Alvarez, Domingo of Miami, FL 

Published June 06, 2017

As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Alvarez, with the firm of Alvarez & Mendoza, PA, CPA, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective March 2, 2017.

Information came to the attention of the Ethics Charging Authority (“ECA”) (comprised of the AICPA Professional Ethics Executive Committee) alleging a potential disciplinary matter with respect to Mr. Alvarez’s performance of professional services on the audit of the financial statements of a not for profit as of and for the year ended December 31, 2012.

The ECA reviewed information publicly available on the Federal Audit Clearinghouse’s website and Mr. Alvarez’s responses to such allegations. Based on this information, there appears to be prima facie evidence of violations of the rules of the AICPA’s Code of Professional Conduct as follows:

Rule 202 – Compliance with Standards

The Schedule of Findings and Questioned Costs incorrectly states that a threshold of $500,000 was used to distinguish between Type A and B programs. (OMB Circular A-133; GAS and A-133 AAG 8.05)

Rule 203 – Accounting Principles

  1. The notes to the financial statements failed to make required subsequent event disclosures. (FASB ASC 855-10-50-2)

  2. The auditor failed to adequately present expenses by their functional classification on the statement of activities and changes in net assets. (FASB ASC 958-720-05-4)

Rule 501 - Acts Discreditable

As the partner responsible for his firm’s peer review compliance, Mr. Alvarez failed to ensure it complied with AICPA and Yellow Book requirements to undergo a proper peer review.

Rule 501, Interpretation 501-5 – Failure to follow requirements of governmental bodies, commissions, or other regulatory agencies

  1. The Schedule of Findings and Questioned Costs incorrectly refers to reportable conditions. (OMB Circular A-133)

  2. The Report of Independent Certified Public Accountants on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 omitted a statement that the auditee’s response is included and that the response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, the auditor expresses no opinion on the response. (OMB A-133; AAG-EBP 13.31jiv)

Agreement:

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

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

  2. To waive his rights to a hearing under AICPA bylaws section 7.4.

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

  4. To his suspension from membership in the AICPA for a period of two years from the effective date of this agreement. During the period of suspension, he is prohibited from representing himself as a member of the AICPA and from using any AICPA credentials.

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

  6. To complete 25 hours of continuing professional education (CPE) courses (Not-for-Profit A&A Update; Accounting and Reporting for Not-for-Profit Organizations; Yellow Book: Government Auditing Standards) within 3 months of the effective date of this agreement and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

  7. To comply with directive e. above, submit 6 months after completion of the CPE courses above, 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 CPE courses and the end of the six-month period following completion of the CPE courses. The following information should be included regarding the engagements listed: total hours spent on each 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 subject to Uniform Guidance until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits subject to Uniform Guidance, no longer act in a supervisory capacity on such engagements or he has not performed such engagements during the above specified period, he must inform the ECA of this change, 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 AICPA joint trial board for a hearing or take such other action as it deems appropriate.

  8. To submit within 30-days after he has signed this agreement evidence that his firm has submitted an application to join the Governmental Audit Quality Center. Upon membership in that Center, he agrees that his firm will comply with the directives of that Center.

  9. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA 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, 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 he submitted to comply with directive g. above substantially complies with professional standards.

  10. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in auditing and accounting and Uniform Guidance until he has completed all directives in this letter. This restriction will be communicated to those responsible for engaging CPE instructors at the AICPA. This requirement shall remain in effect until the ECA determines that the work product he submitted to comply with directive g. above substantially complies with professional standards.

  11. 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 you submitted to comply with directive g. above substantially complies with professional standards. This restriction will be communicated to his peer review oversight agency.

  12. 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.

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

  14. 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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