Description
For any twelve-month period, summarize “8” enforcement actions taken by The Texas State Board of Public Accountancy. For each action, list the respondent’s name, date of action, rule and act violation (by section number) and a brief description of the violation (i.e., fraud, failure to file income taxes, CPE violation, etc.). Also, examine the most interesting case using two different ethical lenses ( Virtue, Rights, Consequentialism, Utilitarianism).At least 4 of the cases must be from Texas.Here is a sample paper:
Unformatted Attachment Preview
RESEARCH QUESTION SUMMARY 2
2
Summarize “12” enforcement actions taken by the Texas State Board of Public
Accountancy
Table 1. 12 Enforcement Action Cases by TSBPA 2021–2022 year
1. Agreed Consent Orders Behavioral Enforcement Committee (6 cases)
Date of
Action
Rule Violation
Act
Violation
1 November Jefferey Scott
11, 2021 Burns
501.90(5): Discreditable
Acts
901.502(6)
901.502(11)
– felony (DWI)
2 November Robert McLean
11, 2021 Robert McLean
(Firm)
501.80: Practice of
Public Accountancy
501.81: Firm Licensing
501.90(12):
Discreditable Acts
901.502(6)
– violate to provide
professional services without
a valid license (failure to
renewal)
– failure to respond to an
inquiry within a reasonable
time
3 September Ruth Lydia
16, 2021 Elizondo Pavon
501.76: Records and
Work Papers
501.81: Firm Licensing
501.90(12):
Discreditable Acts
901.502(6)
– violate to hold a valid
license
– failure to respond to an
inquiry, to provide copies to
clients within a reasonable
time
4
July 15,
2021
Johanna Elizabeth
Kimball &
Johanna Kimball
CPA (Firm)
501.74(b): Competence
501.81: Firm Licensing
501.90(12):
Discreditable Acts
901.502(6)
– failure to hold professional
competence
– violate to provide
professional services without
valid licenses (failure to
renewal, unregistered firm)
– failure to respond to an
inquiry to client within a
reasonable time
5
May 13,
2021
Steven Lane
Jenkins
501.90(8): Discreditable
Acts
901.502(6)
901.502(11)
– violations of unethical
activities by SEC
6
January
14, 2021
Adam Charles
Childers & Adam
Childers, CPA,
P.C.
501.75: Confidential
Client Communications
501.80: Practice of
Public Accountancy
501.81: Firm Licensing
901.502(6)
Date of
Action
Respondent’s
Name
Rule Violation
Act
Violation
Brief Description
527.4: Enrollment and
Participation
901.159:
Peer Review
901.502(6)
– violate the peer review
program
7
January
13, 2022
Respondent’s
Name
Brief Description
– violate to hold a valid
license (failure to renewal)
– violate to disclose the
confidential client
information without client’s
permission
2. Technical Standards Review Committee (5 cases)
Snell, Levin &
Co., RLLC
RESEARCH QUESTION SUMMARY 2
3
8 November Kenneth Ray Johse 501.60: Auditing
11, 2021 Kenneth R. Johse
Standards
(Firm)
501.61: Accounting
Principles
501.81: Firm Licensing
901.502(6)
901.502(11)
– violate GAAS
– violate GAAP
– violate to hold a valid
license
9
July 15,
2021
Christopher Edwin
Knauth & Knauth
& Company, P.C.
501.60: Auditing
Standards
901.502(6)
– violated GAAS
10
May 13,
2021
Lam Duy Ha
501.90(7): Discreditable
Acts
901.502(6)
901.502(11)
– suspension order of federal
regulatory (SEC)
11
January
14, 2021
PMB Helin
Donovan, LLP
501.90(7): Discreditable
Acts
901.159:
Peer Review
901.502(6)
901.502(9)
901.502(12)
– violate the peer review
program
– violation several acts that
cause disciplinary actions
including a rule of
professional conduct
3. Proposed Default Judgment Board Order (1 case)
12
Date of
Action
Respondent’s
Name
January
13, 2022
Mark J. Trappio
Rule Violation
Act
Violation
Brief Description
501.90(4): Discreditable
Acts
501.90(5): Discreditable
Acts
501.90(13):
Discreditable Acts
501.91: Reportable
Events
901.502(6)
901.502(11)
– felony (DWI)
– criminal prosecution
– intentionally
misrepresenting facts
– failure to reportable events
– violation of a rule of
professional conduct
– conduct indicating lack of
fitness
*Act Violation 901.502: GROUNDS FOR DISCIPLINARY ACTION.
