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California Accountancy Board Takes Disciplinary Actions Against Violators.

SACRAMENTO, Calif., Sept. 7 /PRNewswire/ --

The California Board of Accountancy released a list of disciplinary actions taken against seven violators today.

When the Board receives a complaint, an investigation is conducted. Information regarding a complaint generally is gathered by staff Investigative CPAs, often accompanied by a licensee's appearance before the Board's Administrative Committee. In some cases, information is gathered by the Department of Consumer Affairs' Division of Investigation. Following this investigation, a recommendation is made either to close the case for lack of evidence or other reasons, or to refer the matter to the Attorney General for review and possible preparation of an accusation against the licensee or a statement of issues relating to the applicant.

The Board may revoke, suspend, or impose probation for violation of applicable statutes or regulations. In addition to any case-specific terms of probation, the standard probationary terms include:

-- Obey all federal, California, other states', and local laws, including those rules relating to the practice of public accountancy in California.

-- Submit, within 10 days of completion of the quarter, written reports to the Board on a form obtained from the Board. The respondent shall submit, under penalty of perjury, such other written reports, declarations, and verification of actions as are required. These declarations shall contain statements relative to respondent's compliance with all the terms and conditions of probation. Respondent shall immediately execute all release of information forms as may be required by the Board or its representatives.

-- During the period of probation, appear in person at interviews or meetings, as directed by the Board or its designated representative, provided such notification is accomplished in a timely manner.

-- Comply with the terms and conditions of the probation imposed by the Board and cooperate fully with representatives of the Board in its monitoring and investigation of the respondent's compliance with probation terms and conditions.

-- Be subject to and permit a practice investigation of the respondent's professional practice. Such a practice investigation shall be conducted by representatives of the Board, provided notification of such review is accomplished in a timely manner.

-- Comply with all final orders resulting from citations issued by the California Board of Accountancy.

-- In the event respondent should leave California to reside or practice outside this state, respondent must notify the Board in writing of the dates of departure and return. Periods of non-California residency or practice outside the state shall not apply to reduction of the probationary period or of any suspension. No obligation imposed herein, including requirements to file written reports, reimburse the Board costs, or make restitution to consumers, shall be suspended or otherwise affected by such periods of out-of-state residency or practice, except at the written direction of the Board.

-- If respondent violates probation in any respect, the Board, after giving respondent notice and an opportunity to be heard, may revoke probation and carry out the disciplinary order that was stayed. If an accusation or a petition to revoke probation is filed against respondent during probation, the Board shall have continuing jurisdiction until the matter is final, and the period of probation shall be extended until the matter is final.

-- Upon successful completion of probation, respondent's license will be fully restored.

If charges are filed against a licensee, a hearing may be held before an independent administrative law judge who submits a proposed decision to be considered by the Board of Accountancy or the matter may be settled. The Board either may adopt the proposed decision or decide the matter itself. Please note that Board actions reported here may not be final. After the effective date of the Board's decision, the licensee may obtain judicial review of its decision. On occasion, a court will order a stay of the Board's decision or return the decision to the Board for reconsideration.

Copies of the accusations, decisions, and settlements regarding any of these disciplinary actions are available by sending a written request to: California Board of Accountancy, Attention: Disciplinary Actions, 2000 Evergreen Street, Suite 250, Sacramento, CA 95815-3832. Please state the licensee's name and license number, and allow approximately three weeks for each request.

During the period from July 1, 1999, to June 30, 2000, the California Board of Accountancy received 510 complaints, 218 of which involved unlicensed practice, 510 complaint cases were closed, 156 investigations were opened, 25 formal accusations were filed, 70 citations were issued, and 33 disciplinary actions were taken by the Board.

The following is a summary of recent disciplinary actions taken by the California Board of Accountancy against licensees at its June 12, 2000, meeting. Please note that disciplinary cases are listed alphabetically, by city.

BURBANK, CALIFORNIA

MANCHANDIA, MAHESH R. (CPA License No. 67317)

CPA LICENSE REVOKED, STAYED, WITH THREE YEARS' PROBATION

The California Board of Accountancy has adopted a decision pursuant to a Stipulated Settlement in the matter of the Accusation filed against Mahesh R. Manchandia of Burbank, California. Mr. Manchandia was disciplined, effective August 4, 2000.

