Yedin, Alan M. of Merrick, NY

October 7, 2019

As a result of an investigation of alleged violations of the AICPA Code of Professional Conduct, Mr. Yedin, with the firm of Alan M. Yedin, CPA, entered into a settlement agreement under the Joint Ethics Enforcement Program, effective August 28, 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. Yedin’s failure to ensure his firm obtained an appropriate peer review. 

The ECA reviewed the allegations in the referral and information publicly available on the United States Department of Labor’s EFAST website relating to the financial statements of an employee benefit plan for the year ended December 31, 2011, and Mr. Yedin’s responses to such findings and other relevant documents Mr. Yedin submitted to support his responses. Based on this information, the ECA charged Mr. Yedin with violations of the AICPA Code of Professional Conduct as follows:

Rule 201 – General Standards A. Professional Competence 

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

Rule 202 – Compliance With Standards

The auditor did not obtain sufficient competent evidential matter to support his opinion on the financial statements with respect to participant data. (Audit and Accounting Guide, Employee Benefit Plans (AU C-500)

Rule 203 – Accounting Principles

The financial statements fail to disclose the following:

1.      Identification of investments that represent 5 percent or more of total net assets, as applicable for the plan (FASB 962-325-45)
2.      Related party (party-in-interest) transactions (FASB ASC 850-10-50)
3.      For assets and liabilities measured at fair value on a recurring basis, the disclosures required by FASB ASC 850-10-50
4.      Subsequent event disclosures required by FASB ASC 850-10-50
5.      The federal income tax status of the plan (FASB ASC 962-325-50)
6.      Disclosures related to guaranteed investment contracts (FASB ASC 962-325-35-5)

Rule 501 – Acts Discreditable (with regard to the AICPA only)

As the partner responsible for his firm’s peer review compliance, Mr. Yedin failed to ensure it complied with the requirements of the AICPA to undergo a peer review.     

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

1. The Statement of Net Assets Available for Benefit was not presented comparatively as required by the Department of Labor (AAG-EBP APP A-1; 29 CFR 2520. 103-1 (b)(2)(i))
2. The Schedule of Assets Held, End of Year has not been included in the financial statements as required by the Department of Labor with the opinion extending to this schedule (29 CFR 2520. 103-10; AAG-EBP Exhibit A-1)
3. The Form 5500 indicated a limited scope audit was performed but a review report was issued (AAG-EBP App A-24)

Agreement

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

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

b. To neither admit nor deny the above specified charges

c. To his suspension from the AICPA, for a period of two years from the effective date of this agreement

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

e. To provide an attestation immediately, then every six months for a period of three years that he is no longer performing audit or review engagements. If he returns to performing such work, he agreed:

  • i. To complete the following 42.5 hours of continuing professional education (CPE) prior to commencement of fieldwork and provide evidence of such completion (for example: attendance sheets, course completion certificates, and so on).   

    Upcoming Peer Review: Is Your Firm Ready? — 11 hours
    Accounting and Auditing Update for Small Businesses — 11 hours
    Audit Workpapers: Documenting and Reviewing Field Work — 6.5 hours
    Annual Accounting and Auditing Workshop — 14 hours
    Total CPE — 42.5 hours
  • ii. To comply with directive (d) 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 all audit engagements by him for one year from the date the reviewer has been approved by the ECA or until completion of the CPE specified in directive (ei) above, if later. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after resuming audit engagements.

    He agreed to permit the outside party to report quarterly to the ECA o 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 agreed to have this pre-issuance review performed at his expense. The ECA has the right to extend the period of time and number 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 during the period he is subject to the pre-issuance reviews or if he has not performed any audits. If his practice changes and he is no longer involved with audits, 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 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 and undergo the pre-issuance reviews.

  • iii. To further comply with directive (d) above, submit six months after completion of the pre-issuance reviews a list of the highest level audit engagements that he 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 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 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 until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits, 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 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 trial board for a hearing or take such other action as it deems appropriate.

f. To provide an attestation immediately, then every six months for a period of three years that he is no longer performing employee benefit plan engagements. If he returns to performing such work, he agreed:

  • i. To complete the following 12 hours of continuing professional education (CPE) prior to commencement of fieldwork and provide evidence of such completion (e.g., attendance sheets, course completion certificates, etc.).

                  Auditing Employee Benefit Plan — 12 hours

  • ii. To comply with directive (d) 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 all employee benefit plan engagements 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 resuming audit engagements.

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

  • iii. To further comply with directive (d) above, submit six months after completion of the pre-issuance reviews in (fii) above a list of the highest level audit engagements that he 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 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 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 until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits, 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 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 trial board for a hearing or take such other action as it deems appropriate.

  • iv. To submit within 30-days after he has resumed audits of employee benefit plans evidence that his firm has submitted an application to join the Employee Benefit Plan Audit Quality Center. Upon membership in that Center, he agreed that his firm will comply with the directives of that Center.

g. 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.

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

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 products he submitted to comply with directives (eiii) and (fiii) above substantially comply with professional standards. This restriction 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 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, he must inform those responsible for such appointments of this ethics investigation. This requirement shall remain in effect until the ECA determines that the work products submitted to comply with directives (eiii) and (fiii) 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 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 requirement shall remain in effect until the ECA determines that the work products he submitted to comply with directives (eiii) and (fiii) above substantially comply with professional standards. 

l. 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.