Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Board of Accountancy was the state agency responsible for the certification and licensing of public accountants and the regulation of the public accounting profession in Florida. Respondent, Gerald E. Shaw, was licensed as a certified public accountant, (CPA), in Florida and operated a public accounting practice in Florida as Gerald E. Shaw, P.A. During the period between December 31, 1990 and April 20, 1991, Respondent was retained to audit the financial books and records of High Point of Fort Pierce Condominium Association Section I, Inc. His audit report and allied papers were submitted to the membership of the association by letter dated April 20, 1991. In his letter he indicated he had conducted his audit in accordance with generally accepted auditing standards, (GAAS), and he opined therein that the financial statements he prepared, "present fairly, in all material respects, the financial position of the [Association] as of December 31, 1990 and the results of its operations for the year then ended in conformity with generally accepted accounting principles." At some point thereafter, the Department/Board of Accountancy received the financial statements prepared by the Respondent which contained apparent deficiencies on the face, particularly the lack of adequate note disclosure. Thomas F. Reilly, C.P.A., an expert in public accounting and an individual who had, on previous occasions, conducted similar investigations for the Board of Accountancy, was retained to conduct an investigation to ascertain the facts related to the instant financial statements prepared by the Respondent. By letter dated October 4, 1991, the Department notified Respondent that the investigation would take place and the subject matter thereof. Mr. Reilly thereafter met with the Respondent and discussed the financial statements and work papers in issue with him. Though Respondent was initially reluctant to participate in the investigative process unless he was provided, ahead of time, with a list of the reported deficiencies, he later agreed to a review of his work product. When he had completed his investigation, Mr. Reilly prepared a report in which he stated his opinions regarding the sufficiency of the financial statement prepared by Respondent which he determined to be inadequate. His opinion was based on his findings that there were a significant number of departures from the accounting standards called for in Statement of Accounting Standards, (SAS), 58 developed and promulgated by the American Institute of Certified Public Accountants, (AICPA). Mr. Reilly also found there were no references in the Financial Statement prepared by Respondent to footnotes as required by Accounting Principles Board, (APB), Statement 4. There also was no summary of significant accounting policies as required by APB Statement 22. All of this was determined from the hierarchy of accepted auditing principles as found in SAS 5. APB Statement 22 is at the top of the hierarchy and indicates that a failure to follow generally accepted accounting principles is a significant deviation. Among the deviations Mr. Reilly found were included: Cash in reserve funds was incorrectly referred to as a current asset. Reserve funds should not be considered current assets. (See APB Statement 43). Leases should be disclosed and here these were significant. (See FASB 13, Section L-10). Related party disclosures are not mentioned in the notes as they should be. Here there were 3 separate condominium associations and this financial statement related to only one of them. Since the 3 associations were related, however, the statement should have referred to the others within the complex shared by them all. Because of their interrelationship, disclosure was important. There was no allocation of expenses among the three different associations. There were some invoices paid which may have been allocated among the 3 associations and this was not discussed. It could be significant. Rule 7D-23, F.A.C., requires disclosure of common property and the costs of repair thereof. This requires reserves be maintained for future repair, and the method of allocation, or the waiver thereof, should be explained. This can be very significant, and it was not done by Respondent here. Among the work papers submitted some things which should have been shown were not in evidence. These included: A written audit program should have outlined as required by SAS 22 and SAS 41. This is very significant. A client representation letter should have been obtained as called for in SAS 19. Without it, a limitation on the audit is imposed. This is very significant. A review of related party transactions was not shown to have been done as required by SAS 45. Because of the related organi- zations, this was a material deviation. There appeared to be no review of the internal control structure, (policies, pro- ceedings, etc. relating to the accounting practices of the organization). The auditor should look at this and understand it so he can plan his audit, as required by SAS 55. Here, the audit report did not show it was done and this is significant. A preliminary judgement of materiality levels, as required by SAS 47 was not done. There was no showing that planning had been done as required by SAS 22 and 47, or analytical procedures used in planning the nature, timing and extent of other audit procedures, as required by SAS 56. Each of these alone might not be significant, but taken together, they all are significant. There appeared to be no consideration given to applicable assertions in develop- ing audit objectives as required by SAS 31. An attorney's letter was not in the file as required since the books showed an attorney had been used during the year. This is called for by SAS 12 and is used to check on the status of the legal work and any potential liability of the client. No check was made to see if any test- ing had been done to insure the association was in compliance with Rule 7D-23, FAC. No inquiry was made to see if the client was in compliance with the laws and regulations of the state in general, as called for by SAS 63. The work papers contained a lot of unnecessary bills and statements not norm- ally included. These should not have been there in that form without a showing they were used in the audit. (See SAS 41) There was no showing that any tests were done to insure a correct expense all- ocation among the 3 entities. There was no reporting disclosure checklist. While not required, such a list is common practice to insure all required disclosures pertinent to condo associations were made. The failure to do this is, in Reilly's opinion, practice below commonly accepted standards. The checklists are available from many sources readily access- ible to accountants. There is nothing secret or exclusive about them. Accounting competency standards are found in Rule 21A-22.001 - 21A- 22.003, F.A.C. In Mr. Reilly's opinion, based on, among other discrepancies, the matters outlined above, Respondent deviated from these standards to a point below the standard for a reasonably prudent certified public accountant. He defines "generally accepted accounting practices", (GAAP), as a source of knowledge that exists as defined within the parameters of SAS 5. Certified public accountants keep current in literature pertinent to their professional practice by attendance at continuing education courses, conferences, by performing quality and peer reviews, by doing investigations for the Board of Accountancy, and by networking with other CPA's. These are, of course, not the sole methods of maintaining currency but the ones used mostly by active practitioners, to the best of Mr. Reilly's knowledge. In his report of investigation, Mr. Reilly notes that Respondent is not a member of either the Florida Institute of Certified Public Accountants or the American Institute of Certified Public Accountants and does not participate in the peer review or quality review programs of either organization. His continuing professional education, as reported by him, consisted mainly of self study programs published by Accounting Publications, Inc., and though his practice is related, to a substantial degree to condominium associations, he has not attended any recognized continuing professional education course in that area. Mr. Felsing, also a CPA, heard Mr. Reilly's testimony at the hearing and reviewed his report of investigation. He agrees with Mr. Reilly concerning Respondent's report and he also considers Respondent's departure from generally accepted accounting standards to be significant. He notes that the Respondent here expressed a "clean" opinion regarding the status of the association which he should not have done because of the deficiencies in his work. Mr. Felsing did not review Respondent's work papers, but based on his understanding of Reilly's testimony, he identified what he considers to be significant departures from standard. These include: There should have been a work program developed as required by SAS 22. This is very significant. There should have been a client representation letter as required by SAS 19. This is significant because the failure to have it requires a qualification of the report. SAS 45 requires a review of all related parties and this was not done here even though related parties existed. Respondent's failure to document his thought processes on understanding on internal control standards is indicative of Respondent's attitude toward those standards. Felsing generally concurs with the opinions given by Mr. Reilly right down the line. He concludes that the Respondent's demonstrated lack of planning raises a question as to the effectiveness of the audit since one cannot determine if all required tasks were done. Generally accepted accounting standards require the use of analytical procedures as a valuable tool. Failure to use them would be a significant departure from accepted standards since they all relate to the planning of the engagement and without documentation, a reviewer of the audit report cannot tell if the required tasks were performed. The mere inclusion of client documents in the work papers is not acceptable proof that the work was done. The significance of the disclosure checklist lies in the fact that it is the only way to insure that all required items are included in the financial statement. After a review of all the evidence available to him, Mr. Felsing concluded that Respondent failed to use due diligence as a CPA in this audit. In the aggregate, the information available shows Respondent was either not aware of or chose to disregard the applicable professional standards pertinent here. In his defense against the charge of failing to conform to generally accepting accounting standards, Respondent refers to SAS 5 and AU 411.02 and 411.05. These authorities basically outline the standards against which accounting practice is measured. He notes that the term, "generally accepted accounting practices" includes not only pronouncements but also concept statements of the Financial Accounting Standards Board and "broad conventions and rules" which are not pronouncements. Respondent urges that a practitioner has to follow generally accepted accounting practices when performing an audit. There are two subgroups of these practices which pertain to (1) profit and nonprofit organizations, and (2) governmental entities. According to the AICPA interpretation of Conduct Rule #3, there are reasons to depart from GAAP when appropriate. One is the evolution of a new form of business transaction and another is new legislation requiring a departure. In either case, a certified public accountant might legitimately deviate from GAAP. Since, he claims, GAAP is somewhat fluid in application, the auditor has the responsibility and the right not to act as a robot but to see that the audit properly serves the purpose of the entity being audited so as to promote decision making and to identify net income and net worth. Respondent asserts that GAAP are not an end in themselves but a tool in making business decisions. The usefulness of the financial information should be the primary quality to be sought. Usefulness deals with relevance and reliability. In the instant case, Respondent claims that the concept of condominium ownership of realty is so new and so different, and governed by such new legislation that GAAP which have been in use over the past 10 or 15 years and developed to deal with the condominium association are not pertinent. Here, he claims, he had to modify. His position, however, is not well taken. The audit report in issue was to be read by the condominium owners who are interested in the stewardship of the condominium board and the net worth of the association. Respondent contends they are not interested in profit or tradable net worth. A condominium association has a clear and stated purpose which is the management and maintenance of the condominium property. Therefore, an accountant who goes into an audit of a condominium association without having these concepts in his mind is, in his opinion, not doing a good job. Turning to the specifics of the allegations made by Petitioner's witnesses and in the report of investigation, while he accepts some of the comments as valid so far as they allege a particular action, he also claims, in those cases, that the alleged inadequacy has no significant effect on the financial statements. For example, on page C-1 of Mr. Reilly's report, under the heading, Financial Statements, he refers to audits (plural) when only one year is reported on. On the other hand, Respondent disagrees with Reilly's comments regarding an "unorthodox" practice of presenting separate operating statements for the general and reserve funds. Respondent claims there is no definition of "unorthodoxy" for a condominium association and, as evidenced by the 1990 budget of the association, there were more than one reserve account indicated on the financial statement. In his opinion, the accountant should honor that segregation of funds. Respondent agrees that his financial statements do not contain a general reference to the accompanying notes, but he cannot see where any damage was done to a reader of those statements because the footnotes were there without a separate reference. He disagrees that it is generally accepted to record changes in financial position as a basic part of the financial statement when dealing with condominium associations. They are "new animals" and as the accountant, he has the right, he claims, to decide if that information is necessary to the reader of the financial statement. Here, he concluded it was not and, in fact, could be a source of confusion. Respondent also disagrees the Reilly's comment regarding the information regarding reserve funds. He believes that if the financial reporter feels there is a need for segregation of funds, he has to present that segregation in detail. In this case, Respondent believes there is no orthodoxy for condominium reporting and it would be useful to the reader of the statement to see total assessments from all sources so as to determine the justification for his monthly assessment. He also disagrees with Reilly's conclusion that the financial statements do not contain a summary of significant accounting policies. There are, he claims, no alternatives to the way he presented them. Respondent has difficulty responding to Reilly's seventh assertion which is to the effect that cash in reserve funds was inappropriately reflected as a current asset since the reserves are long term. Mr. Shaw believes that if the cash is there, it is available to the board whether it is used or not. This appears to be a matter of semantics and not an issue particularly related to the accounting for condominium associations. While it is true the reserve asset is current and available, it is a dedicated asset and the better accepted accounting practice, as indicated by both experts, is to treat it more as a long term asset. It is so found. Respondent also disagrees with Reilly's conclusion that his terminology in Sections 2 and 3 of the balance sheet is unorthodox. He asserts that those sections do not have to be defined anywhere in the financial statements and are not related to Section 1. He contends that any reader of the audit report would know what is what and be able to understand it. With regard to the "missing" note disclosures, he disagrees with all allegations. He claims that disclosures under FASB #13 and #96 clearly do not apply to condominium associations but relate to investor owned leaseholds. Review of the pertinent bulletin does not necessarily support Respondent's position. He also claims that since there are no related parties none need be disclosed as regards the property management company or the other Sections. The same, he contends, relates to disclosure of potential allocation of expense between the three associations in the same complex. He also does not accept the need to disclose the allocation of interest income between funds utilized by the association. As to disclosures related to reserves and the funding for major repairs and replacements, he contends there is no GAAP that requires this disclosure. Only the state requires it. If a practice is called for in either a statute or rule governing a business activity, whether the profession agrees or not, that requirement must be met and one who fails to do so omits at his peril. In general, those things omitted from his audit, such as a cash flow statement, were not requested by the client, he claims. Had he been asked for them, he would have provided them. Respondent also seeks to rebut some of Mr. Reilly's comments regarding his work papers. He has no complaint with the first two which are not critical of his audit, and he admits he may be in violation of GAAP with regard to Reilly's finding that certain required documentation was not included therewith. However, if, as he alleged, the financial statement conforms to GAAP, there is no harm done when the supporting work papers are not exactly as they should be. He contends, as well, that several, such as SAS #22 which refers to assistants, do not apply. Admitting to a violation of SAS #19 which calls for a client representation letter, he claims to have cured that defect by subsequently getting one and thereafter saw no reason to change the financial statement. Again, as with his response to the complaints regarding the financial statement, he claims any alleged failure regarding related parties is invalid since, he asserts, there are none. With regard to the remaining alleged defects in the supporting documentation to the work papers, he claims there was a search for unrecorded liabilities but because there was no mention made of it, Reilly could not tell this from the documents. Admitting there was no documentation regarding understanding of the internal control structure, as required by SAS #55, Respondent claims he understood it. He alleges he did accomplish an assessment of control risk as required by SAS #55 but admits there is no record of it in the work papers. The preliminary judgement of materiality levels, planning, and analytical procedures in planning the nature, timing and extent of other audit procedures, as required by SAS #'s 22,47 and 56 were all accomplished, he claims, but admits they were not included in the work papers. He also admits he did not get an attorney's letter and that this is a violation. However, he claims he did test to determine if the association was in compliance with pertinent statutes and rules, but it was not written down in the work papers, and he claims that confirmation of accounts receivable was not necessary because there were none except from Sections 2 and 3, which he did verify. In this latter assertion, it appears he was correct. Mr. Shaw refers to allegations 4 - 6 regarding work papers as mere statements of fact with which he takes no issue. A closer look at the report, however, reveals that numerous omissions were noted here as well. He admits that a financial statement reporting checklist was not in evidence but relates he deemed it not necessary. Mr. Reilly disagreed and his opinion is more supportable. There is little to disagree with in Mr. Reilly's item 8 under work papers when he asserts that the omission of an overall index of the work papers made them difficult to review and void of audit methodology. Taken together, the evidence demonstrates that Respondent's audit did not sufficiently conform to GAAP and was less than required under the circumstances.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is recommended that a Final Order be entered in this case placing Respondent, Gerald E. Shaw's, license as a certified public accountant in Florida on probation for a period of three years under such terms and conditions relating to practice and continuing education as are deemed appropriate by the Board of Accountancy. RECOMMENDED this 12th day of October, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of October, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-3420 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of fact submitted by the parties to this case. FOR THE PETITIONER: Accepted and incorporated herein except as they relate to the treatment of reserve accounts as long term assets. FOR THE RESPONDENT: None submitted. COPIES FURNISHED: Charles F. Tunnicliff, Esquire Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Gerald E. Shaw 10780 South US 1 Port St. Lucie, Florida 34952 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Martha Willis Executive Director Department of Professional Regulation/Board of Accountancy Suite 16 4001 Northwest 43rd Street Gainesville, Florida 32606
The Issue Whether Respondents violated the statutes and rules alleged in the Second Amended Administrative Complaint; and, if so, what is the appropriate penalty to be imposed against Respondents.
