E-NEWSLETTER
Fall 2013 Kentucky Board of Accountancy E-NEWSLETTER In This Issue BOARD MEMBERS BOARD MEMBERS...................... 1 In August of 2012, Kevin Doyle, CPA, Joe Hancock, CPA, and Toni CarverSmith, the non-CPA member, were reappointed by Governor Beshear. Their new terms will expire as of June 30, 2016. Mr. Doyle is the CFO of Congelton-Hacker Construction Company in Lexington. Mr. Hancock is the President of Riney Hancock CPAs PSC in Owensboro and Ms. Carver-Smith is the Associate Director of Mission Effectiveness and Administration with the Presbyterian Church USA in Louisville. BOARD MEETING DATES.............. 1 PEER REVIEW........................... 1 2012 CPA EXAM STATISTICS.......... 2 ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS........... 3 DISCIPLINARY ACTIONS............... 10 CONTACT INFORMATION............. 14 On June 6, 2013, Jamie Laws, CPA, and Phil Layne, CPA, were reappointed to the Board. Ms. Laws is a partner at Louis T Roth & Co, in Louisville and Mr. Layne is the managing partner at Kelley Galloway & Co, PSC, in Ashland. Their new terms will expire June 30, 2017. The remaining Board members are Dr. Daniel Fulks, CPA, and Alan Long, CPA. Dr. Fulks is the Director of the Accounting Program at Transylvania University, and Mr. Long is the managing partner at Baldwin CPAs, LLC, in Richmond. In July of 2013, Mr. Layne was elected as President of the Board and Ms. CarverSmith as the Secretary/Treasurer. BOARD MEETING DATES FOR 2013 The Board meets at its office in Louisville located at 332 W Broadway Suite 310. The following meeting dates remain for 2013: September 20, October 25, November 14, and December 20. Please keep in mind meetings may be canceled or rescheduled. PEER REVIEW Please remember that as of January 2012 all compilations must undergo peer review. Even if you, or your firm, only issue compilations for management use only they must undergo peer review. To enroll in the peer review program, contact the KY Society of CPAs or another organization that conducts peer reviews according to the standards established by the AICPA. A Member of NASBA 2012 CPA EXAM STATISTICS January - February Testing Window 383 candidates sat for 470 sections of the exam. 111 were first time candidates. 48 candidates passed their last sections of the exam and are now eligible to apply for licensure once they satisfy the experience requirement. 1234 candidates are currently approved to sit for different sections of the exam. 217 of these are new candidates. 1017 are candidates who have previously taken the exam. AUD 149 sat 71 passed 48% pass rate FAR 95 sat 43 passed 45% pass rate REG 149 sat 77 passed 52% pass rate BEC 77 sat 43 passed 56% pass rate April - May Testing Window 351 candidates sat for 433 sections of the exam. 65 were first time candidates. 49 candidates passed their last sections of the exam and are now eligible to apply for licensure once they satisfy the experience requirement. 1116 candidates are currently approved to sit for different sections of the exam. 239 of these are new candidates. 877 are candidates who have previously taken the exam. AUD 130 sat 58 passed 45% pass rate FAR 100 sat 50 passed 50% pass rate REG 100 sat 58 passed 58% pass rate BEC 103 sat 62 passed 60% pass rate July - August Testing Window 457 candidates sat for 622 sections of the exam. 126 were first time candidates. 74 candidates passed their last sections of the exam and are now eligible to apply for licensure once they satisfy the experience requirement. 1162 candidates are currently approved to sit for different sections of the exam. 198 of these are new candidates. 964 are candidates who have previously taken the exam. AUD 174 sat 91 passed 52% pass rate FAR 158 sat 78 passed 49% pass rate REG 155 sat 88 passed 57% pass rate BEC 135 sat 81 passed 60% pass rate October - November Testing Window 428 candidates sat for 565 sections of the exam. 74 were first time candidates. 57 candidates passed their last sections of the exam and are now eligible to apply for licensure once they satisfy the experience requirement. 1203 candidates are currently approved to sit for different sections of the exam. 238 of these are new candidates. 965 are candidates who have previously taken the exam. 2 Kentucky State Board of Accountancy E-NEWSLETTER AUD 146 sat 50 passed 34% pass rate FAR 144 sat 57 passed 40% pass rate REG 119 sat 65 passed 55% pass rate BEC 156 sat 66 passed 42% pass rate ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS 2011-051 Martin J. Hampton - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. However due to an office and home move in 2010 a number of records were shredded so the Respondent was only able to substantiate he had completed 26 hours of CPE, including 2 hours of ethics, when he renewed his license in 2011. Remedy: Complete 68 hours in CPE courses within 90 days from the date the Order is signed by the Board President, pay a $500 fine and be included in the CPE audit for 2013. 2011-058 Suzanne Renee Wingo - Respondent renewed her license 2011 and indicated she had completed 60 hours of CPE. The Respondent was able to verify that she had completed 53.5 hours of CPE, 2 of which were in ethics related courses. Remedy: Complete an additional 13 hours in CPE courses within 90 days from the date the Order is signed by the Board President, pay a $250 fine and be included in the CPE audit for 2013. 2011-035 Maria L. Bouvette - Respondent renewed her license in 2011 and indicated she had completed 60 hours of CPE. After repeated requests for the documents the Respondent was able to verify she had completed well in excess of 60 hours of CPE during the 2009 through 2010 reporting period, apologized for not having responded earlier, and stated that her office had been in the process of moving during the time the requests for documents had been received. Remedy: Respondent was fined $100. 2011-036 Brandon James Breunig - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. Following several unsuccessful attempts to contact the Respondent, on January 24, 2012 Mr. Breunig advised Board staff he had been experiencing difficulty in receiving all of his mail but he had completed in excess of 100 CPE hours during 2009 and 2010. He submitted copies of documents that verified he had completed those hours. Remedy: Respondent was fined $100. 2011-046 William L. Logan - Respondent renewed his license in 2011 and indicated he had completed 80 hours of CPE. Following several attempts to contact the Respondent, on February 2, 2012 he emailed copies of his completed CPE documentation along with a letter of explanation. Remedy: Respondent was fined $100 and will be included in the CPE audit for 2013. 