May 8, 2017 ARIZONA STATE BOARD OF ACCOUNTANCY

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ARIZONA STATE BOARD OF ACCOUNTANCY OPEN SESSION MINUTES

May 8, 2017

Members of the Arizona State Board of Accountancy (“Board”) held a meeting at the Accountancy Board Office in Suite 165, 100 N. 15th Avenue, Phoenix, Arizona 85007. Executive Session was held from 8:29 a.m. to 8:41 a.m. BOARD MEMBERS: Layne Reid Simmons, CPA .................................................................. President Douglas N. Kimball ............................................................................... Secretary

LeRoy M. Gaintner, CPA ...................................................................... Treasurer ▲ Giselle C. Alexander, CPA...................................................................... Member Gary L. Freed .......................................................................................... Member

William C. Heimerdinger, CPA ................................................................ Member Julie S. Klewer, CPA ............................................................................... Member

▲ Arrived at 10:04 a.m. STAFF PRESENT: Monica L. Petersen .................................................................. Executive Director Jacki Hancock ............................ Assistant Director, Registration and Operations

Christopher Rasmussen.............. Assistant Director, Regulation and Compliance Andrea Byrd ............................................................. Program Project Specialist 2

John Oyas ............................................................... Program Project Specialist 2 ASSISTANT ATTORNEY GENERALS: Scott Donald, Esq. .................................................... Assistant Attorney General Seth Hargraves, Esq. ............................................... Assistant Attorney General

GUESTS PRESENT AND/OR PARTICIPATING:

Adela E. Jiménez, CPA, CGMA ..................................... COO and CFO, ASCPA John C. Todd, II, CPA ................ Chairperson, Law Review Advisory Committee Robert Korljan, CPA ........................................................................... Registrant James Raftery, CPA ........................................................................... Registrant Rick Carter, Esq. .................................................................................... Attorney Otto Shill, Esq. ....................................................................................... Attorney

ARIZONA STATE BOARD OF ACCOUNTANCY

100 North 15th Avenue, Suite 165 Phoenix, Arizona 85007

Phone (602) 364-0804 Fax (602) 364-0903

www.azaccountancy.gov

http://www.azaccountancy.gov/

ARIZONA STATE BOARD OF ACCOUNTANCY OPEN SESSION MINUTES May 8, 2017

The meeting was called to order at 8:15 a.m. by Layne R. Simmons, Board President. The following order of business was then considered: OPEN SESSION CALL TO THE PUBLIC

Attorneys Rick Carter and Otto Shill addressed the Board and stated that they were present to represent Robert Korljan, and James Raftery, respectively.

DISCUSS, AMEND AND APPROVE MINUTES Board members (“Members”) provided technical, conforming, and clarifying changes to the Open Session minutes. A motion was made by Julie S. Klewer, seconded by Douglas N. Kimball, to approve the March 27, 2017 Open Session minutes, as amended. The motion passed 6 – 0. A motion was made by Douglas N. Kimball, seconded by Julie S. Klewer, to approve the March 27, 2017 Executive Session, as drafted. The motion passed 6 – 0.

DECLARATION OF CONFLICTS OF INTEREST Julie S. Klewer declared a conflict of interest on Agenda Item XIV. U.1 – Andy D. Coumides. William C. Heimerdinger declared a conflict of interest on Agenda Items XIV.K.10 - Lutich, J. David 5311-E and XIV.K.14 - Sonne, Lee B. 13327-E.

Gary L. Freed declared a conflict of interest on Agenda Item X.A.2 – File No. 2017.102.

CONSENT AGENDA William C. Heimerdinger declared a conflict of interest on the following Consent Agenda (V) items: • Agenda Item V.F.25 – Kelley, Kayla Marie • Agenda Item V.F.28 – Lambert, Rachel Marie • Agenda Item V.G.4 – Durazo, Rebecca • Agenda Item V.G.13 – Miller, Leslie A. • Agenda Item V.G.17- Treon, Christopher • Agenda Item V.H.1 – Fitzgerald, Riley M.

A motion was made by LeRoy M. Gaintner, seconded by Douglas N. Kimball, to approve agenda items V.F.25, V.F.28, V.G.4, V.G.13, V.G.17, and V.H.1. The motion passed 5 – 0. William C. Heimerdinger was conflicted and recused himself from the vote. A motion was made by Douglas N. Kimball, seconded by Julie S. Klewer, that the Board approve the remainder of the Consent Agenda. The motion passed 6 – 0.


A. Recommended for Registration of Firms for the Following Applicants: 1. Black Mountain Accounting LLC

Partner: Dennis M. Peglowski 16063-E 2. Lazarus Alliance Compliance, LLC

Partner: William Ray Marshall 11651-E 3. SmartBooks LLC

Partner: Maryalice Bachani 13130-E 4. Troy G. Hildenbrand, P.C.

Partner: Troy G. Hildenbrand 17363-R

B. Recommended for Firm Name Change: 1. Soldinger Hu & Devoll PLLC

From: Soldinger Hu L.L.P. 6210-B Partner: Tanya A. Devoll 15655-E

C. Recommended for Firm Cancellation – Do Not Wish to Renew: 1. Auletta, Frank, CPA 4741-S 2. Chavez, Ernesto A., CPA 5926-S 3. Deiter, Jonathan W., CPA 5753-S 4. Easton, Richard H., CPA 4903-S 5. Ezell, Kerry M., CPA 4870-S 6. Fox, Kellianne M., CPA 5669-S 7. Fulford, David Alan, CPA 5701-S 8. Gehrke, Donald R., CPA 4101-S 9. Hall, Nancy S., CPA 4868-S 10. Halvorson Accounting, PC 2673-C 11. Holzhauer, Robert E., CPA 4587-S 12. Hudson, Melissa, CPA 4077-S 13. J A Hondorp CPA LTD 14. Landers-Warner, Ashlie Dee, CPA 4668-S 15. Mercer, Sara M., CPA 4622-S 16. Miller, Stanley W., CPA 4323-S 17. Pehlic, Denis, CPA 6106-S 18. Prime Consulting, LLC 3334-L 19. Ranke, Peter Jay, CPA 5293-S 20. Wardrip, Rick G., CPA 5062-S

D. Recommended for Cancellation of Certificate per Registrant’s Request Not to

Renew: 1. Burch, Michael 15714-E 2. Ezell, Kerry M. 9921-R 3. Foutch, Chris P. 17664-E 4. Funk, Matthew Walker 17001-R 5. Hoeschele, John H. 12869-R 6. Kesteloot, Donald R. 7161-E


7. Smith, Timothy 10796-E 8. Trujillo, Andrea R. 16743-E

E. Recommended for Reissuance of Certificate Because of Name Change:

1. Issued as: Karen A. Francis 14856-R ; New Name: Karen A. Fox 2. Issued as: Mona W. Reese 8586-E ; New Name: Mona Wood 3. Issued as: Rebecca Farr 11272-E ; New Name: Rebecca Deeny 4. Issued as: Rebecca Ivanhoe 16554-E ; New Name: Rebecca Ivanhoe Galen

