ASBA update

              Inside...
As I write this
message, I am sitting
at the Phoenix airport
on my way to New
Mexico to visit my
dad who lives in
Santa Fe. So, I get here the suggested two hours before,
and find out my flight has been cancelled. The airline
quickly put me on the next flight out (one and one-half
hours later than when I was scheduled to depart). It is
better to be safe and arrive at my destination complete
and intact than to take a chance.
Since I assumed the duties of President in July of 2002,
my focus has been to get our statutes updated and
redrafted to present to our lawmakers. Much like my
flight, our bill introduced into last years Session (2002)
was cancelled. Now, the bill is being introduced by
Senator Barbara Leff in the 2003 Session. This piece
of legislation is a more complete and intact version than
what we presented a year ago.
The new Bill is Senate Bill (SB)
#1062. You can follow its progress
and actually even print out a
draft of it by going to
www.azleg.state.az.us.
I need to thank so many individuals
and stakeholders who contributed
a substantial amount of time and
effort in preparing this piece of
legislation. Our Law Review
Committee, chaired by Janice
Washington, CPA, took the old
statute two years ago and was
challenged to update, merge rules
and substantive policy statements,
u p d a t e
Meet The New
Executive Director
Enforcement Actions
Arizona State Board of
Accountancy 2003 Master
Meeting Schedule
State Board Report
Committee Volunteers Sought
A Message From
the President
arizona state board of accountancy spring 2003
By Florentino J. Gonzales
ASBA
merge Uniform Accountancy Act (UAA)
provisions, present transition statutes for the 150
hours educational requirement for certification
and the computerized CPA exam [coming in
Spring 2004], and address issues raised by the
Auditor General when the Board had an Sunset
Review Audit in 1999. You can easily see how
this task gained weight quickly and grew to
become a challenge.
My thanks to Cindie Hubiak and the Arizona
Society of CPAs who have been involved in this
journey every step of the way. The Societys
concern and thoughtful insight proved to be quite
valuable.
Our Board has reviewed this legislation at least a
dozen times. As I said earlier, this process started
two years ago and has been championed by my
predecessor Bill Baker. We have a jewel in Mr.
Baker as a public member of the Board. His
wisdom, guidance and experience have helped
all of us who have worked with the Board. I would
also like to recognize fellow Board members,
Richard Gardner, CPA, Loretta Peto, CPA, Bill
Williams, (public member), Frank Brady, CPA,
and Don Bays, CPA who have been diligent and
focused in seeing this piece of legislation get to
the capitol.
Our legislative liaison, Greg Harris has given me
the confidence to believe this legislation will pass.
He has been visible, responsive and succinct in
providing us with direction. I offer my gratitude
for his efforts and availability.
(continued on page 2)
2
Valerie M. Elliott was appointed Executive Director of the Arizona State Board of
Accountancy in July 2002. Ms. Elliott is a familiar face at the Accountancy Board.
She has been with the Board since 1999, serving as the administrative officer and
deputy director. In addition to her government experience, Ms. Elliott has worked in
the non-profit and real estate fields.
Ms. Elliott holds a Master’s degree in government, as well as a Bachelor’s degree in
government and economics from New Mexico State University.
She is married to Jeff Elliott, a certified professional counselor and has a nearly two-year
old daughter.
SOURCES OF INFORMATION
Each day the Board office receives phone calls and e-mails asking questions about
examination, certification, registration, continuing professional education, complaints
and the statutes and rules. There are four sources of information registrants can
solicit to get your questions answered:
1) The annual publication of Accountancy Law, Rules and Substantive Policies. In
the next few weeks, registrants will be receiving this publication. Any changes to
the Accountancy Law, Rules or Substantive Policies will be available on the
website or by calling the office.
2) The Board’s website at www.accountancy.state.az.us. Besides the availability of
the statutes, rules and substantive policies, there are frequently asked questions
posted. Also, most of the forms used by the Board are available on the website.
3) The ASBA Update. The Board’s newsletter contains valuable information
including frequently asked questions and updates on issues affecting certification,
examination and regulation.
