Samson, Ruben of Northridge, CA 


As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Samson, with the firm of Katz & Varon, P.C., entered into a settlement agreement under the Joint Ethics Enforcement Program effective March 17, 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. Samson’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, 2014.

 

The ECA reviewed certain workpapers and financial statements for the engagement as well as Mr. Samson’s responses and 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 Code of Professional Conduct as follows:

 

1.300.001 General Standards .01b Due Professional Care (Prior to December 15, 2014 - Rule 201, B.)

The footnotes disclose that all expenses of maintaining the plan are paid by the plan sponsor; however, the statement of changes in net assets available for benefits presents $7,116 in administrative fees. 

 

1.310.001 Compliance with Standards (Prior to December 15, 2014 - Rule 202)

1.   The auditor failed to obtain sufficient and appropriate audit evidence to express an opinion on the financial statements regarding investment selection at the participant level.  (AU-C 500)

2.   The auditor failed to adequately assess the SOC 1 report for the record keeper/trustee. (AU-C 402) 

3.   The auditor failed to prepare audit documentation that would enable an experienced auditor, having no previous connection to the audit, to understand the procedures performed for subsequent events.  (AU-C 230) 

 

1.320.001 Accounting Principles (Prior to December 15, 2014 - Rule 203)

The disclosure of the plan’s investments in the financial statements is not consistent with the classification in the trustee’s statements and the Form 5500.  Accordingly, the disclosures of the investments in the financial statements may not comply with generally accepted accounting principles.

 

1.400.001 Acts Discreditable (Prior to December 15, 2014 Rule 501), 1.400.050 Government bodies, commissions, or other regulatory agencies (Prior to December 15, 2014 - Interpretation 501-5)

1.   The financial statement disclosures failed to present a reconciliation to the Form 5500 regarding benefits paid.  (29 CFR 2520.103-1)

2.   The supplemental schedule of assets (held at end of year) did not identify parties-in-interest to the plan and did not disclose the term of participant loans.  (29 CFR 2520.103-10)

 

Agreement:

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

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

d.    To his admonishment by the AICPA.

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

f.     To complete 46.5 hours of continuing professional education (CPE) courses (Auditing Defined Contribution Plans; Audits of 401(k) Plans; Internal Control & Risk Assessment: Key Factors in a Successful Audit; GAAS: A Comprehensive Review for Auditors; Annual Update for Accountants & Auditors) within 12 months of the effective date of this agreement and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

g.    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.  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. 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, type of organization, his role and anticipated hours on each engagement, anticipated date the report will be released and whether it is an initial engagement.

 

He agrees to permit the outside party to report 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 the number and composition 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 audits of employee benefit plans.  If his practice changes and he is no longer involved with audits of employee benefit plans, 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, submit six months after the due date for 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, and 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 Joint Trial Board for a hearing or take such other action as it deems appropriate.

i.      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 submitted to comply with directive h. above substantially complies with professional standards. 

j.      To be prohibited from teaching continuing professional education courses approved by the AICPA or the state societies in 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.  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 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.

l.      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.

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

n.    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.




A A A


 
© 2017 Association of International Certified Professional Accountants. All rights reserved.