ALJDEC decisions subject to certification as final

09F-2009.093-ACY · State Board of Accountancy · 2010-01-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 15, 2009 at 1:00 p.m. APPEARANCES: The Arizona State Board of Accountancy appeared through Elizabeth Campbell, Esq., Assistant Attorney General; Respondent John W. Degnan did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT 1. The Arizona State Board of Accountancy (“the Board”) issued to Certified Public Accountant Certificate No. 3562-E to Respondent John W. Degnan and Certified Public Accounting Firm Registration No. 694-C to John W. Degnan, CPA, PC. 2. At the time of the hearing in this matter, Mr. Degnan’s Certified Public Accountant Certificate No. 3562-E had been suspended for his failure to renew it. 3. Mr. Degnan’s Certified Public Accounting Firm Registration No. 694- C will expire on July 1, 2010. 4. On May 29, 2009, the Board received a consumer complaint from the attorney representing the United States Sports Insurance Company, Inc. against Mr. Degnan. The attorney enclosed with the complaint to the Board copy of a civil complaint against Mr. Degnan filed in Maricopa County Superior Court. 5. On June 5, 2009, the Board sent via certified mail to Mr. Degnan at his address of record a letter, with which was enclosed a copy of the complaint to the Board. The Board informed Mr. Degnan that the complaint had been assigned for investigation to an investigator and would be reviewed by the Accounting and Auditing Standards Committee (“the Committee”). 6. The Board required Mr. Degnan to furnish a written response to the complaint no later than 30 days from the date of the letter. 7. An Anne Mueller signed the return receipt for the certified letter dated June 5, 2009 that the Board had sent to Mr. Degnan’s address of record. 8. Mr. Degnan never responded to the Board’s June 5, 2009 certified letter. Because the Committee could not investigate the complaint without a response from Mr. Degnan, it terminated the investigation and recommended that the Board revoke Mr. Degnan’s certificate and registration because he had shown that he could not be regulated. On September 22, 2009, the Board sent via certified mail to Mr. Degnan at his address of record a Complaint and Notice of Public Hearing, which charged Mr. Degnan with unprofessional conduct under A.R.S. § 32-741(A)(15) and (9) (specifically A.A.C. R4-1-455.03(F)), A.R.S. § 32-741(D), and A.A.C. R4-1-455.03(A). The Complaint and Notice of Hearing set a fair hearing on December 3, 2009 at the Office of Administrative Hearings, an independent state agency. The Board sent the Complaint and Notice of Hearing to Mr. Degnan at his address of record. On December 2, 2009, the Office of Administrative Hearings received a request from Mr. Degnan that the hearing be continued because he had a respiratory infection. The Board did not oppose a brief continuance. On December 3, 2009, the Administrative Law Judge issued an order continuing the hearing to January 15, 2010 at 1:00 p.m. The Office of Administrative Hearings mailed a copy of the order continuing the hearing to Mr. Degnan at his address of record. A hearing was held on January 15, 2010. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Mr. Degnan additional travel time, he did not appear personally or through an attorney and did not contact the Office of Administrative Hearings to request another continuance or that the time for the start of the hearing be further delayed. Mr. Degnan did not present any evidence to defend his Certified Public Accountant Certificate or his Certified Public Accountant Firm Registration. The Board presented the testimony of its Compliance Manager Ryan Edmondson and submitted three exhibits to establish the facts set forth above. CONCLUSIONS OF LAW The notice of the hearing, which was continued at Mr. Degnan’s request, that the Office of Administrative Hearings mailed to Mr. Degnan at his address of record was reasonable and he is deemed to have received the notice of the continued hearing.[1] It appears that Mr. Degnan actually received the Board’s Complaint and Notice of Hearing. The Board has been created and authorized to regulate and control the profession of Certified Public Accountancy in Arizona.[2] The Board bears the burden of proof to establish Mr. Degnan’s statutory and regulatory violations by a preponderance of the evidence.[3] 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.”[4] 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.”[5] Applicable regulation also prohibits a certified public accountant from committing any “discreditable acts,” which include violation of any administrative regulation.[6] The Board established at the hearing that Mr. Degnan violated applicable regulation by failing to respond to the Board’s communication, thereby committing a discreditable act.[7] Under applicable regulation, registrants such as Mr. Degnan are deemed to have knowledge of the rules.[8] 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 adopted by the Board or that the Registrant failed to respond or to furnish information to the Board after legal request.[9] The Board established that Mr. Degnan violated applicable regulations and that he refused to provide information, upon request, about his transactions with his purported former client United States Sports Insurance Company, Inc. Mr. Degnan’s refusal or failure to respond to the Board’s inquiry or to attend or present evidence at the duly noticed continued hearing indicate that he cannot be regulated at this time. The Board also may revoke a firm’s registration for the same reasons that allow it to revoke an individual registrant’s certificate or following the revocation or suspension of any certificate previously issued to any shareholder in the firm.[10] RECOMMENDED ORDER Based on the foregoing, it is recommended that the Board revoke Certified Public Accountant Certificate No. 3562-E, previously issued to John W. Degnan It is further recommended that the Board revoke certified Accounting Firm Registration No. 694-C, previously issued to John W. Degnan, CPA, PC. Done this day, January 21, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director Arizona State Board of Accountancy ----------------------- [1] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [2] See A.R.S. § 32-701 et seq. [3] 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). [4] Black’s Law Dictionary at page 1220 (8th ed. 1999). [5] A.A.C. R4-1-455.03(F). [6] See A.A.C. R4-1-455.03(A)(3). [7] See A.A.C. R4-1-455.03(A)(1) and (3). [8] A.A.C. R4-1-102(A); see also Conway v. State Consolidated Publishing Co., 57 Ariz. 162, 171, 112 P.2d 218 (1941) (Everyone is presumed to know the law). [9] A.R.S. § 32-741(A)(9) and (15). [10] A.R.S. § 32-742(B)(1) and (2).

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