Joint Ethics Enforcement Program (JEEP)

PICPA is a participating state society in the Joint Ethics Enforcement Program (JEEP), an agreement between the American Institute of CPAs and state CPA societies.

What is JEEP?

“The purpose of the JEEP agreement between the AICPA and a state society is to permit joint enforcement of their respective codes of professional conduct with respect to a member of either or both by means of a single investigation and, if warranted, a single settlement agreement or joint trial board hearing.” (JEEP Manual of Procedures, Dec. 2006)

Depending on the nature of the ethics complaint, and the individual’s membership in various CPA societies, either the PICPA Professional Ethics Committee or AICPA Professional Ethics Division will conduct the investigation. If prima facie evidence of a violation is found, the two organizations will concur on a decision, depending on the severity of the violation.

Summary of the JEEP Process

All ethics cases include these steps:

1. Complaint is filed

Complaints can be filed by a member of either organization or by the public. Alternatively, they can come to the attention of the committee from federal, state, and local governments; newspaper articles or media reports; or public decisions of judicial and regulatory authorities (ex. Securities and Exchange Commission or State Board of Accountancy).

2. Respondents are identified

JEEP ethics cases may only be brought against members of one or more participating CPA societies. In cases where a firm is alleged to have violated the ethics code, information about the individuals responsible is requested from the firm so that specific respondents can be identified.

3. Case investigator is assigned

One member of the committee will serve as the case investigator and primary liaison with respondents. All correspondence related to the case is sent to the case investigator.

4. Opening letters are sent to respondents

Each respondent is sent a letter informing them of the investigation, the specific violations of the Code of Conduct alleged by the complaint, and questions to be answered or documents to be provided. Respondents are required to respond to the opening letter, generally within 30 days.

5. Evidence and interviews are collected

The case investigator will gather evidence from the respondents. In addition, all respondents will be given the opportunity for an interview to discuss the investigation and offer additional evidence.

6. Case is presented to the committee

Once the investigator has collected and evaluated the relevant evidence, a summary of the case will be presented to the committee. The committee will review the evidence and issue a decision as to whether there is prima facie evidence of a violation of the Code of Professional Conduct.

Respondent Interviews

All respondents are offered the opportunity for an interview during the investigation. The interview allows the respondent to discuss the investigation and offer additional evidence. There are a few key points to consider about JEEP interviews:

1. The interview is optional; a respondent may decline the interview offer.

2. If accepted, representatives from the committee and the respondent (or a representative) will attend the interview. The respondent may be accompanied by legal counsel and representatives or legal council of the firm.

3. Interviews are:

a) Conducted on an informal basis
b) Conducted either by telephone or in person
c) Held a time, date, and location mutually agreeable to all parties
d) Subject to recording, with the respondent's approval

4. Respondents may decline to respond to any interrogatories during the interview. However, declining to respond may result in the committee subsequently posing the question in writing and requiring the respondent to make a substantive response.

After the interview, a draft written summary will be circulated to all attendants for comments and corrections. If no comments are received within a reasonable time frame, the written summary will be finalized and become a part of the evidence for the case.

Deferring an Investigation

An investigation may be deferred because the issues and parties involved are currently subject to:

a) Legal proceedings before a state or federal civil or criminal court
b) Proceedings or investigations by a state or federal regulatory agency or other organization authorized to regulate accountants (ex. Securities and Exchange Commission, State Board of Accountancy)
c) Appeals actually undertaken from a decision of a state or federal civil or criminal court or regulatory agency.

During a deferral, respondents will be required to periodically update the committee in writing regarding the status of the litigation or proceeding. Respondents, or a firm designee, will also be responsible for preserving all documents necessary to the investigation (ex. financial statements, working papers, memoranda, correspondence, litigation documents).

Upon the conclusion of the litigation or proceeding, the investigation will resume.

Possible Conclusions of an Investigation

After discussion, the committee may issue the following decisions:

1. No violation

If there is no prima facie evidence of a violation, the investigation will be closed. Closing letters will be sent to the respondent and complainant, but the investigation and results will be kept confidential. The committee will reserve the right to reopen the case if additional evidence is brought to its attention.

2. Required corrective action (RCA)

If there is evidence of a minor infraction, the committee may choose to offer the respondent a letter specifying corrective actions that should be undertaken. The actions generally include CPE or pre-issuance reviews of engagements. Once the actions are completed, closing letters are sent to the respondent and complainant, but the investigation and results will be kept confidential. A respondent may reject the RCA, but in doing so may be subject to a Joint Trial Board hearing.

3. Settlement agreement

In lieu of referring the case to the Joint Trial Board, the committee may, at its discretion, choose to offer the respondent a non-negotiable settlement agreement. The agreement will specify whether it may be published as directed by AICPA and PICPA bylaws. A respondent may reject the non-negotiable settlement agreement, but will then be subject to a Joint Trial Board hearing.

4. Referral to the Joint Trial Board (JTB)

If there is prima facie evidence of a violation, and the parties do not agree on one of the above options, the case will be referred to the JTB. A JTB hearing panel will consider the case, as presented by the committee, and respondents will be given the opportunity to appear at the hearing. The panel may find a respondent not guilty or, if a guilty verdict is issued, may expel or suspend the respondent’s membership, admonish the respondent, or take additional action as it considers appropriate. The decision of the JTB will be published under AICPA and PICPA bylaws. A respondent may appeal a guilty verdict.

Confidentiality

All ethics investigations are conducted in a confidential manner. Names of complainants and respondents, along with any materials relating to the substance of the investigation will be kept confidentially and segregated from other office files.

There are two exceptions to the confidential nature of JEEP investigations:

1. Complainants will be informed of the results of the investigation. If the results are not otherwise published, the complainant will be reminded of the confidential nature of the investigation and the sensitivity of the information.

2. If prima facie evidence of a violation is found, and the respondent (a) is referred to the Joint Trial Board or (b) agrees to a settlement agreement specifying the results of the investigation will be published, then AICPA and PICPA bylaws allow for publication of the results of the investigation and disciplinary actions. Disciplinary actions are available though the organizations’ respective periodicals and Web sites.

JEEP Manual of Procedures

The complete JEEP Manual of Procedures is available through the AICPA Web site. Print copies are also available from the PICPA Professional & Technical Standards team.

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