As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Ben-Yehoshua with the firm of Tax Vision, Inc., entered into a settlement agreement under the Joint Ethics Enforcement Program effective December 14, 2016.
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. Ben-Yehoshua’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. Ben-Yehoshua’s responses to such allegations. The ECA charged Mr. Ben-Yehoshua with violations of the AICPA Code of Professional Conduct as follows:
Rule 202 – Compliance with Standards
The auditor’s report failed to address the comparative year in the financial statements. (AU 508; SAS No. 58)
Rule 203 – Accounting Principles
1. The notes to the financial statements failed to include fair value disclosures. (FASB ASC 820)
2. The notes to the financial statements failed to include net asset value disclosures related to the plan’s investments in common collective trusts and pooled separate accounts. (FASB ASC 820)
Rule 501, Interpretation 501-5 – Failure to follow requirements of governmental bodies, commissions, or other regulatory agencies
1. As the partner responsible for his firm’s peer review compliance, Mr. Ben-Yehoshua failed to ensure it complied with state board requirements and those of the AICPA to undergo a peer review.
2. The auditor incorrectly limited the scope of the audit based on the certification of two executives of the plan’s sponsor. (29 CFR 2520.103-8)
In consideration of the ECA forgoing further investigation of Mr. Ben-Yehoshua’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Ben-Yehoshua agreed as follows:
a. To waive his right to a hearing under the AICPA bylaws Section 7.4.
b. To neither admit nor deny the above specified charges.
c. To his suspension from membership in the AICPA for a period of two years from the effective date of this agreement.
d. To comply immediately with professional standards applicable to professional services he performs and submit evidence of such compliance.
e. To provide an attestation immediately, then every six months for a period of three years that he is no longer performing audits or reviews. If he returns to performing such work, he agrees to the following:
· To complete 41 hours of specific continuing professional education courses (Annual Update for Accountants and Auditors; Auditing Employee Benefit Plans: Mastering the Fundamentals*; Get Ready for Peer Review – Upcoming Peer Review: Is Your Firm Ready?; Risk Assessment Standards: Applied to Audits of Smaller, Less Complex Entities) prior to commencing such work and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).
*Required only if Mr. Ben-Yehoshua accepts an employee benefit plan audit.
· To comply with directive d. above, he agrees 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 audit and review engagements performed by him for one year from the date the pre-issuance 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 accepting an audit or review engagement.
He agrees to permit the outside party to report quarterly 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 are due every 90 days thereafter. The ECA has the right to extend the period of time and number 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 or changes in his role during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with audits or reviews or no longer acts in a supervisory capacity on such engagements, 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 and undergo the required pre-issuance reviews.
· He agrees to provide the ECA a list of the highest level (audits, reviews, 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 engagement 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 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 or changes in his role until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits, reviews, or compilations with note disclosures, or no longer acts in a supervisory capacity on such engagements, 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 work 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 trial board for a hearing or take such other action as it deems appropriate.
· To submit within 30 days after he has agreed to audit an employee benefit plan, 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.
· To enroll in a peer review program and provide evidence of such enrollment within 60 days of accepting an audit or review engagement. In addition he must provide the peer review report and acceptance letter within 30 days of it being accepted.
f. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA or the state CPA societies 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 e., above substantially complies with professional standards.
g. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state societies in accounting and auditing 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 e., above substantially complies with professional standards.
h. 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 e., above substantially complies with professional standards. This restriction will be communicated to his peer review oversight agency.
i. To schedule a peer review of his firm. The review should be scheduled through his firm’s administering entity within 60 days of resuming audit or review engagements and he must submit evidence of the scheduled review by submitting a copy of the review team approval letter issued by his firm’s administering entity. His firm’s accepted peer review documents will be due to the ECA within 10 months of resuming audit or review engagements.
j. 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.
k. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.