Court Opinion

ID: 4910916
Source: CourtListenerOpinion
Date Created: 2021-09-14 20:02:42.523286+00
Date Added: 2024-06-11T08:13:28.240191
License: Public Domain

Filed 9/14/21 Walker v. The Department of Consumer Affairs etc. CA2/5

   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION FIVE

 SAM WALKER & SAM WALKER                                                  B300723
 CPA, INC.,

           Petitioners and Appellants,
                                                                          (Los Angeles County
           v.
                                                                          Super. Ct. No. BS171533)
 THE DEPARTMENT OF CONSUMER
 AFFAIRS, CALIFORNIA BOARD OF
 ACCOUNTANCY,

           Respondent and Appellant.
      APPEAL from a judgment of the Superior Court of Los
Angeles County, James C. Chalfant, Judge. Affirmed.
      Samuel Walker, in pro. per. for Petitioner and Appellant
Samuel Walker.
      The Law Office of Sam Walker and Sam Walker, for
Petitioner and Appellant Sam Walker CPA, Inc.
      Xavier Becerra, Attorney General, Carl W. Sonne, Senior
Assistant Attorney General, Joshua A. Room and Linda L. Sun,
Supervising Deputy Attorneys General, Stephen D. Svetich,
Deputy Attorney General, for Respondent and Appellant.
        _______________________________________________

      Petitioners, appellants, and cross-respondents Sam Walker
and Sam Walker CPA, Inc.,1 appeal from a judgment granting a
petition for writ of administrative mandate pursuant to Code of
Civil Procedure section 1094.5. In the petition, Walker sought to
compel respondent and cross-appellant California Board of
Accountancy, Department of Consumer Affairs (the Board) to
vacate an administrative decision imposing discipline against
Walker. The trial court granted the petition in part, finding
Walker was entitled to further examination of the Board’s expert
witness, and remanded the matter to the Office of Administrative
Hearings. Walker does not challenge the portion of the order
remanding the matter for further testimony, but contends the
trial court should have granted the petition on additional grounds

      1For clarity, Sam Walker CPA, Inc., will be referred to as
“the Corporation.” The parties will be referred to collectively as
“Walker,” except for a few instances where it is clear from context
that “Walker” denotes the individual.

                                 2
as well, including that: (1) professional negligence for the
purpose of disciplinary action under Business and Professions
Code section 5100 requires finding serious misconduct, causation,
and harm;2 (2) Walker was entitled to have notes from an
investigative hearing produced in discovery; (3) certain findings
by the trial court were not alleged in the Board’s amended
accusation or were not supported by substantial evidence; and (4)
the accusation was barred by the statute of limitations and
laches. We conclude that because Walker was not aggrieved by
the trial court’s order and has not yet exhausted his
administrative remedies, his appeal must be dismissed.
       In a cross-appeal, the Board contends the trial court erred
by remanding the matter for further examination of certified
public accountant (CPA) Kay Lewis. We disagree. The
administrative law judge consistently instructed the parties
during the administrative hearing to treat Lewis as a percipient
witness only. The Board’s designation of Lewis as an expert after
the administrative hearing concluded rendered the
administrative proceedings fundamentally unfair. Walker was
prejudiced, because he was deprived of an opportunity to fully
cross-examine Lewis on the foundation and formation of her
opinion as an expert. The trial court’s order remanding the
matter to the Office of Administrative Hearings to allow further
examination of Lewis is affirmed.

      2All further statutory references are to the Business and
Professions Code unless otherwise stated.

                                3
         FACTUAL AND PROCEDURAL HISTORY3

Tax Returns Prepared for Taxpayer 1

       Walker worked as a business tax auditor for the California
State Board of Equalization for two years, until July 2008.
During that time, on March 13, 2008, the Board issued a CPA
certificate to Walker as an individual. He began attending law
school in 2008 and received his law degree in May 2011. The
Board issued a CPA corporation certificate to the Corporation on
March 23, 2011. Walker prepared eight tax returns for the 2011
tax year, which was the first year of his practice using e-filing
software published by Lacerte.
       Taxpayer 1 paid $125 for Walker to prepare and file her
2011 tax returns. She provided him with a W-2 reflecting gross
wages from her employment with the County of San Bernardino
and a Form 1099-MISC for wages that her deceased son earned
from the Defense Financing and Accounting Service, which
Taxpayer 1 had received as the beneficiary of a deceased
employee.
       The instructions on the back of the 1099-MISC form noted
that the amount should generally be reported as “other income”
on line 21 of a Form 1040, but Walker combined the amounts
from the W-2 and the Form 1099-MISC as “wages” on line 7 of an

     3  In accordance with the standard of review, we state the
facts in the light most favorable to the judgment based on the
factual record developed to date. Because the judgment of the
administrative agency has been reversed and the matter
remanded for further evidentiary proceedings, the facts have not
been conclusively determined.

                                4
IRS Form 1040A. Relevant tax publications state that inherited
wages retain their character, providing colorable support for
Walker’s decision to report the amount as “wages.”
       Walker input an employer identification number
incorrectly. He attempted to electronically file Taxpayer 1’s tax
returns on Friday, February 17, 2012. He did not obtain
Taxpayer 1’s signature on a Form 8879 to authorize electronic
filing prior to submitting the federal tax return.
       Walker sent an email to Taxpayer 1 at approximately 7:00
p.m. stating that he had received an error message because he
did not have “the address of your w-2 for the defense fiance corp
[sic]” and asking her to send the address for that employer. At
approximately 8:00 p.m., Taxpayer 1 emailed the Form 1099-
MISC to him, which had the address of her son’s employer, as
well as the payor’s identification number.
       A little before 9:00 p.m., Walker emailed copies of Taxpayer
1’s 2011 federal and state returns to her and wished her luck in
her probate administration. At approximately 10:30 p.m.,
Taxpayer 1 replied, “The instructions for the 1040A indicate that
I needed to file a 1040 because I received a 1099-MISC, but you
filed a 1040A. Could you please explain?”
       Taxpayer 1’s state tax return was accepted for filing, but
the federal tax return was rejected. The software generated a
rejection diagnostics report stating that the federal return e-
postmarked on February 17, 2012, at 7:28 p.m. was rejected by
the federal taxing agency on February 18, 2012. The diagnostic
directed Walker to take four steps, including verifying the
employer identification numbers on all of the W-2 forms, before
refiling the corrected return at no additional charge.

                                 5
      On Saturday, February 18, 2012, Walker sent an email
reply to Taxpayer 1, “The instructions you read are wrong. You
don’t need to file a 1040 because you were not required to file
schedule C.” Later that night, Taxpayer 1 attempted to direct
Walker’s attention to the back of the 1099-MISC which stated,
“Box 3. Generally, report this amount on the ‘other income’ line
of Form 1040 and identify the payment. The amount shown
may be payments received as the beneficiary of a
deceased employee, . . . . [sic]” Walker replied on Sunday,
February 19, 2012, “Keyword ‘generally’. Your taxes are
prepared correctly. If you have any further questions call me.”
      Walker left Taxpayer 1’s federal tax return in a rejected
status. He never tried to correct the employer identification
number or refile the return. At the end of the week on Friday,
February 24, 2012, Taxpayer 1 contacted the IRS for clarification
about whether she should have filed a Form 1040. She sent an
email to Walker stating that the IRS told her to file Form 1040
and identify the type of income shown in box 3 of the 1099-MISC
on line 21 as other income, because the Form 1099-MISC
reported income that she received as a beneficiary, not wages
that she earned. She added, “The IRS advised me to file an
amended return now, rather than waiting to be notified by the
IRS that I failed to report the income shown on the 1099-MISC.
Please let me know how you intend to handle this.”
      Walker replied that day, “I believe your taxes are prepared
correctly. My services are finished. . . . I am sorry that you do
not agree with me about the correct way to file your taxes. You
are free to find someone else to amend your tax return but I will
not change the tax return that I have prepared for you. Please,
find some[one] else for any further services that you may need[.]

