As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Renda, with the firm of Renda and Renda Accountants & Auditors, P.C. entered into a settlement agreement under the Joint Ethics Enforcement Program, effective May 4, 2015.
Information came to the attention of the Ethics Charging Authority (“ECA”) alleging a potential disciplinary matter with respect to Mr. Renda’s performance of professional services on the audit of the financial statements of a governmental entity as of and for the year ended December 31, 2011.
The ECA reviewed the auditor’s report, financial statements for the year ended December 31, 2011, and certain other documents. 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 201 – General Standards A. Professional Competence
The auditor lacked the professional competence to complete the engagement in accordance with professional standards.
Rule 202 – Compliance with Standards
The auditor’s report on supplementary information did not comply with professional standards. (SAS 118, AU §551)
Rule 203 – Accounting Principles
1. The financial statements are inappropriately prepared in accordance with a reporting model applicable
to nonprofit entities though the entity is governmental in nature and is subject to the accounting and
reporting standards promulgated by GASB. In addition, the auditor failed to perform and report on the
audit in accordance with Government Auditing Standards as required by the New York State Office of
the State Comptroller. (AICPA Audit and Accounting Guide – State and Local Governments. (“AAG-
SLV”) par. 1.01 & 1.02)
2. The financial statements omitted the following required disclosures, among others: (GASB Cod. §2300)
a. The definition of cash and cash equivalents used in the statement of cash flows;
b. The policy for eliminating internal activity within the financial statements;
c. The length of time used to define available for purposes of revenue recognition;
d. Disclosures related to subsequent events;
e. Related party disclosures; and
f. Length of service program (“LOSAP”) disclosures required by New York State
Rule 501 – Acts Discreditable
The auditor failed to obtain a peer review as required by his membership in the AICPA.
In consideration of the ECA forgoing further investigation of Mr. Renda’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Renda agrees 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 expulsion from membership in the AICPA.
e. 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.
f. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement