NEVADA STATE BOARD OF ACCOUNTANCY Minutes July 18, 2001

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1 NEVADA STATE BOARD OF ACCOUNTANCY Minutes July 18, 2001 An open meeting of the Nevada State Board of Accountancy was called to order at 9:00 A.M. by President Sydney Wickliffe, on Wednesday, July 18, 2001 at 3773 Howard Hughes Pkwy, Suite 490N, Las Vegas, NV. Board Members Present: Sydney H. Wickliffe Michael J. Small Karl M. Brunner Raja Mourey Ronald L. Smith David W. Turner Board Members Absent: Donald L. Muckel Board Staff Present: N. Johanna Bravo, Executive Director Todd Russell, Counsel Viki A. Windfeldt, Assistant Director Agenda Item 1: Approval of June 13, 2001 Board Meeting Minutes Motion was made, seconded and carried to approve the June 13, 2001 Board Meeting Minutes as amended. Agenda Item 2: Grievance Report and Grievance Matters. Motion was made, seconded and carried to go into closed session to discuss grievance matters. Upon resumption of the open session, motion was made, seconded and carried to accept the signed stipulated agreement in complaint matter S-00-6, Letha Rupert. The provisions provide for a letter of reprimand, payment of a $250 fine and $300 attorney s fees and costs within 30 days, board recommendation that Ms. Rupert provide an engagement letter for each client. The decision will be published. Mike Small as liaison abstained from the vote. Motion was made, seconded and carried to close complaint matter S-01-4 based on lack of probable cause. David Turner assigned as liaison in complaint matter S Motion was made, seconded and carried to close non-licensee grievance matter SS-01-9, Paul Y. Jenson based on compliance. Agenda Item 3: Report of Counsel Todd Russell did not have items to report on.

2 Agenda Item 4: Applications for Certification: Motion was made, seconded and carried to approve the applications for CPA Certification for the following individuals: Stuart Barney Mark Borel Jack Christensen Marilynn Clyburn Sarah Coverely Lisa Gann Scott London Katina Peters Anthony Vickers Ronald Wargo Motion was made, seconded and carried to approve the application for CPA Certification for Christopher Beard based on the results of the individual review of work experience as provided by John Rhodes. Motion was made, seconded and carried to move forward with a full board hearing concerning the licensure request of Marty Carraher. Lisa Dennis came forward to discuss her application for CPA Certification in Nevada. The board discussed Ms. Dennis work experience and provided direction in obtaining verifiable documentation. The board discussed the issue of using the Supplemental CPE Bridge courses toward the required exposure to the attest function. The board determined that an individual must receive an all Yes answered certificate of attest experience form based on the individual being exposed to the various functions of attest as provided within the form. The supplemental CPE Bridge courses are only to be used for lowering the actual attest and audit hour requirement. Agenda Item 5: Request for Inactive/Retired Status This item was removed from the agenda Agenda Item 6: Review of Income & Expense Statement. The board reviewed the Income & Expense Statement for the month of June Agenda Item 7: Bills Paid since last board meeting. Motion was made, seconded and carried to approve the bills paid in June by check numbers 4661 through 4713 totaling $46, Agenda Item 8: Approval of Temporary Permits: Motion was made, seconded and carried to ratify the following temporary permits: A. Timothy Johnson, Virchow Krause & Co. B. Edmond Sahm, Reid Sahm Isaacs & Schmeizien 2

3 C. Nyuk Ling, Nyuk Ling, CPA D. Thomas Rhoda, Thomas Rhoda & Assoc. 3

4 Agenda Item 9: Executive Director Report. Executive Director provided a variety of informational items to the board. Executive Director stated that an individual who has been licensed since 1979 in California is interested in becoming a Nevada CPA, however the individual does not have a degree. The individual has taken the CLEP exam that has been approved by California as meeting the education requirement. Ms. Bravo requested direction of the board in responding to the individual. The board discussed the issue and indicated that the individual should apply and provide all information for licensure. Executive Director indicated that conversations have taken place between the University of Nevada Reno and the board staff regarding out of state proctoring requirements. Ms. Bravo provided some background as to the policies and procedures for proctoring another state s candidate. The location for proctoring out of state candidates has been set for Las Vegas for the November 2001 examination. UNR has developed a program to accept Japanese students into the masters program. As part of the marketing of the program, the University has promised these students that they can take the CPA examination in Reno. Board staff indicated that we could possibly accommodate those students for the May Ms. Bravo wanted the board to be advised of the reasons for proctoring out of state candidates at the Las Vegas site only and the circumstances surrounding the Universities request. Agenda Item 10: Request course consideration for 150-hour requirement. The board reviewed the request for course consideration for the 150-hour requirement. Motion was made, seconded and carried to approve the Financial Management FIN 406, 466, and 516 courses toward the accounting elective requirement for Par Sandquist. Mr. Sandquist is responsible for obtaining the required Intermediate II and III courses to satisfy the Financial Accounting portion of the 150-hour requirement. Agenda Item 11: Public Comment Regarding Consideration of Nevada Society of CPAs proposal for Peer Review Program 10:00AM The Board of Accountancy conducted a public comment session to consider the Nevada Society of CPAs proposal to conduct a Peer Review Program for the Board. A number of individuals came forward to provide the board with information relating to the proposal. Dennis Meservy and Dianne Ruud representing the Nevada Society of CPAs summarized the proposal for Peer Review. Meservy indicated that after conducting a poll of their membership it appears 80% are in favor of the proposal. Clarification was made, that the Society does conduct the Peer Review programs for both Wyoming and Utah. Meservy added that the Peer Review requirement would assist CPA s in remaining current with the standards of practice. 4

