MINUTES. Texas State Board of Public Accountancy September 20, 2012

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1 MINUTES Texas State Board of Public Accountancy September 20, 2012 The Texas State Board of Public Accountancy met from 10:00 a.m. until 10:33 a.m. on September 20, 2012, at 333 Guadalupe, Tower 3, Suite 900, Austin, Texas A notice of this meeting containing all items on the agenda was filed with the office of the Secretary of State at 3:28 p.m. on September 7, (TRD # ) (ATTACHMENT 1) Board Members Present A. Carlos Barrera, CPA Presiding Officer J. Coalter Baker, CPA John R. Broaddus, CPA Jonathan B. Cluck, Esq. Rocky L. Duckworth, CPA James C. Flagg, PhD, CPA Assistant Presiding Officer Everett R. Ferguson, CPA Jon R. Keeney David L. King, CPA Treasurer Maribess L. Miller, CPA Thomas G. Prothro, CPA Secretary Catherine J. Rodewald Executive Committee Member-at-Large John W. Steinberg, CFE Board Members Absent Evelyn M. Martinez, Esq. Steve D. Peña, CPA excused Others Present John Furge, CPA Frank McElroy, Esq. Robert Owen, CPA Lea Ann Schnarr Erin Bigler Ismael Castillo Karen Davis Alan Hermanson, CPA Donna Hiller Jean Keith Virginia Moher, Esq., CPA Patrick Myers, Esq. Marisa Rios April Serrano Barbara Stooksberry William Treacy I. Mr. Barrera, presiding officer, called the meeting to order at 10:00 a.m. Mr. King moved to excuse the absence of Mr. Peña from the Board meeting. Mr. Steinberg seconded the motion, and it passed unanimously. At this time, Mr. Barrera, presented 10-year service award plaques to April Serrano and Patrick Myers. II. III. Mr. Steinberg moved to approve the July 19, 2012, Board meeting minutes as amended. Mr. King seconded the motion, and it passed unanimously. Mr. Barrera, Executive Committee chair, reported on the September 19, 2012, committee meeting. Members Present A. Carlos Barrera, CPA James C. Flagg, PhD, CPA David L. King, CPA Thomas G. Prothro, CPA Catherine J. Rodewald Others Present John Furge, CPA Alan Hermanson, CPA William Treacy 1

2 A. Dr. Flagg moved to approve the Board s financial statements as presented. Mr. Keeney seconded the motion, and it passed unanimously. B. Mr. Barrera requested that Board members indicate meeting date preferences for CY 2013 so the calendar could be set. C. Mr. Barrera reviewed NASBA dates of interest. D. Mr. King moved to approve the amendments to the professional service contracts listed below. Mr. Prothro seconded the motion, and it passed unanimously. FY 2012 Amendments: 1. John Mason Andres, CPA 9/1/11 8/31/12 $3,300 (increase contract by $2,100 from $16,378 to $18,478 for fees) (increase contract by $1,200 from $1,270 to $2,470 for travel) 2. Gary S. Hoffman, CPA 9/1/11 8/31/12 $3,000 (increase contract by $2,000 from $16,378 to $18,378 for fees) (increase contract by $1,000 from $1,270 to $2,270 for travel) 3. Rebecca J. Teague, CPA 9/1/11 8/31/12 $2,300 (increase contract by $2,300 from $16,378 to $18,678 for fees) 4. Padgett, Stratemann, & Co. 9/1/11 8/31/12 $40,000 (increase contract by $40,000 from $130,000 to $170,000 for travel) Mr. King moved to approve the professional service contracts listed below. Mr. Prothro seconded the motion, and it passed unanimously. FY 2013: Behavioral Enforcement Committee consultants: On an as-needed basis budget of $25,000 Technical Standards Review Committee consultants: 1. Benjamin Gomez, CPA 9/1/12 8/31/13 $10, Edward H. Gowett, CPA 9/1/12 8/31/13 $10, Padgett, Stratemann, & Co. 9/1/12 8/31/13 $90, Harper & Pearson 9/1/12 8/31/13 $90,000 Peer Review Committee consultants: 1. John Mason Andres, CPA 9/1/12 8/31/13 $25, Gary S. Hoffman, CPA 9/1/12 8/31/13 $27, Rebecca J. Teague, CPA 9/1/12 8/31/13 $18,648 Office of the Attorney General 9/1/12 8/31/13 $30,000 State Office of Administrative Hearings: 9/1/12 8/31/13 $50,000 Internal Audit 9/1/12 8/31/13 $25,000 Peer Assistance 9/1/12 8/31/13 $90,000 Independent consultant contract (SOAH litigation): Mary Alice Boehm-McKaughan 9/1/12 8/31/13 $90,000 2