4) Staff. The Board staff is available to answer questions from registrants. Below is
a quick reference on who to speak with regarding specific areas:
George Beard, Deputy Director .......................... Firms and CPE
Elena Moreno, Registrant Manager .................... Registration and Examination
Liz Chouklas, Administrative Assistant .............. Certification
Mary Ramoz, Administrative Assistant .............. Certification
Kimberly Hayes, Investigation Coordinator ....... Complaints and Discipline
Jim Dube, Administrative Assistant III ............... Complaints and Discipline
Jesse Contreras, Administrative Officer .............Website
If you have any suggestions and comments, please feel free to email Valerie Elliott at
vme@mail.accountancy.state.az.us or call the Board office at 602-364-0804. 􀂙􉥖
Valerie M. Elliot
Executive Director
Meet The New
Executive Director
(continued from
“Message from the President”)
The staff at ASBA has worked
so very hard to help with this
legislation. This is in addition
to all of their daily duties of
licensing, registration and
regulation. Valerie Elliott,
your Executive Director, is
responsive and timely. She has
made the Board’s life easier by
being efficient and keeping us
informed.
So we have arrived at our
destination, safe, complete
and intact. We have delivered
the ASBA legislation to the
lawmakers. By the time the
next newsletter is out, I will
have an update for you on the
next leg of our journey. It is
an honor and a privilege to be
a CPA and to be President
of your State Board of
Accountancy. 􀂙􉤀
3
POLICY STATEMENT ON
ENFORCEMENT ACTIONS
It is the policy of the Board to publish all final disciplinary orders. Since
open discussion of disciplinary actions has an educational value, the board
believes such publication to be in the public interest.
Although every effort is made to provide correct information, you should
check with the Board before making a decision based on this information.
Some provisions of an order may not be summarized here and the listing
does not reflect pending appeals, if any.
Consent Order - Order entered into by the Board with the consent
of the respondent who agrees with all the terms and provisions of the
consent order. Consent orders are normally entered into without a formal
hearing.
Order - Order entered into following a formal hearing in which the
Board determines the terms and provisions without the respondent’s
consent. 􀂙􉤨
(Continued On Page 6)
ORDER OF REVOCATION
NO. 2001.004
EDWARD TARZIAN
On July 31, 2002, the Arizona State Board of Accountancy
issued an Order of Revocation to Edward Tarzian. The Order
of Revocation arose from Mr. Tarzian’s failure to comply with
a Decision and Order (By Consent) entered into in 2001.
ORDER OF REVOCATION
NO. 2002.014
ROBERT DALE HYLTON
On October 23, 2002, the Arizona State Board of Accountancy
issued an Order of Revocation to Robert Dale Hylton. The
Order of Revocation arose from Mr. Hylton’s unprofessional
conduct in violation of A.R.S. 32-741(A)(6), (A)(8) and
(A)(9); and A.A.C. R4-1-455.03(A)(1), (A)(2) and (A)(3).
ORDER OF REVOCATION
NO. 2002.013
GEOFFREY THOMAS OSOWSKI
On October 23, 2002, the Arizona State Board of Accountancy
issued an Order of Revocation to Geoffrey Thomas Osowski.
The Order of Revocation arose from Mr. Osowski’s
unprofessional conduct in violation of A.R.S. 32-741(A)(2).
DECISION AND ORDER (BY CONSENT)
NO. 00A-98230D-ACY
ALAN PROCTOR HAGUE
On July 31, 2002, the Arizona State Board of Accountancy
entered into a two-year Consent Order with Alan Proctor
Hague. The Consent Order arose from allegations that Mr.
Hague violated professional standards. Mr. Hague was a tax
partner at Arthur Andersen, LLP (“Andersen”), in Andersen’s
Phoenix, Arizona office and was involved in some of the
consulting services provided to the Baptist Foundation of
Arizona (“BFA”). The engagements that are the subject of
this Consent Order include: a special income tax assessment
review in 1997 and 1998 (“Tax Risk Assessment”) to
determine BFA’s potential liability exposure if the Internal
Revenue Service (“IRS”) audited BFA’s operations and
determined that BFA engaged in substantial for-profit
activities that might jeopardize BFA’s tax exempt status. He
was the engagement partner on Andersen’s Tax Risk
Assessment.