2011-053 M. Darryl McCormick - Respondent renewed his license in 2011 and indicated he had completed 80 hours of CPE. Mr. McCormick submitted documentation to substantiate he had completed 77.5 hours of CPE prior to renewing his license in 2011. Unfortunately the Respondent miscalculated that he had completed 80 hours of CPE prior to renewing his license. The documents further verified that in August of 2011 Mr. McCormick completed 16 hours of CPE. Remedy: Complete 5 hours in CPE courses within 90 days from the date the Order was signed by the Board President. He received credit for having satisfied this requirement by using 5 of the 16 CPE hours he completed in August of 2011. He was allowed to use the remaining 11 hours toward satisfying the CPE requirement when he renews his license in 2013. In addition he was fined $250 and will be included in the CPE audit for 2013. 2011-061 Robin A. Meeks - Respondent renewed her license in 2011 and indicated she had completed 60 hours of CPE. She was able to substantiate that in 2009-2010 she completed 38 hours of CPE, 2 of which were in an ethics related course and that on January 5 and 6, 2011 she completed another 16 hours of CPE for a total of 54 hours of CPE. When the Respondent renewed her license in 2011 she was 6 hours short of meeting the 60 hours requirement. On October 24 and 25, 2011 the Respondent completed an additional 16 hours of CPE. Remedy: Complete an additional 12 hours of CPE within 90 days from the date the Order was signed by the Board President. The 16 hours completed after the renewal of her license was used to satisfy the additional 12 hours. She was also fined $250 and will be included in the CPE audit for 2013. 2011-063 Jae B. Yoo - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. The Respondent verified he had completed 60 hours of CPE, including 2 hours in an ethics related course, however 6 of the 60 hours were completed after he renewed his license. Remedy: Complete an additional 12 hours of CPE within 3 Kentucky State Board of Accountancy E-NEWSLETTER ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS (Continued) 90 days from the date the Order was signed by the Board President. The 6 hours completed after the renewal of his license may be used to reduce the hours still to be completed from 12 to 6. He was also fined $250 and will be included in the CPE audit for 2013. 2011-007 Stephen E. Turner - Respondent renewed his license in 2008 and indicated he had completed 60 hours of CPE. Because he was unable to substantiate he had completed 60 hours of CPE prior to renewing his license, the Respondent was fined $500 and required to complete 64 hours of CPE (Case No. 2008-028). In addition he was selected to submit documentation that he complied with the CPE requirements when he renewed his license in 2010. In 2010 he was unable to substantiate he had completed 60 hours of CPE prior to renewing his license. He was fined $1000 and required to complete 120 hours of CPE by July 29, 2011(Case No. 2011-007). The check was received in the proper amount of time but the Respondent failed to submit documentation to verify he completed the 120 hours of CPE. Remedy: Respondent’s license was suspended for 30 days, he was required to submit documentation that verifies he completed 120 hours of CPE, and reimburse the Board in the amount of $500 for all fees incurred to prosecute this matter. 2011-034 Todd A. Berger - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. Mr. Berger eventually responded to the request for documentation stating he was not aware that he had been chosen for the random audit, that he had completed his CPE, and would send the documents to the Board. Respondent emailed his completed CPE documentation showing 82 hours were completed; however the two hours in ethics were completed after he had renewed his license. Remedy: Complete 4 CPE hours all of which must be in ethics related courses within 90 days from the date the Order was signed by the Board President. The 2 hours in ethics completed after the renewal of his license may be used to reduce the hours still to be completed from 4 to 2. He was also fined $250 and will be included in the CPE audit for 2013. 2011-039 F. Jeffrey Sizemore - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. 4 Kentucky State Board of Accountancy E-NEWSLETTER Remedy: Complete 180 hours in CPE courses. Four (4) of these hours must be in ethics related courses. He was also required to pay a $500 fine and will be included in the CPE audit for 2013. 2011-054 Julie Lynn Murphy - Respondent renewed her license in 2011 and indicated she had completed 60 hours of CPE. The Respondent sent an email to the Board which stated that all of her CPE attendance records were maintained on a computer system operated by the company where she is employed but company personnel had deleted all of those records. She also stated that due to an extended period of unemployment she would not be able to pay a fine or complete any CPE courses. Remedy: Respondent’s license was voluntarily surrendered as if revoked. If the Respondent shall ever seek to reinstate her license she shall: complete 180 hours of continuing professional education within the two years prior to submitting a reinstatement request, 30 of which must be in accounting or auditing courses. She must submit proof of having attended the courses listed on the reinstatement application, pay the reinstatement fee in effect at that time, and pay a $500 fine. 2011-037 Oladele Giwa - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. Remedy: Complete 120 hours in CPE courses. Four (4) of these hours shall be ethics related courses within 90 days from the date the Order is signed by the Board President. He must also pay a $500 fine. Failure to pay the fine or complete the CPE hours shall result in an immediate suspension of the Respondent’s license without benefit of a hearing before the Board. The suspension shall remain in effect until such time as the Respondent pays the fine and submits proof of having completed the hours. He will also be included in the CPE audit for 2013. 2011-040 Aaron L. Strahota - The Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. The Respondent advised the Board that the majority of his CPE had been obtained from one provider that does not provide completion certificates. Remedy: Respondent’s license was voluntarily surrendered as if revoked. If he seeks to reinstate his license in the future ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS (Continued) he shall submit: proof of having completed 120 hours in CPE courses and whatever additional CPE course requirements are in effect for reinstatement of a license when he seeks reinstatement. He will also have to pay a $500 fine and the reinstatement fee in effect at the time he seeks reinstatement. Following reinstatement of his license, the Respondent shall be included in the CPE audit for the next renewal period. 