BEFORE THE CALIFORNIABOARD OF ACCOUNTANCY … · THOMAS EDWARD HART 140 Sierra View Road Pasadena, CA 91105 Certified Public Accountant Certificate No. ... · Patti Bowers ("Complainant")

BEFORE THE CALIFORNIA BOARD OF ACCOUNTANCY DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

In the Matter ofthe Petition to Revoke Probation Against:

THOMAS EDWARD HART 140 Sierra View Road Pasadena, CA 91105 Certified Public Accountant Certificate No. 56052

Respondent.

Case No. D1-2010-30

OAR No. 2016080166

DECISION AND ORDER

The attached Stipulated Settlement and Disciplinary Order is hereby adopted by the

. California Board of Accountancy, Department of Consumer Affairs, as its Decision in this

matter.

This Decision shall become effective on YV\t(;rdf\ lp 1 '1.-01"1

It is so ORDERED f.i.Jo ? , 'LD\'l

FORTH CALIFORNIA BOARD ACCOUNTANCY DEPARTMENT OF CONSUMER AFFAIRS

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KATI-ILEEN A. KENEALY Acting Attorney General of California MARC D, GREENBAUM Supervising Deputy Attorney General ZACHARYT. FANSELOW Deputy Attorney General State Bar No. 274129

300 So. Spring Street, Suite 1702 Los Angeles, CA 90013

Telephone: (213) 897~2562 Facsimile: (213) 897-2804 Attorneys for Complainant


STATE OF CALIFORNIA

In the Matter of the Petition to Revoke Case No. D1~2010-30 Probation Against:

THOMAS EDWARD HART OAH No. 2016080166

140 Sierra View Road Pasadena, CA 91105 Certified Public Accountant Certificate No.

STIPULATED SETTLEMENTAND ·DISCIPLINARY ORDER

56052

Respondent.

IT IS HEREBY STIPULATED AND AGREED by and between the parties to the above- ·

entitled proceedings that the following matters are true:

PARTIES

1. · Patti Bowers ("Complainant") is the Executive Officer of the California Boa~·d of.

Accountancy ("CBA"). She brought this action solely in her official capacity and is represented·

in this matter by Kathleen A. Kenealy, Acting Attorney General of the State of California, by

Zachary T. Fanselow, Deputy Attorney. General.

' 2. Respondent Thomas Edward Hart ("Responde~1t") is representing himself in this

proceeding and has chosen not to exercise his right to be represented by counsel.

3. On or about May 11, 1990, the CBA issued Certified Public Accountant Certificate

No. 56052 to Respondent. The Certified Public Accountant Certificate was in full force and

effect at all times relevant to the charges brought in Petition to Revoke Probation No. D1-2010

30, expired on August 31, 2016, and has not been renewed.

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STIPULATED SETTLEMENT (Dl-2010-30)

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JURISDICTION

4. Petition to Revoke Probation No. D1-2010-30 was filed before the CBA and is

currently.pending against Respondent. The Petition to Revoke Probation and all other statutorily

required documents were properly served on Respondent on June 27, 2016. Respondent timely

filed his Notice of Defense contesting the Petition to Revoke Probation.

5. A copy of Petition to Revoke Probation No. D1-2010-30 is attached as Exhibit A and

incorporated herein by reference.

ADVISEMENT AND WAIVERS

6. Respondent has carefully read, and understands the charges and allegations in Petition

to Revoke Probation No. D1-2010-30. Respondent has also carefully read, and understands the

effects .of this Stipulated Settlement and Disciplinary Order.

7. Respondent is fully aware of his legal rights in this matter, including the right to a

hearing on the charges and allegations in the Petition to Revoke Probation; the right to be

represented by counsel at his own expense; the right to confront and cross-examine the witnesses

against him; the right to present evidence and to testify on his own behalf; the right to the

issuance of subpoenas to compel the attendance of witnesses and the production of documents;

the right to reconsideration and court review of an adverse decision; and all other rights accorded

by.the California Administrative Procedure Act and other applicable laws.

8. Respondent voluntarily, knowingly, and intelligently waives and gives up each and

every right set forth above.

. CULPABILITY

9. Respondent admits the truth of each and every charge and allegation in Petition to

Revoke Probation No. D1-2010-30.

10. Respondent agrees that his Certified Public Accountant Certificate is subject to

discipline and he agrees to be bound by the CBA's probationary term~ as set forth in the

Disciplinary Order below.

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STIPULATED SETTLEMENT (D1-2010-30)

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CONTINGENCY

11. This stipulation shall be subject to approval by the CBA. Respondent understands

and agrees that counsel for Complainant and the staff of the CBAmay communicate directly with

the CBA regarding this stipulation and settlement, without notice to or participation by

~espondent. By signing the stipulation, Respondent understands and agrees that he may not

withdraw his agreement or seek to rescind the stipulation prior to the time the CBA considers and

acts upon it. If the CBA fails to adopt this stipulation as its Decision and Order, the Stipulated

Settlement and Disciplinary Order shall be of no force or effect, except for this paragraph, it shall

be inadmissible in any legal action between the parties, and the CBA shall not be disqualified

from further action by having considered this matter.

12. The parties understand and agree that Portable Document Format ("PDF") and

facsimile copies of this Stipulated Settlement and Disciplinary Order, including PDF and

facsimile signatures thereto, shall have the same force and effect as the originals.

13. This Stipulated Settlement and Disciplinary Order is intended by the parties to be an

integratedwriting representing the complete, final, and exclusive embodiment of their agreement.

It supersedes any and all prior or contemporaneous agreements, understandings, discussions,·

negotiations, and commitments (written or oral). This Stipulated Settlement and Disciplinary.

Order may not be altered, amended, modified, supplemented, or otherwise changed except by a

writing executed by an authorized representative of each of the parties. ·

14. In consideration of the foregoing admissions and stipulations, the parties agree that

the CBA may, without further notice or formal proceeding, issue and enter the following

Disciplinary Order:

DISCIPLINARY ORDER

IT IS IlliREBY ORDERED that Certified Public Accountant Certificate No. 56052 issued

to Respondent Thomas Edward Hart is revoked. However, the revocation is stayed and

Respondent is placed on probation for one (1) year on the following terms and conditions.

1. Obey All Laws

Respondent shall obey all federal, California, other states 1 and local laws, including those

3 STIPULATED SETILEMENT (Dl-2010-30)

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rules relating to the practice of public accountancy in California.

2. Submit Written Reports

R~spondent shall submit, within 10 days of completion 6f the quarter, written reports to the

CBA on a form ob.tained from the CBA. Respondei)t shall submit, under penalty of perjury, such

other written reports, declarations, and verification of actions as are required. These declarations

shall contain statements relative to Respondent1s compliance with all the terms and conditions of

probation. Respondent shall immediately execute all release of information forms as may be

required by the CBA or .its representatives.

3. Personal Appearances

Respondent shall, during the period of probation, appear in person at interviews/meetings as

directed by the CBA or its designated representatives, provided such ·notification is accomplished

in a timely manner ..

4; Comply With Probation

Respondent shall fully comply with the terms and conditions of the. probation imposed by

the CBA and shall cooperate fully with representatives of the CBA in its monitoring and

investigation of the Respondent1S compliance with probation terms and conditions.

5. Practice Investigation

Respondent shall be subject to, and shall permit, a practice investigation cif Respondent1s

professional practice. Such a practice investigation shall be conducted by representatives of the

CBA, provided notification of such review is accomplished ~n a timely manner.

6. Comply With Citations

Respondent shall comply with all final orders resulting' from citations issued by the CBA.

7. Tolling of Probation for Out-of-State Residence/Practice

In the event Respondent should leave California to reside or practice outside this state,

Respondent must notify the. CBA in writing of the dates of departure and return. Periods of non-

California residency or practice outside the state shall not apply to reduction of the probationary

period,. or of any suspension. No obligation imposed herein, including requirements to file

written reports, reimburse the CBA costs, and make· restitution to consumers, shall be suspended

4 STIPULATED SETTLEMENT (Dl-2010-30)

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or otherwise affected by such periods of out-of-state residency or practice except at the writte11

direction of the CBA.