Findings Of Fact OFR is the state agency charged with administering and enforcing chapter 560, Florida Statutes, including part II related to money services businesses. At all times material hereto, Payservices has been a foreign corporation and part II licensee pursuant to chapter 560, specifically a "money services business," as defined in section 560.102(22), and "money transmitter," as defined in section 560.102(23).4/ At all times material hereto, Mr. Danenberg has been the chief executive officer, compliance officer, and an owner of Payservices. As such, Mr. Danenberg is an "affiliated party" and a "responsible person" as defined in sections 560.103(1) and 560.103(33). Count I Licensees, such as Payservices, are required to annually file a financial audit report within 120 days after the end of the licensee's fiscal year. The financial audit report is prepared by a certified public accountant and is used to demonstrate to OFR that the licensee has the financial health to conduct its business and transmit funds within the State of Florida. Payservices' fiscal year ends December 31st. Respondents were required to provide Payservices' 2016 financial audit report to OFR by no later than May 1, 2017. On December 20, 2017, William C. Morin, Jr., OFR's Chief of the Bureau of Registration, contacted Payservices by email with regard to Payservices' failure to timely file a financial audit report within 120 days after the 2016 fiscal year ended. Mr. Danenberg responded by email that same day, telling Mr. Morin that Payservices' accountant had prepared a financial audit report "many months ago," and that it was his "impression" that it had been uploaded to the REAL system "at some point when we filed the quarterly reports." Mr. Danenberg attached to his December 20, 2017, email what OFR accepted as the financial audit report that same day. Notably, the document indicated it was prepared by a certified public accountant on June 15, 2017, after the May 1, 2017, deadline. In any event, Mr. Morin reviewed the REAL system regarding Payservices and determined there were no problems with the REAL system's ability to accept uploaded documents. Mr. Morin testified that he could see on the REAL system that Payservices successfully uploaded a quarterly report and Security Device Calculation Form on January 26, 2017, which created a transaction number. Mr. Morin also observed that Payservices started to upload its financial audit report, which would create a transaction number, but no financial audit report was actually attached and uploaded to the REAL system on January 26, 2017, under that transaction number. According to Mr. Morin, Payservices may have attempted to start to file a financial audit report on January 26, 2017, but it did not complete the transaction because no financial audit report was attached. At hearing, Mr. Morin acknowledged that: "When I looked at the Financial Audit Report transaction, nothing was attached. And I also know that the functionality of the REAL system will kind of allow for the transaction to be completed and nothing attached." Tr. p. 100. Mr. Morin testified that Mr. Danenberg was cooperative when he was contacted on Decemeber 20, 2017, and submitted the financial audit report. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not submit their financial audit report to OFR until December 20, 2017, almost eight months after the May 1, 2017, deadline. Count II Licensees, such as Payservices, are required to annually file Form OFR-560-07, Security Device Calculation Form, by January 31st of each calendar year for the preceding calendar year. The Security Device Calculation Form requires licensees to report to OFR the dollar amount of transactions with Florida consumers. The dollar amount of transactions identified in the form is then utilized by OFR to determine if additional collateral is necessary to protect Florida consumers in the event a claim is made against the collateral for monies that were not properly transmitted by the licensee. Andrew Grosmaire, OFR's Chief of Enforcement in the Division of Consumer Finance, acknowledged at hearing that a licensee has 60 days to amend the face value of its surety bond, should an increase be required, and that at all times material hereto, the value of Payservices' surety bond has been correct for the minimum amount required. Nevertheless, Mr. Morin testified that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. Count III Licensees, such as Payservices, are required to update information contained in an initial application form, or any amendment to such application, within 30 days after the change is effective. In Payservices' initial application dated September 25, 2015, Respondents identified Corporate Access, Inc., as its registered agent with an address for service of process at 236 East 6th Avenue, Tallahassee, Florida 32303. According to the Department of State, Division of Corporation's records, on January 10, 2017, Mr. Danenberg was appointed as Payservices' registered agent with a new address for service of process at 300 West Palmetto Park Road, A210, Boca Raton, Florida 33432. Respondents filed an amended license application with OFR on August 28, 2017, which still listed Corporate Access, Inc., as the registered agent for service of process. On February 26, 2018, Respondents amended their registered agent information with the Department of State listing a new address for Mr. Danenberg at 14061 Pacific Pointe Place, No. 204, Delray Beach, Florida 33484. Mr. Morin testified that at no time have Respondents updated their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.5/ Mr. Morin and Mr. Grosmaire testified that the reason a licensee needs to update a change in the registered agent's name and address is so that OFR may effectuate service of process against the licensee. Yet, Mr. Grosmaire acknowledged that OFR has access to the Division of Corporation's records. Nevertheless, the persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not update their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that OFR impose an administrative fine against Respondents in the amount of $6,000. DONE AND ENTERED this 16th day of December, 2019, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of December, 2019.
The Issue The issue in these consolidated cases is whether disciplinary action should be taken against Respondent's license to practice as a certified public accountant in the state of Florida based upon the alleged violations of Chapter 473, Florida Statutes, set forth in the Amended Administrative Complaints filed by Petitioner.
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made: At all times pertinent to these proceedings, Respondent was licensed to practice as a certified public accountant ("CPA") in the state of Florida, having been issued license number AC0001638. Respondent's most recent business address was 224 North Federal Highway, Suite #4, Fort Lauderdale, Florida 33301. Petitioner has presented evidence of a number of Final Orders entered by the Florida Board of Accountancy (the "Board") against Respondent as a result of prior disciplinary action initiated by Petitioner. While the records presented are somewhat confusing and bear several different case numbers, it appears that, as a result of the various cases, Respondent has been on probation for approximately the last 12 years. According to the records presented, the first action taken against Respondent's license is reflected in a Final Order dated December 31, 1981 and filed on February 8, 1982 in DPR Case Number 0000499. That Final Order indicates that a stipulation executed by Respondent "as to facts, law and discipline" was accepted by the Board "with no changes." The stipulation referenced in that Final Order was not included with the exhibits entered into evidence in this proceeding. Thus, the "facts, law and discipline" are not of record in this case. Next, the Board entered a Final Order dated May 11, 1982 and filed on May 17, 1982 in DPR Case Numbers 16369, 16370 and 15399 imposing a $1,000 fine against Respondent and suspending his license for eighteen (18) months. An Amended Final Order dated September 3, 1982 was filed in DPR Case Numbers 16369, 16370 and 15399 on September 15, 1982. That Amended Final Order accepted a signed stipulation dated July 30, 1982 and modified the Final Order entered on May 11, 1982. In lieu of the fine and suspension imposed in the May 11 Final Order, the Amended Final Order placed Respondent on probation for five years with a requirement for a review of Respondent's practice at the end of each year by a CPA selected by the Department at Respondent's expense. The independent certified public accountant was supposed to submit written and oral reports to the Board and the Department regarding Respondent's compliance with the applicable statutes and rules governing the accounting profession. The Stipulation which was incorporated into the Amended Final Order specifically required Respondent to comply "with all provisions of Chapter 455 and 473, Florida Statutes, and the rules promulgated pursuant thereto." The Stipulation provided in part as follows: The Board shall determine at a public hearing whether [Respondent] has complied with Chapters 455 and 473, F.S. and the rules promulgated thereto. The Board may restrict or prohibit [Respondent's] practice of public accountancy during his period of probation as it deems necessary to protect the public safety and welfare. It is clearly understood and agreed that, in the event the DEPARTMENT, the BOARD or the BOARD'S Probable Cause Panel find sufficient evidence to believe reasonable cause exists that [Respondent] has violated any of the conditions of probation as outlined above, a notice of said violation shall be sent to [Respondent], by certified mail, setting forth the nature of the alleged violation and an emergency hearing will be held by the BOARD or the BOARD'S Probable Cause Panel, and upon a find [sic] of probable cause, [Respondent's] probation may be vacated and his license to practice accountancy in the State of Florida, subject to automatic suspension, with further disciplinary proceedings, pursuant to Chapters 455 and 473, F.S. If Respondent has not complied with all the terms and conditions of this joint stipulation and final order of the BOARD, the BOARD shall enter an Order imposing such further terms and conditions of probation pursuant to the statutory powers set forth in 473.323(1)(3), F.S., and shall further cause said matter to be referred to the BOARD'S Probable Cause Panel or such other jurisdictional authority as may be established for purposes of determining probable cause and initiating further administrative and/or judicial action against the Respondent. * * * [Respondent] expressly waives all further procedural steps and expressly waives all rights to seek judicial review of, or to otherwise challenge or contest the validity of a joint stipulation of facts, conclusions of law and imposition of discipline, and the final order of the BOARD incorporating said stipulation. At a meeting on January 21, 1985, the Florida Board of Accountancy reviewed a report from the consultant hired to conduct the inspection and review of Respondent's public accountancy practice in accordance with the terms of the Amended Final Order entered on September 15, 1982. Based upon its review of the consultant's report, the Board imposed an additional condition of probation that all audits, reviews and compilations prepared by Respondent were to be reviewed prior to their issuance by a CPA selected by Respondent at Respondent's expense. This additional aspect of Respondent's probation was incorporated in a Final Order dated February 15, 1985 and entered on February 28, 1985 in DPR Case Number 0016369. In an Administrative Complaint dated December 4, 1985, Petitioner charged Respondent with violating the terms of his probation by issuing compilations without prior review by another CPA. This Administrative Complaint was assigned DPR Case Number 0063064. As reflected in a Final Order dated February 23, 1987 and filed on March 10, 1987 in DPR Case Number 0063064, Respondent's probation was extended until September 1988 based upon a signed Stipulation dated November 16, 1986 which was accepted by the Board during its meeting on January 30, 1987. As a result of the March 10, 1987 Final Order extending Respondent's probation, Respondent was required to continue to obtain review and approval by an independent CPA prior to issuance of any audited financial statements, reviewed financial statements and compiled financial statements and related accountant's reports. In an Administrative Complaint dated December 7, 1989 in DPR Case Number 0063064, Petitioner charged Respondent with violating Section 473.323(1)(g), Florida Statutes, as a result of his issuance of financial statements without prior review by a CPA as required by the previous Final Orders entered against Respondent. The Complaint did not specify any date(s) or specific financial statements involved. At a meeting on February 22, 1990, the Board accepted a Counter- Settlement Stipulation signed by Respondent on March 26, 1990 in Case Number 0063064. The Board entered a Final Order dated April 4, 1990 and filed on April 10, 1990 confirming its acceptance of the Counter-Stipulation. 