5 Agenda Item 11 Continued Brenda Stout, CPA and Executive Director for the Las Vegas Chamber of Commerce indicated that a similar proposal was passed in Florida and that based on the adoption of the proposal, small firms had to drop their small client service engagements because they could not afford the cost of a peer review. Ms. Stout indicated that small firms often service small clients that cannot afford the cost of the peer review to be passed on to them. Kelly Booth, CPA, Sole Proprietor has an occasional compilation which will effect his current business. Mr. Booth requested clarification of fees regarding the administrative fee of $75, $450 for compilation etc. The Society responded that they are currently at the midway cost scale compared to other state societies. Todd Russell, Legal Counsel for the Board of Accountancy summarized the issues surrounding state board authority to delegate such a program to a trade organization. Richard Hanseen, CPA, Sole Practitioner, and past Chair to the Society indicated that he supports the concept of a peer review program and that he currently has peer reviews done. However, indicated that the program must be supervised by the Board. Mr. Hanseen does not support the concept that the NSCPA should supervise or administer the entire peer review program. In addition, Mr. Hanseen summarized issues surrounding an individual and the lack of response on behalf of the NSCPA. Carol Stone, CPA, Sole Practitioner, indicated that she has had a peer review conducted that cost over $11,000. Ms. Stone stated that issues came up involving the Peer Reviewer such as independence, GAAP, etc. Ms. Stone stated that she is not a member of the NSCPA and the AICPA because she cannot afford the cost of peer review. Ms. Stone suggested the Society require a peer review of their membership and not place the burden on the small practitioner. The current program offers the CPA a choice. Ms. Stout added additional comments that there are many small practitioners that offer their services to Not for Profit agencies. The Not for Profit agencies depend on the audits but cannot afford the big firm prices who usually send the least experienced individual to the engagement. Bruce Gamett, CPA, Sole Practitioner, questioned the board regarding problems or complaints received for work deficiency that culminated in disciplinary action. No evidence has been established that a Peer Review will identify problem firms. The Board sets minimum entry-level requirements. Mr. Gamett indicated that searching for the Ideal is a mistake. Ronald Smith, Board Member, indicated that he is opposed to the proposal. The proposal makes it difficult for the public to find different grades of CPAs. Mr. Smith stated that the public is sophisticated and is fully aware of the differences between CPA s and what they pay for. Mr. Smith stated that the minimum requirement that includes the choice of the PEP program and the disciplinary measures are sufficient. Mr. Smith answered Mr. Gamett s question regarding the amount of board discipline from work deficiency and stated he has only seen possibly 1 complaint in 6 years. The proposal s cost is extreme and it will affect the public and gradation is good. 5

6 Agenda Item 11 Continued Karl Brunner, Board Member, questioned whether the current PEP program is sufficient. Mr. Brunner expressed concerns surrounding those complaints or work deficiencies that are not being provided to the board. Mr. Brunner is not satisfied that the PEP program will find the errors a peer review might find. Mr. Gamett indicated that the 3 legged stool of exam, experience, and education is the same as the stool of PEP, CPE, and discipline. There is nothing that can be done to assure everyone is at the same level. The public needs gradation. Raja Mourey, Board Member, summarized the opposition and stated that the cost benefit will be passed to the consumer. The current proposal does not seem to be sufficient. Richard Layton, CPA, summarized the statistics based on the change of the Statement of Cash Flows. The type of CPAs and the work being done has not significantly changed over the years. 10 years ago Mr. Layton was opposed to the cost of a peer review, however he is now in favor of a quality peer review. In addition, a firm could actually save money from the tips provided from the peer review. Glen Goodnough, CPA with Stewart Archibald Barney, is in favor of the peer review proposal for individuals who conduct audit or reviews. Mr. Goodnough indicated that what is measured is improved. In favor of a proactive approach. Board Member Mike Small indicated he was in favor of researching the matter further by identifying a minimum standard to set the bar at an appropriate level. Direction was provided to staff to research a possible expansion of the boards current PEP program. Staff was further directed to contact John Rhodes to establish steps for improvement and to place on the agenda for the August board meeting for discussion. Staff was also requested to provide information regarding procedures of other states of comparable size and licensee population. Agenda Item 12: Request approval of fictitious name: A Accounting Firm The board reviewed the request for use of the fictitious name A Accounting Firm. The board discussed the use of fictitious names. Motion was made, seconded and carried to approve the use of A Accounting Firm by Scott W. Waite. Agenda Item 13: Approval of the 2001 Review of Certificates of Attest Experience as provided by John Rhodes. Motion was made, seconded and carried to approve the 2001 Review of Certificates of Attest Experience as provided by John Rhodes. 6