3 Sponsor Review Program consultants: Master Reviewers: Ron Huntsman 9/1/12 8/31/13 $150.00/hour Mitch Sutherlin 9/1/12 8/31/13 $150.00/hour Reviewers: Kathy Abshire 9/1/12 8/31/13 $125.00/hour Richard Baland 9/1/12 8/31/13 $125.00/hour Michael Burnett 9/1/12 8/31/13 $125.00/hour Manuel Cavazos 9/1/12 8/31/13 $125.00/hour David Crumbaugh 9/1/12 8/31/13 $125.00/hour Helen Cruz-Diaz 9/1/12 8/31/13 $125.00/hour Pamela Evans 9/1/12 8/31/13 $125.00/hour Jennifer Fadal 9/1/12 8/31/13 $125.00/hour Alice Jennings 9/1/12 8/31/13 $125.00/hour John Jones 9/1/12 8/31/12 $125.00/hour Connie Kelly 9/1/12 8/31/13 $125.00/hour Tim Madrigal 9/1/12 8/31/13 $125.00/hour Michael McMennamy 9/1/12 8/31/13 $125.00/hour James Molduene 9/1/12 8/31/13 $125.00/hour Ray Newman 9/1/12 8/31/13 $125.00/hour Timothy Prebe 9/1/12 8/31/13 $125.00/hour Darlene Pulliam 9/1/12 8/31/13 $125.00/hour Janet Ann Smith 9/1/12 8/31/13 $125.00/hour Mark Turner 9/1/12 8/31/13 $125.00/hour Neal Van Zante 9/1/12 8/31/13 $125.00/hour Alva Winston 9/1/12 8/31/13 $125.00/hour Steve Wright 9/1/12 8/31/13 $125.00/hour IV. E. Mr. Barrera reported that the Executive Committee went into executive session pursuant to Section of the Opens Meetings Act to discuss the duties of the executive director. Mr. Prothro, Rules Committee chair, reported on the September 19, 2012, committee meeting. Members Present J. Coalter Baker, CPA A. Carlos Barrera, CPA ex officio Rocky L. Duckworth, CPA Thomas G. Prothro, CPA Catherine J. Rodewald Member Absent Maribess L. Miller, CPA Others Present Everett Ferguson, CPA John Furge, CPA Tim La Frey, Esq., CPA Robert Owen, CPA Mark Vane, Esq. Roel Cantu Karen Davis Donna Hiller Jean Keith Marisa Rios April Serrano Barbara Stooksberry William Treacy A. Mr. Prothro reported that the committee had reviewed Chapter 523 (Continuing Professional Education) and will continue its review of the chapter at its November 7, 2012, meeting. B. Mr. Prothro reported that the committee had discussed the exposure draft of the Professional Ethics Executive Committee, the exposure draft of the AICPA Accounting and Review Services Committee and draft comment letter by NASBA. The committee expressed agreement with NASBA s draft comment letter to the exposure drafts and will determine in November there is a need for the Board to offer its own comments on the proposed exposure drafts. C. The committee scheduled its next meeting for November 7, 2012, at 9:30 a.m. 3

4 V. Dr. Flagg, Scholarship Program Advisory Committee member, reported on the July 24, 2012, committee meeting. Members Present Walter Davis, CPA Roselyn Morris, PhD, CPA Kamala Raghavan (for Sewon O) Cynthia Ramos, CPA Melanie G. Thompson, CPA Member Absent James C. Flagg, PhD, CPA Alan Hermanson, CPA Donna Hiller Karen Davis Marisa Rios Maggie Warpenburg A. Dr. Flagg reported that the committee had received a report from Alan Hermanson stating that $1 million in funding was available to the eligible colleges and universities for the Fall 2012 and Spring 2013 school year. It was agreed by the committee, with staff s recommendation, to increase the minimum scholarship award to $3,000 for two semesters with a lifetime maximum award of $7,500. B. Dr. Flagg reported that the committee discussed ways for the Board to implement the objectives of the Fifth-Year Accounting Students Scholarship Fund. C. Dr. Flagg informed the Board that an audit of the Board s disbursement of the fund money was very good and showed no deficiencies. VI. Dr. Flagg, Qualifications Committee chair, reported on the September 19, 2012, committee meetings. Members Present Florence J.A. Atiase, CPA Jonathan B. Cluck, Esq. James C. Flagg, PhD, CPA David L. King, CPA Roselyn Morris, PhD, CPA Thomas G. Prothro, CPA Melanie G. Thompson, CPA Members Absent MacGregor Stephenson, PhD, JD Gilbert Gutierrez Donna Hiller Patrick Myers, Esq. Barbara Stooksberry William Treacy A. Dr. Flagg reported that the committee had considered amendments to Section (Scoring) of the Board s Rules to incorporate Section (Request for Review) into Section with an explanation about the score review process. The committee has referred its recommendations to the Rules Committee for its consideration. B. Dr. Flagg informed the Board that the committee is recommending the repeal of Section (Request for Review) due to its incorporation into Section (Scoring). The committee has referred its recommendation to the Rules Committee for its consideration. C. Dr. Flagg reported