentioned services shall not represent that an 'audit' or 'examination' has been made by them, shall not furnish written certificates or opinions concerning the correctness, fairness or fair presentation of financial statements, schedules, reports, or exhibits, and shall not perform any act prohibited by § 14."

Section 17 provides that any violation of the provisions of § 14 constitutes a misdemeanor, punishable by fine or imprisonment. Section 18 provides that the use by a person of his name, in conjunction with the words "certified public accountant" or "public accountant" or any abbreviation thereof shall be prima facie evidence that such person "is holding himself out to be a certified public accountant or public accountant holding an enrollment certificate."

(2)

Comprehensive Accounting Service Company (Comprehensive), a foreign corporation registered to do business in Maryland, does not hold an enrollment certificate to practice public accounting in Maryland. It nevertheless holds itself out to the public as "Accountants" and advertises that it provides "accounting" services. Specifically, it characterizes its services as "Bookkeeping, Accounting and Tax Records Services" and denominates itself on its business letterhead as "Accountants." It claims a nationwide network of 150 authorized franchisees, staffed by qualified, graduate accountants who service 15,000 clients throughout the country. In its promotional literature, Comprehensive states that it was founded on the notion that "small and medium-sized business concerns cannot afford on their payroll the high-salaried accountants, systems specialists and consultants of huge corporations." Comprehensive advertises that it can provide "these same essential services to smaller businesses" and that it will "undertake All the bookkeeping, accounting, systems work, and permanent records for taxes for the business . . .." (Emphasis in original.) The "basic services" which Comprehensive offers to the public include the preparation of profit and loss statements, "Bank Reconciliation" statements, complete records for tax purposes, the maintenance of detail general ledgers, and computerized accounts receivable systems, including all necessary journals.

Comprehensive claims that it has developed a specialized method of collecting, processing and disseminating financial information in order to furnish small business clients with monthly financial statements and a tax preparation service. Comprehensive's system is said to be based upon mass production "accounting" techniques, requiring mass media advertising to obtain large numbers of clients. Comprehensive does not represent that it conducts "audits" or "examinations," nor does it furnish written certificates or opinions concerning the correctness of financial statements, schedules, reports, or exhibits which it prepares.

(3)

The Board filed a bill of complaint in the Circuit Court for Baltimore City to enjoin Comprehensive from violating the provisions of § 14(e) by holding itself out to the public as "Accountants" and describing the services it offers as "Accounting" services. Comprehensive filed a combined demurrer and answer, in which it admitted offering "Accounting" services to the public and holding itself out as "Accountants." Alleging that the services it performs for its clients are permissible under § 15(e), Comprehensive claimed that § 14(e) violated the due process clause of the fourteenth amendment and the free speech provisions of the first amendment because the statute restricted the dissemination of accurate commercial information to the public.

The trial court (Sullivan, J.) decided the case on the pleadings, without conducting an evidentiary hearing. It held that the challenged statute did not violate the due process clause of the fourteenth amendment because:

"The use of the word 'accountant' by an uncertified person may deceive the public into believing that the person is certified by the state. Section 14(e) . . . does not violate due process because the means selected has a real and substantial relation to the (public welfare) object sought to be obtained."

While concluding that a rational basis existed for the enactment of § 14(e) protection of the public from misleading and deceptive information the court stated that nothing in the statute prevented Comprehensive "from offering the services it presently provides." The Board, it said, "has not attempted to stop . . . (Comprehensive) from practicing (its) livelihood, only from describing such as accounting services."

Addressing Comprehensive's first amendment claim, the court recognized that "prohibiting the use of the words 'accountant' and 'accounting' may infringe upon . . . (Comprehensive's) free speech." It observed, however, that "the right of free speech is not an unlimited, unqualified right, but the societal value of speech must on occasion be subordinated to other values and considerations." The court concluded that Comprehensive's right of free speech "can be limited so as not to mislead or deceive the public that . . . (it) has the qualifications of a certified corporation." The court said that nothing in the "commercial speech doctrine" inhibited the practice of a state's preventing false, misleading or deceptive information in the advertising of professional services. It, therefore, permanently enjoined Comprehensive from describing its services as "accounting" or holding itself out to the public as an "accountant."

(4)

Comprehensive contends that the statutory prohibition upon use of the words "accountant" and "accounting" to describe its services is unconstitutional, both facially and as applied. It argues that § 15(e) permits uncertified accountants to perform any and all accounting work, other than the attest function. Consequently, it argues that the statute creates an anomaly of expressly authorizing an uncertified accountant to perform accounting services for the public while at the same time prohibiting him from describing those services as accounting, or holding himself out to the public as an accountant. As a result,...