We received a letter from the California Board of Accountancy, dated 12/3/13,  regarding the use of the word “Accounting” on our website. We have been harassed by an individual person, whom is not a client, who has tried to leave reviews on every available merchant site out there such as Yelp, Merchant Circle, Switchboard, you name it, he has tried it and yet, every one of these sites has removed the review due to content violation. He uses fake profile names and fake emails.  He contacted the California Board of Accountancy, he tried contact the Chamber of Commerce, that didn’t get him anywhere, so he contact the BBB, which didn’t get him anywhere either. He has not contacted us directly. We’re not sure what his next move is however we have done a fair amount of research on exactly what is an “Accountant”, who can practice public accounting by california law, what exactly is public accounting and we have compiled with the request by the California Board of Accountancy.

We have never claim to be, nor do we solicit or advertise that we are certified public accountant (CPA or PA).  

The word “Accountant” is confusing.  Anyone can claim to be an accountant as anyone can claim to be a bookkeeper but that doesn’t make you one. An Accountant in my opinion is someone that goes beyond the basic data-entry of a bookkeeper, an accountant is someone that looks at your profit and loss or balance sheet and see the financial picture, that takes the time to analysis the information and dive deeper into the numbers. An accountant that has a background in software and programming will look into the way the software is talking to the other software and design or redesign the controls to function with the software.  An accountant that has years of experience in varies industries will use their knowledge to help a client see the big picture of their financial details in a way a client understand that information.

We’re not a traditional firm, we’re not a CPA Firm either nor have we ever claim to be one.  We work our own hours, we don’t have storefront office and we don’t charge astronomical rates for the work we do, we believe that every small business should be able to afford an Accountant that can help them with their financial picture.

CPA’s are expensive, why are they so expensive, because they have the distinction of having those three little letters after their title.   A CPA has certain requirements in order to be a CPA, a lot of its education and experience and a CPA also has to shell out $$ and take a very hard 4-part computerized exam.  CPAs are accountant just like normal accountants except that are licensed by the state of california and passed an exam, you don’t have to be a CPA to be an accountant. Yes, read that again: You don’t have to be a CPA to be an Accountant.

American Institute of CPAs says this on their site:  All CPAs are accountants, but not all accountants are Certified Public Accountants (CPAs). The principal differences between accountants and CPAs are education, experience, and opportunity. Becoming a CPA is a challenging goal, but one very much within your reach. In order to become a CPA, there are education and experience requirements you’ll need to fulfill, and a Uniform CPA Exam that you must pass. Receiving your CPA certification distinguishes you from other business professionals – the benefits are increased trust, opportunity, and financial reward.

Another site, The Advisor,  says this about the differences between bookkeepers, accountants and CPAs: In general, bookkeepers are doers, accountants do and oversee, and CPAs do technical work, provide guidance, and manage.

The California Board of Accountancy has no info on the distinctive differences that I can find except to say

  • that CPAs are required to comply with CBA Regulations section 54.1. This regulation provides that no confidential information obtained by a CPA shall be disclosed without the client’s permission.  
  • Before any work is done by the CPA, it is important to make certain that you receive an engagement letter detailing the work to be performed for you, who specifically will be performing the work, including whether the work is outsourced, confirming that all private and personal information is secure, and specifying the cost of the services.
  • The following are titles or designations likely to be confused with the titles Certified Public Accountant and Public Accountant within the meaning of Section 5058 of the Business and Professions Code:
    (a) “Accountant,” “auditor,” “accounting,” or “auditing,” when used either singly or collectively or in conjunction with other titles.
    (b) Any other titles or designations which imply that the individual is engaged in the practice of public accountancy

In general practice, chaotic cancellation does not disclose any confidential information about a client without their permission. We  always requires an engagement letter to be signed for all clients which specifics the cost of services and confirms private and personal information is secure. We usually require a deposit for services as well. We always tell potential clients and new clients that we are not a certified public accountant and/or correct them if they assume that.

For that matter, the word license and certification is confusing. Anyone can have several different types of licenses or certifications, you can be a certified Quickbooks Advisor. You could be a certified on a different accounting software, you could have a license to install telephone system, you could have a business license or a california certified corporation number.  But when you use the word licensed on your website, you better be really clear on what that means and spell it out for the average joe.  Lesson learned, don’t use a template for a website without checking the contents.

So what is public accounting by definition of California Law?  

Under the BUSINESS AND PROFESSIONS CODE – BPC DIVISION 3. PROFESSIONS AND VOCATIONS GENERALLY [5000 – 9998.8] ( Heading of Division 3 added by Stats. 1939, Ch. 30. ) CHAPTER 1. Accountants [5000 – 5158]  (read more about the law)

a person shall be deemed to be engaged in the practice of public accountancy within the meaning and intent of this chapter if he or she does any of the following:

(a) Holds himself or herself out to the public in any manner as one skilled in the knowledge, science, and practice of accounting, and as qualified and ready to render professional service therein as a public accountant for compensation.

(b) Maintains an office for the transaction of business as a public accountant.

(c) Offers to prospective clients to perform for compensation, or who does perform on behalf of clients for compensation, professional services that involve or require an audit, examination, verification, investigation, certification, presentation, or review of financial transactions and accounting records.

(d) Prepares or certifies for clients reports on audits or examinations of books or records of account, balance sheets, and other financial, accounting and related schedules, exhibits, statements, or reports that are to be used for publication, for the purpose of obtaining credit, for filing with a court of law or with any governmental agency, or for any other purpose.

(e) In general or as an incident to that work, renders professional services to clients for compensation in any or all matters relating to accounting procedure and to the recording, presentation, or certification of financial information or data.

(f) Keeps books, makes trial balances, or prepares statements, makes audits, or prepares reports, all as a part of bookkeeping operations for clients.

(g) Prepares or signs, as the tax preparer, tax returns for clients.

(h) Prepares personal financial or investment plans or provides to clients products or services of others in implementation of personal financial or investment plans.

(i) Provides management consulting services to clients.

The activities set forth in subdivisions (f) to (i), inclusive, are “public accountancy” only when performed by a certified public accountant or public accountant, as defined in this chapter.

A person is not engaged in the practice of public accountancy if the only services he or she engages in are those defined by subdivisions (f) to (i), inclusive, and he or she does not hold himself or herself out, solicit, or advertise for clients using the certified public accountant or public accountant designation. A person is not holding himself or herself out, soliciting, or advertising for clients within the meaning of this section solely by reason of displaying a CPA or PA certificate in his or her office or identifying himself or herself as a CPA or PA on other than signs, advertisements, letterhead, business cards, publications directed to clients or potential clients, or financial or tax documents of a client. 

So basically the distinction per California Law for public accountancy is that the person can not claim to be or solicit or advertise for clients as a CPA or PA.  We never have claimed  to be a CPA or a PA.

We do have the knowledge and skill to practice accounting. We do have an office. We do not certify any documents but we do review financial transactions and accounting records. We do prepare financial records for the purpose of obtaining credit, any person can do that, run your P&L and Balance Sheet.  We do keep books and prepare reports as part of bookkeeping operations. We do prepare tax returns. We do provide some management consulting for clients and if you need more than we offer, we have several great firms that we can refer you too. We do not do any financial or investment planning, however we do have a great guy at Ameriprise we can refer you too.  So yes, I guess we do public accounting but we have never claim to be, solicited or advertised that we were a CPA or PA, because we are not.