ALJDEC decisions subject to certification as final

07F-2007.074-ACY · State Board of Accountancy · 2007-06-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 15, 2007 at 9:00 a.m. APPEARANCES: The Arizona State Board of Accountancy (“the Board”) appeared through Seth T. Hargraves, Esq., Assistant Attorney General; Respondent Stephan H. Brewer did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The Board presented evidence on the issue of whether Certified Public Accountant Certificate holder Stephan H. Brewer violated applicable statutes and regulations. Based on this evidence, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Board. FINDINGS OF FACT Background and Procedure 1. The Board issued to Mr. Brewer Certified Public Accountant (“CPA”) Certificate No. 10612-E. 2. Mr. Brewer’s address of record at the Board is 610 N. Gilbert Rd., Suite 301, Gilbert, AZ 85234. 3. On April 2, 2007, the Board issued a Complaint and Notice of Hearing, alleging certain facts and charging Mr. Brewer with violations of A.A.C. R4-1-455.01(H), A.A.C. R4-1-455.04, A.R.S. § 32-741(A)(14)(a) and (c), A.R.S. § 32-741(A)(9) and A.A.C. R4-1- 455.03(F), A.R.S. § 741(A)(15), and A.A.C. R4-1-455.03(A). The Complaint sought to discipline Mr. Brewer’s certificate pursuant to A.R.S. § 32-741(A) and (D), as defined in A.R.S. § 32-701(6). 4. The Complaint and Notice of Hearing set an administrative hearing on May 15, 2007 at 9:00 a.m. before the Office of Administrative Hearings. The Board sent the Complaint and Notice of Hearing to Mr. Brewer at his address of record via certified mail, return receipt requested. 5. On May 9, 2007, the Office of Administrative Hearings received an unsigned note from Mr. Brewer, stating that “I . . . accept the notice of public hearing and request a postponement to seek adequate legal counsel.” 6. On May 9, 2007, the Administrative Law Judge issued an order denying the request for continuance as untimely under A.A.C. R2-19- 106(C). The order was mailed to Mr. Brewer at 610 N. Gilbert Road, Suite 301, Gilbert, Arizona 85234 on May 10, 2007. 7. Mr. Brewer did not contact the Office of Administrative Hearings to ascertain the status of his motion to continue. 8. A hearing was held on May 15, 2007 at 9:00 a.m. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Mr. Brewer additional travel time, he did not appear personally or through an attorney, contact the Office of Administrative Hearings to request that the time for the hearing be further delayed, or present any evidence at the hearing to defend his public accountant certificate. 9. A hearing was held on May 15, 2007, at which the Board presented the testimony of Mr. Brewer’s former client Christine Ray, the Board’s employee Project Specialist Ryan Edmonson, and the Board’s contract investigator Marshall E. King, CPA and had admitted into evidence twenty exhibits. 10. According to the docket of the Office of Administrative Hearings, on May 16, 2007, staff received a telephone call from Mr. Brewer, “stating he never got the Order denying the [motion to continue] and the he never got the [Notice of Hearing].” Hearing Evidence File No. 2006.089 11. Christine Ray has been a nurse for 14 years. She is employed by the Maricopa Integrated Health Care as a burn unit nurse and by CNS as a registry nurse. 12. Ms. Ray retained Mr. Brewer as her CPA to file her personal taxes for five to eight years. In 2005, she retained him to file articles of incorporation for an entity called Ray Nursing Solutions, PLLC, a nursing registry for which Ms. Ray would be the sole employee. Mr. Brewer charged Ms. Ray $1,000 for this service, payable half down and half at the completion of the job. 13. Ms. Ray authenticated and testified consistently with a complaint she made to the Board against Mr. Brewer on May 7, 2006, as follows: I paid by check a partial payment of $500.00 in December 2005 for Stephan to file the necessary forms . . . . The documents were filed on January 3, 2006 with the Arizona Corporation Commission (ACC).

On January 23, 2006 I received a notice from the ACC that requested more information to complete the incorporation. I called Stephan that day explaining the letter, and faxed him the request. He stated that he would take care of the matter.

Several weeks passed and I called asking the status of the incorporation, I was told by Stephan that it took the ACC a great deal of time to complete the request. I started calling each week asking if they had heard anything.