Cause for Discipline:

The accusation charges and for purposes of settlement, Mr. Manchandia admits that he was grossly negligent in his performance of an audit and a compilation for Soft Touch International, Inc. for the periods ended April 30, 1998, and July 31, 1998, respectively. Both the audited and compiled financial statements for Soft Touch were included in a private offering memo sent to prospective investors. The audit and compilation contained material departures from prescribed professional standards.

The auditor's report for the period ended April 30, 1998, omitted various disclosures required by generally accepted accounting principles (GAAP). The work papers in support of the audit did not demonstrate adequate planning, Mr. Manchandia's understanding of internal control, consideration of audit risk, and evaluation of subsequent events. Additionally, they did not evidence that sufficient competent evidential matter was obtained in support of the reasonableness of carrying values of receivables, inventory, investments, patents, and trademarks.

The compilation report issued by Mr. Manchandia for the period ended July 31, 1998, failed to reference the relevant professional standards, included inaccurate reference to the reporting period, and failed to reference the entity's departure from GAAP in its method revenue recognition. Additionally, the notes accompanying the compiled financial statements exclude disclosures required by GAAP and contain inconsistencies and inaccuracies.

Probation terms include:

-- Prohibition from performing audits, reviews, or attestation engagements during the period of probation. Mr. Manchandia may perform compilations during probation; however, the compilation report and compiled financial statements must be reviewed by a Board approved licensee prior to release. Mr. Manchandia will be responsible for the costs of the reviewer.

-- Completion of a Board-approved ethics examination, within one year from the effective date of the decision.

-- Completion of 40 hours of continuing education courses. The course content and completion timeframe shall be at the discretion of the Board or its designee.

-- Reimbursement of $7,200.00 to the Board for investigative and prosecution costs. Mr. Manchandia may reduce the reimbursement amount to $5,000.00 upon proof of completion of 30 hours of community service.

-- Other standard terms and conditions.

The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (c), (f), and (i). The Board's disciplinary action is based in part on violations of Business and Professions Code, Section 5062, and California Code of Regulations, Title 16, Section 58.

ENCINITAS, CALIFORNIA

KUEBLER, PETER F. (CPA License No. 30546)

CPA LICENSE REVOKED, STAYED, WITH THREE YEARS' PROBATION, AND A 60-DAY

SUSPENSION

The California Board of Accountancy has adopted a decision pursuant to a Stipulated Settlement in the matter of the Accusation filed against Peter F. Kuebler of Encinitas, California. Mr. Kuebler's CPA License, No. 30546, was disciplined, effective July 21, 2000.

Cause for Discipline:

For purposes of this proceeding, Mr. Kuebler admits the truth and accuracy of the allegations and charges in the Accusation. Mr. Kuebler stipulated through settlement to discipline imposed by the Securities and Exchange Commission (SEC) which included being barred from practice before the SEC for a period of four years. Mr. Kuebler, Vice President and Chief Financial Officer of Wilshire Technologies, Inc., along with other officers of Wilshire, were responsible for improperly recognizing sales contrary to generally accepted accounting principles (GAAP), thus materially inflating earnings reported in press releases and included in quarterly and annual reports filed with the SEC from at least July 1993 through January 1994. In addition, Mr. Kuebler omitted to state material facts to Wilshire's independent auditors in connection with their audit of Wilshire's 1993 financial statements.

Probation terms include:

-- 60-day suspension commencing on the effective date of the decision.

-- Reimbursement of $5,000.00 to the Board for investigative and prosecution costs.

-- Other standard terms and conditions.

-- The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (g).

MISSION VIEJO, CALIFORNIA

TATMAN, ELIZABETH ANN TUEY (CPA License No. 28868)

CPA LICENSE REVOKED

The California Board of Accountancy has adopted a decision pursuant to a Stipulated Settlement in the matter of the Accusation filed against Elizabeth Ann Tuey Tatman of Mission Viejo, California. Ms. Tatman's CPA License, No. 28868, was revoked, effective July 21, 2000.

Cause for Discipline:

For purposes of settlement, Ms. Tatman admits to the factual allegations set forth in Accusation AC-2000-1. This accusation includes allegations that Ms. Tatman diverted a minimum of $568,740, between 1986 to 1996, from the corporate funds of Howard & Tatman, an accountancy corporation, of which she was a 50 percent owner. Ms. Tatman falsified entries on the firm's financial records to conceal the diversions.

