Ushijima, Gregory of Honolulu, HI 


As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Hawaii Society of CPAs, Mr. Ushijima, with the firm of G. Ushijima CPA LLC, entered into a settlement agreement under the Joint Ethics Enforcement Program effective May 3, 2017.

 

Information came to the attention of the Ethics Charging Authority (“ECA”) (comprised of the AICPA Professional Ethics Executive Committee and the Hawaii Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Ushijima’s performance of professional services on the audit of the financial statements of an employee benefit plan as of and for the year ended December 31, 2013.

 

The ECA reviewed the findings of the U.S. Department of Labor’s Employee Benefits Security Administration and Mr. Ushijima’s responses as well as other relevant documents he submitted to support his response.  Based on this information, there appears to be prima facie evidence of violations of the rules of the AICPA’s and Hawaii Society of CPAs’ codes of professional conduct as follows:

 

Rule 202 - Compliance with Standards

1.   The auditor failed to prepare a written audit program that set forth the procedures necessary to accomplish the objectives of the audit in the area of participant data.  (AU-C 300)

2.   The original auditor’s report failed to specify the date or period covered by each financial statement that the financial statements comprise.  (AU-C 700)

3.   The auditor failed to re-date the reissued audit report.  (AU-C 560)

4.   The auditor failed to fully describe the auditor’s responsibility in the auditor’s report.  (AU-C 700)

5.   The auditor failed to obtain sufficient appropriate audit evidence to express an opinion on the financial statements in the area of participant data.  (AU-C 500)

 

Rule 203 - Accounting Principles

1.   The statement of net assets available for benefits and the statement of changes in net assets available for benefits do not specifically identify the source of contributions receivable and contributions received, respectively.  (FASB ASC 965)

2.   The financial statements incorrectly included the realized gain/loss on the sale of investments in the interest and dividends line item of the statement of changes in net assets available for benefits.  (FASB ASC 965)

3.   The financial statements failed to disclose:

a.    net appreciation (depreciation) by investment type; (FASB ASC 965)

b.    fair value of investments for the prior year presented; (FASB ASC 205)

c.    the accounting policy for investment purchases and sales, interest income, dividend income, and realized/unrealized gain/loss; (FASB ASC 965)

d.    the accounting policy for, and the amount and disposition of, forfeited nonvested accounts; (FASB ASC 965)

e.    general risks and uncertainties for financial instruments; (FASB ASC 275)

f.     subsequent events; and (FASB ASC 855)

g.    the accounting policies for material line items in the statement of changes in net assets available for benefits.  (FASB ASC 235-10-50)

 

Agreement:

In consideration of the ECA forgoing further investigation of Mr. Ushijima’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Ushijima agreed as follows:   

a.   To waive his rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures.

b.   To waive his rights to a hearing under AICPA bylaws section 7.4 and the Hawaii Society of CPAs Article XI.

c.   To neither admit nor deny the above specified charges.

d.   To his admonishment by the AICPA and the Hawaii Society of CPAs.

e.   To comply immediately with professional standards applicable to the professional services he performs and to submit evidence of such compliance.

f.    To complete an 8 hour continuing professional education (CPE) course (Auditing Employee Benefit Plans) within three months of the effective date of this agreement and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

g.   To comply with directive e. above, he agrees to hire an outside party, acceptable to the ECA to perform a pre-issuance review of the reports, financial statements, and working papers on all employee benefit plan audits performed by him for one year from the date the reviewer has been approved by the ECA. In addition, he must undergo a pre-issuance review on three non-employee benefit plan audits performed by him that year.  He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the effective date of this agreement.  Also, no later than 30 days after the effective date of this agreement, he must submit a list to the ECA of the audits on which he expects to issue reports in the upcoming 12 months from which the non-employee benefit plan audits will be selected.  The following information should be included regarding the engagements listed: anticipated number of hours to be spent on the engagement, level of professional services to be rendered, his role and anticipated hours on each engagement, type of organization, and whether it is an initial engagement.  

