The United States Court of Appeals for the District of Columbia Circuit in the case of Noel Canning v. National Labor Relations Board (“NLRB”) threw the area of employment law into a state of turmoil. On January 25, 2013, the Court ruled that three of President Obama’s appointments to the NLRB were invalid.  If this decision is not overturned it means that more than 200 decisions by the NLRB may no longer be valid and may have to be revisited.  Included in the decisions are a number of rulings dealing with employers’ attempts to restrict employees’ use of social media.
                 
The most controversial decisions by the NLRB during this time were the rulings that employees can use social media to complain about or comment on management, without retribution.  As an example, see the Costco case decided on September 7, 2012.  These were also other decisions concerning employers’ social media policies and what restrictions were overly broad.  These cases are likely to be appealed and the state of the law will be in some state of turmoil until these issues are resolved.
                 
Sharon Block, Richard Griffin and Terence Flynn’s appointments were all ruled invalid.  They were all appointed prior to January 4, 2012.  There are only five members on the NLRB.  These three members were part of the quorum necessary for the NLRB to decide cases since January 4, 2012.  Without them the NLRB did not have a proper quorum and thus each of its decisions would be in question.  
                 
The NLRB continues to stand by its rulings, and therefore, it appears that this case is headed for the Supreme Court to ultimately decide this issue.  There have been contrary decisions by other appeals courts.  This split in decisions and the importance of the issue presented make it likely that the Supreme Court will take the case and make a decision on the matter.  One of the issues will be: if this decision is upheld, there have been a large number of other appointments and actions that could also be found to be unconstitutional.   Also, it appears that Presidents going back to James Madison and certainly all the recent Presidents have made the same type of appointments, which would now be considered unconstitutional.  
                
We’ll just have to wait and see what the NLRB and the Supreme Court do.

 
 
Okay.  You have received a letter from the PICPA Committee on Professional Ethics ("the Committee") indicating that it has received information that "you may have violated the PICPA Code of Professional Conduct."  What do you do?  Stop.  Breathe.  Remember it is not the end of your world.  The Committee’s role is remedial not to punish.  If you are doing something wrong the goal is to help you learn and improve and thus protect the public and provide a better service.  

For clarification purposes, if you have committed a felony and in some other egregious situations, you will be expelled.  However, in these situations you generally have a lot more to worry about than your PICPA membership.  

The Committee commonly refers to this letter as the "Opening Letter."  The last thing you want to do is ignore this letter.  Do not bury your head in the sand and hope this will go away.  It will not.  Keep in mind that as a member of the PICPA you have agreed to abide by the Code of Professional Conduct and a part of the Code is that you will cooperate with an ethics investigation.  Failure to cooperate is grounds for termination of your membership in the PICPA.  Not responding to the committee when it asks for a response and/or further information is failing to cooperate and may lead to expulsion from the PICPA.  The good news is that if you do not respond to the first letter there will be a follow-up about 30 days letter giving you another opportunity to respond.  The reality is that you will have to ignore numerous opportunities to respond before you will be expelled for non-cooperation.

You generally have thirty days to respond to the Opening Letter.  Appropriate responses to this letter include just about anything that demonstrates that you will cooperate.  You can ask for more time, you can provide the requested information, and you can ask for a deferral because the underlying matter is in dispute in any court of law and/or if there is an ongoing investigation by another regulatory body (i.e. the SEC).  Deferrals are routinely granted and are preferred by the Committee because a member should not have to fight a battle concerning their actions on two fronts at the same time and because any investigation or findings by the Committee should not be used as leverage in any other proceeding.  You will eventually have to provide the requested information, even if it is years later after the matter has been deferred during that time (i.e. while you defend yourself from a civil lawsuit).  Should you request additional time to respond to the Opening Letter, the Committee will generally work with you, if demonstrate you need extra time.

Once the Committee has the information requested it will review all the information and ask for more information if necessary.  It will ultimately decide whether there has been any violation of the Code.  The best outcome is a letter from the Committee that based upon the response received that the Committee "has concluded not to pursue the matter at this time."  The worst case is expulsion from the PICPA but this does not directly affect your license to practice accounting.  Typically, the Committee will recommend CPE’s that will help you learn and understand how to do a better job the next time you under take a similar engagement.  Other remedial measures include pre or post issuance reviews, an accelerated PEER Review and restrictions on performing PEER Reviews.  Short of expulsion, the Committee also has the authority to suspend a member up to two years and to publicly admonish the member.

Before the Committee will decide anything other than an outright dismissal based upon your initial response you will be offered an interview where you will be given an opportunity to answer questions and present your side of the issues.  There are a number of procedural and due process protections.  Additionally, members can agree to settle cases rather than undergo a full investigation.  Where no settlement agreement is reached the case is heard by the AICPA Joint Trial Board for a decision.

Please let me know if you have any general questions about this topic but if you have a specific matter before the Ethics Committee I cannot address those issues because I represent and advise the Committee on legal issues including due process issues as they may arise. jmcguire@c-wlaw.com


 
 
On Friday January 18, 2013, the IRS’ attempt to regulate non-CPAs, non-enrolled agents, and non-attorneys were put to an end by a decision of the United States District Court for the District of Columbus.  The IRS believes that it has the authority to regulate “representatives” who “practice” before it.  However, three independent tax-preparers brought the suit objecting to the IRS’ efforts and the Court agreed.  
                  
U.S. District Court Judge James E. Boasberg ruled against the IRS and enjoined the agency  from enforcing its Registered Tax Return Preparer requirements.  The Court held that the IRS’ regulatory scheme was impermissible and entered a permanent injunction.  The judge ruled that IRS does not have the statutory authority to regulate tax preparers.  If no further action is taken, tax preparers will not have to comply with the recently enacted regulations.
                 
At this point it remains to be seen what the IRS will do next.  Their first option is to appeal to the Circuit Court in an effort to have the decision overturned.  If an appeal is not successful, the IRS will have to turn to the Legislature for the authority to regulate tax preparers.  The IRS would like to require an exam, a fee, and required continuing  education courses for all non-CPA, non-enrolled agent, and non-attorney tax preparers.


 
 
 
Below is a link to my article on the Cipriani & Werner website about cyber risk from a professionalviewpoint.

http://goo.gl/ovGwf