Part I: Provide a short synopsis of your Course Assignment #1. Provide a short description of
the following items: the facts, laws that were broken, what were the consequences and a short
analysis of whether the punishment fits the crime and your reasoning.
Part II: Provide feedback on the three responses. In your feedback to the three responses, provide your analysis of whether the punishment fits the crime and your reasoning for each response!
For my Memorandum assignment, I was assigned George Steven Burrill’s case to review. Mr. Burrill’s crime was fraudulently misappropriating more than $18 million in funds from an investor fund set up by his company, Burrill Capital Management, LLC. These funds were misappropriated as “advanced management fees” that were above and beyond the fees that the fund was required to pay. Mr. Burrill used these funds to cover his opulent lifestyle, pay his employees, and cover cash storages when other funds were not producing the return expected. Mr. Burrill was found in violation of Section 141 a and b, Section 5109, 5100 h and l, and Section 5100.5. These violations show the progression from the sent disciplinary actions taken by the CBA to his eventual license removal. Mr. Burrill’s license was revoked and he cannot practice or be employed by an investment firm, broker, or dealer. He also cannot serve as a board of director or officer for an investment company. He was ordered to pay $4,600,000 and interest of $185,000 to the SEC. Finally, he was ordered to pay $1,000,000 in a civil penalty to the SEC.
In my opinion, Mr. Burrill’s punishment is reasonable with his crime. He broke the trust of the public and his clients. Thus, he will not be able to serve as a CPA or investment broker. This shows that if trust is broken, then the consequence is severe. Also, I believe that the amount is sufficient for the crime. In a perfect world, he would be required to pay back all the money he misappropriated, but this usually never happens. So, the fact that he is now required to pay over $6 million provides a deterrent to potential fraud.
My assigned course assignment was of Chen Yi, a former corporate controller of Oplink Communication Inc. Chen Yi decided to commit fraud after coming across some private company financial information in which she subsequently bought a total of 4,740 company shares realizing a profit of $34, 678.44.
In this case Chen Yi broke section 10(b) and 14(e) of the exchange act which prohibits any manipulative or deceptive action made by a person under the rules and regulations of the commission. This law also states that it is for the protection of investors or for the public interest, as Chen Yi had insight that no other investor had making it unfair and unlawful. After being caught, Yen Chi was placed in a probation period of 3 years, CPA certificate was suspended for 90 days, had to pay a total of $73,847.25 in CBA and SEC fees, appear in person to meet when directed by the CBA, and take a 4 hour course education program and CBA course on the California Accountancy Act and regulations..
In my personal opinion, I don’t believe that the consequences placed by the CBA were fair for the severity of the case as Chen Yi violated 1/3 of the AICPA code of conduct. She showcased low level of integrity and responsibility even after serving 10 years as a CPA accountant. I think her probation period should be longer in order to make an example out of him/her and to make sure no similar incidents happen again.
My case what about the CBA disciplining Cathy Sue Fix, CPA, for several crimes which included gross negligence, misappropriation of funds, failure to notify the CBA of change of address, and failure to respond to inquiries from the CBA. The facts are that Cathy Sue Fix was negligent in her work when she did not provide timely reports to her clients, misappropriated funds when she failed to refund her clients for incomplete services, and lastly Cathy Sue Fix did not respond to any inquiries by the CBA as they received every inquiry back as “Not Deliverable To This Address”, therefore resulting in a failure of change of address to the CBA. As a result her license was disciplined and the punishment fit the crime.
Running Head: MEMORANDUM 7
TO: Jerry Schenaus
FROM: John White
RE: Disciplinary actions/License Restrictions of Richard Blecker
Good morning Sir,
Our firm is one of the best firms in the country with a distinguished rating form our clients. We cannot, therefore, afford to ruin the good name of our firm by acting unethically. Some of the CPAs in the firm have been engaging in various activities that negatively affect our firm. Serious and speedy disciplinary actions are therefore necessary for such persons. As you requested, concerning coming up with a memo discussing some corrective measures and license restrictions of some particular Certified Public Accountants, I, at this moment, present you this memo, which carries all the requested answers. Richard Blecker has been involved in various accusations by the CBAs, leading to his CPA Certificate revocation.
Severe disciplinary actions are necessary for such CPA professionals. Richard Blecker was involved in various efforts such as lack of compliance with the CBA regulations, operating under an expired certificate, and failing to discharge his duties as required by the law ethically. This fact is one cause of discipline for this accountant. Another reason for the punishment was his lack of corporation with the CBA, primarily unethical conduct for a CPA professional.
An investigation in the matter concerning the violation of the CPA rules was conducted. The team promulgating the discipline first locked into details the conduct of the accused. This move was the first step to ascertain if the accused professional had a history of any other unethical cases. This action is a good gesture that decisions about any form of acquisitions are not made in a hurry. In-depth investigations give room for more discoveries and the right cause of the decision.
The disciplinary team also took the action of suspending the CPA license issued to the CPA profession. This action was to stop him from performing any duties related to the CPA profession. This disciplinary action was to act as a warning to other CPA professionals who might have the intention of perfuming CPA violations in the firm.
As part of disciplinary actions, the professional was barred from acting in a CPA’s capacity for any client. He would remain under watch for some time before he could be allowed to work again as a CPA in the firm. He could not transact of the act on behalf of the firm or use the firm’s name to claim that he is an accountant. This move discourages any form of unethical actions among the CPAs in our firm (Duska, Duska & Kury, 2018).
