ALJDEC decisions subject to certification as final

11F-2011.004-ACY · State Board of Accountancy · 2010-09-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 8, 2010 at 1:00 p.m. APPEARANCES: The Arizona State Board of Accountancy appeared through Seth T. Hargraves, Esq., Assistant Attorney General; Respondent David Allen Lund appeared on his own and his firm’s behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Arizona State Board of Accountancy (“Board”) is the state agency authorized pursuant to A.R.S. §§ 32-701, et seq. to regulate the practice of public accounting by Certified Public Accountants in the State of Arizona. 2. The Board issued Certificate No. 4206-E to Respondent David Allen Lund. This certificate enables Mr. Lund to practice as a certified public accountant in the State of Arizona. 3. The Board also issued Firm Registration No. 605-C to Mr. Lund to allow him to operate his accounting business, David A. Lund, C.P.A., P.C. (“firm”). 4. On July 21, 2010, the Board issued a Complaint and Notice of Public Hearing charging Mr. Lund with four violations of the statutes and rules that regulate accountants, as follows: (1) Failing to provide proof that he had completed 80 hours of Continuing Professional Education (“CPE”) on his biennial registration, in violation of A.R.S. §§ 32-741(A)(6) (specifically, A.R.S. § 32- 730(D)); (2) Failing to complete 80 hours of CPE in the registration period 2008-2010, in violation of A.R.S. § 32- 741(A)(9) (specifically, A.A.C. R4-1-453(D)); (3) Failing to respond to the Board’s request for information or to furnish proof that he had completed 80 hours of CPE before June 30, 2010, in violation of A.R.S. § 32-741(A)(15); and (4) Committing a discreditable act, as defined by A.A.C. R4-1-455.03(A)(3), by violating the charged statutes and regulations. 5. A hearing was held on September 8, 2010. 6. The Board presented the testimony of its deputy director, Jim Dubé, and submitted five exhibits. 7. Mr. Lund testified on his own behalf and submitted three exhibits. Hearing Evidence 8. On December 31, 2009, the Board received Mr. Lund’s completed biennial registration form (“biennial registration”) for the period 12/31/2009 – 12/31/2011. On the biennial registration, Mr. Lund checked the box for “no” to the question, “Do you request a waiver of the CPE requirement?” 9. Mr. Lund did not submit with the biennial registration a CPE form that documented his completion of at least 80 hours of CPE, as required by A.R.S. § 32-730(D) and A.A.C. R4-1-453(D). Instead, Mr. Lund attached to his biennial registration a letter requesting a six-month extension to complete CPE requirements, in relevant part as follows: The reason I am requesting an extension of time is twofold, both of which have been serious medical conditions. In June of this year, I returned to my office after lunch and immediately became disoriented and collapsed due to what I learned later is termed “gastro-intestinal vovulus” [sic]. Luckily my son was present with me and immediately called 911. By the time paramedics arrived, I was in cardiac arrest. After arriving at Banner Boswell Hospital in Sun City, Arizona, I was taken to surgery in attempt to save my life. I’ve been told that emergency physicians informed my family that the prognosis was grim. Despite the odds, I struggled to recover.

During my recovery, a number of complications arose. One morning I “coded” in intensive care and physicians again worked to revive me. Again I did. Then weeks later, due to a medical error in prescribed medications, I experienced an episode of delium [sic] which took over 10 days to recover from.

After the month of June passed and physicians felt comfortable to discharge me, I was too weak to return home. I had lost over pounds and am still unable to walk without the assistance of a walker. I spent the month of August in a rehabilitation facility learning how to regain my strength. Finally, after returning home at the end of the month, working at being able to walk was my only concern.

Against medical advice, I attempted to save my struggling practice that suffered during my absence. I hired and trained an apprentice CPA to help me complete returns and extensions that desperately needed to be filed. It was more than a full time job, and many times my body couldn’t handle the demands.