                                6
I believe that you would be better off preparing your taxes with
someone else in the future.”
       Taxpayer 1 responded that she was very confused and he
had refused to answer questions until she paid for his services.
Had the IRS advised her that it was permissible to file a Form
1040A, she would not have asked Walker to amend her return.
She stated that she would contact the IRS on Monday “to inquire
as to how I should go about amending a tax return that a CPA
submitted on my behalf.”
       Walker replied, “you have a lot of built [up] frustration and
I don’t appreciate you taking it out on me.” He told her that if
she wanted to rely on the IRS help line to prepare her taxes, that
was her choice. He reminded her of details from prior
conversations and added, “Again if you are confused stop
emailing me and call me and i will be happy to explain
everything as I have repeatedly told you. Again I am not here for
you to let out your frustrations after your tragic events that have
unfolded for you and your family over the last several months. I
am sorry for your loss. Please, seek tax advice elsewhere. thank
you. [sic]”
       That day, on February 24, 2012, Taxpayer 1 filed a
complaint against Walker with the Board. She alleged Walker
refused to answer questions about her 2011 return until paid,
insisted he had correctly combined income from her W-2 with a
1099-MISC on a Form 1040A, and when the IRS advised her to
file an amended return, insisted that he had filed the return
correctly. She believed that if Walker had made a mistake, he
should fix the mistake or refund her money. The Board notified
Walker of Taxpayer 1’s complaint on March 21, 2012.

                                 7
       On March 23, 2012, Taxpayer 1 called the IRS to inquire
about her income tax refund and learned that her federal tax
return had been rejected and never filed, because the employer
identification number reported for her W-2 was incorrect. She
filed a corrected return herself on March 24, 2012, and received
confirmation that it was accepted. She wrote an email to Walker
asking him not to file any new or corrected state or federal 2011
return on her behalf to avoid any confusion. Walker never
offered or provided a refund to Taxpayer 1.

Preparation of Taxpayer 2’s Tax Return

      Taxpayer 2 and his spouse paid $150 to Walker to prepare
their 2011 tax returns. Taxpayer 2 provided Walker with a W-2
showing receipt of $5,000 in dependent care benefits paid by his
employer. He also provided a Form 1099-R for a gross annuity
distribution. The plan administrator included the early
withdrawal code for the distribution, although another box on the
form indicated that no contributions had been made to the
investment within the past five years.
      Based on the information that a tax preparer enters,
Lacerte software generates a federal tax Form 2441 for child and
dependent care expenses. A taxpayer who did not receive any
dependent care benefits completes the first page of Form 2441. A
taxpayer who received dependent care benefits completes the
second page. If the software functioned correctly when Walker
entered Taxpayer 2’s receipt of $5,000 in dependent care benefits,
it should have populated the second page of Form 2441 and
precluded Taxpayer 2 from claiming any further child care
benefits. Other than Form 2441, the dependent care benefits

                                8
received from an employer will not be shown anywhere else in the
tax summary or the tax return provided to the client.
      In the copy of the federal tax return that Walker provided
Taxpayer 2, the first page of Form 2441 was populated, providing
Taxpayer 2 with a $600 credit for child and dependent care
expenses, and the second page of the form was not generated.
The federal tax summary clearly showed that Taxpayer 2 was
receiving a $600 credit for child and dependent care expenses.
Walker did not notice, however, that the software calculated a
$600 credit for child and dependent care expenses that Taxpayer
2 was not entitled to claim.
      Although an early withdrawal code was included on Form
1099-R for Taxpayer 2’s annuity distribution, Walker did not
include a ten percent early withdrawal penalty for the
withdrawal. Taxpayer 2 did not provide Walker with any
information showing that he received a California state tax
refund in 2011, so Walker did not know to include a state tax
refund as income on the federal return. Walker filed the returns
electronically in March 2012.

Enforcement Advisory Committee Investigative Hearing

       The Enforcement Advisory Committee (EAC) is a
committee of volunteers who assist the Board with investigations.
On October 18, 2012, the EAC held an investigative hearing.
Walker appeared and testified at the hearing on his own behalf
without counsel. He explained that at the time of Taxpayer 1’s
complaint, he had been in the process of establishing his business
for a few months and recently purchased the software to run the
business. Taxpayer 1 usually prepared her own taxes. She felt

                                9
she needed the protection of a third party preparer for her 2011
tax returns, based on potential financial complications from her
son’s death and administration of his estate.
       Walker acknowledged that 1099-MISC income should
generally be entered as “other income” on line 21. However,
payor and payee information does not have to be disclosed for
miscellaneous income, and Walker wanted to disclose the payor
and payee information in this case to preclude allegations of
fraud. He believed the software would not allow him to include
payor information for miscellaneous income, so he entered the
amount as wages on line 7. Walker believed this was a situation
in which the general instructions did not apply. When all of
Taxpayer 1’s income was entered as wages on line 7, the software
automatically generated Form 1040A, rather than Form 1040.
Whether the income was reported on line 7 or line 21, the tax
calculation was the same.
       One of the examiners, who used Lacerte software, stated
that payor information can be input on line 21 and explained the
procedure to enter it. Walker acknowledged that he did not
contact Lacerte for assistance about how to enter the information
that he wanted to report. If he had known payor information
could be entered on line 21, he would have reported the amount
on line 21.
       The federal tax return was rejected because he entered
incorrect information for the employer identification number. He
testified that he asked Taxpayer 1 to provide the address again,
entered it, and the return was rejected a second time because of
an incorrect identification number. He never attempted to
correct the identification number and refile the return after that.
He asserted that before he could correct the error, Taxpayer 1

                                10
instructed him not to file her return and disengaged his services.
He also testified, however, based on the same email exchange,
that he told her the return was rejected and asked for correct
information, but she never provided it. He stated that he would
have filed her federal return if she had given him the correct
address and the correct identification number.

Investigation and Complaint by Taxpayer 2

       Kay Lewis was the Investigative CPA for the Board
assigned to investigate Taxpayer 1’s complaint. The
Corporation’s certificate expired and was not valid as of April 1,
2013. Lewis issued findings and conclusions on October 8, 2013,
including a determination that Walker’s testimony demonstrated
a lack of knowledge about preparation of tax returns using
Lacerte software.
       In December 2013, the IRS issued a notice to Taxpayer 2
and his wife that they owed an additional tax liability of $1,387,
plus interest of $74. The IRS notice showed that Taxpayer 2
correctly reported dependent care benefits of $5,000 had been
received from an employer, but incorrectly claimed an additional
$600 credit for child and dependent care expenses. In addition,
taxes were owed based on early withdrawal of funds from a
qualified plan, and the return failed to account for the state
income tax refund of $150. No penalties were assessed.
Taxpayer 2 contacted Walker for an explanation.
       On December 23, 2013, Walker sent an email to Taxpayer 2
stating that the amount of the deficiency was correct. He
directed them to pay the amount due and offered to discount the
cost of their next tax return or issue a check in the amount of $74

                                11
to cover the interest that had accrued on the unpaid taxes.
Walker explained that they were not entitled to a credit for child
care expenses because they had already received dependent care
benefits. He added, “I am not sure why this was overlooked.”
       Walker sent another email stating, “I have included an
amended return so that you can review. Also, I prepared your CA
amended return which you should file and pay the increase as
well. Please, note that the retirement benefits from met-life were
also taxable as per the IRS detail that they provided.” An
amended return dated December 26, 2013, was prepared by the
Corporation.
       On January 11, 2014, Taxpayer 2 filed a complaint against
Walker with the Board, alleging that Walker did not correctly
complete Taxpayer 2’s 2011 tax return. Due to the simplicity of
the return, Taxpayer 2 believed the errors demonstrated
incompetence, and he wanted Walker to pay the additional tax
owed, the interest due, and the cost of tax preparation. The
Board assigned the investigation of Taxpayer 2’s complaint to
Lewis. Ultimately, Walker apologized to Taxpayer 2 and
refunded a total of $226 for tax preparation fees and the interest
incurred.
       On May 15, 2014, the Executive Officer of the Board
(Complainant) filed an accusation against Walker with the
Board. Lewis investigated Taxpayer 2’s complaint and issued
findings and conclusions on November 3, 2014. In her factual
findings, Lewis stated the dependent care benefits reported on
the W-2 and the tax credit for child and dependent care expenses
were both included on the 2011 Form 1040 prepared for Taxpayer
2, when the tax rules do not allow both benefits to be claimed.
Walker failed to include a ten percent early withdrawal penalty,

                               12
even though the Form 1099-R from the plan administrator had
included the proper code to report an early withdrawal.
       Lewis found Walker did not take responsibility for the
errors on Taxpayer 2’s 2011 tax return. He claimed the error in
the dependent care credit resulted from a problem with the tax
preparation software. He was not certain how the software error
occurred, as he had not been able to replicate the error. He
claimed the error for the ten percent early withdrawal penalty
was the fault of the preparer of the Form 1099-R, because the
plan administrator should have entered a different distribution
code.
       In Lewis’s summary of her investigation, contrary to her
earlier statement in the facts, she concluded that Walker must
not have entered the box 10 amount of $5,000 from Taxpayer 2’s
W-2 when he initially prepared the return. When Walker
entered information to prepare an amended return for Taxpayer
2, Form 2441 populated correctly and showed Taxpayer 2 was not
entitled to the credit. Walker had not been able to duplicate the
error. Even if it were a problem with the software, he should
have reviewed the tax return and known that the taxpayer was
not entitled to the tax credit because the taxpayer had received
dependent care benefits.
       Lewis expressed concern that Walker did not have enough
experience and should be working under the guidance of another
CPA. He had demonstrated difficulty correctly completing a
simple tax return. He advertised trust and estate work as an
area of practice for his law firm, but tax returns for these entities
are more complicated that the simple individual returns that he
prepared.