7 Agenda Item 14: Full Board Hearing Letha Rupert This item was removed from the agenda. Agenda Item 15: Approval of Proposed Regulation Amendments The board reviewed the proposed regulation amendments as summarized by Todd Russell. The board directed staff to make the proper notification of public hearing for adoption of the regulation language. Agenda Item 16: Recommendation of Hearing Officer Regarding Revocation due to Non-Payment of Licensure Fees and Non-Compliance with CPE Requirements Todd Russell summarized the recommendation of the Hearing Officer, Donald Muckel, for the Board regarding the revocations for violation of CPE requirements and non-payment of licensure fees. Motion was made, seconded and carried to approve the recommendation of the Hearing Officer to revoke CPA Certificates for non-payment of licensure fees and non-compliance with CPE requirements for the following individuals: A. David Barr B. Laura Bunch C. Jeffrey Dahl D. Gary Farnsworth E. Tristan Kaatze F. Lynne Kindle G. Ina Levitzky H. Gregory Moser I. James Pace J. Greg Stamberger K. Mark Thompson L. William Woodring Motion was made, seconded and carried to dismiss the following complaints for Non- Payment of 2001 license fees based on voluntary surrender of their CPA Certificate: A. Mona Cunanan B. Kenneth Garelick C. Yossi Jakubovits D. Chris McCormack E. Mark Schreiner F. Nancy Vandebeken G. S. Vanveldhuizen H. Larry Wilis I. Nazzi Zola J. Sharon Swander Motion was made, seconded and carried to dismiss the following complaints for Non- Payment of 2001 license fees based on compliance: A. Donna Barrett B. Glenn Day C. George Folsom D. Robert Martindale E. James Schefley F. Mark Vetter G. Robert Evans Motion was made, seconded and carried to dismiss the following complaints for Non- Payment of 2001 license fees based on compliance and subject to payment of attorney s fees and costs: A. Archie Granata B. Louis Musso C. David Williams 7

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9 Agenda Item 17: Recommendation of Hearing Officer Regarding Non-Response to CPE Administrative Complaint Procedure: Todd Russell summarized the recommendation of the Hearing Officer, Donald Muckel, for the Board regarding non-response to the CPE Administrative Complaint Procedure. Motion was made, seconded and carried to accept the recommendation of the hearing officer, Donald Muckel in the complaint matter against Jamie Cook. It is the decision of the board that Mr. Cook be placed on probation until January 30, 2002, at which time he must provide the board with continuing education hours and evidence of completion to satisfy the 2001 CPE requirement. Mr. Cook is further required to satisfy the outstanding CPE shortage for 2000 by August 31, 2001 and provide backup documents. Payment of a civil penalty of $300, attorney s fees of $250 and hearing costs of $35 is also assessed. Mr. Cooks certificate will be revoked if any of the provisions are not met within the specified time lines. Motion was made, seconded and carried to accept the recommendation of Hearing Officer, Donald Muckel, in the complaint against S. Gordon Simmonds. Mr. Simmonds CPA Certificate will be revoked based on his non-response to the CPE Administrative Complaint Procedure. Upon request for re-licensure, Mr. Simmonds must pay $150 penalty, $250 Attorney Fees and $35 Court Reporter Fee. Agenda Item 18: Approval of May 2001 CPA Examination Grades as provided by AICPA Motion was made, seconded and carried to approve the May 2001 CPA Examination Grades as provided by AICPA. Agenda Item 19: President s Report No items were discussed under this agenda item. Agenda Item 20: New Business/Public Comment Mike Moore 11:00 AM Mike Moore came before the board to discuss the possibilities of a Drug & Alcohol Rehabilitation program for CPAs. Mr. Moore indicated that he is an alcoholic in recovery and there are probably more CPAs with similar issues. Mr. Moore has looked at programs in Texas that assist professionals with alcohol or drug related problems. Mr. Moore requested the board allow him to send informational brochures regarding the program with some of the mass mailings the board sends to licensees. Todd Russell indicated that a program of this nature would be more properly considered by the Nevada Society of CPAs. The board summarized the role of the government agency and indicated that there would be a conflict of interest. The board determined including material of this nature in State Board mailings could not be provided. Karl Brunner provided the board with information relating to the computerized examination process. Specifically conditioned status, parts available and the scheduling of the exam. 9