Disciplinary Notices and Regulatory Penalties

Listed below are the press release which have been issued by the discipline and appeals tribunals as well as the disciplinary notices published by the ICAS Investigation Committee.

Discipline Tribunal notices

For more information or any questions contact the Tribunals Clerk.

Richard Gibson CA - July 2018

Richard Gibson, a member based in Glasgow, has been found guilty of five charges of professional misconduct in respect that while he was the sole shareholder and director of St Vincent Street Property Limited (formerly known as Haines Watts Glasgow Limited) and hereafter referred to as "the Company “.

Mr Gibson has been severely reprimanded, and in respect of his practising certificate been prohibited from acting as a sole principal for a period of three years. In addition, Mr Gibson was required to pay a penalty of £10,000 and was ordered to pay the costs of ICAS and the Discipline Tribunal totalling £72,230.

Charges

  • on 7 March 2013 he transferred the Company’s shares in HW Forensic (Scotland) Limited to HW Glasgow (Holding) Limited (in which he was the sole shareholder) without any price being paid to the Company, when he knew that the shares had a value;
  • on 7 March 2013 he transferred 75% of the shares the Company held in HW Corporate Finance (Glasgow) Limited to HW Glasgow (Holding) Limited (in which he was the sole shareholder) and 25% of the shares the Company held in HW Corporate Finance (Glasgow) Limited to a third party, without any price being paid for any of the shares, when he knew, or ought to have known, that the shares had a value;
  • between 31 March 2013 and 12 June 2015, he failed to obtain formal advice from an insolvency practitioner, or some other professional experienced in insolvency or distressed businesses, in relation to the financial position of the Company and the steps it could take to protect its creditors;
  • in or around 1 June 2014 he transferred the Company’s assets, including its clients, goodwill, investments, and the non-trading receivable balance due to the Company to Newco for a price which was lower than the actual value of these assets; and
  • he failed to obtain an independent valuation of the Company’s assets in advance of the transfer of its assets to Newco in or around 1 June 2014.

All of which actions or omissions were to the prejudice, or potential prejudice of the Company and its creditors and which constituted breaches of the Member’s duties, in terms of Sections 172(3), 174 and 175(1) and (2) of the Companies Act 2006 and the fundamental principles of integrity, objectivity and professional behaviour in sections 110.1, 120.1 and 150.1 of the ICAS Code of Ethics.

Commentary

Peter Anderson, Discipline Panel Chair, said

“From July 2012, Mr Gibson knew the Company was faced with problems which were financially very severe and threatened the continued existence of the practice in which he was to be the principal continuing member. The most serious difficulty was the heavy cost of continuing property lease obligations for the next 12 years which the business had to fund although faced with reduced resources. This was exacerbated during the next 15 months by the departure of Directors who were providers of fee income. The Defender from March 2013, embarked on a programme of sophisticated reorganisation of the Company which had as its primary objectives the retaining of fee income, the Defender’s own practice, his fees and reputation, the benefits attached to keeping the Haines Watts franchise and the avoidance of liquidation of the Company. The events from July 2012 suggested administration/liquidation of the Company as an obvious, if also obviously unattractive step to take.

Mr Gibson as organiser of the transactions and as the Director in charge, had the responsibility, to be satisfied, on objective evidence, that the approach to valuation was accurate and reliable. The absence of the valuation and the absence of any independent evidence to support the nil value does not have sufficient regard to the required high standards of business conduct. It is action likely to bring the profession into disrepute.

It was Mr Gibson’s professional obligation to have independent advice in order to satisfy himself and as necessary, creditors, that the steps he was taking had been fully considered, did not create further risks to creditors, were demonstrating integrity and awareness of the options and were setting out the reasons for a particular course being adopted. Failure for an experienced CA such as the Defender to do that in the circumstances of this case in our judgement amounts to professional misconduct.

Mr Gibson pursued a course of conduct which we judge to be at the top of a category of serious professional misconduct but falling short of the category of “very serious “. There are indications of remorse and insight from Mr Gibson into the professional failings. It is appropriate to protect the public and to mark disapproval that the substantial penalties have been imposed”.

Muhammad Zubair Hussain CA - July 2017

Charges and Sanction

Muhammad Zubair Hussain, a member of the Institute of Chartered Accountants of Scotland based in Edinburgh has been reprimanded and ordered to pay penalties totalling £5000 following a hearing of the Discipline Tribunal on 6th February 2017.  In addition Mr Hussain was ordered to pay the costs of ICAS in the sum of £8560 and the costs of the Discipline Tribunal of £3680.

Mr Hussain was found guilty of two charges of unsatisfactory professional conduct in respect that on charge 1 he prepared a financial reference addressed to a lender which incorrectly stated that his client had an earned income of £60,000 per annum when he knew, or ought to have known that the information in the financial reference (a) contained a materially misleading statement and (b) contained a statement that omitted information which caused the statement to be misleading in breach of Section 110 of the ICAS Code of Ethics; on charge 2 he prepared and delivered to his client three backdated payslips to be used to support a mortgage application when he knew or ought to have known that the information in his clients gross salary payments contained in the payslips were (a) materially misleading and (b) omitted information, which caused the payslips to be misleading in breach of Section 110 of the ICAS Code of Ethics.

Commentary

Peter Anderson, Discipline Panel Chairman, said “The Tribunal was of the view that in respect of both charges Mr Hussain breached established principles of fairness, truthfulness and independence which are essential for members of the Institute of Chartered Accountants of Scotland.  Having regard to all the facts of the case, including the information provided to him and representations from his client, his actings are properly characterised as unsatisfactory professional conduct rather than misconduct.  In those circumstances a reprimand is appropriate together with a financial penalty of £2500 on each charge. “

A subsequent appeal affirmed the decisions of the Discipline Tribunal.

Note

Unsatisfactory professional conduct includes, but is not limited to, any act or default, whether in the course of carrying out professional work or otherwise which falls below the standards to be expected of a Member, CA Student Member or Affiliate of ICAS but which does not amount to professional misconduct.

July 2017

Norman Gregor - January 2017

Norman McLeod Gregor, a member of the Institute of Chartered Accountants of Scotland based in Edinburgh has been excluded from membership of the Institute following a hearing of the Discipline Tribunal on 30 January 2017. In addition Mr Gregor was ordered to pay the costs of ICAS in the sum of £20,393 and the costs of the Discipline Tribunal of £8370.

Mr Gregor was found guilty of four charges of professional misconduct in respect that as a director in EVO 2014 Ltd ( formerly Gregor’s Accountants Ltd ), on charge 1 he allowed the company to trade and accrue a debt of £77,046.49 to Her Majesty’s Revenue and Customs (HMRC) when it was unable or unlikely to be able to settle it’s debts; on charge 2 between November 2012 and March 2014 he allowed the company to trade and fail to pay monies due to HMRC within a reasonable period of them becoming due; on charge 3 between July 2010 and March 2014 he failed to register the company for payment of Corporation Tax with no such tax being paid by the company during this period; and on charge 4 between March 2014 and March 2015 he allowed the company to trade under the name “Gregor’s “ , which is so similar to Gregor’s Accountants Limited, that it suggested an association with that company in contravention of Section 216(2)(b) of the Insolvency Act 1986 and Rules 4.80 to 4.82 of the Insolvency (Scotland ) Rules 1986.

Peter Anderson, Discipline Board Chairman, said “The circumstances of the case gave rise to serious professional misconduct. The public purse had lost substantially as a result of the way in which Mr Gregor carried on practice and failed to meet his obligations to HMRC. In relation to charges 3 and 4 he had breached well known requirements of law for anyone claiming membership of the Institute of Chartered Accountants of Scotland. The Discipline Tribunal concluded that his conduct was so serious that in the interests of the public and of the profession Mr Gregor must be excluded from membership of the Institute forthwith.

(January, 2017)

Richard Beattie CA - September 2016

Richard Gordon Beattie, a member of the Institute of Chartered Accountants of Scotland based in Glasgow, has had his practising certificate withdrawn for a period of 7 years and has been issued with a severe reprimand following a hearing of the Discipline Tribunal. In addition Mr Beattie was ordered to pay the costs of ICAS in the sum of £13,000 and the costs of the Discipline Tribunal of £1150.

Mr Beattie admitted six charges of professional misconduct in respect that on charge 1 he failed to pay within a reasonable time, monies received or held and due by a LLP to HMRC with a liability of £162,105.02; on charge 2 he failed to file accounts for the LLP as required by Section 17 of The Limited Liability Partnerships (Accounts and Audit ) (Application of Companies Act 2006) Regulations 2008; on charge 3 he transferred the LLP’s assets ( with the exception of its outstanding debtor book )  including its goodwill, fixed assets and work in progress to another limited company of which he was a director and shareholder, for no consideration, to the prejudice or potential prejudice of the LLP and its creditors; on charge 4 when he knew or ought to have known that the LLP was insolvent, transferred the main asset of the LLP, its outstanding debtor book to his own company ( R G Beattie & Co Ltd ) for the sum of £10,000 to the potential prejudice of the LLP and its creditors; on charge 5 he failed to wind up the LLP to the potential prejudice of its creditors; and on charge 6 he caused or materially contributed to the insolvency of the LLP leading to a winding-up order being made.

Peter Anderson, Discipline Board Chairman, said “ The failure to make payment of amounts due to the Exchequer is a serious example of professional misconduct. In our judgement together with the other charges it warranted a severe reprimand together with singly and in cumulo a finding that Mr Beattie be ineligible for a practising certificate for a period of 7 years. Mr Beattie’s decision to withdraw from practice as a CA means that the public interest is protected by the sanction we selected, as are the interests of the profession. The most severe penalty of excluding Mr Beattie was withheld partly because he had 35 years of previous practice with no criticism or complaint. Additionally we considered that the defender was entitled to recognition for the full acceptance of responsibility which was put forward, the agreed plea and this avoided any contested hearing with further cost and inconvenience.”

(September, 2016)

James Thomson CA - May 2016

James Thomson, a member of the Institute of Chartered Accountants of Scotland based in Edinburgh, has been suspended from membership of the Institute for one year and been issued with a severe reprimand following a hearing of the Discipline Tribunal. In addition Mr Thomson was ordered to pay the costs of ICAS in the sum of £4150, and the costs of the Discipline Tribunal of £1400.

Mr Thomson admitted 6 charges of professional misconduct and breaches of professional competence in respect that on charges 1,2, and 3 he failed to submit tax returns for clients for a period of 4 years; in respect of charge 4 he failed to provide his clients with the contact details of his firm’s professional liability insurance; in respect of charge 5 he failed to respond to a letter from new accountants requesting professional clearance in respect of a client and did not provide any of the information requested; and on charge 6 he failed to (i) adequately respond to letters, emails and telephone calls from case officers in the Investigations Department and (ii) attend interviews with the Investigator on 2 occasions.

Peter Anderson, Discipline Board Chairman, said “in relation to the first 3 charges, Mr Thomson’s professional conduct personally in his dealings with his clients and the failure to secure that the necessary tax returns were filed with HMRC by the due dates demonstrated a serious failure of professional competence. The failure to co-operate to any material extent with the staff of ICAS dealing with the complaint and investigation is serious .It is the obligation of any Chartered Accountant to assist ICAS so long as the requests made are reasonable. In this case they were  and Mr Thomson’s conduct prevented ICAS from properly administering the best interests of the profession as a whole and its reputation before the public.”

A subsequent appeal was refused.

(May, 2016)

Leonard Harris CA - December 2015

Leonard Harris, a member of The Institute of Chartered Accountants of Scotland based in Manchester, has been issued with a severe reprimand following a hearing of the Discipline Tribunal. In addition Mr Harris was ordered to pay the costs of ICAS in the modified sum of £40,000 and the modified costs of the Discipline Tribunal of £10,000.

The Discipline Tribunal found Mr Harris guilty of three charges of professional misconduct in respect that he (1) assisted and supported the director of a company with the transfer of the company’s main asset to another company owned and controlled by the said director, for the consideration of £1, to the detriment or at least the potential detriment of the creditors of the first company and that he did so in the knowledge that said company was unable to avoid insolvency, that the asset had been transferred at undervalue, or at least potentially at undervalue, and that the transaction was intended to avoid any material return to the company’s creditors, contrary to the fundamental principles of integrity, objectivity and professional behaviour contained in the ICAS Code of Ethics; (2) together with his business partner he purchased the entire issued share capital of the new company in order to acquire the assets which had been transferred, to the detriment, or at least the potential detriment of the creditors of the first company, and to his personal gain, all in breach of the fundamental  principles of integrity, objectivity and professional behaviour contained in the ICAS Code of Ethics, and (3) he did falsely and dishonestly state in an email to a creditor of the first company that he had no knowledge of the transfer of the client base from that company to the new company prior to the event, in breach of the fundamental principle of integrity contained in the ICAS Code of Ethics.

A subsequent  Appeal was refused.

(December, 2015)

Appeal Tribunal notices

For more information or any questions contact the Tribunals Clerk.

Brian Carson CA - 24 June 2014

INSTITUTE OF CHARTERED ACCOUNTANTS OF SCOTLAND DECISION OF THE APPEAL TRIBUNAL IN RELATION TO AN APPEAL BY BRIAN CARSON, CA HEARD ON 24 JUNE 2014 AGAINST A DECISION OF THE ICAS INVESTIGATION COMMITTEE

INTRODUCTION

1. This is an Appeal against the decision of the Adjudication Committee dated 11th April 2014 (production 7). In terms of that Order and following consideration of the evidence Mr Carson was found liable to disciplinary action in two respects and that resulted in the Investigation Committee deciding that he was guilty of unsatisfactory professional conduct with the consequence that he was issued with a formal written warning and fined £1,000.

2. By letters dated 24th March 2014 (erroneously dated) (Production 9) and 28th April 2014 Mr Carson challenged the level of fine, the letter of 28th April 2014 (production 11) being a formal appeal against that fine. Mr Carson indicated before the Tribunal that he was not challenging either the finding of unsatisfactory professional conduct or the written warning.

3. At the Hearing held on 24th June Mr Carson represented himself while the Investigation Committee was represented by Mr Mudge accompanied by Mrs Beattie who carried out the investigation.

4. The Appeal Committee had before it the letter from Mr Carson dated 28th April 2014, a response from the Investigation Committee dated 15th May 2014 and productions 1 through to 11. In the course of the Hearing Mr Mudge produced a further document entitled “When is a practicing certificate required” which was admitted with the agreement of Mr Carson and numbered as production 12.

