Schneider, Paul F. of Plantation, FL

June 2, 2020

As a result of an investigation of alleged violations of the AICPA Code of Professional Conduct, Mr. Schneider with the firm of Schneider & Associates of SOFL, LLC entered into a settlement agreement under the Joint Ethics Enforcement Program, effective March 17, 2020.

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. Schneider’s performance of professional services on the audit of an employee benefit plan as of and for the year ended December 31, 2015.

The ECA reviewed the findings of the U.S. Department of Labor’s Employee Benefits Security Administration and Mr. Schneider’s responses to the ECA’s inquiries and other relevant documents Mr. Schneider submitted to support his response, including certain working papers, financial statements, and relevant correspondence.

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:

General Standards Rule (1.300.001) .01a Professional Competence

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

Compliance with Standards Rule (1.310.001)

1.     The auditors’ report is not presented in accordance with the Clarity Standards. (AU-C 700)

2.     The “Combining Schedules of Changes in Net Assets Available for Benefits by Investment Account” is not covered by the auditor’s report. (AU-C 725)

3.     The auditor failed to obtain sufficient and appropriate audit evidence to express an opinion on the financial statements in substantially all audit areas. (AU-C 500)

Accounting Principles Rule (1.320.001)

1.     The financial statements failed to disclose the net change in each significant type of investment. (FASB ASC 962-205-45-7)

2.     The financial statements failed to include substantially all fair value disclosures as required by FASB ASC 820.  Portions of the disclosure that were provided were inaccurate.

3.     The financial statements failed to disclose transactions with related parties and parties-in-interest. (FASB ASC 850-10-50)

4.     The financial statements failed to disclose the amount and disposition of forfeited nonvested accounts.  (FASB ASC 962-205-50-1)

Governmental Bodies, Commissions, or Other Regulatory Agencies (1.400.050)

1.     The statement of net assets available for benefits was not comparative.  (29 CFR 2520-103.10)

2.     The supplemental schedule of assets (held at end of year) was not in the format prescribed by ERISA, did not identify parties-in-interest to the plan, and did not disclose the term of participant loans.  (29 CFR 2520.103-10)

3.     The financial statements did not include the Schedule of Delinquent Participant Contributions. (29 CFR 2520-103.10)

4.     The financial statements improperly disclosed that contributions, withdrawals, expenses and fund transfers were covered by the limited-scope certification. (29 CFR 2520.103-8)

5.     As the partner responsible for peer review compliance, Mr. Schneider failed to ensure the firm complied with the requirements of the AICPA to undergo a peer review.

Agreement

In consideration of the ECA forgoing further investigation of Mr. Schneider’s conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Schneider 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 his 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 audits, reviews, or compilations with note disclosures. If he returns to performing such work, he agreed:

i.       To complete the following 21 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).

Audit Workpapers: Documenting Field Work

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Audit Workpapers: Reviewing Field Work Documentation

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Annual Accounting and Auditing Workshop

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ii.     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 accepts such an engagement. Also, no later than 30 days after the date he accepts such an engagement, 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 report should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); 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 ECA approves the reviewer 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.

iii.    To further comply with directive (e) above, submit, six months after completion of the 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 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, or 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, 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 enroll his firm in the AICPA Peer Review program within 14 days of returning to such work and to provide evidence of enrollment.

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

i.       To complete the following 24.5 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).

Audits of 401(k) Plans

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Documenting Your EBP Audit: What You Need to Know

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Employee Benefit Plan Audits: Common Misconceptions and How to Address Them

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                       ii.         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 all employee benefit plan audits he performs for one year from the date the ECA approves the reviewer. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days of the date he accepts such an engagement.

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 report should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); 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 ECA approves the reviewer 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 employee benefit plan audits during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with employee benefit plan 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 months after completion of the pre-issuance reviews, a list of the employee benefit plan audit engagements that he performed in the six-month period following the date he completed 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 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 employee benefit plan audits until a suitable work product is selected for review. If his practice changes and he is no longer involved with employee benefit plan 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 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 accepting an employee benefit plan audit, 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.

v.     To enroll his firm in the AICPA Peer Review program within 14 days of returning to such work and to provide evidence of his enrollment.

h.     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 comply with professional standards. This prohibition will be communicated to his firm’s peer review administering entity.

i.       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 comply with professional standards.

j.       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 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 comply with professional standards.

k.     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.

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

m.   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.