Ms. Tatman pled guilty to grand theft and enhancement in the Orange County Superior Court on November 29, 1999, and was sentenced on March 10, 2000, to one year in the county jail and was ordered to make restitution to James D. Howard, CPA, in the amount of $750,000.

Ms. Tatman may petition the Board for reinstatement of her revoked license no earlier than two years from the effective date of the decision. Ms. Tatman shall pay the Board $10,341.00 in reimbursement for investigation and prosecution costs prior to filing the petition for reinstatement.

The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (a), (h), (i), and (j).

SAN DIEGO, CALIFORNIA

MACCARTHY, BARRY PETER (CPA License No. 64186)

CPA LICENSE REVOKED, STAYED, WITH THREE YEARS' PROBATION

The California Board of Accountancy has adopted a decision pursuant to a Stipulated Settlement in the matter of the Accusation filed against Barry Peter MacCarthy of San Diego, California. Mr. MacCarthy's CPA License, No. 64186, was disciplined, effective July 21, 2000.

Cause for Discipline:

For purposes of settlement, Mr. MacCarthy admits to the factual allegations set forth in Accusation AC-2000-22. This accusation includes allegations that Mr. MacCarthy performed an audit of a nonprofit organization that contained extreme departures from generally accepted auditing standards and government auditing standards. Deficiencies noted included failure to document in the work papers proper planning of the engagement, sufficient understanding of the internal control structure, assessed level of control risk, and that the audit tests were actually performed. Mr. MacCarthy additionally failed to: confirm receivables or payables, indicate in the audit report the degree of responsibility that the auditor was taking with regard to supplementary information submitted in the audited financial statements, and modify his audit report for management's failure to make required disclosures.

Probation terms include:

-- Submission of all work papers and draft reports relative to any audit engagement to an outside CPA for review at his own expense. Mr. MacCarthy may select the reviewing CPA subject to the approval of the Board or its designee.

-- Completion of 24 hours of continuing professional education (CPE) as directed by the Board or its designee. The CPE shall be completed within the first 18 months of probation as part of the normal 80-hour CPE requirement.

-- Reimbursement of $4,000.00 to the Board for its investigative and prosecution costs. Payments shall be made in four scheduled installments of $1,000 each.

-- Other standard terms and conditions.

The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (c), and (f). The California Board's disciplinary action is based in part on violations of Business and Professions Code, Section 5062 and California Code of Regulations, Title 16, Section 58.

SAN FRANCISCO, CALIFORNIA

IZABAL, ROBERTO (CPA License No. 21613)

CPA LICENSE REVOKED, STAYED, WITH THREE YEARS' PROBATION

The California Board of Accountancy has adopted a decision pursuant to a Stipulated Settlement in the matter of the Accusation filed against Roberto Izabal of San Francisco, California. Mr. Izabal's CPA License, No. 21613, was disciplined, effective July 21, 2000.

Cause for Discipline:

For purposes of this proceeding, Mr. Izabal admits the truth and accuracy of the allegations and charges in Accusation AC-2000-11. This Accusation alleges that Mr. Izabal performed two audits of a nonprofit organization that contained extreme departures from generally accepted auditing standards and government auditing standards. Deficiencies noted include failure to document in the work papers compliance tests of laws and regulations as they relate to drug free workplace, administrative requirements, cash management, and federal financial reports (1995 audit only). The work papers also failed to document compliance tests of laws and regulations as they relate to specific requirements pertaining to the Head Start program and evidence of supervisory review.

Mr. Izabal additionally failed to: 1) compare the statement of expenditures incurred under federally sponsored programs, as shown in the Schedule of Federal Awards, with the books and records of the organization, 2) obtain sufficient competence evidential matter, 3) obtain written representation from the client's lawyer regarding litigation, claims, and assessments, and 4) make required inquiries concerning the professional reputation and independence of the other auditor on whose work Mr. Izabal relied upon.

Probation terms include:

-- Completion of a peer review on the firm of Izabal, Bernciak and Co. and submission of a copy of the peer review report with letter of comments and responses to the letter of comments, if any, to the Board or its designee no later than September 30, 2000.

