FINACT18F.2018.121-ACY.pdf

18F.2018.121-ACY · State Board of Accountancy · 2018-05-30

BEFORE THE ARIZONA STATE BOARD OF ACCOUNTANCY In the Matter of Certified Public OAH Docket No. 18F.2018.121-ACY Accounting Firm Registration No. 64-C ASBA File No. 2018.121 Issued to: WILLIAM E. CARNELL, P.C. DECISION AND ORDER Respondent Firm. On May 14, 2018, this matter came before the Arizona State Board of Accountancy (“Board”) for consideration of Administrative Law Judge (“ALJ”) Diane Mihalsky’s proposed Findings of Fact, Conclusions of Law and Recommended Order (“ALJ’s Decision”). Neither William E. Carnell P.C. (“Respondent Firm”) nor an

attorney on their behalf appeared. Assistant Attorney General Scott Donald appeared on behalf of the State. The Board received independent legal advice from Assistant Attorney General Seth Hargraves. The Board, having considered the ALJ’s Decision and the entire record in this

matter, hereby issues the following Findings of Fact, Conclusions of Law and Order (“Decision and Order”). FINDINGS OF FACT

The Findings of Fact as set forth in the ALJ’s Decision are adopted in their

entirety and incorporated herein. CONCLUSIONS OF LAW The Conclusions of Law as set forth in the ALJ’s Decision are adopted in their

entirety and incorporated herein. // // A true and correct copy of the ALJ’s Decision is attached and certain parts of it are incorporated here as set forth above. ORDER Based on the foregoing, the Board ORDERS that Respondent Firm Certified Public Accounting Firm Registration No. 64-C be REVOKED. IT IS FURTHER ORDERED that Respondent Firm shall be required to reimburse the Board $41.30 within thirty (30) days of the effective date of this Decision and Order. This amount reflects the costs and attorney’s fees the Board incurred in prosecuting this matter.2 NOTICE OF APPEAL RIGHTS Respondent Firm is hereby notified that they have the right to move for a rehearing or review by filing a motion with the Board’s Executive Director within thirty (30) days after service of this Decision and Order. A.R.S. § 41-1092.09. The motion must set forth legally sufficient reasons for granting a rehearing. A.A.C. R4-1-114(C). Service of this Decision and Order is effective on the date of personal service or five (5) days after the date of mailing. If a motion for rehearing is not filed, the Board’s Decision and Order becomes effective thirty (30) days after it is mailed to Respondent Firm. Respondent Firm is further notified that the filing of a motion for rehearing is

required to preserve any rights of appeal to the Superior Court. DATED this 22nd day of May, 2018. ARIZONA STATE BOARD OF ACCOUNTANCY By:___________________________________ LeRoy M. Gaintner, CPA, Board President The Board voted to modify the ALJ’s Decision to include reimbursement of fees and costs to recuperate costs for enforcement. Original of the foregoing Decision and Order (and attachment) nd filed this 22 day of May, 2018 with: Monica L. Petersen Executive Director Arizona State Board of Accountancy th 100 N. 15 Avenue, Suite 165 Phoenix, AZ 85007 Copy of the foregoing nd Decision and Order (and attachment) e-filed this 22 day of May, 2018 with: Greg Hanchett, Director Arizona Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, AZ 85007 Copy of the foregoing Decision and Order (and attachment) mailed via U.S. First Class Mail and Certified Mail # [account number redacted] 9238 this 22nd day of May, 2018, to: William E. Carnell Partner in Charge William E. Carnell, P.C. 8283 N. Hayden Rd, Ste 170 Scottsdale, AZ 85258 Copy of the foregoing Decision and Order (and attachment) emailed this 22nd day of May, 2018 to: Scott Donald Assistant Attorney General 2005 N. Central Avenue Phoenix, Arizona 85004 Seth Hargraves Assistant Attorney General Independent Advisor 2005 N. Central Avenue Phoenix, Arizona 85004 By: ___________________________________ IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of No. 18F.2018.121-ACY

Certified Public Accounting Firm ADMINISTRATIVE LAW JUDGE Registration No. 64-C DECISION Issued to: William E. Carnell, P.C.

Respondent Firm.

