ALJDEC decisions subject to certification as final

12F-2012.033-ACY · State Board of Accountancy · 2012-04-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 16, 2012, at 8:00 a.m. APPEARANCES: The Arizona State Board of Accountancy was represented by Seth T. Hargraves, Esq., Assistant Attorney General; Respondent David L. Shorey appeared on his 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. 6724-R to David L. Shorey (“Respondent”). This certificate enables Respondent to practice as a CPA in Arizona. 3. On February 17, 2012, the Board issued a 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 his CPA certificate under A.R.S. § 32- 741(A)(9), specifically, A.A.C. R4-1-455.03(A) and (F), and A.R.S. § 32-741(A)(15). 4. On April 16, 2012, a hearing was held in the Office of Administrative Hearings, an independent agency. The Board presented the testimony of Ryan Edmonson, its Compliance Manager, and submitted three exhibits. Respondent testified on his own behalf and submitted two exhibits. Hearing Evidence 5. On or about January 19, 2011, the Board received Respondent’s biennial registration renewal form. Respondent requested a fee waiver because he was older than sixty-five years and provided as his primary occupation, “Retired.” 6. Mr. Edmonson testified that because no statute allows a registrant to use “retired” as his status, a registrant holds a certificate until it is cancelled, revoked, or relinquished. Mr. Edmonson testified that since Respondent submitted a biennial registration renewal, he could call himself a CPA and was subject to the Board’s statutory and regulatory requirements. 7. On or about October 6, 2011, the Board received a consumer complaint from Joseph Maher, Jr. Mr. Maher complained that Respondent had improperly assessed Mr. Maher’s business for his wife in a divorce proceeding. Mr. Maher asked the Board to require Respondent to pay $3,500.00 to reimburse Mr. Maher for the attorney’s fees that he allegedly incurred as a result of the assessment. 8. On October 12, 2011, the Board sent via certified mail a copy of Mr. Maher’s complaint to Respondent at his address of record. The Board’s letter that accompanied the complaint stated in relevant part: The [Board] has received a complaint filed against you by [Mr. Maher] copy enclosed. The Board has not made any determination about the veracity of the complaint; it is taking the first step in its analysis of the complaint by furnishing a copy to you. Please be assured that the Board will do everything it can to timely complete its investigation[.]

An investigator will be assigned to assist in determining the relevant facts and subsequently the complaint will be reviewed by the Accounting and Auditing Standards Committee (Committee) . . . .

When the Committee concludes it has adequate information, it will make a determination if reasonable cause exists to open an investigation file. Its recommendation will be conveyed to the Board for consideration. If the Board votes to open an investigation file, the file will be returned to the Committee to complete its investigation.

Please review the enclosed complaint and allegations. You are hereby requested to respond by submitting the requested documentation within thirty days from the date of this letter. Please be advised that your failure to timely respond and/or submit the requested material may be considered a violation of A.A.C. R4-1-455.03(F), and grounds for disciplinary action against your certificate pursuant to A.R.S. § 32-741(A)(9) and (15). . . .

