Committee Members PresentStaff
Nancy Young, CPAChairMartin Pittioni, Executive Director
Joe Sullivan, CPATheresa Gahagan, CPA, CFE, Investigator
Bill Holmes, CPANoela Kitterman, CPA, Investigator
Marissa Nelson, CPAAnthony Truong, CPA, Investigator
Gary Homsley, CPAJoel Parks, Compliance Specialist
Members ExcusedBoard Counsel
Haley Lyons, CPA Vice-ChairSusan Bischoff, Sr. AAG (excused)
Kent Bailey, CPABoard Liaison
Larry Brown, CPA
- CALL TO ORDER
The BOACC Chair Nancy Young called thePublic Session to order at 8:37 a.m. and announced that the meeting was being recorded.
- REVIEW AND APPROVAL OF AGENDA
The BOACCapproved the Agenda.
- REVIEW OF PUBLIC SESSION MINUTES
- January 25, 2016 BOACC – Public Session
COMMITTEE ACTION: Moved by Mr. Sullivan and carried to accept the January 29, 2016 BOACC Meeting Public Session minutes as presented.
VOTE: 5Ayes, 1 abstained (Mr. Homsley)
- OLD BUSINESS
- Review of February 5, 2016 Board Meeting
Mr. Brownreported that most of the cases followed the BOACC’s recommendations. There was one case in which there was discussion at the Board meeting and was deferred. Mr. Brown said that the findings in case for Mike Nicholls were substantially the same. The Board also heard five cases that were not heard by the BOACC. These cases were straightforward and were heard by the Board in an attempt to increase efficiency at the BOACC level. Mr. Brown also reported at the last BOACC, there was extensive discussion on the Studer and Hammock cases. The Board respectfully considered the BOACC’s request to reconsider the cases and did not change its approach.
Mr. Brown said that at the previous BOACC, there was discussion on the differences between Board’s rules and the AICPA that were at issue in the two cases, and that matter was referred to the Laws and Rules Committee. Mr. Pittioni added that there was a Laws and Rules Committee prior in the week that addressed this issue. There are currently proposed changes to Division 30 rules relating to the professional misconduct rule to clarify professional standards and the AICPA rules. Mr. Pittioni also said that there will be reorganization for Division 10 for firms and consolidation of reporting requirements so that these rules will be easier to locate. Mr. Holmes noted that lawyers do not sue for fraud because insurance policies typically do not cover fraud. He said that there may be many unreported cases as a result.
Mr. Brown briefly discussed the Board’s history of updating the Rules and the development of the Laws and Rules Committee.
Mr. Holmes had a question about the rules of integrity and objectivity applying to CPAs in private industry. He said that this was related to a recent case the BOACC considered. Mr. Pittioni stated that he will research the matter further.
- NEW BUSINESS
- Review calendar of meeting dates
Mr. Pittioni said that item A and item C are identical, so he will discuss both items at this time.
Mr. Pittioni reviewed the upcoming BOACC meeting dates and asked the BOACC its preference for an extended schedule. Mr. Pittioni stated that there are increased staff resources and few contested cases, which may mean larger caseloads coming BOACC’s way. Mr. Pittioni asked the BOACC about the possibility of having an extra meeting in order for the BOACC to hear additional cases.
Ms. Young and Ms. Nelson stated that having a two day meeting would be difficult. They stated that she would be in favor of extending the BOACC meeting day. Mr. Brown asked if this should take place in July. Mr. Pittioni said that it is possible, but may need to wait until September or November meetings.
Mr. Pittioni mentioned that some cases may be heard at the Board level only, in order to increase efficiency at the BOACC level. Mr. Holmes asked if it was possible to know which cases are heard at the Board only. Mr. Pittioni answered that the case docket may be discussed in executive session. Ms. Gahagan added that an additional column on the case docket can be added to track these cases. Mr. Brown briefly and generally discussed the type of cases heard at the previous Board meeting, and the actions taken by the Board on these cases. Mr. Brown and Mr. Pittioni explained that depending on the case, the Board may refer this cases to the BOACC for the BOACC’s review.
Mr. Brown suggested to Mr. Pittioni that if there is a long case list for the upcoming BOACC meeting, it may be more efficient to organize schedule of cases to be heard by topic: taxes, audit, etc. Mr. Pittioni noted that this may be possible, however, quorum of the BOACC members will also be needed.
- Discussion of appointing new members
Mr. Pittioni reported that Ms. Bridgham has fully retired and is no longer on any committees. Mr. Pittioni asked the BOACC that if they have any recommendations for new committee members to please let him know. There was some discussion by the BOACC members regarding the expertise required of new BOACC members. There was further discussion by BOACC members on the possibility of recruiting a BOACC member that does not work in public accounting.
Mr. Pittioni requested Board staff Mr. Parks to bring a roster of BOACC members with their respective areas of expertise to the next meeting to review
- Discussion of adding meeting dates to the schedule
This section was discussed in section A above.