F. Recommendation of the Certification Committee for Approval of Candidates for the

Uniform CPA Examination: 1. (No Last Name Provided),

Sharmila 2. Agrawal, Mayank Kumar 3. Bailey, Maxwell Patrick 4. Balasubramanian, Vijay 5. Becerra, Abdel A. 6. Bondre, Sharik Abdul

Razzaque 7. Bongale, Amol Chandrakant 8. Brown, Micah Stephen 9. Choudhary, Abhishek Ram 10. Crum, David Theodore 11. DeGomez, Gabriel 12. Dominguez, Zachary Isaac 13. Fulton, Susan Michelle 14. George Paul, Sandeep 15. Gupta, Ridhi 16. Gupta, Saiby 17. Guzman, Ruth 18. Hargreaves, Connie Leigh 19. Haughey, Myles Edward 20. Jadhav, Ganesh Shankar 21. Jenkins, Kevin Michael 22. Jensen, Cassie Marie 23. Johnson, Alex Michael 24. Joshi, Amitkumar

Sampatkumar 25. Voted on Separately 26. Konke, Autumn Erika

27. Kuslits, Cheryl Ann 28. Voted on Separately 29. Li, Wendy Qunfang 30. Liu, Xindi 31. Lodha, Suravi 32. Lozoya, Richard 33. Mahendran, Poonam 34. Martin, Jennifer Nicole 35. Mishra, Vivek 36. Muthaiah, Munesh 37. Nagaraj, Una Maheshwari 38. Nurka, Maristela 39. Obolsky, Angela Meredith 40. Padarthi, Venkata Prudhvi 41. Prasad, Shiva 42. Rubin, Emily Elizabeth 43. Schneider, Juergen 44. Selvamani, Manisha 45. Sharma, Bharat

Bhimashankar 46. Sharma, Kshitij 47. Siddique, Mohammed Imran 48. Tracy, Summer 49. Vason, Tyoti 50. Vijaykumar, Varada Vijay 51. Wang, Siqi 52. Wylie, Emily A. 53. Youssefi, Arman Zaman

G. Recommendation of the Certification Committee for Approval of Certification by

Examination: 1. Alessi, Joshua Anthony 2. Arkfeld, Colby M. 3. Chen, Yuxi

4. Voted on Separately 5. Feddah, Waseem Riad 6. Hald, Laura K.


7. Hamlin, Jamie 8. Joven, Vincent Verne 9. Kanduri, Rajeswari 10. Lesure, Christopher 11. Li, Jianjie 12. McAlister, Joshua J. 13. Voted on Separately

14. Nunes, Marc 15. Pollard, Ross M. 16. Stodola, Patrick 17. Voted on Separately 18. Vomocil, John S. 19. Young, Alicia Williams

H. Recommendation of the Certification Committee for Approval of Certification by

Grade Transfer: 1. Voted on Separately

I. Recommendation of the Certification Committee for Approval of Certification by

Reciprocity: 1. Bratcher, Kevin

J. Recommendation of the Certification Committee for Approval of Certification by

Reciprocity Based on Substantial Equivalency: 1. Aguirre, Katie R. 2. Byard, Nicole C. 3. Chapman, R. Llee 4. Ciosek, Angela P. 5. Constance, Troy W. 6. Hauge, Barbara A.

7. Hrncir III, Stanley G. 8. Otten, William O. 9. Rothschadl, Jill 10. Schrag, Joanna R. 11. Schuerman, Michele 12. Woerner, Nathan

K. Recommended Approval of Retired Status for the Following Registrants:

1. Baron, Allen A. 11483-R 2. Bartlett, Sammie W. 8445-E 3. Beissel, Richard Dale 1779-E 4. Blair, James A. 14348-R 5. Boyce, Scott 2761-E 6. Brandt, Marty J. 1838-E 7. Casey, Joan 18063-R 8. Cunningham, Robert Lee

1839-E 9. Eberly, Laura Sundt 2647-E 10. Escobedo, Carol M. 6742-E 11. Flynn, Thomas Joseph 3271-

E 12. Ford, Stephen L. 3386-R 13. Gerlach, Richard E. 2906-R 14. Goslar, Pamela Walters

2787-E 15. Grube, Connie B. 4376-E 16. Halvorson, Ronald L. 1606-E

17. Hamer, Robert E. 3163-E 18. Hardison, Joan Carol 5118-E 19. Hartogs, Sharon O'Brien

3038-E 20. Hoback, Pamela L. 9319-E 21. Hondorp, Jane A. 5236-E 22. Jaqua, Byron K. 11490-R 23. Landers-Warner, Ashlie Dee

6550-E 24. Mayo, Richard C. 5622-E 25. McDonnell, Dennis J. 7392-E 26. Mengel, Gary Ethan 6272-E 27. Norem, Gary Russell 7913-E 28. Reeves, Donald A. 14783-R 29. Retzer, James P. 1190-E 30. Rosato, Terry 15276-R 31. Rosten, Juli 9268-E 32. Shoecraft, John Albert 1022-

E


33. Sinclair, Kathryn Ellis 2872-E 34. Sunday, Scott E.14213-R 35. Weiss, Joyce M. 6676-E

36. Wilson, Douglas McPherson 3550-E

37. Wong, Bing K. Jr.1455-E 38. Zander, John David 6488-E

L. Recommended for Reactivation of Certificate from Inactive Status:

1. Charais, Larissa A. 12853-E 2. Chen, YingYing 16631-R 3. Christensen, Peter L. 7820-E 4. Davis, Stephanie Ann 6908-E

5. Green, Dennis Gabriel 4478-E.

6. Haislip, David E. 6936-E 7. Moore, Jared A. 10137-E

M. Recommendation of the Peer Review Oversight Advisory Committee for Approval

of the Following Firms in Compliance with Peer Review Requirements: 1. Baker, Gene, CPA PC 1226-C 2. Bollard, Roger T., PLLC 2828-L 3. Cohan, Alyx, CPA, PC 1241-C 4. H & H Accounting and Business Services 2146-P 5. Hayes, Joseph, CPA, PC 177-C 6. Lipinski, David A., C.P.A., P.C. 2442-C 7. May Clark & Company PLLC 2772-L 8. McGaffin, Mark D., CPA, PLLC 3112-L 9. Moser Marriott, PLLC 3320-L 10. Oliver & Spencer, CPA, PC 976-C 11. Patten, M. C., CPA, P.C. 760-C 12. Reinert, Dorothy, CPA, PLLC 3342-L 13. Sauvageau, Connie A., CPA 4326-S 14. Spiers, Patricia J., CPA, PC 2389-C 15. Thornton, R.C., and Associates, LLC 2668-L 16. Tull, Forsberg & Olson, P.L.C. 2188-L 17. Urke & Stoller, LLP 763-C 18. Weber, Theresa P., CPA PLC 2973-L


