Friel, Daniel F. of Waltham, MA

As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Massachusetts Society of CPAs, Mr. Friel, with the firm of Daniel F. Friel, CPA, P.C. entered into a settlement agreement under the Joint Ethics Enforcement Program, effective March 28, 2022.

Information came to the attention of the Ethics Charging Authority (ECA – AICPA Professional Ethics Executive Committee and the Massachusetts Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Friel’s performance of professional services on the audit of the financial statements of a commercial entity as of and for the year ended December 31, 2019.

The ECA has reviewed Mr. Friel’s responses to the ECA’s inquiries and other relevant documents Mr. Friel submitted to support his response, including certain work papers, financial statements, and relevant correspondence.

Based on this information, there appears to be prima facie evidence that Mr. Friel has violated the following rules of the AICPA and the Massachusetts Society of CPAs’ codes of professional conduct.

Violations

Compliance with Standards Rule (1.310.001)

• The auditor failed to document:

  1. the nature of the threats to independence from nonattest services provided, the safeguards applied, and whether the threats were reduced to an acceptable level. (AU-C §220)

  2. the basis for the assessment of control risk below high for all significant audit areas. (AU-C §330)

  3. his understanding of internal control over financial reporting and information technology. (AU-C §315)

• The management representation letter was dated after the audit report date. (AU- C §580)

Accounting Principles Rule (1.320.001)

The financial statements failed to include substantially all disclosures required by FASB ASC 606 including:

• transition disclosures (FASB ASC 606-10-65);

• disaggregation of revenue (FASB ASC 606-50-7);

• performance obligations (FASB ASC 606-10-50-12); and

• judgments, and changes in the judgments, used in determining the timing of satisfaction of performance obligations and the transaction price and the amounts allocated to performance obligations. (FASB ASC 606-10-50-17)

Agreement

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

• To waive his rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures.

• To waive his rights to a hearing under AICPA bylaws section 7.4 and Massachusetts Society of CPAs bylaws Article VIII.2(d).

• To neither admit nor deny the above specified charges.

• To his expulsion from membership in the AICPA and the Massachusetts Society of CPAs. His expulsion from the AICPA includes the loss of his AICPA credentials and certificates.

• 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.