In the Consent Order, Mr. Hague disputes that the Factual
Findings are complete and accurate; denies any wrongdoing
with regard to the allegations made; and denies that any
violations of professional standards occurred.
Pursuant to the Consent Order, in the event that Mr. Hague
returns to the practice of public accounting in Arizona or any
other state, he shall (1) provide the Board with written notice
10 days before commencement of a practice of public
accounting; (2) be monitored and at the end of the first six
months of his practice of public accounting submit all work
papers for all engagements involving tax consulting services
for review by the Board; and (3) complete 24 hours of
continuing professional education in the areas of ethics,
independence and non-profit taxation. This CPE is in addition
to the biennial CPE requirement and shall be pre-approved
by the Board.
DECISION AND ORDER (BY CONSENT)
NO. 00A-98230C-ACY
ANN M. MCGRATH
On July 31, 2002, the Arizona State Board of Accountancy
entered into a Consent Order with Ann M. McGrath. The
Consent Order arose from allegations that Ms. McGrath
violated professional standards. Ms. McGrath was an audit
manager at Arthur Andersen, LLP (“Andersen”), in
Andersen’s Phoenix, Arizona office assigned to the audits of
the financial statements of the Baptist Foundation of Arizona
(“BFA”). Ms. McGrath was on the BFA audit engagement
team from 1988-1998. Commencing in 1991, she was a
manager on the audit engagements. For certain of these audit
engagements, she was the sole audit manager on the
engagement. The engagements that are the subject of this
Consent Order include: (1) the audits of BFA’s 1992-1997
combined financial statements and (2) work performed after
the series of articles published in the Phoenix New Times
regarding BFA. For audit years 1992-1998, along with the
engagement partner and any other manager on the
engagement, she had responsibility for the planning of the
audit and field work, identifying areas of exposure, and
supervising and reviewing the audit. In the Consent Order,
Enforcement Actions
4
Arizona State Board of Accountancy
2003 Master Meeting Schedule
Board Meetings Law Committee Meetings
January 13
January 29
Special Meeting
February 18
March 26
Special Meeting
April 21
May 7 & 8
Examination Testing
May 12
June 9
July 14
July 30
Special Meeting
August 4
August 14 & 15
Annual Meeting
September 24
Special Meeting
Ocotber 6
November 5 & 6
Examination
Testing
December 1
A and A Committee Meetings
January 16
February 20
March 20
April 24
June 19
July 24
August 21
September 18
October 16
December 4
Tax Committee Meetings
January 30
February 27
March 13 & 14
Exam Appl. Review
May 1
June 26
July 31
August 28
September 11 & 12
Exam Appl. Review
October 23
November 20
CPE Committee Meetings
January 21
February 25
March 25
April 29
May 27
June 24
July 22
August 19
September 23
October 21
November 18
February 5
May 7
October 1
November 12
Certification Meetings
January 27
April 28
May 19
June 30
August 25
November 3
5
From The National Association of State Boards of Accountancy’s
STATE BOARD REPORT
Bush Picks Donaldson for SEC Chair
President George W. Bush on December 10 named William H
Donaldson, a founder of the investment banking firm of
Donaldson Lufkin & Jenrette, to be the 27th chairman of the
Securities and Exchange Commission. His appointment is
subject to confirmation by the Senate, but has been praised by
members of both parties.
Mr. Donaldson, 71, was the first dean of management at Yale
University, served as CEO of the New York Stock Exchange
and later of Aetna. He has disagreed with the SEC on some of
its past proposals, including accounting standards for foreign
companies listed in the US and quoting stock prices in decimals
rather than fractions.
In announcing Mr. Donaldson’s selection, President Bush said,
“Bill Donaldson will be a strong leader with a clear mission —
to vigorously enforce the nation’s laws against corporate
corruption and uphold the highest standards of integrity in the
securities market.’’ 􀂙􉥒
Revised UAA On NASBA Web
The complete November 2002 revised edition of the Uniform
Accountancy Act and Uniform Accountancy Act Rules can now
be downloaded from the NASBA website www.nasba.org. It
can be found under the heading of ‘“Publications and Speeches.”