2/ The Counter- Settlement Stipulation incorporated in the April 1990 Final Order extended Respondent's probation "until the terms of probation have been met." The terms of probation were stated to be: That the Respondent shall not violate the provisions of Chapters 455 or 473, Florida Statutes or the rules promulgated pursuant thereto or the terms and conditions of this joint stipulation. A Department of Professional Regulation Certified Public Accountant consultant shall interview the Respondent's clients to determine the type of work product they are receiving from the Respondent. A Department of Professional Regulation Certified Public Accountant Consultant shall conduct a review of the Respondent's tax practice along with work papers at the Respondent's expense. The Counter-Stipulation further provided that: Respondent and the Department fully understand that this Stipulation, and the subsequent Final Order incorporating same, will not in any way preclude additional proceedings by the Board and/or Department against the Respondent for acts or omissions not specifically detailed in the investigative findings of the Department upon which a finding of probable cause was made. Respondent and the Department expressly waive all further procedural steps, and expressively waives [sic] all rights to seek judicial review of or to otherwise challenge or contest the validity of the joint stipulation and the Final Order of the Board, if said stipulation is accepted by the Board and incorporated in the Final Order.... In early 1991, Marlyn Felsing, a CPA retained as a consultant to conduct a review of Respondent's work pursuant to the terms of his probation, met with Respondent and reviewed financial statements, work papers and various tax returns prepared by Respondent for his clients. Felsing reviewed the financial statements and/or business tax returns for approximately four of Respondent's business clients and reviewed the personal income tax returns for approximately three of Respondent's clients who were business owners. He also reviewed all of the related work papers and discussed his review with Respondent. Felsing prepared a report dated April 23, 1991 detailing several problems and deficiencies he found during his review. A copy of Felsing's report was offered into evidence in this case and he testified at the hearing regarding many of those findings. This evidence was offered in support of the charges in the First DOAH Complaint (DOAH Case Number 92-3421) as amended. Neither Felsing's report nor any of his findings are specifically alleged in the First DOAH Complaint. That Complaint referenced a probation report which "revealed deficiencies which were brought before the Probable Cause Panel, and it was determined that Respondent had violated the terms of the Final Order." As noted in the Preliminary Statement above, the First DOAH Complaint was filed on January 23, 1992. As reflected in a Final Order dated June 19, 1991, and filed on July 1, 1991 in DPR Case Number 0063064, the Board reviewed a probation report during its meeting on May 21, 1991 and approved a settlement stipulation extending the probation imposed by the April 4, 1990 Final Order for a period of one (1) year. The settlement stipulation referenced in this July 1, 1991 Order has not been offered into evidence in this proceeding. As best can be determined from the evidence presented in this case, the Final Order entered in DPR Case Number 0063064 on July 1, 1991, was entered after review of the probation report prepared by Marlyn Felsing on April 23, 1991. Thus, it appears that the Board has already taken final action with respect to the deficiencies found in Felsing's report. During the Board Meeting on May 21, 1991, the Board also considered whether disciplinary action should be taken against Respondent with respect to another Administrative Complaint filed against Respondent on January 7, 1991. That new Administrative Complaint was assigned DPR Case Number 95979 and contained allegations that Respondent "was associated with personal financial statements for Michael Raybeck which did not meet the appropriate standards." As reflected in a Final Order dated June 19, 1991 and filed on July 1, 1991 in DPR Case Number 95979, the Board during its May 21, 1991 meeting accepted a settlement stipulation signed by Respondent on April 15, 1991. In that settlement stipulation, Respondent admitted the allegations in the Administrative Complaint in DPR Case Number 95979. The Settlement Stipulation provided as follows: * * * Stipulated Disposition 2. Respondent's license to practice public accounting is currently on probation in case number 63064. Probation in this case shall run concurrently with the probation in case number 63064. The same CPA consultant who is assigned to review the Respondent's practice in Case Number 63064 shall also review the personal financial statements the Respondent's office prepares. The consultant shall also review the Respondent's records to determine whether he is accepting commissions. These additional terms shall also be paid for by the Respondent. * * * 5. Respondent and the Department fully under- stand that this Stipulation, and the subsequent Final Order incorporating same, will not in any way preclude additional proceedings by the Board and/or Department against the Respondent for acts or omissions not specifically detained [sic] in the investigative findings of the Department upon which a finding of probable cause was made. * * * 8. This Settlement Stipulation is [sic] an admission of any liability on behalf of the Respondent and is being entered into merely to resolve a dispute. It shall not be admissible in any court of law or any subsequent adminis- trative proceeding for any purpose. As reflected in an Order dated September 29, 1992 and filed on September 30, 1992 in DPR Case Number 90-95979, the Board reviewed a probation report during its September 24, 1992 meeting and determined "that the probation imposed upon Respondent by the Final Order dated July 1, 1991, shall be extended and/or modified as follows: extend probation and defer action until Case Number 90-13254 is resolved." Case Number 90-13254 is the Second DOAH Complaint, which was filed on July 6, 1992 (DOAH Case Number 92-5696). The Second DOAH Complaint includes specific allegations against Respondent based upon his purported preparation of misleading financial statements for American British Enterprises, Inc. and Federal Restaurants, Inc. The Second DOAH Complaint The evidence presented in this case established that Respondent provided a number of accounting services to American British Enterprises, Inc. and Federal Restaurants, Inc. The exact nature and scope of the services provided by Respondent are not entirely clear. Respondent's records of his engagement include a balance sheet of Federal Restaurants as of August 17, 1987; Consolidated Financial Statements of American British Enterprises, Inc. as of August 25, 1987; Interim Compiled Financial Statements, American British Enterprises, March 31, 1988; Financial Statements of American British Enterprises, Inc. November 30, 1988; and Financial Statements of American British Enterprises, Inc., December 31, 1988. The Second DOAH Complaint, as amended, alleges that the financial statements referenced in paragraph 19 above were included in due diligence packages for American British Enterprises and were distributed to broker- dealers. No persuasive evidence was presented regarding any such distribution. The Second DOAH Complaint also alleges that "Respondent distributed misleading financial statements to brokers with the purpose of driving up the price of the stock so they could sell shares they controlled at a profit." No evidence was presented to support this allegation. Respondent's counsel suggested that all of the financial statements in question were simply drafts and were not intended to be issued. The evidence established that Respondent executed a letter in connection with the August 17, 1987 Balance Sheet of Federal Restaurants which provided as follows: I have examined the accompanying Balance Sheet of Federal Restaurants, Inc., as of August 17, 1987 whose sole Assets are Cash and [sic] Purchase Deposit. My examination was made in accordance with standards established by the American Institute of Certified Public Accountants and accordingly, included such procedures as I considered necessary in the circumstances. In my opinion the enclosed Balance Sheet represents the financial position of Federal Restaurants, Inc., as of August 17, 1987 in accordance with generally accepted accounting principals. Similarly, Respondent's records include a signed letter to the Board of Directors of American British Enterprises in connection with the August 28, 1987 Consolidated Balance Sheet. That letter provides that Respondent conducted an examination "in accordance with generally accepted auditing standards and accordingly, included such tests of the accounting records and such other auditing procedures as I considered necessary in the circumstances." The letter further opines that the financial statements "present fairly the Consolidated Financial Position...[of the companies] in conformity with generally accepted accounting principals." Respondent's records also include a signed letter regarding both the November, 1988 and December, 1988 Financial Statements for American British Enterprises indicating that Respondent had conducted an audit in accordance with generally accepted auditing standards and that, in his opinion, the financial statements "present fairly, in all material respects, the financial position" of the company as of the stated date. There is no indication on any of these financial statements that they were drafts that were not to be issued. Aside from the letters noted in paragraph 22, the only evidence presented that any of the financial statements listed in paragraph 19 above were issued was the testimony of one of Petitioner's experts who suggested that the statements had to have been issued since they were found in the SEC's files. However, no direct evidence was presented to establish that any investors or potential investors received the financial statements. Moreover, no evidence was presented that any such investors suffered a loss as a result of their reliance upon the financial statements. Certified public accountants are required to utilize specific guidelines in the performance of accounting services. Those guidelines are codified in the Statements on Standards for Accounting and Review Services ("SSARS"). The failure to abide by the SSARS guidelines constitutes performance below acceptable accounting standards. Petitioner has presented testimony from two experts regarding the deficiencies in the various financial statements referenced in paragraph 19 above. Many of the problems cited by Petitioner's experts relate to alleged deficiencies in Respondent's work papers. Respondent's expert has challenged some of those alleged deficiencies. Because the work papers have not been offered into evidence, it is impossible to resolve some of the conflicts in the experts' opinions. Nonetheless, the evidence was sufficient to clearly and convincingly demonstrate that Respondent's work was not in accordance with generally accepted accounting principals in several respects and the financial reports identified in paragraph 19 failed to comply with the SSARS in several ways. The August 17, 1987 balance sheet of Federal Restaurants indicates that the only assets of the company were cash and a purchase deposit on a contract to acquire a restaurant. The balance sheet of Federal Restaurants as of August 17, 1987 has no notes to it. Accounting Principals Board ("APB") Opinion 22 provides that a description of all significant accounting policies of the reporting entities should be included as an integral part of the financial statements. In this particular instance, the omission of accounting policies is of minor importance since the balance sheet only reflects two assets: cash being held in escrow and a deposit on a contract to purchase a restaurant (the "Purchase Contract"). As discussed below, none of the financial statements prepared by Respondent disclosed the terms of the Purchase Contract. Furthermore, it appears from other documents in Respondent's records that the corporation is wholly owned by American British Enterprises and/or is jointly controlled, but there is no disclosure of that relationship in the financial statements. These omissions are significant deficiencies which have not been explained. Statement of Auditing Standards ("SAS") 41 requires work papers to support the conclusions of an audit. According to SAS 41, the work papers constitute the principal record of the work that the auditor has done and the conclusions that he has reached concerning significant matters. Respondent's records do not include work papers for the August 17, 1987 audit. SAS 22 provides guidance to an independent auditor making an examination in accordance with generally accepted auditing standards on the considerations and procedures applicable to planning and supervision, including preparing an audit program, obtaining knowledge of the entity's business, and dealing with differences of opinion among firm personnel. While there is conflicting evidence as to what was included in Respondent's work papers, the evidence was clear that Respondent's records for the August 17, 1987 audit do not comply with the requirements of SAS 22, because there was no clearly identified planning memos or audit programs. In fact, there is not even an engagement letter. SAS 19 requires an independent auditor to obtain certain written representations from management as part of an examination made in accordance with generally accepted auditing standards and provides guidance concerning the representations to be obtained. Petitioner's experts contend that Respondent's work papers do not include an appropriate representation letter from management for any of the Financial Statements. Respondent's expert contends there was such a letter with respect to the August 27, 1987 Consolidated Financial Statements. While it is not clear what is contained in the records, it is clear that the records do not clarify conflicting documentation in Respondent's work papers regarding the relationship between Federal Restaurants and American British Enterprises. Furthermore, Respondent's records do not include a clear statement from management regarding the terms of the Purchase Contract and the apparent contingencies involved with that Contract. Consequently, Respondent has failed to comply with SAS 19 and SAS 45 (which addresses related-party disclosures). The August 27, 1987 Consolidated Financial Statements are not properly consolidated in accordance with Accounting Research Bulletin ("ARB") 51. In addition, the consolidated Financial Statements do not include the disclosures required by Accounting Principals Board Opinion 22. Respondent's expert contends that the statements were mistakenly entitled and they should have been captioned as "combined" rather than consolidated financial statements. Even if this after the fact justification is accepted, the statements do not adequately disclose the relationship between the companies. Respondent's expert suggests that the August 25 Consolidated Financial Statement for American British Enterprises and Federal Restaurants reflects a voidable acquisition of Federal Restaurants by American British Enterprises. If this interpretation is accepted, the August 17, 1987 Balance Sheet for Federal Restaurants was not necessarily misleading for failure to disclose its relationship with American British Enterprises. However, the August 25, 1987 Consolidated Financial Statements are incomplete since the transaction is not fully explained. Moreover, there is no disclosure that the companies were apparently under common control or ownership. With respect to the November, 1988 balance sheet of American British Enterprises, the evidence established that there was a discrepancy between the amount reflected in the financial statement for a note receivable which was the major asset of the corporation and the confirmation in the work papers regarding that asset. While this discrepancy may have been due to a discount and/or accrued interest, no explanation is provided. The discrepancy