N. Recommendation of the CPE Advisory Committee for Compliance of the Following Registrants regarding CPE Audit: 1. Calvert, Diane 9943-E 2. Castillo, Milton M. 16591-R 3. Di Muro, Louis P. 14235-R 4. Fahlman, Michael A. 12296-E 5. Jacobsen, Jann D. 13071-E 6. Kestner, Julie Jean 13429-R 7. Krog, Charles A. 13564-R 8. Lincoln, Georgia R. 17674-E 9. Logan, Timothy R. 3132-E 10. Moloney, John M. 16193-R 11. Orr, Keith J. 3201-E 12. Roberg, Kenneth J. 12164-E 13. Worth, Christine M. 17460-E

O. Recommendation of the CPE Advisory Committee for Pre-Approval or

Approval of CPE Coursework Related to Disciplinary Order and/or Compliance and/or Partial-Compliance Regarding CPE-Related Documentation Submitted as Part of the CPE Disciplinary Order Review: 1. Becker, Cheryl A. 11027-E 2. Espinosa, Alejandro B. 17423-E 3. Verhoeven, Brian J. 11624-R

P. Termination of Decision and Order:

1. File No. 2011.051; Ward, Maria 2. File Nos. 2015.097; Becker Accounting, LLC and 2016.068; Becker, Cheryl 3. File No. 2017.135; Verhoeven, Brian

ITEMS FOR REVIEW, DISCUSSION AND POSSIBLE ACTION INCLUDING DISCIPLINARY ACTION

Response/Counteroffers/Non-Response to Offered Decision and Order (By Consent) File Nos. 2015.108; Raftery, James and 2017.056; Raftery, James E. CPA, P.C. Otto Shill, attorney for James Raftery, provided a brief statement and summarized the proposed Decision & Order (By Consent) (“Consent Order”) to the Board, in response to the initial Consent Order that was offered to Mr. Raftery. Mr. Shill also expressed concern that the initial proposed Consent Order may create difficulties for Mr. Raftery in other matters.

EXECUTIVE SESSION

A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer and passed 6 – 0, to go into executive session at 8:29 a.m. to discuss confidential information and obtain legal advice pursuant to Arizona Revised Statutes (A.R.S.) § 38-431.03(A)(2)


and (3) regarding File Nos. 2015.108; Raftery, James and 2017.056; Raftery James E. CPA, P.C. After consideration in executive session, the Board reconvened in open session at 8:41 a.m.

OPEN SESSION ITEMS FOR REVIEW, DISCUSSION AND POSSIBLE ACTION INCLUDING DISCIPLINARY ACTION

Response/Counteroffers/Non-Response to Offered Decision and Order (By Consent) File Nos. 2015.108; Raftery, James and 2017.056; Raftery, James E. CPA, P.C. Layne R. Simmons expressed that the Board was receptive to the grammatical and technical changes proposed by James Raftery and his counsel. LeRoy M. Gaintner provided that Mr. Raftery and his legal counsel could consult with Scott Donald to negotiate acceptable language that would satisfy both parties. On the matter of CPE pre-approval, Layne R. Simmons stated that the pre-approval process ensures that the CPE courses that the Registrant will take are the right ones to satisfy the requirements of the Consent Order. James Raftery highlighted his concern as it relates to the timeline for obtaining CPE pre-approval. A motion was made by LeRoy M. Gaintner, seconded by William C. Heimerdinger, that the Board defer consideration of the Consent Order and provide the Registrant, his legal counsel, and the Assistant Attorney General the opportunity to negotiate language which would be reviewed at the June meeting agenda. The motion passed 6 – 0. James Raftery thanked the Board for the opportunity to address the matter. File No. 2017.133; Korljan, Robert Gary L. Freed declared conflict of interest. Rick Carter, legal counsel for Robert Korljan, provided a brief summary of the matter and their position as it relates to the offered Consent Order. Mr. Carter requested that the Board remand the matter back to the CPE Committee in order to give them the opportunity to review the additional material. A motion was made by LeRoy M. Gaintner, seconded by Douglas N. Kimball, that the Board remand the matter back to the CPE Committee for further consideration. The motion passed 5 – 0. Gary L. Freed was conflicted and recused himself from the vote.


Settlement Offers File No. 2017.084; Kane, Larry Seth Hargraves, Assistant Attorney General, was present as independent advisor for the matter. Staff provided a brief background of the matter and explained that the Registrant had signed a Consent Order for violations of A.R.S. § 32-741(A)(9) and Arizona Administrative Code (A.A.C.) R4-1-455.03(F) for failure to respond to the required CPE audit. A discussion ensued amongst the Board and Scott Donald to clarify the language of the Consent Order. A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board approve the Consent Order, as signed. The motion passed 6 – 0.

ASSISTANT ATTORNEY GENERAL’S REPORT

Attorney General’s Office’s Litigation Update Laws 2017, Ch. 128 (SB 1437) – Agencies; review; GRRC; occupational regulation Scott Donald provided the Board with the position held by the Office of the Attorney General regarding the legislation which included that its impact would be limited due to how occupational rule is defined in the bill. Monica L. Petersen read aloud a letter from the Office of the Governor regarding SB 1437.

LEADERSHIP REPORT

Executive Director Update Budget Update Monica L. Petersen provided to the Board that the state budget was passed and that the Board was approved for an additional full-time position. Agency Operations Update Monica L. Petersen stated that Staff had a remarkable experience in hiring for the vacant Program Project Specialist 2 position. Ms. Petersen stated that the position was offered and accepted by Maegan Johnson. Ms. Petersen provided Ms. Johnson’s educational background and experience with working in the Legislature and the Office of Administrative Hearings. The Board congratulated Christopher Rasmussen on his promotion to Assistant Director of Regulation and Compliance. Monica L. Petersen also stated that the Board underwent an audit for annual review of per diem compensation and reimbursement for expenses of state boards and commissions. Ms. Petersen provided a brief historical background of actions by the Industrial Commission which may have been the impetus to create the new legislative requirements.


