ALJDEC decisions subject to certification as final

11F-2011.051-ACY · State Board of Accountancy · 2011-05-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 28, 2011, at 8:00 a.m. APPEARANCES: The Arizona State Board of Accountancy appeared through Seth T. Hargraves, Esq., Assistant Attorney General; Respondent Maria G. Ward appeared on her own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Arizona State Board of Accountancy (“the Board”) is the state agency authorized pursuant to A.R.S. §§ 32-701 et seq., to regulate the profession of Certified Public Accountants (“CPAs”) in the State of Arizona. 2. The Board issued CPA Certificate No. 15080-R to Maria G. Ward (“Respondent”). This certificate enables Respondent to practice as a CPA in Arizona. 3. On February 7, 2011, the Board voted to file a Complaint and Notice of Public Hearing to revoke Respondent’s CPA certificate. The Board referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 4. The Board on March 2, 2011, issued a Complaint and Notice of Public Hearing, and on March 28, 2011, issued an Amended Complaint and Notice of Public Hearing, charging Respondent with having committed acts that furnished cause for the Board to revoke, suspend, or take other disciplinary action against her CPA certificate under A.R.S. § 32-741(A)(6), specifically A.R.S. § 32-730(D), A.R.S. § 32- 741(A)(9), specifically A.A.C. R4-1-453(D), and A.R.S. § 32- 741(A)(15). The Complaint and Notice of Public Hearing also charged a discreditable act that reflected adversely on Respondent’s fitness to engage in the practice of public accounting as defined by A.A.C. R4-1-455.03(A)(3). 5. A hearing was held on April 28, 2011. The Board presented the testimony of Jim Dubé, its deputy director, and submitted nine exhibits. Respondent testified on her own behalf. Hearing Evidence 6. On or about June 25, 2008, Respondent submitted an application to the Board for a CPA certificate by reciprocity, based on having passed the AICPA Examination on February 13, 1998, and having been licensed as a CPA in Illinois. 7. On August 14, 2008, Board staff sent a letter to Respondent, congratulating her on its approval of her application for a CPA certificate by reciprocity and enclosing a form for her initial registration in Arizona. 8. With the August 14, 2008 letter, the Board also sent a notice of its continuing professional education (“CPE”) requirements under A.A.C. R4-1-453. The Board informed Respondent that she was required to submit proof of having taken 70 hours of CPE in April 2010. 9. On or about August 22, 2008, Respondent submitted to the Board her initial registration for the period from August 14, 2008, through April 30, 2010. Board statutes and regulations do not require Respondent to submit proof of having completed any CPE with her initial registration. 10. The Board subsequently issued CPA Certificate No. 15080-R to Respondent. 11. On or about March 22, 2010, the Board received Respondent’s completed Registration Renewal Form for April 30, 2010, through April 30, 2012 (“2010 registration renewal”). Respondent failed to report that she had taken any CPE to comply with the Board’s requirements. 12. Respondent also did not request inactive status on the 2010 registration renewal, but requested a waiver of the CPE requirement due to financial hardship. Respondent attached to her 2010 registration renewal a letter explaining that she had been laid off in May 2009 due to a reduction in work force, that her employer formerly paid for her CPE, and that historically she always took her CPE during the last six months before the required date for completion. Respondent explained further that she had been focusing on finding another job and that her unemployment insurance benefits did not allow her to pay for CPE. 13. At the Board’s meeting on May 3, 2010, it considered Respondent’s request for a CPE waiver due to financial hardship. The Board voted to deny Respondent’s request for an exemption, but instead to grant Respondent a six-month extension to complete the CPE requirements for her 2010 registration renewal. 14. Mr. Dubé testified that this Board historically has not granted CPE exemptions due to financial hardship. Mr. Dubé testified that the Arizona Society of CPAs offers free or low-cost CPE to registrants and that although Board staff does not direct registrants to specific courses, they do inform registrants of the availability of free or low-cost CPE from various providers. 15. On May 4, 2010, Board staff sent a letter to Respondent, informing her that the Board had denied her request for an exemption, but had granted her an extension until November 4, 2010, to comply with the Board’s CPE requirements for her 2010 registration renewal. 16. The Board’s May 4, 2010 letter also informed Respondent that pursuant to A.A.C. R4-1-455.03(F), she was “requested to respond to this request by submitting the requested documentation by November 4, 2010.” (Emphasis in original.) Respondent was further informed that her failure to comply with the Board’s request could furnish additional grounds for discipline against her CPA certificate. 17. Respondent did not communicate or provide any documentation to the Board by November 4, 2010. Respondent did not complete any CPE. 18. On November 5, 2010, the Board received via facsimile a request from Respondent on a Board form to place her CPA certificate on inactive status. 19. On January 7, 2011, the Board received a letter from Respondent, stating that she faxed the request to place her CPA certificate on inactive status on the evening of November 4, 2010, “per some delay that was out of [her] hands.” The facsimile date stamp on Respondent’s request that her CPA certificate be placed on inactive status indicated that it had been sent on November 5, 2010, at 1:14 p.m. 20. Mr. Dubé testified that the Board considers documents that are filed after the close of business at 5:00 p.m. on a due date to be untimely. 21. Because the Board did not receive Respondent’s request that her CPA certificate be placed in inactive status until after the November 4, 2010 deadline, at its meeting on February 7, 2011, the Board considered Respondent’s failure to respond to the Board’s May 4, 2010 letter or to submit proof of having completed the required CPE. As noted above, the Board voted to file a Complaint and Notice of Hearing for revocation of Respondent’s CPA certificate. 22. Respondent argued that she did not deserve discipline for missing the Board’s deadline by only 12 hours. Respondent testified that she has been unemployed and her parents are ill and that she has no money to take CPE. Under the circumstances, Respondent argued that the Board has been unduly harsh in its dealings with her. CONCLUSIONS OF LAW The Board has been created and authorized to regulate and control the profession of Certified Public Accountancy in Arizona.[1] This matter lies within its jurisdiction. The Board bears the burden of proof and must establish cause to discipline Respondent’s CPA certificate by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses or factors in mitigation of any penalty 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.R.S. § 32-730(D) required Respondent to submit to the Board as part of her 2010 registration renewal “satisfactory proof, in a manner prescribed by the [B]oard, that [she] has completed the [CPE] requirements established by the [B]oard.” Pursuant to its statutory authority, the Board promulgated A.A.C. R4-1-453 to set forth specific requirements for CPE. Respondent is deemed to have knowledge of the Board’s rules.[5] Although A.A.C. R4-1-453(D)(10) allows the Board to grant a registrant an exemption from CPE requirements, the Board is not required to grant such an exemption. In this case, on August 14, 2008, the Board informed Respondent that she would need to take at least 70 hours of CPE before April 30, 2010, but she did not request an exemption until March 22, 2010, more than 18 months later and more than 10 months after she lost her job in public accounting. The Board did not abuse its discretion under A.A.C. R4-1- 453(D)(10) in denying Respondent’s request for an exemption from statutory and regulatory CPE requirements. Respondent’s request on November 5, 2010, that her CPA certificate be placed on inactive status was untimely. Respondent’s request for inactive status was filed more than 24 months after the Board advised her of its CPE requirements for her 2010 registration renewal and more than 16 months after she lost her job in public accounting, and appears to have been filed solely to avoid retroactively having to complete CPE requirements for her 2010 registration renewal. Respondent did not establish that the Board erred in not considering her untimely request for inactive status, especially since A.R.S. § 32-730(B) allows the Board discretion to deny the request. Respondent’s failure to submit to the Board satisfactory proof of having completed the Board’s CPE requirements on her 2010 registration renewal violates A.R.S. § 32-741(A)(6),[6] specifically, A.R.S. § 32-730(D),[7] and A.R.S. § 32-741(A)(9), specifically, A.A.C. R4-1-453(D)(2).[8] Respondent’s failures to complete the Board’s CPE requirements for registration renewal or to comply with the Board’s request that she provide CPE documentation constitute discreditable acts, as defined by A.A.C. R4-1- 455.03(A)(3).[9] Because Respondent’s November 5, 2010 response to the Board’s May 4, 2010 letter was untimely, it provided additional grounds under A.R.S. § 32- 741(A)(15)[10] for the Board to discipline her CPA certificate. Respondent’s violations of the applicable statutes and regulations provide grounds for the Board to take disciplinary action against her CPA certificate under the charged sections of A.R.S. § 32-741(A). Because the Board established that Respondent failed to complete CPE requirements for the 2010 registration renewal period, A.R.S. § 32-741(D)[11] requires the Board to suspend her CPA certificate. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Board’s final order, the Board suspend Respondent Maria G. Ward’s Certified Public Accountant Certificate No. 15080-R for a period of twelve months or until Respondent submits proof that is satisfactory to the Board that she has completed 70 hours of CPE for the 2010 registration renewal period, whichever occurs earlier. It is further recommended that if Respondent fails to submit proof that is satisfactory to the Board that she has completed 70 hours of CPE for the 2010 registration renewal period within twelve months, the Board deem her CPA certificate to be expired pursuant to A.R.S. § 32-741(D). It is further recommended that pursuant to A.R.S. § 32-701(6)(f), the Board require Respondent to reimburse its costs of investigation and of proceeding to hearing in this matter within thirty days of the effective date of the final order. It is further recommended that if Respondent fails to so reimburse the Board’s costs, the Board suspend Respondent’s CPA Certificate No. 15080- R until Respondent has reimbursed to the Board its costs under A.R.S. § 32- 701(6)(f). In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five days from the date of that certification. Done this day, May 17, 2011.