constitutes a violation of SAS 1, Section 331, which addresses the appropriate background information for receivables, and SAS 1, Section 530 which addresses the dating of the auditor's report. If the discrepancy is due to a discount, Respondent failed to comply with APB Opinion 6, paragraph 14 which requires unearned discounts to be shown as a deduction from the related receivable and/or APB Opinion 21, paragraph 16 which provides for the discount or premium to be reported on the balance sheet as a direct deduction from or addition to the face amount of the note. The work papers for the November audit do not include a reconciliation between the 1982 financial statements of the predecessor corporation and the 1987 statements. There is no documentation of efforts to communicate with the prior auditor nor is there any discussion of the consistency of application of accounting principals between the two statements. As a consequence, the statements do not conform with SAS 7 which addresses communications with a prior auditor. The work papers fail to reflect any audit work being performed on the appraisal for the equipment collateralizing the note. In addition, the work papers include a confirmation from the stock transfer agent that doesn't agree with the number of shares reflected on the financial statement. There is no explanation for this discrepancy nor is there any clear indication of the audit work performed. The financial statements also include a footnote referencing a joint venture agreement. Respondent's records do not include any evidence of audit work performed with respect to this venture agreement. The deficiencies noted in paragraph 33 also appear in the December 31, 1988 financial statements for American British Enterprises. Furthermore, Respondent's records do not contain an audit file for this December statement. The November 30, 1988 and the December 31, 1988 audits of American British Enterprises do not contain a segregation between current and noncurrent assets. This deficiency is relatively insignificant since the company was essentially just a holding company. However, it does constitute a violation of ARB 43. Similarly, the cash flows in the financial statements were not presented in the appropriate format or style required by Statement of Financial Accounting Standards 95. However, it appears that all of the necessary information was present. The deficiencies found in the financial statements prepared for Federal Restaurants and American British Enterprises constitute negligence on the Respondent's part and establish a failure to exercise professional competence and due professional care in the performance of accounting services. On or about June 14, 1990, the Securities and Exchange Commission ("SEC") filed a civil lawsuit against Respondent and three other defendants alleging the preparation of false and misleading financial statements for American British Enterprises, Inc. On August 5, 1991, Respondent executed a Consent of Edwin Tunick to the Entry of a Final Judgement of Permanent Injunction in the civil action initiated by the SEC. On September 2, 1991, a Final Judgement of Permanent Injunction as to Edwin Tunick was entered by the United States District Court for the Southern District of Florida (Fort Lauderdale Division) in Case Number 90-6483CIV-ZLOCH. That Final Judgment "permanently restrained and enjoined" Respondent from violating Section 17(a) of the Securities Act, 15 U.S.C. 77q(a) and Section 10(b) of the Exchange Act, 15 U.S.C 78 (j)b and Rule 10b-5 promulgated thereunder. The Final Judgment did not include any specific findings of any violations of the federal securities laws.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Accountancy enter a Final Order dismissing the Administrative Complaint filed in DOAH Case Number 92-3421 (DPR Case Number 91-09729); finding Respondent guilty of violating Sections 473.323(1)(a), (g) and (h), Florida Statutes, and Rules 21A-22.0001, 21A-22.0002, and 21A-22.003, Florida Administrative Code, as alleged in the Administrative Complaint filed in DOAH Case Number 92-5696 (DPR Case Number 90-13254) and dismissing the other charges in that Complaint. As penalty for the violations, Respondent should be fined $1,000, and his license should be suspended for three years. Before resuming practice, Respondent should be required to complete such mandatory continuing education courses as may be mandated by the Board and he should be placed on probation for three (3) years. DONE and ENTERED this 14th day of November, 1994, at Tallahassee, Florida. J. STEPHEN MENTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 1994.
The Issue Whether Respondent, a certified public accountant licensed by the Board of Accountancy, violated provisions of the Florida Statutes and Florida Administrative Code as alleged in an Administrative Complaint issued to him by the Board on March 14, 1996. If so, what is the appropriate discipline?
Findings Of Fact The Parties The Petitioner is the Department of Business and Professional Regulation, Board of Accountancy. The Board, "created in the department [of Business and Professional Regulation], Section 473.303, Florida Statutes," is charged with powers and duties under the Public Accountancy Act, Chapter 473, Florida Statutes. Among these is the authority to enter an order imposing penalties up to license revocation whenever it finds "any licensee guilty of any of the grounds set forth in subsection (1). . . [of Section 473.323, Florida Statutes, the '[d]isciplinary proceedings' section of the Act]." Section 473.323(3), Florida Statutes. William David Herron is a certified public accountant, licensed as such by the Board since 1987, having been certified in August of that year. His license number is AC0018690. The offices for Mr. Herron's busy practice are in Sarasota. He describes his practice as unique, "in that most of my clients are elderly, and I still make house calls." (Tr. 277) Approximately 150 clients of Mr. Herron's are senior citizens, that is, over the age of 65. Excluding real estate holdings, Mr. Herron conservatively estimates the net worth of his senior citizen clients to be around 110 million dollars. Among his well-heeled clients (that is, until late 1994 when the Lutheran Ministries of Florida, Inc., was appointed guardian of her person and property and terminated Mr. Herron's professional relationship with her) was an elderly resident of Plymouth Harbor, a Sarasota County retirement center: Florrie Alderson. Florrie Alderson By commencement of final hearing, Florrie Alderson had passed away. At the time of her death, she was in her early 90’s and had been a long-time resident of Plymouth Harbor. When she first began to reside at Plymouth Harbor, where residents are described as a "very affluent group of people," (Tr. 39) Ms. Alderson lived in an individual apartment on the fourth floor. In the first few years of this decade, however, the needs of Ms. Alderson, then in her late 80's, grew more pronounced. She was moved to Plymouth Harbor’s Callahan Center. The Callahan Center is designed for residents in need of a higher level of care than the residents of the area in which Ms. Alderson first resided. Comprised of ten apartments on the second floor, the Callahan Center is close to the nurse's station. Each of the ten apartments is equipped specially to take into account the resident's impairment. (Tr. 45) At the same time, precautions are taken for the protection of the resident. For example, the doors to the rooms automatically close in case of fire. To prevent fires in the first place, none of the Callahan Center apartments have stoves. As an added protection for its residents, the center is equipped with an intercom system. The purpose of the system is self-evident. It is both a communication device, allowing the nurses at their nearby station to interact directly with the residents, as well as a monitoring device, allowing them from time-to-time to hear what is happening inside the apartment of a resident whose needs for assistance and care are numerous and diverse. Part of the intercom system is a red light situated on one of the walls of the resident's room. Whenever the intercom is in use the red light is illuminated. In the case of Ms. Alderson, the intercom system was used for more than just communication and monitoring purposes. It was used to remind her to come down to the dining room. "She did walk to the dining room, but she needed to be reminded." (Tr. 82) In her case, therefore, the intercom system was often in use and, over the years she was in the Callahan Center, it was used "[m]any times." Id. When Ms. Alderson was on the fourth floor of Plymouth Harbor the nurses visited her if she called. When she moved to the Callahan Center, however, and for the two years or so that she lived there prior to January 13, 1994, the nurses "did what they call total care. We did her showers; we assisted her dressing; we combed her hair." (Tr. 84) Ms. Oma Horan, a licensed practical nurse and the person closest to Ms. Alderson with the possible exception of Mr. Herron, described Florrie Alderson and the intimacy with which her care was administered in these words: "Many times I put a little bit of rouge and lipstick [on Florrie]. She was absolutely adorable. She was easy to love, easy to care for." (Tr. 84) Florrie Alderson was also compliant. She was that way with everyone, even other residents of Plymouth Harbor. If someone asked her to do something, she would do it. Oma Horan attributed her compliancy to the sweetness of her nature. Of all the residents "that I cared for" (Tr.85), "she was one of the sweetest." Id. Other than sporadic visits by her attorneys and regular visits by Mr. Herron, Ms. Alderson did not have visitors in the many years she resided at Plymouth Harbor. She had no immediate relatives. The remainder of her family, whom she heard from by letter only on occasion, resided in Great Britain, Florrie Alderson's country of origin. More Than an Accountant-Client Relationship In 1982, prior to being licensed as a certified public accountant, Mr. Herron had a tax and personal bookkeeping practice known as Personal Financial Services of Sarasota. In late 1984, Florrie Alderson was recommended to him as a client. At first their relationship was one of accountant- client. They retained that relationship until Mr. Herron’s dismissal in late 1994. During that time, Mr. Herron on occasion discussed with Ms. Alderson investment options presented by her trustee, Sun Bank. But Mr. Herron did not manage her money. That fell to her trustee, the bank. In contrast, Mr. Herron provided Ms. Alderson with services such as insurance claim filing, balancing her checkbook, preparation of bill payments, reviewing her trust account statements, and preparation of her individual tax returns. But, in Mr. Herron's own words, the relationship grew beyond more than just one of accountant/client. “[I]t evolved into more than that. It evolved into a personal and social relationship over the years. . . ." (Tr. 279) Tea and Bon Bons Sometime in the 1980's, Ms. Alderson invited Mr. Herron to have lunch with her in the dining room at Plymouth Harbor. On later occasions, both Mr. Herron and his wife were invited. Still later, Mr. Herron began seeing Ms. Alderson in her apartment on the fourth floor where "she insisted on making a cup of tea for both of us and having some cookies." (Tr. 279) As might be expected of someone of British origin, Ms. Alderson greatly enjoyed tea. When she moved into the Callahan Center and was without cooking facilities, Mr. Herron purchased a small hot pot with which to heat water to make tea for Ms. Alderson. Ms. Alderson insisted on reimbursing Mr. Herron for the purchase. The two continued to enjoy tea together on a regular basis for as long as Ms. Alderson was at Plymouth Harbor. Ms. Alderson also enjoyed chocolate petit fours. She asked Mr. Herron to order two boxes from a catalog at a cost of $50. Shortly thereafter, Mr. Herron found the same chocolates at a local gourmet grocery store at a cost of only $18 for two boxes. He began buying them for her at a rate of about two boxes twice a month or so until asked by the nursing staff to stop. The chocolate had become too much for Ms. Alderson at her age. During the time Mr. Herron was bringing Ms. Alderson chocolates, however, she insisted on seeing the receipt, reimbursing him and rounding up the reimbursement $5 or so for Mr. Herron's time and gas. At first, Mr. Herron visited Ms. Alderson once a month. Around 1990, he began to visit her twice a month and then in 1991 he began to visit her nearly every week. The increase in the number of Mr. Herron's visits were not far in time from a remarkable gift made by Ms. Alderson to Mr. Herron and a subsequent augmentation of the gift. The gift concerned a revocable trust. Ms. Alderson's Revocable Trust On December 17, 1970, Ms. Alderson executed a Revocable Trust Agreement. Between April 1, 1980 and February 15, 1985, amendments to the trust were executed, numbered the first through fourth. In December 1988, Mr. Herron's wife Sandy, then his office manager, contacted Camden Theodore French, Ms. Alderson's attorney, to advise him of Ms. Alderson's wish to amend the trust a fifth time. Among the changes to the trust to take place by virtue of the fifth amendment, was to name William Herron as a ten per cent (10%) beneficiary of the trust assets. On February 16, 1989, Ms. Alderson executed the fifth amendment. Mr. Herron was now a ten per cent (10%) beneficiary of the trust assets (a value of approximately $30,000,), to be received upon dissolution of the trust, that is, upon the death of Ms. Alderson. Now a beneficiary of a trust of one of his clients, Mr. Herron had concerns about his ethical obligations. His own research into the law and rules governing certified public accountants in Florida revealed only broad standards without specific guidance as to his situation. Feeling that the research failed to provide a satisfactory answer, Mr. Herron consulted an attorney. He was told his concerns were unfounded. He received the same advice from a second attorney. In neither case, however, did Mr. Herron receive an opinion letter. (Nor were the identities of the attorneys revealed at hearing.) In June of 1992, Mr. Herron contacted Mr. French of Ms. Alderson's wish to amend the trust to increase Mr. Herron's interest. On July 8, 1992, Mr. Alderson executed the sixth amendment making Mr. Herron the beneficiary of a 30 per cent (30%) interest, a value of approximately $90,000. In February of 1993, Mr. French received a letter from Ms. Alderson advising him of her wish to amend the trust yet again, this time to increase Mr. Herron's interest to sixty per cent (60%). Questions of Testamentary Capacity Mr. French had been the attorney who had prepared the fifth and