NASBA UAA Committee Chair Michael Weatherwax stated:
“The additions to the model rules under the UAA recently
adopted by the NASBA and AIGPA Boards of Directors provide
an excellent roadmap for state boards to follow in drafting-their
rules related to interstate practice under substantial equivalency
and for the adoption of the new conditioning and transitioning
requirements for the computer-based CPA examination, going
on line in the spring of 2004. The NASBA UAA Committee
strongly encourages boards to review and adopt these new
uniform rules within the next, few months.”
The November 2002 revision contains changes to conform the
UAA to professional standards with regard to SSARS
compilations and includes rules on: notification under substantial
equivalency; disclosure for Internet practice; and
implementation of the computer-based Uniform CPA
Examination.
In addition, a model notification form to be used by professionals
who want to apply for practice privileges in another jurisdiction
under UAA Section 23 - Substantial Equivalency can be found
on the NASBA website (in the “Publications” section under”
UAA”). The streamlined notification form was developed by
the NASBA UAA Committee to make it easy for all licensees
to comply with state notification. Its distribution was approved
at the October NASBA Board of Directors’ meeting. 􀂙􉥃
Committee Volunteers Sought
Two of the Board’s Committees, Tax Practice and
Certification, are looking for new CPA volunteers.
The Tax Practice committee reviews complaints made against
Arizona licensed CPA’s and makes recommendations to the
Board regarding the disposition of the complaints. The
Committee utilizes the assistance of CPA investigators, hears
testimony from respondents, and receives input from Assistant
State Attorney Generals assigned to work with the Board.
The Certification Committee reviews certification and CPA
examination applications and makes recommendations to the
Board regarding the qualifications of the applicants.
The Committees meet from eight to ten times a year on a
regular basis, in addition to occasional special meetings.
Members receive small stipends for each meeting attended.
If you have an interest in joining either of these committees,
please send a letter expressing your interest and a resume to:
Arizona State Board of Accountancy
Attn: Valerie M. Elliott, Executive Director
100 N. 15th Avenue, Suite 165
Phoenix, AZ 85007
6
(Continued On Page 7)
(continued from page 3)
Ms. McGrath disputes that the Factual Findings were complete
and accurate; denies any wrongdoing with regard to the
allegations made; and denies that any violations of
professional standards had occurred.
Pursuant to the Consent Order, Ms. McGrath relinquished
her certificate.
DECISION AND ORDER (BY CONSENT)
NO. 2000.056
JAY STEVEN OZER
On July 31, 2002, the Arizona State Board of Accountancy
entered into a Consent Order with Jay Steven Ozer. The
Consent Order arose from allegations that Mr. Ozer violated
professional standards. Mr. Ozer was a partner in Phoenix,
Arizona office of Arthur Andersen (“Andersen”) and was the
partner in charge of the audits and other services provided to
Styling Technologies, Inc. (“STC”), which included STC’s
November 1996 Initial Public Offering (“IPO”) and the audits
of the 1996, 1997 and 1998 financial statements of STC. Mr.
Ozer, as the supervising partner on the STC engagements,
was required to conduct the audits in accordance with
professional standards.
DECISION AND ORDER (BY CONSENT)
NO. 00A-98230B-ACY
JAY STEVEN OZER
On July 31, 2002, the Arizona State Board of Accountancy
entered into a Consent Order with Jay Steven Ozer. The
Consent Order arose from allegations that Mr. Ozer violated
professional standards. Jay Ozer was the partner on Arthur
Andersen’s audits of the 1992-1997 financial statements of
the Baptist Foundation of Arizona (“BFA”). Mr. Ozer was
the Andersen partner with the ultimate responsibility for the
conduct of the audits, including reviewing all work performed,
resolving all accounting issues, evaluating the results of the
audits and forming an opinion in issuing final reports. As the
audit partner, he was required to know, understand and
consider any other information about BFA gathered in
connection with Andersen’s Tax Risk Assessment and to
determine if such information should be included in or had a
material affect on BFA’s financial statements. The
engagements that are the subject of this Consent Order
include: (1) the audits of BFA’s 1992-1997 combined financial
statements and (2) a special risk assessment review in 1997
and 1998 (“Tax Risk Assessment”).