                                 13
       Based on the portion of the amended return that Lewis
received from Taxpayer 2 showing corrections to the original
return, Lewis concluded that Walker amended Taxpayer 2’s 2011
tax return on December 26, 2013, and identified the Corporation
as the paid preparer of the return. Lewis noted that the Board
sent Walker a deficiency letter on July 14, 2014, with respect to
the Corporation’s license, but Walker had not responded to the
letter and the Corporation continued to be delinquent.
       The Corporation’s certificate was renewed on November 5,
2014.

Amended Accusation

      On August 12, 2015, the Complainant filed an amended
accusation alleging Walker committed errors in preparing tax
returns for Taxpayer 1 and Taxpayer 2. The following causes for
discipline were alleged: (1) gross negligence in the preparation of
Taxpayer 1’s return; (2) repeated acts of negligence in the
preparation of Taxpayer 1’s returns in violation of section 5100,
subdivision (c); (3) discipline under section 5100, subdivision (g)
for willful violation of the requirement to comply with all
applicable professional standards as required by Board Rule 58
(Cal. Code Regs., tit. 16, § 58) in the preparation of Taxpayer 1’s
return;4 (4) repeated acts of negligence in the preparation of tax

      4 “Licensees engaged in the practice of public accountancy
shall comply with all applicable professional standards, including
but not limited to generally accepted accounting principles and
generally accepted auditing standards.” (Cal. Code Regs., tit. 16,
§ 58.)

                                14
returns for Taxpayer 2 and his wife in violation of section 5100,
subdivision (c); (5) discipline under section 5100, subdivision (g)
for willful violation of the requirement to comply with all
applicable professional standards under Board Rule 58 in the
preparation of Taxpayer 2’s return; and (6) the Corporation was
subject to discipline under section 5100, subdivision (g), for
willful violation of certain relevant code sections prohibiting
practicing without a permit by preparing an amended tax return
for Taxpayer 2 and his wife while the Corporation’s license status
was expired.
       On November 11, 2016, Walker issued subpoenas seeking
the notes of Lewis and two other individuals at the investigatory
hearing “regarding the results of any voting by the hearing
panel.” Complainant filed a motion to quash the subpoenas and
issue a protective order based on the deliberative process
privilege provided in Evidence Code section 1040, which is
incorporated in administrative hearing discovery procedures
under Government Code section 11507.6, subdivision (f).
       Walker filed a trial brief and final exhibit list.
Complainant filed a list of exhibits, including Lewis’s resume.

Evidentiary Hearing and Closing Argument

      An evidentiary hearing was held before an administrative
law judge (ALJ) from December 13 to 15, 2016.5 Walker

      5 Walker filed a petition in the trial court on May 10, 2016,
for a peremptory writ of prohibition that sought dismissal of the
accusation. The Board’s demurrer to this petition was sustained
and the petition was dismissed. Walker appealed and this
appellate court affirmed the dismissal on December 8, 2017.

                                15
appeared in pro per. The ALJ granted the Complainant’s motion
to quash Walker’s subpoenas. The ALJ found that Walker’s
subpoenas sought disclosure of the mental processes by which the
Board’s decision was reached, or notes and records from
conversations, discussions, debates, and deliberations that served
to inform the Board.
       Lewis testified that she has been licensed to practice as a
CPA in California since 2003. She took accounting classes,
completed the CPA exam, and worked for a public accounting
firm. She has worked as an Investigative CPA for the Board for
seven years. In her position, she investigates complaints filed by
the public, as well as internal referrals. As an investigative CPA,
she is required to be familiar with state laws and regulations
applicable to the practice of accountancy, as well as professional
standards with which certified public accountants practicing in
California are required to comply.
       The Complainant’s attorney questioned Lewis about her
relevant work history and training, then sought to move her
resume into evidence. Walker objected on the ground of
relevance, arguing Lewis was testifying about factual matters,
not as an expert witness. The ALJ agreed with Walker, but
concluded Lewis’s resume was relevant to her background and
the basis of her testimony about her investigation.
       Shortly after, when the Complainant’s attorney questioned
Lewis about error codes from the software program that rejected
Taxpayer 1’s federal return, the ALJ sustained Walker’s objection
to a leading question. The Complainant’s attorney stated, “I’m
presenting this witness as an expert witness. [¶] Do I need to

(Walker v. Office of Administrative Hearings (Dec. 8, 2017,
B277315 [unpub. opn.].)]

                                16
have additional qualification of her?” The ALJ asked, “You’re
now designating her as an expert?” Walker objected that he had
not been provided notice of the expert designation. The
Complainant’s attorney replied, “She was working as an
investigative CPA for the Board of Accountancy. She’s an expert
in certified public accountancy practice for this state, and I don’t
know what more I would need to do to qualify her to testify as an
expert.” The ALJ stated that designating Lewis as an expert
simply to ask leading questions was problematic. The ALJ
added, “I understand she has expertise . . . as a CPA and may be
able to testify based on her experience[.]” The Complainant’s
attorney stated, “[M]y client has brought charges alleging gross
negligence and negligence. So eventually we will get to these
issues, but you’re right. [¶] I can try to ask the questions in
another way to avoid the objection for now, but we will eventually
get to this issue, because we will be attempting to establish the
witness and we will be offering her opinions that [Walker’s] acts
committed gross negligence and repeated acts of negligence.” The
ALJ responded, “Well, whether she can testify as an expert, I will
take under submission. I would like you to proceed as though
she’s not, though.” The Complainant’s attorney acknowledged,
“All right.”
       A few questions were asked based on Lewis’s training and
experience. Each time Walker objected on the ground that she
was not an expert and was present to testify to the facts only.
The ALJ allowed testimony based on Lewis’s opinion as an
investigator. Lewis testified that as an investigative CPA, she
was familiar with the standard of care and ordinary standards of
conduct for preparation of tax returns for CPAs practicing in

                                17
California. One of her tasks was to determine whether Walker’s
services complied with those professional standards.
      Lewis explained that a tax preparer does not need to be a
licensed CPA, but a licensee must comply with professional
standards even while performing a task that a non-licensee could
perform. Board Rule 58 requires licensees engaged in the
practice of accounting to comply with all professional standards,
including but not limited to, generally accepted accounting
principles (GAAP) and generally accepted auditing standards
(GAAS). Treasury Circular 230 is a guideline issued by the
Internal Revenue Service (IRS) for persons practicing before the
IRS.6 The Complainant also relies on and adheres to standards
promulgated by the American Institute of Certified Public
Accountants (AICPA), which are the professional standards that
all CPAs should follow in preparing tax returns. The AICPA
standards provide that a member shall comply with standards
imposed by the taxing authority, and Circular 230 requires the
exercise of due diligence. A CPA in California must use due
diligence or proper care to minimize mistakes when preparing a
tax return.

      6 “[T]he Secretary of the Treasury publishes regulations
governing ‘practice’ before the IRS in the Code of Federal
Regulations, Title 31, part 10. These regulations are commonly
known as ‘Circular 230.’ Most of Circular 230 outlines duties and
restrictions concerning ‘practice’ before the IRS as they relate to
practitioner character, reputation, and competency. See 31
C.F.R. §§ 10.20–.38. The IRS has applied these regulations to
attorneys, CPAs, and other specified tax professionals. See 31
C.F.R. § 10.3 (2009).” (Ridgely v. Lew (D.D.C. 2014) 55 F.Supp.3d
89, 91–92.)

