ELIGIBILITY OF STATE EXAMINERS FOR REGISTRATION AS PUBLIC ACCOUNTANTS
State examiners employed by the Municipal Corporation's division of the office of the Auditor of the State of Washington are not eligible for registration as public accountants under the provisions of chapter 226, Laws of 1949.
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May 22, 1950
State Board of Accountancy
1114 Smith Tower
Seattle 4, Washington Cite as: AGO 49-51 No. 280
We are in receipt of your letter of February 21, 1950, wherein you have asked the following question:
Are certain state examiners, employed by the municipal corporations division of the office of the Auditor of the State of Washington, eligible for registration as public accountants under the provisions of chapter 226, Laws of 1949?
The conclusions reached may be summarized as follows:
The state examiners in question are not eligible.
You have advised us that certain state examiners employed by the municipal corporation division of the office of the State Auditor have, pursuant to the provisions of section 23, chapter 226, Laws of 1949 (8269-30 Rem. Supp 1949), applied to the Public Accountants' Registration Committee for registration as public accountants. The registration committee rejected these applications upon the grounds that the applicants did not meet the requirements of subsection (c) thereof. The applicants thereupon filed an appeal with the Board of Accountancy in accordance with section 25 of said act (8269-32 Rem. Supp. 1949) and requested a hearing which was granted. At the hearing the applicants presented [[Orig. Op. Page 2]] the Board with a brief, setting forth the basis of their appeal. Upon the request of the applicants the Board has consented to withhold its decision upon the appeal pending the issuance of an opinion by this office.
Section 23, chapter 226, Laws of 1949 (8269-30 Rem. Supp. 1949), provides as follows:
"Any person (a) who is a resident of this state, or who has a place of business or is employed in this state, and (b) who is of good moral character and (c) who meets the requirements of subdivision (1) or (2) or (3) of this section may apply for registration as a Public Accountant:
"(1) Persons who held themselves out to the public as Public Accountants, and who were engaged within this state at the effective date of this act in the practice of public accounting as their principal occupation;
"(2) Staff Accountants employed by Certified Public Accountants or by Licensed Public Accountants or by Public Accountants and regularly assigned to accounting engagements at the effective date of this act; and
"(3) Persons serving in the armed forces of the United States or any of the United Nations, who immediately prior to entering such service were residents of this state and held themselves out to the public as Public Accountants and who were engaged in the practice of public accounting as their principal occupation, or who were employed as Staff Accountants by Certified Public Accountants or by Licensed Public Accountants or by Public Accountants and regularly assigned to accounting engagements. In the case of any such person serving in the armed forces of the United States or any of the United Nations on the effective date of this act, the time for registration provided for herein shall be extended for a period of twelve months from the time such person is honorably discharged from such service.
[[Orig. Op. Page 3]]
"The application for registration must be filed on or before sixty days after the effective date of this act, accompanied by a fee of twenty-five dollars."
The applicants have met the residence and character requirements of the statute and the sole question is whether their experience is of the type specified in subdivision (1) or (2) or (3) of clause (c) of said section. Applicants have apparently made no claim that they qualify under subdivision (3) (referring to military service), nor do they contend that subdivision (2) applies to them. Upon the other hand, they vigorously contend that they are entitled to be registered by virtue of the language contained in subdivision (1) set forth above.
In order to qualify under subdivision (1), supra, the applicants must show themselves to be "persons who [firstly] held themselves out to the public as Public Accountants and [secondly] who were engaged within this state at the effective date of this act in the practice of public accounting as their principal occupation."
Nowhere in the act is the phrase "public accountant" defined. In the absence of any such definition, we deem it proper to set forth some commonly accepted definitions of the phrase. Thus, Webster's International Dictionary (2nd Edition Unabridged) defines "public accountant" as "An accountant whose services are available to the public," and inUltramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (447). Judge Cardozo remarked that public accountants are public only in the sense that their services are offered to anyone who chooses to employ them.
The act is likewise silent as to the meaning of the phrase "held himself out to the public." The legal connotation thereof is that a person who does so offers his services to the public. We find the following language in the recent case of Vincent v. U. S. (D.C.), 58 A. (2d) 829, 831:
"'Question arises as to the meaning of the words "Holds itself out," as applied to a common carrier. They clearly imply, we believe, that the carrier in some way makes known to its prospective patrons the fact that its services are available. This may be done in various ways, as by advertising, solicitation, or the establishment in a community of a known place of business where requests for service will be received. However, the result may be [[Orig. Op. Page 4]] accomplished, the essential thing is that there shall be a public offering of the service, or, in other words,a communication of the fact that service is available to those who may wish to use it' * * *."