The California Board of Accountancy has a role in ensuring that only certified CPAs are operational. The board does this to protect the clients and consumers against illegal accountants who operate against California’s established professional standards. In the case of Richard Blecker, the first case taken by the CBA was to file a lawsuit against Richard. The board was seeking to revoke the CPA license issued to Richard Blecker for failing to adhere to the rigid CPA rules and guidelines. The board revoked the license, and the action was bound to be recorded in the history of the CPA with the CBA.
The CPA was also fined an amount of $7,000, which would count for the investigation cost. This action by the CBA would ensure that the CPA covers the expenses taken by the CBA and the issuance of a reinstated license. This action also acted as a warning to other CPAs who might not be operating under the rigid CBA guidelines.
The CBA also ordered the CPA to present his pocket license is issued. The CPA was to also present his wall certificate to the board. These actions would ensure that the professional would not, in any circumstance, operate as a certified public accountant. He had nothing to prove that he was an accountant in California (Morris & Mintz, 2013).
The CBA also stated that it would treat all the future applications for a new license as a petition. This action by the CBA was also another form of ensuring that the CPA proves to the board that he can execute his duties effectually without violating any of the board guidelines. The CPA should act according to California laws and demonstrate that he would not exploit the consumers in this State.
The CPA made the following violations:
· Section 5050 of the code states that:
No person will engage in the practice of Public accountancy without a valid permit issued by CBA.
However, the CPA violated this section for his license had expired.
· Section 5060 of the code states that:
No one or any firm is authorized to operate in the public accountancy under any false or unregistered name.
The CPA was inviolate of this law by using the name of a false company.
· Section 5100 of the code states that”
The CPA was due to disciplinary actions for failing to comply with a CBA citation under the circumstances stated under the section.
However, the CPA violated the issued citation, for he failed to respond to the CBA’s letters requiring him to comply with the code of regulations. Under this section, he also was unable to comply with the CBA directives requiring knowing details of his actions, and he also never submitted a peer review reporting as required by the board (Miller, 2016).
Under this section also, the CPA committed various repeated negligent acts. The audit reports he prepared and issued did not comply with the auditor’s CBA requirement and management responsibility concerning financial statements. The CPA failed to also abide by the set professional standards. Concerning code 5062 also, the CPA was unable to provide a report conforming to his professional standards. He fails to meet the expected professional standards as per the guidelines of the CBA.
The laws that were violated by Richard are in place to ensure that they regulate the CPAs’ ethical conduct. The rules act as a guideline on how one should behave and how one could avoid any unethical practice. The laws ensure that the CPA does not exploit members of the society and that such corrupt vices are cleared from society. The community becomes a better place to live with minimal cases of fraud and theft by pretense.
I was the CPA I would ensure that I follow all the required rules by the CBA. I would deal ethically with my clients to avoid ruining my name as a CPA. I would also ensure that I set an example to the other entire CPA professional by dealing transparently and lawfully toward my clients. I would ensure that I make a change to my society by avoidi9ng actions that would lead to my prosecution and suspension as a CPA Professional.
Duska, R. F., Duska, B. S., & Kury, K. W. (2018). Accounting ethics. Wiley-Blackwell.
Miller, R. L. (2016). Business Law: Text & cases – Commercial law for accountants. Cengage Learning.
Morris, R., & Mintz, S. (2013). Ethical obligations and decision-making in accounting: Text and cases. McGraw-Hill Education.
Writing Assignment #1
Facts: You are a new Staff Accountant at a mid-size CPA firm. Your direct Manager has asked you to prepare a short memo discussing Disciplinary Actions/License Restrictions of some particular CPAs. Please follow our firm’s format, as provided below.
Your paper should be double spaced; 12 font; Time New Roman font and 2-2.5 pages double spaced. Don’t worry if the Rules section causes you paper to be over 2.5 pages. Remember this is a memorandum to a Manager level CPA, so the tone should fit accordingly.
1. At the bottom of this document there is a list of CPAs disciplined by the California Board of Accountancy. I have assigned each student a specific person. (YOU WILL BE DOING RICHARD BLECKER)
2. Use this link to find your assigned CPA. Use the search function in the link. Once you go to the website, you must click on “Clear” before you enter the CPA’S name.
3. From the link attached click on the Related Documents: Accusation and Decision. I provided this link as an example Accusation and Decision
4. Use your CPA’s Accusation and Decision to complete the assignment.
5. Please submit your assignment by Saturday August 29, 2020 at 11:59PM.
TO: Jerry Schnaus
FROM: Use your name
DATE: December 1, 2020
Good morning Mr./Mrs.:
Provide a brief fact summary of the cause of discipline. In a couple of paragraphs provide me a detail of the actions taken by the CPA promulgating such discipline.
List all the actions the CBA took. Provided the exact actions taken against the CPA.
List the violations the CPA was charged with and a brief description of the law that was violated. These will be the laws and regulations the CPA violated. List the Section of the statute and the actual statute.
Example: Section5063 of the Code states:
(a) A licensee shall report to the board in writing of the occurrence of any of the following events occurring on or after January 1, 1997, within 30 days of the date the licensee has knowledge of these events: ·
(1) The conviction of the licensee of any of the following:
(A) A felony or (B) Any crime related to the qualifications, functions, or duties of a public accountant or certified public accountant, or to acts or activities in the course and scope of the practice of public accountancy.
What do you think is the reason the laws the CPA violated are in place? This needs to be analytical. Let me know how the laws better society.
What would you do differently? Limit this response to a paragraph.