                                18
      Lewis testified about her investigation, her findings,
Walker’s testimony at the EAC hearing, and her conclusion that
Walker was negligent in filing the tax returns for Taxpayer 1 and
Taxpayer 2. Lewis noted that Walker prepared just eight tax
returns for 2011. Walker did not exercise due diligence in
completing Taxpayer 1’s tax engagement and failed to obtain a
signed Form 8897 from Taxpayer 1 prior to attempting to submit
her return electronically.
      With respect to preparation of the return for Taxpayer 2,
Lewis testified that a competent CPA would have entered the
receipt of $5,000 in dependent care benefits on the input screen
for the W-2. The software would have automatically generated
page two of the form and precluded the tax credit. Page two was
not generated on the copy of the original return that Walker
provided to Taxpayer 2. The standard of practice requires a CPA
in California to review tax returns prepared on tax software like
Lacerte. The amended Form 1040 showed that the software
program picked up the receipt of $5,000 in dependent care
benefits and determined the taxpayers were not entitled to the
dependent care credit. A competent CPA preparing the tax
returns for Taxpayer 2 would have also entered the code for the
distribution on the 1099-R and made a note that it was an early
withdrawal penalty.
      Lewis testified about her conclusion that Walker prepared
an amended return for Taxpayer 2 listing the Corporation as the
paid preparer during the time when the Corporation was not
licensed. An amended tax return has a Form 1040X on the top
and a corrected Form 1040 is typically attached to it. Although
Taxpayer 2 did not provide Lewis with a copy of a Form 1040X,
he provided the supporting Form 1040 that Walker prepared

                               19
reflecting corrections from the original return and prepared
under the license of the Corporation. The corrected Form 1040,
along with Walker’s email transmitting an amended return,
supported Lewis’s conclusion that Walker prepared an amended
return for Taxpayer 2 which listed the Corporation as the paid
preparer.
       Walker cross-examined Lewis about her definition of
relevant terms. Lewis defined gross negligence as an extreme
departure from the standard of care and defined negligence as
having done something wrong, making a mistake, or not doing
what the person needed to do. In her professional opinion, any
mistake in the preparation of a tax return was negligence.
       Walker’s case was the first time that Lewis had testified in
an administrative hearing. She stated that she discussed her
concept of negligence with coworkers at the Board, but it was not
clear whether she discussed with them her definition of
negligence or conduct that she considered to be negligent. She
did not remember doing any research of tax laws in the course of
her investigation. She consulted tax publications and
instructions for the tax returns.
       At the lunch recess, Walker asked that his expert witness
William Wolf to be taken out of order to testify in the afternoon.
The Complainant’s attorney responded that the Board’s case
would be finished once Lewis’s testimony was completed, because
Lewis was the Complainant’s only witness. The ALJ asked,
“She’s your only witness?” The Complainant reserved the right to
call Walker in the event that he did not testify. Because Walker
needed a few additional hours for cross-examination of Lewis,
however, Wolf was taken out of order.

                                20
       Wolf testified that Walker exercised due diligence and
prepared the tax returns correctly based on the information
received from the taxpayers. Wolf believed Taxpayer 2 did not
owe an early withdrawal penalty for the annuity withdrawal,
because the form showed no contributions had been made in the
past five year and Taxpayer 2 provided additional information to
Walker that caused him to believe the contribution was
withdrawn in the year it was made.
       At the beginning of the third day of the hearing, prior to
Wolf resuming his testimony, Walker asked the ALJ to clarify
whether Lewis was going to be admitted as an expert or whether
her opinion would be considered expert opinion. Walker
reminded the ALJ that the expert determination had been
deferred. The ALJ stated, “[M]y determination is that she is here
as the investigator for the Board and not as an expert.” The
Complainant’s attorney asked the reason that the ALJ had
determined Lewis was not an expert. The ALJ stated, “Because
she’s a percipient witness, I don’t think her qualifications to be
designated have been established.”
       In Wolf’s opinion, it is possible to make a mistake on a tax
return without being negligent, and not every error on a tax
return should be found to be negligence. He defined negligence
as requiring a departure from the standard of care, materiality,
and causation of harm. A material mistake in a tax return that
should have been caught could be negligence if it caused harm. A
violation of section 5100, subdivision (c), did not necessarily
require harm. The violation may result from enumerated
conduct such as dishonesty, for example. But a violation of
section 5100, subdivision (c), based on gross negligence or
repeated acts of negligence required harm. The standard of care

                                21
requires due diligence. He considered Walker’s statement to
Taxpayer 1 asking her to seek tax advice elsewhere to constitute
disengagement. Wolf was not aware of any professional
standards for disengagement.
       Wolf testified that if a client presented him with Taxpayer
1’s 1099-MISC, he would generally report it as other income on
line 21, but circumstances might exist where he would report it
as wages on line 7. If a client had presented the 1099-MISC and
said she wanted to file a Form 1040, rather than a Form 1040A,
there had to be reason to refuse, but he believed there was merit
to Walker’s position.
       Wolf explained that a tax preparer prints paper copies of
tax returns for the clients from the software in the office. The
information that is e-filed with the IRS does not appear to the
IRS in the form of a paper copy or PDF of the tax return. The
IRS captures the fields that were input into the return. Although
the paper tax return printed for Taxpayer 2 did not show $5,000
in dependent care benefits having been reported, the IRS notice
of discrepancy clearly stated $5,000 in dependent care benefits
had been correctly reported. Based on the statement in the IRS
notice, Wolf concluded the IRS had captured a field showing the
tax preparer inputted $5,000 in dependent care benefits that
Taxpayer 2 received. No one knows why the Lacerte software
calculated a $600 credit instead of printing page two of the Form
2441 for child and dependent care expenses. The software should
have completed the form to show the taxpayer was not eligible for
the dependent care credit. Wolf stated that CPAs generally rely
on the computer software, but if the computer software makes an
obvious mistake, hopefully in reviewing the return, the CPA will
discover the mistake. It is very common for tax software to have

                               22
bugs and for manufacturers to issue updates every few weeks to
remedy the bugs.
       As Lewis prepared to resume giving testimony, Walker
announced that based on her prior testimony, Walker perceived
her to be a hostile witness and had no further questions. In re-
direct, the Board’s attorney asked Lewis whether Wolf was
correct that the tax instructions could be reasonably interpreted
to mean income retains its character as wages. Walker objected
on the ground of relevance, because Lewis was not testifying as
an expert. The ALJ found Lewis investigated the allegations
against Walker and could testify about how she reached her
recommendations to the Board.
       Walker’s expert Kim Onisko also testified. Onisko testified
that Walker was not required to comply with AICPA’s statements
on standards for tax services, because Walker was not a member
of the AICPA. Even if Walker were required to comply,
reasonable individuals could conclude that Walker had correct
numbers on Taxpayer 1’s tax return, because regardless of which
line the deceased son’s wages was on, there was no change in tax
and no damages or harm to the taxpayer. In addition, the return
was never filed. Onisko testified that there were differences
between errors, mistakes, negligence, and gross negligence. In
his opinion, there was no gross negligence shown as to either
return. At most, the choices could be described as mistakes in
the draft of Taxpayer 1’s return and not negligence. Walker was
not required to refund the fee that had been paid, other than for
customer service purposes, because even though the return had
not been filed, work had been done.
       In Onisko’s opinion, the failure to catch the software error
that allowed Taxpayer 2 to report both types of child care benefits

                                23
was a mistake that did not rise to the level of negligence. Onisko
noted that 1099-Rs are often incorrect because they are prepared
by banks and investment companies with improper distribution
codes and incorrect numbers. No portion of the annuity had been
listed as the taxable portion. In Onisko’s opinion, if a CPA asks
the taxpayer to provide all relevant tax documents and the
taxpayer fails to provide the 1099-G for a taxable state refund,
the CPA’s failure to include the taxable amount would not be
negligent. Onisko would have asked about receipt of a taxable
state refund, but did not have any information showing Walker
did not ask.
       A licensed CPA is required to exercise due diligence in
preparing and filing tax returns. Onisko defined due diligence as
utilizing proper care so there are as few mistakes as possible.
Based on the research Walker did in preparation of Taxpayer 2’s
return, Onisko opined that Walker exercised due diligence.
Onisko teaches new tax preparers to comply with the standard of
care by reading the form, reading the instructions, and following
up with publications and auxiliary third-party information to
assist in characterization. Onisko explained that the Lacerte
software selected Form 1040A based on the input of wage income
only. To input wage income only and prepare a Form 1040,
Walker would have had to disable the Lacerte program’s default
settings.
       The parties filed written closing arguments. Among other
points, Walker argued the Complainant failed to offer the opinion
of an expert as to the professional standards applicable to any of
the causes for discipline. Walker stated that the Complainant’s
sole witness Lewis was found to be unqualified as an expert and
had testified merely as a percipient witness. As a result, the

                               24
Complainant had not met the burden to establish the applicable
professional standard and the causes for discipline should be
dismissed. In contrast, Walker had offered the testimony of two
expert witnesses on the applicable professional standards. Since
the Complainant failed to satisfy the burden of producing
evidence of a violation of professional standards, Walker had no
duty to even respond. In addition, the Complainant had to meet
the heightened standard of clear and convincing proof to a
reasonable certainty.
      In the Complainant’s closing argument, the Complainant
stated that expert testimony was required to establish negligence
only where the professional significance of the underlying facts
seemed beyond the comprehension of a lay person. The
Complainant argued that several of the negligence issues
presented in the case did not require an expert CPA’s technical
knowledge for resolution. These included Walker’s treatment of
Taxpayer 1, refusal to comply with instructions on the back of the
form to report 1099-MISC income, and failure to communicate to
Taxpayer 1 a comprehensible reason for rejecting the
instructions. Alternately, the Complainant argued, negligence
was the degree of care which would have been exercised by a
competent professional. The Complainant referred to Lewis’s
testimony to support negligence under this standard. The
Complainant also argued that Walker’s experts’ definitions of
negligence and opinions of the industry standard of care were
incorrect.

