Stages, Mary Sue of Clinton, LA

As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Society of Louisiana CPAs, Ms. Stages entered into a settlement agreement under the Joint Ethics Enforcement Program, effective December 3, 2018.

Information came to the attention of the Ethics Charging Authority (ECA) (AICPA Professional Ethics Executive Committee and Society of Louisiana CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to performance of professional services for a public utility.

The ECA reviewed certain working papers, correspondence and other relevant documents submitted by Ms. Stages. Based on this information, the ECA charged Ms. Stages with violations of the AICPA and the Society of Louisiana CPAs codes of professional conduct as follows:

Rule 102 – Integrity and Objectivity

Ms. Stages provided the public utility, or its representative(s), the manner in which to provide bonuses to its employees even after admitting that such bonuses were not allowed, as stipulated in the Louisiana Constitution, specifically Article VII, Section 14(a). 

Rule 501-5 Failure to follow requirements of governmental bodies, commissions or other regulatory agencies

As it relates to the audit of the financial statements for the public utility, as of and for the fiscal year ended August 31, 2012, Ms. Stages failed to obtain adequate audit evidence to comply with minimum state compliance requirements of a Louisiana governmental audit. Specifically, procedures related to the following:

  • Public bid law
  • Code of ethics
  • Public records
  • Asset management laws
  • Cash management
  • Debt restrictions
  • Revenue and expenditure restrictions
  • Compliance with LSA-RS 33:4161-4548.

(Louisiana Governmental Audit Guide, Section 342)

Agreement:

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

a.    To waive her rights to a hearing under AICPA bylaws section 7.4 and the Society of Louisiana CPAs bylaws Section B.

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

c.    To her suspension from membership in the AICPA and the Society of Louisiana CPAs for a period of two years from the effective date of this agreement. During the period of suspension, she is prohibited from representing herself as a member of the AICPA and the Society of Louisiana CPAs and from using any AICPA credentials or certificates.

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

e.    To complete 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.):

Ethics (must be taken live)—8.0 hours

Audit Workpapers: Documenting Field Work—3.5 hours

Applying the Risk Assessment Standards to Ensure a Quality Audit—5.5 hoursaaaaaaa
Annual Update for Accountants and Auditors—9.5 hours

Total—26.5 hours

f.     To comply with directive d. above, Ms. Stages 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 five audit engagements and two review engagements performed by her during the one-year period from the date the reviewer has been approved by the ECA. She must submit the name of the chosen reviewer to the ECA for approval no later than 30 days after the effective date of this agreement. Also, no later than 30 days after the effective date of this agreement, she must submit a list to the ECA of the audit and review engagements on which she expects to issue reports in the upcoming 12 months from which the audits and reviews subject to pre-issuance review will be selected. The following information should be included: regarding the engagements listed:

  • anticipated number of total hours to be spent on the engagement;
  • level of professional services to be rendered;
  • her role and her anticipated hours on each engagement;
  • type of organization; and
  • whether it will be an initial engagement.

She agrees to permit the outside party to report quarterly to the ECA on her 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 due every 90 days thereafter. She agrees to have this pre-issuance review performed at her 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.

She agrees to inform the ECA of any changes in the composition of her practice or changes in her role as an engagement partner during the period she is subject to the pre-issuance reviews. If her practice changes and she is no longer involved with audits and reviews or no longer acts in a supervisory capacity on such engagements, 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 and undergo the pre-issuance reviews.

g.    To further comply with directive d. above, she agrees to submit, six months after the completion of the pre-issuance reviews, a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that she 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 engagements listed: number of hours spent on the engagement, her role and total hours on each engagement, level of professional services rendered, type of report issued, type of organization, whether the organization was subject to Government Auditing Standards, and whether it was an initial engagement. 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 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 or changes in her role until a suitable work product is selected for review. If her practice changes and she is no longer involved with audits, reviews, and compilations with note disclosures or no longer acts in a supervisory capacity on such engagements, 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 trial board for a hearing or take such other action as it deems appropriate.

h.    To provide an attestation immediately, then every six months for a period of three years that she is no longer performing audits subject to Government Auditing Standards. If she returns to performing such work, she agrees:

  • To comply with the CPE requirements of individuals performing work under Generally Accepted Government Auditing Standards and provide evidence of such completion. This directive applies to her most recently completed two year reporting cycle and her next reporting cycle.

In addition to the CPE reported above, she must complete the following CPE prior to returning to such work and provide evidence of such completion.

Studies on Single Audit and Yellow Book Deficiencies—9.0 hours
Government Accounting & Auditing Update—8.0 hours
Conducting Governmental Audits under GAAS, GAGAS, and the
Single Audit, a Risk Based Approach—8.0 hours
Total—25.0 hours

  • To comply with directive d. above, Ms. Stages 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 audits subject to Government Auditing Standards performed by her for one year from the date the reviewer has been approved by the ECA. She must submit the name of the chosen reviewer to the ECA for approval no later than 30 days after she is engaged to perform such work.

She agrees to permit the outside party to report quarterly to the ECA on her 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 due every 90 days thereafter. She agrees to have this pre-issuance review performed at her 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.

She agrees to inform the ECA of any changes in the composition of her practice or changes in her role as an engagement partner during the period she is subject to the pre-issuance reviews. If her practice changes and she is no longer involved with audits subject to Government Auditing Standards or no longer acts in a supervisory capacity on such engagements, 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 and undergo the pre-issuance reviews.

  • To further comply with directive d. above, she agrees to submit, six months after the completion of the pre-issuance reviews above, a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that she 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 engagements listed: number of hours spent on the engagement, her role and total hours on each engagement, level of professional services rendered, type of report issued, type of organization, whether the organization was subject to Government Auditing Standards, and whether it was an initial engagement. 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 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 or changes in her role until a suitable work product is selected for review. If her practice changes and she is no longer involved with audits, reviews, and compilations with note disclosures or no longer acts in a supervisory capacity on such engagements, 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 trial board for a hearing or take such other action as it deems appropriate.

  • To submit within 30-days of acceptance of an engagement subject to Government Auditing Standards, evidence that her firm has submitted an application to join the Governmental Audit Quality Center. Upon membership in that Center, she agrees that her firm will comply with the directives of that Center.

i.      To be prohibited from performing peer reviews in any capacity until the above directives in this letter have been completed. This prohibition will remain in effect until the ECA determines that the work products she submitted to comply with directives g. and h., above, substantially comply with professional standards. This prohibition will be communicated to her peer review oversight agency. 

j.      To be prohibited from serving as a member of any ethics or peer review committee of the AICPA or the Society of Louisiana CPAs until she has completed all directives in this letter. This prohibition will be communicated to those responsible for appointments to such committees. In addition, if she applies to join any other committee of the AICPA or the Society of Louisiana CPAs she must inform those responsible for such appointments of the results of this ethics investigation. This prohibition will remain in effect until the ECA determines that the work products she submitted to comply with directive g. and h., above, substantially comply with professional standards.   

k.    To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in accounting, auditing, ethics, government auditing standards and single audit. This prohibition will be communicated to those responsible for engaging CPE instructors at the AICPA and the Society of Louisiana CPAs. This prohibition will remain in effect until the ECA determines that the work products she submitted to comply with directives g. and h., above, substantially comply with professional standards.  

l.      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.

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

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.