Torres, Joaquin of Lake Mary, FL

As a result of an investigation of alleged violations of the AICPA’s Code of Professional Conduct, Mr. Torres, of AGA Certified Public Accountants & Advisors, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective January 17, 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. Torres’ performance of professional services on the audit of the financial statements of an employee benefit plan as of and for the year ended December 31, 2013.     

The ECA reviewed information from the Department of Labor’s E-fast website, the financial statements, certain workpapers, and Mr. Torres’ responses to the ECA’s inquiries as well as relevant documents Mr. Torres submitted to support his responses. Based on this information, there appears to be prima facie evidence of violations of the rules of the AICPA’s Code of Professional Conduct as follows:

Rule 201 – General Standards, A. Professional Competence

The auditor undertook an engagement that he could not reasonably expect to complete in accordance with professional standards.

Rule 201 – General Standards, B. Due Professional Care

  1. The auditor’s report improperly identifies the plan as the certifying entity for purposes of the limited-scope exemption.
  2. The 2013 investment income and net appreciation in the fair value of investments per the “Information Prepared and Certified by Trustee” disclosure does not agree to the statement of changes in net assets available for benefits.

Rule 202 – Compliance with Standards

  1. The auditor failed to obtain sufficient appropriate audit evidence to support the opinion on the financial statements in substantially all areas (AU-C §500).
  2. The above is not intended to be a comprehensive list of all the deficiencies in the matter described in 1., above. Had a more comprehensive review been made of the financial statements and working papers, additional deficiencies may have been noted.

Agreement

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

a.    To waive his rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (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 admonishment 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 provide an attestation immediately, then every six months for a period of three years that he is no longer performing . If he returns to performing such work, he agrees:

i.        To complete the following 16.5 hours of continuing professional education (CPE) courses* prior to commencing such work and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

Annual Update for Accountants and Auditors—8.0 hours

Audit Workpapers: Documenting Field Work—2.5 hours

Audit Workpapers: Reviewing Field Work Documentation—1.5 hours
Upcoming Peer Review: Is Your Firm Ready—4.5 hours

Total—16.5 hours

*Courses are subject to periodic pilot testing that could affect the CPE hours granted for the courses above. AICPA CPE selected to satisfy this directive should be based primarily on the course title and content. Significant credit hour differences should be pre-approved by the ECA.

                     ii.        To comply with directive e., above, 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 performed by him for one year from 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 after he commences performing such engagements.

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. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agrees to inform the ECA of such. agrees to have these pre-issuance reviews performed at 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.

agrees to inform the ECA of any changes in the composition of his practice, changes in his role or if has not performed any audits during the period he is subject to the pre-issuance reviews. If 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.

                    iii.        To further comply with directive e, above, submit, six (6) months after completion of the , a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the month period following the date he completed the .

The ECA will select one of these engagements for review. 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 from this requirement.

He agrees to inform the ECA of any changes in the composition of practice, changes in role or if he has not performed any audits, reviews, or compilations with note disclosures until a suitable work product is selected for review. If practice changes and he is no longer involved with audits, reviews, or 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.

g.    To provide an additional attestation immediately, then every six months for a period of three years that he is no longer performing audits of employee benefit plans. If he returns to performing such work, he agrees:

                      i.        To complete, in addition to the CPE prescribed in f.i. above, the following 24.5 hours of CPE courses prior to commencing such work and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

Auditing Employee Benefit Plans—15.5 hours

Documenting Your EBP Audit—9.0 hours

Total—24.5 hours

                     ii.        To comply with directive e., above, 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 of employee benefit plans performed by him for one year from 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 after he commences performing such engagements.

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. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agrees to inform the ECA of such. agrees to have these pre-issuance reviews performed at 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.

agrees to inform the ECA of any changes in the composition of his practice, changes in his role or if has not performed any audits of employee benefit plans during the period he is subject to the pre-issuance reviews. If practice changes and he is no longer involved with audits of employee benefit plans, 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.

                    iii.        To further comply with directive e, above, submit, months after completion of the , a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the month period following the date he completed the .

The ECA will select one of these engagements for review. 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 from this requirement.

He agrees to inform the ECA of any changes in the composition of practice, changes in role or if he has not performed any audits, reviews, or compilations with note disclosures, until a suitable work product is selected for review. If practice changes and he is no longer involved with audits, reviews, or 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.

                   iv.        To submit, within 30 days after he has accepted an engagement to audit an employee benefit plan, evidence that his firm has submitted an application to join the Employee Benefit Plan Audit Quality Center. Upon membership in that Center, he agrees that his firm will comply with the directives of that Center.

h.    Provide a copy of his most recent peer review report and acceptance letter from his firm’s peer review administering entity within 60 days of the effective date of this agreement.

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 he submitted to comply with directives f. iii. and g. iii., above, if applicable, substantially complies with professional standards. This prohibition will be communicated to his firm’s peer review administering entity.

j.      To be prohibited from serving as a member of any ethics or peer review committee of the AICPA until he has completed all directives in this letter. 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 products he submitted to comply with directives f. iii. and g. iii.., above, if applicable, substantially complies with professional standards.

k.    To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in the areas of accounting, auditing and employee benefit plans until he has completed all directives in this letter. 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 products he submitted to comply with directives f. iii. and g. iii., if applicable, 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 firm’s peer review administering entity, 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.