Discussing impressions of the cases and TSBPA action
Agreed Consent Orders Behavioral Enforcement Committee (6 cases)
Case 1. Jefferey Scott Burns
TSBPA Action
The respondent was convicted of a third degree felony of driving while intoxicated
(DWI). As a result, the CPA certification was suspended for 7 years from the effective date of
the Agreed Consent Order (ACO). However the suspension was commuted and instead 7
years of probation were implemented. The respondent was also required to participate in the
Accountants Confidential Assistance Network (ACAN).
Impression
RESEARCH QUESTION SUMMARY 2
4
The sentence against him seems reasonable because the respondent’s failure to uphold the
basic ethical principles of his profession. Seven years of probation will allow the respondent
to see if he or she is driving under the influence, and is sufficient time to correct the
respondent’s negative propensities. With ACAN’s help for accountants, he’ll be able to reset
his ethical mindset as a professional and help solve his alcohol problem. Also, because it is a
requirement, not a voluntary participation, it seems that ACAN will play an important role in
ensuring that respondents participate and avoid drunk driving in the future.
Case 2. Robert McLean & Robert McLean (Firm)
TSBPA Action
Respondents agreed to pay an administrative fee of $612.98 within 30 days from the date
of the order as part of the ACO and to receive an additional 4 hours of ethics training within
the renewal cycle. Their violations included failing to respond to questions from the Internal
Revenue Service about conducting public accounting while their license expired.
Impression
As an expert, it is natural to receive ethical education on what was done despite the Rule
not to perform public accounting work in a situation where the license has expired. However,
if stronger penalties such as license revocation as specified in the rules were imposed along
with ethics education, it is believed that other accountants will be able to prevent the practice
or mistake of performing public accounting tasks after the license expires.
Case 3. Ruth Lydia Elizondo Pavon
TSBPA Action
Respondent conducted public accounting through an unregistered firm, did not respond to
client inquiries, and did not provide copies of client records upon request. As a result, an
ACO was signed with the Commission, and an administrative fine of $2,500 and an
administrative fee of $529.72 must be paid within 30 days from the date of the order.
Impression
Under Rule §501.76, Respondent should have provided the client with a copy of the
customer record, but did not, and did not respond to inquiries. In addition, since the
corporation that performed public accounting was not registered, disposition of an
administrative fine of $2,500 and payment of administrative expenses incurred appears to be
appropriate.
Case 4. Johanna Elizabeth Kimball & Johanna Kimball CPA (Firm)
TSBPA Action
As professionals, the Respondents provided inaccurate advice to clients regarding the
opening of a Simplified Employee Pension Plan, which should be accurate and error-free,
RESEARCH QUESTION SUMMARY 2
5
and made errors in their tax returns. Also, the Respondents ignored the client’s request and
did not respond to the client’s question within a reasonable time. Above all, at the time the
defendant’s license expired, she was practicing through an unregistered company.
Accordingly, the defendants were required to reimburse $750 as part of the reprimand and
entered into an ACO with the Commission to register the company within 30 days of the
order. You will also be required to complete 16 hours of CPE in tax and pay an administrative
fee of $542.12 and an administrative penalty of $600 during the renewal period.
Impression
Despite the need for professional service and professional care as a CPA expert, the
respondent made inaccurate advice, made errors in tax returns, and violated several rules,
such as not answering customer questions. Even when the license has expired, it seems
appropriate that the measures were taken because the business was provided through an
unregistered firm. Also, errors on tax returns are not professional, so it is only natural that
continuing professional education courses that are specifically focused on taxation must be
completed in 16 hours. In addition, it is considered appropriate to have to pay administrative
expenses and administrative fines incurred unnecessarily.
Case 5. Steven Lane Jenkins
TSBPA Action
Respondent was involved in an administrative action with the US Securities and
Exchange Commission (SEC) as a result of not disclosing two federal bankruptcy petitions.
That’s because he didn’t, even though he was a member of the board and the company was
supposed to file with the SEC. As a result, Respondent’s privileges to appear or practice in
the SEC as an accountant were denied for three years, and a civil fine of $30,000 was
imposed. In the Commission and the signed ACO, the respondent’s license was suspended for
three years, but the suspension was suspended in lieu of probation for three years under
certain conditions.
Impression
The SEC punished the respondent for failing to disclose to the SEC its professional
position as a CPA and for failing to disclose the federal bankruptcy petition that the company
was required to file despite being a member of the company’s board of directors. The
suspension is a natural result. He had to adhere to his position as an expert in a situation
where his duties and judgment as an expert were clouded by personal gain, but the
respondent was not able to do so. The imposition of a hefty civil fine as a result is seen as a
very appropriate measure. However, the suspension of suspension by the TSBPA is
considered to be a light measure.