8. Violation of Probation

If Respondent violates probation in any respect, the CBA, after giving Respondent notice ..

and an opportunity to be heard, may revoke probation and carry out the disciplinary order that

was stayed. If an accusation or a petition to revoke probation is filed against Respondent during

. probation, the CBA shall have continuing jurisdiction until the matter is final, and the period of

probation shall be extended until the matter is final.

The CBA's Executive Officer may iss~1e a citation under California Code of Regulations,

Section 95, to a licensee for a violation of a term or condition contained in a decision placing that

licensee on probation.

9. Completion of Probation

Upon successful completion of probation, Respondent's license will be fully restored.

10. Ethics Continuing Education

· Within one-hundred and eighty (180) days of the effective date of theDedsion and Order,

Respondent shall complete four hours of continuing education in course subject matter --

pertaining

to the following: a review of nationally recognized codes of conduct emphasizing how the codes

relate to professional responsibilities; case-based instruction focusing on real-life situational

learning; ethical dilemmas facing the accounting profession; or business ethics, ethical sensitivity,

and consumer expectations. Courses must be a minimum of one hour as described in California

Code of Regulations Section 88.2. The course or courses will be in addition to the standard

continuing education requirements for continuing licensure.

If Respondent fails to complete said courses within the time period provided, Respondent

shall so notify the CBA and shall cease practice until Respondent completes said courses, has

submitted proof of same to the CBA, and has been notified by the CBA that he may resume

practice. Failure to complete the required courses within the time period provided shall constitute

a vio.lation of probation.

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STIPULATED SETTLEMENT (Dl-2010-30)

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----

--· -----------·------·-- --- --- -- --· -- --'-------·---__________:__ ______.______________

11. Regulatory Review Course

Within one-hundred and eighty (180) days of t~e effective date of the Decision and Order,

Respondent shall complete a CBA-approved course on the provisions of the California

Accountancy Act and the California Board of Accountancy Regulations specific to the practice of

.public accountancy .in California emphasizing the provisions applicable to current practice

situations. The course also will include an overview of historic and recent disciplinary actions

taken by the CBA, highlighting the misconduct which led to llcensees being disciplined. The

· course shall be a minimum of two hours. This course will be in addition to the standard

continuing education requirements for continuing licensure

If Respondent . . fails to complete said course within the time period provided, Respondent


submitted proof of same to the CBA, and has been notified by the CBA that he or she may

resume practice. Failure to complete the required courses within the time period provided shall

constitute a violation of probation.

12. Continuing Education Courses -~----

- ------------·-- -------Within one-hundred and eighty (180) days of the effective date of the Decision and Order,

Respondent shall complete and provide proper docunientation of twenty-four· (24) hours of

pr~fessional continuing edu~ation courses. These courses shall be in addition to the continuing

education requirements for continuing licensure.

. · If Respondent fails to complete said courses within the time period provided, Respondent


submitted proof of the same to the CBA and has been notified by the'CBA that he may resu1ne

practice. Failure to complete the required courses within the time period provided shall constitute

a violation of probation.

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STIPULATED SETILEMENT (Dl-2010-30)

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I have carefully read the Stipulated Settlement and'Disciplinary Order. I understand the

stipulation and the ·effect .it will .have on my Certified Public Accountant Cel'tificate. l enter.into

this Sti.pulated Settlement and Disciplinary Order voluntarily~ knowingly, and intelligently, a11d

agre'e to be bound by the Deci~ion. and Order ·of the California :Boat:d of Accountancy.

DATED:

r• I 1'- ~

!c.: ...~. ·~ .~/~.----,...-THOMAS EDWARD HART Respondent

ENl\'!OBSEME;!ST

- - -

:J,respectftl:llycsubmitte:d,~

· KA'I'IiiLEEN A. KENEALY . Acting Attorney General o.f California MARC D. GREENBAUM Su · ing Deput Attol'ney Ge.neral

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LA2016l501435 52340925.doc ·

7 STIPULATED SETTLEMENT (Dl-2010-.30)

KAMALA D. HARRIS Attorney General of California MARC D. GREENBAUM Supervising Deputy Attorney General ZACHARYT. FANSELOW Deputy Attorney General State Bar No. 274129

300 So. Spring Street, Suite 1702 Los Angeles, CA 90013 Telephone: (213) 897-2562 Facsimile: (213) 897-2804

Attorneys for Complainant


STATE OF CALIFORNIA

In the Matter of the Petition to Revoke Case No. D1-2010-30 Probation Against:

THOMAS EDWARD HART 140 Sierra View Road PETITION TO REVOKE PROBATION Pasadena, CA 91105 Certified Public Accountant Certificate No. 56052

. Respondent. I·

Complainant alleges:

PARTIES

1. Patti Bowers ("Complainant") brings this Petition to Revoke Probation solely in her

official capacity as the Executive Officer of the California Board of Accountancy, Department of

Consumer Affairs.

2. On or about May 11, 1990, the California Board ofAccountancy issued Certified

Public Accountant Ce1tificato Number 56052 to Thomas Edward Hati ("Respondent"). The

Certified Public Accountant Certiftcate was in effect at all times relevant to the charges brought

herein and will expire on August 31, 2016, unless renewed.

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PETITION TO REVOKE PROBATION

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3. In a disciplinary action entitled 11ln the Matter ofAccusation Against Thomas Edward

Hart, 11 Case No. AC-2010-30, the California Board of Accountancy, issued a decision, effective

June 29, 2013, in which Respondent's Cei.tified Public Accountant Certificate was revoked.

However, the revocation was stayed and Respondent's Certified Public Accountant Certificate

was placed on probation for a period of three (3) years with certain terms and conditions. A copy

of that decision is attached as Exhibit A and is incorporated by reference.

JURISDICTION

4. This Petition to Revoke Probation is brought before the California Board of

Accountancy ("CBA"), Department of Consumer Affairs, under the authority of the following

laws. All section references are to the Business and Professions Code unless otherwise indicated.

5. Section 5100 states, in pertinent part:

After notice and hearing the board may revoke, suspend, or refhse to renew any permit or certificate granted under Article 4 (commencing with Section 5070) and Article 5 (commencing with Section 5080), or may censure the holder of that pennit or certificate for unprofessional conduct that includes, but is not limited to, one or any combination of the following causes:

(g) Willful violation of this chapter or any rule or regulation promulgated by the board under the authority granted under this chapter.

6. Section 5100.5 states, in pertinent pa1i:

(a) After notice and hearing the board may, for unprofessional conduct, permanently restrict or limit the practice of a licensee or impose a probationary term or condition on a license, which prohibits the licensee from performing or engaging in any of the acts or services described in Section 5051.

(c) The authority or sanctions provided by this section are in addition to any other civil, criminal, or administrative penalties or sanctions provided by Jaw, and do not supplant, but are cumulative to, other disciplinary authority, penalties, or sanctions.

(d) Failure to comply with any restriction or limitation imposed by the board pursuant to this section is grounds for revocation of the license.

(e) For purposes of this section, both of the following shall apply:

(1) 11 Dnprofessional conduct'' includes, but is not limited to, those grounds for discipline or denial listed in Section 5100.

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(2) "Permanently restrict or limit the practice of, includes, but is not limited to, the prohibition on engaging in or performing any attestation engagement, audits, or compilations.

7. Section 5109 provides, in pertinent part, that the expiration of a license shall not

deprive the CBA of jurisdiction to proceed with a disciplinary proceeding against the licensee or

to render a decision imposing discipline on the license.

8. Probation Condition 8 of the Decision and Order In the Matter ofAccusation Against

Thomas Edward Hart," Case No. AC-2010-30, states:

Violation of Probation If Respondent violates probation in any respect, the Board, after giving Respondent notice and an opportunity to be heard, may revoke probation and carry out the disciplinary order that was stayed. If an accusation or a petition to revoke probation is filed against Respondent during probation, the Board shall have continuing jurisdiction until the matter is final, and the period of probation shall be extended until the matter is fmal.

9. Grounds exist to revoke Respondent's probation and re-impose revocation of

Respondent's Public Accountant Certificate Number 56052 h1 that Respondent did not comply

with the terms and conditions ofhis probation, as set forth below.

