ALJDEC decisions subject to certification as final

20A-2020.149-ACY · State Board of Accountancy · 2020-07-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Hugh Maroney

Registration No. 12148-E,

Appellant.

No. 20A-2020.149-ACY

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: June 26, 2020, at 9:00 a.m., with the record held open until July 6, 2020

APPEARANCES: Assistant Attorney General Scott Donald represented the Arizona State Board of Accountancy. Witnesses Andrea Byrd, Assistant Director of Registration and Operations, and Tiffany Young, Board Member, testified on behalf of the Board. Appellant Hugh Maroney appeared on his own behalf.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

_____________________________________________________________________

FINDINGS OF FACT

1. The Arizona State Board of Accountancy (“the Board”) issued Certified Public Accountant Certificate No. 12148-E to Hugh Maroney (“Mr. Maroney” or “Appellant”). This certificate enables Respondent to practice as a certified public accountant (“CPA” or “registrant”) in the State of Arizona.

2. On February 25, 2020, Mr. Maroney filed with the Board his Certified Public Accountant Registration Renewal Form (“Registration Renewal”) for the period February 2020 through February 2022. See Exhibit 3. Along with the Registration Renewal, Mr. Maroney filed an Inactive Status Request with the Board. Id. at 013.

3. The Inactive Status Request (“Current Request”) states that Mr. Maroney’s Position Title is Internal Revenue Agent, and his Position Description indicates, “I am an Auditor for the IRS. I audit 1040, 1065, 1120 and 1120S returns. I do not provide any CPA services.” Id.

4. Andrea Byrd, Assistant Director of Registration and Operations for the Board, testified that her job duties include reviewing applications for Certified Public Accountants, regulating renewals and status changes for certifications, and making recommendations to the Board. Ms. Byrd does not make any decisions relating to the applications and requests that she reviews. Ms. Byrd testified that every status change request must be decided upon by the Board, and that the Board receives approximately twenty such requests per month. Ms. Byrd further explained that the Board is comprised of five CPAs and two public members, and that each Board member serves a five year term.

5. Mr. Maroney had filed two previous Inactive Status Requests. The first such request was filed on February 19, 2016, for the period of February 2016 through February 2018. See Exhibit 3, page 016. The 2016 Request stated that Mr. Maroney was an “IRS – Tech Services – Revenue Agent” and the Position Description stated, “For the next three years I will be reviewing IRS case files in Tech Services. There will be no CPA duties associated with this job.” Id. The second request was filed on February 27, 2018, for the period of February 2018 through February 2020. Id. at 015. The 2018 Request stated that Mr. Maroney was an Internal Revenue Agent Reviewer and the Position Description stated, “Review audit case files.” Id.

6. Both of those previous requests were granted.

7. Ms. Byrd testified regarding the March 23, 2020 Open Session Meeting Minutes submitted by the Board as Exhibit 1. Those Meeting Minutes indicate that Board Member Tiffany Young stated that “verifying and analyzing financial information is included in the definition of accounting services, which is the role of an auditor.” See Exhibit 1. Board Member Lisa B. Lumbard made a motion to deny Mr. Maroney’s Current Request because Mr. Maroney was analyzing and verifying financial information in his employment. Id. The motion was seconded by Board Member Larry C. Schafer. Id.

8. Ms. Byrd explained that Mr. Maroney’s two other Inactive Status Requests were granted because they contained different job descriptions. The Current Request stated that Mr. Maroney was an auditor. Ms. Byrd testified that at the Board Meeting, the Board discussed Mr. Maroney’s Current Request and the differences between the Current Request and the previous Requests. The Board determined, based upon the Position Description in the Current Request, that Mr. Maroney was indeed performing accounting services and decided to deny Mr. Maroney’s Current Request. Mr. Maroney did not attend the meeting, but subsequently obtained the audio recording of the Meeting.

