STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF ACCOUNTANCY, )

)

Petitioner, )

)

vs. ) CASE NO. 81-631

)

LESLIE H. ROTH, CPA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings, in Miami, Florida.

APPEARANCES

For Petitioner: Drucilla E. Bell, Esquire

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Leslie H. Roth, pro se

Post Office Box 9174

Pembroke Pines, Florida 33024

This cause came on to be heard on the administrative complaint filed by the Petitioner wherein it seeks to revoke, suspend the Respondent's Certified Public Accountant license, or take other disciplinary action against the Respondent as a licensee. The complaint charges that with regard to an unaudited financial statement dated June 30, 1978, prepared by the Respondent for Holiday Inn at Calder Race Course in Miami, that the notation at the bottom of each page indicated that year-end adjustments were needed, but the accountant's report did not disclose these. Also an operating lease was disclosed with annual payment terms included, but the aggregate minimum future lease payments were not included in the disclosure as required by Rule 21A-4.03, Florida Administrative Code (1978). This is an alleged violation of Section 473.251(c), Florida Statutes (1978), currently reenacted as Section 473.323(1)(g), Florida Statutes, as well as Sections 473.251(d), Florida Statutes (1978), and Section 473.251(d), Florida Statutes (1978), readopted as Section 473.323(1)(a), Florida Statutes (1979), in that the Respondent is allegedly guilty of violations of the provisions of that chapter or rules of the Board and has committed acts which render him unfit to associate with fair and honorable members of his profession.

With regard to Count Two of the Amended Administrative Complaint, the Respondent is charged with collecting fees from clients of a pubic accounting firm, Rachlin & Cohen, P.A. for which he had not performed services and for which fees were not due and owing him. This is charged to be a violation of

Rule 21A-7.01, Florida Administrative Code, in that the Respondent allegedly has committed an act discreditable to the profession of public accounting which in turn constitutes a violation of Section 473.323(1)(g) and (b), Florida Statutes (1979).

Count Three charges that the Respondent represented a client and its affiliated companies while that client was still the client of the Respondent's former employer, Rachlin & Cohen, which allegedly constitutes a violation of Rules 21A-7.02(11) and 21A-6.01, Florida Administrative Code (1978).

Count Four alleges that the Respondent failed to demonstrate to the Department and the Board that he had met the continuing education requirements imposed by Section 473.312, Florida Statutes (1979), and Rule 21A-33, Florida Administrative Code, as of December 31, 1979 and, therefore, that his license reverted to inactive status. The Petitioner then charges that the Respondent practiced public accounting with that license after that date and, therefore, has violated Section 473.322(1)(f), Florida Statutes (1979). Thus, the issue is whether the Respondent is guilty of violating these various standards of practice enunciated in the Amended Administrative Complaint.

The Petitioner presented five witnesses and two exhibits. The Respondent testified on his own behalf.

FINDINGS OF FACT

1. Leslie H. Roth is a licensed CPA in the State of Florida, holding License No. R0004593. He was employed by the CPA firm of Rachlin & Cohen from December 2, 1974, through August 26, 1977. During that period of employment he was paid a salary plus a commission based upon the number of clients he brought to the firm and the fees he generated. The Respondent left that firm on August 26, 1977, and became an employee of Holiday Inn at Calder Race Course in Miami. Upon leaving the firm of Rachlin & Cohen the Respondent signed acknowledgements disclosing the status of the clients' work to which he had been assigned and the related amount of money owed to the firm. When he left that firm, the firm owed him no additional commissions or salaries. The Respondent failed to remit to Rachlin & Cohen the fees collected from their clients for whom he had performed services and when Rachlin & Cohen attempted to collect those fees some of the clients claimed they had already paid the Respondent. Rachlin & Cohen, therefore, filed suit in circuit court and obtained a judgment against the Respondent in the amount of $550 representing the firm's fees collected by the Respondent.

   
   

2. In early 1978, while working as a CPA for Holiday Inn at Calder Race Course, the Respondent prepared some unaudited financial statements in order to help the business maintain or keep a loan with a financial institution. These unaudited financial statements are required to comply with applicable generally accepted accounting principles and auditing standards. They contained a technical deficiency because the Respondent failed to disclose an aggregate future minimum lease payment and a potential deficiency in that the notation that the statements were "before final year-end adjustments" did not disclose whether material adjustment needed to be made. The Respondent also was shown to have performed the service of filing a "1120-SK-1 form" for Pro-Management, Inc., while Pro-Management, Inc., was a client of Rachlin & Cohen. Filing s such a form is normally the duty of the regularly retained accounting firm for that company.

3. The Respondent's "reestablishment period" for his CPA license was 1977 through 1979. He was required to file yearly continuing professional education reports related to his reestablishment period. These were due by January 15, of each following year, reporting on his level of compliance with continuing professional education (CPE) requirements for the preceding year. In 1977, when the period started, the CPE requirements were 30 hours per year, with at least 8 hours of accounting and auditing. If not completed the first year and any time during the 3-year period, he would have to completed 120 hours of CPE courses, including at least 32 hours of accounting and auditing. In October, 1977, the law changed and licensees could choose to complete the old requirements or the new ones which were 24 hours per year including at least 64 hours of auditing and accounting, but licensees could not use a combination of those.