When I met with Stephan in February 2006 for my personal income tax appointment, I once again asked about the application and was told that it took time for the ACC to complete the applications as they were behind in their work.

By February 23, 2006 I was totally frustrated and called the ACC to see if I could expedite the process. During the conversation I was told that the information requested on January 3, 2006 had never been received. I asked them about their process and thanked them for their time.

I was on my way to Stephan’s office in Sun City at that time. When I arrived I asked to speak with Stephan, but he was not there. On the way home I called his east valley office and was unable to speak with him. I left a message that I wanted to speak with Stephan that day.

That evening I received a call from Stephan. During that conversation he told me that he had delivered the re-submitted application himself. When I asked him to fax me the ACC stamped copy of the re-submitted application he could not provide that copy. During the conversation there were a number of discrepancies that he could not resolve, so I told him that I was severing our relationship. I also requested that he send me the $500.00 I had paid him as he had not completed the agreed upon work, and to please send me all the research that I had completed to substantiate my school loan repayment by the corporation.

I received a letter from the ACC dated 3-7-06 stating that they needed one or more descriptive words to be added to Naufali Nursing Solutions to distinguish my corporation from Naufali Nursing Solutions. Not understanding this request, I contacted the ACC via phone. On 2-24-06, (the day after I had severed our working relationship with him during that phone call), Stephan re-submitted my Articles of Organization with the name Naufali Nursing Solutions, PLLC. It had my address, a different address under article II, and him as the Statutory Agent, my file number, and me as the member.

14. Ms. Ray attached to her complaint and the Board had admitted into evidence the ACC’s January 18, 2006 letter informing her that “[a] Professional Limited Liability Company must indicate the purpose is to render the specified professional service(s) that the company is organized to provide”; the submission for Ray Nursing Solutions, PLLC, that Mr. Brewer had made on her behalf to the ACC on January 3, 2006; her letter to Mr. Brewer dated March 13, 2006, recounting her severance of their relationship and, the next day, his filing amended articles on her behalf, with the incorrect name, Naufali Nursing Solutions; a copy of the Articles of Organization filed with the ACC on February 24, 2006 for Naufali Nursing Solutions, PLLC, with a business address in Gilbert and showing Ms. Ray as the sole member at her address in New River and Mr. Brewer as the statutory agent; the letter from the ACC dated March 7, 2007; and her letter to Mr. Brewer dated April 5, 2006, again requesting return of $500 payment, her research, and prior tax returns. 15. Ms. Ray testified at the hearing that she has nothing to do with Naufali Nursing Solutions. 16. Ms. Ray also testified that Mr. Brewer still has not returned her $500, research, or copies of past tax returns. 17. Ms. Ray testified that she made the necessary corrections to the documents that Mr. Brewer had filed on February 24, 2006 and that she filed the corrected documents with the ACC on March 15, 2006. The Board had admitted into evidence the corrected Articles of Organization for Ray Nursing Solutions, PLLC, which were date- stamped as having been received by the ACC on March 15, 2006. Mr. Brewer’s name as statutory agent is crossed out and Karen Shipp’s name and address inserted. 18. Mr. Edmonson has been employed by the Board for three years as a Program Project Specialist. Mr. Edmonson facilitates meetings, processes documents, and, with Executive Director Valerie M. Elliott, manages the investigation process. 19. Mr. Edmonson testified that the Board regulates the practice of accounting by CPAs. Anyone may practice accounting in Arizona but, to be called a “CPA,” a person must have a certificate issued by the Board. 20. Mr. Edmonson testified that CPAs are governed by Board statutes and regulations and by the standards adopted by the American Institute for Certified Public Accountants (“AICPA”). 21. Mr. King testified at the hearing. He has been an independent contractor serving the Board in investigations since 1994. His job is to gather evidence on possible violations of AICPA standards and the Board’s regulations and statutes. 22. Mr. King testified that he has been a CPA since 1985. He earned a BS in Accounting from ASU in 1983. He has worked both in the tax related and financial statement areas of the profession. 23. Mr. King testified consistently with the two reports he prepared, quoted infra, which were admitted into evidence. 24. Mr. Edmonson is familiar with the complaint process. The Board may receive complaints from a named complainant, as in this case, or anonymously. The Board may also initiate a complaint. 25. Mr. Edmonson testified that, when the Board receives or initiates a complaint against a CPA, it opens a file on a database to track the complaint and assigns an investigative liaison to investigate the complaint. The Board has two committees: the Tax Practice Committee and the Accounting and Auditing Standards Committee. The relevant committee reviews the investigative report and makes a recommendation to the Board, which makes the final decision. 26. Mr. Edmonson testified that, when a complaint if received, the Board requires the CPA to respond to the complaint in writing within 30 days. In this case, on May 12, 2006, the Board sent a letter to Mr. Brewer, enclosing Ms. Ray’s complaint and informing him that “[a] written response is required, pursuant to Arizona Administrative Code [“A.A.C.”] R4-1-455-03(F), and should be received in the Board office no later than 30 days from the date of this letter.” 27. The Board’s May 12, 2006 letter was sent via certified mail, return receipt requested to Mr. Brewer’s address of record at 610 N. Gilbert Rd., #301, Gilbert, AZ 85234. The return receipt for the letter indicates that it was received at that address on May 15, 2006. 28. Mr. Edmonson testified that the Board did not receive any response to Ms. Ray’s complaint from Mr. Brewer within 30 days of May 12, 2006. Instead, on June 21, 2006, the Board received Mr. Brewer’s response, in relevant part as follows: I asked [Ms. Ray] several times to assure that her employer could pay her as an Independent Contractor and more importantly, as an entity. She was told several times that this was a crucial issue. She indicated to me that her new employing registry was to be the same registry as used by another of our clients. Our client was currently being paid as an Independent Contractor by this registry. . . . .