that the committee had considered amendments to Section (Evaluation of Foreign Education) of the Board s Rules and has referred its recommendations to the Rules Committee for its consideration. D. Dr. Flagg reported that the committee had reviewed materials submitted by Western Governors University and recommended that the Board approve the institution as meeting Section (c) (Recognized Institutions of Higher Education). The Board approved the Qualifications Committee recommendation. E. Dr. Flagg reported that Melanie Thompson had addressed the committee concerning the recent study done by the Pathways Commission on a national higher education strategy for accounting. F. Dr. Flagg informed the Board that Michael Decker of the AICPA was unable to attend the meeting. G. Dr. Flagg reported to the Board that the committee had reviewed NASBA s Candidate Concerns 12Q2 report. 4

5 VII. Ms. Miller, Behavioral Enforcement Committee chair, reported on the August 29, 2012, committee meeting. Members Present J. Coalter Baker, CPA John R. Broaddus, CPA Everett Ferguson, CPA Donald W. Harcum, CPA Donna J. Hugly, CPA Maribess L. Miller, CPA John W. Steinberg, CFE Member Absent James D. Ingram IV, CPA Patrick Myers, Esq. A. Mr. King moved to dismiss the following investigations based on insufficient evidence of violations of the Rules or the Act. Mr. Prothro seconded the motion, and it passed. 1. Investigation Nos L 1 and L 1 2. Investigation Nos L 1 and L 1 3. Investigation No L 1 4. Investigation Nos L 1 and L 1 5. Investigation No L 1 6. Investigation Nos L 1, L 1, L 1 and L 1 7. Investigation Nos L 1, L 1, L 1 and L 1 8. Investigation Nos L 1 and L 1 9. Investigation Nos L 1 and L Investigation No L Investigation No L Investigation Nos L 1 and L Investigation No L Investigation No L Investigation No L Investigation Nos L 1 and L 1 B. Mr. King moved to dismiss the following investigations based on voluntary compliance with the Rules or the Act. Mr. Prothro seconded the motion, and it passed. 1. Investigation Nos L 1 and L 1 2. Investigation Nos L 1 and L 1 C. Mr. King moved to approve a request for reinstatement of his certificate from an applicant whose certificate was revoked by the Board as the result of Investigation No L. Mr. Prothro seconded the motion, and it passed. The applicant s certificate was reinstated unconditionally. D. Other The committee had considered 12 other items that required no action. The next meeting is scheduled for October 30, 2012, at 9:00 a.m. VIII. IX. Ms. Moher, staff attorney, reported on the status of the Enforcement Division s probation monitoring system. Mr. Hill, general counsel, reported on the status of investigations of violations of Subchapter J of the Public Accountancy Act regarding the unauthorized practice of public accountancy. X. The Board took the following actions on agreed consent orders, agreed cease and desist orders, cease and desist orders, motion for rehearing, and a proposal for decision: A. Agreed Consent Orders Behavioral Enforcement Committee Dr. Flagg moved to approve the following Agreed Consent Orders as presented. Mr. Cluck seconded the motion, and it passed. 1. Investigation No.: L Hometown: Duncanville, TX Respondent: Scott Newman Cannon Certificate No.: Rule Violation: Act Violations: (6), (11) 5

6 Respondent entered into an Agreed Consent Order with the Board whereby Respondent was reprimanded. In addition, Respondent must pay $2,000 in administrative penalties. Respondent failed to respond to Board communications provided by letters dated October 31, 2011, December 8, 2011, and January 26, Investigation No.: L Hometown: El Paso, TX Respondent: Robert Diaz Certificate No.: Rule Violation: Act Violations: (3), (6) Respondent entered into an Agreed Consent Order with the Board whereby Respondent was reprimanded and placed on limited scope status, whereby Respondent cannot provide any attest services until such time as Respondent obtains a firm license and enrolls in peer review. After Respondent obtains a firm license and enrolls in peer review, Respondent s attest work is subject to pre-issuance review. In addition, Respondent must pay $5,000 in administrative penalties and $ in administrative costs within 30 days of