5. The Appeal only related to the level of fine and it is therefore not necessary to rehearse the factual background in any detail other than to note (as was accepted by the Investigation Committee) that the breaches which Mr Carson had been found guilty of (and which he accepted) were as a result of inadvertence rather than deliberate behaviour and separately that in respect of the set of accounts which were at the heart of the matter (the accounts for MS4/I.4464.1 2 the Loch Lomond Angling Association for the year to 30th November 2012) despite the terms of these accounts no audit had in fact been undertaken by Mr Carson.

SUBMISSIONS BY MR CARSON

6. Mr Carson explained that the circumstances which had resulted in the investigation resulted from mistakes or inadvertence on his behalf rather than any attempt to deliberately breach the rules of the Institute. He had been asked by a friend to help out against the background where he understood there were issues amongst the members of the Association in respect of their accounts. The fee of £400 was a fee that they had proposed to him. In fact Mr Carson explained he had done rather more work than he had anticipated in relation to the preparation of the accounts but had not sought to amend the fee. In relation to his personal circumstances he was not working having been made redundant approximately eighteen months ago. Mr Carson explained that he had a hereditary kidney condition which was likely to result in kidney failure and that had apparently been exacerbated by his redundancy and his health had deteriorated as a result. He was now receiving dialysis three days a week and was unable to work. It appeared likely that the only long term solution would be a kidney transplant. Mr Carson considered that against that background the fine was excessive having regard to (a) all the circumstances; and (b) his personal position.

7. In relation to questions from the Tribunal Mr Carson confirmed that he was in receipt of benefits. His wife worked part time. He had three children one of whom was working abroad, one of whom had just finished a university course and the other would be shortly starting a university course at Stirling. As a result there would be travel or accommodation charges to support that child at university.

SUBMISSIONS ON BEHALF OF THE INVESTIGATION COMMITTEE

8. In response Mr Mudge made the point that there were two separate charges and that while the behaviour was at the “lower end of the spectrum” nonetheless the underlying charges which Mr Carson had accepted related to breaches of rules or provisions of some significance namely the Code of Ethics and the Public Practice Regulations. Mr Mudge submitted that in considering the level of the fine it was important in his view to take into account there were two charges of some significance. He did not dispute the fact that no audit had been carried out. He also submitted that the Committee had been lenient in the sense that they had not found Mr Carson guilty of professional misconduct and that the issue of a formal written warning was the lowest sanction permissible. In relation to the fine Mr Mudge made the point that the maximum fine was £2,000 and that while he accepted that there need not be any fine having regard to the nature of the two provisions that had been breached (referred to above) the fine of £1,000 was not an unreasonable one. Mr Mudge further made the point that in carrying out its regulatory functions ICAS had to have MS4/I.4464.1 3 regard to the public interest and the Investigation Committee was concerned that if no fine was levied at all that would send out the wrong message. In particular there would be little by way of a deterrent effect. Mr Mudge made it clear that the Investigation Committee was prepared to look at arrangements for payment which fully took into account Mr Carson’s circumstances. Mr Mudge referred to the guidance that he had produced from the ICAEW. While he accepted that this was not binding upon the Appeal Committee in his submission it identified the appropriate level of sanction for breaches of the type which Mr Carson had been found guilty of (and which he had accepted) and which resulted in a fine higher than that which had been applied by the Committee. Mr Mudge clarified that in reaching its decision the Investigation Committee had been unaware of Mr. Carson’s circumstances. On receipt of the letter dated 24 March the Committee had been able to consider the position but adhered to the original decision, while offering an extended period to make payment. He also referred to the guidance he produced (production 12) to clarify that where the Public Practice Regulations referred to a “nominal” fee ICAS considered that a fee in excess of £50 per engagement might be difficult to justify as nominal.

9. In response to questions from the Committee Mr Mudge accepted that there was no requirement to levy any fine but again made the point that it was in his view relevant for the Committee to take into account issues relevant to the regulatory function carried out by ICAS including protecting the public interest, the maintenance of public confidence and the maintenance of proper standards. Mr Mudge however accepted that whatever might be considered the appropriate proportionate sanction might be modified to take account of the personal circumstances of the party against whom action was taken.

DETERMINATION

10. The Appeal Committee carefully considered the submissions that had been made by Mr Carson and on behalf of the Investigation Committee. The only issue before the Committee was the level of fine. In considering matters the Committee acknowledged:

(a) That it might be said that Mr Carson had been dealt with leniently in the sense there was no finding of professional misconduct and the issuing of a formal written warning was the lowest sanction possible;

(b) That ICAS as a regulatory body has certain objectives which is appropriate for it to seek to consider in fulfilling its regulatory function including the deterrent effect of any sanctions it imposes with a view to ensuring the appropriate professional standards are maintained and separately that rules and regulations are adhered to; and MS4/I.4464.1 4

(c) That the behaviour of Mr Carson was at the lower end of the spectrum and certainly appeared to the Committee to result from a lack of appreciation of the relevant regulations rather than any deliberate conduct.

The Appeal Committee was concerned that mitigation had not been taken into account by the Investigation Committee at the time of the original decision primarily because the Investigation Committee was not made aware of the circumstances of Mr Carson but did note that the Investigation Committee had an opportunity to reconsider matters having been provided with a copy of Mr Carson’s letter of 24th March 2014 (albeit this letter was wrongly dated).

The Appeal Committee was of the view that given the terms of the regulations there did not need to be a fine but in determining whether or not there should be a fine it was appropriate to have regard to the objectives and functions which ICAS were entitled to consider when fulfilling its regulatory function.

Having carefully considered the position the Committee came to the view on the balance it did not think that the fine was so unreasonable that it should disturb the decision of the Investigation Committee and therefore decided to refuse Mr Carson’s Appeal. However in making that determination the Committee wanted to strongly encourage ICAS to come to an arrangement with Mr Carson in respect of payment of the fine which fully took into account his current difficult personal circumstances.

In view of the decision of the Appeal Committee there was no reason to depart from the position which the Investigation Committee had taken in relation to publicity. Mr Mudge confirmed that having regard to all the circumstances there was no application on behalf of the Investigation Committee for expenses.

Interim Orders

Committees may make an interim order application to the Discipline Tribunal where they consider there is sufficient evidence available concerning a Member or Affiliate.

William Ian Main - 23 October 2017

A Discipline Tribunal on 23rd October 2017 made a further interim order under Rule 13.18.1 of the ICAS Rules suspending William Ian Main, a member based in Selkirk, from membership of ICAS for a period of 6 months from 25th November 2017.

William Ian Main - 25 May 2017

A Discipline Tribunal on 25th May 2017 made an interim order under Rule 13.18.1 of the ICAS Rules suspending William Ian Main, a member based in Selkirk, from membership of ICAS for a period of 6 months pending the outcome of current investigations.

Investigation Committee disciplinary notices

For more information or any questions contact Investigations.

Ross Simon Clarke CA - June 2018

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Clarke guilty of professional misconduct on the following grounds:

Between 7 January 2015 and 26 April 2016, he recklessly claimed expenses in the sum of £874.54 from his employer when he knew or ought to have known he was not entitled to do so in terms of his employer’s expenses policy.  

He has failed to adhere to the fundamental principle of integrity contained in sections 110.1 and 110.2 of the ICAS Code of Ethics, and he is therefore liable to disciplinary action under ICAS Rule 13.1.2 and 13.5.1.

Sanction

Under operation of Investigation Regulation 2.15, Mr Clarke has accepted an order of severe reprimand and a requirement to pay £2,000 towards the reasonable costs of the investigation.