   
   

4. If a licensee files such a form substantially late it must be accompanied by a verification of attendance at the subject CPE courses. The CPA is also required to maintain documentation of CPE courses attended for 3 years following his reestablishment period. The Respondent filed a CPE education report for 1977 on January 1, 1978. It was reviewed and returned February 1, 1978, with a letter by the Board explaining that the Respondent had reported one course incorrectly for "accounting and auditing" when it was only half-approved for that category. He also was informed by the Board that he reported 7 hours of accounting and auditing credit for Dade County, Florida Institute of CPA Monthly Meetings, but with no dates and no titles of sessions attended. The Respondent returned the 1977 form to the Board's office January 7, 1980, along with the 1978-1979 CPE report forms, approximately 2 years late with regard to the 1977 form and 1 year late with regard to the 1978 reporting period.

   
   

5. The forms filed by the Respondent reflected that in 1977 he had obtained 22 hours of accounting and auditing and 34 hours total CPE. He still supplied no dates for the meetings of the Dade County Chapter of FICPA, nor had he apportioned hours properly. He reported 15 hours accounting and auditing and

   37 hours total CPE for 1878, but again he included FICPA monthly meetings for 4 hours of his accounting and auditing requirement and 4 hours for "other." Under the category "Accountants for Public Interest," he reported 3 hours accounting and auditing and 10 hours "other," but with no itemization of the programs attended on his 1979 form. The 1979 form was, however, timely filed. The hours reported by the Respondent which were verified still did not fulfill the continuing professional education requirements imposed by the Board for the years involved.

   
   

6. The staff of the Board attempted to notify the Respondent of the deficiencies in his reporting and requested verification of his courses attended. The Board received no response from the Respondent. In view of his lack of response and the deficiency in reporting CPE courses attended, the Continuing Education Committee recommended to the Board of Accountancy that the Respondent's license be reverted to inactive status. The Respondent was accordingly notified on March 1, 1980, that his continuing professional education appeared deficient and he was given 30 days to correct the situation. The Respondent did not respond and on May 1, 1980, he was informed by the Continuing Professional Education Committee that it would recommend to the Board that it relegate his license to inactive status. On July 30, 1980, the Respondent was sent another letter with essentially the same information giving him an additional period of time to resolve his difficulty. Finally, at the August, 1980, meeting of the Board of Accountancy the reversion to inactive status was accomplished. The Respondent's license has thus legally been inactive since August 20 of 1980.

7. Since May of 1980, to the date of the hearing, the Respondent has been employed by Gerson, Preston & Co., a CPA firm, where he has utilized his accounting skills and worked as a staff accountant. He has thus practiced as a CPA since August 20, 1980.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of these proceedings. Section 120.57(1), Florida Statutes.

   
   

9. The Petitioner has presented competent and substantial evidence to prove all violations alleged in the administrative complaint. In support of the allegations of Count One, the testimony of Harold Monk, a certified public accountant who has taught CPE courses and has been as investigator for the Board of Accountancy for approximately 4 years, established that he had reviewed the subject unaudited financial statements of the Holiday Inn at Calder Race Course and found the technical deficiency described above. Rule 21A-4.03, Florida Administrative Code (1977), readopted as 21A-22.03(1), Florida Administrative Code (1979), requires CPAs to disclose any departure from generally accepted accounting principles. The Respondent failed to do this by failing to state the aggregate minimum future lease payments required by the accounting principles incorporated in Chapter 21, Florida Administrative Code (otherwise known as FASB, 13 paragraph 23; AC Section 4053.023bii).

   
   

10. Section 473.323 provides as follows:

    
    

    1. The following acts constitute grounds for which the disciplinary actions in subsection (3) may be taken:

       1. Violation of any provision of s. 473.317, s. 455.227(1), or any other provision of this act:

          * * *

          1. Upon proof that the licensee is guilty of fraud or deceit, or of negligence, incompetency, or misconduct, in the practice of public accounting;

          2. Violation of any rule adopted pursuant to this act or chapter 455;

          3. Practicing on a revoked, suspended, or inactive license;

          * * *

          (3) When the board finds any licensee guilty of any of the grounds set forth in subsection (1), it may enter an order imposing one or

          more of the following penalties:

          1. Denial of an application for licensure.

          2. Revocation or suspension of a license.

          3. Imposition of an administrative fine not to exceed $1,000 for each count or separate offense.

          4. Issuance of a reprimand.

          5. Placement of the licensee on probation for a period of time and subject to such conditions as the board may specify, including requiring the licensee to attend

             continuing education courses or to work under the supervision of another licensee.

          6. Restriction of the authorized scope of practice by the certified public accountant.

          . . .