Monica L. Petersen spoke to Executive Order 2017-02, which requires state agency directors to engage with their respective regulated or stakeholder communities to solicit comment on which rules the regulated community believes to be overly burdensome and not necessary to protect consumers, public health, or public safety. It requires each agency to submit a report to the Governor's Office by September 1, 2017, which the Board had already complied with through sending out an email directing stakeholders to the Governor’s Redtape.gov website as well as adding a link to the same on its website. With regards to Executive Order 2017-03, Monica L. Petersen mentioned that this executive order requires the Board to submit a report to the Governor's Office no later than June 30, 2017. Ms. Petersen noted that staff has already started the work necessary to comply with this executive order and the Board would receive a draft of the report at its June 12 meeting. Monica L. Petersen informed the Board of its first registration renewal reminder in April that was sent to affected Registrants via email, with the assistance of the National Association of State Boards of Accountancy (NASBA). She noted that this would be done monthly prospectively. Legislative Update Laws 2017, Ch. 39 (HB 2271) – Occupational licensing; military members Monica L. Petersen provided that this bill makes the education, training or experience requirements for a professional license, certificate or registration completely- or partially-satisfied, as determined by the regulating entity, if an applicant fulfilled requirements as a member of the U.S. Armed Forces, National Guard or any other reserve component. Ms. Petersen commented that Board staff needs to research on how the Board’s processes need to be updated to be compliant with these new legislative requirements. Laws 2017, Ch. 78 (SB 1078) – Electronic; digital signatures; requirements; ADOA Monica L. Petersen provided that this bill requires state agencies to accept electronic records and electronic signatures. Laws 2017, Ch.145 (SB 1123) – State contract lobbyist; prohibition Monica L. Petersen provided that this bill prohibits a state agency, office, department, board or commission or any person acting on their behalf from entering into a contract or other agreement with a person or entity for lobbying services or spending monies for any person or entity to lobby on their behalf, unless that person is a state employee directly employed by a state government unit to lobby as part of their employment. Ms. Petersen provided that this legislation seeks to codify Executive Order 2016.05 into law. Aging Reports Discussion Monica L. Petersen informed the Board that staff has created a new tool, the Assistant


Attorney General Aging Report, to allow the Board to review the matters that have been sent to the Attorney General’s Office, including the aging of those matters. She told the Board that due to open meeting law issues and the need for independent advisors the Board would not be able to discuss any of the matters unless they are requested to be added to a future Board agenda where they can be separately agendized. She expressed that she was hopeful that this will be a tool which will increase accountability for the AAG’s services to the Board as its client and in turn support the Board’s mission to protect the public by ensuring a more timely delivery of service which has been lacking for many years. Agency Operations Update Gary L. Freed inquired of Monica L. Petersen regarding on-boarding new Board members. Ms. Petersen stated that the Governor’s Office is in the process of interviewing candidates. Assistant Director of Registration and Operations Update CPE Model Rules Jacki Hancock stated that the CPE Committee reviewed the CPE Model Rules Exposure Draft and stated that it did not have any substantive feedback that warranted commenting on the exposure draft. The CPE Committee provided that the Board is not required to adopt the rules; rather, it can simply use them as a resource for what they may or may not like to incorporate in future rulemaking. Discussion briefly ensued amongst Board members as to whether the model rules would impose a yearly requirement of how much CPE a Registrant must take. Motion Language in Some Staff Feedback Sheets for D&Os and CNOH Jacki Hancock provided that when the Registrant does not do what the Board initially anticipates, the matters are frequently brought back to the Board for additional deliberation, voting, and follow-up action. Ms. Hancock provided that such action is costly and time-consuming in terms of the efforts of staff and the Board, and delays protecting the public, which is the Board's primary mission. Ms. Hancock has noted that staff will strive to proactively include language in staff feedback sheets to help guide the Board in its deliberations and subsequent motions. Systems Manager Agency Operations Update Monica L. Petersen commented on the remarkable efforts made by the Board’s IT team, specifically David Dusick, in remediating some of the challenges that were encountered during the process of converting to a new server.

ADVISORY COMMITTEE UPDATE AND REQUEST FOR DIRECTION

Law Review Advisory Committee Continuing Professional Education John C. Todd II, Chairman of the Law Review Committee, stated that the Committee is currently looking into the CPE standards and analyzing how it can be modernized


and adopted into the statutes and rules. Additionally, Mr. Todd noted that members from the CPE Committee provided insight as to whether the Board should expand this analysis beyond nano-learning. As discussed earlier in the meeting, Monica L. Petersen reiterated the CPE Committee’s stance on the model rules released by NASBA. Ms. Petersen also provided a brief background of the fields of study document, which would be utilized by CPE providers to assist in the classification of CPE. John C. Todd elaborated on how the Committee has analyzed the topic of CPE as it relates to nano-learning. Monica L. Petersen noted that this matter is on the agenda for policy guidance. Julie S. Klewer said that she was interested in deliberating whether or not the Board should make changes. LeRoy M. Gaintner added that he is also interested in hearing the perspectives that the Committees may provide in order to provide policy guidance. William C. Heimerdinger expressed that he is in favor of consistency and uniformity, unless the Board has a good reason to do otherwise. Douglas N. Kimball also expressed that he believes that there is no rush in addressing this matter. John C. Todd noted that this matter is something that the Law Review Committee and Board may review continuously to determine if changes need to be made. He also provided the Board with the strategy of changing statutes and rules in a holistic manner, rather than making the changes project by project. Giselle C. Alexander entered the room at 10:04 a.m. A discussion amongst the Board and staff ensued to further clarify the distinguishing aspects of the documents released by NASBA and how they are interrelated. Julie S. Klewer expressed that she agrees with William C. Heimerdinger in the aspects of uniformity, and that discussions and analysis should be made in order to determine how the current rules and statutes compare and contrast with the model rules, and if changes need to be made. Monica L. Petersen noted that, due to the complex nature of the matter, the Board may want to provide policy guidance, as requested by the Law Review Committee. After brief discussion, the Board unanimously agreed that analysis would need to occur in order to identify the gaps in policy between the model rules and the Board’s current statutes and rules. A discussion amongst the Board and staff ensued to clarify the purpose of regulatory guidance provided by the model rules. A subsequent discussion ensued as to whether the finalized version of the model rules should be released, prior to analysis occurring. Layne R. Simmons concurred that the Board can examine the model rules, once a final version of the model rules is released which would be sometime after June 30 which


is when the exposure comment period is over. Firm Registration John C. Todd recapped the Board’s policy direction previously given to the Law Review Advisory Committee, which was to direct the Committee to develop proposed rules and statutes that identify that CPAs that practice in the form of firms that are 51 percent or more owned by CPAs that provide attest services or compilations must register as a firm. Further, that associations of CPAs, where there are two or more CPAs practicing in conjunction and are providing CPA services, whether they have the designation of CPA or not in the firm name, must be registered as a CPA firm (if they have 51 percent or more ownership with CPAs.) Further, that the Committee develop language for potential carve outs for wealth management and law firms. Mr. Todd noted that in acting on the guidance from the Board, the Law Review Committee had agreed to the following modifications to A.R.S. § 32-731, as it relates to firm registration:

Except as provided in A.R.S. § 32-725, the following must register as a firm:

1. A business organization, a simple majority of the ownership in terms of direct and indirect financial interests and voting rights, of which is held by certified public accountants or public accountants, that has an office in this State and is engaged in the practice of public accounting.

2. A sole proprietorship, the owner of which is a certified public accountant or public accountant, that has an office in this State and performs attest services or compilation services.

3. An individual certified public accountant or public accountant, who practices in this State and performs attest services or compilation services, other than as an owner or employee of a sole proprietorship or business organization required to register under subparagraphs 1 or 2, above.

