Walker, Jonald J. of New Orleans, LA

As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Society of Louisiana CPAs, Mr. Walker, with the firm of Bruno & Tervalon LLP CPAs entered into a settlement agreement under the Joint Ethics Enforcement Program, effective January 14, 2025.

Information came to the Ethics Charging Authority (ECA) (AICPA Professional Ethics Executive Committee and the Society of Louisiana CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Walker’s performance of professional services on the reviews of a not-for-profit entity as of and for the years ended December 31, 2020 and December 31, 2021 and the audits of a governmental entity as of and for the fiscal years ended September 30, 2021 and September 30, 2022.

The ECA has reviewed the allegations in the complaint and Mr. Walker’s responses to the ECA’s inquiries and other relevant documents Mr. Walker submitted to support his response.

Based on this information, the ECA charged Mr. Walker with violations of the AICPA and Society of Louisiana CPAs codes of professional conduct as follows:

Violations

General Standards Rule .01a. Professional Competence (1.300.001)

The auditor undertook engagements he could not complete in accordance with professional standards.

Governmental Audits (1.400.055)

The auditor failed to comply with the continuing professional education requirements of Government Auditing Standards during the firm’s 2021-2022 reporting period. (Government Auditing Standards, 2018 Revision 4.16, .23-.24)

As it relates to:

Not-for-Profit Entity – Review of the Financial Statements for the Year Ended December 31, 2020

Compliance with Standards Rule (1.310.001)

The accountant failed to design and perform analytical procedures and inquiries to address all material items in the financial statements. (AR-C Sec. 90)

The accountant failed to investigate fluctuations or relationships which were inconsistent with other relevant information or that differed from expected values by a significant amount through the application of additional inquiries or other procedures. (AR-C Sec. 90)

The accountant failed to document management’s ability to:

1. oversee the preparation of the depreciation schedule,

2. assume all management responsibilities related to the service,

3. evaluate the adequacy and results of the service performed, and

4. accept responsibility for the results of the service. (AR-C Sec. 60, 90)

Accounting Principles Rule (1.320.001)

The financial statements failed to disclose a concentration of credit risk related to uninsured bank balances in excess of FDIC coverage. (FASB ASC 825-10-50)

The financial statements failed to accurately present interest expense on the Statement of Functional Expenses and cash paid for interest on the Statement of Cash Flows. (FASB ASC 958-205-45, 230-10-45)

As it relates to:

Not-for-Profit Entity – Review of the Financial Statements for the Year Ended December 31, 2021

General Standards Rule .01b. Due Professional Care (1.300.001)

The Statement of Cash Flows improperly presents proceeds from the line of credit as a use of a cash flow.

The date on the Statement of Financial Position improperly references the presentation “for the year ended” instead of “as of” December 31, 2021.

Compliance with Standards Rule (1.310.001)

The accountant failed to design and perform analytical procedures and inquiries to address all material items in the financial statements. (AR-C Sec. 90)

The accountant failed to investigate fluctuations or relationships which were inconsistent with other relevant information or that differed from expected values by a significant amount through the application of additional inquiries or other procedures. (AR-C Sec. 90)

The accountant failed to document the procedures applied, the evidence obtained, and the conclusions reached as it relates to:

1. concentrations by erroneously identifying this step of the program as “not applicable”, and

2. inquiries marked as “performed” in the program. (AR-C Sec. 90)

The accountant failed to ensure all working papers were dated when the procedures were performed. Additionally, certain working papers failed to indicate who performed the review, the extent, and date the review was performed. (AR-C Sec. 90)

The accountant failed to document management’s ability to:

1. oversee the preparation of the depreciation schedule,

2. assume all management responsibilities related to the service,

3. evaluate the adequacy and results of the service performed, and

4. accept responsibility for the results of the service. (AR-C Sec. 60, 90)

As it relates to:

Governmental Entity – Audit of the Financial Statements for the Fiscal Year Ended September 30, 2021

Compliance with Standards Rule (1.310.001)

The auditor failed to obtain sufficient appropriate audit evidence that all contingent liabilities and subsequent events that require adjustment or disclosure were identified. (AU-C §500, §580)

The auditor failed to design and perform audit procedures sufficient to obtain appropriate audit evidence regarding litigation, claims and assessments involving the entity that may give rise to a risk of material misstatement. (AU-C §501)

The auditor failed to adequately or accurately, document:

1. fraud risk. (AU-C §230, §240)

2. the evaluation of the design of the controls relevant to the audit and whether they have been implemented by performing procedures in addition to inquiry of the entity's personnel. (AU-C §230, §315)

3. inquiries or other procedures performed when the results of analytical procedures resulted in variances that were unexpected or unexplained. (AU-C §230, §520)

4. the sampling methodology utilized in testing payroll. (AU-C §230, §530)

5. the procedures performed when testing payroll. (AU-C §230)

Throughout the working papers the auditor failed to accurately document the date procedures were performed. (AU-C §230)

Governmental Audits (1.400.055)

The auditor failed to obtain sufficient appropriate audit evidence to support assertions and management’s representations regarding laws and regulations that would have a direct and material effect on the financial statements. (AU-C §250, §500; GAS 6.15, .39-.44)

As it relates to:

Governmental Entity – Audit of the Financial Statements for the Fiscal Year Ended September 30, 2022

Compliance with Standards Rule (1.310.001)

The auditor failed to adequately plan the audit. (AU-C §300)

The auditor failed to assess the risk of material misstatement. (AU-C §315)

The auditor failed to obtain sufficient appropriate audit evidence that all contingent liabilities and subsequent events that require adjustment or disclosure were identified. (AU-C §500, §580)