          
          

11. In filing the subject financial statements without properly disclosing year-end adjustments the Respondent has been shown to be guilty of a violation by his failure to follow generally accepted accounting principles and auditing standards incorporated in the Board's rules. This amounts to a violation of Section 473.251(c), Florida Statutes (1978), now adopted as Subsection (g) of the above authority, in that he committed wrongful acts while holding his certificate. This is a technical violation, however, and the adjustments involved in this charge were not shown to be material to the subject matter of the financial statement. Thus, this act alone does not render the Respondent unfit to associate with the fair and honorable members of the public accounting profession although he violated Section 473.323(1)(a) quoted above in that he has technically violated a rule of the Board.

    
    

12. With regard to the allegations in Count Two of the Administrative Complaint, the testimony of Mr. Safra, a certified public accountant and a member of the firm of Rachlin & Cohen, P.A, establishes that when the firm attempted to collect fees from their clients they were informed that the clients had paid those to the Respondent. This, coupled with the certified copy of the judgment of $550 in evidence clearly shows these fees were indeed due and owing to the firm and not the Respondent and that he had wrongfully collected them. Thus, the Respondent is guilty of a violation of Rule 21A-7.01, Florida Administrative Code (1978), by committing an act discreditable to the profession of public accounting which in turn is a violation of then Section 473.251(1)(c), (f), and (g), Florida Statutes (1978), now Section 473.323(1)(g), quoted above, in that he is guilty of fraudulent and wrongful acts committed in the course of his practice.

    
    

13. Count Three of the Administrative Complaint was also largely proven by the testimony of Mr. Safra. Thus, it was established in an unrefuted way that Pro-Management, Inc., was and continues to be a client of their firm and not the Respondent although the Respondent prepared the above-described form for that company. Such a service is normally the task of the certified public accounting firm retained by such a client and therefore, Mr. Roth was improperly performing accounting services for the client of another CPA firm, since the record conclusively shows that client relationship was not severed. The testimony of Mr. Roth, himself, establishes that at the time, he was solely employed by Holiday Inn at Calder Race Course rather than Pro-Management, Inc., but he believed them to have severed their relationship with Rachlin & Cohen. Mr. Safra's testimony establishes, however, that although the firm was concerned about the unpaid bill, that no steps had been taken by the firm or that client to terminate the accountant-client relationship and that client, Pro-Management, Inc., continues to be an accounting client of Rachlin & Cohen, P.A. Therefore, the Respondent has violated Rule 21A-6.01, Florida Administrative Code (1978), and 21A-7.01, Florida Administrative Code (1978), and the above statutory authority, specifically, Subsection (k) above.

    
    

14. The evidence that the Respondent failed to comply with the Board's continuing education requirements contained in Chapter 473 as well as Chapter 21A, Florida Administrative Code, is conclusive. Jean Feingold, the coordinator for continuing professional education for the Board of Accountancy since March 20, 1978, established that she is thoroughly acquainted with all continuing

    education requirements and that any reporting form received substantially late must be accompanied by verification of attendance at the subject courses. She ascertained and verified that the Respondent's CPE reports for 1977 filed at the beginning of 1978 were incomplete and failed to contain all required information regarding accounting and auditing credits. He was notified of this discrepancy by letter of February 1, 1978, but the Board received no further communication from him until January 7, 1980, when his forms for 1977, 1978 and 1979 were submitted to the Board. The Board at that point required verification of the tardy 1977 and 1978 CPE information, but the Respondent never replied to that request from the Board. The Board then made its own independent attempt to verify some of the FICPA courses with that state organization, but to no avail. There were many additional unsuccessful attempts to communicate with the Respondent culminating in the imposition of inactive status on the Respondent and his license. Since even the Respondent's own testimony establishes that after August 20, 1980, when his license became inactive, he continued to work for the accounting firm of Gerson, Preston and Company performing services as a certified public accountant, he violated the above authority in so representing himself. Although the Respondent remonstrated that he had received no notice of his inactive status from the Board, he presented no evidence to show that he ever informed the Board of any change of address nor otherwise explained his lack of communication with the Board for several years regarding the above- described continuing education requirements or his business location or activity. The record clearly establishes that the Respondent's license has been inactive since at least August, 1980, which fact Respondent should have been aware of. The Respondent has been and continues to practice as a CPA without an active license in violation of Section 473.322(1)(f), Florida Statutes (1979), as well as in violation of Subsections (1)(a) and (1)(i) of that section.

    
    

15. In summary, it must be concluded that the Respondent is guilty of the acts and omissions charged in the Administrative Complaint, although the errors in the financial statement are of a purely technical nature and do not reflect any intent to defraud or to deceive a client and thus with regard to that violation, no penalty is warranted.

RECOMMENDATION

Having considered the foregoing findings of fact, conclusions of law, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is

RECOMMENDED that the Respondent, Leslie H. Roth, be found guilty of the charges in the Administrative Complaint herein and that his License No. ROOO4593 be placed in a suspended status for 3 months from the date of the final order herein; that his licensure then be returned to active status, but that he be placed on probation for 3 years and be required to complete 120 hours of continuing professional education, including at least 32 hours of accounting and auditing and that he be fined the sum of $1,000.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 5th day of October, 1981.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1981.

COPIES FURNISHED:

Drucilla E. Bell, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Leslie H. Roth

Post Office Box 9174

Pembroke Pines, Florida 33024

Docket for Case No: 81-000631

Orders for Case No: 81-000631