sixth amendments to Ms. Alderson's revocable trust and who had assisted her in the execution of the documents reflecting the amendments. When the sixth amendment was executed, Mr. French took pains to ensure that the amendment was, in fact, the will of Ms. Alderson. Although out of the ordinary, Mr. French took another lawyer with him from his office to Plymouth Harbor for its execution. In the presence of this additional lawyer, Mr. French asked Ms. Alderson a series of questions regarding her testamentary capacity. Aside from her advanced age, part of Mr. French’s motivation in asking these questions was his understanding that Mr. Herron was not the natural object of Ms. Alderson’s bounty. In addition to questions about those who would be the natural object of her bounty, he asked her questions about the composition of her assets, their value, and how much she spent a month. The purpose of the questions (asked outside the presence of Mr. Herron to ensure that no "undue influence" was at work,), was so that Mr. French could be satisfied that Ms. Alderson was capable of executing the amendment and fully understood its import. Following this question and answer session, and satisfied that Ms. Alderson possessed testamentary capacity, Mr. French assisted her in the execution of the sixth amendment. When Ms. Alderson sent word to Mr. French in early 1993 that she wanted to amend the trust agreement again to make Mr. Herron a sixty per cent (60%) beneficiary, Mr. French undertook to ascertain her testamentary capacity in much the same manner as he had done with the sixth amendment. On three separate occasions in 1993, the standard questions were asked. On each of the three occasions, it appeared to Mr. French that Ms. Alderson lacked testamentary capacity, so the amendments were not executed. In the interest of caution, Mr. French checked with others. He found that the SunBank trust officer who dealt with the corpus of Ms. Alderson’s trust and her personal physician shared his concern. On each of the three occasions in 1993, when Mr. French visited Ms. Alderson to inquire about her capacity to make Mr. Herron a 60 per cent beneficiary, he made sure that Mr. Herron was not present. By 1993, Mr. French feared that Mr. Herron might have acquired undue influence over Ms. Alderson. Mr. French was also aware that Ms. Alderson, at her advanced age, had good days and bad and that it was possible he had caught her on three of her bad days. He planned to make one final attempt to determine whether she possessed testamentary capacity necessary to execute the seventh amendment to the trust agreement in order to make Mr. Herron a sixty per cent beneficiary. If he were not satisfied at this final inquiry, in all probability he would have concluded that Ms. Alderson was not capable of regaining testamentary capacity. The attempt was scheduled for the day of January 13, 1994. January 13, 1994 Oma Horan, in her capacity as a licensed practical nurse, was with Ms. Alderson almost every day for the years she was a resident of the Callahan Center prior to January 13, 1994. During this period, she observed Ms. Alderson's mental capacity to be failing. Ms. Alderson had begun to dress inappropriately. Left to herself she would not have administered necessary personal care. She had no idea how much money she had or where it came from. Ms. Alderson typically did not know what day it was, even after Ms. Horan showed her the date at the top of the newspaper while reading it to her because, "she was incapable of really reading the newspaper." (Tr. 91) January 13, 1994, was a few days before Ms. Alderson's ninetieth birthday. As Ms. Horan and another nurse, Sally Eisner, emerged from the break room near the nurse's station where they had just finished lunch, they observed Mr. Herron cross the hall from the stairway and enter Ms. Alderson's room. Within a short time, Ms. Horan and Ms. Eisner entered the nurse's station. Ms. Horan pushed down the intercom button to talk to Mr. Herron and Ms. Alderson about plans for the upcoming birthday celebration. The nurses at the Callahan Center are trained to announce themselves immediately whenever they use the intercom system unless they hear conversation in the room. If they hear people talking, out of common courtesy, they wait for a lull in the conversation before announcing themselves. Upon pushing down the intercom button and before she could announce it was in use, Ms. Horan heard Mr. Herron, in a loud voice, explaining to Ms. Alderson how much money she had in her trust. As she listened she heard him also explain to Ms. Alderson what the percentages were of some of the beneficiaries, how much Mr. Herron was now entitled to, and "what it was going to go to." (Tr. 92) Mr. Herron also told Ms. Alderson that there would be people coming to visit her, and she needed to remember what he had told her. Ms. Eisner heard the same thing. It sounded like Mr. Herron was "coaching her. She was to remember exactly the amount of monies that she had because he quoted $300,000; and he was telling her specifically to remember this because there were people coming in for her to sign some papers and that she needed to remember what he was telling her." (Tr. 118) Ms. Horan and Ms. Eisner were alarmed by what they heard. Ms. Horan told Ms. Eisner to call their supervisor, Mrs. Stratton, "because I felt that Florrie was not competent enough to sign anything or -- or to have this change that he wanted changed in the will." (Tr. 93) Ms. Eisner called Ms. Stratton. Ms. Stratton told Ms. Eisner to call the administrator of services. Ms. Stratton then left to go directly to Ms. Alderson's apartment. In the meantime, Ms. Horan and Ms. Eisner left the intercom button down so they could hear Mr. Herron and Ms. Alderson in the room. At no time did Ms. Horan or Ms. Eisner hear Mr. Herron do anything other than speak to Ms. Alderson in a loud voice about her trust assets, beneficiaries' percentages and the impending visit by her attorney, Mr. French. They did not hear Mr. Herron threaten Ms. Alderson. Other than what they interpreted to be "coaching," they did not hear Mr. Herron say anything that could be characterized as coercive. Nor did they hear him promise her anything or seem to be trying to persuade her to do anything. Aside from the effect of whether Mr. Herron was "coaching" Ms. Alderson or simply reviewing her trust documents with her, Mr. Herron's version of the events of January 13, 1994, squares for the most part with Ms. Horan's and Ms. Eisner. Mr. Herron did not threaten, coerce, or make promises to Ms. Alderson. Nor did he attempt to persuade her to do something she did not of her own free will intend. Mr. Herron spoke to her in a loud voice because she was hard of hearing. He reviewed Ms. Alderson’s trust documents with her in order to prepare her for the impending visit by Mr. French. There are, however, some discrepancies in Mr. Herron's versions of what happened that day so fateful to this case when compared with other evidence. In a letter dated March 16, 1995, Mr. Herron related the background and his perspective as to what happened on January 13, 1994, to Daniel J. Hevia, Investigating Officer for the Board of Accountancy and one of the Board's two expert witnesses at hearing. Differing with the evidence establishing that the fifth amendment to the trust was initiated by Mr. Herron’s wife’s telephone call to Mr. French is one of the statements in the letter: The first knowledge I had of being a beneficiary came when Miss Alderson's attorney, Ted French forwarded a copy of the fifth amendment to her trust to Miss Alderson. Miss Alderson told me after she had taken care of all the paperwork. The letter goes on to describe the events of January 13, 1994, and background: As time went along, I saw Miss Alderson on a weekly basis. I would often sit in the early afternoon and have a cup of tea with her as we talked and reviewed whatever business we had. * * * It was clear that she enjoyed the attention and my companionship as much as I enjoyed hers. Miss Alderson would often ask me where her money went when she died. I would review the list with her. One day she decided that the list wasn't right. She said that she didn't want one church to have any, that she hadn't seen her old neighbor in quite a while, and she thought I should have more. I was flattered that she felt such kindness for me. She asked what I would do with the money if she left me more. I told her that my wife and I had a piece of property which we hoped to build a house on one day when we had saved enough money. Miss Alderson said she wanted us to have more to make our dream come true. I was honored. As time went along, Miss Alderson would often ask me where her money was going when she died. I would review the list with her whenever she asked. I began to do this almost weekly. Miss Alderson began saying that I wasn't getting enough. We continued to review the list. Finally she said that she wanted to make a change. Miss Alderson's trust officer left Sun Bank in late February, 1993, and we had not been notified of her replacement. Therefore, when Miss Alderson again decided to change the beneficiaries and prepare a seventh amendment to the trust agreement, she did not know who to contact at the bank. She asked me to arrange for it. She hand wrote a list of beneficiaries for me to keep and sent another list to her attorney, Ted French in February, 1993 . . . Mr. French prepared this amendment and made arrangements to visit Miss Alderson. However, when he did so, he did not feel Miss Alderson was oriented, and he left without her signature. When Miss Alderson again began asking what would happen to her money when she died, we determined that she had not signed the amendment. She asked to do so. She even joked that she might die before she signed! Mr. French again came to Plymouth Harbor to obtain Miss Alderson's signature. Again he left without it since he did not feel she was oriented. This would all happen a third time. At this point I spoke at length to Mr. French because Miss Alderson kept insisting that she wanted to make this change and we better get it done. I was concerned that my continuing to call Mr. French might be misinterpreted; however, Mr. French assured me that he understood that elderly people sometimes had good days when everything was clear and some not so good days when they were confused. At Miss Alderson's request, I agreed to visit with her prior to Mr. French's visit to refresh her memory. Apparently I was overheard during this conversation. Miss Alderson has difficulty hearing, and I had to speak loudly for her to hear me. I had nothing to hide, so the door was open, as it was most every time I visited her. I understand from the petition that the person who overheard me was a nurse, Oma Horan. I know Ms. Horan although I do not recall seeing her on January 19, [sic] 1994. If I had, it would not have seemed unusual to me. Mr. French arrived with two witnesses from his office. I have since discovered that these two people were attorneys in Mr. French's firm. Therefore, three attorneys visited Miss Alderson on January 19, [sic] 1994 to facilitate the signing of this amendment. I had no knowledge of whether or not the seventh amendment had even been signed. I did not pursue the matter any further to determine if it had been signed because Miss Alderson did not ask me to. I had no reason of my own to find out. Petitioner's No. 10, Section F, pgs. F-3 and F-4. When Mr. French arrived with his assistants, Mr. Herron departed. Mr. French conducted his routine inquiry. He determined both that the increase for Mr. Herron represented Ms. Alderson's wishes and that she was competent to execute the amendments. But, Mr. French did not know, although he might have surmised, that Mr. Herron had just gone over with Ms. Alderson the information necessary for her to answer Mr. French's questions. He did not know because Mr. Herron had not told him so. Expectation of Privacy: Behind Closed Doors? While Mr. Herron's letter discloses that he knew his communication to Ms. Alderson on January 13, 1994, had been overheard by Nurse Horan, it appears that at the time of the letter, he did not know it had been heard through the intercom. The letter makes no mention of the intercom. It simply states that, "I understand that the person who overheard me was a nurse, Oma Horan." Id., p. F-4. Indeed, Mr. Herron did not learn that he had been overheard through the intercom until he read the administrative complaint (Tr. Vol. III, pg. 288) issued on March 14, 1996, one year after writing the letter to Mr. Hevia. The letter differs with testimony elicited from Ms. Horan and Ms. Eisner by Mr. Herron's attorney at trial and from testimony given by Mr. Herron under oath at trial. All three testified that the door must have been closed to Ms. Alderson's room during the time that Mr. Herron was reviewing her trust documents with her. Ms. Horan testified that the door closed behind Mr. Herron when he entered the room. (Tr. Vol. I, pg. 96.) Ms. Eisner did not see the door close behind Mr. Herron when he entered but she assumed that the door closed behind him because "[i]t automatically closes." (Tr. Vol. II, Pg. 10.) In describing his visit to Ms. Alderson on January 13, 1994, Mr. Herron testified, "The doors automatically close, so it did close behind me." (Tr. Vol. III, pg. 284.) There is no question that the door was closed. Mr. Herron offered an explanation at hearing of the discrepancy between the testimony and his letter. The reference to the door being "open" in the letter is that he meant that the door was "unlocked." (Tr. Vol. III, pg. 295.) Mr. Herron’s testimony about the door to the room was offered in hopes of establishing that both he and Ms. Alderson had expectations of privacy when the overheard communication about the trust took place. His expectation of privacy is bolstered by the content of the communication: matters related to Ms. Alderson’s trust documents, that is, content normally within the scope of Mr. Herron’s and Ms. Alderson’s accountant- client relationship. But, despite Mr. Herron's claim that he had an expectation of privacy when he was conferring with Ms. Alderson within the bounds of their accountant-client relationship, he has continued to maintain long after his March 1995 letter to Investigator Hevia that he did not have any fear of being overheard. (Tr. Vol. III, p. 325.) Mr. Herron maintains this stance because, in his view, his intent in meeting with Ms. Alderson on January 13, 1994, was to do nothing other than assist her in making sure that her wishes were carried out. Mr. Herron’s written indication, contrary to his testimony, that he did not care whether the meeting was private is supported by what one would expect would have been Ms. Alderson’s expectation (if she were capable of