                               25
ALJ’s Proposed Decision

       On February 13, 2017, the ALJ issued a proposed decision.
The ALJ noted that the standard of care is a question of fact
usually proven through expert testimony. The relevant standard
of care was the use of a reasonable degree of skill, care, and
knowledge ordinarily possessed and exercised by members of the
profession under similar circumstances at the time of the
incidents at issue. Lewis, an investigative CPA with the Board
for seven years, testified that in evaluating the conduct of
licensees, the Board adheres to the Statement on Standards for
Tax Services and Circular 230. The ALJ found appellants had a
duty to comply with the cited portions of the Standards and
Circular 230. The ALJ found Wolf and Onisko’s definitions of
negligence under section 5100, subdivision (c) to require harm
were incorrect. A mistake on a tax return is by its very nature a
departure from the standard of care for a CPA, although an
isolated instance of ordinary negligence was not cause for
discipline.
       The instructions for Form 1040A returns and the printed
instructions on the reverse side of Form 1099-MISC both directed
Taxpayer 1 to report 1099-MISC income on Form 1040. Walker
failed to comply with the instructions by reporting the income as
wages on line 7 of Form 1040A. The failure to comply was not a
departure from the standard of care, however, unless Walker
failed to exercise due diligence in taking this tax position, caused
unreasonable delay by doing so, or made false representations.
The publications support a colorable basis to report the income as
wages on line 7 of Form 1040A. Walker’s conduct in response to
Taxpayer 1’s request to file Form 1040 supported finding that he

                                26
had performed the necessary analysis in his preparation of the
return. Walker’s failure to comply with the instructions was not
a breach of his duty to exercise due diligence, and Taxpayer 1’s
return was not rejected because income was reported on the
wrong form. The return was rejected because the data entered
did not match the IRS records. Walker’s conduct in reporting the
income as wages on line 7 of Form 1040A was not a departure
from the standard of care.
       However, appellants departed from the standard of care in
other respects. By electronically filing the return for Taxpayer 1
without a signed authorization, appellants breached their duty
not to give false or misleading information on a federal tax
return.
       There was a legal basis to report the income as
miscellaneous income on line 21 of Form 1040, as requested by
the client. Wolf testified that he reports all client income on
Form 1040, overrides the Lacerte software if it prints Form
1040A, and there is no advantage to filing one form or the other.
Wolf and Onisko both testified that they would accede to the
client’s wishes to take a particular tax position if it was
supported by the law. Walker breached his duty to determine the
correctness of his representations to Taxpayer 1 with respect to
her returns when he said the IRS instructions that she had cited
were wrong without providing any analysis. He further departed
from the standard of care by falsely telling Taxpayer 1 that her
return was rejected because he did not have the address of her
son’s employer.
       Walker’s refusal to correct and refile Taxpayer 1’s return
was unfounded. Walker took no steps to cure the data entry
error and refile the return as directed by the diagnostic report,

                               27
opting instead to disengage from the client before her return was
filed. These actions caused unreasonable delay in the filing and
acceptance of her return.
       Walker failed to exercise due diligence in preparing
Taxpayer 2’s joint income tax return. The ALJ concluded that
Walker did not enter the dependent care benefits paid by the
employer, so the software generated Form 2441 reflecting a $600
credit for child and dependent care expenses, erroneously
reducing Taxpayer 2’s tax liability, although the trial court later
disagreed with this finding. The ALJ also found Walker failed to
report additional tax required for an early distribution from an
annuity. The ALJ concluded that whether the errors were caused
by a data entry error or a software glitch, Walker failed to catch
the errors, which was a breach of his duty to exercise due
diligence in determining the correctness of the representations
made on the return.
       Although the annuity distribution may have been properly
reported as explained by Wolf, Walker’s conduct after reviewing
the tax deficiency notice showed this research was not part of his
due diligence in determining the correctness of the information
reported on the return. Instead, he acknowledged a mistake and
sent the client an amended return to correct the mistake.
       Without evidence that Taxpayer 2 furnished information to
Walker about the state tax refund, however, Walker did not
depart from the applicable standard of care by failing to include
the state tax refund in gross income.
       If Walker had used the reasonable degree of skill, care, and
knowledge ordinarily possessed and exercised by other CPAs
under similar circumstances, he would have known the return for
Taxpayer 1 was not rejected because the address was entered

                                28
incorrectly, followed the steps provided on the rejection notice
and filed a corrected return, heeded the client’s reasonable
request to file Form 1040, and caught the mistakes on the return
prepared for Taxpayer 2. These departures from the standard of
care constituted repeated acts of negligence, involving multiple
breaches of Walker’s duty to exercise due diligence, and a failure
to comply with professional standards.
       The Complainant presented clear and convincing evidence
to prove Walker engaged in repeated acts of negligence.
Although Walker departed from the ordinary standard of conduct
in many respects, the evidence was not sufficiently clear, explicit,
and unequivocal to prove Walker engaged in gross negligence.
The Complainant presented clear and convincing evidence that
the Corporation did not hold a valid certificate at the time that
an amended return was prepared and sent to the client to review.
Walker knew or reasonably should have known the Corporation’s
certificate was issued for a two-year period and needed to be
renewed every two years. Allowing the permit to expire and
remain invalid for more than 18 months was sufficiently careless
to constitute a willful violation of the law.
       The ALJ found cause for discipline under section 5100,
subdivisions (c) and (g), because Walker engaged in repeated acts
of negligence, failed to comply with applicable professional
standards, and practiced accountancy without a valid permit.
The two engagements were relatively simple, and constituted one
quarter of the returns that Walker prepared. The number of
negligent acts under the circumstances increased the likelihood
of recurrence and made the nature of the offenses more severe.
Walker did not testify, so there was no evidence of rehabilitation,
education, or implementation of changes to his business practice

                                29
to avoid a recurrence. There was no testimony or affidavit of a
supervising CPA or professional support network to prevent a
recurrence. There was no evidence of remorse or
acknowledgment of wrongdoing. Walker maintained an attitude
that no wrongdoing was committed. The ALJ proposed
revocation of Walker’s certificates.
      The ALJ noted that the Board was authorized to recover all
reasonable costs incurred to investigate and prosecute a
licensee’s violation of the licensing act. The ALJ found the
Board’s prosecution and investigation costs totaling $40,778.70
were reasonable considering the complexity of the case.
However, because Walker’s ability to pay was not established at
the hearing, all payment was deferred until such time as Walker
successfully petitioned the Board for reinstatement of any of the
licenses.

The Board’s Decision

       The Board was entitled to adopt, reject, or modify the
proposed decision. On April 3, 2017, the Board rejected the ALJ’s
proposed decision and elected to decide the issues based on the
record, including the hearing transcript, and additional argument
of the parties. On October 2, 2017, the Board issued a decision
reflecting many of the same findings of fact as the ALJ had
proposed. The Board found, however, that Complainant had
presented Lewis as an expert. The Board rejected the expert
testimony presented by Walker. The Board credited Lewis’s
opinion that AICPA standard 100.4 and Circular 230 governed
the standard of practice for Walker’s conduct. The Board found
negligence under section 5100, subdivision (c), did not require a

                               30
showing of harm. The Board added, “As explained by Ms. Lewis,
a mistake on a tax return is by its very nature a departure from
the standard of care for a CPA.”
       In addition to the grounds cited by the ALJ, the Board
found Walker’s conduct in failing to ensure his work met the most
basic requirements for filing an electronic return showed his
preparation was grossly inadequate to meet Taxpayer 1’s
objective to file an electronic return, which constituted
incompetence under section 10.51(a)(13) of Circular 230. In
addition, “[a]ny lay person applying common sense would expect
that if the CPA did not perform the services that he had been
hired to perform, a refund would be in order.” The Board found
gross negligence had not been proven, but Walker committed
repeated acts of negligence, violated Board Rule 58, and the
Corporation practiced accountancy without a valid permit.
       The Board ordered a stayed revocation of Walker’s CPA
certificates and imposed a three-year probation. The Board found
Walker’s ability to pay the reasonable costs of investigation and
enforcement had not been established at the hearing. The cost
recovery was reduced to reflect that although the Complainant
established nearly all of the allegations in the amended
accusation, Walker had raised a colorable challenge to some of
the charges. Walker was required to jointly and severally
reimburse the Board during the probation period in the amount
of $30,000 for investigation and prosecution costs. In addition,
Walker was required to submit quarterly written reports and
complete four additional hours of continuing education in certain
subjects and an approved course on the provisions of the
California Accountancy Act and the Board’s regulations specific

                               31
to the practice of public accountancy. The decision became
effective November 11, 2017.