The Articles of Organization for Ray Nursing Solutions, PLLC were filed on January 3rd, 2006 with the [ACC]. After having been in process about three weeks, my office inquired as to the status of the entity. My office was told that the system showed that it had been filed on January 3rd 2006. There was no other indication as to status, therefore, it was still in process. My office again inquired at the beginning of February and was told that the Articles of Organization needed some descriptive language as to the allowed function of the entity. We also had a similar request for another client (Naufali Nursing Solutions, PLLC), regarding similar language. The additional documentation was prepared for both entities and delivered to the ACC two days later. This was during tax season and I personally went down to the ACC to insure these documents were properly submitted. I was in a rush to get back to the office after waiting a very long time. I did not get a stamped copy of the delivered documents as is our normal policy. On this day, the ACC was having a problem with their copier and I could not wait any longer. Ms. Ray indicated that the documents were mixed up between the two entities and it appears that they were, even though the clerk was told that they were two separate entities. On the ACC website, it shows the correct Articles, so this apparently was corrected. . . . .

Ms. Ray states that I did not represent her and should not have filed the additional paperwork. As the Articles of Organization signed by Ms. Ray indicate, I am listed as the Statutory Agent. In addition, we were verbally contracted by Ms. Ray—with due consideration, to set up the entity known as Ray Nursing Solutions, PLLC. Therefore, the follow-through with additional requested information, presented to the ACC, was clearly within my duties as contracted and statutory agent. Clearly, as the approved Articles of Organization indicate, the entity was properly set up and all necessary documentation delivered.

Somewhere around the end of February, I was informed by the owner of the second approved entity—Naufali Nursing Solutions, PLLC, that the owner of the employing registry could no longer employ her as an Independent Contractor. This was due to liability issues with organizations that the registry was contracted with. This is the same registry that was to employ Ms. Ray as an Independent entity. It was about this same time that Ms. Ray contacted me to sever our relationship sighting [sic] incomplete setup of her entity. Clearly the entity was properly set up as indicated by the approved Articles of Organization. Ms. Ray also indicated that she requested all copies of documents submitted both to us as part of Ms. Ray’s research and all documents submitted to the ACC by us. In addressing the above issues, I told Ms. Ray that, yes, we needed to sever our relationship, that I would not be returning her $500.00 retainer and that the documents both submitted to us and by us, are working papers and would not be returned. I indicated that we had properly completed more than half of the services and therefore had more than earned the retainer.