The auditor failed to design and perform audit procedures sufficient to obtain appropriate audit evidence regarding litigation, claims and assessments involving the entity that may give rise to a risk of material misstatement. (AU-C §501)

The auditor failed to adequately, or accurately, document:

1. fraud risk. (AU-C §230, §240)

2. who performed the work associated with engagement acceptance and the date such procedures were performed. (AU-C §230)

3. the evaluation of the design of the controls relevant to the audit and whether they have been implemented by performing procedures in addition to inquiry of the entity's personnel. (AU-C §230, §315)

4. who performed the work associated with the auditor’s understanding of the components of internal control, the date such procedures were performed, as well who responded on behalf of the auditee and the date of such response. (AU-C §230, §315)

5. the specific items and controls observed in the walkthrough for accounts payable. (AU-C §230)

6. the sampling methodology for payroll testing. (AU-C §230, §530)

7. audit procedures and attributes of the specific items included in the sample for payroll testing. (AU-C §230)

8. the audit procedures related to the search for unrecorded liabilities. (AU-C §230)

9. the response to inquiries or other procedures performed when the results of analytical procedures resulted in variances that were unexpected or unexplained. (AU-C §230, §520)

10. all nonattest services and the safeguards implemented to reduce significant threats to an acceptable level. (AU-C §230)

11. the responses received to related party inquiries. (AU-C §230, §550)

12. the date confirmations were received. (AU-C §230)

Throughout the working papers the auditor failed to accurately document the date procedures were performed. (AU-C §230)

Governmental Audits (1.400.055)

The auditor failed to obtain sufficient appropriate audit evidence to support assertions and management’s representations regarding laws and regulations that would have a direct and material effect on the financial statements. (AU-C §250, §500; GAS 6.15, .39-.44)

Agreement

In consideration of the ECA forgoing further investigation of Mr. Walker’s conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Walker agreed as follows:

To waive his rights to a hearing under AICPA bylaws section 7.4 and Society of Louisiana CPAs bylaws section C.

To neither admit nor deny the above specified charges.

To his suspension of membership in the AICPA and Society of Louisiana CPAs for a period of one year from the effective date of this agreement. During the period of suspension, he is prohibited from representing himself as a member of the AICPA and Society of Louisiana CPAs and from using any AICPA credentials or certificates.

To comply immediately with professional standards applicable to the professional services he performs.

To complete the following 24 hours of continuing professional education (CPE) courses within 12 months of the date he signs this letter and provide evidence of such completion (e.g., attendance sheets, course completion certificates).

• Yellow Book: Staying Compliant with

• Government Auditing Standards 11.5

• Government Accounting and Auditing Update 8.5

• Accounting and Attest Update Part 1:

• Hot Topics for Preparing Current Period

• Financial Statements 2

• Accounting and Attest Update Part 1:

• Hot Topics for Preparing Current Period

• Financial Statements 2

To hire an outside party, acceptable to the ECA, to perform a pre-issuance review of the reports, financial statements, and working papers on 3 audits or reviews performed by him for one year from the date the reviewer has been approved by the ECA. A peer review undergone by his firm would not exempt them from this requirement. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the date he signs this letter. Also, no later than 30 days after the date he signs this letter, he must submit a list to the ECA of the audits and reviews on which he expects to participate and reports will be issued in the upcoming 12 months from which the engagements subject to pre-issuance review will be selected.

He agreed to permit the outside party to report to the ECA on his progress in complying with this agreement as stated herein to comply with professional standards. The report is due 30 days after the reviewer has completed their review and should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); a description of the nature of the entity reviewed; the entity’s year end; and the date of the review.

He agreed to have this pre-issuance review performed at his expense. The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.

He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any audits or reviews during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with audits or reviews, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change and undergo the required pre-issuance reviews.

To submit six months after completion of the pre-issuance reviews, a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the six-month period following the date he completed the pre-issuance reviews.

The ECA will select one of these engagements for review. He will be informed of this selection and will be asked to submit information to include a copy of the auditor’s report, the financial statements, and working papers related to that engagement for review by the ECA.The ECA may extend the period to select an engagement to ensure a suitable selection is available.A peer review undergone by his firm would not exempt him from this requirement.

He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any audits or reviews until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits or reviews, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change, and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change, and the ECA will select a suitable work product for review.

After an initial review of such report, financial statements, and working papers, the ECA may decide he has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement he submitted is warranted. If, at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the AICPA joint trial board for a hearing or take such other action as it deems appropriate.

Provide his most recent peer review documents (report; representation letter; acceptance letter; letter of response and completion letter, as applicable) within 30 days of the effective date of this agreement.

Submit written evidence from the partner at his firm responsible for coordinating his firm’s peer review and the firm’s managing partner that he has provided this letter to them within 30 days of the effective date of this agreement.

To be prohibited from performing peer reviews in any capacity until he has completed all directives in this letter. This prohibition will be communicated to his firm’s peer review administering entity.

To be prohibited from serving as a member of any ethics or peer review committee of the AICPA or the Society of Louisiana CPAs until he has completed all directives in this letter. This prohibition will be communicated to those responsible for appointments to such committees. In addition, if he applies to join any other committee of the AICPA or the Society of Louisiana CPAs, he must inform those responsible for such appointments of the results of this ethics investigation.

To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in the areas of accounting, auditing, reviews, and/or Government Auditing Standards until he has completed all directives in this letter. This prohibition will be communicated to those responsible for engaging CPE instructors at the AICPA and the Society of Louisiana CPAs.

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 firm, the charges, and the terms of this settlement agreement.

That the ECA shall monitor his compliance with the terms of this settlement agreement and initiate an investigation where the ECA finds there has been noncompliance.