In the Consent Order, Mr. Ozer disputes that the Factual
Findings were complete and accurate; denies any wrongdoing
with regard to the allegations made; and denies that any
violations of professional standards had occurred.
Pursuant to the respective Consent Orders, the Respondent
relinquished his certificate.
In the Consent Order, Mr. Ozer disputes that the Factual
Findings were complete and accurate; denies any wrongdoing
with regard to the allegations made; and denies that any
violations of professional standards had occurred.
Pursuant to the respective Consent Orders, the Respondent
relinquished his certificate.
DECISION AND ORDER (BY CONSENT)
NO. 00A-98230-ACY
ARTHUR ANDERSEN LLP
On September 11, 2002, the Arizona State Board of
Accountancy entered into a Consent Order with Arthur
Andersen LLP (“Andersen”). The Consent Order arose from
allegations that Andersen failed to comply with certain
applicable accounting and audit standards regarding services
Andersen provided to the Baptist Foundation of Arizona
(“BFA”). The engagements that are the subject of this Consent
Order include: (1) the audits of BFA’s 1992-1997 combined
financial statements and (2) a special risk assessment review
in 1997 and 1998 (“Tax Risk Assessment”). Andersen denies,
on behalf of itself and each of its present and former partners
and employees, any wrongdoing with regard to the matters
set forth in the Consent Order and denies that any violations
of professional standards had occurred.
Pursuant to the Consent Order, Andersen paid the principal
amount of $217 million pursuant to the global settlement
entered in Baptist Foundation of Arizona Liquidation Trust
v. Arthur Andersen LLP, Case No. CV_2000_01589, the terms
of which were incorporated into the Order. The payment of
$217 million was deemed restitution to BFA investors, except
for $640,000 which was paid to the Board as reimbursement
of costs. Andersen’s registration to practice in Arizona was
subject to a biennial renewal on September 1, 2002. Andersen
decided not to renew its registration to practice in Arizona
and relinquished its registration on August 31, 2002. In the
event Andersen or any successor firm applies for a registration
to practice public accounting in Arizona, the Board will
consider all disciplinary actions pending as of August 31,
2002 as well as all other matters it determines to be
appropriate.
not issue public securities for pre_issuance review; and (3)
complete 40 hours of continuing professional education in
the areas of ethics, internal controls, corporate governance,
adjustments of financial statements for prior periods,
objectivity and professional skepticism.
DECISION AND ORDER (BY CONSENT)
NO. 2002.074
Jeffrey Louis Stern
On October 23, 2002, the Arizona State Board of Accountancy
entered into a five-year Consent Order with Jeffrey Louis
Stern. The Consent Order arose from Mr. Stern’s felony
conviction in United States District Court.
Pursuant to the Consent Order, Mr Stern’S certificate is placed
on probation for five years with the following terms: (1) his
certificate is suspended for the first six months, during which
he cannot hold himself out as a Certified Public Accountant,
and he is required to notify his employer and any clients of
his suspension; (2) shall submit to a psychological evaluation;
(3) enroll in behavioral health counseling for a minimum of
three months; (4) submit to pre-issuance peer review on all
restricted financial services and full disclosure compilations;
(6) pay the Board’s investigative and administrative costs of
$500; and (7) comply with all the terms of his federal
probation/supervision.
DECISION AND ORDER (BY CONSENT)
NO. 2002.011
Tkatchov & MacIntrye CPA’s, P.C.
On December 4, 2002, the Arizona State Board of
Accountancy entered into a Consent Order with Tkatchov &
MacIntrye CPA’s, P.C. The Consent Order arose from failure
to comply with certain accounting and audit standards with
respect to audit for a nonprofit organization.
Pursuant to the Order, the Respondent shall: (1) submit the
next three audits, including at least one audit of a nonprofit
for pre-issuance review and (2) pay the Board’s investigative
costs in the amount of $6168.80.