HEARING: May 4, 2018, at 9:00 a.m. APPEARANCES: The Arizona State Board of Accountancy (“the Board”) was represented by Scott Donald, Esq., Assistant Attorney General; William E. Carnell, P.C. (“Respondent Firm”) failed to appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _________________________________________________________________

FINDINGS OF FACT 1. On March 14, 2018, the Board issued a Complaint and Notice of Hearing setting this matter for an evidentiary hearing at 9:00 a.m. on May 4, 2018, before the Office of Administrative Hearings (“OAH”), an independent state agency. 2. The Complaint and Notice of Hearing provided that the issue to be decided was “whether good cause exists to revoke, suspend or take any other disciplinary action against Firm Registration No. 64-C issued to [Respondent Firm].” 3. The Board sent the Complaint and Notice of Hearing via United States regular and certified mail to Respondent Firm at its address of record with the Board. 4. Respondent Firm did not request to appear telephonically at the hearing and did not request that the hearing be continued. Although the start of the duly noticed hearing was delayed seventeen minutes to allow Respondent Firm additional travel time, Respondent Firm did not appear, through an authorized partner or attorney, and did not contact OAH to request that the start of the hearing

be further delayed. Consequently, Respondent Firm did not present any evidence to defend its firm registration.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 5. The Board presented the testimony of Christopher Rasmussen, its Assistant Director of Regulation and Compliance, and submitted two exhibits. 6. Mr. Rasmussen testified that he is familiar with Respondent Firm because he had reviewed the file in this matter. Mr. Rasmussen testified that William E. Carnell is a certified public accountant (“CPA”) and Respondent Firm’s only partner. 7. Mr. Rasmussen testified that Mr. Carnell’s CPA certificate was not in good standing because it had been suspended after Mr. Carnell failed to renew his individual CPA certificate. 8. Mr. Rasmussen testified that on December 11, 2017, Board staff sent Mr. Carnell and Respondent Firm by regular and certified mail a letter that provided in relevant part as follows:

In reviewing its records, [the Board] is aware that CPA Certificate No. 570-E, belonging to WILLIAM EARL CARNELL, the Partner-In-Charge of William E. Carnell, PC (Firm 64-C) is currently suspended, due to non- renewal of the certificate. This suspension was made effective on 12/1/2017. Pursuant to A.R.S. § 32-731(A)(1), CPA firm qualifications include the requirement that a firm have at least one partner who is a resident and a full-time practicing certified public accountant in good standing in Arizona. According to our records, William E. Carnell, PC (Firm 64-C) does not presently meet this statutory requirement to be registered and recognized as a CPA firm in Arizona. Pursuant to A.R.S. § 32-742(A), “[a]fter notice and an opportunity for a hearing, the board shall revoke a firm’s registration to practice public accounting if at any time it does not have all the qualifications prescribed by this chapter.” Therefore, if WILLIAM EARL CARNELL DOES NOT RENEW THE INDIVIDUAL CPA Certificate No. 570-E by 1/10/2018, the Board may take action to REVOKE the firm’s registration.

If it is not your intention to renew your CPA certificate, we ask that you cancel your individual certificate and firm registration by 1/10/2018. . . .1 9. One Nancy Ray signed to accept the copy of the December 11, 2017 letter that the Board sent to Mr. Carnell and Respondent Firm at their address of record via certified mail.2 10. Mr. Rasmussen testified that the current status of Mr. Carnell’s CPA certificate was than it was still suspended. Mr. Rasmussen testified that the Board had not received any communications from Mr. Carnell or Respondent Firm in response to the Board’s December 11, 2017 letter. 11. Mr. Rasmussen testified that registered individuals and firms are required to keep current addresses on file with the Board. Mr. Rasmussen testified that under A.R.S. § 32-747, Respondent Firm cannot hold itself out as a CPA firm without a partner whose individual CPA certificate is in good standing. CONCLUSIONS OF LAW 1. The Board has personal and subject-matter jurisdiction over Respondent Firm pursuant to A.R.S. § 32-701 et seq. and A.A.C. R4-1-101 et seq. The Board has the authority to discipline Respondent pursuant to A.R.S. § 32-742. 2. The Board bears the burden of proof to establish cause to discipline Respondent Firm’s firm registration 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 3. A.R.S. § 32-731(A)(1) provides in relevant part as follows: [A] partnership engaged in this state in the practice of accounting by certified public accountants or public accountants . . . shall meet the following requirements:

1 The Board’s Exhibit A. See the Board’s Exhibit B. 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). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 1. At least one partner shall be a resident and a full-time practicing certified public accountant in good standing in this state. A.R.S. § 32-742(A) provides in relevant part as follows: After notice and an opportunity for a hearing, the board shall revoke a firm's registration to practice public accounting if at any time it does not have all the qualifications prescribed by this chapter. A.R.S. § 32-747(B) provides that no firm shall hold itself out as able to rendered CPA services unless it meets the qualifications set forth in statute. 4. The Board established that Respondent Firm currently lacks a partner who holds a CPA certificate that is in good standing, as required by A.R.S. § 32- 731(A)(1). Therefore, A.R.S. § 32-742(A) requires the Board to revoke Respondent Firm’s firm registration. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final order, Certified Public Accounting Firm Registration No. 64-C previously issued to Respondent Firm William E. Carnell, P.C. shall be revoked. 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 4, 2018 /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to:

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