Commentary

  • The Committee considered that the charge, which was brought to the attention of ICAS by Mr Clarke’s former employer, indicated a serious departure from the ethical standards which Chartered Accountants are expected to observe.
  • The Committee determined that Mr Clarke submitted claims for expenses that he was not entitled to, on eighty-six occasions over a period of fifteen months.  He did so despite being warned by his employer on several occasions of the need to submit expense claims accurately.  Mr Clarke knew or ought to have known that the expense claims contained information that was furnished recklessly.  This behaviour demonstrated a lack of integrity.
  • In determining an appropriate sanction, the Committee took account of a number of mitigating factors, including: (i) Mr Clarke’s full co-operation with the investigation, (ii) his relative inexperience and (iii) evidence that he was suffering from ill health during the relevant period.

Date of order: June 2018

Date of publication: June 2018

Ann Hansen CA - April 2018

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Ann Hansen, a CA Member and director of The Hansen Company Scotland Limited (trading as The Hansen Company), guilty of unsatisfactory professional conduct on the following grounds:

During the years 2010 to 2017, Mrs Hansen accepted loans to the Hansen Company Scotland Limited (“the Firm”), in the sum of £103,579, from a client of the Firm, when Mrs Hansen was acting for the client in a professional capacity as a Chartered Accountant.  This action was held to be a breach of Section 280.3(b) of the ICAS Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15.3 and 2.15.4, the Committee imposed an order of reprimand and a financial penalty of £2,000.

Commentary

  • The issue was brought to the attention of the Investigation Committee after an ICAS Practice Monitoring visit to the Firm in March 2017 identified the loans.
  • Mrs Hansen accepted that the loans had been made, explaining that she was not aware that there is a prohibition on receiving loans from a client in the ICAS Code of Ethics (“the Code”).
  • Mrs Hansen said that she relied upon the ICAS ‘Accountants’ procedures for the audit exempt company’ and its ‘appointment/ reappointment’ work programme, and that she interpreted its wording as allowing loans to be accepted from clients where appropriate safeguards were applied to reduce the risk to objectivity.
  • The Committee was disappointed that Mrs Hansen failed to consult the Code, as Section 280.3(b) would have clearly shown that it was not appropriate for her to have accepted the loan.
  • When assessing the matter, the Committee took account of several mitigating factors, including Mrs Hansen’s cooperation and insight and the fact that she had subsequently repaid the loan in full when alerted to the breach of the Code.

However, taking account of the wording of the Code, and the size of the loan, the Committee determined that Mrs Hansen’s failings were sufficiently serious to establish a charge of unsatisfactory professional conduct.

Date of order: February 2018

Date of publication: April 2018

Vincent Burgoyne CA - March 2018

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Vincent Burgoyne, a CA Member and partner in the firm of Burgoyne Carey, guilty of unsatisfactory professional conduct on the following grounds:

In December 2012, the Member provided a loan in the sum of £90,000 to a client of his firm, Burgoyne Carey, in breach of his professional obligations under section 280.3b of the ICAS Code of Ethics not to directly or indirectly make a loan to a client.

Sanction

Under operation of Investigation Regulation 2.15.1, the Committee has imposed a formal written warning.

Commentary

  • The issues in question were brought to the attention of the ICAS Investigation Committee after a Practice Monitoring visit in November 2016 identified that a loan had been made to a client of Mr Burgoyne’s firm.
  • Mr Burgoyne explained that the loan had been assigned, with all repayments being made by the client to his grandchildren.
  • While taking account of the structure of the agreement, the Committee considered that Mr Burgoyne’s actions fell within the terms of Section 280.3(b) of the Code of Ethics, which prohibits a CA from making loans directly or indirectly to clients.
  • The Committee determined that Mr Burgoyne’s breach of the Code of Ethics amounted to unsatisfactory professional conduct.
  • Taking account of the inadvertent nature of the breach, the Committee decided not to apply a financial penalty.

Date of order: February 2018

Date of publication: March 2018

David Bridges CA - February 2018

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found David Bridges, a CA Member and principal of Benson, Wood & Co, guilty of unsatisfactory professional conduct on the following grounds:

In his capacity as a principal of Benson, Wood & Co (“the Firm”) he failed to ensure that professional services provided to a client of the Firm, Company A, were provided to the standards expected of a Firm of Chartered Accountants, with the professional services involving advice on:

  1. An entitlement of the director to claim maternity allowance; and
  2. The level of salary that could be drawn by Company employees without the Company requiring to re-register for PAYE with HMRC.

Sanction

Under operation of Investigation Regulation 2.15.3 and 2.15.4, the Committee has imposed an order of reprimand and a financial penalty of £2,000.

Commentary

  • The issues in question were brought to the attention of ICAS by the client, Company A.
  • A director of Company A had sought advice from the Firm regarding her entitlement to claim maternity allowance, and had subsequently returned a completed MA1 Form to the Firm for onward submission to the Department for Work & Pensions. A member of the Firm’s staff confirmed he would ‘get the maternity pay sorted out’.
  • However, there was no evidence that the Firm had either submitted the claim on the director’s behalf or advised the director to submit the claim herself.
  • Separately, the Committee noted that a member of the Firm’s staff had incorrectly advised the Company that it did not need to operate PAYE on payments made to employees because the payments were below the Lower Earnings Limit for PAYE, when in fact the payments exceeded the limit.
  • The Committee acknowledged that, in both cases, Mr Bridges was not directly responsible for the errors that had occurred.  Notwithstanding, the Committee was of the view that, as a principal of the Firm, Mr Bridges was ultimately responsible for the inadequate services provided to the client.

The Committee agreed that the failings were sufficiently serious to establish a charge of unsatisfactory professional conduct.

Date of order: January 2018

Date of publication: February 2018

William Ian Main - January 2018

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Main guilty of professional misconduct on the following grounds:

On 6 November 2017, at Selkirk Sheriff Court, Mr Main pled guilty to, and was convicted of, the criminal offence of fraud, for which he later received a sentence of imprisonment, which brings discredit to him, ICAS and the profession of accountancy. Mr Main has failed to adhere to the fundamental principle of professional behaviour contained in Section 150 of the ICAS Code of Ethics, and is therefore liable to disciplinary action under ICAS Rule 13.1.2

Sanction

Under operation of Investigation Regulation 2.16, Mr Main has accepted an order of exclusion from Membership and a requirement to pay the reasonable costs of the investigation.

Commentary

  • The matters in question occurred when Mr Main was a director in the firm of Stark Main & Co, based in Selkirk. The Committee understands that concerns were first raised by employees of this firm.
  • The ICAS Rules provide that a Member shall be presumed to be guilty of professional misconduct if (a) convicted in the United Kingdom of an indictable offence, or (b) sentenced to imprisonment on summary complaint.
  • As Mr Main was convicted on an indictable offence, and has received a a prison sentence, the Committee concluded that this represents prima facie evidence that he is guilty of professional misconduct, and that he is therefore liable to disciplinary action.
  • In addition, the Committee considered that Mr Main has breached the fundamental principle of professional behaviour, as set out in section 150.1 of the ICAS Code of Ethics, in that he failed to avoid actions which he knew (or should have known) would discredit the accountancy profession.
  • The Committee considered that the facts of the case are extremely serious, in that they involve: (i) financial impropriety by a Chartered Accountant in public practice, (ii) an abuse of a position of trust, and (iii) prejudice to a third party.

Mr Main’s conduct fell far below the standards that the public reasonably expects of Chartered Accountants and is incompatible with his continued Membership of ICAS. As such, no lesser penalty than exclusion could be justified; notwithstanding Mr Main’s early acceptance of guilt, and his full cooperation with ICAS.

Date of order and publication: January 2018

Paul Brien CA - December 2017

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Paul Brien, a CA Member and sole practitioner operating as MRA Business Services Ltd, guilty of unsatisfactory professional conduct on the following grounds:

In breach of Section 280.3(b) of the ICAS Code of Ethics, he made the following loans to clients of his firm, MRA Business Services Limited:

(i) A loan of £5,000 to Client 1 in or around July 2016.

(ii)   A loan of £5,000 to Client 2 in or around June, and a further loan of £6,500 made in or around September 2016.

Sanction

Under operation of Investigation Regulation 2.15.1, the Committee has imposed a formal written warning.

Commentary

  • The issues in question were brought to the attention of the ICAS Investigation Committee after a Practice Monitoring visit identified two loans which Mr Brien had made to clients in 2016.
  • Mr Brien accepted that the loans had been made, explaining that he was not aware that there is a prohibition on making loans to clients in the Code of Ethics.
  • While the Committee was disappointed that Mr Brien had not thought to consult the Code of Ethics, it took account of several mitigating factors, including Mr Brien’s cooperation and insight, as well as his assurance that no loans will be made to clients in the future.
  • The Committee determined that Mr Brien’s actions in this regard amounted to unsatisfactory professional conduct, rather than professional misconduct.
  • Taking account of the lack of any real financial benefit to Mr Brien, the Committee decided not to apply a financial penalty.
  • The Committee encourages all Members to be aware of the provisions of Section 280.3(b) of the Code of Ethics, which also prohibits receiving loans from clients.

Date of order: October 2017

Date of publication: December 2017

Tony Nasir CA - September 2017

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Tony Nasir, a CA Member and sole practitioner operating as Bareham & Co, guilty of unsatisfactory professional conduct on the following grounds:

While engaged on behalf of a client, Company A, to prepare annual accounts and corporation tax returns for the Company for the periods ended 31 October 2008 to 31 October 2012, he:

  1. failed to submit to HM Revenue & Customs by the due date the corporation tax returns for Company A for the years ended:

    (a)   CT600 for the period ended 31 October 2008, due for filing with HMRC by 31 October 2009.

    (b)   CT600 for the year ended 31 October 2009, due for filing with HMRC by 31 October 2010.

    (c)   CT600 for the year ended 31 October 2010, due for filing with HMRC by 31 October 2011.

    (d)   CT600 for the year ended 31 October 2011, due for filing with HMRC by 31 October 2012.

    (e)   CT600 for the year ended 31 October 2012, due for filing with HMRC by 31 October 2013.

  2. failed to submit to Companies House by the due date the annual accounts for Company A for the:
  3. (a) accounting period ended 31 October 2008.

    (b) accounting year ended 31 October 2009.

    (c) accounting year ended 31 October 2010.

    (d) accounting year ended 31 October 2012.

Sanction

Under operation of Investigation Regulations 2.15.1 and 2.15.4, the Committee has imposed a formal written warning with a financial penalty in the sum of £1,000.

Commentary

  • The issues in question were brought to the attention of ICAS by the client, Company A, in June 2016.
  • The Member was engaged to prepare annual accounts and corporation tax returns for the Company for the periods ended 31 October 2008 to 31 October 2012.
  • Except for the year ended 31 October 2011, the Member had failed to submit accounts to Companies House within the filing deadlines for the years ended 31 October 2008 to 2012.  As a result, the Company had incurred late filing penalties.
  • Corporation tax returns for Company A were only completed in March 2017.
  • The Committee accepted the Member’s explanation that the late submission of the accounts and tax return for the year ended 31 October 2009 was caused by the Company’s accounting records being corrupted and that additional work was required to reconstruct the records in order to prepare the accounts and associated tax returns for subsequent years.
  • Notwithstanding this, the Committee determined that the Member had failed to satisfactorily explain why the accounts for the Company for the years ended 31 October 2008, 2010 and 2012 had not been completed in the required time.
  • Although the Member and the complainer now appear to have resolved matters between themselves, the Committee could not ignore the number of deadlines that the Member had missed for the filing of the annual accounts or the time it had taken him to complete the corporation tax work.  As a Chartered Accountant, Mr Nasir had an obligation to pay adequate attention to his client’s affairs, and to ensure that the assignment was carried out thoroughly and on a timely basis.
  • The Committee agreed that Mr Nasir’s actions fell below the standards to be expected of him as a Member of ICAS and amounted to unsatisfactory professional conduct.

Date of order: June 2017

Date of publication: September 2017

John Doyle - August 2017

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Doyle guilty of professional misconduct on the following grounds:

On 20 May 2017, at Paisley Sheriff Court, he pled guilty to, and was convicted of, the criminal offence of embezzlement, for which he later received a sentence of six months’ imprisonment, which brings discredit to himself, ICAS and the profession of accountancy. He has failed to adhere to the fundamental principle of professional behaviour contained in Section 150 of the ICAS Code of Ethics, and is therefore liable to disciplinary action.

Sanction

Under operation of Investigation Regulation 2.16, Mr Doyle has accepted an order of exclusion from membership and a requirement to pay the reasonable costs of the investigation.

Commentary

  • The ICAS Rules provide that a Member shall be presumed to be guilty of professional misconduct if (a) convicted in the United Kingdom of an indictable offence, or (b) sentenced to imprisonment on summary complaint.
  • As Mr Doyle has received a a prison sentence, the Committee concluded that that is prima facie evidence he is guilty of professional misconduct and he is therefore liable to disciplinary action.
  • In addition, the Committee considered that Mr Doyle has breached the fundamental principle of professional behaviour contained in section 150.1 of the ICAS Code of Ethics, insofar as he failed to avoid actions which he knew (or should have known) would discredit the profession.
  • The Committee considered that the matters upon which this complaint was founded were of such seriousness that no lesser penalty than exclusion was warranted. Mr Doyle’s conduct fell far below the standards that the public expected of chartered accountants and was incompatible with his continued membership of ICAS.

(August 2017)

Lynn Taylor - July 2017

Member

Lynn Taylor

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (‘the Committee’) has found Lynn Taylor guilty of professional misconduct on the following grounds:

Mrs Taylor admitted that, whilst employed as Financial Controller of a company, she made unauthorised payments from the company to her of in or around £220,000 between the years 2007 and 2015, which conduct represents a serious departure from the fundamental principles of integrity and professional behaviour in sections 110.1 and 150.1 of the ICAS Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.16, the Committee excluded Mrs Taylor from Membership of ICAS and ordered her to pay the reasonable costs of the investigation.

Mrs Taylor did not contest the findings from the investigation and accepted the Committee’s order.

The order was applied in October 2015 but was not published until the conclusion of a criminal process which culminated in Mrs Taylor pleading guilty to charges of embezzlement at Edinburgh Sheriff Court on 26 July 2017.

As a consequence of this finding, Mrs Taylor has no longer been entitled to use the description ‘Chartered Accountant’, or use the designatory letters ‘CA’.

Commentary

  • This matter was brought to the attention of ICAS in August 2015 by an individual acting on behalf of the company.
  • ICAS was provided with documentary evidence which shows that, over an extended period of time, Mrs Taylor made unauthorised payments to her bank account from the bank accounts of the company.
  • The Committee considered an extract of a report prepared by a forensic accountant setting out the varied means used by Mrs Taylor to make these withdrawals, whilst avoiding detection by the company.
  • In correspondence with ICAS, Mrs Taylor accepted the allegations and accepted that the actions constituted professional misconduct.
  • The Committee considered the offence to be very serious, with particular concern over the abuse of a position of trust by a Chartered Accountant.
  • The Committee determined that the only appropriate sanction for an offence of this nature was exclusion from Membership.

Date of order: October, 2015

Date of publication: July, 2017

Campbell Dallas LLP - June 2017

Firm

Campbell Dallas LLP

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Campbell Dallas LLP (“the Firm”) liable to disciplinary action. The following charges concern the Firm’s audit of the financial statements of Company A (“the Company”).

  1. In its audit of the Company’s financial statements for the years ended 31 December 2011 and 31 December 2012, the Firm failed to (a) adequately evaluate the involvement of Mr X with the company for the purpose of considering whether the Company’s financial statements and FSA returns should have included related party disclosures in respect of Mr X; (b) adequately document any evaluation which it did carry out as referred to at (a); and (c) categorise Mr X as a related party and include relevant related party disclosures in the Company’s financial statements and FCA returns; which failures constitute professional incompetence, and which breach:

    (i) Paragraph 9 of ISA 550 (Related Parties) as referred to in guidance outlined in paragraphs 223 to 227 of APB Practice Note 20 (The Audit of Insurers in the United Kingdom);

    (ii) Paragraph 3 of ISA 315 (Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment); and

    (iii) Regulation 3.10 of the ICAS Audit Regulations.
  2. In its audits of the Company’s financial statements for the years ended 31 December 2011 and 31 December 2012, the Firm did not adequately consider whether an appropriate provision for claims incurred but not provided (‘IBNR’) should have been included in the Company’s financial statements, which failure constitutes professional incompetence, and which breaches:

    (i) Paragraph 3 of ISA 315 (Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment), as referred to in guidance outlined in paragraph 131 of APB Practice Note 20 (The Audit of Insurers in the United Kingdom);

    (ii) Paragraph 6 of ISA 540 (Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures) as referred to in guidance outlined in paragraphs 196 to 201 of APB Practice Note 20 (The Audit of Insurers in the United Kingdom); and

    (iii) Regulation 3.10 of the ICAS Audit Regulations.
  3. In its audit of the Company’s financial statements for the year ended 31 December 2012, the Firm failed to adequately understand and challenge the basis of the Company’s involvement with two forms of motorsport insurance cover, and failed to adequately document their considerations of the same, which failures constitute professional incompetence, and which breaches:

    (i) Paragraph 10 of ISA 240 (The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements), as referred to in guidance outlined in paragraphs 51 to 58 of APB Practice Note 20 (The Audit of Insurers in the United Kingdom); and

    (ii) Regulation 3.10 of the ICAS Audit Regulations.
  4. In its audit of the Company’s financial statements for the year ended 31 December 2012, the Firm failed to adequately consider, or document its consideration of, the recoverability of two material balances due to the Company, in the sum of £210,156 and £209,037, and failed to obtain specific representations from the Company’s directors of the recoverability of the balance, which failures constitute professional incompetence, and which breach:

    (i) Paragraph 6 of ISA 580 (Written Representations), as referred to in guidance outlined in paragraph 235 of APB Practice Note 20 (The Audit of Insurers in the United Kingdom); and

    (ii) Regulation 3.10 of the ICAS Audit Regulations.

Sanction

Under operation of Investigation Regulation 2.16, Campbell Dallas LLP has accepted an order of severe reprimand, with a financial penalty in the sum of £45,000 and a requirement to pay the reasonable costs of the investigation.

Commentary

  • In February 2016, ICAS noted regulatory findings published separately by the Prudential Regulatory Authority and the Financial Conduct Authority against Company A (“the Company”). The Company, which had entered administration in December 2013, was a UK-based insurance company.
  • The financial statements for the Company for the years preceding its failure were audited by Campbell Dallas LLP (“the Firm”). The Firm is authorised by ICAS to undertake audit work in the UK.
  • Aside from a related company, the Firm did not provide audit services to any other insurance entities.
  • ICAS received an expert report from an individual with extensive experience of the audit of insurance entities. Based on a thorough review of the Firm’s audit files, the report identified areas of possible concern.
  • With the cooperation of the Firm, ICAS’ Investigation Committee carefully analysed the concerns which had been identified, to assess whether they presented grounds upon which to find a liability to disciplinary action. In addition to considering ICAS’ Rules and Regulations, the Committee reviewed the standards and practice notes which are relevant to the audit of insurance entities.
  • At the conclusion of the Committee’s investigation, the Firm acknowledged that its audit work for the Company had not met the standards which would reasonably have been expected. It accepted a consent order for the charges and sanction set out above.
  • The Committee accepted that the Firm had tried in good faith to discharge the duties of an auditor in a specialist field, and that there was evidence to suggest that the Firm had been misled by third parties.
  • However, the Committee considered that auditors with a better level of knowledge and experience would have been more likely to recognise that important changes in the Company’s business in 2011 required corresponding changes in audit planning and audit work.
  • Due to its limited knowledge and experience, the Firm appeared to have relied more heavily on representations received from the Company, at the expense of the level of independent scrutiny which would reasonably be expected in an audit.
  • When assessing sanction, the Committee took account of the Firm’s acceptance of the charges, and its cooperation throughout the investigation. The financial penalty takes account of various factors, including the need for deterrence and the financial resources of the Firm.

The Committee hopes that this sanction will serve as a reminder of the challenges which are presented when Members and Firms act in specialised areas of practice where they have limited knowledge, skills and experience. Any Members or Firms contemplating such engagements are encouraged to give careful thought to the steps which might be taken to secure an appropriate level of competence.

(June, 2017)

Mark Logan - June 2017

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Logan guilty of professional misconduct on the following grounds:

On 16 March 2017 at Glasgow Sheriff Court he pled guilty to, and was convicted of, the criminal offences of:

  1. voyeurism, under sections 9(1) & (4) of the Sexual Offences (Scotland) Act 2009; and
  2. sexual assault, under section 3 of the Sexual Offences (Scotland) Act 2009

which offences bring discredit to himself, ICAS and the profession of accountancy. He has failed to adhere to the fundamental principle of professional behaviour contained in section 150 of the ICAS Code of Ethics, and he is therefore liable to disciplinary action under ICAS Rule 13.1.2.

Sanction

Under operation of Investigation Regulation 2.16, Mr Logan has accepted an order of exclusion from Membership and a requirement to pay the reasonable costs of the investigation.

Commentary

  • This matter was brought to the attention of ICAS by Mr Logan’s former employer, shortly after he was convicted of the criminal charges in March 2017. The charges relate to Mr Logan’s conduct while carrying out his professional work.

The Investigation Committee considered that the matters upon which this complaint was founded were of such seriousness that no lesser penalty than exclusion was warranted. Mr Logan’s conduct fell far below the standards that the public expected of Chartered Accountants and was incompatible with his continued Membership of ICAS.

(June 2017)

David Rutherford CA - March 2017

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found David Rutherford, a CA Member and Senior Partner of Cowan and Partners Limited, guilty of professional misconduct on the following grounds:

  • In Mr Rutherford’s capacity as trustee in the sequestration of a debtor, he failed to hold a meeting of creditors when requested to do so on 6 August 2014 and 2 September 2014 by two separate creditors who each constituted more than one-third in value of the total creditors in the debtor’s sequestration, in breach of his obligations under paragraph 1(b) of Schedule 6 of the Bankruptcy (Scotland) Act 1985.

Sanction

Under operation of Investigation Regulations 2.16.1, 2.16.2 and 2.16.3, with the consent of Mr Rutherford, the Investigation Committee used its powers to apply an order for severe reprimand with a financial penalty in the sum of £3,250.  The Investigation Committee also ordered Mr Rutherford to pay the reasonable costs of the investigation.

Commentary

  • The issue in question was brought to the attention of ICAS through a complaint from a creditor in the sequestration of a debtor.
  • In August and September 2014, Mr Rutherford, the trustee in the sequestration, received requests from two creditors to hold a meeting of creditors.
  • The creditors informed Mr Rutherford that they had information in respect of the debtor’s affairs which they believed to be pertinent to the sequestration.
  • Mr Rutherford did not hold a meeting of creditors until March 2016, following an order from the Accountant in Bankruptcy.
  • On reviewing the terms of paragraph 1(b) of Schedule 6 of the Bankruptcy (Scotland) Act 1985, the Investigation Committee decided that Mr Rutherford’s failure to convene a meeting of creditors in response to the requests was a breach of his statutory duties as trustee.
  • The failure was deemed to be sufficiently serious to warrant a finding of professional misconduct.
  • Mr Rutherford fully accepted the Investigation Committee’s position and agreed, that with hindsight, he should have held a creditors meeting prior to March 2016.

In determining sanction, the Investigation Committee took account of the sanctions guidance which is shared by the Recognised Professional Bodies which authorise insolvency practitioners in the UK.

(March, 2017)

James Murphy CA - February 2017

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found James Murphy, formerly of Gerber Landa & Gee Chartered Accountants, guilty of professional misconduct on the following grounds:

  1. In January 2009, while a partner in Gerber Landa & Gee, Mr Murphy allowed members of his immediate family to accept payments totalling £20,000 from his client, in breach of the ICAS Code of Ethics section 260 and the fundamental principle of professional behaviour contained in section 150.1.
  2. While engaged as the audit engagement partner and Responsible Individual for the client company for the year ended 31 December 2007, Mr Murphy failed to document the reasoning for the decision to undertake an engagement to provide non-audit services to the company and any safeguards adopted, as required in terms of paragraph 37 of APB Ethical Standard 5.  Such failure constitutes a breach of Audit Regulations 3.02 and 3.04.

Sanction

Under operation of Investigation Regulation 2.16, Mr Murphy accepted an order of severe reprimand, a financial penalty of £7,500 and payment of the costs of the investigation in the sum of £3,500.

Commentary

  • The issues in question were brought to the attention of ICAS through a complaint from the former liquidator of a client (Company A) of Gerber Landa & Gee.  In January 2009, Mr Murphy had instructed a client to pay him a bonus in the form of monetary gifts to members of his immediate family.
  • At an early stage in the investigation, Mr Murphy confirmed to the Investigation Committee that he fully accepted the allegation made against him.
  • At that time the gifts were made, the firm had an internal policy which required partners to disclose gifts and hospitality received from a client, but Mr Murphy failed to do so.  The Investigation Committee noted, however, that Mr Murphy has since disclosed the gifts to the firm and has repaid the money via an adjustment to his director’s loan account with the firm.
  • The Committee considered it relevant that, at the time the gifts were made, Mr Murphy held the role of Responsible Individual for the audit of Company A.  Although the client who instructed the gifts was not a director of Company A at that point, he was in a position to exert significant influence over Company A.
  • The Committee determined that Mr Murphy’s actions, in allowing immediate members of his family to accept payments from the client and failing to disclose the payments to his firm, demonstrated a serious departure from the fundamental ethical principle of professional behaviour.
  • Separately, while acting as a Responsible Individual for the audit of Company A, Mr Murphy failed to document the application of appropriate safeguards to reduce the threat to his auditor’s objectivity and independence, arising from him providing non-audit services to the company.
  • The Committee determined that this breach, when considered in conjunction with the first charge, was sufficient to establish a charge of professional misconduct.

(February, 2017)

Stephen Usher CA - February 2017

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Stephen Usher, a CA Member and Partner of Key Professional Partnership Ltd, guilty of unsatisfactory professional conduct on the following grounds:

When preparing accounts for a limited company client for the year end 31 March 2011, Mr Usher included income and expenditure which he knew had been earned or incurred by the company’s director working on a self-employed basis, in April and May 2010, prior to the incorporation of the company.

Which action constitutes a breach of the fundamental principle of integrity, as set out in Section 110.2(a) of the ICAS Code of Ethics.

Sanction

Under operation of Investigation Regulations 2.15.3 and 2.15.4, the Investigation Committee applied an order of reprimand with a financial penalty in the sum of £2,000.

Commentary

  • The issues in question were brought to the attention of ICAS through a complaint from the director of the limited company client (“the complainer”) in March 2016.
  • The accounts for the company included sums which had been incurred by the complainer on a self-employed basis prior to the incorporation of the company.
  • Emails submitted by the complainer showed that Mr Usher had previously advised him that it would not be appropriate for the sums to be included in the company’s accounts.
  • However, Mr Usher later decided to include the sums in the company’s accounts, claiming that he proceeded in reflection of his client’s wishes.
  • The Investigation Committee considered that by preparing the accounts in this way, Mr Usher was associated with information that was false and misleading.
  • As a Chartered Accountant, Mr Usher should have been aware that the accounts misrepresented his client’s position to HMRC.
  • His failure represents a breach of the fundamental ethical principal of integrity, as set out in Section 110.2(a) of the ICAS Code of Ethics.
  • In determining sanction, the Investigation Committee took account of Mr Usher’s acceptance of the charge, noting his assurance that he will act differently if presented with similar circumstances in the future.

(February, 2017)

James Anderson & Co Limited - November 2016

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found the audit-registered Firm of James Anderson & Co Limited, guilty of professional incompetence and failing to adhere to the Rules, Regulations or other guidance governing the regulation of Firms, on the following grounds:

While engaged to act as auditor of Company X, James Anderson & Co (“the Firm”):

  1. Accepted reappointment and issued an audit report for the Company for the year ended 31 December 2013, in breach of audit regulations 3.02 and 3.03, insofar as the Firm failed to adequately identify and manage a self-review threat which arose from the Firm’s provision of non-audit services to the Company, as required by APB Ethical Standards 1 and 5.
  2. On 4 August 2014, issued an audit report on the financial statements of the Company for the year ended 31 December 2013, in breach of Audit Regulations 3.05 and 3.10, insofar as the audit was not conducted in accordance with:
  • International Standard on Auditing (UK and Ireland) 500 ‘Audit evidence’ in that it failed to obtain sufficient audit evidence in respect of:
    • Trade debtors;
    • Bad debt provision; and
    • Trade creditors.
  • International Standard on Auditing (UK and Ireland) 230 ‘Audit documentation’ in that it failed to prepare sufficient audit documentation to support the conclusion reached in respect of:
    • Wages and salaries; and
    • Going concern, with particular reference to its failure to document the fact that the Company had entered into a VAT and PAYE payment plan with HMRC. 

Sanction

Under operation of Investigation Regulation 2.15, James Anderson & Co Limited received a formal written warning with a financial penalty in the sum of £1,000.

Commentary

The ICAS Investigation Committee (“the Committee”) received a complaint in October 2015 raising concerns over the audit work undertaken by James Anderson & Co Limited (“the Firm”) for Company X.