Monica L. Petersen commented that the Law Review Committee created a distinction between sole proprietor and sole practitioner. John C. Todd provided that the language agreed upon by the Committee would take care of the carve outs requested by the Board. A discussion amongst the Board, staff, and John C. Todd ensued regarding various hypothetical situations and how they would apply to the draft language and its practical effects. Giselle C. Alexander noted her concern regarding CPAs who practice in the legal profession, but do not provide accounting services. A discussion amongst the Board


and John C. Todd ensued regarding legal services falling into the broad scope of consulting services. Ms. Alexander also expressed her concern with requiring attorney-CPAs who do not provide accounting services to register as a CPA firm because it would be overstepping the Board’s regulatory boundaries and would potentially cause increased risk to the public in the form of diminished malpractice coverage for legal services. Monica L. Petersen asked the Board if they still agreed that anyone who performs attest and compilation services must register as a firm. The Board unanimously agreed. Ms. Petersen inquired with the Board as to the intent to require firms to register who do not perform attest and compilation services, and provided the Board with the distinguishing aspects of registration and regulation of such firms. Ms. Petersen also noted to the Board that there was a discussion in the Law Review Committee meeting, which deliberated and expressed concern regarding enforcement actions of the Board on firms that do not have the CPA designation in their name. A discussion amongst the Board ensued regarding the ability of the Board to enforce action on firms as it relates to different naming conventions. A subsequent discussion ensued regarding the registration of firms as it relates to the percentage of ownership. Monica L. Petersen posed a question to the Board, asking if a sole proprietor, meeting the 51% or more requirement of ownership, and not providing attestation and compilation services, should register as a firm. The Board stated that because these individual Registrants may be regulated by the Board through their individual certificates, they should not have to register as a firm. The Board also agreed that firms that are owned 51% or more by CPAs, that do not provide compilation and attest services, should not be required to register as a firm. In summary of the discussion, Layne R. Simmons stated that the Board believes that if a firm does not provide attestation and compilation services, it should not be required to register as a firm, regardless of the number of CPA partners. Layne R. Simmons thanked the Law Review Committee for their hard work and dedication.

INITIAL ANALYSIS

File No. 2017.055 Staff provided the Board with a summary of the file and stated that in the Registrant’s response to the complaint, he explained that his CPA certificate expires in July 2018 and that he will probably not renew as he only has two active Arizona clients.

A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board open the investigation file and direct the AAG to file a complaint and notice of hearing for revocation of the Registrant’s certificate for violations of A.R.S. §§ 32-741(A)(7), (13), and (14)(b). The motion passed 7 – 0.


File No. 2017.122 Staff provided the Board with a background of why the matter was put back on the agenda for this month. A motion was made by William C. Heimerdinger, seconded by Julie S. Klewer, that the Board close the file. The motion passed unanimously. File No. 2017.149 Staff provided the Board with a background of the matter and the remedial actions taken by the firm. A motion was made by Gary L. Freed, seconded by William C. Heimerdinger, that the Board accept the Registrant’s response and close the file. The motion passed unanimously.

COMMITTEE RECOMMENDATIONS – COMPLAINT/INITIAL ANALYSIS FILES

Accounting and Auditing Advisory Committee File Nos. 2017.093 and 2017.094 A motion was made by William C. Heimerdinger, seconded by Giselle C. Alexander, that the Board accept the Accounting and Auditing Advisory (A&A) Committee’s recommendation to close the files. The motion passed unanimously. File No. 2017.102 A motion was made by Douglas N. Kimball, seconded by William C. Heimerdinger, that the Board accept the A&A Committee’s recommendation to close the file. The motion passed 6 – 0. Gary L. Freed was conflicted and recused himself from the vote. Tax Advisory Committee File Nos. 2017.103 and 2017.104 A motion was made by Douglas N. Kimball, seconded by William C. Heimerdinger, that the Board accept the Tax Advisory (Tax) Committee’s recommendation to close the files. The motion passed unanimously. Accounting and Auditing Advisory Committee File Nos. 2017.095 and 2017.096 Tax Advisory Committee File Nos. 2017.115 and 2017.116 Staff provided a brief background of the files and stated that they were both on the Board’s agenda for non-response.


A motion was made by Gary L. Freed, seconded by Douglas N. Kimball, to accept the Committees’ recommendations to open investigation files for File Nos. 2017.095, 2017.096, 2017.115, and 2017.116 and to direct the Assistant Attorney General to file a Complaint and Notice of Hearing for Revocation at the Office of Administrative Hearings under A.R.S. §§ 32- 741(A)(15) and 32-742(8) for failure to respond to the Board’s correspondence. The motion passed unanimously.

ALLEGED UNLAWFUL USE OF DESIGNATION

File No. 2017.038; Sanders, CPA P.C. Staff provided a background of the file, highlighted key elements in the Respondent Firm’s response, and noted remedial actions taken by the Respondent Firm. A motion was made by Douglas N. Kimball, seconded by William C. Heimerdinger, that the Board take no action and close the file. The motion passed unanimously. File No. 2017.119; Trajan Wealth/Trajan Tax Staff provided a background of the file to the Board and summarized the response provided by the Respondent Firm. LeRoy M. Gaintner inquired of staff as to whether or not complaints, such as unlawful use of the designations, are sent to the applicable individual and/or firm via certified mail and if staff’s letter to the individual and/or firm include a request to respond. Staff responded that that is correct. A motion was made by Gary L. Freed, seconded by William C. Heimerdinger, that the Board direct staff to draft a letter to the Respondent Firm explaining that advertisements containing language similar to those mentioned in the complaint are considered by the Board to be a violation of A.R.S. § 32-747 and that the continued use of such advertisements without corrective action would result in the Board having to take the formal action of an injunction, as provided in A.R.S. § 32-750. The motion passed unanimously.

REVIEW OF ASSISTANT ATTORNEY GENERAL AGING REPORT

A discussion ensued amongst the Board and the Assistant Attorney General regarding the possibility of discussing items on the report in open session, with the Assistant Attorney General, or with the Executive Director. Scott Donald provided that doing so may have legal implications, as well as the risk of divulging privileged information. Douglas N. Kimball also commented on the age of the files on the report and noted the possibility of having quorum issues.