- CONVENE EXECUTIVE SESSION [Pursuant to ORS 192.660(2)(f)]
At 9:03 am, Executive session was convened pursuant to ORS 192.660(2)(f), for the purpose of examining exempt public records. After the Executive session recessed, Public session was reconvened at 12:09 pm.
- COMMITTEE RECOMMENDATIONS
- Cases #14-026; 14-030; 14-031; 14-032; 14-033 and 14-035
Ms. Young noted that for those potential rule violations in the investigation report that BOACC took no action on, there may be action by the BOACC at a later date and those issues are not closed.
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for issuing a 1099-C Cancellation of Debt to an ex-employee without sufficient accounting records.
Discussion:None.
VOTE: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for making allegations of theft against employees who filed complaints without sufficient accounting records to support the transactions.
Discussion: None.
VOTE: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for making potentially misleading or false representations to the Board relating to firm registration issues.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for multiple instances of filing tax returns with the IRS and the Oregon Department of Revenue, which potentially contain false representation of employee’s PTIN numbers and respondent’s PTIN numbers.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for providing the Board potentially misleading or false representations relating to $395 the respondent was attempting to collect from a former employee.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for not providing her employees their final paychecks in a timely manner and failing to provide accounting records to support paying of paychecks on time as required by Oregon law.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for failing to disclose to the Tax Board the current professional complaints opened by the Oregon Board of Accountancy.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0010 (1) (b) Due Professional Care for multiple instances for failing to ask clients to sign form 8879 after the clients were provided with their completed tax return and prior to electronically filing said tax return. These include, but not limited to, the spouses of the respondent’s clients.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0009 (9) Notification of change of address, employer or assumed business name, for failing to disclose employment with Northwest Neurospine Institute.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0005 (2) Integrity and Objectivity for allowing one taxpayer to sign Form 8879 on behalf of their spouse.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (6)(b)(B) Board Communications and Investigations for multiple instances of providing tax returns to the Board that do not match tax returns filed with the Department of Revenue.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1)(a) Professional Competence for undertaking a tax practice without sufficient training or experience, which include, but not limited to the examples identified in the other recommendations.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (4) Public communications and advertising for using a name on the respondent’s business card which was different than the name on the respondent’s CPA license and was different than the name listed as the owner of the respondent’s firm with the Oregon Board of Accountancy and the Oregon Secretary of state.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0020 (1) Professional Misconduct for willful failure to file tax returns known to be required to be filed in the state of Oregon.
Discussion: None.
Vote: 5 ayes
Ms. Young reemphasized that for those concerns or rule violations that BOACC took no action, there may be action by the BOACC at a later date and the matter is not closed. Mr. Holmes asked for clarification on taking no action.
At 12:26 p.m., Public session was recessed.
- CONVENE EXECUTIVE SESSION [Pursuant to ORS 192.660(2)(f)]
Executive session was reconvened at 12:33 p.m. pursuant to ORS 192.660(2)(f), for the purpose of examining exempt public records. After the second Executive session concluded, Public session was reconvened again at 4:22 pm.
- COMMITTEE RECOMMENDATIONS (continued)
- Case #12-066
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0010 (1) General Standards – Due Professional Care related to the failure to obtain the sufficient evidential information in connection to the audits of internal controls and GAAP financial statements for the 2007 audit.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0010 (2) Auditing Standards for multiple instances related to internal controls and scope limitations.
Discussion: None.
Vote: 5 ayes
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is sufficientevidenceto make a preliminary finding of violation per OAR 801-030-0010 (3) Accounting Standards for multiple instances of issuing opinions on financial statements and internal controls.
Discussion: None.
Vote: 5 ayes
- Case #14-019
COMMITTEE ACTION: Moved by Mr. Holmes and carried to recommend that there is insufficientevidenceof violations per OAR 801-030-0345 (1); OAR 801-030-0020 (1); OAR 801-050-0020 (1); and OAR 801-050-0020 (4),
Discussion: None.
Vote: 5 ayes
- Case #12-066 (Continued)
Recommendation to the Board: Ms. Youngrecommended that there should be consideration for staff to follow up and obtain 2006 audit documentation and financial statements. Ms. Young recommended that the Board consider that the firm in question should receive some training in audit skepticism and auditing management representations, and sufficient and
relevant data in auditing internal controls. Mr. Holmes noted that the Board should consider than Jon Harder admitted to fraud of $120 million and that the financial statements were general purpose statements. The conduct was egregious due to reliance on statements by management.
- Cases #14-026; 14-030; 14-031; 14-032; 14-033 and 14-035 (continued)
Recommendation to the Board: Ms. Young recommended to the Board that the conduct was very egregious due to the body of conduct of the respondent. The Board should consider not only disciplinary action and compliance, but whether the individual should be allowed to be continued to practice in Oregon due to the lack of integrity, competence, and treatment of employees.
- ANNOUNCEMENTS AND ADJOURNMENT
Mr. Pittioni thanked the BOACC committee members for their hard work and dedication.
Chair Young adjourned the meeting at 4:32 pm.
BOACC Public Session MinutesApril 29, 2016Page 1 of 7