[Emphasis added.] 29. Among the documents that Mr. Brewer attached to his response was a printout from the ACC website dated June 20, 2006 for Ray Nursing Solutions, PLLC. The printout showed Karen Shipp as the statutory agent and that the Articles of Organization had been received on March 15, 2006. 30. Also among the documents that Mr. Brewer attached to his response was a printout from the ACC website dated June 20, 2006 for Naufali Nursing Solutions, PLLC. The printout showed that the Articles of Organization had been received on November 14, 2005 and published on December 14, 2005. There is no notation of anything having been filed after January 13, 2006. 31. Mr. Edmonson testified that the complaint was assigned to investigative liaison Marshall King, CPA, who prepared a report dated May 18, 2006 for the members of the Tax Practice Committee. Based on his interviews with Ms. Ray and Mr. Brewer, Mr. King reported: The originally filed Articles of Organization, prepared by Brewer, did not include the Purpose of the PLLC was organized to provide, as required. On January 23, 2006, Ray called Brewer and faxed him a copy of the deficient filing letter from the ACC dated January 18, 2006 (included as attachment to Ray’s complaint). Brewer stated that he would take care of the matter but failed to do so within the 20 days required, as stated in the ACC’s letter. She stated that this was a violation of trust and caused her great concern.

Ray stated during the interview that she was so surprised and upset when she learned that Brewer filed the incorporation papers with the ACC on February 24, 2006 under a different name (Naufali Nursing Solutions, another client of Brewer’s) and address and listing himself as the appointed Statutory Agent after she had told him on the previous day (February 23, 2006) that she was terminating his services and requested that he return documentation she had completed to substantiate her school loan repayment by the corporation. Ray stated that she worked with a respresentative of the ACC to make the necessary corrections and ultimately her Articles of Organization for Ray Nursing Solutions, PLLC was approved by the ACC.

Ray stated that Brewer has not responded to her April 5, 2006 letter to him (attachment to Ray’s complaint—sent with Delivery Confirmation) in which she requested the return of her research documents, her prior tax returns and the $500.

Based on my interview of Ray and review of the complaint and supporting documents, I believe Brewer violated the following ethical standards . . . included in the AICPA’s Professional Code of Conduct (Volume II of Professional Standards, ET Section):

ET Section 54 – Integrity

Paragraph .02 states, in part, “Integrity requires a member to be, among other things, honest and candid within the constraints of client confidentiality . . . “

Paragraph .03 states, in part, “. . . Am I doing what a person of integrity would do? Have I retained my integrity? . . . “

ET Section 56 – Due Care

Paragraph .04 states “Members should be diligent in discharging responsibilities to clients, employers, and the public. Diligence imposes the responsibility to render services promptly and carefully, to be thorough, and to observe applicable technical and ethical standards.”

ET Sections 501 – Acts Discreditable

Paragraph .01 states, in part, “Retention of client records after a demand is made for them is an act discreditable to the profession . . . “

32. The Tax Practice Committee Minutes for their session on July 24, 2006 indicate that the Tax Practice Committee voted to recommend to the Board to open an investigation file and to invite Mr. Brewer for an investigative interview at its October 23, 2006 meeting. 33. The Board’s open session minutes for its September 11, 2006 meeting indicate that it voted to accept the Tax Practice Committee’s recommendation to open an investigative file. 34. On September 12, 2007, the Board’s Executive Director Ms. Elliott sent a letter to Mr. Brewer, informing him that the Tax Practice Committee had determined that “reasonable cause exists to believe that there has been a violation of the Board’s regulations” and had opened an investigation file. Ms. Elliott also informed Mr. Brewer that “[t]he Committee has invited you to an investigative interview at their October Committee meeting.” Ms. Elliott informed Mr. Brewer that a written response was required, pursuant to A.A.C. R4- 1-455.03(F), within 30 days, indicating whether Mr. Brewer would attend the Tax Practice Committee’s meeting and, if so, whether he would be accompanied by legal counsel. The September 12, 2007 letter was mailed to Mr. Brewer at his address of record in Gilbert. 35. On October 6, 2006, the Board received Mr. Brewer’s response, which indicated that he would be attending the Tax Practice Committee’s October meeting. Mr. Brewer’s letter continued: As to the question of myself being accompanied by legal counsel, I would need to know what the supposed violation is. I cannot believe that this case has gotten this far. I would like a response to the suspected violation and will then advise as to attendance of legal counsel.