forming an expectation) with relation to the privacy of the communication. As a Callahan resident receiving total care, Ms. Alderson was accustomed to staff coming in and out of her room with regularity. She had been aware for some time that that the intercom could come on at any time whether for a nurse to speak to her, to check on her, or as a reminder to come to the dining facilities. In fact, after the red light came on and remained on in her room as the nurses listened in on January 13, 1994, Ms. Alderson, whether aware of it or not, did not protest that the nurses or others may have been listening through the intercom. There is a legal gloss to whatever Ms. Alderson’s privacy expectations may have been or would have been had she been capable of forming them. The “Residents Bill of Rights,” applicable to residents of facilities such as Plymouth Harbor, states as follows: [E]very resident of a facility shall have the right to unrestricted private communication, including receiving and sending unopened correspondence, access to a telephone, and visiting with any person of his choice. . . . Section 400.428(1)(d), Florida Statutes. Events After January 13, 1994 Six months after the fateful meeting between Mr. Herron and Ms. Alderson to prepare her for the questions of Mr. French, an Examining Committee appointed by the Twelfth Judicial Circuit Court in and for Sarasota County determined that Florrie Alderson was suffering from senile dementia, rendering her incapable of making decisions as to her finances or care. The committee made its determination as part of a guardianship proceeding. The proceeding had been initiated not as the result of further deterioration of Ms. Alderson’s condition after January of 1994, but rather in direct response to the actions of Mr. Herron and her attorney in allowing her to execute the seventh amendment to her trust. (Petitioner’s Exhibit No. 10, C-4; Finding No. 30, Respondent’s Proposed Findings and Recommended Order.) The response was the result of the judgment of Plymouth Harbor personnel that Ms. Alderson “was not competent to understand the significance of any documents she executed.” (Petitioner’s Exhibit No. 10, p. C-4.) On August 18, 1994, based upon the findings of the Examining Committee, the Circuit Court issued Letters of Plenary Guardianship of Person and Property to the Lutheran Ministries of Florida, Inc., with relation to Ms. Alderson. Mr. Herron was dismissed from Ms. Alderson’s employ, and the guardian asked the Department to review Mr. Herron’s conduct in connection with the case. Nearly one and one-half years later, the Department of Business and Professional Regulation filed an administrative complaint against William David Herron. The Administrative Complaint The Administrative Complaint was filed On March 14, 1996. It charges William Herron with statutory violations under two specific provisions of Section 473.323(1). They are found in subparagraphs (g) and (h): The following acts constitute grounds for which . . . disciplinary actions . . . may be taken: Committing an act of fraud or deceit, or of negligence, incompetency, or misconduct in the practice of public accounting. Violation of any rule adopted pursuant to this chapter or chapter 455. Section 473.323, Florida Statutes. The rules with which Mr. Herron is charged to have violated are Rules 61H1-36.001(1), (17) and (20), Florida Administrative Code: Discipline. The following acts shall constitute grounds for which authorized and appropriate actions may be taken by the Board: A licensee has made misleading, deceptive, untrue, or fraudulent representations in the practice of public accounting; * * * A licensee is guilty of fraud or deceit or of negligence, incompetency or misconduct in the practice of public accountancy; A licensee has performed a fraudulent act while holding a license to practice public accounting. After receipt of the complaint, William David Herron requested a formal hearing and this administrative proceeding ensued.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Board of Accountancy suspend the license of William David Herron for a period of one year to be followed by a probationary period of two years with reasonable conditions of probation to include completion of a course in accountancy ethics preferably involving conflicts of interest and gifts from clients. DONE AND ORDERED this 15th day of October, 1997, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1997. COPIES FURNISHED: Joseph W. Lawrence, II, Esquire Vezina Lawrence & Piscitelli, P.A. Suite 1850 500 East Broward Boulevard Fort Lauderdale, Florida 33394 Paul L. McKean, Esquire 3671 Webber Street, Suite B Sarasota, Florida 34232 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Martha Willis, Executive Director Division of Certified Public Accounting Department of Business and Professional Regulation 4001 Northwest 43rd Street, Suite 16 Gainesville, Florida 32606
The Issue Count I of the Amended Administrative Complaint as modified by the August 22, 1991 Order on Reconsideration alleges Respondent Certified Public Accountant (CPA) practiced public accounting in an unlicensed firm by appending the CPA designation after her name in the telephone book and on business cards in violation of Sections 473.323(1)(a), (g), and (h) F.S. and Rule 21A-20.012 F.A.C. Count II of the Amended Administrative Complaint as modified by the August 22, 1991 Order on Reconsideration alleges that Respondent CPA violated Sections 473.323(1), (g), and (h) and Rule 21A-24.001(1)(g) F.A.C. by appending the certified financial planner (CFP) designation along with the CPA designation after her name in the telephone book and on business cards, in that the CFP designation allegedly is an unapproved specialty of accountancy. Count III of the Amended Administrative Complaint as modified by the August 22, 1991 Order on Reconsideration alleges that Respondent CPA practiced public accounting by holding herself out as a CPA by appending the CPA designation after her name in the telephone book and on her business cards, implying that she abides by the provisions of Chapter 473 F.S., and is thereby in violation of Sections 473.323(1)(f), (g), and (h) F.S. and Rule 21A-24.001 F.A.C. [no specific subsections cited].
Findings Of Fact Respondent Silvia S. Ibanez is a practicing attorney, a member of the Florida Bar, and holds active Florida CPA License No. 10842, currently in good standing. She is also a Registered Investment Advisor with the Florida Division of Securities and a certified financial planner (CFP). At all times material, she has been actively certified as a CFP in good standing with the International Board of Standards and Practice for Certified Financial Planners (IBCFP). The IBCFP is a corporation. "CFP" and "certified financial planner" are registered trademarks. The IBCFP has no governmental affiliations within the state of Florida. The Florida Board of Accountancy has no involvement in the CFP accrediting process and no proprietary interest over the CFP mark. As a licensee with the federal Securities and Exchange Commission, Ibanez is required to, and does, disclose the fact that she is a CPA. Ibanez' CPA certificate (like all Florida CPA certificates) authorizes her to display her CPA credentials. The CPA certificate represents that the recipient, . . . has passed all examinations and has met all other requirements prescribed by law and by rule of this board for certification as an expert public accountant, and *is therefore entitled to append the letters CPA after this registrant's name to evidence registration by this board as a Certified Public Accountant.* [Emphasis supplied between *] The Board of Accountancy's only classifications of CPA licenses/licensees are "active" or "inactive." "Active" and "inactive" refer to the status of the CPA license and do not refer to or imply that the licensee is actively practicing public accounting. One can be an actively licensed CPA and not be practicing public accounting. The Board of Accountancy issued a letter opinion to Ibanez that a CPA who offers financial planning services for a fee but who does not hold out as a CPA or become associated with financial statements would not be practicing public accounting. Ibanez is listed in the yellow pages under the heading, "Attorneys," as, "Ibanez, Silvia, S., CPA, CFP." Respondent also is listed in the white pages as "Ibanez, Silvia S., CPA CFP atty." On their face, there is nothing false or fraudulent about these listings. As an attorney, Petitioner also places "CPA" after her name on her business cards and on her letterhead. The Respondent's business card states "Silvia Safille Ibanez, JD, CPA, CFP." DPR contends that because Petitioner "holds out" to the public as a CPA, uses accounting skills, and provides one or more types of management, advisory or consulting services, she is currently "practicing public accounting." Ibanez is not listed in the yellow pages under "accountants," "accountants, certified," or "CPAs." Neither the CFP nor CPA credential is part of the firm name, "Silvia S. Ibanez, P.A. - Law Offices," which also appears on Ibanez' business card. Ibanez' telephone directory listings and card at issue show the CPA and CFP credentials strictly appended to Respondent's individual name. Louis Dooner, accepted as an expert certified public accountant, testified that the Respondent is involved in the practice of public accounting because by merely appending the CPA designation after her name on her business cards, she is telling the public that she is offering to perform services that CPAs perform. Respondent Ibanez currently operates as a sole practitioner of law employed by the law firm of "Silvia S. Ibanez, P.A." As such, she provides specialized legal services for her clients not provided by CPAs. As part of her current, normal professional activities as an attorney, she provides all types of tax services to her clients, including tax opinion work, representation before the Internal Revenue Service, and evaluation of the tax consequences of certain transactions. She also performs financial counselling and planning for her clients. In doing so, she utilizes both her legal education, training, and experience and her education, training, and experience as a CPA. Prior to admission to the Florida Bar, Ibanez was employed by two CPA firms where she did substantially similar work, plus audits. It is conceded by the parties that it is possible to practice law and public accounting in the same business activity and that many activities conducted by professionals and nonprofessionals other than by CPAs and other than by attorneys are identical to activities performed by CPAs engaged in public accounting. For instance, anyone can legally prepare a tax return. Bookkeepers and free-lance tax assistors of all sorts are unregulated in any way. Truthful use, communication, or disclosure of the CPA credential by an actively licensed CPA does not per se constitute false, misleading, or deceptive advertising. The evidence does not support a finding that withholding truthful disclosure that one has earned the CPA credential benefits the public welfare or effects the purposes of the enabling legislation, or indeed, how such nondisclosure could promote them, particularly since it has been shown that persons of considerably lesser competency and achievement levels in the discipline of accounting may legally offer to the public almost all the services provided by CPAs. The use of the term "CPA" implies a specific competency to the public. The fact that Ibanez is a CPA is valuable to her legal clients. CPA status is a valuable property right to each CPA, and the ability of a practicing attorney to publicize the fact that s/he holds an active CPA license is a valuable asset to that individual. The only activity among public accounting activities that is a unique activity of CPAs is the "attest" function. See, Section 473.322(1)(c) F.S. There is no evidence that Respondent Ibanez attests as a CPA in the course of her law practice or that she personally performs audits. Ibanez testified credibly that her intent in appending the CPA and CFP credentials solely to her own name is to indicate that she is, in her own right, individually licensed as a CPA and CFP. Respondent Ibanez has clearly marked her office premises with all the indicia of a law office, including two signs posted outside the building itself. One sign specifies that the building constitutes "law offices," that "Silvia S. Ibanez, P.A." is located there, and that Ibanez is an "attorney at law," with no reference to her CPA or CFP credentials. Another sign specifies, "law offices," without any reference to her CPA or CFP credentials. A potential client must pass these two signs just to enter the building that houses Ibanez' law office. Once in the building, a potential client also must be admitted by a secretary to Ibanez' inner office. Ibanez has consistently required her secretary to screen all telephone calls and potential clients who enter the office to be certain that persons seeking out Ibanez will be fully informed that Ibanez is not offering strictly accounting services and that she is practicing law. Ibanez also personally makes that information clear to individuals at each initial office consultation and consistently follows up office consultations at which her legal employment has been negotiated with letters and/or employment contracts which set forth the parameters of the legal services she has agreed to perform for clients. Elise Rice is an employee of Petitioner Department of Professional Regulation who has earned a vocational school accounting diploma. She is not a CPA, nor is she an attorney. Ms. Rice testified that she, personally, drew the conclusion from looking at Respondent's business card that the Respondent was a CPA, but that she did not know what CFP or JD signified and therefore she would not assume from the card that Ibanez was a lawyer or a certified financial planner. Clearly, the designation "CFP" did not suggest to Ms. Rice that Ibanez was advertising either a specialty or particular competence in public accounting. Ms. Rice further stated that, despite Ibanez' business card's clear use of the term "law offices," she would continue to believe that Ibanez was doing both CPA work and legal work out of "law offices." Ms. Rice further stated that even if she telephoned ahead and spoke to a secretary who clearly indicated that Ibanez was a CPA but was working as a lawyer, she would persist in believing that Ibanez was doing both CPA work and legal work out of "law offices." Ms. Rice also testified that if she arrived at Ibanez' office building and was confronted by the sign posted there which clearly indicates Ibanez is an attorney at law and the two signs that clearly state that the building houses only "law offices," she would then