A. Reprimand Respondents are reprimanded for failing to adhere to applicable standards in their audit practice.
B. Probation and Desk Review
1. Respondent Keith D. Oltrogge’s CPA certificate and Respondent Keith Oltrogge, CPA, PC’s firm permit to practice shall be placed on indefinite probationary status effective the day this Order is executed by all parties.
a. Respondents agree to retain, at their own expense, a Board approved desk reviewer for the purpose of reviewing Respondent’s audit practice and individual audit engagements.
b. Respondents shall supply the Board with the engagement letter with the desk reviewer in advance of implementing their agreement. If not submitted to the Board by June 30, 2010, Respondents shall file a written verification with the Board that they are not performing audit services. Respondents shall not perform any attest services or attest-related peer review services from and after June 30, 2010, except in compliance with this Consent Order.
2. The following terms shall apply to the desk review:
a. The first six 6 governmental audits relating to Iowa governmental bodies performed by Respondents after they have engaged an approved desk reviewer shall be subjected to desk review. As described below, the Board may order additional desk review if the reviews from the first six governmental audits do not demonstrate compliance with applicable audit standards.
b. In addition to pre-release desk review of the six audits referenced above, the peer reviewer shall prepare a more general report for the Board and shall submit it to the Board no later than December 31, 2010. The report shall follow an on-site review in the nature of a peer review of Respondents’ audit procedures, and shall include a review of the firm’s policies and procedures, library and other resources, checklist procedures, work paper documentation and verification practices, and internal quality control systems, as such resources, procedures and systems relate to the firm’s audit practice, with particular emphasis on governmental audits.
c. Respondents shall submit to desk review for pre-release review all work-papers, reports, and related documents for the six audits referenced in subparagraph B2a. Desk reviewer shall perform desk review of the work-papers, reports and related documents for the six audits referenced in subparagraph B2a above. The review shall be for facial compliance with minimum accounting and auditing standards. To aid the desk reviewer Respondents shall supply the reviewer all correspondence Respondents have received from the Iowa State Auditor’s office in the past five years that in any way comment upon or critique Respondents’ audit practices. Peer Reviewer shall not perform field work or warrant the accuracy of Respondents’ work product, but will review work-papers, reports, internal control systems, and such additional documents as are reasonably needed.
d. Desk reviewer shall prepare written comments on each of the six audit reports and work papers, and shall provide the reviewer’s comments, work-papers, and notes simultaneously to Respondents and to the Board.
e. The desk reviewer’s recommended revisions or corrections, if any, shall be incorporated into each final audit prior to release of the report to the client or any third party. Respondents shall, as needed, submit a revised version of each report to the desk reviewer for final approval prior to such release. If Respondents disagree with a recommended revision by the desk reviewer, they shall notify the Board in writing of the recommendation, their response, and the nature of the dispute.
f. Within ten days of the issuance of each audit report, Respondents shall provide the Board a copy of the initial audit report as sent to the desk reviewer, the final audit report as issued to the client, all work papers, and any final desk review comments related to review of the final audit report. These documents do not need to be received by the Board prior to issuance of an audit report approved for release by Respondents’ desk reviewer.
3. Upon completion of the review of the six audits by the desk reviewer, the completion of the on-site review of Respondents’ audit practice, completion of the education described in section D, and the Board’s receipt of all corresponding documentation, Respondents may file an application for release from probation. Respondents shall provide the Board with such access to firm records as is reasonably necessary to verify compliance with this Order.
4. Respondents’ application for release from probation shall comply with 193A Iowa Administrative Code 16.5 and 193 Iowa Administrative Code 7.38. The Board recognizes that 193 Iowa Administrative Code 7.303 is not applicable to this situation.
5. The Board shall release Respondents from probation if they demonstrate full compliance with this Order the general on-site review report verifies that appropriate policies and procedures are in place to address the allegations contained within the Statement of Charges and the correspondence sent to the Respondents by the Iowa State Auditor’s office and the audits released by Respondents demonstrate compliance with applicable accounting and auditing standards. The Board may rely upon the report from and/or written comments prepared by the desk reviewer or the Board may conduct its own inspection of records as may be reasonably required to assure future practices compliant with professional standards.
6. The Board retains full discretion on whether and when to release Respondents from probation. With notice to and an opportunity for Respondents to object, the Board may modify the terms of probation upon a demonstrated basis for such action.
7. Until released from probation Respondents shall not act as peer reviewer for CPA firms offering attest services. This Consent Order shall not preclude Respondents from acting as peer reviewer for individual CPAs or LPAs, or for CPA or LPA firms whose highest level of service is compilation. This Consent Order shall not preclude Respondents from acting as peer reviewer for CPA firms offering attest services outside the State of Iowa. This Consent Order also shall not prevent Respondents from acting as peer reviewer for CPA firms offering attest services in the State of Iowa provided that: 1 such services are pursuant to an engagement letter signed and dated prior to the date of this Consent Order 2 such services are not related to governmental audits and 3 Respondents provide a copy of this Consent Order to such CPA firms.
8. This settlement and final Order shall not preclude the Board from filing additional charges if one or more of the audits subject to desk review or otherwise demonstrate probable cause to take such action. The Order shall also not preclude the Board from taking appropriate action in the event the Board receives any further complaints against either Respondent.
C. Education Respondent Keith Oltrogge shall complete 8 additional hours of continuing professional education specifically in the area of ethics and 24 additional hours of continuing professional education in governmental yellow book. The education must be complete prior to Respondents’ release from probation and may not be used toward the continuing education required for certificate renewal
The Board charges Respondents with repeatedly failing to comply with applicable auditing standards when developing, issuing, and documenting governmental audits, in violation of Iowa Code sections 272C.102 and 3, 542.101b, d, and j 2007, 2009 and 193A Iowa Administrative Code 13.41-5, and 14.21, 5, and 8 2007-2009. The corresponding rules on grounds for discipline, as amended and currently in effect, include 193A Iowa Administrative Code 14.32e, 14.36a, and 14.37a.