FIRST CAUSE TO REVOKE PROBATION

(Failure to Submit Written Reports)

10. At all times after the effective date ofRespondent's probation, Condition 2 stated:

Submit Written Reports Respondent shall submit, within ten (1 0) days of completion of the quarter, written reports to the Board on a form obtained from the Board. The Respondent shall submit, under penalty ofpmjury, such other written reports, declarations, and verification of actions as are required. These declarations shall consist of statements relative to Respondent's compliance with all the terms and conditions of probation. Respondent shall immediately execute all release of information forms as may be required by the Board or its representatives.

11. Respondent's probation is subject to revocation because he failed to comply with

Probation Condition 2, referenced above. The facts and circumstances regarding this violation

are as follows:

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a. On or about May 30, 2013, the CBA sent Respondent, via first class and certified

mai~, amongst other documents, a copy ofthe CBA's decision, a blank Quarterly Written Report

of Compliance, and Respondent's reporting schedule.

b. On or about February 10, 2015, CBA personnel sent Respondent a violation letter as

the CBA had !J-Ot received Respondent's report for the quarter ending December 2014.

c. On or about November 30, 2015, CBA personnel spoke with Respondent and sent

him a follow up email notifying him that the CBA had not received written reports for the

quarters ending March, June, and September of2015.

d. When Respondent submitted written reports, many of them were submitted late, as

follows:

1. The report for the quarter ending December 31, 2014, was due January 10,

2015. The CBA received the report on Apri113, 2015.

2. The report for the quarter ending March 31, 2015, was due April 10, 2015. The

CBA received the report on December 4, 2015.

3. The report for the quarter ending June 30, 2015, was due July 10, 2015. The

CBA received the report on December 4, 2015.

4. The report for the quarter ending September 30, 2015, was due October 10,

2015. The CBA received the report on December 4, 2015.

e. The CBA has not received written repo1is for the quarters ending December 2015 and

March 2016.

SECOND CAUSE TO REVOKE PROBATION

(Failure to Complete Continuing Education Courses)


Continuing Education Courses Respondent shall complete 24 hours of professional education courses as specified by the Board or its designee at the time ofRespondent's first probation appearance. The professional education courses shall be completed within a period of time designated and specified in writing by the Board or its designee, which time-:fi:ame shall be incorporated as a condition ofprobation. This shall be in addition to the continuing education requirements for relicensing.

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Failure to satisfactorily complete the required courses as scheduled or failure to complete same no later than 100 clays prior to the termination ofprobation shall constitute a violation of probation.


Probation Condition 10, referenced above. The facts and ch·cmnstances regarding this violation

are as follows:

a. Mr. Hart was scheduled for appearance before the CBA, by which time he was

required to have completed his continuing education courses, on May 1, 2014. Respondent

requested and was granted an extension to appear before the CBA until October 23, 2014.

Respondent had from the effective date of his probation, June 29, 2013, until October 23, 2014, to

complete the twenty-four (24) hours of continuing education.

b. Respondent did not complete the continuing education requirement by October 23,

2014. Respondent was granted an extension until Apri123, 2015.

c. On or about November 30, 2015, a CBA representative spoke with and emailed

Respondent notifying him that he was in violation ofhis probation for failing to complete the

continuing education course requirement.

d. On or about April1, 2016, a CBA representative sent another letter requesting that

Respondent correct the continuing education deficiency by April29, 2016.

e. Respondent has not yet submitted certificates of completion of the continuing

education requirement.

THIRD CAUSE TO REVOKE PROBATION

(Failure to Timely Pay Cost Reimbursement)

14. At all times after the effective date of Respondent's probation, Condition 11 stated:

Cost Reimbursement Respondent shall reimburse the Board $13,000.00 for its investigation and prosecution costs. The payment shall be made as follows: in quarterly payments (due with quarterly written reports); the final payment being due one year before probation is scheduled to termhmte.


Probation Conditionll, referenced above. The facts and circumstances regarding this violation

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include that Respondent failed to make timely' payment of cost reimbursement as required by the

terms and conditions of his probation, and are described in more detail as follows:

a. On or about January 13, 2014, the CBA received a check :fi:om Respondent in the

amount of $1,300.00. However, the check was dishonored and on or about March 10, 2014, a

CBA representative sent Respondent a letter informing him that his check was returned, unpaid,

to the CBA. with an explanation that Respondent had insufficient funds. The CBA also informed

Respondent that he was required to submit payment of$1,325.00, which includes a $25.00

dishonored check fee.

b. On or about Apri17, 2015, the CBA received a check from Respondent in the amount

of$2,600.00. However, the check was dishonored and on or about June 9, 2015, the CBA sent

Respondent a letter informing him that his check was returned, unpaid, to the CBA with an

explanation of ''Not Re-Present" and informing him that he must submit to the CBA a total

payment of$2,625.00, which includes a $25.00 dishonored check fee.

c. On or about June 23, 2014, a CBA representative sent Respondent's assistant an

email requesting an update on payment of cost reimbursement.

d. On or about August 1, 2014, a cost reimbursement payment of$1,325.00 was

received and processed by the CBA.

e. On or about November 30,2015, a CBA representative spoke with Respondent about

his violations of probation, including unpaid cost recovery. Respondent agreed to pay the

outstanding balance by December 4, 2015.

f. On or about December 4, 2015. Respondent sent the CBA an email with a copy of a

check in the amount of $2,600.00 as an attachment. The CBA did not receive an actual check

from Respondent on or around December 4, 2015.

g. On or about December 29, 2015, a CBA representative notified Respondent that the

CBA had yet to receive his cost reimbursement payment of$2,600. 00.

h. On or about February 1, 2016, the CBA received outstanding cost reimbursement of

$2,600.00.

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FOURTH CAUSE TO REVOKE PROBATION

(Failure to Comply with Probation)


Comply With Probation Respondent shall fully comply with the terms and conditions of the probation imposed by the Board and shall cooperate fully with representatives of the Board in its monitoring and investigation of the Respondent's compli~nce with probation terms and conditions.


Probation Condition 4, referenced above. The facts and circumstances regardilig this violation

are that Respondent has been uncooperative and continuously failed to timely submit writ~en

quarterly reports, respond to inquiries and complete the continuing education course requirement.

Complainant refers to, and by this reference incorporations, the allegations contained in

paragraphs 10 through 15, all subparagraphs included, as though set forth fully.

PRAYER

WHEREFORE, Complainant requests that a heari.ng be held on the matters herein alleged,

and that following the hearing, the CBA issue a decision:

1. Revoking the probation that was granted by the CBA in Case No. AC-2010-30 and

imposing the disciplinary order that was stayed thereby revoking Certified Public Accountant

Certificate No. 56052 issued to Thomas Edward Ha1t;

2. Revoking, suspending, restricting, limiting, or otherwise imposing discipline upon

Certified Public Accountant Certificate No. 56052, issued to Thomas Edward Hart; and,

3. Taking such other and further action as deemed necessary and proper.

-< s Executive Officer California Board of Accountancy Department of Consumer Affairs State of California Complainant

LA2016601435/52140865.doc

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BEFORE THE· . CALIFORNIA BOARD OF ACCOUNTANCY

DEPARTMENT OF CONSUMER AFFAIRS STATE ·oF CALIFORNIA

Case No, AC-2010-30In the Matl:et of the Accusation Agah1s~:.

.OAH .Case No. L-2011 031309 257 S. Fair Oaks Ave. #:210 Pasadena, C.A 91105-:2050

THOMAS EDWARD HART

Certified :Public Accountant License No. 56052 '. '

Respondent.

DECISION AND ORDER

The attached Stipulated Settlement· and Disciplinary Order is hereby ,adopted by the

California Board of Accountancy, Dep~tment of . .

Con~umer Affairs, as it~ Decision in this

matter.

.FOR THE (: IFORNIA BOARD ·oF ACCOUNTANCY . DEPARTMENT OF CONSU:MERAFFAIRS

(

KAMALA D. HARRIS Attorney General of California GREGORY J. SALUTE Supervisir).g Deputy Attomey General HELENE E. SW.AN'SON Deputy Attorney General State Bar No. 130426

300 So. Spring Street, Suite 1702 Los Angeles, CA 90013 Telephone: (213) 620-3005 Facsimile: (213) 897-2804

Attorneysfo~ Complainant

.. .

· .

BEFORE THE CALIFORNIA BOARD OF ACCOUN'l:'ANCY, DEPARTMENT OF CONSUMER AFFAIRS

. . STATE OF CALIFORNIA........ ..

