Accounting/ Violation Of State Accountancy Act term paper 17808

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RIVERSIDE CPA PAYS $25,000 PENALTY

FOR VIOLATING STATE ACCOUNTANCY ACT

Hartford - Secretary of the State Susan Bysiewicz's office announced today that the Connecticut State

Board of Accountancy has accepted a settlement agreement with Michael Smeriglio, a certified public

accountant (CPA) from Riverside, Connecticut, practicing in Greenwich, which requires Smeriglio to pay a

$25,000 civil penalty for allegedly violating the State Accountancy Act. Smeriglio is reported to have

received commissions from the sale of financial products. The penalty represents the net income he

received from the illegal profits of that activity.

"Connecticut law bars CPA’s from accepting commissions or referral fees, even when done through a

business separate from their CPA firm," according to Michael Kozik, attorney for the Connecticut State

Board of Accountancy.

The Board’s case against Smeriglio was initiated when another Connecticut CPA sent the Board a copy of

newsletter apparently published by Trusted Securities Advisors, Corp. Smeriglio was quoted in the

newsletter as saying, "In addition to generating commission revenues that used to go to brokers, I also

make my clients feel much more comfortable with me as their personal financial advisor. It’s a win win

scenario for all of us."

According to Kozik, Smeriglio fully cooperated with the Board’s investigation. "None of Mr. Smeriglio’s

clients complained to the Board, and he may have even thought that he was acting lawfully by setting up

a separate business through which to receive the commissions. He was wrong. He made illegal profits for

about two and a half years. This settlement deprives him of all of those profits," Kozik added.

The settlement also provides that Smeriglio will immediately stop accepting commissions for referring the

products or services of others and will waive his right to receive future commissions on products already

sold. The settlement specifically provides that by agreeing to settle the case, Smeriglio is not admitting he

did anything wrong. He retains his Connecticut CPA license.

Kozik also noted that, although there is a great deal of discussion in the profession and the business

community about changing the law prohibiting CPA’s from receiving commissions, in late October the

Board voted down a proposal to seek such a change from the legislature. The traditional view in the

accounting profession is that accepting commissions would imperil a CPA’s objectivity and independence.

The State Board of Accountancy, which was established in 1907 to regulate the practice of public

accountancy in Connecticut, has been part of the Office of the Secretary of the State since 1986.

Bibliography

RIVERSIDE CPA PAYS $25,000 PENALTY

FOR VIOLATING STATE ACCOUNTANCY ACT

Hartford - Secretary of the State Susan Bysiewicz's office announced today that the Connecticut State

Board of Accountancy has accepted a settlement agreement with Michael Smeriglio, a certified public

accountant (CPA) from Riverside, Connecticut, practicing in Greenwich, which requires Smeriglio to pay a

$25,000 civil penalty for allegedly violating the State Accountancy Act. Smeriglio is reported to have

received commissions from the sale of financial products. The penalty represents the net income he

received from the illegal profits of that activity.

"Connecticut law bars CPA’s from accepting commissions or referral fees, even when done through a

business separate from their CPA firm," according to Michael Kozik, attorney for the Connecticut State

Board of Accountancy.

The Board’s case against Smeriglio was initiated when another Connecticut CPA sent the Board a copy of

newsletter apparently published by Trusted Securities Advisors, Corp. Smeriglio was quoted in the

newsletter as saying, "In addition to generating commission revenues that used to go to brokers, I also

make my clients feel much more comfortable with me as their personal financial advisor. It’s a win win

scenario for all of us."

According to Kozik, Smeriglio fully cooperated with the Board’s investigation. "None of Mr. Smeriglio’s

clients complained to the Board, and he may have even thought that he was acting lawfully by setting up

a separate business through which to receive the commissions. He was wrong. He made illegal profits for

about two and a half years. This settlement deprives him of all of those profits," Kozik added.

The settlement also provides that Smeriglio will immediately stop accepting commissions for referring the

products or services of others and will waive his right to receive future commissions on products already

sold. The settlement specifically provides that by agreeing to settle the case, Smeriglio is not admitting he

did anything wrong. He retains his Connecticut CPA license.

Kozik also noted that, although there is a great deal of discussion in the profession and the business

community about changing the law prohibiting CPA’s from receiving commissions, in late October the

Board voted down a proposal to seek such a change from the legislature. The traditional view in the

accounting profession is that accepting commissions would imperil a CPA’s objectivity and independence.

The State Board of Accountancy, which was established in 1907 to regulate the practice of public

accountancy in Connecticut, has been part of the Office of the Secretary of the State since 1986.

Word Count: 414

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