(Emphasis in original.) According to the certified mail receipt, Respondent received the Board’s October 12, 2011 letter on October 15, 2011. 9. Respondent did not provide a written response to Mr. Maher’s complaint to the Board within thirty days of October 12, 2011, or at any time before the hearing in this matter. 10. Respondent testified that he started gathering information to prepare a written response to Mr. Maher’s complaint, but that he got busy with a lot of other things, including a solar integrator firm for which he is the CEO. Respondent testified that in October 2011, all solar firms in Arizona were abruptly shut down by utility companies’ curtailment of customer rebates. In the face of such adversity, Respondent testified that he needed all his focus to save his firm. 11. Respondent also testified that he is 69 years old, does not have anyone to back up his memory, and the Board did not send him a reminder. Respondent testified that he has not practiced accounting for many years, no longer considers himself to be a CPA, and has never had a complaint against his certificate. 12. Respondent testified that Mr. Maher’s complaint was patently without merit. Respondent testified that he never did any work for Mr. Maher and pointed out that Mr. Maher did not provide any documents or other proof to support the allegations in his letter. 13. Respondent expressed anger at the hearing that the Board did not screen Mr. Maher’s complaint and dismiss it without further investigation. Respondent testified that he did not commit a crime, cheat on a tax return, commit bank fraud, or falsify a financial statement, but just forgot to write a letter. 14. Mr. Edmonson testified that the Board must investigate every complaint that it receives. The only complaints that it does not investigate are those that are determined to be outside the Board’s jurisdiction, such as a fee dispute or a complaint that is not made against a CPA or someone improperly using the designation. 15. Mr. Edmonson testified that because Respondent never provided a written response giving his side of the dispute, the Board was not able to investigate Mr. Maher’s complaint. 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 to 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] Respondent is deemed to have knowledge of the Board’s rules.[5] Respondent’s failure to file a timely response to the Board’s October 12, 2011 letter provides grounds under A.R.S. § 32-741(A)(15)[6] and (9),[7] specifically A.A.C. R4-1-455.03(F),[8] for the Board to discipline his CPA certificate. Respondent’s persistent failure to respond to the Board’s letter and failure to provide any defense to Mr. Maher’s complaint also constitute a failure to comply with the professional standards set forth in A.A.C. R4-1- 455.03(A).[9] Mr. Maher apparently filed the complaint against Respondent as a result of Respondent’s work for Mr. Maher’s wife in divorce litigation. Respondent’s anger at Mr. Maher may be justified, and the complaint may be the result of factors beyond Respondent’s control. However, because Respondent refused to provide the information that the Board needed to conduct an investigation, the merits of Mr. Maher’s complaint cannot be determined at this time. Because the Board must investigate all complaints “to ensure that the public is protected from the incompetent practice of accountancy,”[10] Respondent’s anger at the Board is misplaced. Respondent’s initial failure to timely respond to the Board’s October 12, 2011 letter was inadvertent. After the Board issued the Complaint and Notice of Public Hearing on February 17, 2012, it is not clear whether Respondent was aware that he could mitigate his earlier inadvertent violations of applicable statutes and regulations by providing to the Board a late written response to Mr. Maher’s complaint. Because Respondent appears to have misunderstood the Board’s role in processing complaints, the Board may afford him one last opportunity to demonstrate that he can be regulated. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Board’s final order, the Board revoke Respondent David L. Shorey’s Certified Public Accountant Certificate No. 6724-R. It is further recommended that the Board stay the revocation and, instead, place Respondent’s certificate on disciplinary probation for a period of 180 days if on or before the effective date of the Board’s order, Respondent provides a written explanation responding to Mr. Maher’s complaint that is satisfactory to the Board. 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 180 days of the effective date of the final order. It is further recommended that pursuant to A.R.S. § 32-701(6)(a), the Board require Respondent to pay a civil penalty in the amount of $500.00 within 180 days of the effective date of the final order. It is further recommended that if Respondent fails to reimburse the Board’s costs or fails to pay the civil penalty within 180 days of the effective date of the final order, the Board suspend Respondent’s CPA Certificate No. 6724-R until Respondent has reimbursed to the Board its costs under A.R.S. § 32-701(6)(f) and paid the $500.00 civil penalty under A.R.S. § 32-701(a). 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, April 30, 2012.

/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)(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.” [7] A.R.S. § 32-741(A)(9) provides that after notice and an opportunity for hearing, the board may suspend, revoke, or otherwise discipline any certificate previously issued for “[k]nowing violation of any decision, order or rule issued or adopted by the board.” [8] A.A.C. R4-1-455.03(F) provides as follows: “Communications: When 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.” [9] A.A.C. R4-1-455.03(A) provides in relevant part as follows: Discreditable acts: Certified public accountants, public accountants, or firms shall not commit 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. [10] Laws 2005, Ch. 27, § 3; see also A.R.S. § 32-703(B)(1) (authorizing Board to investigate complaints).

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