believe that she had come to the wrong place to find Ibanez the CPA. However, Ms. Rice conceded that, under the latter circumstances, the premises were, indeed, law offices. Ms. Rice's personal view that Ibanez must be acting as a CPA in the face of significant information to the contrary is not persuasive that the average layman would be misled by Ibanez' business card and telephone listings in the face of all her other disclosures. One who has initially consulted the yellow pages of the telephone directory under the heading "attorneys" would most logically infer from Ibanez' yellow pages listing that Ibanez is a practicing attorney who is dually licensed as a CPA and who possesses a CPA's education, training, experience, and skills and that Ibanez is offering to act as a lawyer capable of applying her additional education, training, experience, and skills as a CPA and CFP. The inferences that the average viewer might draw from Ibanez' white pages telephone listing and her business card are more blurred, but Ibanez demonstrated, and it is conceded by both parties, that an individual may have the opportunity to disabuse members of the public that s/he is engaged in the activity of the practice of public accounting or that s/he is offering all the services normally associated with a CPA, as opposed to law or some other profession, at least where there is direct contact by letter or telephone. It may be reasonable that at least until making direct contact with Ibanez or her office staff, the average viewer of either the telephone listings or the card would assume that, as a CPA, Ibanez is subject to disciplinary oversight by the licensing authority for accounting functions only and that she abides by all Board of Accountancy regulations while doing accounting. However, prior to any meaningful employment, Ibanez exercises reasonable care to disabuse the average viewer of that belief. Since 1982, the Board has consistently issued letter opinions on an individual basis to the effect that the designation "certified financial planner" is an accountancy specialization which has not been approved by the Board and further holding that "CFP" could not be displayed by CPA licensees on stationery or in yellow pages listings in conjunction with the CPA designation. The Executive Director of the Florida Board of Accountancy did not know how "certified financial planner" came to be viewed as a specialty designation of certified public accounting, and the letter opinions do not set forth the Board's rationale for considering it as a specialty. The Board has adopted no rule to that effect. Further, in this proceeding, the agency has not proven any rationale for the policy set forth in the Board opinions. The agency presented no evidence by way of anecdotal experience, professional studies, or accumulated data to show that licensed CPAs or certified CFPs have ever mislead members of the public purely by displaying their credentials in the manner Ibanez has done here. DPR knows of no complaint and has never received any complaint from a member of the public regarding Ibanez' professional activities or advertising. Nor is there any evidence that any member of the public has ever been confused about whether or not Ibanez was practicing accounting or law or financial planning or that any member of the public was mislead into hiring Ibanez under the impression that she would be acting as a CPA solely and not as an attorney, or that she would be performing audits or performing the attesting function of a CPA. Upon the scenario established in the case sub judice, Ibanez is not guilty of any fraudulent advertising so as to mislead the public to the effect that she abides by all regulations of the Board of Accountancy.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Accountancy enter a Final Order that: Finds Respondent Ibanez is not "holding herself out as a certified public accountant" and Finds her not guilty of all charges alleged under Counts I through III and dismisses them. DONE and ENTERED this 15th day of January, 1992, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of January, 1992.
The Issue The issue for determination is whether Respondent committed an unlawful employment act by discriminating against Petitioner on the basis of race in violation of the Florida Civil Rights Act of 1992, as amended.
Findings Of Fact Ms. Westbrooks is an African-American female. In 2000, Ms. Westbrooks began her employment with the City in a billing position in Customer Service as an Account Clerk. She performed very well in that position and received an above satisfactory rating. In 2002, a Junior Accountant position became available, and Ms. Westbrooks applied for the position. The position description for a Junior Accountant indicates that the position’s duties included “Professional accounting work covering all fixed assets accounting and reporting.” Further, the position description indicates that the minimum qualifications consisted of the following: Associate’s degree in Accounting or related field, with some work experience in an accounting environment OR An equivalent combination of training and experience which provides the required knowledge, skills and abilities. Carlos Perez, the City’s Finance Director and a Certified Public Accountant (CPA), performed the hiring for the Junior Accountant position. He hired Ms. Westbrooks for the Junior Accountant position. Mr. Perez considered Ms. Westbrooks’ performance in the Junior Accountant position as excellent. She consistently received performance ratings of above satisfactory and merit increases. In 2006, an Accountant position became available. The City advertised the position. The announcement for the position indicated that the position’s duties included “complex technical work performing professional accounting work covering all phases of account maintenance, classification, analysis, and expenditure control of all phases of City wide fiscal transactions.” Further, the announcement indicated that the minimum requirements for the position were: Bachelors degree in Accounting, Finance or a closely related field with major coursework in accounting . . . plus one to two years experience in accounting. OR An equivalent combination of training and experience which provides the required knowledge, skills, and abilities. Moreover, the announcement provided that “Only those applicants who most closely meet the specific requirements for the position will be contacted for an interview.” Ms. Westbrooks applied for the Accountant position. No dispute exists that Ms. Westbrooks does not possess a bachelor’s degree in accounting. She has an Associates in Arts (AA) degree in Business Administration, which she obtained in 1993. At all times material hereto, the City had a tuition reimbursement program, wherein an employee of the City could obtain a degree and receive tuition reimbursement for obtaining the degree. Ms. Westbrooks was aware of the reimbursement program but chose not to avail herself of it in order to obtain a bachelor’s degree in accounting. However, she did avail herself of the program to obtain certifications associated with her position as a Junior Accountant. No dispute exists that Ms. Westbrooks met the minimum requirements for the Accountant position, satisfying the alternative requirement of equivalent combination of training and experience. Ms. Westbrooks was provided an interview. An interview panel conducted the interviews and rated the applicants, who were interviewed, on a scale of 0 through 5. The interview panel consisted of the City’s Chief Accountant, Budget Administrator, and Pension Administrator. Only the applicants who had an overall rating of 3.0 or higher on the interview were submitted by the City’s Personnel Administration Director, Rebecca Jones, to Mr. Perez. Ms. Jones is an African American and is female. Mr. Perez makes the final decision as to who is hired for accounting positions. He was the final decision-maker for this Accounting position. Mr. Perez is not African American. Only three persons received an overall interview rating of 3.0 or higher. Ms. Westbrooks was one of the three persons, and she received the highest interview score. On December 6, 2006, Ms. Jones submitted to Mr. Perez the names of the three persons, with their interview scores: Laura Westbrooks 4.0 Ronald Castrillo 3.4 Bayard Louis 3.3 Mr. Perez had never hired an accountant who did not have a four-year college degree, i.e., a bachelor’s degree, regardless of race. His position was that the person hired for the Accountant position, and all of his accountants, needed a four-year college degree because that person, as all of his accountants, would be fourth in line to head the Finance Department, as Acting Finance Director, behind himself, the Assistant Finance Director, and the Chief Accountant—at least once a year he (Mr. Perez), the Assistant Finance Director, and the Chief Accountant all attend a conference together; and that a person with a four-year college degree has the technical ability needed to perform in the position, whereas, a person without a four-year degree would not have the technical ability needed. Further, as to the accounting focus of a junior accountant position versus an accountant position, a junior accountant’s focus is fixed assets, whereas, accountants are involved with all aspects of accounting, which includes and goes beyond fixed assets. Mr. Perez had made Ms. Westbrooks aware of his position, regarding accountants, during her tenure in the Junior Accountant position. Ms. Jones did not consider Mr. Perez’s position and action, regarding the hiring of accountants, as being discriminatory. Mr. Perez’s final requirement of a four-year college degree in order to be hired by him as an accountant became the City’s requirement. Mr. Perez offered the Accountant position to Mr. Castrillo who had an AA degree in Business Administration, a Bachelor’s degree in Accounting and who was scheduled to graduate the following semester with a Master’s degree in Accounting. However, Mr. Castrillo did not accept the position due to the failure to agree on a salary. The Accountant position was re-advertised. Ms. Westbrooks remained eligible for the Accountant position and was, therefore, in the pool of applicants to be considered; but was not re-interviewed because the interview questions did not change On March 8, 2007, Ms. Jones submitted to Mr. Perez the names of the applicants who had an overall rating of 3.0 or higher on the interview, together with their interview scores: Tricia Beerom 4.0 Sampson Okeke 3.4 Mirtha Servat 3.3 Mr. Perez hired Ms. Beerom for the Accountant position. Ms. Beerom had a Bachelor of Science degree in Accounting and Management and was an African-American female. Ms. Westbrooks believed that she was not afforded an opportunity to advance because of Mr. Perez’s position regarding accountants possessing a four-year degree and that, therefore, she was discriminated against. However, even though the City had a policy against discrimination and a procedure to file discrimination complaints, she chose not to proceed through the City’s discrimination process because she had no faith in the City. Ms. Westbrooks believed that she was not going to be treated fairly by the City in any attempt by her to achieve upward mobility, which caused her to continuously experience stress, which negatively impacted her health. She eventually resigned from the City. Ms. Westbrooks’ resignation was effective May 4, 2007. At the time of her resignation, Ms. Westbrooks’ salary was $40,000. After her resignation, she received her contributions to the City’s retirement system in the amount of approximately $13,000. In September 2008, over a year after her resignation from the City, Ms. Westbrooks obtained employment with the University of Miami, School of Medicine, as a Grant and Contracts Specialist, with a salary of $41,500. Ms. Westbrooks did not identify any employees who were in classified positions as herself, who were or were not African American and who had upward mobility in positions, and who did not have four-year college degrees. Classified positions are protected by the City’s Civil Service rules and must be advertised. Ms. Westbrooks did identify City employees who were in unclassified positions, not a classified position like herself, i.e., directors and city manager, who did not have four-year college degrees, and who were and were not African American. Unclassified positions are not protected by the City’s Civil Service rules and need not be advertised. The city manager hires all department directors. No dispute exists that, at all times material hereto, a former Director of Purchasing was a white female and a long term employee, who had an AA, not a four-year degree, and who was promoted through the ranks; a Director of Public Works was a white male and a long-term employee, who had an AA, not a four- year degree, and who was promoted through the ranks. No dispute exists that the City’s City Manager is an African-American male who does not have a four-year college degree. No dispute exists that, at all times material hereto, all of the City’s Department Directors, who are African American, have four-year college degrees. The EEOC instituted an “E-RACE Initiative (Eradicating Racism and Colorism from Employment)” and developed a “set of detailed E-RACE goals and objectives to be achieved within a five-year timeframe from FY [fiscal year] 2008 to FY [fiscal year] 2013.” Included in the E-RACE Initiative, were “Best Practices for Employers and Human Resources/EEO Professionals,” which included best practices for recruitment, hiring and promotion. The E-RACE Initiative was implemented by the EEOC subsequent to the action complained of by Ms. Westbrooks and was not demonstrated to be federal law, rule, or regulation; and was, therefore, not shown to have the force or impact of law. The E-RACE Initiative is not applicable to the instant case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order finding that the City of North Miami did not commit a discriminating employment practice against Laura A. Westbrooks in violation of the Florida Civil Rights Act of 1992, as amended, by failing to hire her for an accounting position. DONE AND ENTERED this 1st day of September, 2009, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of September, 2009.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Chapter 473 and rules promulgated thereunder as set forth in the Conclusions of Law portion of this Order. His license should be suspended for one year with probation thereafter for a period of two years. He should also be required to take such additional continuing education courses as the Board deems appropriate. DONE and ORDERED this 15th day of April, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of April, 1986.
