As a result of an investigation of alleged violations of the Codes of Professional Conduct of the AICPA and the Massachusetts Society of CPAs, Mr. DeBiasi, with the firm of James P. DeBiasi, CPA, P.C. entered into a settlement agreement under the Joint Ethics Enforcement Program, effective December 8, 2015.
Information came to the attention of the Ethics Charging Authority (“ECA”) (comprised of the AICPA Professional Ethics Executive Committee and the Massachusetts Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. DeBiasi’s performance of professional services in the audit of the financial statements for an employee benefit plan as of and for the year ended December 31, 2011.
The ECA reviewed the auditor’s report, financial statements, and working papers for the engagement, as well as DeBiasi’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 by Mr. DeBiasi of the rules of the AICPA and the Massachusetts Society of CPAs’ Codes of Professional Conduct as follows:
Rule 202 – Compliance with Standards
1. The opening paragraph of the original auditor’s report did not identify the 2010 Statement of Changes in Net Assets included in the financial statements (AU §508.08).
2. The auditor initially failed to obtain sufficient appropriate audit evidence to support the opinion on the financial statements in the following areas (SAS 106):
a. Audit planning, such as determining the third party service provider’s involvement and responsibilities, determining audit materiality, and performance of preliminary analytical procedures. [AICPA Audit and Accounting Guide-Employee Benefit Plans (AAG-EBP) 5.33,.48,.58];
b. Internal controls (AAG-EBP Chapter 6);
c. Benefit payments (AAG-EBP 9.03);
d. Participant data (AAG-EBP 10.04-.06; 10.15-.16);
e. Parties-in-interest/prohibited transactions (AAG-EBP 11.08-.12);
f. Commitments and contingencies (AAG-EBP 12.11-.13); and
g. Subsequent events (AAG-EBP 12.19).
Rule 203 – Accounting Principles
The original and amended financial statements did not disclose the following:
a. The amounts and disposition of forfeited non-vested accounts (FASB ASC 962-205-50); and
b. Material party-in-interest transactions (FASB ASC 850-10-50).
Rule 501 – Acts Discreditable
The auditor misrepresented his practice to his peer reviewer.
Rule 501, Interpretation 501-5 – Failure to follow requirements of governmental bodies, commissions, or other regulatory agencies
a. The supplemental schedule of assets held at end of year as required by ERISA was not included in the original financial statements in conformity with DOL 29 CFR 2520.103-10;
b. The supplemental schedule of assets held at end of year included with the revised financial statements was not formatted in conformity with DOL 29 CFR 2520.103-10;
c. The supplemental schedule of assets held at end of year included with the revised financial statements did not identify parties-in-interest as required by DOL 29 CFR 2520.103-10; and
d. The Schedule of Assets Held at End of Year was not attached to the revised basic financial statements as required by DOL 29 CFR 2520.103-10.
In consideration of the ECA forgoing further investigation of Mr. DeBiasi’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Mr. DeBiasi 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 Massachusetts Society of CPAs bylaws section 8.2.
c. To neither admit nor deny the above specified charges.
d. To be expelled from membership in the AICPA and the Massachusetts Society of CPAs from the effective date of this agreement.
e. That the ECA shall publish his name, the name of his current firm, the charges, and the terms of this settlement agreement.