As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Klash, with the firm of Thomas W. Klash, CPA, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective July 2, 2019.
Information came to the attention of the Ethics Charging Authority (ECA — comprising the AICPA Professional Ethics Executive Committee) alleging a potential disciplinary matter with respect to the independence requirements for Mr. Klash’s performance of professional services on the audit of the financial statements of a public entity as of and for the years ended June 30, 2012 and June 30, 2013.
The ECA reviewed the Public Company Accounting Oversight Board (PCAOB) Release No. 105-2017-25 dated April 26, 2017 and Mr. Klash’s responses to correspondence with the ECA. Based on this information, there appears to be prima facie evidence of a violation of the rules of the AICPA’s Code of Professional Conduct as follows:
“Independence Rule” [1.200.001] (Prior to December 15, 2014 Rule 101) and more specifically “Close Relatives” Interpretation [1.270.100]
Mr. Klash’s firm was not independent of an attest client due to an individual participating on the attest engagement team with a close relative who had a key position with the attest client.
In consideration of the ECA forgoing further investigation of Mr. Klash’s conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Klash agreed as follows:
- To waive his rights to a hearing under AICPA bylaws section 7.4.
- To neither admit nor deny the above specified charges.
- To be admonished by the AICPA.
- To comply immediately with professional standards applicable to the professional services he performs.
- That the ECA shall publish his name, his firm’s name, the charges, and the terms of this settlement agreement.