the date of the Board Order. Respondent s firm performs audits and offers accounting services to the public as a CPA firm without a valid firm license issued by the Board. The firm s license has not been renewed since Investigation No.: L Hometown: Brownsville, TX Respondent: Luis Ricardo Hernandez Certificate No.: Rule Violation: (7) Act Violations: (6), (9), (11) Respondent entered into an Agreed Consent Order with the Board whereby Respondent was placed on probated suspension for a period of 40 months beginning on the effective date of September 20, In addition, Respondent must pay $2,000 in administrative penalties within 30 days of the date of the Board Order. Respondent was suspended by the IRS for at least 40 months from May 26, 2011, for the willful failure to timely file federal income tax returns for 2004 and 2005 and for failure to file federal income tax returns for 2006 and Investigation No.: L Hometown: Richardson, TX Respondent: Bryan Nicholas Polozola Certificate No.: Rule Violations: (4), (13) Act Violations: (6), (10), (11) Respondent entered into an Agreed Consent Order with the Board whereby Respondent s certificate was revoked. Respondent pled guilty to one count of making a false statement to government officials in violation of 18 U.S.C. 1001, a felony offense. Respondent told government officials that he was unaware of a payment made on his behalf to his former employer (Respondent once worked as Controller and Financial and Operations Principle for a company regulated by the NASD), when in fact his attorney made a payment of $49,350 to his former employer in order to compensate the former employer for monies Respondent converted to his own use. 2 Mr. Cluck moved to approve the following Agreed Consent Order as presented. Ms. Rodewald seconded the motion, and it passed. 5. Investigation No.: L Hometown: Wharton, TX Respondent: Kenneth R. Johse Certificate No.: Rule Violation: (4) Act Violations: (6), (10)(A), (11) Respondent entered into an Agreed Consent Order with the Board whereby Respondent s certificate was placed on probated revocation until December 31, 2012, when the certificate will be revoked. In addition, Respondent must pay $5,000 in administrative penalties and $ in administrative costs within 30 days of the date of the Board Order. Respondent was convicted of a 3 rd degree felony for online solicitation of a minor. 1 Mr. Steinberg moved to approve the following Agreed Consent Orders as presented. Mr. Cluck seconded the motion, and it passed. 6. Investigation No.: L Hometown: Richardson, TX Respondent: Loren Mark Price Certificate No.: Rule Violation: Act Violations: (6), (10) 6

7 Respondent entered into an Agreed Consent Order with the Board whereby Respondent s certificate was revoked. On October 12, 2011, Respondent was convicted of a third degree felony. Respondent is serving a four year sentence in state prison. Respondent failed to report the conviction within 30 days of the date that he had knowledge of the event. 7. Investigation No.: L Hometown: Houston, TX Respondent: Samuel M. Sullivan Certificate No.: Rule Violation: (4) Act Violations: (6), (10), (11) Respondent entered into an Agreed Consent Order with the Board whereby the Board accepts Respondent s involuntary surrender of his certificate in lieu of further disciplinary proceedings. Respondent entered into a deferred adjudication agreement regarding a third degree felony. Technical Standards Review Committee Mr. King moved to approve the following Agreed Consent Order as presented. Mr. Steinberg seconded the motion, and it passed. 1. Investigation Nos.: L & L Hometown: Houston, TX Respondents: Walter Dean Davis, III, Certificate No.: & Walter D. Davis (Firm) Firm License No.: T05248 & C08083 Rule Violations: , Act Violation: (6) Respondents entered into an Agreed Consent Order (ACO) with the Board whereby Respondent Davis and the firm of Walter D. Davis were reprimanded and placed on limited scope as explained further in the next sentence. Respondent Davis and all firms managed by Respondent Davis may not issue audit or review reports of state and federally funded entities until they have been reviewed and accepted for release to a client by a pre-approved pre-issuance