As a result of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Mullen, with the firm of Fuoco Group, LLP entered into a settlement agreement under the Joint Ethics Enforcement Program, effective September 27, 2021.
Information came to the attention of the Ethics Charging authority (ECA - comprising the AICPA Professional Ethics Executive Committee) alleging a potential disciplinary matter with respect to Mr. Mullen’s performance of professional services on the audit of the financial statements of a commercial entity as of and for the years ended December 31, 2019 and 2018.
The ECA has reviewed Mr. Mullen’s responses to the ECA’s inquiries and other relevant documents Mr. Mullen submitted to support his response, including certain working papers, the financial statements, and auditor’s report.
Violations
General Standards Rule (1.300.001) .01a. Professional Competence
The auditor undertook an engagement he could not complete in accordance with professional standards.
Compliance with Standards Rule (1.310.001)
The auditor failed to design and perform tests of controls to obtain sufficient appropriate audit evidence regarding the operating effectiveness of relevant controls when the control risk was assessed at a level below high in certain audit areas. (AU- C §315 and 330)
The auditor failed to prepare audit documentation that would enable an experienced auditor, having no previous connection to the audit, to understand the procedures performed for substantially all audit areas. (AU-C §230)
Accounting Principles Rule (1.320.001)
The financial statements failed to include all the fair value disclosures as required by FASB ASC 820.
The financial statements failed to disclose lease expense. (FASB ASC 840-10-50)
The disclosures for long-term debt and related party transactions were not comparative. (FASB ASC 205-10-45)
Agreement
In consideration of the ECA forgoing further investigation of Mr. Mullen’s conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Mullen agreed as follows:
To waive his rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures.
To waive his rights to a hearing under AICPA bylaws section 7.4.
To neither admit nor deny the above specified charges.
To his expulsion from the AICPA, which includes the loss of his AICPA credentials and certificates.
That the ECA shall provide a copy of this settlement agreement to the AICPA’s Peer Review Division staff, his firm’s peer review administering entity, and his firm’s peer reviewer.
That the ECA shall publish his name, the name of his current firm, the charges, and the terms of this settlement agreement.