BEFORE THE CALIFORNIA BOARD OF ACCOUNTANCY DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

In the Matter of the Accusation Against:

BKD,LLP 910 E. St. Louis St. Suite 400 Springfield, MO 65806

Certified Public Accountant Partnership Certificate Number PAR 6889

Respondent.

Case No. AC-2016-25

OAH No. 2016050845

DECISION AND ORDER

The attached Stipulated Settlement and Disciplinary Order is her~by adopted by the

California Board of Accountancy, Department of Consumer Affairs, as its Decision in this

matter. _

This Decision shall become effective oil _ _,\'--'7..,/c...L\..:..1_.&"_\-=-!_(p-'------It is so ORDERED __,L..\ \1-\w}ko::..='::....\.LL).e:.lo__.....,..

i!rd</JdaFOR 'fH'E CALIFORNIA BOAR~F ACCOUNTANCY DEPARTMENT OF CONSUMER AFFAIRS

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KAMALA D. HARRIS Attorney General of California JANICEK. LACHMAN Supervising Deputy Attorney General ANAHITA S. CRAWFORD Qeputy Attorney General State Bar No. 209545

1300 I Street, Suite 125 P.O. Box 944255 Sacramento, CA 94244"2550 Telephone: (916) 322"8311 · Facshl,.ile: (916) 327 "8643

Attorneys for Complainant

In the Matter of the Accusation Against:

BKD,LLP 910 E. St. Louis St. Suite 400 Springfield, MO 65806.

Certified Public Accountant Partnership Certificate Number PAR 6889

Respondent.

BEFORE THE CALIFORNIA BOARD OF ACCOUNTANCY DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

Case No. AC"2016"25

OAH No. 2016050845

STIPULATED SETTLEMENT AND DISCIPLINARY ORDER

IT IS HEREBY STIPULATED AND AGREED by and between the parties to the above"

entitled proceedings that the following matters are true:

PARTIES

1. Patti Bowers (Complainant) is the Executive Officer of the California Board of

Accountancy (CBA). She brought this action solely in her official capacity and is represented in

this matter by Kamala D. Harris, Attorney General of the State of California, by Anahita S.

Crawford, Deputy Attorney General.

2. Respondent BKD, LLP (Respondent) is represented in this proceeding by attorney

Stephanie Sessions Perkins whose address is: 925 Highland Pointe Drive, Suite 450, Roseville,

California 95678. Respondent is acting through Michael G. Wolfe, Partner & Chief Risk Officer,

1 STIPULATED SETTLEMENT (AC-2016-25)

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and he has been designated· and authorized to enter into this agreement on behalf of Respondent

(hereinafter "Authorized Representative")•

3. On or about June 23, 2004, the CBA issued Certified Public Accountant Partnershif'

Certificate No. PAR 6889 to BKD, LLP (Respondent). The Certified Public Accountant

Partnership Certificate was in full force and effect at all times relevant to the charges brought in

Accusation No. AC~2016~25, and will expire on June 30, 2018, unless renewed.

ruRISDICTION

4. Accusation No. AC-2016-25 was filed before the CBA, and is currently pending

against Respondent. The Accusation and all other statutorily required documents were properly

served on Respondent on March 18, 2016. Respondent timely filed its Notice of Defense

contesting the Accusation.

5. A copy of Accusation No. AC-2016-25 is attached as exhibit A and incorporated

herein by reference.

ADVISEMENT AND WAIVERS

6. Respondent has carefully read, fully discussed with counsel, and understands the

charges and allegations in Accusation No. AC-2016-25. Respondent has also carefully read, fully

discussed with counsel, and understands the effects of this Stipulated Settlement and Disciplinary

Order. ·

7. Respondent is fully aware of its legal rights in this matter, including the right to a

hearing on the charges and allegations in the Accusation; the right to confront and cross-examine .

the witnesses against them; the right to present evidence and to testify on its own '

behalf; the right

to the issuance of subpoenas to compel the attendance of witnesses and the production of

documents; the right to reconsideration and court review of an adverse decision; and all other

rights accorded by the California Administrative Procedure Act and other applicable laws.

8. Respondent voluntarily, knowingly, and intelligently waives and gives up each and

every right set forth above.

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2 STIPULATED SETTLEMENT (AC-2016-25)

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CULPABILITY

9. Respondent admits the truth of each and every charge and ·allegation in Accusation

No. AC-2016-25.

10. Respondent agrees that its Certified Public Accountant Partnership Certificate is

subject to discipline and they ~gree to be bound by the CBA's probationary terms as set forth in

the Disciplinary Order below.