ITEMS FOR REVIEW, DISCUSSION AND POSSIBLE ACTION INCLUDING DISCIPLINARY ACTION

Compliance/Non-Compliance with Decision and Order (By Consent) and Request for Additional Direction from Board Staff File No. 2015.085; Rhue, Robert and 2016.121; Rhue, R. Steven, A P.C. Staff stated that the Board received a response to an affidavit from the Registrant, wherein the Registrant stated that no audits have been performed, nor does the firm expect to complete any future audit engagements. Staff noted that the firm’s website provided that their services include audits, reviews, and compilations. Julie S. Klewer noted that the website may be managed by a third party. Ms. Klewer suggested inquiring with the Registrant for clarification. A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board direct staff to send a letter to the Registrant requesting clarification as to why the firm’s website provides that the firm’s services include audits, reviews, and compilations, whereas in the compliance affidavit, the Registrant provides that no audits have been performed, nor does the firm expect to complete any future audit engagements. The motion passed unanimously. File No. 2016.146; Altman, Jeffrey Staff outlined the dissent received from the Registrant’s attorney, including the corrections that were identified and the requests made in relation to the CPE provision of the offered Consent Order. A discussion amongst the Board ensued regarding the distinguishing aspects of the initially offered Consent Order and Registrant’s dissent to the Consent Order, as well as the CPE that had been submitted by the Registrant. Subsequently, a discussion ensued amongst the Board regarding the ownership composition of the Registrant’s firm and how it relates to the Registrant’s spouse. A motion was made by Gary L. Freed, seconded by Douglas N. Kimball, that the Board adopt the factual and grammatical corrections to the Consent Order, that the Board deny the Registrant's request to consider already completed CPE to count towards the CPE provision of the Consent Order and the Registrant's request for the Board to pre-approve a one-on-one instruction with a CPE instructor, and if not accepted within 30 days, to direct the Assistant Attorney General to file a complaint and notice of hearing. The motion passed unanimously. File No. 2017.071; Stevens, Glenn


Staff provided a background of the file, and noted that the Board received a dissent from the Registrant to the Consent Order for an administrative penalty for his initial non-compliance with CPE requirements. A motion was made by Douglas N. Kimball, the Board Motion to reoffer the Consent Order, and if it is not accepted within 10 days, to direct the Assistant Attorney General to file a complaint and notice of hearing. A discussion amongst the Board ensued regarding clarifications on the Consent Order, as it relates to administrative penalties. The motion was seconded by Julie S. Klewer and passed unanimously.

Consideration of the Board’s November 7, 2016 Motion to Defer Action and the Board’s September 26, 2016 Motion to Direct the Assistant Attorney General to File a Complaint and Notice of Hearing for Revocation and/or Injunction File No. 2016.044; Wengert, Trace File No. 2016.045; Wengert, Trace, CPA, PLLC File No. 2017.045; Wengert, Trace, CPA File No. 2017.059 File No. 2017.060 Staff provided that it acquired from the Arizona Corporation Commission's website an executed Order to Cease and Desist, Order for Revocation, Order for Restitution, Order for Administrative Penalties and Consent to Same By: Tracey N. Wengert and Jeanette Wengert. Staff provided clarification to the Board regarding a name change made by the Registrant. A motion was made by Douglas N. Kimball, seconded by LeRoy M. Gaintner, that the Board offer a Consent Order for revocation that includes the five compliance files mentioned above, that the Board open File Nos. 2017.059 and 2017.060, and if the Consent Order is not accepted within 10 business days, that the Assistant Attorney General file a complaint and notice of hearing. The motion passed unanimously. File No. 2016.101; Jessup, Penny Staff provided a brief background of the matter and stated that the Registrant failed to complete the CPE requirements of her Consent Order. Staff also noted that the Registrant’s certificate expired on April 1, 2017. A discussion ensued amongst the Board and staff regarding reinstatement and whether future similar matters should be agendized for review by the Board. A motion was made by Douglas N. Kimball, seconded by Gary L. Freed, that the Board take no action. The motion passed unanimously.


Consideration of the Board’s December 5, 2016 Motion to Deny a Request for CPE Exemption for Lack of Good Cause and/or Further Disciplinary Proceedings Chio, Ivy 18064-R By way of background, staff noted that though the Board voted to deny the Registrant’s request for CPE exemption for lack of good cause back in December, the Board did not vote to offer the Registrant a Consent Order for suspension for one year due to non-compliance with CPE requirements. Julie S. Klewer inquired with staff if the information regarding her denial for CPE exemption was relayed to the Registrant. Staff acknowledged that it failed to do so. Julie S. Klewer expressed her concerns on the failure to inform the Registrant. Ms. Petersen noted that Staff will make the extra effort to communicate with the Registrant regarding this administrative error due to its sensitive implications. A motion was made by Douglas N. Kimball, seconded by William C. Heimerdinger, that the Board offer a Consent Order for suspension for up to one year with possible early termination once CPE requirements have been met. The motion passed unanimously. Application for Certification by Examination, Recommended Denial by Certification Committee: Bakes, Michelle Rose A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board accept the Certification Advisory Committee’s recommendation for denial. The motion passed unanimously. Application for Certification by Reciprocity Based on Substantial Equivalency, Deferred to Board by Certification Committee: Harvey, Samera Staff provided that as of the meeting, there were no issues outstanding regarding this file and the Board may now approve the Respondent’s application. A motion was made by Douglas N. Kimball, seconded by Giselle C. Alexander, that the Board approve the Respondent’s application for certification. The motion passed unanimously. Reconsideration of the Board’s March 27, 2017 Motion to Deny Certification by Examination and Subsequent Recommendation of the Certification Committee for Approval of Certification by Examination Lal, Ramnendra Staff provided a brief background to the Board stating that the applicant’s file was brought back to the Certification Committee for reconsideration, which resulted in a determination that the course was upper-level and that all educational requirements had been met. The Committee voted to recommend approval to the Board.


A motion was made by Douglas N. Kimball, seconded by William C. Heimerdinger, that the Board rescind its motion for denial of the certification application and accept the Certification Advisory Committee’s recommendation to approve the individual’s application for certification. The motion passed unanimously. Request for Retired Status Redman, K. Sue 10433-R 2:25:00 Staff noted concerns regarding the description that the Registrant had provided regarding her responsibilities at her current employer. A discussion amongst the Board and staff ensued regarding her registration status options. A motion was made by Layne R. Simmons, seconded by Douglas N. Kimball, that the Board deny the request for retired status, direct staff to explain the eligibility requirements for retired status, present the option that she may qualify for inactive status, and that the Board request for the Registrant to respond within 30 days. The motion passed unanimously. Request for NTS Extension Liang, Yidan 1008645 A motion was made by Gary L. Freed to approve the NTS extension request. Discussion amongst the Board and staff ensued to clarify facts on the file. The motion died for lack of a second. A motion was made by Douglas N. Kimball, seconded by Giselle C. Alexander, that the Board deny the request for a NTS extension due to lack of good cause. The motion passed unanimously. The Board recessed from 1:13 p.m. to 1:21 p.m. Request for Inactive Status Lutich, J. David 5311-E Sonne, Lee B. 13327-E A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board approve the request for inactive status. The motion passed 6 – 0. William C. Heimerdinger was conflicted and recused himself from the vote. Berry, Kristyn N. 11641-E Cao, Hui 12796-E Espinosa, Heidi Louise 10088-E


