BOARD OF ACCOUNTANCY MINUTES APRIL 25, 2003 LANDON STATE OFFICE BULIDING, ROOM 108 TOPEKA, KS 1. ADMINISTRATIVE MATTERS: Adley Johnson, CPA, Chair, called the meeting to order. Board members in attendance were Mr. Johnson; Paul Allen, CPA; Tim Mitchell, CPA; Rob Schendel, Esq.; Kent Smoll, CPA; and Gary Summers, CPA. Also in attendance were Susan Somers, Executive Director of the Board; Mary Feighny, Assistant Attorney General and General Counsel to the Board; Steve Phillips, Assistant Attorney General and Disciplinary Counsel to the Board; Joyce Schartz, Public Accountants Association; and T. C. Anderson, Executive Director of the Kansas Society of CPAs. B. CONSENT CALENDAR: The Board reviewed the minutes of the January 17 and 22, 2003 meetings; list of reciprocity certificates/permits to practice/practice by notification; registrations of new/reorganized practice units; and the third quarter receipts and expenditures. Mr. Smoll moved and Mr. Summers seconded to approve. Upon a vote, the motion carried. 2. CPA EXAM MATTERS: A. The Board reviewed the May 2003 exam candidate list and exam status report. Mr. Smoll moved and Mr. Mitchell seconded to approve. Upon a vote, the motion carried. B. Ms. Somers gave a short report on the status of the computerized exam, which will launch April 5, 2004. She indicated that there was a web site that was very useful to the candidates about the computerized exam at www.cpaexam.org and that the simulation tutorials would be available shortly. C. The Board reviewed the proposed cost revision to its contract with CPA Examination Services for the administration of the exam. The board noted that although the cost charged to the candidate would be more than is currently charged, it would not be cost-effective for the Board to take back the responsibility of administering the exam. Costs for creating a database, hiring another employee, and other costs associated with the examination would be more than the Board could handle. Mr. Allen moved and Mr. Summers seconded to extend the current contract with CPA Examination services for the administration of the computerized exam for one year as proposed. Upon a vote, the motion carried.
3. CPE/PEER REVIEW/PERMITS TO PRACTICE/PRACTICE BY NOTIFICATION/RECIPROCITY/FIRM MATTERS: A. The Board reviewed the list of Peer Reviews due or in process. Ms. Somers pointed out that there was one person who needed an extension of his due date, and four others whose Peer Review would be coming due before the Board s next meeting. Mr. Smoll moved and Mr. Schendel seconded to extend the due date of William Mixson s Peer Review to June 16, 2003. Upon a vote, the motion carried. Mr. Schendel then moved and Mr. Summers seconded, that for the four firms who complied with their due date before the Board s next meeting, their due dates would be extended to June 16, 2003. If these firms do not comply with their due dates, then they are to be issued a Summary Order of Suspension of their firm registrations or permits to practice (whichever is applicable), plus a $250 fine, with the suspension being stayed until July 15, 2003, if the firm provided either a Peer Review letter of completion, or a letter stating that the Peer Review was in process and paid the fine. Upon a vote, the motion carried. The Board discussed the late permit renewal/peer review due date of Jane Zieha. Ms. Somers reported that she was to renew her permit July 1, 2002; however, she did not send in her renewal until February 18, 2003. On her permit application she indicated that she had been issuing audits, compilations and tax returns and that her last audit was issued June 14, 2002. She is scheduled to have a Peer Review completed by August 31, 2003. After review, the Board instructed Ms. Somers to write her a letter acknowledging her Peer Review due date, and to advise her that if she is providing any service as a CPA, she needs to have a valid permit to practice. Also, since she is a sole practitioner subject to Peer Review, she is to register as a firm with the Board. B. Ms. Somers reported that the 2003 permit renewal applications would be mailed May 30, 2003. She also reported that due to the high cost of postage, a second mailing would not be made. C. Ms. Somers reported that a CPA from Oklahoma, Derrel White, wanted to register with the Board via Practice by Notification. His firm, however, was a new firm, and had not yet undergone Peer Review. The firm s Peer Review is due March 31, 2004. Ms. Somers pointed out that the practice by notification law requires that proof of completion of Peer Review be provided and that she didn t believe that he would qualify under the notification law. She did, however, state that she believed he could apply for a certificate by reciprocity and then a permit to practice, which could be issued conditionally upon his providing proof of completion of Peer Review on or before his Peer Review due date. The Board agreed and instructed Ms. Somers to write him a letter advising him of their decision. 2
D. The Board reviewed a letter from Stephany Applegate regarding release of client records in electronic format. The Board instructed Ms. Somers to write her a letter and inform her that the Board of Accountancy s position on client records is the same as the AICPA; i.e., that if the client requests their information in an electronic format, and it exists in that format, the CPA is obligated to provide it in the format in which it s requested. 