9. Tiffany Young testified that she has been a Board Member for three years. Ms. Young is a Certified Public Accountant and has worked her entire 26 year career in the tax field. Ms. Young is currently a tax partner at the firm of Deloitte Touche and has been employed at Deloitte Touche for 18 years. Prior to her employment with Deloitte Touche, Ms. Young was employed by Arthur Anderson. Ms. Young testified that she has regularly reviewed Inactive Status Requests for the Board at its meetings and is familiar with the statutes pertaining to such requests. Ms. Young also testified that she concluded based upon Mr. Maroney’s Current Request, that in the course of performing his job duties, Mr. Maroney analyzes and verifies financial information. The analysis and verification of financial information falls within the definition of accounting services. Ms. Young explained that the role of an auditor requires the review of financial information provided to make a determination about that information. Mr. Maroney’s Current Request states that he is an auditor and that he audits 1040 returns (individual taxpayer), 1065 returns (partnerships), 1120 returns (corporations), and 1120S returns (S corporations). Ms. Young explained that materials provided for an audit are financial materials, and that an audit cannot be completed without financial materials. Ms. Young further explained that an audit encompasses analyzing those financial materials. Ms. Young asserted that this process of analyzing and verifying financial information for an audit constitutes the practice of accounting as those activities fall within the definition of accounting services. Ms. Young cited to A.R.S. § 32-701(1) for the definition of “Accounting services,” which means services that are commonly and historically performed by accountants including . . . analyzing or verifying financial information . . . .”

10. Mr. Maroney testified that he was “shocked” to hear some of the things that were said about him at the Board Meeting, especially in light of the fact that the Board Members knew they were being recorded. Mr. Maroney requested that the Administrative Law Judge review the audio recording of the approximately eight minutes that the Board discussed his Current Request at the Board meeting. The record was held open for the submittal of that recording, which was submitted by the Department as Exhibit 4.

11. Mr. Maroney testified that he feels that he is being punished for working for the IRS and that he listened to approximately four hours of the same Board Meeting during which the Current Request was discussed and that there were no comments made about any other individuals’ respective requests. Mr. Maroney contended that he was not given “a fair shake from the start.”

12. Upon review of the recording, Ms. Byrd is heard stating that Mr. Maroney was “lazier with the writing of each renewal.” See Exhibit 4. Laughter was heard after that comment was made. Id. A Board member then asked, “What do we normally do with IRS agents?” Id. The response was “put them through the same ringer” and “punish them.” Id. Thereafter, discussion ensued regarding the actual merits of Mr. Maroney’s Current Request and the differences between the Current Request and Mr. Maroney’s previous requests. Id. The Board discussed that the Current Request indicates that Mr. Maroney is auditing business and individual returns, and that his role is different than in previous requests. Id. The Board Members discussed that an agent for the IRS analyzes financial information, using accounting skills which is different than what a reviewer would do. Id.

13. The Administrative Law Judge finds that the superfluous comments made and laughter during the review of the Current Request were unnecessary, inappropriate, and unprofessional. However, the Administrative Law Judge does not find that they had any impact on the Board’s decision to deny the Current Request.

CONCLUSIONS OF LAW

1. The Board has personal and subject matter jurisdiction over Appellant pursuant to A.R.S. §§ 32-701 et seq. and A.A.C. R4-1-101 et seq.

2. Appellant bears the burden of proof to establish that the Board improperly denied his Request for Inactive Status. See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119; See also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960).

3. Pursuant to A.R.S. § 32-730.01(A), “A registrant who meets all of the following requirements may request that the registrant’s certificate be placed on inactive status: . . . 3. Does not provide accounting services for a fee or other compensation in this state.”

4. “Accounting services” is defined as “services that are commonly and historically performed by accountants, including . . . analyzing or verifying financial information. . . .” A.R.S. § 32-701(1).

5. The Administrative Law Judge concludes, based upon the evidence presented at hearing, that the Position Description as written by Mr. Maroney on his Current Request inherently encompasses accounting services, as such position requires analyzing or verifying financial information. Consequently, Mr. Maroney’s certificate is not entitled to inactive status because his position includes providing accounting services for a fee or other compensation in this state. Therefore, Mr. Maroney has not proven by a preponderance of the evidence that the Board’s Denial of the Current Request was erroneous.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Board’s determination to deny Mr. Maroney’s Request for Inactive Status be upheld.

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, July 6, 2020.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director

Arizona State Board of Accountancy

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