After investigation, the Committee agreed with certain elements of the concerns raised by the complainer, as set out in the charges.  In particular, the Committee considered that the Firm, exercising proper skill and care, ought to have identified and investigated the specific areas of concern.

The Committee agreed that there were sufficient grounds for disciplinary action of account of the material nature of the concerns and the fact that breaches of the Audit Regulations and standards had been found across a number of audit areas.  The Committee, did however accept that there was insufficient evidence to suggest that the issues of concern would have impacted on the audit opinion issued by the Firm.

In considering the appropriate sanction, the Committee took into account that the Firm had shown insight and understanding of the issues of concern, and had taken proactive steps to address these within the Firm prior to conclusion of the Committee’s investigation.  The Committee considered that the Firm’s actions could be adequately addressed through the lowest level sanction of a formal written warning with a financial penalty of £1,000.

(November, 2016)

John Devlin - October 2016

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found John Devlin, guilty of professional misconduct and professional incompetence, on the following grounds:

While acting as the engagement partner and Responsible Individual in the audits of Company A (for the periods ended 31 March 2010 and 2 April 2011) and for Company B (for the year ended 31 March 2011), respectively the “Company” and the “Parent Company”, and collectively “the Clients”, he:

  1. Failed to act in accordance with the independence requirements set out in:
    • Regulations 3.02 and 3.03 of the Audit Regulations;
    • APB Ethical Standard 1; and
    • APB Ethical Standard 5,

    insofar as he failed to adequately identify or manage self-review and familiarity threats which arose both from his provision of non-audit services to the Company, and his general involvement in its business operations.

  2. Failed to prepare adequate audit documentation in the audits of the Company to support the conclusions reached, in breach of:
  • Section 130.1(a) of the ICAS Code of Ethics;
  • International Standard on Auditing 230; and
  • 3.05 of the Audit Regulations,

insofar as he failed to adequately document his partner review of the audit file for the period ended 2 April 2011, and failed on a number of occasions to document the audit work undertaken on individual balances, including goodwill and casual wages.

3.       Failed to recognise or advise that an audit was required for the Parent Company for the year ended 31 March 2010 on account of the group turnover having exceeded the statutory threshold, in breach of Section 130.1(a) of the ICAS Code of Ethics and Regulations 3.05 and 3.08 of the Audit Regulations.

4.       Failed to apply and document adequate customer due diligence measures while engaged to act for the Clients, and for a further related company, Company C, in breach of his obligations under Regulations 7 and 19 of the Money Laundering Regulations 2007.

5.       On 10 June 2010, sent an email to the office of the liquidator of Company C, which contained misleading statements and which omitted information which he knew, or ought to have known, was required by the liquidator in the proper performance of his statutory duties, in breach of his obligations under Sections 110.1 and 110.2 (a), (b) and (c) of the ICAS Code of Ethics.  

6.       On 28 January 2011, he provided certification of income for the ultimate shareholders of Company A, to a mortgage broker, when he knew, or ought to have known, that the figures for income contained therein were incorrect, in breach of his obligations under Sections 110.1 and 110.2 (a), (b) and (c) of the ICAS Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15, Mr Devlin accepted an order for exclusion from Membership and the payment of costs of the investigation in the sum of £8,000.

Commentary

The ICAS Investigation Committee (“the Committee”) received a complaint in 2013 raising concerns over the audit work undertaken by Mr Devlin for Company A.  Separate concerns were subsequently received from a further party in 2014, raising issues over statements presented by Mr Devlin to the liquidator of a related company.

After investigation, the Committee agreed with the concerns raised by the complainers, as set out in the charges.

The Committee acknowledged that Mr Devlin had subsequently relinquished his Responsible Individual status for audit purposes, following internal investigation by his former firm, Haines Watts Glasgow.  Notwithstanding, with reference to the audit breaches, the Committee considered that there were sufficient grounds for disciplinary action on account of the multiple instances of ethical breaches and defective audit work across the same client engagement.

In addition, in providing information to third parties that he knew or ought to have known was incorrect and incomplete, Mr Devlin was knowingly associated with information which was materially false and misleading.  With reference to the fundamental ethical principle of integrity, the Committee determined that Mr Devlin had failed to be straightforward and honest in a professional relationship.  

In considering the appropriate sanction, the Committee took into account the seriousness of the charges, in particular its concerns over the charges relating to the provision of information to third parties.  The Committee considered that Mr Devlin’s actions were incompatible with the standards expected of a Member and, with the consent of Mr Devlin, determined that matter could only be addressed through his exclusion from Membership.

(October, 2016)

Jennifer Wales - September 2016

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Ms Wales, a CA Student Member formerly employed by Deloitte LLP in Aberdeen (2014 – 2016), guilty of professional misconduct on the following grounds:

  1. In May 2016, with regard to journal entry testing work for an audit client of the firm (“Company A”), Ms Wales misrepresented to Company A, and to colleagues within the firm, that:

    (a) she had sent sample selections in respect of this work by email to Company A; and

    (b) this work had been undertaken respectively for separate entities within Company A, when the documents she subsequently produced for the work were identical, except for different file names. 
  2. In May 2016, Ms Wales misrepresented to a colleague in the firm that, in December 2015, she had raised a ‘Bank Confirmation Letter Request’ to the Audit Confirmation Centre in respect of an entity of one of the firm’s audit clients. Further, when asked to demonstrate this action, she produced an email confirmation receipt which she had improperly amended to misrepresent that the request had been made at the correct time. 
  3. On 7 March 2016 and thereafter, Ms Wales misrepresented to her colleagues in the firm that she was unable to attend work on account of a family emergency.
  4. On 7 June 2016 and thereafter, Ms Wales misrepresented to her colleagues in the firm that she had been unable to attend work due to health issues. 

Which actions constitute a breach of the fundamental principle of integrity, as set out in Sections 110.1 and 110.2(a) of the ICAS Code of Ethics, and also the fundamental principle of professional behaviour, as set out in Section 150.1 of the Code.

Sanction

Under operation of Investigation Regulation 2.16, Ms Wales has accepted an order to terminate her training contract and her status as a CA Student Member, effective as of 14 November 2016.

Commentary

  • The issues in question were brought to the attention of ICAS by Deloitte LLP, following the termination of Ms Wales’ contract of employment in July 2016. 
  • At an early stage in the investigation, Ms Wales confirmed to the Investigation Committee that she fully accepted all the allegations made against her. 
  • While taking account of Ms Wales’ relative inexperience, the Committee considered that her actions demonstrated a serious departure from the ethical standards which CA Student Members are expected to observe.    
  • With reference to the fundamental ethical principle of integrity, Ms Wales failed to be straightforward and honest in a professional relationship, with a lack of truthfulness. By altering a number of documents to support her misrepresentations, she was knowingly associated with information which was materially false and misleading. 
  • With reference to the fundamental principle of professional behaviour, Ms Wales’ misrepresentations demonstrate behaviour which adversely affects the good reputation of the accountancy profession, with members of the public reasonably entitled to expect that CA Student Members are truthful and honest at all times. 
  • Taking all circumstances into account, the Committee considered that Ms Wales’ actions were incompatible with the standards expected of a CA Student Member.  
  • With Ms Wales’ consent, the Committee has terminated her training contract and CA Student Member status.

(September, 2016)

For clarity, this notice does not relate to Jennifer Wales CA, previously employed by Deloitte LLP and currently employed by Edrington in Glasgow.

Have a  question? Contact the Tribunals Clerk.

Topics

  • Complaints
  • Public Interest

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