-- Submission of all work papers and draft reports for audit and review engagements undertaken by Mr. Izabal or the firm of Izabal, Bernciak and Co. to review by another CPA prior to release during the period of probation at Mr. Izabal's expense. Mr. Izabal may select the reviewing CPA subject to the approval of the Board or its designee. Upon completion of each engagement review, the outside CPA shall submit their findings of the review in writing to the Board or its designee.

-- Review of the specific engagements shall be at the discretion of the Board or its designee.

-- Completion of 24 hours of continuing professional education (CPE) as directed by the Board or its designee in addition to the normal CPE requirements.

-- Reimbursement of $5,500.00 to the Board for investigation and prosecution costs with payment to be made within 60 days of the Board's decision.

-- Other standard terms and conditions.

The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (c), and (f). The Board's disciplinary actions are based in part on a violation of California Code of Regulations, Title 16, Section 58.

SAN LEANDRO, CALIFORNIA

RAMSEY, JOHN F. (CPA License No. 24779)

CPA LICENSE REVOKED

The California Board of Accountancy has adopted the Default Decision in the matter of the Accusation filed against John F. Ramsey of San Leandro, California. Mr. Ramsey's CPA License, No. 24779, was revoked, effective July 21, 2000.

Cause for Discipline:

Mr. Ramsey was convicted by a plea of guilty in the Alameda County Superior Court to violating Penal Code Section 503, embezzlement, and Corporations Code Sections 25110 and 25540, sale of unlicensed securities, on June 10, 1999. Mr. Ramsey's convictions resulted from intentional and willful violations of the law and the underlying acts were substantially related to the qualifications, functions, and duties of a certified public accountant. On September 16, 1999, Mr. Ramsey was sentenced to serve four years and eight months in state prison and remanded to the California State prison at San Quentin.

The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (a).

SANTEE, CALIFORNIA

COLINA, JOSE M. (CPA License No. 57246)

CPA LICENSE REVOKED, STAYED, WITH THREE YEARS' PROBATION

The California Board of Accountancy has adopted a decision pursuant to a Stipulated Settlement in the matter of the Accusation filed against Jose M. Colina of Santee, California. Mr. Colina's CPA License, No. 57246, was disciplined, effective July 21, 2000.

Cause for Discipline:

For purposes of settlement, Mr. Colina admits the truth of each and every allegation of Accusation AC-2000-20. This Accusation alleges that Mr. Colina performed an audit for California Area Local #4635 -- American Postal Workers Union (APWU) for the year ended December 31, 1996. The audit contained material departures from prescribed professional standards. The auditor's report failed to identify the financial statement audited in the introductory paragraph and failed to include a qualified or adverse opinion in the report when financial statements were materially affected by a departure from generally accepted accounting principles (GAAP). In addition, the audited financial statements did not include a statement of activities or a statement of cash flows. Various disclosures required by GAAP were omitted.

Mr. Colina additionally was engaging in public accounting practice by performing an audit of the APWU and issuing an independent auditor's report in July 1997 at which time his CPA license was expired. Mr. Colina previously renewed his license on "inactive" status on or about February 7, 1994. Further, Mr. Colina failed to notify the Board of a change of address.

Probation terms include:

-- Renewal of his CPA license and maintenance of current license status during the term of his probation. Prior to engaging in public accounting practice, Mr. Colina must convert the license to "active" status.

-- Review of any audit, review, or compilation issued by Mr. Colina during the probationary period by an outside CPA prior to issuance at his own expense. Mr. Colina may select the reviewing CPA subject to the approval of the Board or its designee.

-- Completion of 40 hours of continuing education courses. Required courses and the time frame for completion shall be at the discretion of the Board or its designee.

-- Reimbursement of $3,400.00 to the Board for investigation and prosecution costs, payable within 60 days of the effective date of the decision.

-- Other standard terms and conditions.

The California Board of Accountancy's action is authorized by Business and Professions Code, Section 5100 (c), and (f). The Board's disciplinary actions are based in part on violations of Business and Professions Code, Sections 5050, 5055, 5062, and California Code of Regulations, Title 16, Sections 3 and 58.

CONTACT: Carol Sigmann, Executive Officer of The California Board of Accountancy, 916-263-3980.
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