                       TO BE PUBLISHED IN THE OFFICIAL REPORTS


                            OFFICE OF THE ATTORNEY GENERAL

                                      State of California


                                      JOHN K. VAN DE KAMP

                                         Attorney General


                                       ----------------------------
                                                    :
                       OPINION                      :
                                                    :
                            of                      :      No. 87-403
                                                    :
                JOHN K. VAN DE KAMP                 : DECEMBER 17, 1987
                    Attorney General                :
                                                    :
                 ANTHONY S. DaVIGO                  :
                 Deputy Attorney General            :
                                                    :
                        ----------------------------------------------------------


               THE FRANCHISE TAX BOARD has requested an opinion on the following
question:

                 Has the State Board of Accountancy in its administrative rules and regulations
provided an adequate interpretation as to the character of government experience required to qualify
for a certificate as a certified public accountant?

                                            CONCLUSION

                 The State Board of Accountancy in its administrative rules and regulations has
provided an adequate interpretation as to the character of government experience required to qualify
for a certificate as a certified public accountant.

                                              ANALYSIS

                The statutes governing the practice of accounting in this state are found in section
5000 et seq. of the Business and Professions Code. The State Board of Accountancy (hereafter, the
"board") is authorized to "adopt, repeal, or amend such regulations as may be reasonably necessary
and expedient for the orderly conduct of its affairs and for the administration of this chapter."
(§ 5010.) Further, the board "may by regulation, prescribe, amend or repeal rules of professional


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conduct appropriate to the establishment and maintenance of a high standard of integrity and dignity
in the profession." (§ 5018.)

              Section 5083 prescribes the experience prerequisites for a certificate as a certified
public accountant:

               "Except as otherwise provided in this section, an applicant who successfully
       passes the examination shall receive a certificate as a certified public accountant if
       he has completed, or upon his completion of, any one of the following requirements:

               "(a) Three years of public accounting experience, two years of which have
       been in the employ of a public accountant registered under this chapter or a certified
       public accountant or a partnership of which a majority of the partners are public
       accountants registered under this chapter or certified public accountants.

                "(b) Three and one-half years of public accounting experience, one year of
       which has been in the employ of a public accountant registered under this chapter or
       a certified public accountant or a partnership of which a majority of the partners are
       public accountants registered under this chapter or certified public accountants.

              "(c) Four years of public accounting experience in cases in which none was
       acquired in the employ of a public accountant registered under this chapter or
       partnership of public accountants registered under this chapter or a certified public
       accountant or partnership of certified public accountants.

              "(d) Experience in private or governmental accounting or auditing work of
       a character and for a length of time sufficient in the opinion of the board to be
       substantially equivalent to the requirements of subdivisions (a), (b) or (c) hereof;
       provided, that the length of time that may be determined by the board shall not
       exceed four years.

              "The board shall prescribe rules establishing the character and variety of
       experience necessary to fulfill the experience requirements set forth in this section.

              "An applicant who qualified for the examination pursuant to subdivisions (b)
       or (c) of Section 5081.1 shall have at least four years of experience of a type
       described in this section." (Emphases added.)

                 Pursuant to the authority provided under the penultimate paragraph of the latter
section as well as sections 5010 and 5018, supra, the board has promulgated its rules and regulations
in title 16 of the California Administrative Code, commencing with section ("rule") 1. Rule 11.5
provides:




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              "(a) In order to fulfill the experience requirements set forth in Section 5083,
       the applicant shall show to the satisfaction of the board that his experience has
       included all the following:

               "(1) Experience in applying a variety of auditing procedures and techniques
       to the usual and customary financial transactions recorded in accounting records.

             "(2) Experience in the preparation of audit working papers covering the
       examination of the accounts usually found in accounting records.

               "(3) Experience in the planning of the program of audit work including the
       selection of the procedures to be followed.

               "(4) Experience in the preparation of written explanations and comments on
       the findings of the examination and on the content of the accounting records.

              "(5) Experience in the preparation and analysis of financial statements
       together with explanations and notes thereon.

               "(b) The foregoing requirements apply whether the experience of the
       applicant shall have been obtained in public accounting practice or in private or
       governmental employment. Experience obtained in private or governmental
       employment shall be qualifying if, in the opinion of the board based upon a review
       of the character and variety of experience of an applicant, such experience is deemed
       to be substantially equivalent to the experience requirements set forth in items (1)
       through (5) above.

               "(c) This experience shall be gained in full-time or part-time employment
       under the provisions of Section 5083. Such experience may be fulfilled by a
       combination of financial audits, reviews, compliance, operational and management
       units." (Emphases added.)

                The present inquiry is whether rule 11.5 provides an adequate interpretation as to the
character of government experience required to qualify for a certificate as a certified public
accountant. It is the purpose of regulations to implement, interpret, make specific or otherwise carry
out the provisions of a statute, and no such regulation is valid or effective unless consistent and not
in conflict with the statute and reasonably necessary to effectuate the purpose of the statute. (Gov.
Code, § 11342.2.) Of course, while licensing statutes are primarily designed to protect the public,
they should be interpreted in such a way that capable and deserving applicants, possessing requisite
character and qualifications, may not be denied the right to gain a livelihood by practicing their
calling. (Cf. Goldsmith v. Clabaugh (1925) 6 F.2d 94, cert. den. 269 U.S. 554; 60
Ops.Cal.Atty.Gen. 217, 222 (1977).)