reviewer, from the date of ratification of this ACO until the date the Board ratifies an agreement to remove the scope limitation. Respondent Davis must also pay administrative costs of $2, within 30 days of the date of the order. Respondents issued two audits of state and federally funded entities that did not adequately support the representations made in the audit reports, and the supporting work papers did not comply with Generally Accepted Government Auditing Standards Investigation Nos.: L & L Hometown: Houston, TX Respondents: Richard Phillip Lindsay Certificate No.: & Richard P. Lindsay, Firm License No.: C01185 P.C. (Firm) Rule Violations: , , , Act Violations: (6), (11), (12) Respondents entered into an Agreed Consent Order (ACO) with the Board whereby Respondent Lindsay was reprimanded and his certificate and the Respondent firm license were placed on limited scope status until petition for removal is approved. Respondents are prohibited from performing attest services as defined at Section of the Texas Public Accountancy Act. In addition, Respondent Lindsay must pay an administrative penalty of $5,000 and $9, in administrative costs within 30 days of the date the Board ratifies the order. Respondent firm issued an audit of an engineering firm for the year ended December 31, 2009, that did not adequately support the representations made in the audit report, and the supporting work papers did not comply with Generally Accepted Government Auditing Standards. Respondent firm falsely claimed an exemption from peer review and Respondent Lindsay did not timely respond to Board communications Investigation Nos.: L & L Hometown: Dallas, TX Respondents: Travis Wolff & Co., LLP Firm License No.: P04393 (Respondent Firm) & Firm License No.: P05530 Travis Wolff, LLP (Successor Firm) Rule Violations: , , Act Violation: (6) The Board orders that the Respondent firm and the Successor firm of Travis Wolff, LLP, be reprimanded. In addition, the Successor firm must pay an administrative penalty of $25,000 and $80, in administrative costs within 30 days of the date of the Board Order. Respondent firm did not comply with applicable professional standards and exercise due professional care in regard to audits of the Townes Group for the years 2000, 2001, and The Successor firm failed to abide by the terms of an abatement agreement between the Board and the Respondent firm. 3 7

8 B. Mass Hearings Mr. King moved to approve the following Proposals for Decision as presented. Mr. Steinberg seconded the motion, and it passed unanimously. 1. Respondents: In The Matter of Disciplinary Action Against Certain Licensees for Nonpayment of Professional Fees for Three Consecutive License Periods The respondents failed to pay their licensing fees for three consecutive license periods. Following the public hearing, an Administrative Law Judge (ALJ) of the State Office of Administrative Hearings recommended that the certificate of each respondent still not in compliance be revoked without prejudice. Each respondent may regain his or her certificate by paying all license fees and penalties and by otherwise coming into compliance with the Act. The ALJ found that the respondents violated Section (4) (failure to pay license fees for three consecutive years) of the Act. The respondents, although properly notified, failed to appear, and were not represented at the hearing. No Board Committee considered these actions. (ATTACHMENT 2) Docket Investigation Numbers Scheduled Hearing through May 29, through June 26, Respondents: In The Matter of Disciplinary Action Against Certain License Holders for CPE Delinquencies The respondents failed to comply with CPE reporting requirements found in Chapter 523 of the Rules and Section of the Act. Following the scheduled public hearing, an Administrative Law Judge (ALJ) of the State Office of Administrative Hearings recommended that the license of each respondent still not in compliance be suspended for a period of three years, or until he or she complies with the licensing requirements of the Act, whichever is sooner. Additionally, the ALJ recommended a $100 penalty be imposed for each year a respondent is not in compliance with the Board's CPE requirements. The ALJ found