.. ·rn the Matter of the Accusation Against:

.THOMAS EDWARD HART 257 S. 'Fair Oaks Ave. #210 Pasaqena, ·CA 91105-2050

Certified Public Accountant License No. 56052.

Respondent.

Case No. AC-2010-30

OAH Case No. L-2011031309

STIPULATED SETTLEMENT AND: DISGIPLlNARY ORDER

· IT IS HEREBY STIPULATED AND AGREED by and between the parties to the ~above-

entitled proceedmgs that the following matters are true:

··

PARTIES

1. Patti Bowers (Complainant) is the Executive Officer of the California Board of

Aoc~untancy. · She brought this action so.lely ~her official capacity and is fepresented in this

matter by Kamala D. Ha-.rds, Attomey General of the State of Californi?-, by Helene B. Swanson;

Deputy Attorney Geri.eral.

·

· 2. Respondent Thomas Edward Bart (Respondent) is represented in this proceeding by

attorney Mary E. Work, whose address 1s:

1334 Park View Avenue, Suite 100

Manhattan Beach, CA 90266

STIPULATED SETTLEMENT (AC-2010-30).

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3. · On or ,about May 11, 1.990, the Califot;:t'li~ Board of Accountancy issued Certified

Public Accountant Licens~ No, 56052 to Thomas Edward Hart (Respondent). The license was in

full force and ~:ffeot at all times relevant hereto, with the :exception of the period of time when it

was expired frqm Septe~ber 1, 2008 to March 28, 2009, and ha$ bee;n1·enewed through August

31, 20l4.

JURlSDICTlON .

·. 4. Accusation No, AC-2010-30 was filed before the California Board ofAccoun~anoy

(CBA/Bo~rd), Department of Consume1\ Affaks, and is cutrently pendmg against Respondent.

·The Accusation· and all·0~her statutorily 1·equir~d doeuments;were·properly served on.Respondent

on December 17, 2010. Respondent timely filed his Notice of Defe;nse contesting the Accusation ..

. A copy of.the First Amended Accusation No. AC~2010-30 l8 attached as Exhibit A and

incorporated herein by referei!-c.e\

. ··

ADVISEMENT AND WAIVERS

5. Respondent has carefully read, fully discussed witb counsel, and und~rstands the

charges and allegations in First Ai:he{nded Accusation No; AC-2910-30. Respondent has also

carefully read, fully dis.cussed with counsel, and understands the effects of this 'Stipulated

Settlement and Disciplinary Order. · \ .·' . .~ . . ,•, ·~ ' . '

6. Respondent is fully aware ofbis legal rights in this matter, :fucluding the right to a '

hearing on the charges and allegations in the Accusation;· the right to be r.epres~nted by counsel'at'

his own expense; the right to confro:p.t and cross-examin.e the witnesses against him; the right to

present evidence and to testify on his owp, behatf; the right to the issuance of subpoenas. to compel

.the attenda:ri.ce of witnesses and the production of documents; . the right to reconsideration and .

court review of \\n adv~rse decision; and all other rights accorded ,bY the Califomia

Administrative ProcedUl'e Act and other appljoable laws.

. .

7.' Respondent voluntarily, knowingly, an.d intelligently waives and gives up each and

every right set forth above.

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CULPABILITY

8. Respondent understands and agrees that the charges in Accusation No, 2'01 0~30, if

proven at a hearing, would constitute cause for imposing discipline upon his certifled public

accountant certificat~, For the purpose ofreso.lving the Accusation without the expense and

uncertainty of f'urther proceedings, Respond~nt does not admit the olu:u·ges contained in the

Accusation but agre~s that his Certifiec\ Public Accom1tancy Certificate is subje~t to discipline

and he agrees to be' bound by the CBA's probationary terms as set forth in the Disciplinary Order

below,

CONTINGENCY

9. · This stipulation shall be subject to approval by the ~BA. Respondent understands

an¢. agrees that counsel for Complainant and the staff of the CBA may communicate directly with '

the CBA regarding this stipulatio1,1 and settlement, without notice to or participatibn '

by '·

Respondent or his counsel. By signing the stipulation, Respondent underst~nds and agrees thr;tt he '

may not withdraw his agreement or seek '

to rescind the stipulation prior to th~ time the CBA ·

considers and acts llpon it.. If.the CBA fails to adopt this stipulation as its Decisio~ and Order, the

Stipulated Settlement and Disciplinary Order shall be of no force or effect, except for this·· ' '

,paragraph, it shall be inadmissible in any legal action between the parties, and the CBA sha~l not

·be disqualified from further action by having considered this matt6r.

10, The parties understand a11d agree that facsimile copies ~f this Stipulated Settlement

and Disciplinary Order, includ~g facsimile signatures thereto, shall have the same force and

effect as the originals. ' ' '

11. This Stipulated Settlement and Disciplinary Order is intended by the parties to be an

h1.tegrated writing represent:ing· the complete, fmal, and exclusive 6mbodimel?-t of their agreement.

It supersedes any and all prior or contemporaneous agreements, understand:ings, discussions,

negotia~ions, and commitments (written or oral), This Stipulated Settlement and Disciplinary .

Ord~r may not be altered; amended, modified, supplemented, or otherwise changed except by a

writing executed by an authorized representative of each of the pa):iies.

3 STIPULATED SETTLEMENT (AC·2010·30)

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12. 'In consideration of the foregoing admissions and stipulations, the pa;rties agree that

the CBA' may, without further notice or fop:nal proceeding, issue and entet the following '

Disciplinary Order: . ' '

·~· DISCIPLINARY ORDER . . .

IT J.S HEREBY ORDERED that Certified Public Accowtan.t License No. 56052 issued to

. Respondent Thomas Edwru:d Hart (Respoi1de:nt) is .revoked, HQwever, the revocation is stayed

and Respondent is placed on,probation for three (3) years, on the following terms and conditions:

1. Obey All Laws. Respondent shall obey all federal, California, other states1 and local .

laws 1 inQludin~ those rules relati.:ng to- the .practic~ of public aGcount~l:cy in .California.. . .

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2. Submit Written Reports. Respondent shall submit, ~ithil.1 t~n (l o) days o~

completion ofthe·quarter, written reports to the ~oard on a form obtained from the Board. The .

Respondent shall submit, und~r penalty ofperjury, such other written reports, declarations, and

verification of actions as are required. These declarations .shall contain statements relative to '

Respondent s compliance with. all the terms ~nd conditions ofp:robation. Respondent shall

immediately exeaute all release of information forms as fl!.RY be required by the Board or its

representati:v~s.

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3. Persona~ App~arances.'. Respondent . shall, during the P.eriod ofproba.tjon, apperu: in· ·

person at interviews/me(ftings as 'directed by the Board.or its designated representatives, proyided

such l,leitification is ac?omplished in a thnely manner.

. •' : . . '. '· . . .. .

4. ·Comply With Probation: .Respondent. shall fully col'.Pply with the. terms and

conditions ofthe probation impos~d by the Board and shall cooperate .fully with representatives

of the Board in its rnonitoriug a11d inv\':lstigation of the Respondent's compliance with probation

terms and conditions. ., ' .. . . ' ...... .

5. P1:~ctice Investigatlon. Respondent shall be subject to, and shall permit, practice·

investigation of the Respondent 1s professional practice.· Such a p1·actioe investigation shall be

conducted by representatives of the Board, provided·notificat~on of such review is accomplished

in a timely manner.

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6. ·Comply With Ci~ations. Respondent shall comply with all f~al orders resulting

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fl:om citations issued by the Board of Accountancy.

7. Tolling ofrJ·obation For Out~of-State Residence/Practice. In the event

Respondent should leave California to reside or practice outside this state, Resp'onclent m11st

notify tl~e Board in.writing ofthe dates of departute andreturn. Periods ofnon-Califomia

residenqy ox: practice outside the state shall not apply to reduction of the probationary period, or

of any suspension. No obligation hnposed herein, including :r:rquh:e;rnents to· file written reports,

teilnburse the Board costs, or make restitution to consumers; shall be suspended or otherwise

affected by such pedods ofout~of-shtte residency OJ~ practice except at the written direction ofthe

Bof~Td.

