As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Connecticut Society of CPAs, Mr. Alexander, with the firm of Kolbrenner & Alexander, LLC, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective September 7, 2015.
Information came to the attention of the Ethics Charging Authority (“ECA”) (comprised of the AICPA Professional Ethics Executive Committee and the Connecticut Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Alexander’s failure to ensure his firm obtained an appropriate peer review.
The ECA reviewed the allegations in the referral and information publicly available on the United States Department of Labor’s EFAST website and Mr. Alexander’s responses to such allegations. The ECA charged Mr. Alexander with violations of the AICPA and the Connecticut Society of CPAs codes of professional conduct as follows:
Rule 201 – General Standards, A. Professional Competence
The auditor lacked competence to complete the audit in accordance with professional standards.
Rule 202 – Compliance with Standards
Mr. Alexander failed to perform sufficient audit procedures to support his limited scope audit opinion (AICPA Audit and Accounting Guide Employee Benefit Plans (SAS No. 106; AU 326; AAG-EBP 5.13)).
Rule 501, Interpretation 5 – Failure to follow requirements of governmental bodies, commissions, or other regulatory agencies
As the partner responsible for his firm’s peer review compliance, Mr. Alexander failed to ensure it complied with state board requirements and those of the AICPA and the Connecticut Society of CPAs to undergo a peer review.
In consideration of the ECA forgoing further investigation of Mr. Alexander’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Alexander agreed as follows:
a. To waive his right to a hearing under AICPA bylaws section 7.4 and the Connecticut Society of CPAs’ bylaws Article X: section 10.3.
b. To neither admit nor deny the above specified charges.
c. To comply immediately with professional standards applicable to the professional services he performs.
d. To his suspension from membership in the AICPA and the Connecticut Society of CPAs for a period of two years from the effective date of this agreement.
e. To provide an attestation immediately, then every 6 months for a period of three years that he is no longer performing audits, reviews, or compilations with disclosures. If he returns to performing such work, he agrees to complete 53.5 hours of continuing professional education (CPE) courses (Annual Update for Accountants and Auditors; Auditing Employee Benefit Plans (*This course is to be taken if Mr. Alexander accepts an employee benefit plan audit); Audit Workpapers: Documenting Fieldwork – Getting it Right; Audit Workpapers: Reviewing Field Work Documentation; Risk Assessment and Internal Control: Best Practices; Get Ready for Peer Review – Upcoming Peer Review: Is Your Firm Ready?) and prior to returning to such work and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).
f. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA and the Connecticut 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 committee of the AICPA and the Connecticut Society of CPAs he must inform those responsible for such appointments of the results of this ethics investigation.
g. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state societies in auditing and accounting 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 Connecticut Society of CPAs.
h. If Mr. Alexander has agreed to perform an employee benefit plan audit, he agrees to submit within 30-days after accepting that audit evidence that his firm has submitted an application to join the Employee Benefit Plan Audit Quality Center. Upon membership in that Center, he agrees that his firm will comply with the directives of that Center.
i. Mr. Alexander agrees to provide evidence within 60 days of accepting an audit, review, or compilation that the firm has enrolled in peer review.
j. To be prohibited from performing peer reviews in any capacity until the directives in this letter have been completed. This restriction will be communicated to his peer review oversight agency.
k. That the ECA shall provide a copy of this agreement to the AICPA’s Peer Review Division staff, his peer review administering entities and his firm’s peer reviewer.
l. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.
m. 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.