Katrein, Brenda A. 12956-R Kenny, Michele M. 15993-R Longfellow, Kimberly L. 10133-E Mock, Tracy J. 12994-E Prescott, Ian K. 16173-E Schwartz, Tina D 11696-R Ulloa, Henry M. Jr. 16419-E Warner, John A. 11409-E Young, Lucas J. 15907-R A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board approve the requests for inactive status. The motion passed unanimously. Distler, Mark William 6583-E Gary L. Freed expressed his concern that the Registrant may still be practicing accounting, not just public accounting. Mr. Freed noted that the statutes do not allow any kind of accounting practice when in inactive status. A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board deny the Registrant’s request for inactive status. The motion passed unanimously. Farmer, Scott David 4190-R Gary L. Freed wanted to acknowledge that the Registrant is still practicing accounting, but not for compensation. A discussion amongst the Board and staff ensued clarifying that someone may be in retired status when providing accounting services, if they are not doing it for compensation. A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board approve the request for inactive status. The motion passed unanimously. Heatherson, Danny M. 17655-E LeRoy M. Gaintner noted that the Registrant answered yes to performing accounting services for compensation as part of his employment and indicated he will be working in Arizona, but that his job does not require a CPA certificate. A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board deny the request for Inactive status, as the Registrant is currently providing accounting services for compensation, which is contrary to the provisions of A.R.S. § 32-730.01(B)(2), that the Registrant complete all registration requirements within 60 days, including payment of the balance of the registration fee, and submittal of at least 80 hours of CPE that meets the requirements of R4-1-453. Further, if the Registrant fails to timely complete all registration requirements, that the matter be directed for a complaint and notice of hearing for revocation for failure to respond, pursuant to A.R.S. §32-741(A)(15); and that, if settlement is pursued, the Board agrees to a


suspension for one year for non-compliance with registration requirements, pursuant to §§ 32-730(A); 741(A)(6), (9); Arizona Administrative Code R4-1-345(C); and A.A.C. R4-1-453(C), with early termination from suspension upon compliance with the requirements of the Consent Order, to include reimbursement of the Board's costs of proceedings, including attorney fees. The motion passed unanimously. Distler, Mark William 6583-E A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board amend the previous motion to deny the request for inactive status, as the Registrant is currently providing accounting services for compensation, which is contrary to the provisions of A.R.S. § 32-730.01(B)(2), that the Registrant complete all registration requirements within 60 days, including payment of the balance of the registration fee, and submittal of at least 80 hours of CPE that meets the requirements of R4-1-453. Further, if the Registrant fails to timely complete all registration requirements, that the matter be directed for a complaint and notice of hearing for revocation for failure to respond, pursuant to A.R.S. §32-741(A)(15); and that, if settlement is pursued, the Board agrees to a suspension for one year for non-compliance with registration requirements, pursuant to §§ 32-730(A); 741(A)(6), (9); Arizona Administrative Code R4-1-345(C); and A.A.C. R4-1-453(C), with early termination from suspension upon compliance with the requirements of the Consent Order, to include reimbursement of the Board's costs of proceedings, including attorney fees. The motion passed unanimously. Request for Inactive Status and Disability Fee Waiver Doyschen, Scott M. 15373-E A motion was made by Gary L. Freed, seconded by William C. Heimerdinger, that the Board approve the Registrant’s request for inactive status based on the good cause, deny the Registrant’s request for a disability fee waiver because the Registrant requested inactive status, and the Board only considers disability fee waivers for active certificates, that the Board require that the Registrant complete registration requirements within 60 days by paying the balance of the registration fee. Further, if the Registrant fails to complete registration requirements, that the matter be directed for a complaint and notice of hearing for revocation for failure to respond, pursuant to A.R.S. §32-741(A)(15); and that, if a settlement is pursued, the Board agrees to a suspension for one year for non-compliance with registration requirements, pursuant to §§ 32-730(A); 741(A)(6), (9); and Arizona Administrative Code R4-1-345(C), with early termination from suspension upon compliance with the requirements of the Consent Order, to include reimbursement of the Board's costs of proceedings, including attorney fees. The motion passed unanimously. Violette, James Mark 5252-E A motion was made by Gary L. Freed, seconded by LeRoy M. Gaintner, that the Board approve the Registrant’s request for inactive status based on the good cause, deny the Registrant’s request for a disability fee waiver because the Registrant requested inactive status, and the Board only considers disability fee waivers for active


certificates, that the Board require that the Registrant complete registration requirements within 60 days by paying the balance of the registration fee. Further, if the Registrant fails to complete registration requirements, that the matter be directed for a complaint and notice of hearing for revocation for failure to respond, pursuant to A.R.S. §32-741(A)(15); and that, if a settlement is pursued, the Board agrees to a suspension for one year for non-compliance with registration requirements, pursuant to §§ 32-730(A); 741(A)(6), (9); and Arizona Administrative Code R4-1-345(C), with early termination from suspension upon compliance with the requirements of the Consent Order, to include reimbursement of the Board's costs of proceedings, including attorney fees. The motion passed unanimously. Request for CPE Extension/Exemption Byrne, Caroline J. 17184-E A motion was made by William C. Heimerdinger, seconded by Julie S. Klewer, to approve the request for a CPE extension. The motion passed unanimously. Daugherty, Kathleen Mary 14680-R A discussion amongst the Board ensued to clarify the timeline of extensions. A motion was made by Layne R. Simmons, seconded by Julie S. Klewer, that the Registrant’s request for a CPE extension be approved for meeting the requirement of good cause, and that 60 days be granted to the Registrant to submit version two of the required CPE to the Board. The motion passed unanimously. Byrne, Caroline J. 17184-E A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board amend their previous motion to include that 60 days be granted to the Registrant to submit version two of the required CPE to the Board. The motion passed unanimously. Urquidez, Elvira 13406-E Wadhwani, Nidhi 12698-E A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Registrants’ request for a CPE extension be approved for meeting the requirement of good cause and that the evidence of CPE be accepted, as submitted. The motion passed unanimously. Request for CPE Extension/Exemption and Disability Fee Waiver Gurule, Tina L. 9049-E Gary L. Freed stated that he is inclined to give the Registrant more time because of the circumstances of her request. A discussion ensued amongst the Board and staff regarding CPE extension approvals and the time periods provided to Registrants to comply with CPE requirements.