Applying the foregoing definitions to the analysis of the meaning and purport of the first phrase of subdivision (1), supra, the obvious result is that the applicants must have been offering their accounting services to the public. By "public" is meant:
"The whole body politic, or the aggregate of the citizens of a state, district, or municipality [citing cases]. The inhabitants of a state, county, or community [citing cases]. Also, a part of the inhabitants of a community."
"The term does not mean all the people, nor very many people of a place, but so many of them as contra-distinguishes them from a few. State v. Baker, 88 Ohio St. 165, 102 U.S. 732, 736." Black's Law Dictionary, p. 1459.
The applicants in their brief have called attention to certain statutory provisions defining their duties as state examiners and providing for payment for their services. The following is a quotation from the brief which they have filed with your board:
"Chapter 76, page 140, Laws of 1909, Section 8, (Pierce's Code 6612), contains the authority for the auditing by the State Auditor of public accounts;
"'The State Auditor, a deputy State Inspector and supervisor, and everyState Examiner shall have power by himself or by any person legally appointed to perform the service, to examine into all financial affairs of every public office and officer; . . . On every such examination, inquiry shall be made as to the financial conditions and resources of the taxing district; whether the constitution and Statutory laws [[Orig. Op. Page 5]] of the State, the ordinances and orders of the taxing district and the requirements of the Bureau of Inspection and Supervision of Public Offices have been properly complied with; and into the methods and accuracy of the accounts and reports . . . A report of such examination shall be made in triplicate, one copy to be filed in the office of the State Auditor, one in the auditing department of the taxing district reported upon, and one in the office of the Attorney General.' (Underlining ours.)
"Also Section 11 of the same law names the class of accounts to be audited, and how such examinations are to be paid for:
"'The expense of auditing public accounts shall be borne by each taxing district for the auditing of all accounts under its jurisdiction and the State Auditor is hereby authorized and empowered to certify the expense of such audit to the auditor of the county in which said taxing district is situated, . . .'
"All of the undersigned were and are actively engaged in the auditing of Public accounts as contemplated in the above referenced law. Among the accounts audited are: 1. City of Seattle; 2. County of King; 3. City Transit System; 4. City Light; 5. School Districts; 6. Fire Districts; 7. Water Districts; and many others."
It is indeed true that at least some of the applicants are engaged in auditing the accounts of more than one taxing district and we are informed that the applicants receive their pay directly from the taxing districts whose accounts they audit. On the other hand, we are advised that the rate of remuneration is established by the State Auditor, and that these applicants are assigned to their duties by the State Auditor or one of his subordinates. Furthermore, the taxing agency has no choice as to the person who shall effect the audit but rather must accept the person assigned.
[[Orig. Op. Page 6]] There can be no question but that the applicants are Public Officers (See State ex rel. Hand v. Superior Court, 191 Wash. 98 (106), 71 P. (2d) 24), nor that they perform accounting duties, but such does not constitute an engagement in public accounting within the meaning of subdivision (1) of the act, nor within the meaning of said subdivision does it render their conduct a holding out to the public as accountants.
While the applicants may feel that, as it applies to them, the act is inequitable, it is without our province to consider the wisdom of the legislation here in question. Finally, applicants have made reference to the prior law upon this subject, being chapter 56, Laws of 1933 Ex. Sess., which was expressly repealed by the 1949 enactment, wherein the following language is found:
"Section 1. The following words have in this act the significance attached to them in this section unless otherwise apparent from the context:
"* * *
"(b) 'Practicing public accountancy' or 'the practice of public accountancy.' A person, either individually, or as a member of a firm, partnership or association, shall be deemed to be practicing public accountancy or in the practice of public accountancy, within the meaning and intent of this act:
"* * *
"4. Who prepares or certifies for clients, reports of audits, balance‑sheets, and other financial accounting and related schedules, exhibits, statements, or reports which are to be used for publication or for credit purposes, or are to be filed with a court of law or with any other governmental agency or for any other purpose; * * *" (Emphasis supplied)
The purport of the language above quoted is that an auditor-client relationship must exist to make out the practice of public accountancy, which relationship, as we have seen, is totally lacking here.
[[Orig. Op. Page 7]]
While the 1933 law has been repealed, it is a well accepted rule of statutory construction that the language and provisions of expired or repealed acts on the same subject are to be taken into consideration as instructive steps in the development of the existing system of legislation on a given subject. State v. Vosgien, 82 Wash. 685, 144 Pac. 947.
In view of the authorities cited above we are of the opinion that the applicants in question are not eligible for registration as public accountants under the provisions of chapter 226, Laws of 1949.
Very truly yours,
RICHARD OTIS WHITE
Assistant Attorney General