ALJDEC decisions subject to certification as final

13F-2012.120-ACY · State Board of Accountancy · 2012-11-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 30, 2012 APPEARANCES: Mitchell D. Chronister did not appear. The Arizona Board of Accountancy was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. The Arizona State Board of Accountancy (“Board”) is the authority for regulating the practice of public accounting by Certified Public Accountants (“CPA”) in the State of Arizona. 2. Mitchell D. Chronister (“Respondent”) is the holder of Certificate No. 11525-R issued by the Board. This certificate was issued to Respondent by the Board on June 5, 2000. This certificate enables Respondent to practice as a CPA in Arizona. 3. Respondent is also the holder of Certified Public Accounting Firm Registration No. 5110-S issued by the Board for Respondent’s business, Mitchell D. Chronister, CPA (“Firm”), a sole practitioner. 4. On September 5, 2012, the Board issued a Complaint and Notice of Public Hearing in ASBA File No. 2012-120 charging Respondent and his Firm with allegations of unprofessional conduct and advising the parties of an evidentiary hearing in the matter before the Office of Administrative Hearings, an independent agency. The Complaint and Notice of Public Hearing was sent to Respondent and his Firm at their address of record with the Board. 5. The commencement of the scheduled hearing was delayed 15 minutes to allow for the late arrival of an authorized representative for Respondent and his Firm. After the delay, the Administrative Law Judge conducted the hearing in their absence. 6. On February 9, 2011, the Board received Respondent’s Registration Renewal Form for CPA Certificate No. 11525-R. Respondent disclosed that he practiced accounting as a sole practitioner, which required Respondent to submit a Sole Practitioner Renewal Form to the Board. 7. Each CPA firm that performs restricted financial services or full disclosure compilation services is required to complete a peer review within the three years immediately preceding the firm’s registration date. 8. On February 9, 2011, Respondent submitted an Application for a Certified Public Accountant/Sole Practitioner Office and an Initial Sole Practitioner Renewal Form (“Sole Practitioner Renewal Form”) to the Board for Firm. On the Sole Practitioner Renewal Form, Respondent indicated that his Firm had accepted a December 31, 2009 engagement and that he would submit the required peer review for his Firm to the Board by June 30, 2011. 9. On July 1, 2011, the Board received a written request for an extension of time to complete the peer review from Respondent for his Firm. 10. At its Board meeting on September 12, 2011, the Board granted Respondent and his Firm an extension until March 31, 2012. 11. On September 13, 2011, Board staff sent Respondent a certified letter informing him that the Board had voted to grant his extension request. Respondent was notified that he had to have the completed peer review submitted to the administering entity, the California Society of Certified Public Accountants, by March 31, 2012. The Domestic Return Receipt for the mailing was returned to Board staff indicating that the mailing was received at Respondent’s residence. 12. On October 13, 2011, Respondent submitted a signed Peer Review Affidavit to the Board that confirmed that Respondent and his Firm would undergo and submit a peer review to the administering entity no later than March 31, 2012. The affidavit further advised that Respondent and his Firm would send a copy of the peer review report to the Board no later than March 31, 2012. 13. Respondent failed to submit a peer review to the Board by March 31, 2012. 14. On or about April 30, 2012, Board staff sent Respondent and his Firm a Notice of Board Review advising that the Board would review the Firm’s failure to comply with the peer review requirements at the Board’s May 7, 2012 meeting. 15. At its May 7, 2012 meeting, the Board voted to offer Respondent and his Firm a Decision and Order (by Consent). 16. By letter dated May 15, 2012, Board staff informed Respondent and his Firm of the Decision and Order (by Consent) offered by the Board. The letter advised Respondent and his Firm that a response to the Board was required within 30 days of the date of the letter. 17. Respondent and his Firm failed to respond to the Board’s May 15, 2012 letter. 18. By letter dated August 8, 2012, Board staff advised Respondent that the Board would review the failure to respond to the May 15, 2012 letter at the Board’s meeting on August 24, 2012. 19. As of the date of the hearing, Respondent and his Firm have failed to comply with the Board’s above-described requests. CONCLUSIONS OF LAW 1. The Board has personal and subject matter jurisdiction over Respondent and his Firm pursuant to A.R.S. §§ 32-701 to 32-751 and A.A.C. R4-1- 101 to R4-1-456. 2. The Board has the authority to discipline Respondent and his Firm pursuant to A.R.S. §§ 32-741 and 32-742. 3. Respondent’s and his Firm’s failure to complete the Board required peer review constitutes a violation of A.R.S. § 32-741(A)(15). That statute requires Respondent and his Firm to furnish the Board with the required peer review approved by the administering entity. 4. Respondent’s and his Firm’s failure to complete the Board peer review requirements as provided in A.A.C. R4-1-454 is a knowing violation of the rule adopted by the Board. Therefore, Respondent and his Firm violated the provisions of A.R.S. § 32-741(A)(9). 5. Respondent’s and his Firm’s failure to respond to the Board’s May 15, 2012 letter constitutes a violation of A.R.S. § 32-741(A)(15). That statute requires Respondent and his Firm to respond to the Board’s request for information. 6. Respondent’s and his Firm’s failure to respond to the Board’s May 15, 2012 letter constitutes a violation of A.R.S. § 32-741(9), specifically a violation of A.A.C. R4-1-455.03(F). The rule required a response from Respondent and his Firm within 30 days of the mailing of the Board’s May 15, 2012 letter. 7. As a result of the above-described violations, Respondent’s certificate to practice public accounting should be disciplined, pursuant to A.R.S. §§ 32-741 and 32-701(6). 8. As a result of the above-described violations, the Firm’s registration to practice as a public accounting firm should be disciplined, pursuant to A.R.S. § 32-701(6), and A.A.C. R4-1-454(H). RECOMMENDED ORDER Certified Public Account Certificate No. 11525-R issued to Mitchell D. Chronister and Certified Public Accounting Firm Registration No. 5110-S issued to Mitchell D. Chronister, CPA shall be revoked on the effective date of the Order issued in ASBA File No. 2012.120.

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 shall be five (5) days from the date of the certification.

Done this day, November 19, 2012.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director Arizona State Board of Accountancy -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826