. 8. Violation of Probation.. IfRespondent violates probation in any respect, the Board,

after giving Respondent notioe·and an opportunity to be heard, may revoke probation anq catty

out the disciplinary order that was stayed. If an accusatio~ or a petition to revok~ probation is

filed against Respondent during probEJ.tion, the Board shall have continuing jurisdiction until the

matter i~ final, and the per~od of probation shall be extended until the ~atter is fm~i.

·

.

9. Completion ofProbation, Upon successful complet~on ofprobation, Respondent's

license will be fully restored. ·

10. C~ntinuing Education Cours.es. Respondent shall complete 24 hours of

professional education courses as specified by the ·Board or its designee at the time of

Respondent'~ frrst p1·obation appearance.. The professional edtfoation c'oursesshall be completed

within a period of time designated and specified in writing by the Board or its d~signee, which.· 1 I 11

thne-:fraine shall be inc~rporated as acondition of this probation. This shall be in addition to the'

continU;ing education requh·ements for' relicensing. .

Failure to satisfacto~·ily complete the required courses as sohelduled or failure to complete

same no later than 100 days prior to the tennina'(;ion of probation shall constitute a violation of

probation,

11. Cost Reimbursement. Respondent shall reimburse the Board $13,000.00 for its

investigation and prosecution costs. The payment shall be made as follows: in quarterly

paym~nts (due with quarterly writtcm reports); the final payment being due one ye~r before

5 STIPULATED SETTLEMENT (AC-2010-30)

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probation is scheduled to terminate,

12, Restricted Practice .. DU1'ing .probation, Res~ondent sha11 not engage in and shall be

prohibited from performing any attestation s~rvioes, ·including audits.

IT IS HEREBY FURTHER OliDEMD that:

1. Restl·icted Practice. After the .completion ofprobation, Respond~nt shall be

permane~tly prohibitt;d :fi:om engaging in and perfonnh1g any attestation services, .including

audits. This condition shall continue untilslwh time, if evor, Respondtm.t suoces~:full)' petitions

'the B~ard for the reinstatement. of his ability. to perform attestation services, Respondent

understands and agtees that the Board is under no obligation to reinstate teflpo;o,de!).t' s ability to ' .

perform attestation services, that the Board has made. no representations concerning whether any

such reinstatement might occur, and that the decision to reinatate is within the sole' discretion· of

the Board.

2. . Full Compliance. Respondent under.st~;tnds and agrees tha~ this Stipulated

Settlement and Disciplinary Order as a re~olution to the charges in Accusati~n No, AC~20l0-.30.i£J based upon, inter alia, Respondent's full compliance with J?arag~aphs 1 of this Order (Restricted

Practic.e).-IfRespondent fails to satisfy this conditio!I, he agrees that the Board can file an ;.

accusation against him for unprofessi?nal conduct based o:n.his ~ailure to c~m.ply with

Paragraph 1 as an independent basis for disciplinary action, pursuant to Business and Professions

Code section 5100. In addition, Respondent consents that the Board may enforce Paragraph 1 in

· any court o;f competent jurisdiction (including an administrative court) to· enjoin him, temporarily

and/or pennanently, from violating Paragraph 1, and may seek any sanctions therein as allowed

'by law.

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I. STIPULATED SETTLEMENT (AC,2010-30)

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ACCEPTANCE . '

I l~ave carefully read the abon Stipulated Sett:lement and D.\s'oipHum•y Ord~r and ha:v.e fully.

d'lso'lJ,ssed .it w.ith my attorney; M~~'Y E. Wm'k. lundet.st:a.t1d the ~ti;pulatio~1, and the 0ffeot il; will

have on. my Ct::rtiflecll?ubli.o Accountant License . .I ent\'.lt into t);ds Stipulated Settl(')lnent fl.nd

Disoiplinrny Order voluntar.Uy, knowl~gl~, ~md-lntelligently, fll:td ag1·ee to 'be bo·un.ct by the·

Deots.i.on and Or(!et· of the Ca.liforn.ia Board of Accountancy,

' ' ' ' .

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·

April 30., ~Oi3DATED: THOMAS EDWARD HART Respondent

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. I have read and fully discuss~d. wi.tb Respondent Thomas Edward Hart the te:r.ms and

oo:p.d~tio~1s and other matters o.ontaine9 ·J.n the abo:ve Stipu1ated Settle1nent and D1sGiJ?linary·Ol·der.

I approve i~s 'fonn and cpntent..

;ij;_NDORSEMENT

· The foregoing Stipulated S~.?ttleme~t ~d Disdiplinary Order is 'hereby resp.ectfully

submitted for consideration by the California Board o.f Acic?untan.oy of the Department of Co.nsumer Affairs.

Da.ted: _c;/to ,2012 . '

Resp6otfully submitted, ·

IZAiv.iALA D. BARRIS Attorney Gent?ral of CaHtol.":niaGREOQRY X. SA:LUTE Su:pervis.ing DClplity Attorney General

- · .

\_iJ~ztw'd~·

; '

.HELtkEE. SWA.NSON Deput-y Attorm~Y General Attorneys for Complainant·

'

1A201 0503 \39; 60689161.doc

7 STIPULATED SETTLEMENT (AC-2010-30)

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K.AMALA'D. HAJ.cirs Attorney General of California · GREGORY J. SALUTE ., Supervismg Deputy Att~meyGeneral HELENE E. SWANSON · . Deputy .A:.t~orri.ey' General State BarNo, '130426 ..

300 So, SpriiJ.g StTeet, Suite 1702 · Los Ange~es, CA 90013 Telephone; (213) 620,3005 Facsimile: (21.3) 897~2804

Attorneys for Complainant

. · BEFORE 'Ilill CAUFORNIA.BOAlW OF ACCOlJN'l'A.N"CY . DEl!.ARTMENT. OF CONSUMER AFFAIRS ..

STATE OF.C~IB'ORNlA

...In. the Matter of the Accusation AgaiD.st: ·

THOMAS EDWARD HART 257 S. Fair Oaks Ave, #210 Pasadena, CA 91105-20501 •

Certified Public Accountant License No. 56052

· .

·and ·

IDGHPOINT PARTNERS~ .LLP 257 .S. Fair.Oaks Ave. #210 Pasadena, CA 91105-2050

Certified Public Accountancy Partnership Certificate No, PAR (5935 · ·

. I;-espondellts.

FIRST AMENDED ACCUSATION

Cornpla:inai:J.t ~ll~ges:',.

Ca~e No. AC~2010-30

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PAlrr.IES

·tlie Exe~utive.Of?cer ofthe'9alifornia Bo~·d of Aocounta:ncy, Depa;rirnent ofConsumer Mfairs;

2, On· o:r:. about May 1.1; 1990, the California Board of Accountancy issued'Certifi.e~

Public Accounta.nt LiCense Number 56052 to Thomas Edward Ha1t. The License expired on

September 1,:2008'and; effective M~uch 29~ 20~9; w.~ renewed·tbrough August 31', 2012, The

AGO- 00026 Accusation · •

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liQense was in full force and effect a:t all times rdevant to· th~ .nhm:ges bxought here :in, with the

e:X:~eption ofth.e period oftime ~he~ it was e:x.plredfi:oin Se1jtember 1, 2008 to Marcit. 28, 2009 ..

3. '

On or about beoeriibel' 8, 2004, the Califomia Board df Aooountancy issued Certified .

Public Aocow;rtanoy Partnershin Certi:ficat~ No. 693S to H:ighp?:int Partners; L.LJ?. The oei:t:ificate.

was :in full force and effect aj: all times relevant to ' the ohm:~es brough:t herein> ,and :j:las been

renewed and is v~lid for thepfiriod of time from Jmmary 1, 2011 tlm)'Ugh December 31, 2012..

(Tho~as Edward Hart: and Highpoint Pattners, LLP shall be.refened i:o herein as '~Re~pond13ntsH).

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.

. ' ' .

:. '

' ' JURISDICTION

4. This Acicusati~n is brought before the California Board of Accolm.tan~y ~oard),. Deparlrnent of Consumer Affairs, nn~er the authority ofthe following laws·. ,All section

.references are to the Business and Pr.ofessions Code miles::: ot~erwise :indicated.

·

.