/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] A.A.C. R4-1-102(A). [6] A.R.S. § 32-741(A) provides that after notice and an opportunity for hearing, the board may suspend, revoke, or otherwise discipline any certificate previously issued for the following causes:

6. Violation of any of the provisions of this chapter, of title 44, chapter 12, article 13 or of any fraud provisions of the federal securities laws. . . . .

9. Knowing violation of any decision, order or rule issued or adopted by the board.

[7] A.R.S. § 32-730(D) provides in relevant part as follows: “At the time of registration, every certified public accountant and public accountant shall as a prerequisite to biennial registration submit to the board satisfactory proof, in a manner prescribed by the board, that the registrant has completed the continuing education requirements established by the board. . . .” [8] A.A.C. R4-1-453(D)(2) provides that “[a] registrant who has been certified for less than two years [like Respondent] shall complete 10 hours of CPE for every three months registered before registration renewal.” [9] A.A.C. R4-1-455.03(A)(3) defines a “discreditable act” to include “[v]iolation of any of the provisions of A.R.S. Title 32, Chapter 6, Article 3, or any rule promulgated under these statutes.” [10] A.R.S. § 32-741(A)(15) provides that after notice and an opportunity for hearing, the board may suspend, revoke, or otherwise discipline any certificate previously issued for “[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 or control.” [11] A.R.S. § 32-741(D) provides that “[t]he board shall, after notice and a hearing, suspend the certificate of any certified public accountant or public accountant who fails to show proof, in accordance with section 32- 730, subsection D, of compliance with the continuing professional education requirements established by the board.”

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