Is there any chance of a case to answer on this

Is there any chance of a case to answer on this

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Can anyone help on this one. I have come across a client who is an audit client and had an audit done for 2012 but before completion of the file the audit partner did not renew his audit registration. The accounts were prepared by a non qualified accountant and checked as far as possible by a subcontract member of staff. A long delay then ensued and both non qualified accountant and client were aware of there not being an auditor in place to sign off the accounts. The accounts contained an auditors certificate in the name of the non renewing auditor and right at the filing deadline for Registrar abbreviated accounts were submitted by I presume the non qualified accountant. The matter was flagged and investigated by the old auditors regulatory body and all signatures were found to be false. The audit client was made aware of this and is doing his own investigation. The file produced at the time is incomplete and has no partner review on it. He has asked for this file from the old audit firm. What guidance can anyone give on this? Would you give the incomplete audit file to the client? Is there any possible legal or professional negligence claims that could be levied at the old auditor or the subcontract member of staff?

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By johngroganjga
30th Jan 2014 13:29

Are you the new auditor / accountant to the client in question?

The old auditor and his firm will no doubt have numerous regulatory issues to contend with, but while the client might be interested in this it is nothing to do with him as such.

It is not clear from what you say what your client is investigating and why he wants the auditors' file.

In any event I would have thought that the client's chances of ever seeing the audit file are non-existent and he is wasting his time even asking for it.

How, if at all, has your client been disadvantaged by all this?  

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By I'msorryIhaven'taclue
30th Jan 2014 13:35

In the Frame?

Surely the client is at best an accessory to this deception and at worse a willing participant?

Little wonder he'd like the file!

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By tonyh
30th Jan 2014 14:51

Possible claims

Just a few: fraud, deception forgery. Who ever signed the accounts is guilty of a criminal offence

Maybe even getting money under false pretences. Cannot imagine the client confirming that he knew what was going on.

If the sub contract accountant (you ?) only prepared the accounts without any knowledge of what was going to happen he or she should be ok. They will certainly have a lot of questions to answer. Their professional body will consider whether or not they want them as a member.

I would advise anybody involved in this to consider taking legal advice before answering any questions.

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By johngroganjga
30th Jan 2014 15:02

Not sure that whether signing an audit report while not being a registered auditor is a criminal offence.  It may be technically, although I doubt it.  The professional journals are full of reports of disciplinary proceedings where accountants are fined and reprimanded or struck off for doing just that.  But if an accountant has ever sent to prison for doing it I am sure it would have been front page news.  If it has been, it has passed me by.

Like I said above this is a big professional disciplinary issue for the accountant in question but I am not sure what it has got to do with anyone else.  Perhaps the OP will explain the reason for his client's continuing pre-occupation with the matter.  There may be more going on than we have been told.    

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By I'msorryIhaven'taclue
30th Jan 2014 15:13

And Another Thing...

If the accounts haven't been validly audited then surely they haven't been properly filed at Companies House? (ie they've been filed, but not properly). Late filing penalty accruing?

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Replying to Nick Graves:
By johngroganjga
30th Jan 2014 15:26

Filed but not rejected

I'msorryIhaven'taclue wrote:

If the accounts haven't been validly audited then surely they haven't been properly filed at Companies House? (ie they've been filed, but not properly). Late filing penalty accruing?

We are told that he accounts were filed on time and we are not told that they have been rejected.  If so, no late filing penalties are accruing.

Should they have been rejected?  Well perhaps they were compliant on the face of it.  Not sure Companies House can be expected to check the bona fides of every audit report signatory.  In any case Companies House are notorious for accepting manifestly non-compliant accounts without demur, aren't they?  Allegedly if you trawl though companies' accounts at Companies House long enough you will find plenty of unaudited accounts filed by companies who by virtue of the size of the numbers in their accounts cannot possibly be audit exempt.  What do Companies House do about it ....?

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By tonyh
30th Jan 2014 18:02

false signature

John my reference to criminal act was based on the OP statement that somebody had forged /signed  another persons name.

 

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By johngroganjga
30th Jan 2014 18:20

Can't see where the OP says a signature was forged.  He just says that the name on the audit report was that of the individual whose audit registration had lapsed.  He didn't say that the person who signed that name was an imposter. Of course he might have been and you may be right.

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By tonyh
30th Jan 2014 18:59

This is what I based my assumptions on.

"The matter was flagged and investigated by the old auditors regulatory body and all signatures were found to be false"

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