36. On October 23, 2006, at approximately 1:00 p.m., members of the Tax Practice Committee interviewed Mr. Brewer after he was placed under oath. The Committee pointed out that, according to the ACC web site, “Naufali Nursing Solutions was filed on November 14th, 2005 and approved on that date.” Mr. Brewer admitted that he prepared and filed the Articles of Organization for Ray Nursing Solutions after he prepared and filed the Articles for Naufali Nursing Solutions. 37. At the October 23, 2006 meeting, Mr. Brewer described the sequence of events when he went to the ACC on February 24, 2006 to provide the ACC with the additional requested information on Ray Nursing Solutions, which resulted in the name Naufali Nursing Solutions being on the first page of Ray Nursing Solutions’ Articles of Organization: MR. BREWER: Well, we were having a problem because we’re hearing, and we called down there, we’re hearing that there’s a problem between Naufali and Ray, so I brought both of them down there. . . . .

MR. BREWER: And said here, this is Naufali, this is Ray, because they kept asking us about we can’t get approval for Naufali. We’re not talking about Naufali, we’re talking about Ray, so I brought them both down there, and I don’t know what they did, somehow they got that first page mixed up because I have a copy of a page that was submitted but somehow Naufali got back on that first page. It was Ray after that.

MR. BLAKE: Right, but that one’s the one that’s wrong because it didn’t have a business purpose, so you’re saying you did a new page one?

MR. BREWER: Correct.

MR. BLAKE: Do you have a copy of the new page one?

MR. BREWER: Yes.

MR. BLAKE: Okay. So you took the new page one with you and then just took along the original page two with her signature?

MR. BREWER: Correct, which she already signed.

MR. BLAKE: So now the articles that were approved ended up with two article fives, one for the business purpose and the original article five was about management?

MR. BREWER: But again, I took, because we were discussing this Naufali Ray thing, I took the other one with me too, I said look, this is Naufali, this is Ray, and I was trying to be very specific with the clerk, and yes, they were very jammed up that day and I’m sure it was a really busy day, but I tried to be very specific with her, this is the issues.[1]

38. On October 23, 2007 Tax Practice Committee Meeting its members voted to recommend that the Board offer Mr. Brewer “a Decision and Order (By Consent) to include one year probation; eight hours of continuing professional education, in the area of tax practice management and four hours in the area of ethics . . . in addition to that statutory requirement; reimbursement of the Board’s costs relating to the investigation and a civil penalty to be paid within days from the date of the order.” 39. On October 25, 2006, the Board’s Executive Director Ms. Elliott sent a letter to Mr. Brewer, informing him that the Board would consider the Tax Practice Committee’s recommendations at its December 4, 2006 meeting. 40. On December 4, 2006, the Board voted to accept the Tax Practice Committee’s recommendation to offer a Decision and Order (By Consent), including a civil penalty in the amount of $1,000.00, and, if Mr. Brewer did not accept the offer within 30 days, to file a Complaint and Notice of Public Hearing. 41. On December 5, 2006, Executive Director Ms. Elliott sent a letter to Mr. Brewer, informing him of the Board’s offer, enclosing a Decision and Order (By Consent), and letting him know he had 30 days to accept the Board’s offer. The return receipt indicates that the letter was delivered to Mr. Brewer’s address of record on December 6, 2006. 42. Mr. Brewer never accepted the Board’s offer of a Decision and Order (By Consent). File No. 2007.074 43. On October 23, 2007, the Tax Practice Committee also recommended that the Board open an additional file for the Accounting and Auditing Committee to review. 44. On December 4, 2006, the Board voted to open an investigative file regarding the possible accounting and auditing issues identified by the Tax Practice Committee. 45. On December 8, 2006, Executive Director Ms. Elliott sent another letter to Mr. Brewer, informing him that the Board had voted to approve the Tax Practice Committee’s recommendation to open a separate investigation file to be reviewed by the Accounting and Auditing Standards Committee. 46. The Board’s Accounting and Auditing Standards complaint was assigned to Mr. King to investigate. On December 20, 2006, Mr. King sent a report to the Accounting and Auditing Standards Committee, in relevant part as follows: After reading the transcript [of the Tax Practice Committee’s October 23, 2006 interview of Mr. Brewer], I believe that Brewer and his firm may have violated the professional standards pertaining to the issuance of compiled financial statements (AR Section 100). Brewer stated that his firm does not issue compilation reports with the financial statements submitted to clients under his firm’s letterhead. He described the services as being performed by another CPA that office shares with him (Gilbert office) on a contract basis but issuing the statements under Brewer’s firm letterhead (pages 9-10 and pages 30-32 of Brewer’s transcript). A determination needs to be made whether the financial statements that were issued to various clients of Brewer’s firm were for management’s use only and whether Brewer and his firm complied with AR Section 100.20-.23 for such an engagement. Additionally, independence may have been impaired as Brewer and his firm performed (took responsibility for) both attestation and non-attestation services for the same clients. A determination needs to be made whether Brewer and his firm complied with ET Section 101-3. Furthermore, Brewer may be in violation of the AICPA and the Board’s peer review reporting requirements.