Compounding this issue is a chronic lower back problem that was born in 1984. After being hit by a drunk driver that fractured the vertebrae in my lumbar spine, I have undergone eleven lower back operations since. I am currently fused with plates and rods from my thoracic spine all the way to my sacrum. It has been a constant struggle that I have overcame [sic], however due to a failed disc above my current fusion, I was scheduled to have another back surgery when the emergency during the summer occurred. After physicians deemed me safe enough for an operation of that magnitude, I underwent the procedure this past November. The surgery lasted over twelve hours and again there were complications that delayed my recovery. My current state leaves me in a state of pain which prohibits me from even sitting in chair [sic] for extended periods of time.

10. Mr. Lund also attached to his biennial registration a copy of an office note from Robert D. Dzioba, M.D. of his examination of Mr. Lund on August 11, 2009, in relevant part as follows: This is the patient’s first visit following a very severe and serious illness . . . of gastrointestinal volvulus resulting in gangrene and a large resection of his bowel. This was approximately 2-1/2 months ago. He looks quite shaken, but because he has severe stenosis, would like to think about getting back on the surgical schedule. I told him to wait at least 6 months from surgery. In other words, another 3 months. . . .

Dr. Dzioba’s summary to the office note concluded that Mr. Lund “is permanently disabled and qualifies for that status.” 11. At the Board’s February 8, 2010 meeting, it voted to grant Mr. Lund a 6-month extension to complete the CPE requirements. 12. On February 8, 2010, Board staff sent a letter to Mr. Lund, informing him that the Board had granted his request for extension and that “[y]our 80 hours of CPE must be completed and in the Board office by June 30, 2010.” (Emphasis in original.) The letter also stated that, “[p]ursuant to A.A.C. R4-1-455.03(F), you are hereby requested to respond to this request by submitting the requested documentation by June 30, 2010.” (Emphasis in original.) 13. Mr. Lund did not submit documentation to the Board to establish that he had taken 80 hours of CPE. Instead, on June 30, 2010, the Board received from Mr. Lund a completed CPE Exemption Request (for Good Cause) form. Mr. Lund did not provide any additional documentation to support the request. 14. At the Board’s July 12, 2010 meeting, it voted to direct staff “to file a Complaint and Notice of Hearing for Suspension for up to one year with early release to complete [CPE]” in Mr. Lund’s case. 15. According to Mr. Lund’s medical records, he is approximately 62 years old. Mr. Lund testified that although his injuries from the 1984 motor vehicle accident prevented him from working on occasion, including one period that lasted two and a half years, because he had small children and a family to support, he always returned to work. 16. Mr. Lund testified that the medical emergency involving the gastrointestinal volvulus occurred on June 11, 2010. As a result of the loss of oxygen to his brain when he coded, he suffered a brain injury. A psychiatrist who subsequently evaluated him opined that he was not capable of continuing work as a C.P.A. Mr. Lund rejected the psychiatrist’s prognosis because, in the past, he had always come back to work after his surgeries. 17. Mr. Lund testified that in November 2009, he underwent another extensive back surgery, which had been scheduled in June 2009, but was delayed by the medical emergency created by gastrointestinal volvulus. Mr. Lund submitted a copy of the November 23, 2009 discharge summary from University Medical Center in Tucson that contained the following pre- and postoperative diagnoses: PREOPERATIVE DIAGNOSIS: Severe mid lumbar spinal stenosis with large herniated disk, L2-3, multiple foraminal stenosis with encroachment, segmental instability, lumbar spine and severe facet arthropathy. POSTOPERATIVE DIAGNOSIS: Same; as well as hyponatremia, hypokalemia, acute blood loss anemia