2011-047 John R. Pendleton - The Respondent was selected to participate in the 2009 CPE audit. Due to the failure of the Respondent to submit copies of his CPE completion documents in the time frame requested by the Board, he was fined $100. As a result of being fined during the 2009 CPE audit, the Respondent was selected to participate in the 2011 CPE audit. Due to the failure of the Respondent to comply with the previous requests to provide documents, on February 10, 2012 the Board members directed that a formal complaint be filed. Following the issuance of the complaint the Respondent eventually provided copies of the necessary documents to verify he had completed the appropriate number of continuing education hours prior to renewing his license in 2011. Remedy: Respondent was fined $250. He must also submit documentation to verify he completed his continuing education requirement prior to be being eligible to renew his license in 2013. to the address which is on file with the Board. No response was received to either letter. On February 11, 2013 the Respondent contacted the Board via phone stating that he had been out of town when the audit letters were mailed and did not return until January 25, 2013. He advised the Board someone was getting his mail for him but that person had failed to advise him regarding the letters from the Board. The Respondent advised the Board staff that he had completed his 60 CPE hours within his two-year reporting period and faxed a letter of explanation and a copy of his CPE hours. The Board reviewed his CPE hours and verified the Respondent had completed the hours. Remedy: Respondent was fined $100. 2012-027 Margaret Retzler - The Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. Two letters were mailed to the Respondent to the address she had provided the Board. No response was received from the Respondent. On January 17, 2013 the Respondent contacted the Board via phone and advised she had completed her CPE in the reporting period January 1, 2010 through December 31, 2011 as required and would submit completion documents to the Board. The documents verified completion of the CPE requirements but they were received past the due date. Remedy: Respondent was fined $100. 2012-023 W. Shane Crum - The Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. Two letters were sent to the Respondent at the address which is on file with the Board. No response to the letters was received from the Respondent and the letter was not returned by the US Postal Service. Remedy: Respondent’s license was voluntarily surrendered as if revoked. If the Respondent ever applies to reinstate his license he shall first complete 180 hours of continuing professional education within the two years prior to submitting a reinstatement request, 30 of which must be in accounting or auditing courses and 4 in ethics related courses. He must also submit proof of having attended the courses listed on the reinstatement application, pay the reinstatement fee in effect at that time, and pay a fine in the amount of $500. 2012-024 John J. Grant - The Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. Two letters were mailed to the Respondent 2012-044 Jeffrey L. Kirk - The Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. Mr. Kirk submitted documentation to verify he completed 25.75 hours of CPE with 2 of those hours in ethics related courses. Remedy: Respondent’s license was voluntarily surrendered as if revoked. If the Respondent ever applies to reinstate his license he shall first complete 128.5 hours of continuing professional education within the two years prior to submitting a reinstatement request, 30 of which must be in accounting or auditing courses and 2 in ethics related courses. He shall also submit proof of having attended the CPE courses, pay the reinstatement fee in effect at that time, and pay a $500 fine. 2012-053 Jonathan Louis Grief - The Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. In response to the request the Respondent submitted documentation that established all of the CPE he had completed to renew his license was related to his practice 5 Kentucky State Board of Accountancy E-NEWSLETTER ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS (Continued) as a physician. This documentation was considered by the Board members during their November 2012 meeting and found not to be professionally enhancing to the Respondent as a CPA and therefore did not satisfy the CPE requirement. The Board members allowed the Respondent to have an additional 60 days to submit proof of having completed acceptable CPE courses. The Respondent replied that for a number of past license renewal time periods he was allowed to use the continuing education courses he completed to maintain his physician’s license to satisfy the CPE requirement to renew his CPA license. The Respondent was correct that in the past he had been able to renew his CPA license by using continuing education courses associated with the practice of medicine. However as a result of more careful review of CPE courses submitted by CPAs in the last few years it was determined that the courses used by the Respondent in 2012 to renew his CPA license were not professionally enhancing to him as a CPA. Also pay a fine in the amount of $500 and the reinstatement fee in effect at that time. 2012-022 Paige G. Brown - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. Two letters requesting the CPE completion documents were mailed to the Respondent at the address on file with the Board. No response to the letters was received. On December 17, 2012 the executive director for the Board emailed to the Respondent a proposal to resolve her failure to provide the documentation requested. A reply to the settlement proposal was received from the Respondent which included documentation to verify she had completed well in excess of 60 hours of CPE during the 2010 through 2011 reporting period. The Respondent stated in her cover letter that she apologized for not having responded to the two previous letters but that she had not been through her mail for some time. Remedy: Respondent was fined $100. Remedy: Respondent’s license was voluntarily surrendered as if revoked. If the Respondent decides to reinstate his license in the future he shall comply with the reinstatement requirements in effect at that time. At the present time the requirements consist of submitting proof of having completed 60 hours of CPE, 30 of which must have been in auditing or accounting courses, within two years prior to the date the reinstatement application is submitted, payment of the $200 reinstatement fee, submit proof of having completed an additional 60 hours of CPE within the two years prior to submitting a reinstatement request and pay a $500 fine. 2011-041 Jervis D. Sutton - Respondent renewed his license in 2011 and indicated he had completed 60 hours of CPE. Two letters requesting completion documents were mailed to the Respondent at the address on file with the Board. No response was received to the letters. A letter was received from the Respondent on March 16, 2012 which indicated he had encountered various physical issues over the years and he was unable to locate any CPE completion documents. Remedy: The Respondent’s license was revoked. If the Respondent seeks to have his license reinstated in the future he shall: complete 120 hours in continuing professional education courses within 2 years prior to the date he submits a reinstatement application. Four (4) of these hours shall be ethics related courses. Documentation to support completion of these hours must then be submitted with the application. 