ALJDEC decisions subject to certification as final

19F-2019.211-ACY · State Board of Accountancy · 2019-09-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 21, 2019 APPEARANCES: Assistant Attorney General Scott Donald, Esq., appeared on behalf of the Arizona State Board of Accountancy, with Christopher Rasmussen as a witness. Denise Dodge appeared, representing herself. ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn. _____________________________________________________________________

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 state agency authorized to regulate the practice of Certified Public Accountants in the State of Arizona pursuant to A.R.S. §§ 32-701 et seq. 2. Denise Dodge (Respondent) is the holder of Certified Public Accountant (“CPA”) Certificate No. 17062-R issued by the Board. This certificate enables Respondent to practice as a Certified Public Accountant in Arizona.[1] 3. On January 22, 2015, Respondent filed articles of incorporation for “DD Dodge, CPA, PLLC” (Firm), with the Arizona Corporation Commission (ACC). 4. On March 3, 2015, the Board approved the Firm’s application for registration in Arizona. 5. When the Board did not receive a timely renewal for Firm, the Board placed Firm on suspended status on April 1, 2017.[2] On April 3, 2017, the Board’s Suspension Order was mailed to Firm.[3] The Suspension Order indicates that if the Firm fails to renew its registration within twelve months of the suspension, the Firm’s registration status would expire. Respondent did not receive the Suspension Order at that time. 6. While the Suspension Order states that the address used was the Firm address of record, at hearing, Respondent indicated that the address on Bluefield was her home address, while the Firm was on Helm. Firm’s 2015 incorporation paperwork confirms the Firm was initially located on Helm.[4] At hearing, Respondent also indicated that, at one point, she had changed the Firm address to her home but later moved the Firm to 7th Street.[5] 7. When the suspension status was not cured, Firm‘s registration expired on April 1, 2018. 8. At some point, Respondent received information regarding the Firm suspension and/or expiration. 9. On April 5, 2018, Respondent went the Board offices intending to renew Firm’s registration.[6] However, Respondent was informed that due to the expiration (on April 1, 2018), Firm could not simply renew and that an application for reinstatement would need to be approved by the Board at its next meeting on May 14, 2018. 10. The dilemma for Respondent at that time was that she had several tax returns that needed to be completed. Respondent believed it was best to act in the interests of her clients and Respondent subsequently completed those several tax returns, executing the preparer signature as Firm, using the electronic filing identification number (E-fin) for the Firm. Respondent knew that her own CPA certification had not been suspended, had not expired, and that she remained in active status until May 31, 2018. 11. On May 3, 2018, the Board inquired whether Firm was operating and using the CPA designation because, based on Board records, Firm had expired.[7] The Board mailed this letter to Firm at Bluefield and at 7th Street. The Board requested a written response and information or documents relevant to the situation. 12. By letter dated June 28, 2018, Respondent provided her written statement regarding her and Firm’s activities and actions.[8] Respondent indicated that she had filed Articles of Termination for Firm, that her online presence for Frim had been closed, and that she had destroyed Firm business cards and letterhead “several months back.” Respondent further indicated that she had been struggling with health since summer of 2016 and had subsequent financial difficulties when she was unable to work. 13. This matter was not resolved informally through an offered consent agreement. 14. On July 16, 2019, the Board issued its Complaint and Notice of Hearing (Complaint) to Respondent, proposing to revoke Respondent’s CPA Certificate, setting an administrative hearing, and providing opportunity for an appeal and an informal conference.[9] 15. Respondent filed an Answer on August 6, 2019, admitting to operating the Firm, in completing tax returns, after she discovered that the Board had taken action to suspend Firm’s registration and the Firm registration had expired. Respondent indicated that had she known of the suspension, she would have taken care of it right away. In her Answer, Respondent requested that the Firm Certificate be cancelled, indicating that she does not want Firm to be reinstated and that she now operates as a sole proprietor. 16. At hearing, Respondent took responsibility for her actions, acknowledging that she had completed the tax returns. She also noted, in her defense, that she had not performed any audits, financial reviews, or attestation engagements (i.e., the financial services restricted to CPAs) between April 1, 2018 and April 15, 2018.[10] 17. The Board’s position is that the circumstances demonstrate cause, pursuant to A.R.S. § 32-741(A)(6) [violation of any applicable provision] and A.R.S. § 32-731(A) [regarding registration and payment of a registration fee every two years] to discipline Respondent’ certificate. While the Board indicated that Respondent’s circumstances might go to mitigation of a sanction, the Board proposed that a $2,000.00 civil penalty be imposed.[11] 18. Respondent’s position is that the proposed penalty is excessive as she only “knowingly” operated Firm in violation of the Firm expiration from April 5, 2018 to April 15, 2018 in order to complete some tax returns. CONCLUSIONS OF LAW 1. The Board has jurisdiction over Respondent and the subject matter in this case, pursuant to A.R.S. § 32-701 et seq. and A.A.C. R4-1-101 et seq. The Board’s authority to discipline Respondent is found at A.R.S. §§ 32-741(A) and 32-701(10). Because the Board has been given statutory discretion in regard to suspension, revocation, or taking other disciplinary action, Respondent’s circumstances should be considered in the administrative process. 2. Pursuant to A.R.S. § 41-1092.07(G) (2) and A.A.C. R2-19-119(B), the Board has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. A.A.C. R2-19-119(A). 3. Pursuant to A.A.C. R4-1-102(A), Respondent is deemed to have knowledge of the Board’s rules. 4. The continued operation of Firm in violation of registration requirements does constitute cause, under A.R.S. § 32-741(A)(6), for the Board, in its discretion, to revoke or suspend and/or take disciplinary action against Respondent’s CPA certification. The Board proposes a civil penalty in the amount of $2,000.00. 5. The Administrative Law Judge concludes that a lesser civil penalty is warranted based on the specific circumstances in this case, and recommends a civil penalty in the amount of $500.00. This amount is calculated based on what would have been the Firm registration fee, a late registration fee, and a minimal penalty amount. RECOMMENDED ORDER Based upon the foregoing, IT IS RECOMMENDED that within thirty (30) days of the effective date of the Commissioner’s Final Order entered in this matter, regarding discipline determined appropriate in this matter, Respondent shall pay to the Department a civil penalty in the amount of $500.00, and such payment shall be made by cashier’s check or money order made payable to the Board. IT IS FURTHER RECOMMENDED in the event that Respondent fails to pay the $500.00 penalty, the Board take action to impose further discipline on Respondent’s CPA Certificate No. 17062-R upon proper notice to Respondent.