 

He agrees to permit the outside party to report quarterly to the ECA on his progress in complying with this agreement as stated herein to comply with professional standards. The report should provide the reviewer’s comments in detail for each engagement and should include a description of the nature of the entity reviewed, the entity’s year end and the date of the review.  The first report is due 120 days after the reviewer has been approved by the ECA with subsequent reports due every 90 days thereafter.  He agrees to have this pre-issuance review performed at his expense.  The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.

 

He agrees to inform the ECA of any changes in the composition of his practice, changes in his role during the period he is subject to the pre-issuance reviews or if he has not performed any employee benefit plan and other audits.  If his practice changes and he is no longer involved with audits, no longer acts in a supervisory capacity on such engagements, or has not performed such engagements during the above specified period, he must inform the ECA of this and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements he must inform the ECA and undergo the pre-issuance reviews.

h.   To further comply with directive e. above, he agrees to submit six months after completion of the pre-issuance reviews, a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the period between the date of completion of those pre-issuance reviews and the end of the six-month period following completion of the pre-issuance reviews. The following information should be included regarding the engagements listed: number of hours spent on the engagement, his role and total hours on each engagement, level of professional services rendered, type of report issued, type of organization, and whether it was an initial engagement. The ECA will select one of these engagements for review. He will be informed of this selection and will be asked to submit information to include a copy of his report, the financial statements, and working papers related to that engagement for review by the ECA. The ECA may extend the period to select an engagement to ensure a suitable selection is available.  A peer review undergone by his firm would not exempt him from this requirement.

 

He agrees to inform the ECA of any changes in the composition of his practice, changes in his role or if he has not performed any audits, reviews, or compilations with note disclosures until a suitable work product is selected for review.   If his practice changes and he is no longer involved with audits, reviews, or compilations with note disclosures, no longer acts in a supervisory capacity on such engagements, or has not performed such engagements during the above specified period, he must inform the ECA of this and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements he must inform the ECA of this change and the ECA will select a suitable work product for review.

 

After an initial review of such report, financial statements, and working papers, the ECA may decide he has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement he submitted is warranted. If at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the trial board for a hearing or take such other action as it deems appropriate.

i.    Within 30 days of the effective date of this agreement, he must provide copies of his firm’s year ended November 30, 2015 peer review documents to the ECA.

j.    To be prohibited from serving as a member of any ethics or peer review committee of the AICPA or the Hawaii Society of CPAs until he has completed all directives in this letter. This restriction will be communicated to those responsible for appointments to such committees.   In addition, if he applies to join any other committee of the AICPA or the Hawaii Society of CPAs he must inform those responsible for such appointments of the results of this ethics investigation.  This requirement shall remain in effect until the ECA determines that the work product submitted to comply with directive h. above substantially complies with professional standards. 

k.   To be prohibited from teaching continuing professional education courses approved by the AICPA or the state societies in the areas of auditing and accounting and employee benefit plans until he has completed all of the directives included in this letter.  This restriction will be communicated to those responsible for engaging CPE instructors at the AICPA and the Hawaii Society of CPAs.  This requirement shall remain in effect until the ECA determines that the work product submitted to comply with directive h. above substantially complies with professional standards. 

l.    To be prohibited from performing peer reviews in any capacity until the directives in this letter have been completed.  This prohibition will remain in effect until the ECA determines that the work product he submitted to comply with directive h. above substantially complies with professional standards. This restriction will be communicated to his peer review oversight agency.

m.  That the ECA shall provide a copy of this settlement agreement to the AICPA’s Peer Review Division staff, his peer review administering entities and his firm’s peer reviewer.

n.   That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.

o.   That the ECA shall monitor his compliance with the terms of this settlement agreement and initiate an investigation where the ECA finds there has been noncompliance.




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