U.S. Labor Department Settles With Accounting Firm Over Deficient Audit of Benefits Plan

Archived News Release — Caution: Information may be out of date.

Atlanta - The U.S. Department of Labor has obtained a consent judgment and order requiring the firm of Ahlstrom & Baker CPAs in Los Alamitos, California, to pay $5,000 in restitution to the employee stock ownership plan (ESOP) of Rehab Consultants of Florida Inc. (RCI) and ensure that all personnel conducting plan audits possess appropriate knowledge and continuing education training.

“The law requires audit of employee benefit plans with 100 or more participants,” said Howard Marsh, director of the Atlanta regional office of the Labor Department’s Employee Benefits Security Administration (EBSA). “These audits provide important information for plan fiduciaries and the government about the financial soundness of a plan.”

Under the court order, the CPA firm must make restitution and pay a $1,000 civil monetary penalty to the Labor Department. In addition, the firm must establish a program to ensure audit engagement personnel have the appropriate knowledge to conduct plan audits and that personnel must have completed a minimum of eight hours of professional education related to employee benefit plan audits within three years prior to signing a plan audit opinion or managing a plan audit engagement.

The order resolves a lawsuit alleging that the CPA firm knowingly participated in fiduciary breaches under the Employee Retirement Income Security Act (ERISA). The CPA firm was alleged to have knowingly participated in breaches by the plan committee members and others when the firm failed to disclose in its audit report that the plan was not receiving employer contributions needed to make loan payments on RCI stock purchased by the plan.

In February 2006, the Labor Department sued the plan committee members Joseph Gentzel, Mary Ann Gentzel, Grayson Gentzel and Graeme Gentzel for allowing the plan to engage in a prohibited transaction. Loan payments of more than $170,000 were paid from the plan to Rehab Consultants of Florida Inc. RCI was dissolved and the plan committee members resigned without providing for continued management of the plan.

This court order was entered in federal district court in Atlanta, Georgia. The suit resulted from an investigation conducted by EBSA’s regional office in Atlanta. In fiscal year 2006, the department achieved monetary results of $1.4 billion in pension, 401(k), health and other benefits for millions of American workers and their families.

Employers and workers can contact the EBSA’s regional office in Atlanta at 404.562.2156 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private-sector pension and health plans.

(Chao v. Gentzel)
Civil Action No. 06-CV-0448

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the COAST office. Please specify which news release when placing your request at 202.693.7765 or TTY 202.693.7755. The U.S. Department of Labor is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

Archived News Release — Caution: Information may be out of date.