September 2001

Everything You Ever Wanted to Know About the Joint Trial Board but Were Afraid to Ask

One of the missions of the New York State Society of CPAs Professional Ethics Committee (PEC) is to investigate complaints involving the Code of Professional Conduct and the bylaws, as well as applicable state laws and regulations. PEC follows procedures set forth by the Joint Ethics Enforcement Program (JEEP), which is comprised of the American Institute of CPAs and the member state CPA societies. When an investigation leads to PEC’s decision to suspend or expel a member from the Society and make public that decision, an offer of settlement is made to the member wherein he or she agrees to the penalty. If the member does not wish to settle, the case is turned over to the Joint Trial Board for a hearing.

What Is the Joint Trial Board?

The Joint Trial Board is a hearing board established to adjudicate alleged violations of the ethics codes and bylaws of the AICPA and state societies. It has the authority to suspend or expel members and it is also authorized to receive and act on petitions requesting review of a decision of the Peer Review Board to terminate a firm’s participation in the AICPA’s practice-monitoring program.

What Is the Composition of the Joint Trial Board and How Are Members Selected?

The Joint Trial Board consists of at least 36 members who have been members of the AICPA for at least five consecutive years. They are elected for three-year terms by AICPA Council. The AICPA’s Nominations Committee considers recommendations from the state CPA societies and nominates at least three individuals from each of the twelve regions for election by Council. No member can serve more than two full successive terms. Ethics committee members and state accountancy board members are not eligible. Hearings of disciplinary charges are conducted through panels consisting of five members of the Joint Trial Board who are appointed by the chair.

Where Are Hearings Held?

Hearings are generally held in the regions where the respondents reside. New York hearings are held at the AICPA’s offices in Manhattan.

What Are the Respondents’ Rights?

At least 30 days prior to a proposed hearing date, a Notice of Hearing containing a description of the charges against the respondents and indicating the time and place of the hearing is mailed to the respondents. A hearing memorandum containing the material that the PEC (which is also the Ethics Charging Authority or ECA) intends to rely on and related materials are sent to the respondents. They are encouraged to furnish a reply at least 14 days prior to the hearing. The respondents are sent a plea of guilty form with the notice that they can send it back, waiving their rights to a hearing, accepting the sanctions proposed and consenting to publication.

If the respondents choose to appear in person, they may be represented by counsel and they may produce witnesses. The panel may conduct hearings regardless of whether the respondents or their representatives actually attend the hearing. All proceedings before hearing panels are confidential. However, guilty findings are published by the Society and the AICPA. Additionally, respondents’ state accountancy boards are notified of guilty findings resulting in expulsion from membership unless the hearing panel decides not to do so.

Can a Respondent Request a Review of the Trial Board’s Decision?

Yes. Within 30 days of the trial board decision, a respondent must have filed a request for review with the secretary of the Joint Trial Board at the principal offices of the AICPA. The request must include in detail the reasons for requesting the review. The request may be supplemented by any relevant material, including material not submitted at the hearing. If no reasons or materials are given with the request for review, the request will be deemed invalid. A new panel of five members of the Joint Trial Board is appointed by the chair to act on the request. The ECA may submit a memorandum for the panel’s consideration.

Neither the ECA nor the respondent may appear before the panel. A review of the trial board’s decisions is not a right of respondents. It will be granted only if the panel finds, for example, that the discipline imposed by the hearing panel is disproportionate to the offense; or that the facts as found by the hearing panel are inconsistent with the discipline imposed; or that any applicable rule of ethical conduct that applies to the respondent has been misinterpreted; or that the respondent has satisfied the burden of showing new evidence that existed but was unknown at the time of the hearing and could have possibly changed the results of the hearing.

A decision denying a review is not subject to further review. If a request is granted, a panel of five members who did not participate in prior proceedings of the case is appointed. At the hearing the review panel will consider all information provided by the respondent and the ECA. The respondent will bear the burden of convincing the review panel that there should be a change in the decision of the hearing panel.

Can Respondents Request That a Prior Decision of the Joint Trial Board Be Reconsidered?

Yes. Reconsideration of prior decisions after publication of them can be requested by respondents. This is to reconsider original decisions because of new information that would have likely had a material effect.

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A Day at the Joint Trial Board

I recently attended trial board hearings in New York City as an observer to hear four cases concerning members of the NYSSCPA. In the first case, the member was charged with failing to cooperate in an investigation by PEC. He also failed to appear for the hearing and was expelled from membership.

The three other Society members appeared in turn before the trial board. The ethics staff of the AICPA acting as the ECA presented the cases and the members were given a chance to respond to the charges. They all chose not to be represented by counsel. The five-member panel asked the members questions and they were given the chance to defend themselves. At the end of the hearing, the panel deliberated in private. After the deliberation, the members and the ECA were brought back into the hearing room to hear the decisions.

One member was expelled from membership because he failed to comply with the ECA’s mandate to take 40 hours of CPE, despite many years of extension to do so. Another member was suspended from membership for two years for mishandling his employer’s funds. In the last case, the member was admonished for not returning client records and was given the opportunity to respond to the initial request for the return of the records by the PEC.

Guilty findings of Society members are published in The Trusted Professional in a column called “Disciplinary Matters.”

There are approximately 30,000 members of the NYSSCPA. Currently the Professional Ethics Committee has open investigations that involve about 100 members.