Case 6. Adam Charles Childers & Adam Childers, CPA, P.C.
TSBPA Action
RESEARCH QUESTION SUMMARY 2
6
The respondents were ethically negligent by disclosing the client’s confidential
information to another client, and performed business with an expired license. This resulted
in an ACO requiring Respondents to complete four hours of additional professional ethics
training and an administrative fine of $500 and an administrative fee of $543.64.
Impression
Ethically, the respondents made a grave mistake of leaking confidential information to
another client, despite the fact that the client’s information should be handled with care.
Although the client trusted the CPA as an expert and entrusted client’s confidential
information, the respondents did not perform professionally in that area. For this reason, it is
a natural result to have to additionally complete professional ethics training, and it is also a
natural result to pay the costs and fines incurred in this case.
Technical Standards Review Committee (5 Cases)
Case 7. Snell, Levin & Co., RLLC
TSBPA Action
The respondent consented to deregistration because the firm issued audit reports to
several agencies during the period it was not enrolled in the AICPA Peer Review Program. In
addition, it is possible to work as a CPA only to a limited extent that prohibits conducting
audits and editing and review. An ACO was concluded with the committee to reprimand the
company, and an administrative fine of $6,500 and an administrative fee of $580.73 were
imposed.
Impression
According to American Institute of Certified Public Accountants (AICPA), Firms (and
individuals) enrolled in the AICPA Peer Review Program are required to have a peer review,
once every three years, of their accounting and auditing practice. Although it is the CPA’s job
to issue audit reports to institutions, it must be accompanied by a prerequisite for regular
enrollment in the AICPA peer review program. Since the respondent issued an official audit
report without registration, it is difficult to see an audit report without a review as being
objective. It is justified that administrative fines and accompanying administrative costs were
imposed in this part.
Case 8. Kenneth Ray Johse & Kenneth R. Johse (Firm)
TSBPA Action
Respondents entered into an ACO with the Commission and were reprimanded for not
complying with Generally accepted auditing standards (GAAS) and Generally accepted
accounting principles (GAAP) and for issuing an audit report to the Homeowners’
Association in the absence of a firm license issued.
RESEARCH QUESTION SUMMARY 2
7
Impression
The most basic virtue as a CPA is to comply with GAAS and GAAP. If the respondents
conduct business as a CPA in a non-compliance with this, it is a serious offense to conduct
business as if under a license and issue an audit report, especially in an unlicensed situation.
The decision not to renew the company’s license as a result of this seems to be a very
appropriate move.
Case 9. Christopher Edwin Knauth & Knauth & Company, P.C.
TSBPA Action
Respondents failed to communicate with the successor auditing firm and entered into an
ACO with the Board as a result of not responding in a timely manner to the written
communications of the Board, reprimanded and imposed an administrative fine of $500 and
administrative fees of $609.92.
Impression
It seems appropriate that the respondents were charged with administrative fines and
administrative costs as a result of not responding in a timely manner to written
communications between the successor auditing company and the board of directors.
However, compared to other cases, the administrative fines appear to be high in light of the
nature of the violation.
Case 10. Lam Duy Ha
TSBPA Action
The respondent agreed to settle the charges by agreeing not to appear as an accountant for
two years from the date of the SEC order. In addition, Respondent may only work to a
limited extent that prohibits him from conducting audits, editorials and reviews of public
companies.
Impression
It is difficult to understand why the respondent was suspended from appearing as an
accountant by the SEC. It seems to be the right decision for the respondent to be ordered to
work only to a limited extent.
Case 11. PMB Helin Donovan, LLP
TSBPA Action
Respondent agreed that, subject to the SEC order, the company would agree to a penalty
to settle charges, engage an independent compliance consultant, and pay civil penalties. As a
result, an ACO was concluded, and the respondent was reprimanded. An administrative fine
of $25,000 was decided to be paid within 30 days of the date of the Commission’s order.
RESEARCH QUESTION SUMMARY 2
8
Impression
The SEC’s order to impose high administrative fines and to pay fines within a given
period instead of a payment plan seems strong. Measures taken at the same time, such as
engaging an independent compliance consultant, also seem reasonable.
Proposed Default Judgment Board Order (1 Case)
Case 12. Mark J. Trappio
TSBPA Action
On February 24, 2021, the Behavioral Executive Board (BEC) found that Mark J. Trappio
was sentenced to deferred assault in July 1997, found guilty of marijuana possession in April
2003, and in February 2005. He said he was convicted of driving under the influence (DWI).