4. DISCIPLINARY MATTERS: A. 10:00 TERRANCE KOHL REQUEST FOR APPEAL OF SUMMARY ORDER. The Board reviewed a request from Mr. Kohl for an extension of his appeal to the Board s next meeting. His letter stated that he was taking his wife to South Carolina and would not be back until some time in May. Ms. Feighny reported that Mr. Anderson had informed her that Mr. Kohl s wife was terminally ill. Upon the motion of Mr. Allen, and seconded by Mr. Mitchell, Mr. Kohl s request for an extension to the Board s next meeting to be held in June was granted, with no further extensions. Upon a vote, the motion carried. B. ROLF & PERRIN, KIMBERLY ALLEN & HARRY JOHNSON CONSENT AGREEMENT HEARING: Mr. Phillips presented Consent Agreements for Rolf & Perrin, Kimberly Allen and Harry Johnson for failing to register as a firm, and failure to obtain a permit to practice in Kansas while practicing as a CPA. The firm of Rolf & Perrin moved its office from Missouri to Kansas in October 2002. The firm failed to notify the Kansas Board of its office in Kansas. In January of 2003, Kimberly Allen applied for a permit to practice in Kansas by reciprocity. Upon checking the information of her employer, it was determined that the firm had been practicing in Kansas without being registered. Upon further checking information contained on the firm s web page, it was determined that Kimberly Allen and Harry Johnson were practicing in the State without having permits to practice. As a result, the investigative Board member in this case presented Consent Agreements for the firm and the individual CPAs, which entailed a public censure and a fine of $500 for the firm, and public censure and fines of $200 for Ms. Allen and Mr. Johnson. It is the Board s policy to have parties entering into Consent Agreements to appear before the Board. Mr. Rolf admitted that they had neglected to register as a firm with the Board. He also expressed concern about how the discipline would forever be listed on the Board s web page under Disciplinary Actions. Mr. Schendel moved and Mr. Allen seconded to approve the Consent Agreement of public censure and a fine of $500 for the firm. Upon a vote, the motion carried. Ms. Allen stated to the Board that she had been practicing in Kansas, even before the firm moved to Kansas, without having a permit. She stated that 3
she had received her permit to practice in Missouri in 1999 and had been with the firm since that time. Mr. Smoll expressed concern, in her case, that she is a young CPA and that listing this discipline on the Board s web page might be detrimental to her for the rest of her career. Ms. Feighny advised that the Board could agree not to publish the Consent Agreement on its web page, but that it is discipline and would be disclosed should any one ever ask. Mr. Mitchell stated that it should be the responsibility on the part of the firm to educate their employees to be sure that they are informed about the accountancy laws and are properly licensed in the states in which they do business. Mr. Allen moved and Mr. Mitchell seconded to accept the Consent Agreement of Kimberly Allen, but to strike the language pertaining to publishing the censure on the Board s web site. Upon a vote, the motion carried. C. HARRY JOHNSON: Mr. Johnson admitted that he had been practicing in Kansas for quite some time without a permit to practice, but that he was in the process of obtaining his certificate and permit. All he was lacking was passage of the AICPA ethics exam, which should be eminent. He stated that he had taken an ethics exam in Missouri in the late 1970 s, but that Missouri could not produce evidence of such; therefore, under Kansas law, he was required to take the AICPA ethics exam. Mr. Schendel moved and Mr. Summers seconded to affirm the Consent Agreement. Upon a vote, the motion carried. D. MICHAEL LEWIS: Mr. Phillips reported that Michael Lewis, a Topeka CPA, had voluntarily agreed to surrender his CPA certificate and permit to practice as a result of disciplinary action taken against him by the Supreme Court indefinitely suspending his license to practice law for committing fraudulent acts. Mr. Phillips informed the Board that Mr. Lewis indicated that he didn t have his certificate and permit any longer and that an affidavit had been sent to Mr. Lewis for him to sign to that effect. The Board instructed Mr. Phillips that in the event Mr. Lewis did not sign the affidavit, he is to inform Mr. Lewis that the surrender agreement would be rendered void and his certificate and permit would be revoked permanently if he doesn t sign the affidavit or produce the certificates. 5. LEGISLATIVE/REGULATION MATTERS: A. Mr. Mitchell reported that the legislation presented this legislative session didn t go the way that the Board had hoped. He reported that two of the three bills were put on the Consent Calendar, then they were pulled off the Consent Calendar, and that after resubmitting the legislation, all that remained was a bill that provided for the computerized exam and fees for late firm registrations and examination application processing by the Board. The Governor had signed the bill by the date of the Board meeting. The Board expressed disappointment over the defeat of investigative subpoena power and recoupment of fees incurred in an investigation. The Board members agreed that this legislation should be pursued, as it was necessary to carry out the Board s disciplinary duties. 4
B. Proposed Regulation amendments pertaining to the computerized exam and other necessary amendments were provided to the Board. Mr. Allen suggested that the language contained in K.A.R. 74-1-8, Cheating, be broadened to include penalties for those who don t obey the rules and procedures of the site administrator. Upon motion of Mr. Smoll, seconded by Mr. Schendel, the Board authorized Ms. Feighny and Ms. Somers to begin the regulation approval process. Upon a vote, the motion carried. 6. OTHER: A. Future Board meetings were scheduled for: June 20, July 25 and August 22, 2003 B. Mr. Smoll stated that the Nebraska Board was soliciting recommendations for Kathy Smith as a NASBA Director at Large. After discussion, the Board felt that it would give its support to Phil Gleason, a CPA from Minnesota, previously the Central Regional Director, for Director at Large. 7. ADJOURN: There being no further business to come before the Board, upon motion of Mr. Schendel and seconded by Mr. Mitchell, the meeting was adjourned. /s/_susan L. Somers Susan L. Somers, Executive Director 5