CIRCUMSTANCES IN MITIGATION

11. Several factors mitigate the conduct of Respondent alleged in the Accusation in this

matter, including the following:

a. The basis for the Accusation's alleged violation of Business and Professions Code

section 5100, subdivision (1), by Respondent BKD is the order entered against it by United States

Securities and Exchange Commission ("SEC") on December 8, 2014, in the case In the Matter of

BKD, LLP (Securities Exchange Act of 1934 Release No. 73768, Accounting and Auditing

Enforcement Release No. 3603, Administrative Proceeding File No. 3-16299). BKD has

presented evidence that is in complianCe with the SEC's order.

b. There has been a passage of time since the underlying. conduct occurred that was the

subject of the SEC's Order on December 8, 2014, in the casein the Matter ofBKD, LLP,

(Securities Exchange Act of 1934 Release No. 73768, Accounting and Auditing Enforcement·.

Release No. 3603, Administrative Proceeding. File No. 3-16299).

c. During the·CBA's investigation of this matter, BKD has cooperated fully.

d. BKD is admitting responsibility at an early stage in these proceedings.

e. Prior. to the issuance of the SEC Order, BKD implemented remedial measures·

outlined in the SEC Order.

RESERVATION

12. The admissions made by Respondent herein are only for the purposes of this

proceeding, or any other proceedings in which the California Board of Accountancy or other

California professional licensing agency is involved, and shall not be admissible in any other

criminal or civil proceeding.

3 STIPULATED SETTLEMENT (AC-2016-25)

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CONTINGENCY

13. This stipulation shall be subject to approval by the CBA. Respondent understands

and agrees that counsel for Complainant and the staff of the CBA may communicate directly with

the CBA regarding this stipulation and settlement, without notice to or partici~ation by

Respondent or its counsel. By signing the stipulation, Respondent understands and agrees that

they may not withdraw its agreement or seek to rescind the stipulation prior to the time the CBA

considers and acts upon it. If the CBA fails t~ adopt this stipulation as its Decision and Order, the

Stipulated Settlement and Disciplinary Order shall be of no force or effect, except for this . .

paragraph, it shall be inadmissible in any legal action between the parties, and the CBA shall not

be disqualified from further action by having considered this matter.

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14. The parties understand and agree that Portable Document Format (PDF) and facsimile

copies of this Stipulated Settlement and Disciplinary Order, including PDF and facsimile

signatures thereto, shall have the same force and effect as the originals.

15. This Stipulated Settlement and Disciplinary Order is intended by the parties to be an

integrated writing representing the complete; final, and exclusive embodiment of their agreement.

It supersedes any and all prior or contemporaneous agreements, understandings, discussions,

negotiations, and commitments (written or oral). This Stipull').ted Settlement and Discipiinary

Order may not be altered, amended, modified, supplemented, or otherwise changed except by a

writing executed by an authorized representative of each of the parties.

16. In consideration of the .foregoing admissions and stipulations, the parties agree that

the CBA may, without further notice or formal proceeding, issue and enter the following

Disciplinary Order:

DISCIPLINARY ORDER

IT IS HEREBY ORDERED that Certified Public Accountant Partnership Certificate No.

PAR 6889 issued to Respondent BKD, LLP is suspended for thirty (30) days. However, the

suspension is stayed and Respondent is placed on probation for eighteen (18) months on the

following terms and conditions.

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//

STIPULATED SETTLEMENT (AC-2016-25)

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1. Obey All Laws

Respondent shall obey all federal, California, other states' and local laws, including those

rules relating to the practice of public accountancy in California.

2. Cost Reimbursement

Respondent shall reimburse the CBA $8,530.00 for its investigation and prosecution costs.

Payment shall be made within 100 days of the date the CBA's decision becomes final.

3. Compliance With the SEC Order

Respondent shall comply with all requirements imposed by the United States Securities and

Exchange Commission in its December 28, 2014 Making findings, and imposing remedial

sanction and a cease-and-Desist Order (See, In the Matter ofBKD, LLP, Commission Release

No. 73768) and report such compliance in its quarterly reports submitted to the CBA as required

by Probation Condition No. 4.

4. Submit Written Reports

Respondent shall submit, within 10 days of completion of the quarter, written reports to the

CBA on a form obtained from the CBA. The Respondent shall submit, under penalty of perjury,

such other written reports, declarations, and verification of actions as are required. These

declarations shall contain statements relative to Respondent's compliance with all the terms and

conditions of probation. Respondent shall immediately execute all release of infonnation forms

as may be required by the CBA or its representatives.

5. Personal Appearances

Respondent shall, during the period of probation, appear in person or through other means

as approved by the CBA, at interviews/meetings as directed by the CBA or its designated

representatives, provided such notification is accomplished in a timely manner.

6. Comply With Probation

Respondent shall fully comply with the terms and conditions of the probation imposed by .

the CBA and shall cooperate fully with representatives of the· CBA in its monitoring and

investigation of the Respondent's compliance with probation terms and conditions.

