ALJDEC decisions subject to certification as final

09F-2008.075-ACY · State Board of Accountancy · 2008-12-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 11, 2008 at 9:00 a.m. APPEARANCES: Respondents Denise M. Eddows and Denise M. Eddows, P.C. did not appear; the Arizona State Board of Accountancy appeared through Daniel R. Christl, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Arizona State Board of Accountancy (“the Board”) issued to Certified Public Accountant Certificate No. 4555-E to Respondent Denise M. Eddows and Certified Public Accounting Firm Registration No. 943-C to Respondent Denise M. Eddows, P.C. 2. On October 7, 2008, the Board issued a Complaint and Notice of Public Hearing, which alleged certain facts and that those facts provided grounds to revoke or to take other disciplinary action against Ms. Eddows’ certificate to practice public accounting and firm registration under A.R.S. § 32-741(A)(9), (15) (specifically A.A.C. R4-1-455.03(F) and R4-1-455 through R4-1-455.04), A.R.S. §§ 32-731, 32-742, and 32-747(A), (B), (E), and (F). 3. The Complaint and Notice of Hearing set an administrative hearing on December 11, 2008 at 9:00 a.m. at the Office of Administrative Hearings before an Administrative Law Judge. Enclosed with the Complaint and Notice of Hearing was a copy of the procedures to be following in the Office of Administrative Hearings. 4. The Board sent the Complaint and Notice of Hearing via certified mail to Ms. Eddows at her address of record. 5. Ms. Eddows did not contact the Office of Administrative Hearings at any time before the scheduled hearing to request that she be allowed to appear telephonically or that the hearing be rescheduled. 6. At the time on the date scheduled for hearing, the Board’s attorney appeared personally and indicated that Ms. Eddows had called him about the hearing and that he had instructed her to contact the Office of Administrative Hearings. The Administrative Law Judge instructed her staff to transfer to the hearing room any telephone call received from Ms. Eddows. 7. Staff transferred Ms. Eddows’ telephone call to the hearing room. Ms. Eddows was on her cellular phone on her way to work. She indicated that three of her friends or family members had died in the five weeks before the hearing. She asked to appear telephonically at the hearing, which had already begun. 8. The Board opposed Ms. Eddows’ motion to appear telephonically. Because it had no advance notice of her intent, it had not provided its exhibits to her in advance of the hearing. In addition, the quality of Ms. Eddows’ cellular phone transmission and reception was poor. 9. The Administrative Law Judge denied Ms. Eddows’ request to appear telephonically and disconnected the telephone, based on the Board’s opposition, the untimeliness of Ms. Eddows’ request,[1] and because Ms. Eddows failed to establish good cause for being allowed to appear telephonically.[2] 10. The Board presented the testimony of its Compliance Manager Ryan Edmundson and had admitted into evidence twelve exhibits. Hearing Evidence 11. On May 22, 2008, the Board received a complaint against Ms. Eddows, which alleged that she had been hired to provide professional assistance in calculating an paying a small business’ payroll, sales, and annual taxes, but that she had been filing the tax forms late, which had resulted in the assessment of penalties. In addition, the complaint alleged that Ms. Eddows had not responded to requests for information or returned the client’s paperwork after it had hired another accountant. 12. On May 23, 2008, the Board’s executive director sent via certified mail a copy of the complaint to Ms. Eddows at her address of record. The Board’s letter that accompanied the copy of the complaint concluded: Please review the enclosed Complaint and allegations. A written response is required, pursuant to R4-1-455.03(F), and should be received by the Board office no later than 30 days from the date of this letter. The Board requests that you include any attempts you have made to rectify this matter and any documentation you wish to be considered.

If you fail to respond to this request, this failure may be considered a knowing violation of a regulation promulgated by the Board in violation of A.R.S. Section 32-741(A)(9).