A motion was made by LeRoy M. Gaintner, seconded by William C. Heimerdinger, that the Board approve the CPE extension through February 28, 2018 and approve the disability fee waiver. The motion passed unanimously. Kimbrough, Rebecca A. 9399-E A motion was made by William C. Heimerdinger, seconded by Gary L. Freed, that the Board grant the CPE exemption request of 27 CPE hours, as well as the request for the disability fee waiver for good cause. The motion passed unanimously. A discussion amongst the Board and Monica L. Petersen ensued regarding the deliberation of different requests with the same backgrounds. Julie S. Klewer noted that each request should be viewed as unique and reviewed independent from one another. Compliance/Non-Compliance with CPE Requirements Marshall, Kevin A. 15690-R Gary L. Freed asked staff for their opinion regarding the intent of the Registrant when classifying the CPE courses for the CPE audit. Monica L. Petersen stated that staff does not have the ability to offer an opinion on the intent of the registrant in this matter. A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board offer the Registrant a Consent Order for suspension for one year for non-compliance with CPE requirements, with possible early termination upon completion of the required CPE; and, if not accepted by the Registrant within thirty (30) days, for the Board to proceed to complaint and notice of hearing; and that, if a settlement is pursued, the Board agrees to a suspension for one year for non-compliance with registration requirements, pursuant to §§ 32-741(A)(6), (9); 32-741.02; and Arizona Administrative Code R4-1-453(C), with early termination from suspension upon compliance with the requirements of the Consent Order, to include reimbursement of the Board's costs of proceedings, including attorney fees. The motion passed unanimously. Bibeau, Paul A. 3031-E Staff provided a brief background of the file to the Board. A motion was made by Gary L. Freed, seconded by Julie S. Klewer, that the Board approve the request for reinstatement. The motion passed unanimously. Compliance/Non-Compliance with Peer Review Requirements: PK Accounting & Tax, PC 1304-C Staff provided a brief background of the file and the deliberations of the Peer Review Oversight Advisory Committee (“PROAC”). PROAC recommended that the Board direct staff to draft a letter with language similar to that provided by the California Society of Certified Public Accountants, which acknowledges that the firm is no longer required to complete the peer review process. Additionally, PROAC recommended


that the firm shall notify the Board at the start of any engagements that will subject the firm to peer review. Staff noted that they recommend to the Board to offer a Consent Order to the Registrant Firm enumerating that it will not provide services subject to peer review. A discussion ensued amongst the Board and staff regarding the Registrant Firm’s two failed peer reviews and other possible actions the Board may take. A motion was made by Julie S. Klewer, seconded by Douglas N. Kimball that the Board offer a Consent Order that would subject the Registrant Firm to a practice restriction that prohibits the Registrant Firm from performing any attest services or engagements for compilation services for a period of three years, due to the Registrant Firm’s non-compliance with peer review standards, pursuant to Arizona Administrative Code R4-1-454(F)(3), which is a violation of A.R.S. § 32-741(A)(9). The motion passed 6 – 1. Gary L. Freed voted nay. A motion was made by Julie S. Klewer, seconded by Douglas N. Kimball, that the Board open an investigation file. The motion passed 6 – 1. Gary L. Freed voted nay.

Failure to Respond and/or Failure to Timely Respond to Board Communication Hamilton, Terry Gene 6695-E Staff provided a brief background of the matter stating that the Registrant was 22 days late in providing a response to the CPE audit request. Julie S. Klewer asked for clarification regarding the timeline of the approval of the CPE audit. Ms. Klewer stated that she is not receptive with having to retroactively penalize a Registrant after approving CPE audit due to Board staff’s oversight. A motion was made by Douglas N. Kimball, seconded by Julie S. Klewer, that the Board take no action. The motion passed unanimously. Lyon, Sherra Leigh 9187-E Woolf, David 15045-R Staff provided a brief background of the matters. LeRoy M. Gaintner inquired with staff whether the matters have incurred administrative costs and fees. Staff noted that they have not yet incurred such. A motion was made by Douglas N. Kimball, seconded by Gary L. Freed, that the Board direct the Assistant Attorney General to file a complaint and notice of hearing for revocation for failure to respond, pursuant to A.R.S. §32-741(A)(9) and Arizona


Administrative Code R4-1-455.03(F); and that, if a settlement is pursued, the Board agrees to a suspension for one year for non-compliance with registration requirements, pursuant to § 32-741(A)(6), (9); and Arizona Administrative Code R4-1-453(C), with early termination from suspension upon compliance with the requirements of the Consent Order to include, compliance with CPE audit requirements, reimbursement of the Board's costs of proceedings, including attorney fees; and payment of a $2,000 administrative fee. The motion passed unanimously. Failure to Complete Renewal Requirements Reed-Fuson, Jo 7799-E Staff provided a background of the matter to the Board. A motion was made by Julie S. Klewer, seconded by William C. Heimerdinger, that the Board offer a Consent Order for suspension for one year for non-compliance with registration requirements, pursuant to §§ 32-730(A); 741(A)(6), (9); Arizona Administrative Code R4-1-345(C); and A.A.C. R4-1-453(C), with early termination from suspension upon compliance with the requirements of the Consent Order. The motion passed unanimously. Request to Extend Conditional Credit for All Examination Candidates Testing in 2Q 2017 Who May be Impacted by the 10-Week Delay in Score Reporting due to the Launch of the New Uniform CPA Exam A discussion ensued amongst the Board and staff as to how this matter will affect the administrative processes of the Board. Monica L. Petersen noted that, once the Board receives the appropriate data from NASBA, staff will correspond with the affected individuals, informing them that the Board has granted them an additional conditional window. A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board unilaterally grant an extension of one full testing window to all candidates affected by the score delay. The motion passed unanimously. Committee Membership Accounting and Auditing Advisory Committee: Andy D. Coumides A motion was made by LeRoy M. Gaintner, seconded by Douglas N. Kimball, that the Board approve Andy D. Coumides for an additional five-year term on the A&A Committee. The motion passed 6 – 0. Julie S. Klewer declared a conflict and recused herself from the vote. Accounting and Auditing Advisory Committee Stephen T. Harris Peer Review Oversight Advisory Committee Timothy R. Coffey


A motion was made by LeRoy M. Gaintner, seconded by William C. Heimerdinger, that the Board approve Stephen T. Harris and Timothy R. Coffey for an additional five-year term on the A&A Committee and the Peer Review Oversight Advisory Committee, respectively. The motion passed unanimously. Request from the Public for the Board to Review Auditing and Accounting Professional Guidelines

LeRoy M. Gaintner expressed that no actions need be taken. A motion was made by LeRoy M. Gaintner, seconded by Julie S. Klewer, that the Board take no action. The motion passed unanimously. Annual Meeting Topics Douglas N. Kimball wanted to discuss the topic of the increasing number of international applicants. Monica L. Petersen suggested that the Board focus on draft statutory and/or rules changes, including those changes being discussed in the Law Review Committee and other potential changes that would allow the Committee to streamline processes.

SUMMARY OF CURRENT EVENTS

Monica L. Petersen noted that the Legislature may sine die this week. IDENTIFICATION OF FUTURE MEETING AGENDA ITEMS

• Reasons for Increase in International Uniform CPA Applicants

ADJOURNMENT A motion was made by Julie S. Klewer, seconded by William C. Heimerdinger, and passed unanimously to adjourn at 2:26 p.m.

May 8, 2017 ARIZONA STATE BOARD OF ACCOUNTANCY

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Transcript of May 8, 2017 ARIZONA STATE BOARD OF ACCOUNTANCY