I believe that a detailed investigation is necessary, including interviewing Brewer and conducting an on-site review to determine the nature and scope of the attestation services he performs or his firm is taking responsibility for (compilation engagements as Brewer described on pages 9-10 and pages 30-32 of his interview transcript) to determine whether he or his firm are in compliance with the applicable professional standards. A detailed review of work papers, correspondence files, etc. for randomly selected clients (number of engagements to be determined by the Committee) should be performed to make such a determination.

47. On January 18, 2007, the Accounting and Auditing Standards Committee voted to direct staff to direct the investigator to interview Mr. Brewer and perform an on-site review of work papers. 48. On January 24, 2007, Executive Director Ms. Elliott sent a letter to Mr. Brewer, informing him that the Accounting and Auditing Standards Committee had authorized Mr. King to act as its investigative reviewer, to interview Mr. Brewer, and to perform an on-site review. Ms. Elliott also informed Mr. Brewer that “[t]he Committee now urges your cooperation in permitting Mr. King to visit your office for the purpose of performing this on-site review.” 49. On January 30, 2007, Mr. King sent a letter to the Accounting and Auditing Standards Committee, informing its members that he had contacted Mr. Brewer, but that he “stated that he was objecting to the onsite investigation and was going to request that the Board proceed to Administrative Hearing.” 50. On February 12, 2007, the Board voted to file a Complaint and Notice of Hearing against Mr. Brewer for revocation of his CPA certificate. CONCLUSIONS OF LAW The Board has been created and authorized to regulate and control the profession of Certified Public Accountancy in Arizona.[2] These matters lie within its jurisdiction. The Complaint and Notice of Hearing that the Board mailed to Mr. Brewer at his address of record was reasonable and it appears that he actually received it.[3] If he did not receive the Administrative Law Judge’s order denying his motion to continue, his failure to ascertain the status of that motion before the scheduled hearing was unreasonable. The Board bears the burden of proof to establish Mr. Brewer’s statutory and regulatory violations by a preponderance of the evidence.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[6] Pursuant to its statutory authority, the Board has promulgated administrative rules governing CPAs in Arizona.[7] These rules incorporate the Standards and Principles of Professional Conduct with which all registrants must comply.[8] Mr. Brewer is deemed to have knowledge of the Board’s rules. [9] File No. 2006.089 The Board has established that Mr. Brewer’s practice and conduct in his engagement for Ms. Ray constitute a violation of A.R.S. § 32-741(A)(9) (“Knowing violation of any . . . rule issued or adopted by the Board”), specifically a failure to comply with applicable AICPA standards ET §§ 56 and 201 regarding Due Professional Care, incorporated in the Board’s rules at A.A.C. R4-1-455.01(H) and A.A.C. R4-1-455.04. Mr. Brewer knowingly made a false statement in his initial written response, that he prepared additional documentation for both Ray Nursing Solutions, PLLC and Naufali Nursing Solutions, PLLC and personally delivered the documentation to the ACC and that the ACC incorrectly processed the documentation. All other evidence shows and he later admitted that he only prepared and filed additional documentation for Ray Nursing Solutions, PLLC. The Board therefore has established that Mr. Brewer violated A.R.S. § 32-741(A)(14)(a) and (c).[10] Mr. Brewer failed to timely comply with the Board’s request for a response to Ms. Ray’s complaint. The Board therefore has established Mr. Brewer violated A.R.S. § 32-741(A)(9),[11] specifically, A.A.C. R4-1-455.03(F)[12] and A.R.S. § 32-741(A)(15).[13] Mr. Brewer committed discreditable acts in his performance of his engagement for Ms. Ray. The Board therefore has established that Mr. Brewer violated the standards regarding professional conduct set forth in A.A.C. R4-1-455.03(A).[14] The misconduct that the Board has established that Mr. Brewer committed in his performance of his engagement for Ms. Ray and the resulting violations of professional standards, statutes, and rules are grounds for revocation, suspension, probation, and other disciplinary action against Certificate No. 10612-E, pursuant to A.R.S. § 32-741(A). File No. 2007.074 Mr. Brewer failed to cooperate with the Board’s investigation by refusing to be interviewed or to allow Mr. King to examine his files. The Board therefore has established that Mr. Brewer violated A.R.S. § 32- 741(A)(6),[15] A.R.S. § 32-741(A)(9),[16] and A.R.S. § 32-741(A)(15).[17] The Board has established that Mr. Brewer’s failure to cooperate in the Board’s investigation and proven statutory violations constitute a failure to comply with the professional standards set forth in A.A.C. R4-1- 455.03(A).[18] Mr. Brewer’s persistent refusal or failure to respond to the Board’s inquiries, self-serving knowing misrepresentations, and refusal to accept any personal or professional responsibility for his misconduct show that he cannot be regulated. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Board revoke Certified Public Accountant Certificate 10612-E, previously issued to Stephan H. Brewer. It is further recommended that the Board order Mr. Brewer to pay $500.00 in restitution to Ms. Ray under A.R.S. § 32-701(6)(e). It is further recommended that the Board order Mr. Brewer to reimburse it for its costs of investigations and this proceeding under A.R.S. § 32-701(6)(f). Done this day, June 4, 2007.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of June, 2007, to:

State Board of Accountancy Valerie M. Elliott, Executive Director 100 N. 15th Ave., Suite 165 Phoenix, Arizona 85007

By ___________________________ ----------------------- [1] Interview transcript, Board’s Exhibit 9 at 26, l. 3 to 27, l. 12.

[2] See A.R.S. § 32-701 et seq.

[3] See A.R.S. § 41-1061(A).

[4] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952).

[5] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

[6] Black’s Law Dictionary at page 1220 (8th ed. 1999).

[7] See A.R.S. § 32-703.

[8] See A.A.C. R4-1-455 to -455.04.

[9] A.A.C. R4-1-102(A).

[10] The statute provides grounds for revocation or suspension of a CPA certificate, including the following:

14. Knowingly making a false or misleading statement:

(a) To the board or its designated agent. . . . .

c) In written correspondence to the board.

[11] This statute sets forth among the grounds for revocation or suspension of a CPA certificate “[k]nowing violation of any decision, order or rule issued or adopted by the board.”

[12] This regulation requires that, “[w]hen requested, [CPAs] shall respond to communications from the Board within 30 days of the mailing of such communications by registered or certified mail.”

[13] This statute sets forth among the grounds for revocation or suspension of a CPA certificate “[f]ailing to respond or furnish information in a timely manner to the board or its designated agent, if the information is legally requested by the board and is in the registrant’s possession and control.”

[14] This regulation prohibits CPAs from committing “any act that reflects adversely on their fitness to engage in the practice of public accounting,” including:

1. Violation of any of the provisions of R4-1-455 through R4-1-455.04; . . . .

3. Violation of any of the provisions of A.R.S. Title 32, Chapter 6, Article 3, or any rule promulgated under these statutes.

[15] This statute includes among the grounds for revocation or suspension of a CPA certificate “[v]iolation of any of the provisions of this chapter . . . .”

[16] See note 11, supra.

[17] See note 13, supra.

[18] See note 14, supra.

-----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826