He was convicted of a second DUI conviction in July 2010, received a suspended sentence
for an assault that injured a family member in September 2011, and a third DUI felony in
September 2016. These criminal acts were not reported to the Commission, and fabricated
documents were provided to the Commission. Throughout this process, the Behavioral
Enforcement Committee (BEC) requested an order to revoke his qualifications and pay all
costs incurred. He did not accept it, filed a petition against the order, and did not appear after
notice of the hearing. The State Office of Administrative Hearings Administrative Law Judge
(ALJ) referred all of this to the Commission to ascertain that: 1) Respondent violated Board
Rules 501.90(4), 501.90(5), 501.90(13), and 501.91 as well as Sections 901.502(6) and
901.502(11) of the Public Accountancy Act; 2) Respondent’s individual certificate be
revoked; and, 3) Respondent be assessed $425.60 in administrative costs.
Impression
Comparing the actions of the respondent with the matters specified in Rule 501.90 and
501.91 and Act 901.502, it can be seen that the Rule and Act are clearly violated. Not only
did he not act ethically as a professional, but he also had to stay physically healthy. His
reputation as a CPA was tarnished by marijuana, and excessive drinking and driving under
the influence (DWI). In addition, he assaulted his family, ethically unacceptable behavior. He
concealed his past mistakes without honesty, and even manipulated documents knowingly
violating acceptable ethics. He did not accept the proposals requested by the committee.
Instead submitted a petition against it, and showed an insincere attitude by not appearing to
the hearing after being served. Taken together, it can be seen that the respondent has no
ethical qualifications as a professional. While the consequences for lack of ethics do not
appear to have been set, he should receive a clear rebuke for disgrace, including
administrative costs.
RESEARCH QUESTION SUMMARY 2
9
Reference
American Institute of Certified Public Accountants (AICPA). (n.d). Peer Review Summary.
https://us.aicpa.org/research/standards/peerreview/peer-review-summary
Financial Accounting Standards Board (FASB). (2009). Accounting Standards Codification
(ASC 605-50-45-1). https://asc.fasb.org/section&trid=2197430
Public Company Accounting Oversight Board (PCAOB). (2016, December 31). Auditing
Standards (AS 2101.06). https://pcaobus.org/Standards/Auditing/Pages/ReorgStandards.aspx
Texas Administrative Code, 22 Tex. Stat. § 501.60. (2000 & rev. 2016). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=22&pt=22&ch=501&rl=
60
Texas Administrative Code, 22 Tex. Stat. § 501.61. (2000 & rev. 2012). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=T&app=9&p_dir=N&p_rloc=179152&p_tloc=&p_ploc=1&pg=2&p_tac=&ti=22&pt=22&ch
=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 501.74. (2000 & rev. 2011). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=T&app=9&p_dir=N&p_rloc=199528&p_tloc=&p_ploc=1&pg=9&p_tac=&ti=22&pt=22&ch
=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 501.75. (2000 & rev. 2020). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=T&app=9&p_dir=N&p_rloc=153935&p_tloc=&p_ploc=1&pg=10&p_tac=&ti=22&pt=22&c
h=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 501.76. (2000 & rev. 2020). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=T&app=9&p_dir=N&p_rloc=199529&p_tloc=&p_ploc=1&pg=11&p_tac=&ti=22&pt=22&c
h=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 501.80. (2000 & rev. 2020). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=T&app=9&p_dir=P&p_rloc=199534&p_tloc=&p_ploc=1&pg=16&p_tac=&ti=22&pt=22&c
h=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 501.81. (2000 & rev. 2020). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
RESEARCH QUESTION SUMMARY 2
10
sl=T&app=9&p_dir=N&p_rloc=199533&p_tloc=&p_ploc=1&pg=17&p_tac=&ti=22&pt=22&c
h=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 501.90. (2000 & rev. 2020). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=T&app=9&p_dir=P&p_rloc=198242&p_tloc=&p_ploc=1&pg=24&p_tac=&ti=22&pt=22&c
h=501&rl=60
Texas Administrative Code, 22 Tex. Stat. § 527.4. (2002 & rev. 2016). https://
texreg.sos.state.tx.us/public/readtac$ext.TacPage?
sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=22&pt=22&ch=527&rl=
4
Texas Society of Certified Public Accountants (TXCPA). (n.d). Accountants Confidential
Assistance Network (ACAN). https://www.tx.cpa/resources/acan
Texas State Board of Public Accountancy. (2021-2022). Texas State Board Reports. https://
www.tsbpa.texas.gov/general/board-reports.html
The Public Accountancy Act, Tex. Stat. § 901. (2019). https://www.tsbpa.texas.gov/pdffiles/
TSBPAACT.pdf
Purchase answer to see full
attachment
