IN RE: JUDICIAL REVIEW OF FINAL AGENCY DECISION OF THE N.C. BOARD OF CPA EXAMINERS IN THE MATTERS OF BELINDA L. JOHNSON, CPA #31871; AND BELINDA JOHNSON CPA, P.A., DATED JUNE 23, 2016
in the Supreme Court on 6 February 2018.
pursuant to N.C. G.S. § 7A-27(a)(2) from an opinion and
order dated 1 May 2017 entered by Judge Gregory P. McGuire,
Special Superior Court Judge for Complex Business Cases, in
Superior Court, Wake County, after the case was designated a
mandatory complex business case by the Chief Justice pursuant
to N.C. G.S. § 7A-45.4(b).
Heidgerd Law Office, LLP, by Jason E. Spain, C.D. Heidgerd,
and Eric D. Edwards, for petitioner-appellants.
& Pinnix, P.A., by Noel L. Allen and Nathan E. Standley;
and Frank X. Trainor, III, Staff Attorney, North Carolina
State Board of CPA Examiners, for respondent-appellee.
case we consider whether the North Carolina State Board of
Certified Public Accountant Examiners (the Board) can take
disciplinary action against an individual or entity regulated
by the Board for failure to follow a rule requiring
compliance with the terms of a peer review contract. We also
consider whether the Board's decision to suspend
petitioners' registration in this case was made based on
lawful procedure and substantial evidence. Because we
conclude that the Board lawfully required a certified
professional and her corporation to honor a private peer
review contract and that the Board's decision was based
on substantial evidence, we affirm the decision of the North
Carolina Business Court affirming the Board's
disciplining of petitioners.
Belinda Johnson is a Certified Public Accountant (CPA)
holding a certificate issued by the Board. Petitioner Belinda
Johnson CPA, P.A. (the Firm) is a registered certified public
accounting corporation, solely owned by Johnson. On 23 June
2016, the Board issued a final decision in which it
unanimously found that petitioners failed to comply with
required auditing standards, failed to fulfill the terms of a
peer review contract, and failed to timely respond to the
Board and its staff during an investigation. The Board
concluded that this conduct violated rules and standards
promulgated by the Board and suspended the Firm's
registration for three years or until petitioners fulfilled
the terms of their peer review contract. The Board also
imposed monetary penalties on Johnson, issued a five-year
revocation of Johnson's CPA certificate, and stayed that
revocation "provided Respondent Johnson complie[d] with
all North Carolina Accountancy laws and rules during the
period of the stayed revocation."
facts underlying the Board's decision arise from a 2013
peer review of petitioners' accounting and auditing
practice. In order to satisfy Board rule 21 NCAC 08M
.0105(d), requiring "[p]articipation in and completion
of the AICPA Peer Review Program, " petitioners entered
into a peer review contract with Tina Purvis of Hollingsworth
Avent Averre & Purvis, PA. The peer review contract
specified that Purvis would bill at a rate of $150 per hour
and estimated that the peer review would take between fifteen
and twenty-one hours. In part, Purvis performed a detailed
review of an audit petitioners had performed for one of their
not-for-profit clients (the client audit). Based upon this
review, Purvis noted material departures from the relevant
standards, issued a failing result, and recommended that the
Firm reissue certain documents related to the client audit.
Johnson disputed the results of the failed peer review before
the North Carolina Association of Certified Public
Accountants Peer Review Committee. After an investigation and
telephone conference, the Peer Review Committee accepted
Purvis's review, including the failing result.
April 2014, Purvis filed a complaint with the Board alleging
that petitioners failed to fulfill the terms of the peer
review contract by refusing to pay for the peer review. This
complaint was forwarded to the Board's Professional
Standards Committee (the committee). The committee informed
Johnson that she had not complied with the peer review
contract and directed petitioners to resolve the matter with
Purvis by 23 October 2014. Petitioners did not resolve their
dispute with Purvis and on 28 August 2015, the committee
requested that petitioners submit documents related to the
Purvis peer review. On 4 September 2015, Johnson sent a
letter to the committee declining to send the documents
because she considered the information "unnecessary and
redundant" and "irrelevant and immaterial to this
providing notice to petitioners, the Board held a hearing to
address these matters on 19 May 2016. Petitioners were not
represented by counsel at this hearing, but Johnson attended,
introduced evidence, and cross-examined witnesses. On 23 June
2016, the Board issued its final decision imposing discipline
on petitioners. On 22 July 2016, petitioners filed for
judicial review in Superior Court, Mecklenburg County. The
case was subsequently designated as a mandatory complex
business case by the Chief Justice and venue was transferred
to Wake County.
were represented by counsel before the Business Court. After
receiving briefs from both parties, the Business Court held a
hearing and issued a written order upholding the Board's
decision. The Business Court noted:
Here, the Court's task of reviewing the Board's Order
is made exceedingly difficult by the Petitioner[s']
failure to support their exceptions with references to the
record evidence, or with coherent arguments or citation to
legal authority. Petitioner[s'] brief consists primarily
of declaratory statements that, for the most part, are not
linked to any particular exception in their Petition.
Nevertheless, the Court will review the Board's critical
findings of fact and conclusions of law to determine whether
they are supported by the evidence and free from errors of
In re Johnson, No. 16 CVS 12212, 2017 WL 1745650, at
*4 ( N.C. Super. Ct. Wake County (Bus. Ct.) May 1, 2017).
After completing its review of "the Board's critical
findings of fact and conclusions of law, " id.,
the Business Court affirmed the Board's decision,
id. at *8. Petitioners appealed to this Court.
appeal, petitioners first argue that the Board's decision
to revoke the Firm's registration for three years or
until petitioners fulfilled the terms of the peer review
contract violated the North Carolina Constitution.
Maintaining that the decision effectively was an order
enforcing a disputed private contract, petitioners contend
that such a directive exceeded ...