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 days from the date of the certification. Done this day, September 11, 2019.

/s/ Kay Abramsohn Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director Arizona State Board of Accountancy ----------------------- [1] See A.R.S. § 32-725. [2] See A.R.S. § 32-730(A) and A.A.C. R4-1-345. [3] See Exhibit 2. [4] See Exhibit 3. [5] The dates of such moves and any specific notices to the Board of address changes was not specified during the hearing. The Tribunal cannot determine whether the Suspension Order was mailed to the correct address.

[6] See Exhibit 1. [7] See Exhibit 3. The Board’s file number referenced thereon was File No. 2018.179. [8] See Exhibit 4. Based on Respondent’s response, the Board also inquired about Respondent’s CPA activities in Board File No. 2018.178. [9] When the matter was forwarded to the Tribunal, the Board set the matter as Docket No. 19F-2019.211-ACY. However, the Board noticed the hearing as Docket No. 19F-2019.211-ACY with Board File No. 2018.178. At hearing, the Tribunal specified that the Tribunal Docket No. would remain as originally set, as 19F-2019.211-ACY, rather than attempting to coordinate with the numbering of the Board’s file after the fact. [10] Although she did not cite to this provision, the Tribunal presumes that Respondent was referencing A.R.S. § 32-701(A)(16). The Board did not dispute Respondent’s statements in this regard. [11] The Board has authority to impose a penalty for each act in violation and, thus, could have proposed up to $2,000 penalty for each tax return completed during April 1, 2018 to April 15, 2018. See A.R.S. § 32- 701(A)(6). At hearing, Respondent did not recall the exact number of returns she had completed, but she offered to provide that information; the Board did not being forward any such information.

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