The May 23, 2008 letter and enclosed complaint were delivered to Ms. Eddows’ address of record and accepted by one Debbie Restivo. 13. On June 2, 2008, Board staff informed Ms. Eddows that it had suspended her certificate to practice as a Certified Public Accountant in the State of Arizona under A.R.S. § 32-741(C) because she had failed to timely register and pay the biennial registration fee as required by A.R.S. § 32-730(A). The Board further informed her that, as a result, she was no longer authorized to practice as a certified public accountant in Arizona and that holding herself out as a CPA after suspension of the certificate was a class 2 misdemeanor and could subject her to further disciplinary action. 14. A copy of the Board’s order suspending Ms. Eddows’ public accountant certificate was attached to its June 2, 2008 letter. 15. The Board sent copies of its June 2, 2008 letter to Ms. Eddows via regular and certified mail. The certified mail was delivered to Ms. Eddows’ address of record and accepted by Debbie Sue Restivo. 16. On June 19, 2008, contract investigator Gary L. Gethmann, CPA issued a report to the Board’s Tax Committee, informing it that he had interviewed the complainant and verified the complaint. According to the complainant, Ms. Eddows still had not returned client documents, in violation of Rule 501-1 of the AICPA Code of Professional Conduct. 17. Ms. Eddows did not respond to the Board’s May 23, 2008 letter within 30 days. Instead, on July 24, 2008, she sent via facsimile a letter to the Board, acknowledging receipt of the May 23, 2008 letter but alleging that her secretary had miscalendared the response time. Ms. Eddows did not respond to the complaint but, instead, requested “a chance to respond to the complaint filed.” 18. On July 23, 2008, the Board’s executive director sent a letter to Ms. Eddows, allowing her an additional opportunity to respond to the complaint, without waiving the Board’s ability to take disciplinary action for violations of A.R.S. § 32-741(A)(9) and (15), based on her failure to timely respond to the May 23, 2008 letter. 19. The Board’s July 23, 2008 letter also informed Ms. Eddows that the complaint had been assigned to investigator Mr. Gethmann and urged her to cooperate with Mr. Gethmann. 20. Ms. Eddows still did not submit a written response to the complaint. 21. On September 8, 2008, based on the Tax Committee’s recommendation, the Board voted to open an investigative file and to file a complaint and notice of hearing for the revocation of Ms. Eddows’ certificate and firm registration. 22. On September 9, 2008, Mr. Gethman submitted a report to the Tax Committee. After several appointments, on September 4, 2008, Mr. Gethmann had met with Ms. Eddows at her office. She provided a verbal response to the complaint. However, Mr. Gethmann reported: A larger problem would be Eddows’ failure to adopt the terms of her license suspension. A large sign in front of her office reads “Denise Eddows, P.C.” The first room inside the door contains twenty framed documents. Among them are her CPA certificates from Arizona and California, membership recognition from the Arizona CPA Society, the California Society of CPA’s and a ten year membership recognition from the National Association of Tax Practitioners. All of these documents identify Denise Eddows as a CPA. . . .

