ALJDEC decisions subject to certification as final

12F-2012.078-ACY · State Board of Accountancy · 2012-04-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 17, 2012, at 8:00 a.m. APPEARANCES: The Arizona State Board of Accountancy was represented by Seth T. Hargraves, Esq., Assistant Attorney General; Respondent William Vern Harrell did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT 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 Certified Public Accountant Certificate No. 1456-E to William Vern Harrell (“Respondent”). This certificate enables Respondent to practice as a certified public accountant (“CPA” or “registrant”) in the State of Arizona. 3. The Board also issued Certified Public Accounting Firm Registration No. 4947-S to Respondent’s firm, William V. Harrell, CPA. 4. A.R.S. § 32-730(D) requires all registrants to register biennially with the Board and to submit satisfactory proof that they have completed the continuing professional education (“CPE”) that the Board requires. 5. On or about October 31, 2011, Respondent submitted his biennial registration renewal application (“the 2011 registration renewal”) to the Board. Respondent provided his address of record as his residential address. On the 2011 registration renewal, Respondent reported that he had only completed 52 hours of CPE. 6. Pursuant to A.A.C. R4-1-453(D)(1), Respondent was required to complete 80 hours of CPE during the two-year period immediately preceding his 2011 registration renewal. 7. With the 2011 registration renewal application, Respondent submitted a letter explaining that financial hardship had prevented him from timely completing the required CPE, stating that he intended to take the remaining required CPE, and requesting that the Board grant him an extension of time until January 2012, to complete the required CPE. 8. On November 14, 2011, Board staff sent a letter by certified mail to Respondent at his address of record, in relevant part as follows: At the November 14, 2011 meeting, the [Board] reviewed your letter and granted your request for an extension of your [CPE] requirement. Your remaining 28 hours of CPE must be completed and in the Board office by January 31, 2012. Any CPE used to meet this requirement may not be used on your subsequent registration.

Your [sic] are hereby requested to respond by submitting the requested documentation by January 31, 2012. Please be advised that your failure to timely respond and/or submit the requested material may be considered grounds for disciplinary action against your certificate pursuant to A.R.S. § 32-741(A)(9) and (15) and A.R.S. § 32-741(D). Failure to comply will cause your file to be reviewed at the Board’s next scheduled meeting.

(Emphasis in original.) On November 15, 2011, Respondent signed the certified mail receipt to show that the Board’s November 14, 2011 letter was delivered to him. 9. Respondent failed to submit any documentation to the Board and failed to provide proof that he had completed an additional 28 hours of CPE on or before January 31, 2012. 10. At its regularly scheduled February 13, 2012 meeting, the Board voted to file a Complaint and Notice of Hearing for suspension of Respondent’s CPA certificate, imposition of a $500.00 civil penalty, and recovery of its costs. 11. The Board referred the matter to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing. 12. On February 21, 2012, the Board issued a Complaint and Notice of Public Hearing, setting a hearing on April 17, 2012, at 8:00 a.m. The Board mailed a copy of the Complaint and Notice of Public Hearing to Respondent at his address of record. 13. The Board’s Complaint and Notice of Public Hearing charged Respondent with violating 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), A.R.S. § 32-741(A)(15), and A.A.C. R4-1-455.03(A). 14. A hearing was held at the OAH on April 17, 2012. The Board submitted three exhibits and presented the testimony of Deputy Director Jim Dubé to establish the facts set forth above. 15. Respondent did not request to appear telephonically at the duly noticed hearing and did not request that the hearing be continued. Although the start of the hearing was delayed fifteen minutes to allow Respondent additional travel time, he did not appear, personally or through an attorney, and did not contact the OAH to request that the start of the hearing be further delayed. Consequently, Respondent did not present any evidence to defend his CPA certificate. 16. Mr. Dubé testified that as of the date of the hearing, Respondent had not submitted any documentation to the Board to establish that he had completed 28 hours of additional required CPE. 17. Mr. Dubé testified that Respondent operates his firm, William V. Harrell, CPA, as a sole practitioner and that he is the only member of the firm who is a CPA. Mr. Dubé testified that because A.R.S. § 32-731 requires a CPA firm to have an active CPA as a partner, if Respondent’s license was suspended, his firm’s license also would be suspended. CONCLUSIONS OF LAW The Complaint and Notice of Public Hearing that the Board mailed to Respondent at his address of record was reasonable and Respondent is deemed to have received notice of the hearing.[1] The Board has been created and authorized to regulate and control the profession of Certified Public Accountancy in Arizona.[2] 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.[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] Under A.R.S. § 32-741(A), after notice and opportunity for hearing, the Board may revoke or suspend, or may take additional disciplinary action, as defined by A.R.S. § 32-701(6),[5] against Respondent’s CPA certificate. Respondent’s failure to complete the CPE requirements for the 2011 registration renewal violates A.R.S. § 32-730(D)[6] and provides cause for the Board to discipline his CPA certificate under A.R.S. § 32-741(A)(6).[7]