Mandamus Proceedings

      On November 27, 2017, Walker filed a petition in pro per
for a writ of administrative mandamus under Code of Civil
Procedure section 1094.5. He alleged violations of procedural and
substantive due process, including that the Board failed to
provide discovery, failed to provide notice of the applicable
professional standards, failed to respond to his laches defense,
and made findings that were not supported by substantial
evidence. The Board filed an answer on December 22, 2017.7
      Walker filed a trial brief in support of a writ of
administrative mandamus. Among other arguments, Walker
asserted that the accusation was barred by the expiration of a
two-year statute of limitations and the doctrine of laches. In
addition, the Board’s post-hearing designation of Lewis as an
expert, contrary to the ALJ’s finding that she was not qualified as
an expert witness, deprived him of an opportunity to cross-
examine her as an expert witness. The testimony of an expert
witness was required to establish the standard of care, Lewis’s
opinion was not based on appropriate sources, and the Board’s

      7 Walker filed an ex parte application seeking a stay of the
Board’s decision. In the application, he stated that he had
dissolved the Corporation in April 2016 and renewed his
individual CPA license in an inactive status. He represented that
he did not have the financial ability to make the quarterly
payments demanded by the Board. The motion was denied on
the ground that no exigency had been shown to justify an ex
parte application.

                                32
reliance on Lewis for the necessary expert testimony violated due
process. Walker also argued that the Board could not rely on
AICPA standards or Circular 230 to establish “applicable
professional standards” in this case. Walker was not a member of
AICPA, and federal case law held Circular 230 was inapplicable
to a CPA unless practicing before the IRS, which does not include
simple preparation of tax return.

      A. Tentative Ruling

       The trial court issued a tentative decision prior to the
hearing on the petition for writ of mandate. The trial court found
Lewis was qualified to testify as an expert. She had been
licensed to practice as a CPA in California since 2003, and
employed by a public accounting firm. She is familiar with the
professional standards and standards of practice for a California
CPA generally and for preparing a tax return. Nothing about her
status as an investigator disqualified her from providing expert
testimony and no particular procedure was required to proffer
expert testimony.
       The tentative ruling stated that the ALJ did not decide
until the third day of the hearing that Lewis would not be
received as an expert. Walker had the opportunity, and did,
cross-examine Lewis about her opinions concerning the standard
of practice. Walker did not proffer any questions that he would
have asked Lewis if he had known she would be accepted as an
expert. Also, the Board did not rely solely on Lewis’s testimony,
but also on testimony provided by Walker’s experts.
       The trial court concluded all three experts incorrectly
defined negligence and gross negligence. Lewis was mistaken in

                               33
characterizing every error on a tax return as negligence, because
negligence is situational. Although Lewis correctly defined gross
negligence as an extreme departure from the standard of
practice, she was mistaken in defining the term “extreme” as
“unusual.” The trial court agreed with the Board that the
definitions of negligence and gross negligence provided by
Walker’s experts were also incorrect. Professional negligence
requires conduct below a standard of practice established to
protect against unreasonable harm; it does not require harm to
have occurred. The trial court concluded that although all the
experts incorrectly defined negligence and gross negligence, they
could still provide the appropriate standard of practice. All of the
experts agreed that the standard of practice required a CPA to
exercise due diligence in the preparation of a tax return. Lewis
was mistaken in her definitions of gross negligence and
negligence, and in her conclusion that Walker was guilty of gross
negligence, but her opinion that Walker breached the standard of
practice in preparing the two returns had weight and constituted
substantial evidence.
      The trial court found that the Board could include AICPA
standards as an applicable standard of practice regardless of
whether appellants belonged to the organization. The only
condition for the standard of practice was that they were
commonly accepted in the accounting profession. Lewis testified
that the AICPA’s standards for tax preparation were the
accounting profession standards. Wolf and Onisko had admitted
the AICPA’s GAAP and GAAS are the applicable standards for
auditing and accounting. The evidence was sufficient to require
appellants to adhere to standards of a private organization to

                                34
which they did not belong, and the standards were not an
“underground regulation.”
      Federal case law enjoined enforcement of Circular 230
against CPAs who simply prepare tax returns and do not
represent taxpayers by appearing before the IRS in a tax
proceeding. As a result, Circular 230 was not a standard of
practice for tax preparers. Lewis referred to Circular 230 in her
testimony, however, as providing guidelines for tax preparers.
Circular 230 provides that a CPA representing a taxpayer before
the IRS must exercise due diligence in preparing the return and
determining the correctness of representations to the IRS, not
unreasonably delay preparing and filing the return, and prevent
giving false information to the IRS. All of the witnesses agreed
that the standard of practice requires CPAs to exercise due
diligence in preparation of a tax return, so Circular 230 may be
used as a guideline to evaluate due diligence even though
enforcement has been enjoined by the federal courts.
      The trial court concluded in the tentative decision that
Walker was guilty of repeated acts of simple negligence in
handling the tax returns of Taxpayers 1 and 2. Abandonment of
Taxpayer 1 was the most significant failure. Lewis had made
overstatements, especially in opining that Walker was grossly
negligent, but the Board correctly concluded that Walker’s
repeated acts of negligence suggested a lack of competency in the
practice of public accountancy, because Walker negligently
completed a quarter of the returns that he prepared for the tax
year 2011.

                               35
      B. Hearing and Judgment

       A hearing was held on July 9, 2019, at which Walker
represented himself. The trial court noted that although the
doctrine of laches could be significant, Walker had not set forth
the elements of laches, provided any citation to the applicable
statute of limitations for the Complainant to file an accusation
with the Board, or argued prejudice.
       The trial court concluded from its independent review of
the record that the Board’s findings of negligence were supported
by substantial evidence. The Board had erroneously found
Walker did not enter Taxpayer 2’s receipt of $5,000 in dependent
care benefits. In fact, Walker’s negligence was in reporting
receipt of $5,000 dependent care benefits and taking a $600
credit for child care expenses. But the Board’s error did not
undermine its overall conclusion.
       Walker argued that although the trial court agreed with
the Board that Lewis was qualified to testify as an expert, he had
not been given the opportunity to question her as an expert. The
ALJ instructed the parties on the first day of the administrative
hearing to question Lewis as though she were not an expert. The
Board argued in response that it was not until the third day that
the ALJ determined Lewis would not be considered an expert
witness. The trial court initially agreed with the Board that the
parties had extensive opportunities to question Lewis before the
ALJ ruled that she did not qualify as an expert on the third day
of the administrative hearing.
       Based on Walker’s arguments, however, the court reviewed
the reporter’s transcript of the ALJ’s statements on the first day
of the administrative hearing when the ALJ directed the parties

                                36
to proceed as if Lewis were not an expert. The trial court asked
Walker to explain how he was prejudiced. Walker stated that he
had planned to question Lewis about the material that she relied
on to reach her conclusions, which he believed to be an
inappropriate basis for expert testimony. He had wanted to
question her about the tax laws that she relied upon and how she
formulated her opinion.
       The Board argued that Walker chose not to cross-examine
Lewis further because he deemed her to be a hostile percipient
witness and he had said he had no further questions for her. The
trial court noted there was sufficient evidence in the record to
conclude that Lewis was an expert, but found it problematic if the
ALJ limited Walker’s examination of her as an expert, including
her knowledge as an expert and her opinion on the standard of
practice as an expert. The Board argued Walker had in fact
treated Lewis as an expert, asked her the types of questions that
would be asked of an expert, had an opportunity to cross-examine
her, and cross-examined her extensively on her opinion as to the
standard of practice. The Board also argued that Walker had two
experts testify on the standard of practice, so there was plenty of
evidence of the standard of practice in the record. The trial court
explained that it was not fair to limit the licensee’s examination
of a witness as an expert, then have the Board decide after the
proceeding was over that the witness is an expert. The Board
argued that Walker’s conduct was so obviously negligent that
expert testimony was not required. The trial court disagreed that
the conduct was so egregious that expert testimony on the
standard of practice was not necessary.
       The court ruled that Walker did not have an opportunity to
cross-examine Lewis as an expert witness. Lewis was an expert,

                                37
but Walker was entitled to voir dire her on her expertise and
what she did as an expert to formulate her opinion. The trial
court concluded that the matter must be remanded for additional
examination of Lewis. No other witness would be permitted to
testify. In all other respects, the tentative was adopted as the
court’s order.
       On August 20, 2019, the trial court entered judgment
granting the petition in part for the sole purpose of allowing
Walker to further cross-examine Lewis. The parties would not be
permitted to offer or examine any other witnesses in the remand
process. In all other respects, the petition was denied.
       A writ of administrative mandate was issued to the Board
on August 23, 2019. The trial court commanded the Board to
vacate and set aside its decision, and to remand the matter to the
Office of Administrative Hearings to allow Walker to further
cross-examine Lewis in the administrative proceeding. Other
than Lewis, no other witness was to be offered or examined.
After the remanded hearing, the Board was to prepare a revised
decision and take any further action specifically enjoined on the
Board by law. Nothing in the writ limited or controlled the
discretion legally vested in the Board.
       Walker filed a timely notice of appeal, and the Board filed a
timely notice of cross-appeal.

