Due to the investigations conducted as a result of alleged violations of the AICPA professional codes of conduct and the Massachusetts Society of CPAs; McCorry and the firm of James McCorry agreed on a settlement under the joint Ethics Enforcement Program as of October 12th, 2016. The parties involved were; McCorry and the firm of James McCorry, AICPA and the Massachusetts Society of CPAs.
The Ethics Charging Authority (ECA) which is composed of the AICPA Professional Ethics Executive Committee and the Professional Ethics Committee of the Massachusetts Society of CPAs; was tasked with handling the ethics issues of McCorry and the firm of James McCorry. It is alleges that there was a potential disciplinary issue which addressed Mr. McCorry’s professional performance in terms of services delivery. The audit of financial statements of the employees’ benefits plan as of the year and during the year ending December 31st, 2011 was not according to the professional services during audits of financial statements. The ECA received evidence from the auditor’s reports and the financial statements; and also Mr. McCorry presented his evidence with regards to the alleged claims charged against his firms. The presented information yielded out a prima facie evidence of violations of the rules of the Massachusetts Society of CPAs and the AICPA’s codes of professional conduct. Below is a detailed explanations of the codes of professional conducts that were violated by Mr. McCorry and his firm.
Rule 201: General Standards, A. Professional Competence
1. The engagement of the auditor in the firm was unreasonable since it could not be completed in accordance with the professional standards of work.
Rule 202: Compliance with Standards
1. The auditor failed in acquisition of appropriate audit which should have sufficed the opinion on the financial statement of all the areas of the firm.
2. The basic financial statements and the accompanying supplementary information were not identified in the opening statements of the auditor’s report.
3. The termination of the plan, coming up of a new plan and the transfer of assets between plans were not adequately disclosed in the financial statements.
Rule 203: Accounting Principles
1. There was a comparisons failure between the investments and the fair value measurement notes in the revised financial statements.
2. The financial statement was not comprised of or incompletely composed of: Measurement of assets at a fair value on recurring basis: Material party-in-interest transactions: And providence of subsequent events as demanded by the FASB ASC 855-10-50.
Rule 501: Failure in following requirements of government bodies, commissions and regulatory agencies.
1. As mandated by the DOL 29 CFR 2520.103-10, the schedule of assets at the end of the year did not identify all the assets.
2. Mr. McCorry failed to ensure that the firm’s peer reviews complied with the state board requirements and those of the AICPA and the Massachusetts Society of CPAs.
Mr. McCorry and the firms reached a settlement agreement so as to prevent further investigations; Mr. McCorry agreed to:
1. Waive his rights to further investigations on the matter at hand; and also waive his rights to hearing under AICPA bylaws section 7.4 and Article VI of the Massachusetts Society of CPAs bylaws.
2. To admit nor deny the alleged allegations or charges specified.
3. To accepts suspension from AICPA and the Massachusetts Society of CPAs as a member effective the date of agreement and for a period of two years. In this suspension period, Mr. McCorry will not represent AICPA and the Massachusetts Society of CPAs at any capacity including the use of the credentials of these bodies.
4. Mr. McCorry to provide a proof that he will no longer perform audit review services for the two year period; and every six month provide attestations confirming the same. However, if he is interested in resuming his duties, he must agree to:
Complete 40 hours of training in continued professions education course (CPE).
Hire outside parties to handle the pre-issuance review of the reports, financial statements and the working papers. The selected outside party must be approved by the ECA body; this requires presenting the listed possible bodies for the work 30days before commencing the work to the ECA board.
5. Mr. McCorry should provide an attestation that he no longer performs auditing of employee plans; and provide every six months attestation detailing of the same. However, he can resume the duties after agreeing to:
Completion of 12 hours of CPE course, Auditing Employee Benefits Plan. Hiring of an outside body which should be approved by the ECA body. The outside parties should be presented 30days before the commencing of the job to the ECA for approval. The approved outside party will also make regular reports about the performance of Mr. McCorry with respect to his auditing role.
The ECA protects the codes of conduct for the professionals in the AICPA and the Massachusetts Society of CPAs; I believe that Mr. McCorry violated important aspects of the firms which were required to be exhaustively covered under his auditing office. The punishment offered suffices the violations committed. This is because it gives Mr. McCorry a chance to readjust his profession and work on becoming more industrial under especially with the over-watch from an outside party.