Disciplinary Actions

Under the automatic disciplinary provisions of the CSCPA's bylaws, the following members have had their CSCPA memberships:

Suspended:

Mark A. Federico of Hamden, Connecticut, effective November 5, 2005
Mr. Federico was found guilty of violating the AICPA Code of Professional Conduct, Rule 202 - Compliance with Standards for issuing compilation reports without disclosing his lack of independence and Rule 501 - Acts Discreditable for failure to act on knowledge that should have led to the correction of payroll practices. Mr. Federico was directed to complete the AICPA's continuing education course entitled "Professional Ethics: The AICPA's Comprehensive Course" with a grade of 90 percent or better within the suspension period and submit proof of successful completion of the course to the AICPA.

John J. Pacowta of Middlebury, Connecticut, effective September 23, 2005
Information came to the attention of the Ethics Charging Authority ("ECA") (comprised of the Professional Ethics Executive Committee of the American Institute of Certified Public Accountants [AICPA] and the Professional Ethics Committee of the Connecticut Society of CPAs [CSCPA] in the form of an SEC Litigation Release, No. 16464, dated March 7, 2000, alleging Mr. Pacowta engaged in insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC alleged that while a director of a publicly traded financial services company, he illegally purchased the stock of the company on April 25, 1996, which was prior to the public announcement that the company was to be acquired by another financial services company.

Mr. Pacowta was charged with violating the AICPA and CSCPA Codes of Professional Conduct as follows:

• Charge:
  Rule 501 - Acts Discreditable as supported by Interpretation 501-5 - Failure to follow requirements of governmental bodies, commissions, or other regulatory agencies.
  
  Mr. Pacowta engaged in insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 by using information not known by the general public for his own benefit.

Agreement
In consideration of the ECA foregoing further investigation of John J. Pacowta's conduct as described above, and in consideration of the ECA foregoing any further proceedings in this matter, Mr. Pacowta agrees as follows:

1. To waive his rights to a hearing under AICPA bylaws section 7.4 and the bylaws of the CSCPA.
2. To neither admit nor deny the above specified charge.
3. To his two-year suspension from membership in the AICPA and the CSCPA.
4. That the ECA shall publish his name, the charges, and the terms of this settlement agreement.

Edward M. Considine of Cheshire, Connecticut, effective July 16, 2003
Mr. Considine was found guilty of violating the AICPA Code of Professional Conduct in connection with his audit of a nonprofit organization's June 30, 1995 and 1994 financial statements as follows:

Rule 202 - Compliance with Standards

1. Audit programs documenting that the work had been adequately planned and supervised were not included in Mr. Considine's working papers.  (SAS No. 41/AU Section 339.05a.)
2. Mr. Considine did not document in his working papers an understanding of the entity's internal control structure in order to plan the subject audit engagements. (SAS No. 78/AU Section 319.26)
3. Mr. Considine did not document in his working papers the basis for his conclusions about the assessed level of control risk for the subject audit engagements.  (SAS No. 78/AU Section 319.39)
4. Analytical review procedures for planning and review purposes were done by Mr. Considine, however, these procedures were not documented in his working papers as required by generally accepted auditing standards.  (SAS No. 41/AU Section 339.05c.)
5. Mr. Considine did not document in his working papers his determination of audit risk and materiality.  (SAS No. 41/AU Section 339.05a.)
6. Written representations obtained from management of the nonprofit organization in the form of a signed letter were not maintained and documented in the respondent's audit working papers.  (SAS No. 41/AU Section 339.05c.)
7. Mr. Considine did not inquire of the nonprofit organization's attorney regarding claims, litigation, and assessments.  However, he did not document this inquiry in his audit working papers. (SAS No. 41/AU Section 339.05c.)
8. Subsequent events procedures were performed by Mr. Considine, however, these audit procedures were not documented in his audit working papers.  (SAS No. 41/AU Section 339.05c.)
9. Audit procedures concerning related party transactions were done but not documented in Mr. Considine's working papers.  (SAS No. 41/AU Section 339.05c.)
10. The auditor's consideration of the nonprofit organization's ability to continue as a going concern was not documented in his audit working papers.  (SAS No. 41/AU Section 339.05c.)
11. The respondent should have expressed either a qualified or an adverse opinion due to the departure from generally accepted accounting principles noted below.  (SAS No. 58/AU Section 508.35)

Rule 203 - Accounting Principles

1. The leases between the lessor and the nonprofit organization (the lessee) should have been recorded on the lessee's financial statements as capital leases with the appropriate accompanying note disclosures since these leases were material and transferred ownership of the properties to the lessee by the end of the leases' terms.  (SFAS No. 13, paragraphs 7a., 10 through 14)

The hearing panel voted to suspend Mr. Considine from membership in the AICPA and the CSCPA for 24 months. Mr. Considine is required to complete the following specified CPE courses [67 hours total] during the suspension period; 32 hours of the required CPE must be completed during the first 12 months of the suspension period:

• AICPA Accounting and Auditing Workshop (16 hours)
• Analytical Procedures (8 hours)
• FASB/APB Update and Review (16 hours)
• Non-Profit Auditing (8 hours)
• Workpaper Documentation (8 hours)
• Professional Ethics Self-Study (1 hour) (Note: Completed with a passing grade of at least 90 percent)

Terminated because of final judgments of conviction from crimes punishable by imprisonment for more than one year:

Richard A. Pelletier of North Providence, Rhode Island, effective March 27, 2003
Mr. Pelletier pled guilty to violating USC Title 18, Section 371, Conspiracy to Make False Statements to the Environmental Protection Agency and the United States Customs Service, and Conspiracy to Defraud the Internal Revenue Service.

Anne Monahan Pember of Madison, Connecticut, effective November 8, 2001
Ms. Pember pled guilty to charges of conspiracy to commit mail fraud and wire fraud in United States District Court, District of New Jersey.