5 STIPULATED SETTLEMENT (AC-2016-25) .

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7. Practice Investigation

Respondent shall be subject to, and shall permit, a practice "investigation of the

Respondent's professional practice. Such a practice investigation shall be conducted by

representatives of the CBA, provided notification of such review is accomplished in a timely

manner.

8. Comply With Citations

Respondent shall comply with all final orders resulting from Citations issued by the CBA.

9. Violation of Probation

If Respondent violates probation in any respect, the CBA,,,after giving Respondent notice

and· an opportunity to be heard, may revoke probation and carry out the disciplinary order that

was stayed. If an accusation or a petition to revoke probation is filed against Respondent during

probation, the CBA shall have continuing jurisdiction until. the matter is final, and the period of

probation shall be extended until the matter is final.

The CBA's Executive Officer may issue a citation under California Code of Regulations,"

Section 95, to a licensee for a violation of a term or condition contained in a decision placing that

licensee on probation.

10. Completion of Probation

Upon successful completion of probation, Respondent's license will be fully restored.

11. Active License Status

Respondent shall at all times maintain an active license status with the CBA, including

during any period of suspension. If the license is expired at the time the CBA's decision becomes

effective, the license must be renewed within 30 days of the effective date of the de~ision.

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STIPUlATED. SETTLEMENT (AC-2016-25)

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ACCEPTANCE

I have C<\te:fully read the above Stipulated Settlement and Disciplinary Order and have fully

discussed it with my attorney, Stephanie Sessions Perkins. 1 understand the stipulation and the

effect it will have on my Certified Public Accountant P~utnership Certificate. I enter into this

Stipulated Settlement and Disciplinaty Order voluntarily, knowingly, and intelligently~ and agree

to be bound by the Decision and Order of the CBA.

DATED:

Respondent Michael G. Wolfe, Partner & Chief Risk Officer, Authorized Representative of BKD, LLP

I have read and fully discussed with Respondent BKD, LLP the terms and conditions and

other matters contained in the above Stipulated Sett ent and Disciplinary Order. I approve its

form. and content.

DATED: f(), e.,q, WI STEPHANIE SESSIO'NS PE.RKINS Attorney for Respondent

ENDQRSEMENT

The foregoing Stipulated Settlement and Disciplinary Order is hereby respectfully

submitted for consideration by the CBA. Dated: 10-~g .. / Respectfully submitted,

KAMALA D. HARRIS Attorney General of California JANICEK. LACHMAN SupervJ§j1lll,Deputy Attorney raJ

~·.... 'j

SA2015l05372 1248082Ldoc

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STIPULATED SETTLEMENT (AC-2016-25)

Exhibit A

Accusation No. AC-2016-25

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~ BKD, LLP) ACCUSATION

BEFORE THE CALWORMABOARDOFACCOUNTANCYDEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

KAMALA D: HAR.rus Attorney General ofCalifornia JANICEK.> LACHMAN Supervising Deputy Attorney General ANAHITA S. CRAWFORD Deputy Attorney .General

. State Bar No. 209545 1300 I Street, Suite 125 P.O. :Box 944255 Sacramento, CA 94244-2550 Telephone: (916) 322~8311 Facsimile:· (916) 327.-8643

Attorneys for Complainant

In the Matter ofthe Accusati?n Against:

BKD,LLP . 910 E. St. Louis St. Suite 400

Springfiel,d, MO 65806

Certified Public Accountant Partnership Certificate Number PAR 6.88.9

Respon&nt.''·

Case No.AC.~2016~25 12 13

14 ACCUSATION

19 Complainant alleges:

PARTIES 20

1. Patti Bowers (Complainant) brings t~s Accusation solely in her official capacity as the

Executive Officer of the California Board ofAccountancy, Department of Consumer Affairs. 21

2. On or about June 23', 2004, the California Board ofAccountancy issued C:'lrtified

Public Accountant Partnership Certificate Number PAR 6889 to BKD, LLP (R.espondent1. The ·

Certified Public Accountant Partnership Certificate was in full for~e and effect at aU times relevant

·to the charges brought here:in and will expire on June 30, 2016, unless renewed.

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JURISDICTION1 3. This Accusation is brought before the California Board ofAccount!IDCY (CBA),

Department of Consume;r Affairs, under the authority ofthe following laws. All section teferences

are to the Business and Professions Code unless otherwise indicated.

