ALJDEC decisions subject to certification as final
18F.2018.121-ACY · State Board of Accountancy · 2018-05-04
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of
Certified Public Accounting Firm
Registration No. 64-C
Issued to: William E. Carnell, P.C.
Respondent Firm.
No. 18F.2018.121-ACY
ADMINISTRATIVE LAW JUDGE DECISION
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
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.
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].”
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.
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.
The Board presented the testimony of Christopher Rasmussen, its Assistant Director of Regulation and Compliance, and submitted two exhibits.
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.
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.
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. . . .
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.
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.
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
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.
The Board bears the burden of proof to establish cause to discipline Respondent Firm’s firm registration by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”
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. 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.
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