Wackerly, David H. of Canton, OH

June 4, 2018

As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Ohio Society of CPAs’, Mr. Wackerly, with the firm of David H. Wackerly, CPA, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective March 15, 2018.

Information came to the attention of the Ethics Charging Authority (ECA) (comprised of the AICPA Professional Ethics Executive Committee and the Ohio Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Wackerly’s performance of professional services on the audit of the financial statements of a not-for-profit entity as of and for the year ended December 31, 2012.

The ECA reviewed the auditor’s report and financial statements as well as other relevant documents Mr. Wackerly submitted in connection with this investigation. Based on this information, the ECA charged Mr. Wackerly with violations of the AICPA and the Ohio Society of CPAs’ codes of professional conduct as follows:

Rule 202 – Compliance with Standards

  1. The auditor’s opinion does not comply with clarified auditing standards. (AU-C 700)
  2. The auditor failed to obtain evidence of the agreement between the organization and the foundation regarding the assets transferred as described in the notes to the financial statements. (AU-C 500)

Rule 203 – Accounting Principles

  1. The basis of accounting described in the notes to the financial statements is not consistent with the presentation of certain items on the balance sheet, such as payroll liabilities and the beneficial interest in assets held by Stark Community Foundation. (AU-C 800.07, .15)
  2. The financial statements do not sufficiently describe the nature of the different types of permanently and temporarily restricted net assets. (FASB ASC 958-210-45-9)
  3. If the presentation is not intended to reflect the cash basis of accounting and the beneficial interest in assets held by the foundation is correctly presented, the notes failed to include the related fair value disclosures in accordance with ASC 820.

Agreement:

In consideration of the ECA forgoing further investigation of Mr. Wackerly’s conduct as described above and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Wackerly agreed as follows:

  1. To waive his rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures.
  2. To waive his rights to a hearing under AICPA bylaws section 7.4 and Article XII, Section C of the Ohio Society of CPAs bylaws.
  3. To neither admit nor deny the above specified charges.
  4. To his suspension from membership in the AICPA and the Ohio Society of CPAs for a period of two years from the effective date of this agreement. During the period of suspension, he is prohibited from representing himself as a member of the AICPA and the Ohio Society of CPAs and from using any AICPA credentials.
  5. To comply immediately with professional standards applicable to the professional services he performs and to submit evidence of such compliance.
  6. To complete 31.0 hours of continuing professional education (CPE) courses (Alternatives to GAAP: Using Special Purpose Frameworks; Audit Workpapers: Documenting Field Work; Investments: Not-for-Profit Accounting & Financial Reporting; Accounting and Reporting for Not-For-Profit Organizations) within twelve months of the effective date of this agreement and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).
  7. To comply with directive e. above, you agree 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 audits and reviews performed by him for one year from the date the reviewer has been approved by the ECA or until completion of the CPE, if later. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the effective date of this agreement.

    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 first report is due 120 days after the reviewer has been approved by the ECA with subsequent reports due every 90 days thereafter.  He agrees to have this pre-issuance review performed at his/her expense. The ECA has the right to extend the period of time and the number and composition 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, changes in his role during the period he is subject to the pre-issuance reviews or if he has not performed any audits or reviews.  If his practice changes and he is no longer involved with audits or reviews, no longer acts in a supervisory capacity on such engagements, or has not performed such engagements during the above specified period, he must inform the ECA of this 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 pre-issuance reviews.
  8. To further comply with directive e. above, submit six months after the CPE courses and pre-issuance reviews a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the period between the date of completion of those CPE courses and pre-issuance reviews and the end of the six-month period following completion of the CPE courses and pre-issuance reviews. 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, changes in his role or if he has not performed any audits or reviews until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits or reviews, no longer acts in a supervisory capacity on such engagements, or has not performed such engagements during the above specified period, he must inform the ECA of this 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 working 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
  9. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA or the Ohio 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 other committee of the AICPA or the Ohio Society of CPAs 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 h. above substantially complies with professional standards.
  10. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state societies in the areas of Auditing and Accounting, Not-for-Profit, and Government Auditing Standards and/or OMB Circular A-133/Uniform Guidance 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 Ohio Society of CPAs. This requirement shall remain in effect until the ECA determines that the work product submitted to comply with directive h. above substantially complies with professional standards.
  11. To submit within 30-days after he has signed this agreement evidence that his firm has submitted an application to join the Governmental Audit Quality Center. Upon membership in that Center, he agrees that his firm will comply with the directives of that Center.
  12. 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 directive h. above substantially complies with professional standards.  This restriction will be communicated to his peer review oversight agency.
  13. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.
  14. 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.