23. On September 17, 2008, the Board’s executive director sent a letter to Ms. Eddows, informing her that the Tax Practice Committee had completed its initial analysis of the complaint and determined that reasonable cause existed to believe that Ms. Eddows had violated the Board’s regulations. 24. As a factor in aggravation of the penalty, the Board had admitted into evidence a copy of the amended Board Order against Ms. Eddows in file no. 2005.064 (OAH Docket No. 06F-2005.064-ACY). In that case, on February 14, 2006, the Board had revoked Ms. Eddows’ public accountant certificate based on her failure to respond to a customer complaint or the Board’s enquiries, in violation of A.R.S. § 32-741(A)(9) and (15) and A.A.C. R4-1-455.03(F) and R4-1- 455.03(A)(1) and (3). However, the Board stayed the revocation and, instead, placed Ms. Eddows on probation. 25. On May 5, 2008, the Board issued an order in File Nos. 2005.064 and 2006.103, finding that Ms. Eddows had successfully completed the terms of her probation and terminating her probation. 26. Mr. Edmundson testified at the hearing that, a week before the scheduled hearing, Ms. Eddows had called him and informed him that her boyfriend had just passed away. Ms. Eddows had told Mr. Edmundson that she intended to let her certificate lapse because she did not have $325 to renew it. Ms. Eddows had indicated that she knew a hearing was scheduled on December 22, 2008. CONCLUSIONS OF LAW The notices of the complaint and of the hearing that the Board mailed to Ms. Eddows at her address of record were reasonable and it appears that she actually received such notices.[3] The Board has been created and authorized to regulate and control the profession of Certified Public Accountancy in Arizona.[4] The Board has personal and subject matter jurisdiction over Ms. Eddows and her firm. The Board bears the burden of proof to establish Ms. Eddows’s statutory and regulatory violations by a preponderance of the evidence.[5] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] A preponderance of the evidence is “evidence which is of greater weight or more convincing than evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.”[7] Ms. Eddows is deemed to have knowledge of the Board’s rules.[8] The Board’s Rules incorporate the Standards and Principles of Professional Conduct with which all registrants must comply.[9] The Board may revoke a certificate granted under its statutory authority after hearing if it has established that the registrant committed a knowing violation of a rule issued or adopted by the Board or that the Registrant failed to respond or to furnish information to the Board after legal request, if the information is in the registrant’s possession or control.[10] Applicable regulation requires that, “[w]hen requested, certified public accountants or public accountants shall respond to communications from the Board within 30 days of the mailing of such communications by registered or certified mail.”[11] The Board has established that Ms. Eddows violated this regulation. Applicable regulation also prohibits a certified public accountant from committing any “discreditable acts,” which include violation of any administrative regulation.[12] The conduct and circumstances described in the Findings of Fact are grounds for revocation, suspension, probation and other disciplinary action against Certificate No. 4555-E and Firm Registration No. 943-C.[13] Since Ms. Eddows’ certified public accountant certificate has been suspended, it is unlawful for her to assume or use the titles CPA, C.P.A., P.A., or PA.[14] It is unlawful for Ms. Eddows to represent herself to the public as having received a certificate or registration to practice.[15] Ms. Eddows’ display in her office of her various CPA certificates is prima facie evidence of her violation.[16] Ms. Eddows’s persistent refusal or failure to respond to the Board’s inquiries and disciplinary history indicate that she cannot be regulated. The Board also may revoke a firm’s registration for the same reasons as for revocation of an individual registrant’s certificate or following the revocation or suspension of any certificate previously issued to any shareholder in the firm.[17] RECOMMENDED ORDER Based on the foregoing, it is recommended that the Board revoke Certified Public Accountant Certificate No. 4555-E, previously issued to Denise M. Eddows. It is further recommended that the Board revoke certified Accounting Firm Registration No. 943-C, previously issued to Denise M. Eddows, P.C. Done this day, December 22, 2008.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of December, 2008, to:

Arizona State Board of Accountancy Monica L. Petersen, Executive Director 100 N. 15th Ave., Suite 165 Phoenix, Arizona 85007

By ___________________________ ----------------------- [1] See A.A.C. R2-19-106(C). [2] See A.A.C. R2-19-114(1) and (2). [3] See A.R.S. § 41-1061(A). [4] See A.R.S. § 32-701 et seq.; R4-1-101 et seq. [5] See A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at page 1064 (6th ed. 1990). [8] A.A.C. R4-1-102(A). [9] A.A.C. R-4-1-455 – 455.04. [10] A.R.S. § 32-741(A)(9) and (15). [11] A.R.S. § 32-741(A)(15); A.A.C. R4-1-455.03(F). [12] See A.A.C. R4-1-455.03(A)(3). [13] See A.R.S. § 32-741(A) and (D), as defined in A.R.S. § 32-701(6). [14] A.R.S. § 32-747(A) and (B). [15] A.R.S. § 32-747(E). [16] A.R.S. § 32-747(F). [17] A.R.S. § 32-742(B)(1) and (2).

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

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