6 Kentucky State Board of Accountancy E-NEWSLETTER 2012-025 Donald E. Groot - Respondent renewed his license in 2012 and indicated he had completed 80 hours of CPE. Two letters requesting the documentation were mailed to the Respondent’s address which was on file with the Board. No response was received to either letter. On January 14, 2013 the Respondent mailed a copy of his CPE documents completed in the reporting period January 1, 2010 through December 31, 2011. The documents verified he completed the CPE requirements but they were received past the due date. Remedy: Respondent was fined $100. 2012-026 Jonathan Eric Rauch- Respondent renewed his license 2012 and indicated he had completed 80 hours of CPE. Two letters requesting the documentation were mailed to the Respondent’s address which was on file with the Board. On January 14, 2013 the Respondent contacted the Board via phone and followed up the conversation with an email which noted that his mailing address with the Board was inadvertently not updated when he moved to Louisville from Lexington and therefore he never received any correspondence from the Board. He also attached a signed transcript of his CPE hours showing he had completed 281 hours. A board staff member confirmed Mr. Rauch had completed the CPE hours and that due to the move and failure to advise the Board of his new address Mr. Rauch had not received the audit letters until January 14, 2013. However once he became aware of the letters he immediately contacted the Board. ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS (Continued) Remedy: Respondent was fined $100. 2012-029 Elizabeth Kelly Spencer - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. Two letters requesting the documentation were mailed to the Respondent’s address on file with the Board. No response was received to either letter. On December 19, 2012 the Respondent sent an email with documentation to verify she had completed well in excess of 60 hours of CPE during the 2010 through 2011 reporting period but when reviewing the list of credits noticed she had failed to complete the two (2) hours in ethics. On December 19, 2012 a reply to the Respondent’s email was sent confirming she only failed to complete the two (2) hours in ethics and a revised Agreed Order was emailed to her. The Respondent stated in her cover letter that she did fax her CPE documentation to the Board several times however the line was constantly busy. She had her assistant fax the documents in which she was informed the fax did eventually go through with no printout proving same and the CPE documentation was never received by the Board. Remedy: Respondent was ordered to complete 4 hours in CPE ethics courses within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-030 Brad Thomas White - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. Two letters were mailed to the Respondent at the address which was on file with the Board. No response to the letters was received from the Respondent and the letters were not returned by the US Postal Service. Remedy: Respondent was ordered to complete 120 CPE hours within 90 days from the date the Order was signed by the Board President. Four (4) of these hours shall be ethics related courses. He must also pay a $500 fine and will be included in the CPE audit for 2014. 2012-031 Justin Kevin Adendorff - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he had completed 58 hours of CPE. Remedy: Complete 4 CPE hours within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-034 Linda Pettibone Davis - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. The Respondent submitted documentation to verify she had completed 69.5 hours of CPE however none of those hours included an ethics related course. Remedy: Complete 4 hours in CPE courses related to ethics within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-035 E. Marlene Do - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. The Respondent submitted documentation to verify she had completed 60 hours of CPE however none of those hours included an ethics related course. Remedy: Complete 4 hours in CPE related to ethics within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-036 Terri F. Edelen - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. The Respondent submitted documentation to verify she had completed 60 hours of CPE however she failed to complete 2 CPE hours in ethics in 2010 or 2011. She did obtain these hours in 2009 and 2012. Remedy: Complete 4 CPE hours in courses related to ethics within 90 days from the date the Order was signed by the Board President. The 2 hour ethics course she completed in 2012 may reduce this total to 2 hours in ethics related courses. In addition she must pay a $250 fine and be included in the CPE audit for 2014. 2012-037 Robert L. Ferland - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he completed 61 hours of CPE however none of those hours were ethics related. Remedy: Complete 4 CPE hours related to ethics within 90 days from the date the Order was signed by the Board President, pay a $250 fine, and be included in the CPE audit for 2014. 2012-038 Joseph A. Graviss - Respondent renewed his license in 2012 and indicated he had completed 60 hours 7 Kentucky State Board of Accountancy E-NEWSLETTER ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS (Continued) of CPE. Respondent submitted documentation to verify he completed 56 hours of CPE including 2 hours in ethics related courses in 2010 and 2011. However the Respondent was under the mistaken belief that he met the 60 hour requirement by using 4 hours he completed in 2009 to satisfy the 60 hour requirement. Remedy: Complete 8 CPE hours within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-039 Leigh Ann Haman - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. Respondent submitted a letter and documentation to verify she had completed 33 hours of CPE, including 2 hours in ethics, in 2012 which was after the CPE reporting period. She indicated she was under the impression the former “grace period” was still in effect and also noted she had completed a 20 hour course in 2011 but was not able to provide a completion document. Remedy: Complete 120 hours in CPE within 90 days from the date the Order was signed by the Board President. The Respondent may use the 33 hours she completed and was able to verify in 2012 to reduce the 120 hours to 87. In addition pay a $500 fine and be included in the CPE audit for 2014. 