Rosen, Robert N. of Boca Raton, FL

October 7, 2019

As a result of an investigation of alleged violations of the AICPA Code of Professional Conduct, Mr. Rosen with the firm of Gerstle, Rosen & Goldenberg, P.A. entered into a settlement agreement under the Joint Ethics Enforcement Program (JEEP), effective July 15, 2019.

Information came to the attention of the ethics charging authority (ECA — AICPA Professional Ethics Executive Committee) alleging a potential disciplinary matter with respect to Mr. Rosen’s performance of professional services on the audit of the financial statements of a not-for-profit entity as of and for the fiscal years ended September 30, 2013 and 2014.

The ECA reviewed the allegations in the complaint and Mr. Rosen’s responses to such findings as well as other relevant documents Mr. Rosen submitted to support his response. Based on this information, there appears to be prima facie evidence of violations of the rules of the AICPA Code of Professional Conduct as follows.  

1.320.001 Accounting Principles Rule

  1. The original and revised financial statements failed to separately disclose the nature and amount of cash and cash equivalents and investments with maturities of 90 days or more. (ASC 210-10-45, ASC 305-10-20, ASC 320-10-50)

  2. The amount of accrued allowance for uncollectible receivables is not appropriately presented in the original and revised financial statements for 2013 and 2014. In addition, the original and revised financial statements failed to adequately disclose the methodology used to estimate the allowance for uncollectible receivables and activity included in the balance in the current period. (ASC 210-10-45, ASC 310-10-50)

  3. The disclosure of accounting policies related to revenue recognition for significant revenue sources in the original and revised financial statements is inadequate. (ASC 235-10-50)

  4. The notes to the original and revised financial statements failed to disclose the collateral pledged for the open line of credit. (ASC 860-30-50)

  5. Project costs were improperly accounted for in the financial statements. (ASC 972-720-25)

AGREEMENT

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

a. To waive his rights to further investigation of this matter in accordance with the JEEP manual of procedures.

b. To waive his rights to a hearing under AICPA bylaws section 7.4. 

c. To neither admit nor deny the above specified charges.

d. To being admonished by the AICPA.

e. To comply immediately with professional standards applicable to the professional services he performs and to submit evidence of such compliance.

f. To complete 23.0 hours of the following continuing professional education (CPE) courses within six months of the effective date of this agreement and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

  • Annual Accounting and Auditing Workshop — 15.0 hours
  • Statement of Cash Flows: Preparation, Presentation, and Use — 8 hours
  • Total — 23.0 hours

g. To comply with directive (e) above, he agreed to hire an outside party, acceptable to the ECA, to perform a pre-issuance review of the reports, financial statements, and working papers on two audits performed by him during the one-year period following the date the 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 of the date he signs this letter. Also, no later than 30 days after the effective date of this agreement, he must submit a list to the ECA of the audits on which he expects to issue reports in the upcoming 12 months from which the audits subject to pre-issuance review will be selected.

He agreed 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. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agreed to inform the ECA of such. He agreed to have this pre-issuance review performed at his expense. 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 agreed 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 during the period, he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with audits, no longer acts in a supervisory capacity on such engagements or he has not performed such engagements during the above specified period, 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 undergo the required pre-issuance reviews.

h. To further comply with directive (e) above, submit, six months after completion of 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 six-month period following the date he completed 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 the 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 agreed 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, reviews, and compilations with note disclosures, until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits, reviews, and compilations with note disclosures, no longer acts in a supervisory capacity on such engagements or he has not performed such engagements during the above specified period, 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 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 AICPA joint trial board for a hearing or take such other action as it deems appropriate.

i. To be prohibited from performing peer reviews in any capacity until the above directives 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 prohibition will be communicated to his peer review oversight agency. 

j. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA until he has completed all of the above directives. This prohibition 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 prohibition shall remain in effect until the ECA determines that the work product he submitted to comply with directive (h) above, substantially complies with professional standards.

k. To be prohibited from teaching CPE courses approved by the AICPA or the state CPA societies in the area of accounting and auditing until he has completed all of the above directives. This prohibition will be communicated to those responsible for engaging CPE instructors at the AICPA. This prohibition shall remain in effect until the ECA determines that the work product he submitted to comply with directive (h) above, substantially complies with professional standards. 

l. 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.

m. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.

n. 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.