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                As distinguished from private or governmental employment as an accountant, a
"public accountant," inter alia, practices accountancy while holding himself out to the public as an
accountant or dealing as an accountant with customers in a professional-client relationship. (Bus.
& Prof. Code, § 5051; 58 Ops.Cal.Atty.Gen. 36, 38 (1975).) Section 5083, subdivision (d), of said
code provides that experience as a governmental accountant will qualify for a certificate as a
certified public accountant if in the opinion of the board it is "substantially equivalent" as to
character and time to qualifying experience as a public accountant. (See 58 Ops.Cal.Atty.Gen.,
supra, 38.) Subdivisions (a), (b), and (c) of that section prescribe the quantity in terms of years of
experience as a public accountant required to qualify for a certificate as a certified public accountant.
The same statute further provides that the board shall prescribe rules establishing the character and
variety of qualifying experience as a public accountant.

                Accordingly, rule 11.5, subdivision (a), establishes the character and variety of
qualifying experience as a public accountant. Specifically, such experience must include (1) the
application of auditing procedures and techniques, (2) preparation of audit working papers covering
the examination of accounts, (3) planning the program of audit work, (4) preparation of explanations
and comments, and (5) preparation of financial statements. Subdivision (b) provides first that the
character and variety of qualifying experience as a public accountant applies as well to governmental
accounting experience, and further provides that such governmental experience must be, in the
opinion of the board, "substantially equivalent" as to character and variety to qualifying experience
as a public accountant.

                  It follows, as previously observed in 58 Ops.Cal.Atty.Gen., supra, 39, that if the
governmental experience of an applicant is, in the opinion of the board, substantially equivalent to
the prescribed character and variety of experience in public accounting, the applicant should be
given full credit for such experience to the same extent as an applicant qualifying under subdivisions
(a), (b), or (c) of section 5083.

                 In our view, the term "substantially equivalent" in the context of qualifying
experience does not warrant further specification in rule 11.5 because the matter has been statutorily
consigned to the board's own opinion in each case. (See subd. (b) of the rule: ". . . if, in the opinion
of the board based upon a review of the character and variety of experience of an applicant . . .";
emphasis added.) The board's determination in each case should be based upon the common and
generally accepted meaning of the term, which connotes a certain elasticity or variability as
distinguished from precision or exactitude. (Cf. Flateau v. Anderson (1982) 537 F.Supp. 257, 263 --
"substantial equality"; 59 Ops.Cal.Atty.Gen. 201, 203 (1976) -- "substantially equal"; 6
Ops.Cal.Atty.Gen. 94, 96 (1945) -- "substantially the same salary.") Such variances, if any, should
be derived in turn from the board's perceptions respecting the comparison between public and
governmental accounting experience. Finally, while the term "substantially equivalent" is not
expressly defined and determinations as to equivalency are relegated to the board's own opinion, the
board is nevertheless constrained in its opinions and determinations by the constitutional standard
of reasonableness. (Welsh v. Arizona State Board of Accountancy (1971) 484 P.2d 201, 204.) In
this regard, a primary rule of construction is that a statute should be construed, if possible, so as to
render it valid and constitutional. (In re Rodriguez (1975) 14 Cal.3d 639, 651; 66 Ops.Cal.Atty.Gen.

                                                   4                                             87-403

367, 368 (1983).) In the last cited opinion, we quoted City of Crowley Firemen v. City of Crowley
(Supreme Ct. La. 1973) 280 S.2d 897, 901, regarding the constitutional standard of reasonableness:

                "The fixed rule and basic standard by which the validity of all exercise of the
       police power is tested is that the police power of the state extends only to such
       measures as are reasonable and that all police regulations must be reasonable under
       all circumstances. Too much significance cannot be given to the word 'reasonable'
       in considering the scope of the police power in a constitutional sense, for the test
       used to determine the constitutionality of the means employed by the legislature is
       to inquire whether the restrictions it imposes on rights secured to individuals by the
       Bill of Rights are unreasonable, and not whether it imposes any restrictions on such
       rights. It has been said that the only limitation upon the exercise of the police power
       is that such exercise must be reasonable. The validity of a police regulation therefore
       primarily depends on whether under all the existing circumstances the regulation is
       reasonable or arbitrary and whether it is really designed to accomplish a purpose
       properly falling within the scope of the police power.

              "A statute to be within this power must also be reasonable in its operation
       upon the persons whom it affects, must not be for the annoyance of a particular class,
       and must not be unduly oppressive."

              It is concluded that rule 11.5 provides an adequate interpretation as to the character
of government experience required to qualify for a certificate as a certified public accountant.

                                              *****




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