ALJDEC decisions subject to certification as final

19A-2018.090-ACY · State Board of Accountancy · 2019-05-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 24, 2019 at 10:00 AM. APPEARANCES: No appearance(s) on behalf of Robert Marotti (“Respondent”). Assistant Attorney General Scott Donald, Esq., appeared on behalf of the Arizona State Board of Accountancy (“Board”) with Christopher Rasmussen as a witness. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Executive Director of the Board. FINDINGS OF FACT Background and Procedure 1. Pursuant to Ariz. Rev. Stat. §§ 32-701 et seq., the Board is the authority for regulating the practice of Certified Public Accountants in the State of Arizona. Pursuant to Ariz. Rev. Stat. §§ 32-701 et seq., and Ariz. Admin. Code R401-101 et seq., the Board has personal and subject matter jurisdiction over Respondent. Additionally, pursuant to Ariz. Rev. Stat. §§ 32-741 and 32-742 the Board had the authority to discipline Respondent. 2. Respondent is the holder of Certified Public Accountant (“CPA”) Certificate No. 18886-R, issued by the Board. 3. Administrative Notice is taken of Respondent’s certificate record as reflected on the Board’s public website on April 24, 2019. Such prior record reflects that Respondent’s certificate was issued on March 26, 2018, and is schedule for renewal in September of 2020.[1] There is no disciplinary history noted for the license. 4. On March 26, 2018, the Board approved Respondent’s application to become a CPA. A congratulatory letter was sent to Respondent on March 26, 2018, which outlined prorated continuing professional education (“CPE”) requirements for Respondent’s September 30, 2018, biennial renewal due date.[2] The letter states, in pertinent part, “[T]he table below informs you as to how much CPE you are required to take and report to the Board between the issue date of March 26, 2018, and your biennial renewal due date of September 30, 2018. Any required CPE can only be taken after the issue date of your certificate.”[3] (Emphasis in original.) 5. On October 02, 2018, Board staff received a registration renewal form from Respondent dated September 28, 2018, for the 2018-2020 renewal period wherein Respondent reported taking twenty-six (26) CPE hours overall.[4] Following a review of the reported CPE, Board staff determined that a total of seven (7) CPE hours were taken prior to the certification approval date of March 26, 2018. Accordingly, the following two shortages[5] were identified: a. Respondent is short (1) CPE hour overall. b. Respondent is short four (4) CPE hours in accounting, auditing, taxation, consulting services, or business law.

6. On December 03, 2018, the Board reviewed the matter and voted to offer Respondent a Decision and Order (By Consent) (“Consent Order”) for suspension for six months for non-compliance with CPE requirements.[6]