                                38
                         DISCUSSION

Appealability

      A. The Board

       The Board contends it may appeal from the portion of the
trial court’s order remanding the matter for further testimony by
Lewis. We agree.
       In Dhillon v. John Muir Health (2017) 2 Cal.5th 1109
(Dhillon), the California Supreme Court addressed whether a
trial court order vacating an administrative decision and
remanding for further administrative proceedings was a final
judgment appealable by the respondent. In Dhillon, a hospital
imposed discipline on a surgeon without providing an
administrative hearing. (Id. at p. 1112.) The surgeon petitioned
for a writ of administrative mandamus to compel the respondent
hospital to vacate the discipline and grant an administrative
hearing, to declare that the hospital bylaws violated due process,
and to authorize the surgeon to file a lawsuit for damages. (Id. at
pp. 1112–1113.) The trial court granted the writ petition in part,
ordering the hospital to grant the surgeon a hearing. (Id. at p.
1113.) When the hospital appealed, the appellate court concluded
the remand order was not a final, appealable order and dismissed
the appeal, but the Supreme Court reversed. (Id. at pp. 1113–
1114, 1120.)
       The Supreme Court first noted the general rule that a
judgment is final, and therefore appealable, when it ends the
litigation between the parties on the merits and nothing remains
to be done but to enforce the judgment. (Dhillon, supra, 2 Cal.5th

                                39
at p. 1115.) “‘“As a general test, which must be adapted to the
particular circumstances of the individual case, it may be said
that where no issue is left for future consideration except the fact
of compliance or noncompliance with the terms of the first decree,
that decree is final, but where anything further in the nature of
judicial action on the part of the court is essential to a final
determination of the rights of the parties, the decree is
interlocutory.”’ [Citations.]” (Ibid.)
       Applying these principles, the Supreme Court concluded
the trial court’s order was final and appealable because it granted
or denied each of the surgeon’s claims and “did not reserve
jurisdiction to consider any issues.” (Dhillon, supra, 2 Cal.5th at
pp. 1116–1117.) “Thus, as a formal matter, once the trial court
issued the writ, nothing remained to be done in that court; no
issue was then left for the court’s ‘“future consideration except
the fact of compliance or noncompliance with the terms of the
first decree.”’ [Citations.]” (Id. at p. 1117.) The Dhillon court
explained that unless the respondent had an immediate right of
appeal, the trial court’s interpretation of the hospital bylaws to
require a hearing could effectively evade review. (Ibid.) If after
remand, the administrative decision were decided against the
surgeon and he chose not to seek review, respondent would have
no basis to seek review and could not challenge the earlier ruling
that the surgeon was entitled to a hearing. (Id. at pp. 1117–
1118.) The Dhillon court concluded that an order remanding a
matter to an administrative agency for further proceedings may
be appealable by the respondent agency if the order affects
substantial rights and may, as a practical matter, be
unreviewable after resolution on the merits. (Ibid & fn. 4.)

                                40
       Based on the reasoning of Dhillon, we conclude the order in
this case remanding the matter for further examination of Lewis
is appealable by the Board. If the proceedings after remand are
decided against Walker and he chooses not to seek review, the
Board would have no basis to seek review of the trial court’s
order to allow additional testimony.

      B. Walker

       Walker contends he may appeal from the portion of the
petition denied by the trial court, because the trial court ruling
will have a continuing effect on his rights in the administrative
hearing and the findings will be binding in any subsequent
mandamus proceeding, thereby evading review. This is incorrect.
       Walker’s appeal is governed by the holding in Kumar v.
National Medical Enterprises, Inc. (1990) 218 Cal.App.3d 1050,
1055 (Kumar), which was distinguished by the Dhillon court on
its facts (Dhillon, supra, 2 Cal.5th at p. 1118, fn. 4). In Kumar, “a
doctor challenged the suspension of his hospital privileges in a
petition for writ of administrative mandamus, and the trial court
granted the petition in part: It set aside the decision by the
hospital’s governing board upholding the doctor’s suspension and
remanded the matter for further administrative proceedings, but
it did not reinstate the doctor’s privileges. The doctor appealed.
The Court of Appeal dismissed the appeal, holding that the
judgment was not appealable because the doctor was first
required to exhaust his administrative remedies. [Citation.]”
(Ibid.)
       “Under the doctrine of the exhaustion of administrative
remedies, a party must go through the entire proceeding to ‘a

                                 41
final decision on the merits of the entire controversy’ before
resorting to the courts for relief. (Cal. Administrative Hearing
Practice (Cont.Ed.Bar 1984) § 4.68, pp. 266–267.) An appeal can
be taken only from a final decision aggrieving petitioner.”
(Kumar, supra, 218 Cal.App.3d at p. 1055, italics omitted.)
“[T]he setting aside of a final administrative decision because of
unfair hearing practices requires a remand for further
proceedings. The rationale is that the agency . . . because of
error, did not fully exercise the discretion legally vested in it. By
commencing further proceedings, this discretion is exercised.
(See English v. City of Long Beach (1950) 35 Cal.2d 155, 159.)”
(Kumar, supra, 218 Cal.App.3d at p. 1056.)
       The Dhillon court distinguished the holding in Kumar
based on the different practical consequences of the trial court’s
remand order. The doctor in Kumar would have an opportunity
to appeal the hospital’s discipline if he did not prevail in the
administrative proceedings after remand: “He could file a second
petition for administrative mandamus, and if the trial court ruled
against him, he could appeal from the denial of his petition.”
(Dhillon, supra, 2 Cal.5th at p. 1118, fn. 4.)
       In the case before us, the trial court vacated the
administrative decision and remanded the matter for further
testimony from Lewis, followed by a new decision on the merits.
Because we conclude in the discussion below that the trial court
properly vacated the administrative decision for further
proceedings, we do not need to consider whether the decision
could have additionally been vacated for other reasons as well.
The Board’s prior decision is not res judicata, because the trial
court has ordered the prior decision vacated and set aside in its
entirety. (See Kumar, supra, 218 Cal.App.3d at p. 1056). The

                                 42
trial court’s order remanding the matter for further testimony
would be meaningless if the Board were not free to exercise its
discretion based on the totality of the evidence before it. Walker
must proceed again to a final administrative decision before
seeking review in the courts. Until the Board has considered all
of the evidence, including evidence yet to be elicited in Walker’s
cross-examination of Lewis as an expert witness, and made a
final decision, the Board has not exhausted its power to act. A
determination of all the issues must be made first by the
administrative agency, and Walker is not aggrieved until such
time as he may be adversely affected by a “new” final decision by
the Board. We conclude Walker has not yet exhausted his
administrative remedies and his appeal must be dismissed.