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4. Section 5109 ofthe Code states:

The expiration, cancellation, forfeiture, or suspension of a license, practice privilege, or other authority to practice public accountancy by operation oflaw or by order or decision of the board or a court oflaw, the placement o;f a 1icenJ3e on a retired status, or the voluntary surrender of a license by a licensee shall not deprive the board of jurisdiction ~o commence or proceed with any investigation ofor action or disciplinarYproceeding ·against the licensee, or to render a decision suspending or revoking the license. ·

COST RECOVERY

5. Section 5107 states: 11

12 {a)· The executive officer ofthe board may request the. administrative law judge, as . · part ofthe proposed decision in a disciplinary proceeding, to direct any holder ofa . permit or certificate found to have committed a violation or violations ofthis chapter to pay to the board all reasonable costs ofinvestigation and prosecution of the cas<',

·including, but not litnited to, attol'J;ley's fees. The board shall not recover costs incurred at the adrxrlnistrative hearing.

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16 STATUTORXPROYffilQN

6. ' Section 5100 states: 17

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After notice and hearing the board may revoke, susp~d. or refuse to t:enew any permitor certificate granted under Article 4 (commencing with Section 5070) and Article 5 (commencing with Section 5080), or may censure the holder ofthat permit or . certificate for unprofessional conduct that includes, but is not limitedto, one or any . combinp.tion ofthe following causes:

(1) The imposition of any discipline, penalty, or sanction on a registered publicaccounting firm or any associated person ofsuch firm, or both, or on any other holder of a permit, certificate, license, or other authority to practice in this state, by the Public Company Accounting Oversight Board or the United States SecuP.ties and Exchange Conn::nission, or their designees under the Sarbanes-Oxley Act of2002 or other federal legislation.

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23 . . . · • 24 7. · Section 5116 states:

25 (a) The board, after appropriate notice and an opportunity for h,earlng, may order any li9ensee or applicant for licensure or examination to pay an administrative penalty as Pt:ovided in this article as part of any disciplinary proceeding or other.proceeding provided for in this chapter.

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( BKD, LLP) ACCUSATION

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2.8

FACTUAL SUMMARY

. · 8. .On or about December 8, 2014, in the 'action entitled In the Matter ofBKI!, LLP, File

No. 3-16299, the United States Securities and Exchange Commission (hereinafter "Commission")

imposed sanctions against Respondent. The Col111nission made findings, and imposed remedial

sanctions and a cease-and-desi~t order whereby .Respondent was censured, ordered to cease and

desi~t from committing similar violations of the Exchange Act, and pay 8: civil penalty of $15,000

to the Colllll)ission. The basis fo~ the Commission's action aga!nst ~espondent was as follows:

a. Respondent audited the annual financial statements that were :filecJ. with the

Co~ssion for 21 broker-dealer audit clients for the fiscal years 2010-2012. It was alleged that

for at least one audit ofnine of;the broker-dealer audit clients, Respondent was not independent

under auditor independence criteria established by the commission and rp.ade applicable by

Exchange Act Rule 17a-5(f)(3) to audits ofbrokers and dealers·. Respondent allegedly e~aged in

.improper prof~ssional conduct pursuant to Exchange Act Section 4C(a)(2) and Rule 102(e)(l)(i1') . .

ofthe Commissions' Rules ofPractice, violated the auditor independence rules, and caused each of

the broker~dealers' failure to file an annual report audite4 by an independent accountant.

CAUSE FOR DISCIPLINE

(Imposition ofDisclpline by United States Securities and Exchange Commission)

9. RespondeJ?-t is subject to disciplinary action under section 5100, subsection (1) in that

on or about Dec~er 8, 2014, the United States Securities and Exchange Commission imposed

discipline, penalty, 'or a sanction on Respondent, .a certified public accountancy partnership, for o o o ' ' I ) '

violations of the· C~mmissl.on's auditor independence rules, as set forth above in paragraph 8 and

subparts.

PRAYER

WHEREFORE, Complainant requests that a hearing be held on the matters herein alleged, . . and that following the hearing, the California Board ofAccountancy issue a decision:

. . 1. Revoking or suspending or otherwise imposing discipline upo11 Certified Puplic

Accountant Partnership Certificate Number PAR 6889, issued to BKD, LLP

3 ( BKD, tLP) ACCUSATION ·

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. i, : '<r ( BKD, LLP) ACCUSATION . ·~·

l.•t,

2. Ordering BKD, LLP to pay ~e California Board of Accountancy the reasonable costs

ofthe :investigati~n and. enforcement ofthis ~ase, pursuant to Bwiiness and Professions Code section 5107;

3. Ordering the imposition of an administrative penalty against BKD, LLP pmsuant to Business and' Professions Code section 5116;

4. Taking such other and :further action as deemed necessary and proper.

DATED:~--------~p·4;,.1-. ~dIn_____

PA:. TIBOWER Executive Offwer California Board ofAccountancy Department ofConsumer Affaits State. of California Complainant· SA2015105372

12183130.doc