2012-040 Cynthia W. Hanes - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. The Respondent submitted documentation to verify she had completed 60 hours of CPE however none of those hours were in ethics related courses. Remedy: Complete 4 CPE hours in ethic related topics within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-041 Kenneth Howell - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he completed 60 hours of CPE but none of those were ethics related. However he did complete 4 hours in ethics related courses by November 4, 2012. Remedy: Pay a $250 fine and be included in the CPE audit for 2014. 2012-042 Michael F. Ising - Respondent renewed his license in 2012 and indicated he had completed 60 hours of 8 Kentucky State Board of Accountancy E-NEWSLETTER CPE. The Respondent submitted documentation to verify he completed 62.5 hours of CPE however none of those hours were related to ethics. Remedy: Complete 4 CPE hours in courses related to ethics within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-043 Heather Shrout Jackson - Respondent renewed her license in 2012 and indicated she had completed 80 hours of CPE. The Respondent submitted documentation to verify she had completed 73.3 hours of CPE however none of those hours were in ethics related courses. Remedy: Complete 13.4 hours in CPE courses 4 hours of which shall be in ethic related courses within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-045 Michael S. Merman - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he completed 54.5 hours of CPE. Remedy: Complete 11 hours in CPE within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-046 Gregory A. Mink - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he completed 62.5 hours of CPE including 8 of which were completed in 2012 which was after the CPE reporting period. Remedy: Complete 11 hours in CPE within 90 days from the date the Order was signed by the Board President. The Respondent may use the 8 hours he completed and was able to verify in 2012 to reduce the 11 hours to 3 hours. In addition he must pay a $250 fine and be included in the CPE audit for 2014. 2012-047 James K. Moore - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he completed 58 hours of CPE however none of the hours completed were in ethics related courses. ALL OF THE FOLLOWING CASES ARE CPE AUDIT VIOLATIONS (Continued) Remedy: Complete 4 CPE hours related to ethics within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-050 Mary Jo Schell, 9730 - The Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. The Respondent submitted documentation to verify she had completed 50 hours of CPE. 2012-048 Angela S. Moorin - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. In reply to a request for the documents the Respondent submitted an email in which she stated that she wanted to voluntarily surrender her license because due to a career change a license was no longer required. Remedy: Complete 20 hours in CPE courses within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. Remedy: The Respondent’s license was voluntarily surrendered as if revoked. If the Respondent seeks to reinstate her license in the future she shall: submit proof that she completed 120 hours of CPE, 4 of which shall be in ethics related topics within the 2 years prior to submitting a reinstatement application; pay a $500 fine; and comply with the reinstatement requirements in effect at the time the application is submitted. 2012-049 Keithon George Pennant - Respondent renewed his license in 2012 and indicated he had completed 60 hours of CPE. The Respondent submitted documentation to verify he completed in excess of 60 hours of CPE however he failed to complete 2 hours of ethics related courses. Remedy: Complete 4 CPE hours in courses related to ethics within 90 days from the date the Order was signed by the Board President, pay a $250 fine and be included in the CPE audit for 2014. 2012-051 Lisa Lawson VonHalle - Respondent renewed her license in 2012 and indicated she had completed 60 hours of CPE. The Respondent submitted documentation to verify she had completed 58.5 hours of CPE however none of those hours included an ethics related course. Remedy: Complete 4 CPE hours in ethics related courses within 90 days from the date the Order was signed by the Board President, pay a $250 fine, and be included in the CPE audit for 2014. 2012-052 Benjamin T. Reece - Respondent renewed his license online in 2012 and indicated he had completed 60 hours of CPE. Respondent submitted documentation to verify he had completed 48.2 hours of CPE. However after reviewing course completion documents the Board determined that two courses which totaled 11.8 hours failed to meet the requirements to be considered acceptable CPE. Remedy: Complete 47.6 CPE hours within 90 days from the date this Order is signed by the Board President, pay a $500 fine and be included in the CPE audit for 2014. 9 Kentucky State Board of Accountancy E-NEWSLETTER DISCIPLINARY ACTIONS 2008-046 Kimberly Lee-Chappell - On or about December 11, 2008 a former client of the Respondent submitted a complaint that alleged the Respondent had withdrawn funds from the company account to pay the withholding taxes for some of the former client’s employees. However the former client alleged the Respondent failed to use the funds to pay the taxes and had not returned all of the money withdrawn from the account. The Respondent admitted in correspondence with the former client that she did owe them money and would pay them. Some payments were made by the Respondent however some of the checks sent to the former client were returned due to insufficient funds. As a result there was still a balance owed to the former client of $1,600.66. Over a period of some months the Respondent lead the Board staff to believe that a mutual resolution of the outstanding balance had been reached between the Respondent and the former client, however that was not accurate. Remedy: Respondent was ordered to pay a $500 fine and submit proof that she reimbursed the former client the $1600.66. 