The California Board of Accountancy Update newsletter, issue #93 dated Summer 2021, has details of disciplinary actions with effective dates in the spring and early summer of 2021.
Interesting thing I noticed this time around is the timing of some of the underlying issues. The attestation failures for which a date is mentioned involve financial statements issued in the 2016 or 2017 timeframe. For one of the more splendiferous failures the firm had audit failures on 2015 and 2016 financial statements which generated a failed peer review with the report dated in early 2018, which led to an investigation by the board with disciplinary action effective in June 2021. That was the firm’s second consecutive peer review fail. Firm earned a $2,500 penalty along with reimbursement of $5,000 investigatory costs.
Every CPA that had an attest failure drew a ban on attestation services until such time as the practitioner requests and receives permission from the board to again perform attest work.
Four of the practitioners who had their license revocation stayed also had a suspension of their license in the range of 60 to 90 days. Imagine the lifetime stain of an official revocation on your public record and then on top of that being prohibited from providing any CPA services for two or three months.
Here is my recap of disciplinary actions reported in this issue:
|rev/surr||rev stay||rev & susp||total|
|attest & Peer review||–||6||–||6|
Some comments on the abbreviations:
- “rev/surr” – the CPA’s license was revoked, in one case surrendered.
- “rev stay” – the CPA’s license was revoked with revocation stayed.
- “rev & susp” – the license was revoked with revocation stayed and the firm also drew a suspension, meaning the practitioner may not provide any services for which a license is required – imagine a two or three month involuntary, unpaid vacation.
- “gov’n sanction” – this is either an SEC or PCAOB sanction; this time around there is an unspecified sanction by California government agency severe enough to warrant a stayed revocation.
- “attestation fail” – practitioner got in trouble for an audit failure.
- “attest & peer review”– practitioner had an audit failure and also peer review failure, usually failure to get a review.
One firm with two licensees knew they were in trouble as indicated by the board listing the backdating workpapers as additional cause for sanction.