Articles

Client Alert: 5 Things You Should Do If You Get A VBOA Letter

The Virginia Board of Accountancy (VBOA) investigates complaints received against CPAs and CPA firms alleged to have violated Virginia law. The VBOA also investigates complaints received against non-CPAs and non-CPA firms for using the CPA title and for performing services restricted to licensed CPAs or CPA firms. The first time you may become aware of the existence of a VBOA investigation is from a VBOA letter.

The stakes are high if the VBOA opens an investigation. The VBOA has the authority to impose significant sanctions that include revocation or suspension of a Virginia license, public or private reprimand, censure, limitation of the scope of practice, probation with or without conditions and imposition of a monetary penalty up to $100,000 for each violation. It is important to take a deep breath and consider taking the following five steps to defend yourself and potentially avoid a VBOA disciplinary order:

1. Consider the origins of the complaint and whether you can take remedial steps to address the complaint.
2. Take steps to preserve emails, text messages and other documents and consider requesting an extension to respond to the VBOA letter to give you adequate time to locate and prepare documents and respond to any VBOA questions.
3. Submit a Statement of Position with your response.
4. Start preparing for a potential Informal Fact-Finding Conference.
5. Consider retaining an attorney experienced in defending against VBOA matters.

First, consider the origins of the complaint and potential remedial actions you can take before sending a response to the letter. The VBOA investigates complaints about technical errors, retention of client records, failure to provide due professional care, illegal or unethical conduct, and referrals of concluded disciplinary matters before agencies such as the U.S. Securities and Exchange Commission, the Public Company Accounting Oversight Board, or other state boards of accountancy.

The notification letter usually contains a brief statement of the allegations and will also usually be accompanied by a copy of the complaint. This gives you important information you can use in preparing defenses to the allegations. While the VBOA does not investigate fee disputes, a client complaint may be driven by a feeling that you did not provide certain services or the services provided were poor in quality. Taking remedial measures such as offering to reduce the fee charged, redo certain work with no charge, or revise a firm policy to make sure the problem does not reoccur might prompt the client to withdraw the complaint. At the very least, you can list the remedial steps in your response to the VBOA which may consider them as a mitigating factor.

Second, you have a duty to cooperate with the VBOA in an investigation, and it is also a mitigating factor. Both for your defense of the investigation and to comply with your legal obligations, it is important to take steps to preserve emails, text messages, messaging platform communications (i.e., WhatsApp, Signal, Telegram etc.), and work papers that relate to the investigation. In certain situations, it may be important to preserve metadata associated with electronic documents (i.e., information showing the author, dates of creation and dates of modification). This can be a time-consuming process, so you may need to ask the VBOA for an extension of the deadline to respond.

Third, it is frequently helpful to submit a persuasive brief, often referred to as a Statement of Position (SOP), with your or the firm’s production of documents and information in response to the VBOA letter. The submission provides an opportunity for you to provide a summary of the facts in the best light to your defenses, assert arguments that address the complaint, and present arguments why no violations of statutes or regulations have occurred with citations to documents, statutes, and regulations that support your arguments. Where you may have to concede that a violation has occurred, the SOP provides an opportunity to present mitigating factors and set forth any corrective/remedial actions you or your firm have taken to prevent a reoccurrence in the future. If the VBOA asks you to appear for an Informal Fact-Finding ("IFF") Conference, the panel members will read your SOP before the Conference.

Fourth, in many investigations, the VBOA determines that it needs further information than it receives in your response. If so, the VBOA typically proceeds with scheduling an IFF Conference. An IFF Conference is not a trial. However, the witnesses at the conference testify under oath and a court reporter is present who transcribes the testimony. Prior to the IFF conference, the respondent should prepare by reviewing documents and other information provided to the VBOA as well as applicable statutes and regulations.

Fifth, you have the right to be represented by legal counsel in this process. An attorney experienced in defending accountants and firms who are under investigation by state boards of accountancy can assist you in this difficult process.

Whiteford offers sophisticated, experienced counsel on VBOA investigations and other investigations and litigated matters relating to accounting firms and accountants.

---