Pursuant to A.A.C. R4-1-102(A), Respondent is deemed to have knowledge of the Board’s rules. Respondent’s failure to complete the CPE requirements for the 2011 registration renewal also violates A.A.C. R4-1-453(D)(1)[8] and provides cause for the Board to discipline his CPA certificate under A.R.S. § 32-741(A)(9).[9] Respondent’s failure to respond to the Board’s extension of time to complete and report the required CPE hours provides additional cause for the Board to discipline his CPA certificate under A.R.S. § 32- 741(A)(15).[10] Respondent’s failures to complete the CPE requirement for the 2011 registration renewal or to respond to the Board’s extension of time to complete and report the required CPE hours constitute discreditable acts as defined by A.A.C. R4-1-455.03(A).[11] Under A.R.S. § 32-741(D),[12] Respondent’s failure to complete the CPE requirements for the 2011 registration renewal requires the Board to suspend Respondent’s CPA certificate. If the Board suspends Respondent’s CPA certificate, A.R.S. § 32- 742(B)(1)[13] requires the Board also to suspend his firm registration. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Board’s final order, the Board suspend Respondent William Vern Harrell’s Certified Public Accountant Certificate No. 1456-E and William V. Harrell, CPA’s Certified Public Accounting Firm Registration No. 4947-S for a period of twelve months or until Respondent submits proof that is satisfactory to the Board that he has completed the CPE that the Board required for the 2011 registration renewal, whichever occurs earlier. It is further recommended that pursuant to A.R.S. § 32-741(D), if Respondent fails to submit proof that is satisfactory to the Board that he has completed the CPE that the Board required for the 2011 registration renewal within twelve months, the Board deem his certificate to be expired. 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 twelve months of the effective date of the final order as a condition of keeping his CPA certificate in good standing. 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 twelve months of the effective date of the final order as a condition of keeping his CPA certificate in good standing. It is further recommended that if Respondent fails to reimburse the Board’s costs or fails to pay the civil penalty within twelve months of the effective date of the final order, the Board suspend Respondent’s CPA Certificate No. 1456-E and firm registration 4947-S 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. §§ 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] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] A.R.S. § 32-701(6) defines “disciplinary action” as follows: "Disciplinary action" means any other regulatory sanctions imposed by the board in combination with, or as an alternative to, revocation or suspension of a certificate or registration, including the imposition of: (a) An administrative penalty in an amount not to exceed two thousand dollars for each violation of this chapter or rules adopted pursuant to this chapter. . . . . (f) Reimbursement of the board's costs of investigations and proceedings initiated under this chapter. [6] A.R.S. § 32-730(D) provides 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. The board may grant an exemption from continuing professional education requirements for registrants on a demonstration of good cause as determined by the board. [7] A.R.S. § 32-741(A)(6) allows the Board to revoke or suspend a registrant’s CPA certificate for “[v]iolation of any of the provisions of this chapter.” [8] A.A.C.R4-1-453 provides the Board’s requirements for CPE. A.A.C. R4-1- 453(D)(1) provides that “[a] registrant whose last renewal period was for two years shall complete 80 hours of CPE during the two-year period immediately preceding registration renewal.” [9] A.R.S. § 32-741(A)(9) allows the Board to revoke or suspend a registrant’s CPA certificate for “[k]nowing violation of any . . . rule issued or adopted by the board.” [10] A.R.S. § 32-741(A)(15) allows the Board to revoke or suspend a registrant’s CPA certificate 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.A.C. R4-1-455.03(A) provides 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; [or] . . . . 3. Violation of any of the provisions of A.R.S. Title 32, Chapter 6, Article 3, or any rule promulgated under these statutes. [12] A.R.S. § 32-741(D) provides as follows: The 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. If the board determines that the failure was for reasonable cause or excusable neglect, the board may require compliance as expeditiously as possible. If the certified public accountant or public accountant fails to reinstate the certificate within twelve months after the date of suspension, the certificate expires. The board shall not reinstate a certificate that has expired pursuant to this subsection unless the certified public accountant or public accountant complies with section 32-748 and all other requirements for reinstatement. [13] A.R.S. § 32-742(B)(1) provides that the Board may take disciplinary action against a firm’s registration following “[t]he revocation or suspension of any certificate issued by the board of any partner, shareholder, member, manager, officer, director, agent or employee of the firm.”

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