7. On December 12, 2018, the Board sent the Consent Order to Respondent via regular and certified United States postal mail for his response within thirty (30) days.[7] The Board did not receive a response from Respondent. 8. On February 11, 2019, the Board considered Respondent’s non-response to the Consent Order and voted to proceed to a formal administrative hearing.[8] 9. Per the Complaint and Notice of Hearing, the Board referred this matter to the Office of Administrative Hearings, an independent state agency, on March 26, 2019, for an evidentiary hearing on April 24, 2019, to determine whether the Board has good cause to take disciplinary action against Certificate No. 18886-R issued to Respondent. Hearing Evidence 10. At the hearing, the Board submitted six exhibits and presented the testimony of Mr. Rasmussen, Assistant Director of Regulation and Compliance. No testimony or exhibits were offered by or on behalf of Respondent. 11. The Board argued that revocation was appropriate as evidence established that Respondent could be regulated by the Board. CONCLUSIONS OF LAW 1. This matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq. 2. Pursuant to Ariz. Rev. Stat. § 41-1092.07(G)(2), the Board has the burden of proof in this matter. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[9] The standard of proof is a preponderance of the evidence.[10] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[11] A preponderance of the evidence is also, “evidence which is of greater weight or more convincing than evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.”[12] 4. Ariz. Rev. Stat. § 32-701(12)(g) provides that "disciplinary action" means any other regulatory sanctions imposed by the board in combination with, or as an alternative to, relinquishment, revocation or suspension of a certificate or registration, including the imposition of reimbursement of the board's costs of investigations and proceedings initiated under this chapter, including attorney fees. 5. Ariz. Rev. Stat. § 32-730(C) provides, in pertinent part, that “at the time of registration, every certified public accountant, as a prerequisite to biennial registration, shall submit to the board satisfactory proof in a manner prescribed by the board that the registrant has completed the continuing professional education requirements established by the board.” 6. Ariz. Rev. Stat. § 32-741(A)(5) provides that after notice and an opportunity for a hearing, the board may revoke or suspend any certificate granted under this chapter and may take disciplinary action concerning the holder of any certificate for “[a]ny cause other than failure to pay license or registration fees.” 7. Ariz. Rev. Stat. §§ 32-741(A)(9) and 32-741(A)(15) provide that after notice and an opportunity to be heard, the Board could impose discipline against a certificate holder for a “[k]nowing violation of any decision, order or rule issued or adopted by the board” or “[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.” 8. Ariz. Admin. Code R4-1-453(C)(2) provides that “[a] registrant shall complete a minimum of 50 percent of the required hours in the subject areas of accounting, auditing, taxation, business law, or consulting services with a minimum of 16 hours in the subject areas of accounting, auditing, or taxation.” 9. Ariz. Admin. Code R4-1-455.03(D) provides, in pertinent part regarding communications, that “[w]hen requested, a certified public accountant or public accountant shall respond to communications from the Board within 30 days after the communication is mailed by registered or certified mail.” 9. It is established law that wherever statutory authority conflicts with agency rule-making, the rule must yield to the statute.[13] However, a regulation setting forth 30 days as the time frame necessary to constitute a “timely” response under the statute does not conflict with the statute. 10. Respondent is deemed to have knowledge of the Board’s rules.[14] 11. The Board established by a preponderance of the evidence that the registration renewal form it received from Respondent on October 02, 2018, clearly identified that Respondent was short seven requisite CPE hours to be earned between March 26, 2018, and September 30, 2018, and that Respondent failed to respond to the Board within thirty days of the Consent Order being issued on December 03, 2018, in violation of Ariz. Admin. Code R4-1-455.03(D). 12. Because Respondent violated Ariz. Admin. Code R4-1-455.03(D), the Board has authority to revoke his Certified Public Accountant Certificate under Ariz. Rev. Stat. § 32-741(A)(9). 13. Because Respondent violated Ariz. Admin. Code R4-1-455.03(D), the Board has authority to require reimbursement of the Board's costs of investigations and proceedings, including attorney fees, under Ariz. Rev. Stat. § 32- 701(10)(g).[15] RECOMMENDED ORDER Based on the foregoing facts and conclusions of law, it is recommended that on the effective date of the Board’s Final Order, the Board revoke CPA Certificate No. 18886-R for the failure to submit a timely response to the Board. IT IS FURTHER RECOMMENDED that on the effective date of the Final Order, Respondent shall be required to pay the Board’s costs and attorney’s fees incurred in prosecuting the two violations in this matter pursuant to Ariz. Rev. Stat. § 32-701(10)(g). 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 02, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director Arizona State Board of Accountancy ----------------------- [1] See https://www.azaccountancy.gov/CPADirectory/LicenseeDirectory.aspx?category=0 %2fMktTCYVsxzN1%2fKjFZ7hA%3d%3d&search=T73qvBQ2oJIYVhh3a2kG%2bA%3d%3d. [2] See Board Exhibit 1. [3] Id. [4] See Board Exhibit 2. [5] See Board Exhibit 3. [6] See Board Exhibit 4. [7] See Board Exhibit 5. [8] See Board Exhibit 6. [9] See ARIZ. ADMIN. CODE R2-19-119(B)(2). [10] See Ariz. Admin. Code R2-19-119(A). [11] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [12] Black’s Law Dictionary at page 1064 (6th ed. 1990). [13] See Canon Sch. Dist. No. 50 v. W.E.S. Constr. Co., 177 Ariz. 526, 869 P.2d 500 (1994); Fullen v. Indus. Comm’n, 122 Ariz. 425, 595 P.2d 657 (1979); R.L. Augustine Constr. Co., Inc. v. Peoria Unified Sch. Dist. No. 11, 188 Ariz. 368, 370, 936 P.2d 554, 556 (1997); Ariz. Health Care Cost Containment Sys. Admin. v. Carondelet Health Sys., 188 Ariz. 266, 271-72, 935 P.2d 844, 849-50 (App. 1996). [14] See Ariz. Admin. Code R4-1-102(A). [15] Ariz. Rev. Stat. § 32-701(10)(g) defines “disciplinary action” to include “[r]eimbursement of the board's costs of investigations and proceedings initiated under this chapter, including attorney fees.”

-----------------------

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826