DECISION AND ORDER (BY CONSENT)
No. 1998.155B
Bette N. Rasco
On December 9, 2002, the Arizona State Board of
Accountancy entered into a three-year Consent Order with
Bette N. Rasco. The Consent Order arose from Ms. Rasco
failure to comply with an October 1999 Consent Order.
Pursuant to the Order, the Respondent shall: (1) be place on
three years probation; (2) submit the Federal Form 706
prepared in January 2002 for peer review; and (3) submit the
first two Form 706 she prepares to pre-issuance review. 􀂙􉤷
7
(continued from page 6)
DECISION AND ORDER (BY CONSENT)
NO. 2001.134
ARTHUR ANDERSEN LLP
On September 11, 2002, the Arizona State Board of
Accountancy entered into a five year Consent Order with
Arthur Andersen LLP (“Andersen”). The Consent Order arose
from allegations that Andersen failed to comply with certain
applicable accounting and audit standards regarding services
Andersen provided to National IPF Company and its
subsidiaries and its parent holding company, NIPF Holding
Company. Andersen denies, on behalf of itself and each of
its present and former partners and employees, any
wrongdoing with regard to the matters set forth in the Consent
Order and denies that any violations of professional standards
had occurred.
Pursuant to the Consent Order, (1) the Order shall apply to
Andersen and any successor firms to Andersen, but not to
other certified public accounting firms with which Andersen
partners or employees may now be employed; (2) Andersen’s
registration to practice in Arizona was subject to a biennial
renewal on September 1, 2002. Andersen decided not to
renew its registration to practice in Arizona and relinquished
its registration on August 31, 2002; (3) Andersen was required
to reimburse the Board’s costs in the amount of $40,000; (4)
In the event Andersen or any successor firm applies for a
registration to practice public accounting in Arizona, the
Board will consider all disciplinary actions pending as of
August 31, 2002 as well as all other matters it determines to
be appropriate.
DECISION AND ORDER (BY CONSENT)
NO. 2002.058
WILLIAM E. SIWEK
On September 11, 2002, the Arizona State Board of
Accountancy entered into a five_year Consent Order with
William E. Siwek. The Consent Order arose from allegations
that Mr. Siwek violated professional standards for his role in
the services provided by Arthur Andersen LLP (“Andersen”),
to National IPF Company and its subsidiaries and its parent
holding company, NIPF Holding Company (hereinafter
“NIPF”). Mr. Siwek served as engagement manager for the
audits of NIPF’s 1991, 1992, 1993, 1994 and 1995 financial
statements. Andersen admitted Siwek as a partner in
September 1996. In the Consent Order, Mr. Siwek denies
any wrongdoing with regard to the allegations made and
denies that any violations of professional standards had
occurred.
Pursuant to the Consent Order, Mr. Siwek (1) is precluded
from engaging in auditing of or providing restricted financial
services to any client that issues public securities; (2) is
required to submit his next three audits of companies that do
Address Change? Let Us Know!
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(Please Only Add Information That Has Changed)
Current Home Address: ________________________________________________________________________
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Mail to: Arizona State Board of Accountancy
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ASBA u p d a t e
The ASBA Update is published two times a year by the Arizona State
Board of Accountancy, 100 N. 15th Avenue, Suite 165 - Phoenix,
Arizona 85007. Telephone 602.364.0900. Opinions expressed in articles
by contributors are not necessarily those of the Board of Accountancy.
VALERIE M. ELLIOT, EXECUTIVE DIRECTOR GEORGE L. BEARD, DEPUTY DIRECTOR
Board Members as of July 3, 2002
Florentino J. Gonzales, CPA Term Expires: July 3, 2004 President
Loretta Peto, CPA Term Expires: July 3, 2005 Treasurer
Richard M. Gardner, CPA Term Expires: July 3, 2003 Secretary
Lehman William Williams Term Expires: July 3, 2004 Member
William D. Baker, Attorney Term Expires: July 3, 2004 Member
Frank J. Brady, CPA Term Expires: July 3, 2006 Member
Don R. Bays, CPA Term Expires: July 3, 2007 Member