ALJDEC decisions subject to certification as final

21A-2021.041-ACY · State Board of Accountancy · 2021-05-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Certified Public Accountant Firm

Registration No. 3473-L

Issued to: TIENSVOLD SHAFFER WENZEL CPAS, PLLC,

Respondent.

No. 21A-2021.041-ACY

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: May 5, 2021

APPEARANCES: Assistant Attorney General Scott Donald represented the Arizona State Board of Accountancy. Christopher Rasmussen appeared as a witness for the Arizona State Board of Accountancy. Anne Wenzel, Managing Partner, appeared on behalf of Respondent Tiensvold Shaffer Wenzel CPAs, PLLC.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

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

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.

Tiensvold Shaffer Wenzel CPAs, PLLC (“Respondent”) is the holder of Certified Public Accountant Firm Registration No. 3473-L issued by the Board.

On or about April 30, 2019, Respondent entered into a Decision & Order (By Consent) (“Order”) in Board File No. 2019.078. Pursuant to that Order, Respondent consented to discipline by the Board for failure to complete a peer review as required under Arizona law. The Order was signed by Anne B. Wenzel, Managing Partner of and Authorized Signer for Respondent. The Order became effective on May 14, 2019.

Pursuant to the terms of the Order, Respondent was required, within twelve (12) months of the effective date of the Order, to provide the Board with documentation establishing that a peer review had been completed and initially accepted by the administering entity. In this case, the administering entity was CalCPA.

Pursuant to Term 6 (Non-Compliance) of the Order, “[t]he failure of Respondent Firm to complete or comply with any of the requirements or provisions of this Consent Order, including the General Provisions, shall be deemed a violation of this Consent Order and A.R.S. § 32-741(A)(9) (“Violation of any Board order or rule”).”

Christopher Rasmussen, Assistant Director of Regulation and Compliance for the Board, testified that Respondent failed to provide the Board with evidence demonstrating that a peer review had been completed and initially accepted by the administering entity within twelve months of the effective date of the Order.

Mr. Rasmussen explained that a peer review is a quality check mechanism used to “uncover any possible issues so they can be remedied.”

Mr. Rasmussen testified that following its August 2020 meeting, the Board offered Respondent another Consent Order after reviewing Respondent’s file. The new Consent Order delineated the following in pertinent part:

2. On May 14, 2019, Board staff executed the Probation Order and sent a copy to Respondent Firm's address of record. The only remaining requirement was to provide the Board with documentation demonstrating that a peer review had been completed and initially-accepted by the administering entity, the California Society of Certified Public Accountants ("CalCPA"), by May 14, 2020.

3. On August 26, 2019, Respondent Firm submitted a compliance affidavit stating, "The peer review was conducted by Roy Hichens on April 25, 2019. I have been unable to upload docs to AICPA Peer Review System due to technical issues on AICPA website".

The new Consent Order provided that Respondent’s Firm Registration would be suspended on the effective date of the Order, however, if Respondent provided the Board with documentation demonstrating that a peer review has been completed and initially accepted by the administering entity, CalCPA, Respondent could request early termination of the suspension. Respondent had until October 2, 2020, to accept or reject the new Consent Order.

On September 30, 2020, Ms. Wenzel, on behalf of Respondent, responded to the Board’s offer. Ms. Wenzel stated in her response, that she had the “initial peer review meeting (a system review) but [] had not completed [her] response to the deficient items.” Ms. Wenzel explained in her response that she had intended to have an additional peer review completed in order to demonstrate the changes that Respondent made to ensure compliance. The response further indicated that “[u]pon completion of the October 15th tax filing deadline, [Ms. Wenzel] will make peer review [her] only focus until it is completed.”

Mr. Rasmussen testified regarding the Bard’s automated search for Respondent’s compliance with the peer review. When the Board searched the FSBA Search cite, it demonstrated that a peer review was not completed and accepted.

On November 5, 2020, the Board re-offered Respondent the previously offered Consent Order which included a suspension, peer review and acceptance, and an early termination of suspension upon completion and acceptance of a peer review.

Mr. Rasmussen explained that the initial Consent Oder was probationary and that the subsequently offered Consent Orders contained a term of suspension because Respondent had violated the original Consent Order, therefore, Respondent’s violations were not only for failure to complete the peer review, but also failure to comply with a Board Order.

Mr. Rasmussen testified that Respondent did not accept the re-offered Consent Order and that as of the hearing date, there was no evidence that Respondent completed a peer review and that it was accepted.

Mr. Rasmussen testified that Respondent completed a portion of what was required by the Consent Order, namely, the peer review, however, the initial acceptance has not been completed. Mr. Rasmussen explained the Consent Order only requires an initial acceptance regardless of a “pass” or “fail” rating. Mr. Rasmussen clarified that if Respondent’s peer review had been accepted by CalCPA, Respondent would have been in compliance with the Consent Order. Mr. Rasmussen testified that Ms. Wenzel could have contacted the Board and/or CalCPA to inquire whether a “fail” rating would have been accepted for purposes of the Consent Order. Ms. Wenzel did not do so. Mr. Rasmussen testified that CalCPA continued to conduct business throughout the pandemic, although its business may have been interrupted at times. Mr. Rasmussen opined that albeit difficult, there was nothing that would have prohibited Respondent from complying with the Consent Order.

Ms. Wenzel asserted at hearing that the Board’s actions are punitive, however, Ms. Wenzel acknowledged that Respondent still needs to complete the peer review including the initial acceptance. Ms. Wenzel blamed Respondent’s non-compliance on the COVID-19 pandemic. Ms. Wenzel acknowledged that Respondent had a peer review conducted in April 2019, and that she learned that Respondent had failed the peer review in May 2019. Ms. Wenzel testified that she was going to write a letter of response to the peer review, and have another peer review conducted in order to demonstrate that Respondent could remedy the deficiencies found, but felt she had until May 2020 to do so. Ms. Wenzel explained that she wanted another peer review conducted prior to May 2020 because she “wanted a clean record.”

Ms. Wenzel testified that in March 2020, at the start of the COVID-19 pandemic, her staff would not come in to work, there were IRS and legislative changes, and she needed to serve her clients. Ms. Wenzel asserted that Respondent did not have the opportunity to complete the peer review because of the pandemic. Ms. Wenzel testified that she requested additional time in which to complete the peer review from the Board, and acknowledged that she stated that she would make the peer review her priority after the October 15th tax deadline. Ms. Wenzel further testified that after October 15, 2020, “everything ramped up with COVID, that it did not end, and it has not yet ended.” Ms. Wenzel testified that Respondent is working with limited staff and safety procedures in place, and is “trying to comply with tax changes.” Ms. Wenzel testified that Respondent “could not comply with the Order.” Ms. Wenzel asserted that she is “working towards it” and feels that a suspension of the Firm Registration would be detrimental to everyone.

Ms. Wenzel believed that Respondent could be sanctioned by CalCPA for failing the peer review, however, Ms. Wenzel did not indicate at hearing that she took any affirmative steps to determine whether Respondent would be subject to any sanctions for failing the peer review, either from CalCPA or the Board. Instead, Ms. Wenzel asserted that she was “not sure.” Further, Ms. Wenzel asserted that she had never been through the peer review process and was not aware of what the next steps would be. Ms. Wenzel testified that she was under the impression that if Respondent “failed” the peer review, the Firm Registration would be terminated by the Board. Ms. Wenzel testified that she was “trying to navigate two sets of rules,” those of CalCPA and those of the Board. Ms. Wenzel testified that she “did not understand initial acceptance is what the Board wanted for the Consent Order.” However, Ms. Wenzel failed to demonstrate as an affirmative defense, that she made any effort to investigate or question the peer review process. Respondent’s Consent Order only required evidence demonstrating that a peer review had been completed and initially accepted by the administering entity within twelve (12) months of the effective date of the Order. The Consent Order did not specify that Respondent had to “pass” a peer review or that if Respondent “failed” a peer review that Respondent would have to rectify any deficiencies in order to be in compliance with the Consent Order. Despite having ten months prior to the start of the pandemic, and 24 months since the execution of the Consent Order, Respondent has yet to comply with the Board’s Order.

The Board proposed a suspension of the Firm Registration until Respondent complies with the Board’s Order, a $2,000.00 civil penalty be imposed, and that Respondent be assessed the costs associated with prosecuting this matter.

Respondent’s position was that there was “no way” Respondent could have complied with the Board’s Order by May 2020, or even though the hearing date, and that there should be no violation found due to the pandemic, that Respondent should remain on probation, that the sanctions are punitive, and that the proposed penalty is excessive given Respondent’s lost revenue due to the pandemic.

CONCLUSIONS OF LAW

The Board has been created and authorized to regulate and control the profession of Certified Public Accountancy in Arizona. This matter lies within its jurisdiction.

The Board bears the burden of proof and must establish cause to discipline Respondent’s Certified Public Accountant Firm Registration by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses or factors in mitigation of any penalty by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

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

Respondent’s failure to comply with the terms of the Board’s Order, specifically by failing within twelve (12) months of the effective date of that Order, to provide the Board with documentation demonstrating that a peer review had been completed and initially accepted by the administering entity, constitutes a violation of A.R.S. § 32-741(A)(9). Because the Board established Respondent’s statutory violation, pursuant to A.R.S. § 32-741(A), the Board may revoke or suspend and take other disciplinary action against Respondent pursuant to A.R.S. § 32-742.

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.

The Administrative Law Judge concludes that suspension with an early termination provision, as well as a lesser civil penalty in the amount of $1,000.00, and the assessment of the Board’s costs, are warranted based on the specific circumstances in this case.

RECOMMENDED ORDER

Based upon the foregoing,

IT IS RECOMMENDED that within thirty (30) days of the effective date of the Final Order entered in this matter, Respondent’s license shall be suspended until Respondent submits proof that is satisfactory to the Board that Respondent has completed the requirements of the Consent Order, petitions the Board for early termination of suspension, and the Board approves early termination of suspension.

IT IS FURTHER RECOMMENDED that within thirty (30) days of the effective date of the Final Order entered in this matter, Respondent shall pay a civil penalty in the amount of $1,000.00, and the Board’s costs, such payments 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 $1,000.00 civil penalty and the Board’s costs, the Board take action to impose further discipline on Respondent’s Firm Registration No. 3473-L 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.

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-137160-45720000Done this day, May 17, 2021.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Monica L. Petersen, Executive Director

Arizona State Board of Accountancy

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001

-137160-45720000