Update #92 newsletter from California Board of Accountancy dated winter 2021 lists 14 disciplinary actions summarized below. This tally excludes one listed action which is ending probation for a CPA and another separately listed case for the corporation owned by an individual who is also disciplined.
All these actions are effective at various times during November and December 2020.
My tally of these cases:
| SEC | audit | PR | prob. | other | total | |
| revocation | 1 | 1 | 1 | 1 | 4 | |
| surrender | 2 | 1 | 3 | |||
| Revoc. stayed | 6 | +2* | 6 | |||
| Susp. stayed | 1 | 1 | ||||
| total | 4 | 6 | 1 | 2 | 1 | 14 |
Comments on table:
- Items in audit column represents CPA’s who had an audit failure. Some had more than one audit cited as an issue, and one had a compilation failure.
- “PR” column means there is a serious issue in compliance with the peer review program, typically not being enrolled.
- “Prob.” column refers to CPAs losing their license because of violations of probation requirements related to a previous disciplinary action.
- The “+2*” comment in peer review column means there are two CPAs disciplined for audit failures who also had problems with peer review, specifically not being enrolled in the program and obtaining a peer review when required.
Since most readers of this blog are probably involved in performing audits, further breakout of those disciplinary actions is helpful. Type of audit involved is often mentioned, with following detail:
| GAGAS | 2 |
| NFP & EBP | 1 |
| unspecified | 3 |
| total | 6 |
As I have noticed for quite some time, an audit failure usually results in a ban from providing the service until the CPA obtains specific permission from the Board of Accountancy to resume such services. My recap of level prohibitions this time around:
| audit ban | 1 |
| audit & review ban | 3 |
| all attestation work | 2 |
| total | 6 |
The Board has different levels of prohibitions, to include audits only, or audits and reviews, or all attestation work. The complete ban would include audits, reviews, compilations, and any services under the SSAE rules.
The stayed suspension is for the “Big 4” accounting firm of KPMG. They were sanctioned by California for having been previously sanctioned by the Securities and Exchange Commission. I did not take the time to track down the underlying case.
In California, the firm was assessed a $1.3 million penalty and required to reimburse up to $50,000 of investigatory costs.
In addition, the firm is required to notify all of their staff in California of the disciplinary action by the state.
Another interesting penalty is the firm is required to develop a four hour continuing education class addressing ethics. The firm is required to have every employee in California complete the class, with those hours on top of the regular continuing education requirements in the state.
Furthermore, the firm is required to make that course available to every CPA in California at no charge and is required to provide appropriate publicity to all CPAs in the state.
The class has to be made available within one year of 11/2/20, so keep your eye open next summer or fall if you want to pick up four hours of free CPE.
For further reading on the ugly messes that CPAs have created for themselves, and to get hints on how to keep yourself out of trouble, check out:
- Update #91 – Disciplinary actions from California Board of Accountancy for the middle of 2020.
- Update #89 – Disciplinary actions by California Board of Accountancy in first half of 2019.
- Update #88 – Disciplinary actions from California Board of Accountancy through the end of 2018.
- Update #87 – More disciplinary actions from California Board of Accountancy
- Update #86 – Summary of disciplinary actions from California Board of Accountancy, Winter 2018
- How to stay away from the most popular ways to get in trouble with the California Board of Accountancy.
- Update #85 – Another round of disciplinary actions from California Board of Accountancy