SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 41321 \ April 22, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1130 \ April 22, 1999
FILE NO. 3-8077
|In the Matter of
Paul J. Argy, C.P.A.
|ORDER GRANTING APPLICATION
FOR REINSTATEMENT TO PRACTICE
AS AN ACCOUNTANT BEFORE THE
On June 24, 1993, Paul J. Argy ("Argy"), a certified public accountant, was suspended by the Commission from practicing as an accountant before the Commission as a result of an agreement reached with Argy in settlement of public administrative proceedings instituted by the Commission against Argy pursuant to Rule 2(e) of the Commission's Rules of Practice. [ The institution of public administrative proceedings and the settlement and suspension of Argy were announced in AAER 455.] This order is issued in response to his application for reinstatement to practice before the Commission. [ Rule 2(e) has been recodified in its entirety as Rule 102(e). Rule 102(e)(5)(i) provides: An application for reinstatement of a person permanently suspended or disqualified under paragraph (e)(1) or (e)(3) of this section may be made at any time, and the applicant may, in the Commission's discretion, be afforded a hearing; however, the suspension or disqualification shall continue unless and until the applicant has been reinstated by the Commission for good cause shown. 17 C.F.R. § 201.102(e)(5)(i).]
Argy performed as a senior manager for the accounting firm Price Waterhouse ("PW") on the audit of Star Technologies, Inc. ("Star") leading to the issuance of an unqualified audit report on the fiscal year 1989 financial statements.
The Commission found that Star's 1989 financial statements, which were filed with the Commission, were not presented in conformity with generally accepted accounting principles and that PW's audit was not conducted in accordance with generally accepted auditing standards.
Star and a member of Star's management consented to a cease and desist order in connection with these false financial statements and the partner in charge of PW's 1989 audit of Star consented to a Rule 2(e) order denying him the privilege of appearing or practicing before the Commission, with the right to apply for reinstatement after five years.
Argy, according to the Rule 2(e) order, failed to conduct the audit of Star "in accordance with generally accepted auditing standards" because he failed to exercise due professional care in the performance of his audit of the financial statements of Star. Argy signed off on the audit in spite of his disagreement with the conclusions of the engagement partner and he failed to document such disagreements in the workpapers or bring them to the attention of another PW partner.
Argy consented to the settlement of Rule 2(e) proceedings and to a suspension from practice as an accountant before the Commission, with the right to apply for reinstatement after eighteen months upon meeting certain specified conditions.
Argy intends to practice before the Commission as an independent public accountant with the accounting firm of Argy, Wiltse & Robinson. Argy has represented that his firm is a member of the SEC Practice Section of the AICPA's Division for CPA Firms, has received an unqualified report relating to the firm's most recent peer review, and will comply with the applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, as long as Argy appears or practices before the commission as an independent public accountant.
Argy has undertaken that should he engage in practice before the Commission as a preparer or reviewer of financial statements required to be filed with the Commission, he will have his work reviewed by the independent audit committee of the company or in some other manner acceptable to the staff of the Commission.
On the basis of information supplied by Argy, it appears that Argy has complied with the terms of his suspension from practice before the Commission, that no information has come to the attention of the Commission relating to his character, integrity, professional conduct or qualifications to practice before the Commission that would be a basis for adverse action against Argy pursuant to Rule 102(e) of the Commission's Rules of Practice, and that Argy's offer to condition his reinstatement is fair and in the public interest, it is accordingly,
ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that Paul J. Argy is reinstated to appear and practice before the Commission as an accountant subject to the undertakings set forth above.
By the Commission.
Jonathan G. Katz