As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Ms. Mendoza, with the firm of Rosaline Mendoza, CPA, PA, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective June 4, 2018.
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 Ms. Mendoza’s failure to ensure her 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 Ms. Mendoza’s responses to such allegations. Based on this information, the ECA charged Ms. Mendoza with violations of the Code of Professional Conduct of the AICPA as follows:
Rule 202 – Compliance with Standards
The auditor’s report includes language for both a full scope audit and a limited scope audit. (AU §508)
Rule 501 – Acts Discreditable
As the owner responsible for her firm’s peer review compliance, Ms. Mendoza failed to ensure it complied with AICPA requirements to undergo a peer review.
In consideration of the ECA forgoing further investigation of Ms. Mendoza’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Ms. Mendoza agreed as follows:
a. To waive her right to a hearing under AICPA bylaws section 7.4.
b. To neither admit nor deny the above specified charges.
c. To comply immediately with professional standards applicable to the professional services she performs and to submit evidence of such compliance.
d. To her suspension from membership in the AICPA for a period of two years from the effective date of this agreement.
e. To complete the following continuing professional education (CPE) courses (Auditing Employee Benefit Plans; Upcoming Peer Review: Is Your Firm Ready?; Accounting and Auditing Update for Small Businesses) within six months of the effective date of this agreement and provide evidence of completion (e.g., attendance sheets, course completion certificates, etc.).
f. To comply with directive c. above, submit six months after completion of the CPE courses a list of the highest level (audits, reviews, compilations with note disclosures) of engagements that she performed in the twelve-month period following the date she completed the CPE courses. The ECA will select one of these engagements for review. She will be informed of this selection and will be asked to submit information to include a copy of her 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 her firm would not exempt her from this requirement.
She agrees to inform the ECA of any changes in the composition of her practice, changes in her role or if she has not performed any audits, reviews or compilations with note disclosures until a suitable work product is selected for review. If her practice changes and she is no longer involved with audits, reviews or compilations with note disclosures, no longer acts in a supervisory capacity on such engagements or she has not performed such engagements during the above specified period, she must inform the ECA of this change and the ECA may require that she attest every six months for three years as to the nature of her practice. If, during the three-year attestation period she returns to performing such engagements she 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 she has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement she 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 AICPA joint trial board for a hearing or take such other action as it deems appropriate.
g. To submit, within 30-days of the effective date of this agreement, evidence that her firm has submitted an application to join the Employee Benefit Plan Audit Quality Center. Upon membership in that Center, she agrees that her firm will comply with the directives of that Center.
h. To submit a copy of her most recent peer review report within 60 days of the effective date of this agreement.
i. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA until she has completed all directives in this letter. This restriction will be communicated to those responsible for appointments to such committees. In addition, if she applies to join any other committee of the AICPA, she 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 products submitted to comply with directive f. above substantially complies with professional standards.
j. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in auditing and accounting until she 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 state societies. This requirement shall remain in effect until the ECA determines that the work product submitted to comply with directive f. 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 she submitted to comply with directive f. above substantially complies with professional standards. This restriction will be communicated to her peer review oversight agency.
l. That the ECA shall publish her name, the name of her firm, the charges, and the terms of this settlement agreement.
m. That the ECA shall provide a copy of this settlement agreement to the AICPA’s Peer Review Division staff, her peer review administering entities and her firm’s peer reviewer.
n. That the ECA shall monitor her compliance with the terms of this settlement agreement and initiate an investigation where the ECA finds there has been noncompliance.