2010-018 John L. Jones - On October 16, 2010 the Board received a complaint regarding audit reports issued by the Respondent. The CPA investigator for the Board reviewed all of the documents associated with the complaint and interviewed the Respondent. The investigator was unable to verify that the reports had been intentionally delayed and was provided proof that the Respondent had submitted a corrected W-2. However the investigator recommended the Board look further into the respondent’s audit practice. Following two additional visits to the Respondent’s office the investigator presented reports to the Board as to the quality of the Respondent’s audit practice. Remedy: Mr. Jones is prohibited from ever seeking or accepting any audit work that was not included on the list prepared by the Respondent and attached to the Agreed Order. He was allowed to complete all audit reports on the list according to a number of terms which included preissuance review before the reports are released to a client. In addition the reports must also be reviewed and approved by the board’s CPA investigator before they are released to a client. All audits on the list provided must be completed and delivered to the respective clients by July 31, 2012. Mr. Jones may continue to perform and seek to perform reviews and compilations. However all review engagements must undergo a pre-issuance review process. This pre-issuance review process shall continue until the Respondent receives a peer review rating of “pass” as to an “engagement review” performed by a peer reviewer. The Respondent shall be 10 Kentucky State Board of Accountancy E-NEWSLETTER responsible for the costs incurred with the pre-issuance program. Mr. Jones is currently scheduled for a system review with a due date of May 31, 2012. He must be diligent in having this review scheduled and performed on time and shall not request his peer reviewer for an extension of time beyond the due date. 2010-018 John L. Jones - (Second Order) On April 27, 2012 the Board and the Respondent entered into an Agreed Order. Under the terms of that Order by July 31, 2012 the Respondent was to have completed and delivered audit, review, or compilation reports to certain clients listed in a document attached to the Order. The Respondent failed to comply with this portion of the Order. Remedy: Mr. Jones was ordered to complete and send certain audit reports and associated work papers to the CPA investigator for the Board so they are received no later than Sept. 28, 2012. The investigator will perform a pre-issuance review on each of these reports. If no changes are suggested the reports shall be released to the clients. Any recommended changes to the reports shall be made by Mr. Jones before the reports are released to any client. After Mr. Jones has complied with these requirements, he is prohibited from ever seeking, offering, accepting or performing any attest services (audits, reviews, and all compilations) in the future. On the day Mr. Jones submits this Order to the Board he shall also send out letters to each of the remaining clients included on the list attached to this Order that he is prohibited by the Board from performing any additional attest services for them in that he is currently under contract to perform. A copy of each of these letters shall be submitted to the Board office so they are received no later than September 7, 2012. In the event Mr. Jones received payment from any client on the attached list in advance of performing any work for said client and Mr. Jones is unable to provide evidence to the Board that he performed work on those contracts to justify that he should retain some or all of those funds, such funds shall be returned to the clients within 30 days after this Order is approved by the Board. Mr. Jones may continue to perform and seek to perform tax services. 2011-029 William D. Ruth - On September 20, 2011, the Board received a complaint in which former clients alleged that the Respondent had committed errors related to accounting and income tax issues that were detected by another CPA and that he failed to provide documentation to the clients to assist them with resolving these errors. Eventually the clients were assessed a substantial additional tax liability by the IRS and other taxing entities. The parties entered into a settlement following the filing of a civil lawsuit DISCIPLINARY ACTIONS (Continued) against the Respondent regarding these same errors. Before the Board, the Respondent neither admitted nor denied he negligently prepared any tax returns for his former clients. However he acknowledged there is sufficient evidence that if a hearing was conducted, the Board could conclude that his actions constituted a violation of KRS 325.340(1)(b). Remedy: Respondent was ordered to pay a $5,000 fine within 90 days after the Order is signed by the President of the Board. In addition the Respondent shall complete 16 hours of continuing professional education (“CPE”) courses in corporate and/or individual tax issues in 2013 and again in 2014. These hours are in addition to the 80 hours of CPE the Respondent is required to complete over that same two year time period to renew his license in 2015. All of the courses must be in a face to face setting and be approved by the Board before the Respondent registers for each course. The 16 hours shall be completed no later than December 31, 2013 and 2014. 2012-005 Sam Asamoa - On May 2, 2011 a copy of the peer review report, letter of response to the report, and acceptance letter for Mr. Asamoa and the Firm for the period of time ending March 31, 2010 were received in the Board office. The rating for the report was “fail.” It was subsequently determined that this was the third consecutive “fail” rating. The CPA investigator for the Board reviewed a compilation and review report submitted by the Respondent. The investigator determined both reports were not performed in accordance with professional standards. The firm was terminated from the AICPA Peer Review Program in May of 2012. Remedy: Respondent and the Firm are prohibited from ever offering, seeking, accepting, or performing any audit, review or compilation services. Any report the Firm is currently under contract to perform shall be returned to the respective client so another CPA firm can perform the service requested. The Respondent and the Firm may continue to provide any other accounting and tax related service(s) that are not prohibited under the terms of this Order. 2012-018 John C. Elliott, CPA, PLLC - In October of 2008 Mr. Elliott formed John C. Elliott, CPA, PLLC (the “Firm”). According to Mr. Elliott the purpose for the PLLC was to pay for expenses and income associated with acquiring a one-half interest in the accounting practice formerly operated as Baker & Anderson PSC. Mr. Elliott states the Firm was not held out to the public as a public accounting firm in any manner and that no billings, invoices or communications were ever sent out with the name of the PLLC. According to Mr. Elliott since public accounting services were never provided through the Firm and it was not held out to the public as a public accounting firm, he did not believe a firm license was necessary. Remedy: Pay a fine in the amount of $250 no later than 30 days after Order is approved by the Board and either obtain a license for the Firm or dissolve it with the KY Secretary of State’s Office as soon as possible but no later than 30 days after this Order is approved by the Board. 