that the respondents violated Sections (mandatory CPE) and (mandatory CPE reporting) of the Board's Rules, and (CPE) of the Act. The respondents, although properly notified, failed to appear, and were not represented at the hearing. No Board Committee considered these actions. (ATTACHMENT 3) Docket Investigation Numbers Scheduled Hearing through May 29, through June 26, Respondents: In The Matter of Disciplinary Action Against Certain Certificate Holders for Failure to Complete License Notice The respondents failed to complete their license renewal notices in accordance with of the Board s Rules. Following a public hearing, an Administrative Law Judge (ALJ) of the State Office of Administrative Hearings recommended that the certificate of each respondent not in compliance be revoked without prejudice until such time as the respondent complies with the requirements of the Rules and the Act. The ALJ found that the respondents violated Section (12) of the Act (regarding violations of Board Rules). Although properly notified, the respondents failed to appear in person or by authorized representative. No Board Committee considered these actions. (ATTACHMENT 4) Docket Investigation Numbers Scheduled Hearing through May 29, through June 26, 2012 C. Agreed Cease and Desist Orders Mr. Steinberg moved to approve the following Agreed Cease and Desist Orders as presented. Mr. Baker seconded the motion, and it passed unanimously. 1. Investigation No.: N Hometown: El Paso, TX Respondent: Ray Mendoza d/b/a Ray Mendoza P.C. Act Violations: , Respondent entered into an Agreed Cease and Desist Order with the Board whereby Respondent will cease and desist from providing attest services and using reserved terms. Respondent used the term accounting to assert an expertise in accounting and performed an attest service although Respondent does not hold a license in Texas. 8

9 2. Investigation No.: N Hometown: Midland, TX Respondent: Robert Bomar d/b/a Bomar Consulting Service Act Violation: Respondent entered into an Agreed Cease and Desist Order with the Board whereby Respondent will cease and desist from providing attest services and using reserved terms. Respondent used the term accounting to assert an expertise in accounting although Respondent does not hold a license in Texas. 3. Investigation No.: N Hometown: Dallas, TX Respondent: IMA Tax & Financial Services, Inc. Act Violation: Respondent entered into an Agreed Cease and Desist Order with the Board whereby Respondent will cease and desist from providing attest services and using reserved terms. Respondent used the terms audit and accounting to assert an expertise in accounting although Respondent does not hold a license in Texas. 4. Investigation No.: N Hometown: McKinney, TX Respondent: Fidel Bacigalupo d/b/a Latinsurance Act Violations: , Respondent entered into an Agreed Cease and Desist Order with the Board whereby Respondent will cease and desist from providing attest services and using reserved terms. Respondent used the terms auditing and accounting to assert an expertise in accounting and offered to provide attest services although Respondent does not hold a license in Texas. D. Cease and Desist Orders Mr. Steinberg moved to approve the following Cease and Desist Orders as presented. Mr. Prothro seconded the motion, and it passed unanimously. 1. Investigation No.: N Hometown: Plano, TX Respondents: Cynthia Pullo Porter, Cassandra Pullo Porter & Accurate Accounting, LLC Act Violation: Texas State Board of Public Accountancy staff initiated an investigation of this matter based on evidence discovered during a routine online search. Staff found that Respondents were using a term reserved by the Act for individuals and entities holding licenses issued by the Board. Board staff determined that Respondents have not held individual or firm licenses issued by the Board during all relevant times. During the relevant times, Respondents used the term accounting to assert an expertise in accounting. This action constitutes a violation of Public Accountancy Act Section Respondents also offered services to the public that involve the use of accounting, attest or auditing skills, including tax services. Offering these services while representing to potential clients that they are licensed by the Board is the practice of public accountancy under Section of the Public Accountancy Act. Respondents repeatedly ignored the Board s attempts to gain their compliance with Texas law. Due to that fact, it was necessary for the Board to immediately issue a Cease and Desist Order against Respondents. 