ALJDEC decisions subject to certification as final

19A-2020.040-ACY · State Board of Accountancy · 2020-01-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Certified Public Accountant Firm

Registration No. 2343-L

Issued to: DOUGLAS M. CLARK, CPA, PLLC,

Respondent Firm.

No. 19A-2020.040-ACY

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 07, 2020 at 9:00 AM.

APPEARANCES: Assistant Attorney General Scott Donald, Esq., appeared on behalf of the Arizona Board of Accountancy (“Board”) with Christopher Rasmussen as a witness. No appearances by or on behalf of Certified Public Accountant Firm Registration No. 2343-L (“Respondent Firm”).

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

Respondent Firm is the holder of Certified Public Accountant (“CPA”) Firm Registration No. 2343-L, issued by the Board.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent Firm’s prior registration record as reflected on the Board’s public website on January 07, 2020. Such prior record reflects that Respondent Firm’s CPA Registration was issued on January 01, 2001. There is no disciplinary action on file for Respondent Firm.

Per the Complaint and Notice of Hearing, the Board referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 07, 2020, to determine whether good cause exists to revoke, suspend or take any other disciplinary action against Respondent Firm’s certification.

Respondent did not request an informal Settlement Conference in this matter.

Hearing Evidence

At the hearing, the Board submitted two exhibits and presented the testimony of Mr. Rasmussen, Assistant Director of Regulation and Compliance. Although the start of the duly noticed hearing was briefly delayed allow Respondent Firm additional travel time, Respondent Firm did not appear, by or through an attorney or owner, and did not contact OAH to request that the start of the hearing be further delayed. No request to continue was submitted on Respondent Firm’s behalf, nor was a request to appear telephonically. Consequently, Respondent Firm did not present any evidence to defend its CPA Registration.

Ariz. Rev. Stat. § 32-730(A) and Ariz. Admin. Code R4-1-345 require every CPA and firm to register once every two years with the Board and pay a registration fee pursuant to Ariz. Rev. Stat. § 32-729 and Ariz. Admin. Code R4-1-345.

Firm is a two-member professional limited liability company, of which Douglas M. Clark (“Mr. Clark”) is the sole CPA owner and responsible for Respondent Firm’s practice.

On or about January 10, 2019, Mr. Clark submitted a renewal registration on behalf of Respondent Firm for the January 31, 2019 through January 31, 2021 term. This renewal identified Mr. Clark as being the only CPA owner for Respondent Firm.

On May 01, 2019, Mr. Clark’s CPA Certificate, Certificate No. 9457, was suspended pursuant to Ariz. Rev. Stat. § 32-730(A) and Ariz. Admin. Code R4-1-345 for failure to comply with registration requirements. Mr. Clark failed to vacate the suspension by paying all past due fees and satisfying all of requirements of renewal.

On August 01, 2019, Mr. Clark’s CPA Certificate expired.

On August 01, 2019, the Board issued an Expiration Order to Mr. Clark.

Ultimately, the Board argued to the tribunal that revocation was appropriate as evidence established Respondent Firm could not be regulated by the Board.

CONCLUSIONS OF LAW

This matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.

The Notice of Hearing the Board mailed to Respondent Firm’s address of record is sufficient, and Respondent Firm is deemed to have received the Notice of Hearing in this matter. Because the Board mailed all correspondence to Respondent Firm in the same manner and failed to receive any mail returned as undeliverable, Respondent Firm is deemed to have received all correspondence regarding this matter from the Board as well.

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 R4-1-101 et seq., the Board has personal and subject matter jurisdiction over Respondent Firm.

Respondent is deemed to have knowledge of the Board’s rules.

Pursuant to Ariz. Rev. Stat. § 41-1092.07(G)(2), the Board has the burden of proof in this matter. Respondent Firm bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard. The standard of proof is 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 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.”

Ariz. Admin. Code R4-1-345(B) provides, in pertinent part, that a registrant shall file for renewal registration in a manner prescribed by the board, and that it is the sole responsibility of the registrant to complete the renewal registration requirements once every two years.

Pursuant to Ariz. Rev. Stat. § 32-731(A)(1)(a), in pertinent parts, required qualifications to be a registered CPA firm in Arizona, include having “[a] simple majority of ownership ... that belongs to holders in good standing of certificates or licenses as certified public accountants in any jurisdiction.”

Ariz. Rev. Stat. § 32-742(A) provides, in pertinent part, that “[a]fter notice and opportunity for a hearing, the board shall revoke a firm’s registration if at any time it does not have all the qualifications prescribed by this chapter and has not been granted an extension of time to comply with firm registration requirements.”

Ariz. Rev. Stat. § 32-742(B)(1) provides, in pertinent part, that “[a]fter notice and an opportunity for a hearing, the board may revoke or suspend a firm's registration” if the board revokes or suspends the certificate of any owner that was issued by the board.

Here, the material facts are not in dispute.

The Board established by a preponderance of the evidence that after Mr. Clark’s CPA Certificate expired on August 01, 2019, it resulted in Respondent Firm without a certified simple majority ownership who belonged in good standing.

Because Respondent violated Ariz. Rev. Stat. §§ 32-730(A), 32-731(A)(1)(a) and Ariz. Admin. Code R4-1-345, the Board has authority to revoke Respondent Firm’s CPA Firm Registration under Ariz. Rev. Stat. § 32-742(A).

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that on the effective date of the Board’s Final Order, the Board revoke Certified Public Accountant Firm Registration No. 2343-L issued to Douglas M. Clark.

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, January 09, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director

Arizona State Board of Accountancy