Disciplinary notices

Tony Nasir CA

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

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

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

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

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)

Muhammad Zubair Hussain CA

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

David Rutherford CA

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

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

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)

Norman Gregor

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)

John Devlin

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)

James Anderson & Co Limited

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)

James Thomson CA

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)

Jennifer Wales

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.

Richard Beattie CA

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)

Clare Oddie CA

Charges

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

On or around 12 October 2015, whilst employed as a manager in the Indirect Tax team of KPMG LLP, Ms Oddie acted contrary to the fundamental principles of intergrity (Sections 110.1 and 110.2) and professional behaviour (Section 150.1) of the ICAS Code of Ethics in connection with communications with HMRC over a protective claim for a client in respect of VAT (hereafter “the Claim”) insofar as she:

  • prepared a letter to HMRC dated 5 August 2015, applying the electronic signature of a former employee of KPMG LLP;
  • prepared an email to HMRC dated 5 August in the name of the former employee of KPMG LLP; and
  • deliberately misrepresented to HMRC that the said letter and email were sent to HMRC by the former employee of KPMG LLP on 5 August 2015; 

which actions were undertaken in order to convince HMRC that the Claim had been submitted within the applicable timescale, when Ms Oddie knew that the Claim had not been submitted.

Sanction

Under operation of Investigation Regulation 2.16, Ms Oddie has accepted an order of severe reprimand, with a financial penalty in the sum of £5,000 and a requirement to pay the reasonable costs of the investigation.

Commentary

  • The Committee considered that the charges, which were brought to the attention of ICAS by KPMG LLP, indicated a serious departure from the ethical standards which Chartered Accountants are expected to observe.  
  • With reference to the fundamental ethical principle of integrity (Section 110), Ms Oddie was knowingly associated with communications with she knew were false and misleading, representing behaviour which was neither straightforward, nor honest. 
  • With reference to the fundamental ethical principle of professional behaviour (Section 150), Ms Oddie failed to avoid actions which she knew would discredit the accountancy profession.  
  • In determining an appropriate sanction, the Committee took account of a number of mitigating factors, including: (i) Ms Oddie’s early acceptance of wrongdoing, with expressions of remorse, (ii) the lack of personal gain, with a misguided attempt to deal with an issue for which she was not responsible, and (iii) Ms Oddie’s apparent belief (whether or not correct) that she was acting on the instructions of a more senior employee.  
  • Ms Oddie’s employment with KPMG LLP ended in October 2015 and she is now employed elsewhere in practice.

(August, 2016)

Jane Logan CA

Firm/ Employer

Albus Accounting

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Jane Logan CA, of Albus Accounting, guilty of unsatisfactory professional conduct on the following grounds:

Between 2011 and November 2015, Mrs Logan engaged in practice whilst not in possession of a practising certificate; in breach of the relevant provisions relating to practising certificates in the ICAS Rules, Bye-laws and Regulations, as amended from time to time.

Sanction

Under operation of Investigation Regulation 2.15, Mrs Logan received a formal written warning with a financial penalty in the sum of £2,000.

Commentary

The ICAS Investigation Committee (“the Committee”) received a referral from the ICAS Public Practice Committee (PPC) in November 2015 to alert it to the fact that Mrs Logan had applied for a practising certificate (PC) and had apologised in her covering letter for being late in her application as she had only recently been alerted to the requirement for a PC from an acquaintance in practice.

The Committee appreciated that Mrs Logan had taken full responsibility for her error and noted that Mrs Logan accepted that her actions constituted a breach of the ICAS Rules, Regulations and Bye-laws which were in place during the period in question.

Whilst the Committee respected Mrs Logan’s transparency and level of co-operation throughout the investigation process it still had to take into account the fact that Mrs Logan had been in practice for four years and had received fees for the work undertaken.

The Committee particularly noted however, that Mrs Logan had voluntarily alerted ICAS to her error and had self-reported her lack of a PC, and as such it considered that her actions could be adequately addressed through the lowest level sanction of a formal written warning with a financial penalty of £2,000.

(March, 2016)

Leonard Harris CA

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)

Harpreet Garcha

Firm/ Employer

None

Charge

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

On 24 November 2015, at Leicester Crown Court, he was, upon confession, convicted on indictment of two counts of fraudulent trading, two counts of transferring criminal property, and five counts of fraud, thereby placing him in breach of 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, Mr Garcha has accepted an order excluding him from ICAS Membership, with effect from 3 February 2016.

Commentary

  • Mr Garcha confirmed to the Committee that he pled guilty to a series of criminal charges at Leicester Crown Court on 24 November 2015.
  • The charges stem from Mr Garcha’s operation of a property letting business in Northamptonshire, through which he engaged in fraud, fraudulent trading and the transfer of criminal property. Amongst other actions, he falsely misrepresented the value of property maintenance work to clients and insurers.
  • The Committee was strongly of the view that Mr Garcha’s conduct represents a serious departure from the standards expected of a CA, bringing discredit to him, ICAS and the profession of accountancy.
  • By failing to be straightforward and honest in all professional and business relationships, Mr Garcha has breached the fundamental ethical principle of integrity. In failing to avoid actions which he knew would discredit the profession, Mr Garcha has breached the fundamental principle of ‘professional behaviour’.
  • The Committee considered that Mr Garcha’s actions were entirely at odds with the standards of conduct expected of a CA and has agreed his exclusion from Membership accordingly.

(February, 2016)

Topics

  • Complaints

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