· 5. Section 118, s11bdivision (b), ofthl;l Code provides that the suspension, expiration;

surr~nder or canoe~lation o'fa license during the period within which the license may be refil;lwed,

restor~d. reissued ·or reinstated· shall nbt 'deprive the Board of jurisdi~tion to proceed with a

.di.twiplinary action.

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. '' . . .

6. Section 5050.states:

."(a) Except as·prov~ded in.~ubpivision.(b) ~d (c) of this peot~o:O:, i.n sn.bdiVi~ion: (a) of

Section 5054, ~din. Secti~·n 5096.,12, no person shall e~gage ·:in the practice ofpublio

a~nountanoy in. this state Unless the person is 'file holde:t o~a valid per-mit to practice public

accountan~y i:;;sued by the board ·or a holder of a practice p;dvilege pursuant to Article 5.1

(~on~encing V.:ith Sectio~ .5~96)."' . . ' . ' . . ' .'

..

7. Section 5062 ofthe Code. provides. thata licens.ee ·aha.ll is sue areport which confo~rns

to pr~~essional standm:ds upon completion, of a compilation) revieW o:r .audi~ 0f fmanoial

statements. . I8. Section 5097 provides as follows:

"(a) Audit documentation,sh~ll be a ~oensee1 s records ·ofili.e prooedures applie;d, the tests'

performed, the infomtici~ obtained; ~nd the pertinent COJ;lOlUSlOllS rea:ahecj. in an audit

engagement:.. Audit documentation shall include, but is not ~ited to, programs, analyses,

·-·~· ......... .,_ -·-······- ·-· . 2 . AGO- 00027 Accusation

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F _,. memoranda, letters of confirmation and· representation, oopies' or abstracts of company

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documents, and schedules or co:mmentru:ies p:repru:ed or obtainea by tb,e licensee.

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3 (b) Audit documentation shall contain.suffioient ddoumentatio~ to enable areJViewer with

relevant.lcb.owledge ail.d e:xpe6:ence, having no previous oonnecition with the audit engageme;flt,.to

~derstanMhe nature, timing, extent, and resu~ts of the ~uditing or other prooedUl'e~ performed; ' . .

'evidence obtained, and conclusions reached, an,d to determ:ine the identity oft~ persons who ..

performed and,reviewed the'work.

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8 ' (c) Failure of the audit doou.:m.entation to document the prooedru:es applied, tests performed,·

·e~idence obtamed, and relevant •

oonclusio:b.s reached 0

in an engage:ffient shall raise a presUinption

t~at the procedures were not applied, tests Were not performed, information WEJ!j not obtamed, and. 'relevant conclusions wer.e not reached.. This preaumpt~on. shall be ·a re;:buttf!.ble pr!3sumption

affecting the bqrden ofproofrelative to $ose portion1rofthe a~clit th.~t are not. documented as· reqti.ir~d in subdtvision (b). ~e oUl'den. may be met by a preponder!ID.oe ofthe e~ide~o~.:

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l ''":"'\ 1'4 (d) .Audit docum~ntation shan be maintained by- a licen~ee for the longer of the. . ronowi:Q.g: '• . ' . ·..- .· ~.,l

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The mfuimum perio9. ofr~t(\'ntion·p;oVided in subdivision (e).-

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16 (2) Aperiod suffi.cient.to satisfy professional standards and to comply with ,applicable>'laws

imd·i'e~lations. 17 . . . ·,

ce) .Audit documentation shan be maintained for aminimum of s~ven years ·which shall be .

extende~ during the pend.6pcy ~fany board ln'\'TeBtigatio~ disciplinarY' aotiOJ:!., Ot . legal a.Gtiqn. .

~volving'the lio·~nsee or the licensefl'~ flrnl. The.board may adoptr~gulations to establish a·

different retention period for specific categories oiaudit doollme~tatiori.'wbete the bQa:rd finds' ' I

t4at tlie nature of the do~Um.entation warrants it.

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23 (±) Lioense~s .shall ma~tain written do~~mentatio~ retenti~~ ~~d destruction p~lioy that'.

shall f?et foii:h the lic~nsee:1 s praat~oes an~ procedures complyiJ;~.g,~ith thi~ article:'>

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25 9. Section 5100 states:

11 After notice ·and hea:rillg the board may, revoke, suspend, pi.' r~.?fuse to renew any permit or

certificate granted ~d~r Article 4 (commencing with Sectlon 5070) aJ;J.d' Artidle 5 (oo~encing

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~------------------------------~----------------~ AccusationAGO- 00028 ··..

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with Se.ction 50~0), .otmE.LY. censure the hold~· ofth~t per~it oe:rti~cate fot ~professional . conduct t~at ~~ludes;'but 'ia llOt limited t~, one or atiy ob:mbihati<;>n of the following causes:

or . . '

. (c) Dhlh9nesty,

' :fi.·aud, gross neglige:qce, or repeated :negligent acts corrunittei:l in the sar.he or

differen~ 1 1

engag~me:nts, for ,c~ients, I

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the same or' differeJ?.t 01', my·combi:nation ~f engagemel:\tS or .

clients, each resulting in a violatidn of applicable ptofessional sta.nda:rds that indicate a laqk 'of

oompetenoy.:in the p:raptice ofpublic aooountanoy o:r: in the perfor.qiaO:ce ofthe bopldteephig_

opera~dns desodb~d in. Section 5052.

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. ' (e) Violation ofSection 5097.

· (g) Willful violation ofthis chapter or any rule or regt!.lation promulgated by the board

un4er the authority gran,ted.un.der ~is chapter,." ' t •• ' • • • ' • • •

.... . ' .

, . . ltE'GtJLATORY PR.Oy:rSION~ ·

io.' .. Califor_;ia Code ofRegulatio~s, title 16, Section S8,.atates:

pr~fess~onaJ.'standards, including but not lim~t~;~d to·genera,lly ao,oepted accounting principles and

generally accepted auditing standar~s."

· .

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· 11. · California Code ofR.egUfations, title 16, Seotion 68.2, sta..tes: ' ' ' I~ I '

"(~) To· provide for the ident~cation ofaudit documl!'ntatibn, audit ~cume~tation shall

mclude an'index or guide to th~ ·audit documentation which identifies the components of the audit . . do,oumentation.

'

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(b) In additfm1 to the.r~Jqu:ir~~eht~· ofB~s~~~s.-~d Pr~f~s.si~ns Code Section 5097(b), audit

do·cum.entation shall provide the date the document or working paper was oo;mpleted by the

preparer(s) and any reviewer(a); and sh~ll.inol?-de the id~ntity ofthe'preparer(s) ~d any reviewer(s).

. . ' ' . . ' . .

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' ' . , . (o) Audit doo-q.men~ation shall include botJi the report date and the date of issuanc~ ofthe

report."

AGO~ 00029 ............... ,· ...

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12. California Code.ofRegula.tions, title 16, Section.87; ~tates:

"(a.) 80 Hours.

. · As a condition for'renewing a license in·an active status, ~.llcen.see shall complete at least.

'80 hours nf qualifying oontinu~g education as described i~ Se~.tion 8 8 :ill.the two-year period '

immedi~tely prt~ceding licens~ expiration, ~d n~eet the repm:ting requ:irements described' in

Section 89(a). . A licensee'engaged '

in the practice ofpublic aooounta11cy as in Section . . '

d~fued'

5051 of the Bus:iness and Professions Code is required to hold a.lice!1se in an active status. No

c.arryover of continu~g education is permitted from one license. renBwa1 period to a~other."

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(d) Accounting an~ Auditing.' Continuing Education Requirement.

A licensee. who engages iJ;t planning, dlrect~g, pt:Jrforming substantial portions of the work,

or reporting on an audlt, review, COniJ?ilation, onu±esta.tion service, shall complete 24 hOU!I>'Qffue

·go hours of continuing education required pursuant to .subsection (a,) in the couise sUbject n:iatter . . '

pertaining to financial statement preparation and/or reporting. (whether such state:ments are·

prepared on the basis. of gene~ally aQcepted accounting_p~inciples or_other comprehensiv'e. bf!.ses of

. accpunting), auditing, reviews, compilations, ·industry accC!unting, attestation services, OJ.1·'·

assurance sei:vices. This contlp.uin.g education·shalt be ~omp,leted in the sar.ue two~year license '

renewal period. as the report is issue.d'. Ifno. report is 'iss:ued beca1:1.s~ the :fuiancial statements are

not intended f~1: use by third parties, the continuing ·education shall be completed in. the same W{o

year license reuewal period as the fimtncial statements, ate submitted io· the client.