2. Investigation No.: N Hometown: Aurora, CO Respondents: Larry O Donnell and Larry O Donnell C.P.A., P. C. Act Violations: , , , Texas State Board of Public Accountancy staff initiated an investigation of this matter based on evidence that Respondent provided an attest service in Texas without holding a license issued by the Board. Respondent signed the SEC 10-K filing Independent Auditor s Report for one or more companies that list their principal place of business as Texas in their SEC 10-K filings. Respondent is not licensed in Texas. Under the Texas Public Accountancy Act, signing an Independent Auditor s Report for a publicly traded U.S. company's 10-K filing is considered an attest service. See Act Section (a)(1). All firms providing attest services in Texas are required to be licensed in Texas. Respondent repeatedly ignored the Board s attempts to gain compliance with Texas law. Due to that fact, it was necessary for the Board to immediately issue a Cease and Desist Order against Respondent. 9

10 E. Motion for Rehearing SOAH Docket #: Hometown: Houston, TX Investigation No.: L Certificate No.: Respondent: Rodrick Dow At the July 19, 2012 Board meeting, the Board adopted an order ratifying the recommendations of an Administrative Law Judge to issue to Rodrick Dow a two-year probated suspension and reprimand, require 15 hours of additional CPE, and $10,000 in administrative penalties and $9, in administrative costs. Mr. Dow filed a Motion for Rehearing (MFR). The Administrative Procedure Act requires the MFR to be filed not later than the 20 th day after having been notified of the Board order. The MFR was not timely filed. Mr. Dow s MFR was filed with the Board on August 20, 2012, and the last date that it would have been a timely filing was August 14, Once an order of an administrative agency is final, i.e., August 14, 2012, the administrative agency loses its authority to consider a MFR or revisit its prior order in any way. Therefore, the Board lacked the authority to consider and took no action on Mr. Dow s MFR. F. Proposal for Decision Mr. Steinberg moved to approve the following Proposal for Decision as presented. Mr. Prothro seconded the motion, and it passed unanimously. SOAH Docket #: Hometown: Kennedale, TX Investigation Nos.: L & L Certificate No.: Respondents: John A. Blakeway & Firm License No.: S00550 John Andrew Blakeway, CPA The State Office of Administrative Hearings Administrative Law Judge (ALJ) issued a Proposal for Decision (PFD) recommending that the complaint against Respondents be dismissed. The Board adopted the recommendations contained in the ALJ s PFD. 4 XI. Mr. Baker moved to adopt the following rules on second reading. Mr. Steinberg seconded the motion, and it passed unanimously. The Board received one letter of comments on Board Rules , , and in support of their adoption. 1. Section (Accounting Principles) (ATTACHMENT 5) 2. Section (Educational Definitions) (ATTACHMENT 6) 3. Section (Recognized Institutions of Higher Education) (ATTACHMENT 7) 4. Section (Qualified Accounting Courses) (ATTACHMENT 8) 5. Section (NASBA Verified Substantially Equivalent Jurisdictions) (ATTACHMENT 9) 6. Section (Reinstatement of a License) (ATTACHMENT 10) 7. Section (Individual License Fees) (ATTACHMENT 11) XII. XII. Mr. Barrera reviewed the schedule of future Board meetings. Mr. Barrera adjourned the meeting at 10:33 a.m. ATTEST: A. Carlos Barrera, CPA, Presiding Officer Thomas G. Prothro, CPA, Secretary Mr. Baker, Mr. Broaddus, Mr. Ferguson, Ms. Miller, and Mr. Steinberg recused themselves from participating in this matter. Mr. Barrera, Ms. Miller, and Mr. Steinberg recused themselves from participating in this matter. Mr. Duckworth, Mr. Ferguson, Mr. Keeney, and Mr. King recused themselves from participating in this matter. Mr. Barrera, Dr. Flagg, and Mr. King recused themselves from participating in this matter. 10