18. In early January 2010, Mr. Lund sent a letter to his firm’s clients, informing them that, due to recent health problems, he was transferring his practice to David Dobrusin, C.P.A., whom Mr. Lund had brought in during the summer of 2009 to help with his practice after he suffered the medical emergency that started his health’s decline. 19. Effective January 18, 2010, Mr. Lund conveyed the firm and its assets to Mr. Dobrusin. 20. Mr. Lund testified that he no longer practices accounting, although he sat in on some of Mr. Dobrusin’s first meetings with former clients at their request. Mr. Lund testified that during the past year, he and his wife have incurred $40,000 to $50,000 in unreimbursed medical expenses. He cannot afford to pay any monies to the Board. CONCLUSIONS OF LAW This matter lies within the Board’s jurisdiction. [1] The Board bears the burden of proof and must establish Mr. Lund’s statutory and regulatory violations by a preponderance of the evidence.[2] Mr. Lund bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] A.R.S. § 32-741(A)(6), (9), and (15) set forth causes that allow the Board to take disciplinary action against the holder of any certificate including, respectively, violating any statute that regulates accountants, knowingly violating any rule that the Board has adopted, and failing to respond to the Board or to furnish information that the Board legally requests. A.R.S. § 32-742(B)(1) allows the Board to take disciplinary action against a firm registration after the revocation or suspension of the certificate of a person associated with the firm. A.R.S. § 32-730(D) requires Mr. Lund to submit to the Board as part of his biennial registration satisfactory proof that he has completed the continuing education that the Board requires. Because the Board established that Mr. Lund did not comply with this statute, the Board established cause to discipline his C.P.A. certificate and firm registration under A.R.S. § 32-741(A)(6). A.A.C. R4-1-453(D) requires Mr. Lund to complete 80 hours of CPE during the two-year period immediately preceding registration renewal. A.A.C. R4-1- 102(A) provides that “[a]ll parties are deemed to have knowledge of the rules.” Because the Board established that Mr. Lund did not comply with A.A.C. R4-1-453(D), the Board established cause to discipline his C.P.A. certificate and firm registration under A.R.S. § 32-741(A)(9). A.A.C. R4-1-455.03 prohibits Mr. Lund from committing a discreditable act “that reflects adversely on [his] fitness to engage in the practice of public accounting,” including “[v]iolation of any of the provisions of A.R.S. Title 32, Chapter 6, Article 3, or any rule promulgated under these statutes.” Under this regulation, Mr. Lund’s violations of A.R.S. § 32- 730(D) and A.A.C. R4-1-453(D) constitute a discreditable act. Mr. Lund responded to the Board’s February 8, 2010 letter by the date required, June 30, 2010. Mr. Lund established that he did not give the Board the information that it had requested because his physical condition made it impossible for him to complete the CPE requirement. Therefore, the Board did not establish cause to discipline Mr. Lund’s C.P.A. certificate and firm registration under A.R.S. § 32-741(A)(15). With respect to the appropriate penalty, the gravamen of Mr. Lund’s violations of the charged statutes and regulations was his failure to request an exemption or waiver of CPE requirements on the biennial registration. Mr. Lund’s initial failure to request an exemption or waiver was based on his optimism that he would once again overcome adversity and return to his accountancy practice. Mr. Lund’s optimism was understandable but, unfortunately, turned out to be unfounded. The Board’s legislative purpose is “to ensure that the public is protected from the incompetent practice of accountancy.”[6] The public requires no protection from Mr. Lund because he associated Mr. Dobrusin to protect his firm’s clients, subsequently sold his practice to Mr. Dobrusin, and has since retired. Under the circumstances, requiring Mr. Lund to pay the Board’s costs as additional discipline under A.R.S. § 32-701(6)(f) is an excessive penalty. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Board suspend Mr. Lund’s Certified Public Accountant Certificate No. 4206-E and Certified Public Accounting Firm Registration No. 605-C for up to one year or until he provides proof that he has completed 80 hours of CPE. It is further recommended that, during the term of Mr. Lund’s suspension, the Board allow Mr. Lund to provide additional medical records and other documentation to allow the Board to consider his request for an exemption from the CPE requirement due to his disability and retirement. It is further recommended that if, within one year of the effective date of the Board’s final order in this matter, the Board does not grant Mr. Lund a CPE exemption and he fails to provide satisfactory proof that he has completed the required CPE, the Board deem his Certified Public Accountant Certificate No. 4206-E and Certified Public Accounting Firm Registration No. 605-C to be expired under A.R.S. § 32-741(D). Done this day, September 27, 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. § 32-701 et seq. [2] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1064 (6th ed. 1990). [6] Laws 2000, Ch. 120, § 4.

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