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. (e) A lice~s~~ wh~ must co~lete ~~ntinuing education pursua:nt to subsections (c) and/or

(d) 'ofthi~ Section,Sh.al~ alSO COmplete an 'additional ~ighth0UrS,~fCo0tUlUing education

specifically related to ~he d~tecti~n andJo:t of statements. This :

J:f)pOl~i~g . :fr~~~ ~ f~andal '

oonti:tiuing f)ducation shall be part of the 80 'ho~·s of o'ontmuing educa~ion required by subsection ' '

(a), but shall not be pa.rt oft~e continuing education.requ.ired by subs eotions (c) o~ (d).

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(~)Failure to Comply.

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. A licensee1s willful failure to comply with th~ requirements. ?f this section shal:L constitute . '

cause for disciplinary action pursuant to Section 5100(g) of the Accountancy· Act" ·'' ·

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13. ·California Code ofRegulations,·title 16 Section 87.7, sta:tes: 1 · . ' . '

.'~(a) In order 'to renew a license in au' active status a licensee 'sh~11, :within thG six years

preoed~g the licenq~ expiration date; complete .a contin~ing 'edrimJ.tion .course ~n the provisions of

the Accountancy Act and the ' ' Board 'ofAcoounta.ncy Regulations, application to current practice,

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arid ~t},ler rules ofprofessi?nal conduct. Such course shall be approve¢!. by the B.oa:rd prior to the I '

'licensee teceiving 'continu:i;n.g education credit for the cou:rse and shall. ~e 'a minimum. of 8 hours. '

'The eight hours shall be COUnted tow~ds the 80 hours required pursuant to Section 87."

. PROFESSIONAL STANDARDS' . ' . '

14. ' The standards ofpractice pertinent t.o this Accusation 'and the engagements at issue

include, without limitation:

A. Generally Acoepted·Auditing Standards (GAAS) issued by the American Institute of

.Certffie9 Public Ac~~'uittatrts (AICPA): 'I'he te.~.~eneral, fi~ld' wo~k, and reporting standards· ' . . .

·outlined by GAAS (AU§ 150), which are interrelated, are discussed in the Statements ori.:

Auditing Standards (SAS). The SAS are codified, by "AU11 nuni.ber; :i:n the AICPNs Codi:fic~tion . of'Statements on Auditing; ~tandards. Amnng the .SAS rele:'an.~ -heretrJ.., :i?-. ~dt;lition t~ ~U §150

which sets forth the Generally Accept~d Auditing Standards are: AU §311.19 and §311.20

(Planning ~d·Supervision-. Th~ Audit Plan), 'AU §316.83 .(Co~sidenition ofFraud in a Financial· 0 I o

Statement Audit- Docu,roentirig the Au,ditor's Cqnsideration ofFr~;J:ud), AU §329.0'1 '(Analytical

Pxocedures), I I ,

AU I

§330. 04, §330..06 o ~d §3:30.35 (The Con~;m.atl~n P:roc~ss- Definition ·o~the

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Confumation,l'rocess, Relationship of the Confrrmation Procedures to the Auditor's Assessment

of.{\.udit Rlsl'"· and Confum~tio:O. of Accotmts Receivable),.A.tJ §3;J7,06 and §33'7.08 (lo.quir:Y of a

Client's .Lawyer Concerning Litigation, Claims and ~s~essments - Audit Procedures and Inquicy

of a Cl~ent's Lawyer), and AU §508.08 (Reports on Audited Financia-l Statements).

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COSTRECOVERY

15. · Seotio~ 1~5.3 ~fthe Code provides, :in pertinent part, tha~ the Board ma~ request' the

administrative law judge .to direct a licentiate found '

to·have committ~d a violation or. ' violations of

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' the JiceJ:!.sing act to pay a sum not to exceed the reasdnable co~ts ofihe :inv:stigation and.

enforcement ofthe case.

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·16: Se~tio~ 5107, subdivision (a) 1 ofthe Code states:

"The· executive o.fficer cifthe board may 1·equest the adm:inistmtive law judge, as part ofthe

proposed d~cision in a disci]llinary proceeding,· to direct any h~ldei' of a. permit or certificate ·

f~und to have committ~d a via lation 'or violations .of this cbapt~r to pay t~ the board all reasonable

costs o'f illvesti!Sation and prosecution ofthe c.ase, iri.cluding, but riot lin~ited to, attpmeys1 ~ees.

The b6ard shall not recover costs inotmed at the adm:inistrative hearing.'·'

FIRST CAUSE FOR DISCIPLINE .

(~ross Negligence}

17. . . Respondents me-subject to disoiplin~y -action'under Sections 51 0.0, subdivision (o) . .

and 5156, :in that Respondents . committ!;ld grdss negligence, :in the performance of an audit for . . .

S.A. Kitsl.nian,·Inc..("Kitsinian"), for the years ended December 31,2006 and 2007. The audits . . ' ' '

ofiCitsinian oontained'extreme departures fro~ generally ao~epted au<;l{ting standa:i-dP. and regl(lla.tory

. require~ents..

··The sp,ecific acts and standard~ ofpractice.that were violated, that .

collectively ponstitute &ross negligence, are as ~oll.ows:

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a. The'audit report for KJ.tsiniatJ. does not have a title that includes the. w~rd 1· ' independent'7 as required by AU 508.08 .

b. · The au:dit feporl does not identify t~e relating Statement ofRe~ined E~ings, · c. · The audit report' does not contain statement that the. :financial statements are

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,the responsibility of the company's mana~emeni.·

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d.. The audit report does ni:Jt idemtify the country of origin as the United . .States of

-~eri~~-(or tT~s.) ofthe ~enerally ~ccepted au~iting -sta~dfl,t'ds iti"b~t:b.-the ope~in~ and opitiion"

~aragraphs;,and does·not contain a st.atement th.at the audit was conducted maccordap,c~. with

those standaxds.

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e, Respondents issued an auditor's opinion· for Ki.tsinian forth~ fiscal years

endmg 2006 and 2007, w)len, the notes to' the financial statements failed to ·meet' professional

standards, f\S foliows: ·

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L No.te 4. The note on "Related Party Transactions" does not disclose bl the' not11 nor ,in the Fin<rncial Statem~nts the amoUJJ.t due from related parties as o:f ihe date ,of each

'balance sheet presented; . ,,

2. · · NotB 8', The no~e on "Gotr11nitroi:mtsn does u.ot disclose futurre minimum

lease payments in the aggregate and for each ofthe ,five 'succeeding years. The disclosure ~

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pr.ovides oniy fout years offutm.'e minimum lease payments without an aggregate (SFA~ No. 57,

paragraph 2);

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3. .Balances of the Long-tenn D~bt e,re presented mthe Bahin.ce Sheet, but

the1'e is :ho disclosure on the Long-tenn Debt (SFAS.No. 47); ' ' . '

'. 4. There .is no di~Qlosure for cash paid for interest and income taxes on the·

·Statement o~Callh Flows or in the Notes to the ~inanoial Statements (SFAS No.,.95; paragrap~

121); ,, '.

5. Footnote on the financial. statements :indicates,"See Accountant's , •

Compilation Report,. J'he .footnote states that the fmanclal statements were not audited, yetan.

auait report was issued. lt should be·stated as ."See Indepe~dent AucHter's Report".

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' · 6, Note 4. The ncite ori ·~elated Par.ty'T;ninsaations" states "Outstanding.,

balances' relating to ihese .sales. are presented as the receivable from related party :in the

acoompauyhlg ~alance.sheet". Receiv~bJe :fl:~m.related party of~t lea~t $63o;237for the year

ended Decembe; 3 i) 2006 ,(as it i~ presented in the Statement of Cash Flo~s) is not presented in

the Balance Sh\'let.

7 . l'fote 7. The note on Income Taxes fo,;r 2006 dpes"nOt agree to the amount . .

shown on the fmanoia.l stateme:qt, in that the ~ote ptovides fot income taxes of$1,209 for 2006, l '. ' ' • • ' .