Remand for Examination of Lewis as an Expert Witness

      A. Statutory Scheme

      The Board’s responsibilities include licensing (§§ 5023,
5033, 5080), issuing permits to engage in
public accountancy practice to licensees (§ 5070, subs. (a)),
continuing education (§§ 5027, 5028), promulgating governing
professional rules, regulations, and standards for the practice (§§
5018, 5060, subd. (d), 5061, subd. (e)), and disciplinary action
(§ 5100).
      After notice and hearing, the Board may revoke, suspend,
or refuse to renew any permit or certificate to practice public
accountancy, or may censure the holder for unprofessional
conduct, which includes: “(c) Dishonesty, fraud, gross negligence,
or repeated negligent acts committed in the same or different

                                43
engagements, for the same or different clients, or any
combination of engagements or clients, each resulting in a
violation of applicable professional standards that indicate a lack
of competency in the practice of public accountancy . . . . (g)
Willful violation of this chapter [(§ 5000 et seq.)] or any rule or
regulation promulgated by the board under the authority granted
under this chapter.” (§ 5100, subds. (c) and (g).)
       The Board has issued regulations requiring accountants to
“comply with all applicable professional standards, including but
not limited
to generally accepted accounting principles and generally accepte
d auditing standards.” (Cal.Code Regs., tit. 16, § 58.)8

      8 Generally accepted auditing standards (GAAS) are
“promulgated by the American Institute of Certified Public
Accountants (AICPA), a national professional organization of
CPA’s, whose membership is open to persons holding certified
public accountant certificates issued by state boards of
accountancy. [Citation.]” (Bily v. Arthur Young & Co. (1992) 3
Cal.4th 370, 381 (Bily).) Generally accepted accounting
principles (GAAP) “are an amalgam of statements issued by the
AICPA through the successive groups it has established to
promulgate accounting principles: the Committee on Accounting
Procedure, the Accounting Principles Board, and the Financial
Accounting Standards Board. Like GAAS, GAAP include broad
statements of accounting principles amounting to aspirational
norms as well as more specific guidelines and illustrations.” (Id.
at p. 382.)

                                44
      B. Standard of Review

       A petition for writ of administrative mandate is addressed
to “whether the respondent has proceeded without, or in excess
of, jurisdiction; whether there was a fair trial; and whether there
was any prejudicial abuse of discretion.” (Code Civ. Proc., §
1094.5, subd. (b); Doe v. Regents of University of California,
supra, 5 Cal.App.5th at p. 1072.)
       “After an administrative agency imposes discipline on a
professional licensee, the trial court to which application for
mandate is made exercises its independent judgment on the facts.
(Bixby v. Pierno (1971) 4 Cal.3d 130, 143–146; Hughes v. Board of
Architectural Examiners (1998) 17 Cal.4th 763, 789.) After the
trial court exercises its independent judgment in reviewing the
facts, the appellate court confines itself to determining whether
substantial evidence supports the trial court’s findings. The
appellate court, however, independently exercises its ability to
decide issues of law. (Marek v. Board of Podiatric
Medicine (1993) 16 Cal.App.4th 1089, 1095–1096.)” (Griffiths v.
Superior Court (2002) 96 Cal.App.4th 757, 767–768.)
       “‘Where, as here, the issue is whether a fair administrative
hearing was conducted, the petitioner is entitled to an
independent judicial determination of the issue.’ (Pomona Valley
Hospital Medical Center v. Superior Court (1997) 55 Cal.App.4th
93, 101.) We must therefore independently review the fairness of
the administrative proceedings as a question of law. (Rosenblit v.
Superior Court (1991) 231 Cal.App.3d 1434, 1438.)” (Sinaiko v.
Superior Court (2004) 122 Cal.App.4th 1133, 1140 (Sinaiko).)

                                45
      C. Fairness of Hearing

       The Board contends that the trial court erred by remanding
the matter for further examination of Lewis, because the Board’s
determination after the hearing that Lewis was qualified to
provide expert testimony did not make the proceedings
fundamentally unfair, and no prejudice has been shown. We
disagree.
       “Due process is the opportunity to be heard at a meaningful
time and in a meaningful manner. (Mathews v. Eldridge (1976)
424 U.S. 319, 333.) Unlike some legal rules, due process ‘“is not a
technical conception with a fixed content unrelated to time, place
and circumstance.” [Citation.]’ (Id. at p. 334.) Rather, it ‘“is
flexible and calls for such procedural protections as the particular
situation demands.” [Citation.]’ (Ibid.) Determining whether a
particular administrative procedure is constitutionally sufficient
requires analysis of the governmental and private interests
involved: (1) the private interest that will be affected by the
official action; (2) the risk of an erroneous deprivation of such
interest through the procedures used and any probable value of
additional or substitute procedural safeguards; and (3) the
government’s interest, including the function involved and the
fiscal and administrative burdens that the additional or
substitute procedural requirement would entail. (Id. at p. 335.)”
(Southern Cal. Underground Contractors, Inc. v. City of San
Diego (2003) 108 Cal.App.4th 533, 543.)
       California law does not require that every administrative
hearing provide an opportunity to confront and cross-examine
witnesses (Doe v. Regents of University of California (2016) 5
Cal.App.5th 1055, 1084), “[b]ut in ‘almost every setting where

                                46
important decisions turn on questions of fact, due process
requires an opportunity to confront and cross-examine adverse
witnesses.’ (Goldberg v. Kelly (1970) 397 U.S. 254, 269.) The
right to cross-examine applies in a wide variety of administrative
proceedings. (Giuffre v. Sparks (1999) 76 Cal.App.4th 1322, 1330
[disciplinary hearings]; Davis v. Mansfield Metropolitan Housing
Authority (6th Cir.1984) 751 F.2d 180, 185 [housing
authority]; Welfare Rights Organization v. Crisan (1983) 33
Cal.3d 766, 769 [welfare]; Pence v. Industrial Acc. Comm. (1965)
63 Cal.2d 48, 50–51 [industrial accident]; Desert Turf Club v.
Board of Supervisors (1956) 141 Cal.App.2d 446, 455 [use
permit].) It is especially important where findings against a
party are based on an adverse witness’s testimony. (Fremont
Indemnity Co. v. Workers’ Comp. Appeals Bd. (1984) 153
Cal.App.3d 965, 971; Palmer v. Rent Control Board of
Brookline (1979) 7 Mass.App.Ct. 110 [rent control board erred by
not allowing landlord to cross-examine investigator who provided
report to the board].)” (Manufactured Home Communities, Inc. v.
County of San Luis Obispo (2008) 167 Cal.App.4th 705, 711.)
       A witness who meets the threshold test for qualification
and is permitted to testify as an expert on direct examination, “‘is
subject to as penetrating a cross-examination as the ingenuity
and intellect of opposing counsel can devise. This inquiry may
challenge not only the knowledge of the witness on the specific
subject at issue, but also the reasons for his opinion and his
evaluation of any written material upon which he relied in
preparation for his testimony.’ [Citation.]” (Sinaiko, supra, 122
Cal.App.4th at p. 1142 [admission of medical expert opinion].)
       In this case, Lewis was the Board’s sole witness. Any
findings against Walker turn on the credibility and weight of

                                47
Lewis’s testimony. Walker faces severe consequences, including
potential deprivation of his license and substantial liability for
investigation costs. Walker, who had been recently admitted to
practice law, represented himself in the administrative hearing,
in the trial court, and now represents himself on appeal. He
never had an opportunity to cross-examine Lewis regarding her
qualifications and opinion as an expert, including the reasons for
any opinion and evaluation of any written material upon which
she relied, because the ALJ consistently ruled throughout the
administrative hearing that Lewis was not testifying as an expert
witness. At the outset of Lewis’s testimony, the ALJ instructed
the parties to question her as a percipient witness only, not as an
expert, until such time as the ALJ ruled directly on her
qualifications. Prior to resuming cross-examination of Lewis,
Walker asked the ALJ to rule on whether she would be permitted
to testify as an expert witness; Walker stated he had two
additional hours of questions for her. The ALJ ruled, consistent
with prior instructions to the parties, that Lewis was testifying
as a percipient witness only. Once the ALJ confirmed that Lewis
was not testifying as an expert witness, questions addressed to
her knowledge as an expert were irrelevant. As a tactical matter,
the Complainant did not have the testimony of an expert witness
to establish the standard of practice. Walker chose not to
question her further. When the Board later designated Lewis as
an expert, after completion of the hearing, the Board undermined
the fairness of the proceeding by depriving Walker of an
opportunity to vigorously cross-examine Lewis on her expert
opinion, and by making findings against Walker based on the
unchallenged testimony. For example, Walker contends that
Lewis relied solely on IRS publications and form instructions to

                                48
form her opinions, which he contends is not the type of material
reasonably relied upon by CPA experts. Walker had no
opportunity to cross-examine the basis of her opinions as an
expert witness to show that she did not rely on authoritative
sources of federal tax law. The trial court correctly ordered the
matter remanded to the Office of Administrative Hearings to
allow further examination of Lewis, and for the the Board to
exercise its legally vested discretion based on a consideration of
all the evidence.

                         DISPOSITION

      The judgment is affirmed. In the interests of justice, the
parties are to bear their own costs on appeal.

             MOOR, J.

We concur:

             BAKER, Acting P.J,

             KIM, J.

                                49