2011-030 Jeffrey D. Cogswell - The Respondent was requested to provide copies of: a report from an outside party that was to have performed a pre-issuance review of all of the firm’s auditing and accounting engagements, the acceptance letter from the KY Society of CPAs, and the letter from the Society confirming that the firm’s most recent peer review was complete. The Respondent failed to respond to 11 Kentucky State Board of Accountancy E-NEWSLETTER DISCIPLINARY ACTIONS (Continued) this letter and return phone messages regarding the request for documents. A formal Complaint and Notice of Hearing was filed against the Respondent. Thereafter the Respondent submitted copies of: a letter from his pre-issuance reviewer to the Peer Review Committee, a letter from the Respondent to the Peer Review Committee and a letter from the Respondent to the Board. As a result of the poor quality of the audit work cited by the pre-issuance reviewer the Respondent indicated in his letters to the Board and the Peer Review Committee that he would cease performing any audits upon completion of the audits currently under contract to complete for the year ending December 31, 2010. Remedy: The audit reports the Respondent is obligated to complete for the year ending December 31, 2010 shall be reviewed and approved by a CPA appointed by the Board prior to being released to any clients. Any changes recommended by the CPA shall be incorporated into the reports prior to their release. Respondent shall send a copy of every report and letter he receives from the CPA and a copy of every letter or report received from the KY Society of CPAs Peer Review program as a result of this process to the Board office no later than 10 business days following receipt. Once the audit reports mentioned above have been approved and issued, the Respondent is prohibited from ever again issuing any audit reports and must pay a $500 fine. 2012-020 Gary L. Goble - On September 6, 2012, a Judgment on a Guilty Plea was entered in criminal case 11CR 3023 in the 13th Division of the Jefferson County Kentucky Circuit Court against the Respondent. The Judgment indicates that the Respondent pled guilty to one count of Theft by Failure to make Required Disposition of Property over $500, as amended from Theft by Failure to make required Disposition of Property over $10,000, one count of Theft by Failure to make Required Disposition of Property over $500 but less than $10,000, and one count of Theft of Labor over $500 but less than $10,000, all felonies. The actions related to the Respondent intentionally failing to transfer funds withheld from the paychecks of three employees to their 401(k) retirement plan accounts, and issuing 3 checks in excess of $5,000 on a checking account that the Respondent knew would not be honored by the bank. As a result of the guilty plea the Respondent was sentenced to serve 2 years on each count to run concurrently for a total of 2 years. The 2 year sentence was then diverted for 3 years on unsupervised probation. It was noted in the Judgment that restitution had been made. Prior to the plea being entered in Jefferson Circuit Court another action was taking place in the US Bankruptcy Court involving Mr. Goble that was related to the circuit court case. Since the bankruptcy court action is not resolved the Board and the Respondent 12 Kentucky State Board of Accountancy E-NEWSLETTER have agreed to a temporary resolution of this matter as set forth in this Agreed Order. Remedy: Respondent’s license is temporarily suspended effective January 13, 2013 and until such time that the Respondent and the Board have entered into a final resolution of this action. The suspension means the Respondent is prohibited from holding himself out to the public in any manner as a CPA and from engaging in or providing any type of public accounting services including, but not limited to, the preparation and issuance of any type of tax returns. 2012-020 Selma C. Dean - On November 14, 2012 a Judgment was entered against the Respondent in criminal case 12-CR-321 in the Court of Common Pleas for Lawrence County, Ohio. The Judgment indicates that the Respondent pled guilty to one count of Engaging in a Pattern of Corrupt Behavior a second degree felony in violation of Ohio Revised Code Section 2923.32(A)(1). As a result of the guilty plea the Respondent was sentenced to serve 4 years on Community Control Sanctions under Intensive Supervised Probation and to pay full restitution in the amount of $46,006.66 by Jan. 31, 2013. Remedy: Respondent’s license is permanently revoked and she is prohibited from ever submitting an application to the Board to renew her license or for consideration of reissuance or reinstatement of her license. 2012-004 Marc A. Fountain - During their meeting on January 25, 2013 the members of Board of Accountancy considered a Recommended Order of Default prepared by the hearing officer assigned to this case. Following discussion the Board voted unanimously to adopt the Recommended Order. Remedy: The license of Mr. Fountain is revoked and shall remain revoked until such time that his Kansas license is reinstated in good standing by the Kansas State Board of Accountancy. Following reinstatement of his Kansas license Mr. Fountain may request that his Kentucky license be reinstated through the process in effect at that time. 2012-015 Kevin Meenach - On July 13, 1995, a Judgment was entered in criminal case CR 95-2 in the United States District Court for the Eastern District of Kentucky against the Respondent. The Judgment indicates that the Respondent pled guilty to one count of Bank Fraud, a felony. The actions related to the guilty plea occurred while the Respondent was serving as the managing officer of Lawrence Federal Savings Bank. As a result of the guilty plea the Respondent was sentenced to serve 4 months in a halfway house, three years of supervised release thereafter and paying $19, 045.46 in restitution to the bank. DISCIPLINARY ACTIONS (Continued) Remedy: Respondent’s license is permanently revoked. The Respondent is also prohibited from ever submitting an application to the Board to renew his license and for consideration of reissuance or reinstatement of his license. 2008-015 Gaw & Associates, PLLC and Troy Gaw On October 19, 2011 the Board entered into an Agreed Order with the Respondent wherein he was required to have all future audits undergo a pre-issuance review prior to being released to any clients. Thereafter it was discovered that the Respondent had submitted audit reports to 6 school districts for pre-issuance review to the Board investigator but issued the reports without first making corrections that were required by the pre-issuance reviewer. The school districts received the reports and filed them with the KY Department of Education. Remedy: The Firm and Mr. Gaw are prohibited from ever again preparing, or assisting with the preparation of or issuing any audit, review and all compilation reports including compilations without disclosures intended for management use only. This prohibition shall not be subject to review or change by the current or any future Board. He shall immediately recall the audit reports for the 6 school districts that were issued in violation of the terms of the Agreed Order