· yet provision for inoo~~ taxes presented on th~. State1nent o.f Income and Retained Earnings

shows $800 for 2006...

8. Note 6. The note on Property and Eq~,ipment for 2007 and 2006 does not

\Lgtee with the amount shown on the financial statement, in tpat the note shows $Z73 ,433 for 2007

and $355,299 for 2006, yet thE~ Balance S)+eet presents $302,892 fol~ Z007 and $340,218 for 2.006..

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f. Res~cind.ents' working pap~rs did not contain a wrlt;:en audit plan or any.

docutrient~tion of analytical·p~·ooedUl'es being usel(in oonjunotio~ with AU :section 150);

g. 'There i~ no d?cu:mentatip~ that Respond~nts . sent a letter of. audit inqu-b:y to . .

client's law)rer or obtame~'arespq~e the1·~from~ as reqt'liJ;ed by AU S~o'Lion~ 329.01,.337.06 and ·'

337.08,

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. . h. · Ther~ is insufficient documentation showing that ;procedu:t:es were performed to

' . ' . affoid a reasonable basis.'for an opinion :tegm:ding tht< f'mancial statements,

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doo~mentation that any audit ~vidence was g~lher~d to oonfum.'fue ~c~ounts reoei~able. balance I

of.$2,569,603 when the total assets are $4;511;457 as ofDecember 3'1, 2007, as required py AU

Sections 150, 330.06 a;nd 330.35.

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.. . i.. Respondents failed to ·.do~~ent.his consid~ration ?f :fraud in;'the audit, in that

. . . there is no documentation sho~.ing that Respondents considered:material misstatern,ent(s) caused

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·by fraud while oonQ.ucting the audit, as required by AU Sections 3l6. 83 ..

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SECOND CAUSE FOR DISCIPLI:N'E

(Repeated. Acts ofNegligence)· . . .

- Hl. . Respondents.are suojeot to ,4isclplmary.act~on unaer Sections 5.10~, s~bdiyision

in that Respondents oo~itted rep'eated ~ts ofneglig~?,noe, in! I

the peL"fonnance of an audit fO'l;'' I

Kitsinian., fortb.eyears.~dedDecemb~r31, 2006 and20{)7. The cirbumstances ofthls violation

axe.set forth in Para~a~h 17(~)-(i),. above, which is incorp'ora~e~ byreferen?a as though set forth

fully.,

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Timm CAUSE FOR.DlSCIPLlNE

(Viola~on ofProfessional Standards)

19. Respond~~ts 'iu:e"subjeotto discipline purs~ant.t~ Code ~E?ction SH)o; subdiv·isio; (g),

:in conjunotiqn with California Code of Regulations, title 1~, sectiqn5 8,. in that Respondents '

willfully violated applicable professional standards. The circumstances of this violation are set

'forth :in Paragraph 17(a)-(i); above, which is incorporated by'. reference as thougp. set forth fully.. . .

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. . FODRTH CAUSE FOR.DlSCIPLINE

' ' ' WMlure to Issue Repoi·ts in Accm·dance with J.>rofess~o~al Standa~·ds)

20, · R.espondeuts ai'e 'subject to discipline pursuant to Code secti~ns 5100, subdivision (g)

a:ud 5062, Jn t1l~t'Responde:nt's issued auditor's report~ that failed to co:t;J.form t6 professipual '

stanclard.s~ as more fully discussed in P~IJ:a;graphsl7(aH~)· and 19, ab~ve, .which are inc~rpor~tedby reference as thC!ugh set forth fully.

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FIFTII CAUSE FOR DISCIPLINE

(Lfl-ck ofSufficient Audit Documentation)

21. Respondents are subject to disciplinary ao~ion under Sections 5100, subdivision (e) · ·

·and S097., u~divisions (a)-(f), in ~ha;~ Respond~nts'· audit ci.oc~ent~ti~n did not ~ontain. . ' . ' '. '

sufficient documentation to epable a reviewer to understand the nature, timing, extent, and results. ' . ..

ofthe .auditm~ procedures perfo:n:rled, ~vidence obtained, and oonclusio:t;lS reached, an,d under

California Board ofAccolintancy Regulations Section 68 .2, fu that respondent's audit

documentation did not include an·~dex or guide ,Vvh1ch iP,entifiedthe components a~ the audit'

docUJl!.entation, Complainant iuco~porat~s ·by refe~ence the allegations set forth in Paragraph

17(~)~(i) above, as though set forth :EuHy.

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SIXTH CAUSE FOR DISCIPLINE

(Lack of' Co~tim1in~ J.>rofession~i Educati~n Baslc Req~ire~~nts) 22. Rt;lspondent Th01p.as Hart is subject to discipline pursuant: to Code section 5 too,

subdivJ.sion(g), ~d'Californi~ Code,ofRegulations, title 16, St:;ction 87' (d). and·(~), and 8;.7, in . . '

that Respondent marked on his August 2006 ~d 2008 license· :renewal forms that he did not

coni.pl~te the required 8-hour Profession~l Conduct an~ E~hics (PC&B) c~ntinu.lng ed11~atio~· (CE)

oo~se, and on the Aligu~t 2008 lioe~se renewal forin, thf;it he did not complete the :requ:lr~d 8

hour fraud .CE oours~. Respondemt failed tei oomplete.24 hours ofAccounting and Auditing

(A&A) CE, eight hours'~f:fi:aud CE, and eight b.'~urs ofPC&E OE prior to his August 31, 2008·.

license renewal date. R~spo:i:i.dent d~d not ·eoinplet~ eight hours ofPC&E CE until March ~0,

2009, 24 hours of A&A CE Un.til June 5, 2009, and eight hours of fraud OE'untll May 20, 2009.

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. 'I 1 TherBfore, Respondent failed to ti!n~ly oo.mplete the requisite conthllling p:rofC?ssional education

(CPE) specified by said regttlations. · ........

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'' 3 SEVENTH CAUSE FOR

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DI~~CIPLINE . '

(Pra.cticmg :Without A.Vali~, Une:s:pirea .Accountancy 'Licm~se)4 ·.

5 23. Respondent Thomas Hart is subJect to disciplinary action ttnder Sections. 5050,

subdivision (a), iu th!l.t he practiced public .~cc6uritan~y with·an e~~it~d license from Septenib.er

1~ 2008 through Marph 28', 20?9 .. Respondent .acloiowledged his license C1Xp:ired ar?tind August

31,2008, and was not renewed until on or after Marah2.9, ~0091 However, the 6ontinuing

education deficiencies were not completed, corrected and effective up.tilAugust 3, 2009:

.Complainant ~oo:rp;rates by reference the all~g~tions'aet forth in P~a~aph 22 above, as I

·thi'JU~h ~et fortli fully.

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PRAYER+z 13 'WHEREFORE, Compl,ainant requests that a he~g'be heid on the matters her~in all<:lged, ·

and th~t follow~g the hearin~,·fue California Board.of Accountancy issue adecision: '( ") 14 ' ........ '

15 . 1. Revoking, suspending or otheryvise imposing discipline upon Certifie~ Public.

Accol.inta:nt License Number 56052, iBSU;ed to Thomas Edward Hart; ' 16

17 2.' Revoldng, su8pending ·or othe:rWise imposing disciplin\'l. upon C~rt;ified Public

Accoun,tancyP~tnership Certificate No.6935 issued to Hig~point'Parl:i:lers, LLP; . ' . . " '

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19 3. Ordering Thomas Edward Hart and Highpoint Pai-tners, LLP, jointly a~d.severally, to . . .

pa.y th~ California BoFLtd of Accountancy the r~asonable costs ofthe investigation and . ~Uforcement

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ofthis case, puniuruit to Business and Professions Code s.eoti.ons 125.3 and 5107;

and

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23' 4. Taking such other and further actiol a · deemed nepessary and proper.'

DATED:

PA TIBO Executive OfficerCalifornia Board of Accountancy Dep artmen:t of Consumer .A.:ffairsState of CaliforniaComplainant'

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AGO -· 00036 . Acou'sation ·

Documents

BEFORE THE CALIFORNIABOARD OF ACCOUNTANCY … · THOMAS EDWARD HART 140 Sierra View Road Pasadena, CA 91105 Certified Public Accountant Certificate No. ... · Patti Bowers ("Complainant")