The California Supreme Court and the "A" Word
Sager, William H., The National Public Accountant
The California Supreme Court on July 2, 1992, issued its long awaited opinion in the case of Bonnie Moore and the California Association of Independent Accountants v. California State Board of Accountancy. Even among the seven justices of the California Court, there was a noticeable lack of unanimity on permitted use of the "A" word. Four justices of the court, in a 41-page opinion written by justice Baxter, affirmed the judgment of the Court of Appeal and upheld the validity of contested Regulation 2, under which the Board claimed authority to prohibit an unlicensed accounting practitioner from using the title "accountant" or the term accounting." Three justices joined in separate dissenting opinions written by Justice Mosk and Justice George, and would hold contested Regulation 2 invalid as a barrier to commercial speech protected by the constitution.
To the extent that the three dissenting justices could not persuade another justice to go along, thus making the minority dissenting opinion the majority opinion and hence the law of the land in California, the Bonnie Moore decision is disappointing.
To the extent that the four majority justices, even while upholding the validity of Regulation 2, provided a safe-harbor for unlicensed accountants to practice their profession, Bonnie Moore decision is encouraging and represents a giant leap forward for the unlicensed California accounting practitioner.
Until July 2, 1992, the date of the Bonnie Moore decision, the California State Board of Accountancy refused to recognize the "A" word under any circumstances. The use of the title "accountant" by an unlicensed individual was prohibited. Moreover, the Board refused to recognize decisions of the United States Supreme Court that the state has a heavy burden to justify a categorical prohibition against the dissemination of accurate factual information to the public. In brief, the Board on its own determined that the "A" words, the terms "accountant" and "accounting," were allegedly misleading to the public and hence issued its infamous Regulation 2 prohibiting the use of those terms by individuals not licensed by the Board. We say "allegedly misleading" for there is ample reason to believe that the Board's 12 members (consisting of six CPAs, two PAs and four public members) were more interested in eliminating competition to its licensees by denying the use of the "A" word by unlicensed individuals than they were in protecting the public.
Despite the opinion upholding the validity of Regulation 2, it is clear that the majority of the court, at the same time, reached the conclusion that Regulation 2 was overly broad. The majority concluded the Board's regulatory scheme may constitutionally ban only those uses of the terms "accountant" and "accounting" that may potentially mislead the public regarding the user's licensed or unlicensed status.
Accordingly, the opinion stated, where the terms "accountant" and "accounting" are used in conjunction with a modifier or modifiers that serve to dispel any possibility of confusion, use of the "A" words is constitutionally permissible. An example of a modifier that would dispel confusion would be an express disclaimer stating the "accounting" services being offered do not require a state license. A disclaimer that the individual is not licensed by the state board of accountancy would appear to serve the same purpose. Thus, the majority opinion is clear that the California Board of Accountancy may not prohibit absolutely (as the Board has continued to do for a great many years, threatening unlicensed accountants with contempt actions, fines and imprisonment) the right of unlicensed accountants to use the title "accountant" if the unlicensed accountants used the disclaimer or caveat fashioned by the California Supreme Court.
In order to satisfy the First Amendment to the U.S. Constitution, unlicensed accountants must be permitted to use the terms "accountant," "accounting," or "accounting services," if the use of those terms is further qualified by an explanation, disclaimer or warning stating the individual using those terms is not licensed by the state or the services being offered do not require a state license. …