entered into on October 19, 2011. Mr. Gaw shall revise each report to incorporate the corrections suggested by the Board investigator. Each revised report shall then be submitted to the investigator for final approval. Once the approval is received Mr. Gaw shall reissue each report to each school district and for filing with the KY Dept. of Education. All reports shall be received by all of the school districts no later than May 10, 2013. Mr. Gaw is responsible for all costs and expenses associated with this process and pay a $10,000 fine. 2013-013 Larry T. Williams - On August 2, 2012, the executive director of the Board was contacted by a representative in the Inspector’s General Office in the Cabinet for Health and Family Services regarding the failure of the Respondent to allow the representative to view work papers associated with the 2011 audit report the Respondent had issued for a CAP. Following a meeting with the representative from the IG’s Office, the executive director and CPA investigator met with the Respondent at his office. The Respondent promised to send copies of the audit work papers to the CPA investigator by August 24 and copies of his CPE completion documents to the executive director by that same date. The Respondent failed to submit copies of any of the documents. Thereafter the executive director, in a letter to the Respondent dated September 7, 2012 again requested the Respondent to submit the documents mentioned above by September 17, 2012. The Respondent failed to comply with this directive. The Respondent was to have completed his most recent peer review by June 11, 2011. However the Respondent failed to complete his review by that date and in September of 2012 was terminated from the AICPA Peer Review Program. Remedy: The Respondent is prohibited from ever offering, seeking, accepting, or performing any audit, review or compilation services. Any report the Firm is currently under contract to perform shall be returned to the respective client(s) so another CPA firm can perform the service requested. The Respondent and the Firm may continue to provide any other accounting and tax related service(s) that are not prohibited under the terms of the Order. 2013-003 Robert Allen Young - The Respondent held a KY CPA license from 1983 until 2004 when he failed to renew his license. By failing to renew his Kentucky license the Respondent was prohibited from performing public accounting services to KY residents or out of a KY based office or use the abbreviation CPA. The Respondent also held a Florida CPA license from 1984 until 2003. The Board received a complaint in February of 2013 that the Respondent had prepared: one 1040 form for a KY resident, a City of Louisville Occupational License Tax Return and used the abbreviation CPA on both forms. Thereafter it was discovered the Respondent had also prepared federal tax returns in 2009, 2010, and 2011 for clients. On each form the Respondent listed his name and used the CPA abbreviation even though at the time he did not hold a KY or FL license. Remedy: Respondent shall reinstate his license by completing 80 acceptable CPE hours 2 of which must be related to ethics. Documentation to verify completion of these hours must be submitted to the Board with a Reinstatement Application and payment of the $200 reinstatement fee. Thereafter the Respondent shall renew his reinstated license on or before August 1, 2014, submit copies of CPE course completion documents to renew his license in 2014 and pay a $10,000 fine. 2013-004 Garstka, Gander & Crab, PSC - On or about April 13, 2013, a former client of the Firm submitted a complaint that alleged the Firm had failed to properly report sales and use taxes and losses taken on the client’s federal returns. These errors were detected by another CPA firm which assisted the client in resolving these errors. Ultimately the client was assessed additional tax liability by the KY Department of Revenue and the IRS. While the Firm denied committing any violation and denied engaging in any improper conduct regarding the reporting of sales and use 13 Kentucky State Board of Accountancy E-NEWSLETTER Board Members DISCIPLINARY ACTIONS (Continued) Phillip M. Layne, CPA President, Ashland tax issues of the client and the proper recording of losses on the client’s federal returns, the Firm recognized the Board could conclude that the Firm engaged in conduct that constitutes a violation of the Board’s statutes. Toni Carver-Smith Sec./Treasurer Citizen Member, Louisville Kevin M. Doyle, CPA Lexington Daniel L. Fulks, CPA, PhD Harrodsburg Joseph A. Hancock, CPA Owensboro G. Alan Long, CPA Richmond Jamie R. Laws, CPA Louisville Staff Members Richard C. Carroll Executive Director Phyllis Gordon Policy Analyst Mary Stevenson Administrative Assistant Board Address: Kentucky State Board of Accountancy 332 West Broadway, Suite 310 Louisville, KY 40202 Phone: (502) 595-3037 Fax: (502) 595-4500 Website: cpa.ky.gov Remedy: The Firm was ordered to pay a $500 fine. Mr. Gander on behalf of the Firm is to submit to the Board in writing within 30 days after the Order is approved by the Board a plan to insure that the errors associated with the tax issues which arose in this matter will not be repeated. The Board shall review the plan and if necessary make changes which shall then be adopted by the Firm. 2013-005 David A. York - On June 20, 2011, the Respondent was granted a waiver from having to complete any further CPE based upon a provision that authorizes the Board to exempt those from CPE if they are 55 years of age or older and completely retired from the practice of public accounting. In April of 2013 it was discovered that the Respondent had placed an ad in the Greater Ohio Valley Yellow Pages under the heading of Certified Public Accountants. Located next to the Respondent’s name in the ad were the abbreviations “CPA” and “CVA”. The ad indicated that the Respondent performed business valuations, evaluation of business opportunities and other consulting services. When contacted the Respondent indicated he was under the impression that he could use the “CPA” abbreviation in an ad and believed the services he was providing were not considered to be public accounting. According to KRS 325.290(2) CPAs who are granted a waiver from CPE may use the abbreviation “CPA” but shall not engage in regulated activities. The Board has interpreted the definition of regulated activities found in KRS 325.220(5) to include some of the services being provided by the Respondent. Remedy: The CPE waiver granted to the Respondent was rescinded. The Respondent was ordered to reinstate his license through the normal process, pay a $500 fine, and obtain a license for the firm. UPDATE YOUR CONTACT INFORMATION To update your contact information submit the address change form found on our website @ cpa.ky.gov. 14 Kentucky State Board of Accountancy E-NEWSLETTER
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