Findings Of Fact The Petitioner is Barbara Clark and Company, a CPA firm. Barbara Clark owns and operates the company. The Respondent issued a Request for Proposal, RFP Number 7112, for CPA audit services. The Petitioner responded to the RFP along with four other proposers. The award for RFP Number 7112, CPA audit services, was to be made to the two (2) companies who received the highest number of points based on individual evaluations by four (4) people selected for the RFP review committee. The evaluation criteria to be used by the review committee members was specified in Section 1.16 of the RFP and involved review of the management and technical aspects of a given proposal. The committee members for the RFP were instructed by the FAMU Purchasing Director to use the criteria as outlined in Section 1.16 in the process of evaluating the management and technical plans of the respective proposals and that each member should evaluate and score each proposal independent from the other committee members. The evaluations by each member were placed in a sealed envelope. The proposals submitted in response to RFP Number 7112, CPA audit services, were reviewed by the evaluation committee members. After the members completed their review, they met as a group with the Purchasing Director. The sealed envelopes which contained the individual committee members' evaluation sheets for each proposal were opened and the points for each proposer were determined by adding the points for each respective proposal. The evaluation of RFP Number 7112, CPA audit services, occurred pursuant to the evaluation criteria in RFP Number 7112, CPA audit services. No committee member testified. There was absolutely no evidence submitted by Petitioner which demonstrated that the committee members did not follow the specifications of the RFP. Likewise, there was a lack of evidence that the evaluation process established in the RFP was arbitrary or capricious. The two (2) proposers that received the highest number of points were recommended for the award of RFP Number 7112, CPA audit services. Petitioner's proposal was not evaluated as having either of the highest point totals for RFP Number 7112, CPA audit services and therefore did not receive an award of the contract. The FAMU Purchasing Director, Oscar Martinez, sent to each proposer by certified letter, return receipt, notification of the intended award of RFP Number 7112, CPA audit services, to the two proposers with the highest number of points. The FAMU Purchasing Director, Oscar Martinez, discussed the results of RFP Number 7112, CPA audit services, with Barbara Clark after he mailed the intended award notification to the proposers. A mathematical error in the calculation of points for one of the proposers was discovered and corrected. The error had no effect on the rankings of the proposers and was therefore an immaterial discrepancy in the award of the RFP. Petitioner utterly failed to establish that the intended award pursuant to RFP Number 7112, CPA audit services, was not in good faith and not the result of a fair, full and honest exercise of the agency's discretion in making such an award. Likewise Petitioner utterly failed to establish that Respondent acted arbitrarily or capriciously in its intended award of RFP Number 7112, CPA audit services. After a review of the evidence Petitioner's protest of the intended award of RFP Number 7112, CPA audit services, was clearly without merit and lacked factual or legal support and was therefore frivolous and improper. Indeed the barest attempt was made by Petitioner to prepare or pursue evidence for the hearing in this matter. Although Respondent consulted with Petitioner and provided Petitioner information regarding RFP Number 7112, CPA audit services, Petitioner persisted in pursuing its protest of the intended award of the RFP. Petitioner continued its protest of RFP Number 7112, CPA audit services, long after it was or should have been aware that it had no factual or legal grounds for such a protest causing Respondent's attorney to spend 13 hours in preparation for this case. However, Respondent did not submit an affidavit from another attorney who reviewed the file and number of hours spent by Respondent's attorney and attested to the reasonableness of the hours spent or the fee charged. Therefore, Respondent's motion for attorney's fees is denied.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That the protest be dismissed. DONE and ENTERED this 29th day of May, 1996, in Tallahassee, Leon County, Florida. DIANNE CLEAVINGER, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of May, 1996. APPENDIX CASE NO. 96-1371 1. The facts contained in paragraphs 1-28 of Respondent's proposed findings of fact are adopted, in substance, in so far as material. COPIES FURNISHED: George W. Butler, Esquire Florida Agricultural and Mechanical University Office of the General Counsel 300 Lee Hall Tallahassee, Florida 32307 Barbara A. Clark Barbara A. Clark and Company 270 First Avenue South, Suite 101 St. Petersburg, Florida 33701 Frank T. Brogan, Commissioner Department of Education The Capitol Tallahassee, Florida 32399-0400 Michael Olenick, Esquire Department of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400 Bishop Holifield, Esquire Florida Agricultural and Mechanical University 300 Lee Hall Tallahassee, Florida 32307-3100
Findings Of Fact Edward J. Tooze holds certificate number R-0434 as a certified public accountant in the State of Florida. Tooze's certificate is currently under suspension pursuant to order of the State Board of Accountancy entered under to authority of Section 473.111(5), Florida Statutes. Tooze, although under suspension, is subject to the authority of the Florida State Board of Accountancy for violations of Chapter 473 and the rules contained in Chapter 21A, Florida Administrative Code. Tooze undertook to provide an audited and an unaudited financial statement for Gull-Aire Corporation on September 30, 1976. Said audited and unaudited financial statements were received into evidence as Composite Exhibit #1. Financial statements are representations made by management, and the fairness of a representation of unaudited statements is solely the responsibility of management. See Section 516.01 of Statements on Auditing Standards, No. 1, (hereinafter referred to as SAS) The auditor's report dated October 4, 1976, prepared by Tooze, states as follows: In accordance with your instructions, we submit herewith the balance sheet of Gull-Aire Corporation as of September 30, 1976. This statement was prepared without audit, and accordingly we do not express an opinion thereon. Each page of the unaudited statement bears the language, "Prepared without audit from books of account and information provided by management." Paragraph 516.04 of SAS provides an example of a disclaimer of opinion as follows: The accompanying balance of x company as of December 31, l9XX, and the related statements of income and retained earnings and changes in financial position for the year then ended were not audited by us and accordingly we do not express an opinion on them. (Signature and date) The form of the disclaimer used by Tooze in the financial statement of Gull-Aire quoted in Paragraph 6 is not identical to the example given in Section 516.04, SAS, No. 1. However, Tooze's statement does reflect that the financial statement was not audited and that Tooze did not express any opinion on it. The notes to the audited financial statement of Gull-Aire Corporation do not include a summary of significant accounting policies used by Tooze in the preparation of the financial statement. While only a balance sheet is shown in both of the Gull-Aire financial statements, retained earnings were reported which were the result of the sale of a parcel of real property. No notes were made on either of the reports explaining this sale, and its treatment, although this was a major business transaction and source of income to the corporation for the period covered. Tooze did not disclose the treatment of income taxes in both the financial statements of Gull-Aire, particularly the tax treatment of the retained earnings in the amount of $45,499.64 from the sale of the real property. Although Tooze issued two financial statements for Gull-Aire Corporation as of September 30, 1976, one audited and one unaudited, he did not state on the second financial statement the reason for its preparation and explain the accounting decisions which resulted in the change of various entries on the second statement. Tooze stated to the Board's investigator that he did not obtain a representation letter from the management of Gull-Aire Corporation. Tooze further stated that he did not prepare a written audit program nor obtain and report what internal controls existed within Gull-Aire Corporation. Tooze also prepared a financial report dated April 30, 1977, for Jack Carlson Company, Inc., which was received into evidence as Exhibit 2. The disclaimer prepared by Tooze in the Jack Carlson financial statement contained in the letter to the Board of Directors of the company dated September 15, 1977, stated as follows: We submit herewith our report on the examination of the books and records of Jack Carlson Company, Inc., for the fiscal year ended April 30, 1977, and the following exhibits: (delete) The terms of our engagement did not include those standard auditing procedures instant to the rendition of an opinion by an independent Certified Public Accountant. The limited scope of our examination precludes our expression of an opinion as to the fairness of the over-all representations herein. The attached statements were made the basis for the preparation of the U.S. Corporation Income Tax Return for the fiscal year ended April 30, 1977. Essentially the same statement is contained in the statements for Albeni Corporation and Georgetown Mobile Manor, Inc. No statement of changes in financial position was contained in the financial statement prepared for Jack Carlson Company, Inc. Section 516.08, SAS, No. 1 provides in pertinent part as follows: When financial statement's are issued proporting to present fairly financial position, changes in financial position, the results of operations in accordance with generally accepted accounting procedures, a description of all significant accounting policies of the reporting entity should be reported as an integral part of the financial statement. (Emphasis supplied) Tooze prepared financial statements for Albeni Corporation which were received as Exhibit #3, and financial statements for Georgetown Mobile Manor, Inc., which were received as Exhibit #4. The financial statements of Carlson, Georgetown and Albeni were all unaudited. Tooze did not provide an explanation or note to the financial statements describing significant accounting policies which he applied in preparing the statements. In the financial statement of Albeni Corporation, Tooze indicated that "these interim financial statements are intended primarily for internal management use." The fixed assets in the financial statement of Georgetown Mobile Manor, Inc., constitute $301,642 out of $345,000 of the company's assets. Depreciation and accumulated depreciation are reported as $103,641. The method of computing depreciation was not indicated on the financial statement. In the unaudited financial statements prepared for Carlson and Albeni, the basis of stating inventories and the methods used to determine inventory costs were not disclosed, although inventories constitute a significant percentage of both companys' assets.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law the Bearing Officer recommends that the Board of Accountancy take no action on the violation of Rule 21A-4.02, Florida Administrative Code, and Section 473.251, Florida Statutes. DONE and ORDERED this 3rd day of April, 1979, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 COPIES FURNISHED: Douglas M. Thompson, Jr. Executive Director State Board of Accountancy Post Office Box 13475 Gainesville, Florida 32604 Samuel Hankin, Esquire Post Office Box 1090 Gainesville, Florida 32602 Mr. Edward J. Tooze 464 Patricia Avenue Dunedin, Florida 33528
Findings Of Fact At all times material to this proceeding, Respondent Favret held public accounting license number 0001424 with the State of Florida. Respondent's license to practice public accounting reverted to inactive status by operation of law on January 1, 1980, due to his failure to demonstrate to the Department of Professional Regulation and the Board of Accountancy compliance with the continuing education requirements imposed on licensed public accountants pursuant to Section 473.312, Florida Statutes, and Chapter 21A-33, Florida Administrative Code. The Respondent was aware that his license reverted to inactive status on January 1, 1980, due to his failure to meet professional continuing education requirements. Respondent chose not to comply with the continuing education requirements because he did not wish to maintain an active license and did not feel that formal continuing education was of benefit to him. Between January 1, 1980, and August, 1981, Respondent continued to perform tax advisory services for approximately twenty-five (25 ) clients. His services included the preparation of personal federal income tax returns and all necessary supporting tax schedules. Respondent explained the tax services he provided as including the accumulation of raw data brought in by a client in categories, summarizing the information and then preparing the necessary tax forms. Although the Respondent signed all the tax forms as the preparer, he ceased using the professional designation, "C.P.A." when he received formal notice of the inactive status of his license. To prepare the income tax returns for his clients, knowledge of the present tax laws and regulations, tax accounting and arithmetic were utilized by the Respondent in the tax advisory and preparation services for which he received compensation. The preparation of personal income tax returns involves the use of accounting skills which includes the ability to make a determination of what items need to be recognized and included7 the reasonableness of the items, the proper categorization of the items and whether to apply certain accounting functions such as allocation to the items. 1/
