SC Administrative Law Court Decisions

STATEMENT OF THE CASE

By this appeal David W. Croswhite challenges a denial of an application for licensure by comity by the South Carolina State Board of Accountancy (Board). The Appellant requested a license by comity based upon his grandfathered CPA license from the state of Illinois, and contends that the Illinois requirements for his licensure as a CPA are substantially equivalent to the requirements for South Carolina. S. C. Code Ann. §40-2-240 allows the State of South Carolina to extend comity recognition to certain other state licenses to practice certified public accounting (CPA). On January 30, 2008, following deliberation, and by majority vote, the Board denied the application for licensure and notified Appellant of its decision. The decision was based upon the determination that the Appellant needed an AICPA Ethics course and 24.67 additional semester hours, including 1 hour in an accounting course, to meet South Carolina’s educational requirements for licensure as a CPA in this State.

The Board concluded that because Appellant’s license was granted under a provision of Illinois law which did not require him to meet the current educational requirements of that state that his license does not substantially meet the educational requirements for South Carolina licensure as a CPA by reciprocity.

STANDARD OF REVIEW

In an appeal from an administrative agency, this Court is governed by the Administrative Procedures Act. S.C. Code Ann. 1-23-380(B) (1976, as amended). According to this statute, the decision of the Accounting Board should not be disturbed unless found to be clearly erroneous in view of the reliable, probative and substantial evidence or found to be arbitrary and capricious. South Carolina Code Ann. § 1-23-380(A)(6)(e) & (f) (1976, as amended). An Appellate Court must not substitute its judgment for that of the [Board] as to the weight of the evidence on questions of fact in the absence of either of the above-described situations. A reviewing court may not overturn an agency’s decision unless it finds the decision is “clearly erroneous” in view of reliable, probative, and substantial evidence on the whole record.” S.C. Code Ann. § 1-23-380(g)(5) (2002). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. “Midlands Utility, Inc. v. S.C. Department of Health and Environmental Control, 298 S.C. 66, 69, 378 S.E.2d 256, 258. Applying this standard of review, an appellate court may not substitute its judgment for that of the agency concerning the weight that could be afforded the evidence. See e.g., Toussaint v. State Board of Medical Examiners, 303 S.C. 316, 400 S.E.2d 488 (1991). The decision of an administrative agency can be reversed only if the administrative findings are clearly erroneous in view of the substantial evidence on the whole record. Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981).

DISCUSSION

The governing statute, S.C. Code Ann. §40-2-240, in pertinent part reads, “[t]he board may issue a license to a holder of a certificate, license, or permit issued under the laws of any state or territory of the United States or the District of Columbia or any authority outside the United States upon a showing of substantially equivalent education, examination, and experience . . .” [emphasis added] The conditions which have been set for licensure as a Certified Public Accountant in this State are found in S.C. Code Ann. § 40-2-240(A)(1)-(6), (particularly § 40-2-240(A)(1)) and include a requirement that the applicant for recognition of another state license show a record of education and experience which is substantially equivalent to that required of local applicants.

S. C. Code Ann. §40-2-240 (A)(1) sets the standard for the Board’s exercise of discretion to license by reciprocity that “the applicant received the designation, based on educational and examination standards substantially equivalent to those in effect in this State, at the time the designation was granted”. The South Carolina Board has consistently found that this language requires it to compare qualifications for licensure in another jurisdiction to those in effect in South Carolina at the time of the initial licensure by the other jurisdiction.

Illinois has confirmed that the Appellant passed four sections of the CPA exam between November of 1981 and November of 1982 and received his CPA Certificate from the Illinois Board of Examiners in 1983. The Appellant, however, did not obtain licensure in Illinois as a CPA until he applied and was grandfathered in July of 2007.

Appellant contends that the Illinois requirements for licensure as a CPA are substantially equivalent to the requirements for South Carolina. This position is only partially correct. Illinois focuses on the date when the candidate completed his CPA examination as the key date for determining qualification for licensure. South Carolina, in comparison, focuses on the date “when the designation was granted” in determining whether to grant comity licensure. The South Carolina emphasis is clear in the provisions made in 2004 Act 289, Sections 2.A and 2.D for grandfathering. At that time, the South Carolina General Assembly stated that all currently licensed CPAs would continue to hold that license even if they didn’t meet the newest standards for licensure. The General Assembly went on to say that persons with open applications had twenty-four months to complete qualifications under the older standards. After that time, they would be required to meet all current standards.

At the time when the Appellant received the designation of Licensed CPA in Illinois, that state accepted his educational hours which qualified him to take the CPA examination in that state in 1982. That education did not meet the requirements in effect in South Carolina when he applied for licensure in 2007. The State of South Carolina looks that the date in which the equivalent designation was granted, and whether the requirements for licensure under that designation are substantially equivalent to the requirements for licensure in South Carolina. In 2007, Illinois had two separate paths to licensure. One matched the current requirements in this State. However, Appellant did not have to meet the current requirements for licensure in the state of Illinois or of South Carolina because he chose licensure using a second path, usually referred to as grandfathering. When he was licensed in July of 2007 by action of the grandfather provision of the Illinois statute, he was licensed by standards which are not the substantial equivalent of the educational requirements of South Carolina in July of 2007 which would be “at the time the designation was granted” under 40-2-240(A)(1).

In Andre R. Brooks vs. SCDLLR, 05-ALJ-11-0231-AP (November 16, 2005) Brooks argued that he should be licensed based upon a comparison of the Michigan licensing statute with the South Carolina licensing statute, rather than a comparison of his education background to the education requirements of South Carolina's licensing statute. This Court determined that a comparison of the statutes did not reveal the similarity of the underlying requirements and upheld the Board's decision to deny licensure to the Appellant stating that "[i]t defies reason to assume that South Carolina would allow an applicant licensed in another jurisdiction to be licensed in South Carolina with qualifications less than required of South Carolina residents". The circumstances of the present case warrant the same reasoning.

It is within the Board’s discretion in deciding whether a licensee in another state meets the requirements for licensure in South Carolina. The Board in making its decision gave full consideration to the requirements of Illinois for licensure at the time the applicant received the designation of CPA in that state, however because Appellant’s license was grandfathered, he did not have to meet the current educational requirements of Illinois, and therefore his license does not substantially meet the educational requirements for South Carolina licensure as a CPA.

IT IS HEREBY ORDERED accordingly for all of the foregoing reasons, the Board’s decision to deny the application of the Appellant for failure to meet the educational requirements for licensure as a CPA in this state is AFFIRMED.

AND IT IS SO ORDERED.