ACCA accountant disciplined over quality control procedures
A St. Albans-based ACCA accountant was severely reprimanded by the ACCA after failing to implement the correct International Standard on Quality Control (ISQC 1) procedures, despite assuring the practice reviewer that they would be.
In a hearing held by Skype this month, Neville David Ward accepted that he had never actioned the ACCA’s ISQC1 request. The ACCA member also admitted that he did not realise the seriousness of the requests made of him by ACCA in 2019.
The conduct dates back to November 2018 when Ward was asked to complete a compliance questionnaire. The practice reviewer followed up in April 2019 requesting confirmation that Ward’s firm had put ISQC 1 procedures in place and that the firm had amended the website to include missing company registration details.
Ward assured the practice reviewer in his reply that the written procedures would be in place before taking on any audit assignment while his website was undergoing a refresh. He said a meeting with the website designer was in fact booked for the following day.
But as the reviewer pointed out to Ward, the written procedures should have been in place regardless of whether he held any audit appointments. The practice reviewer set a deadline of 8 May 2019 for the accountant to confirm that the procedures were in place and the website updated.
However, Ward did not respond and so the case was referred to an ACCA senior investigations officer in August 2019. But despite their intervention, Ward still did not respond to the senior investigations officer’s three attempts to contact him during August and September.
During the hearing, Ward recognised that he was remiss in not chasing his website designer. In trying to explain why he didn’t action the ACCA’s requests, Ward said he did not realise the seriousness of the requests. But he couldn’t explain why he didn’t respond to the ACCA.
The Committee decided that the only appropriate sanction was a severe reprimand. However, the initial order for Ward to pay costs of £6034 was reduced to £3000 once the Committee learned that he had no savings or income and was in the process of applying for Universal Credit.
Offering his expert commentary is Chris Cope, solicitor and now a consultant with Blake Morgan, solicitors
Not much to comment upon in this case other than to emphasise that accountancy regulators are determined to pounce on any failure to implement advice, particularly when the practitioner promises to do so. Also interesting that the hearing was conducted by Skype. Digital (or remote) hearings will become a normality in the future in respect of all accountancy regulators. The only exception may be contested hearings involving witnesses. Even so, the medical profession manages to handle contested cases digitally and with witnesses, on a regular basis. The world is changing. Appearing before a tribunal is likely to become ‘the way we used to do it’.
Over at the ICAEW, August marked another month without any reported disciplinary decision. But with 18 cases, there was still plenty for the Investigation Committee to chew over.
No evidence of fair and true opinion
The biggest ICAEW fine this month went to Michael Peter George FCA. The ICAEW member was struck with a £3,500 fine and ordered to pay costs of £2,103 after he agreed to a consent order on 19 June 2020.
As part of the consent order, the Investigation Committee also gave George a severe reprimand.
The basis of the complaint claimed that the Luton-based accountant had signed a statement attached to service charge accounts without specifying the work undertaken to reach his “fair and true” opinion. The work related to two consecutive years.
Chris Cope, consultant to Blake Morgan, solicitors
I would have expected a reprimand as opposed to a severe reprimand which is the highest penalty available to the Investigation Committee. However, we do not know the background to the complaint or the consequences of Mr George’s failings. That the conduct occurred over two consecutive years may well have persuaded the Committee that only a severe reprimand was appropriate.
Severe reprimand for changing audit samples
Keith Khounsombath was given a consent order by the Investigation Committee for changing sample items when engaged in the audit of a plc.
Khounsombath first breached the ICAEW’s code of ethics while auditing the financial statements of a plc for the year ended 31 December. The Investigation Committee asserted that the Hayes-based accountant changed sample items within his custodian testing, rather than resolving the reported exception, by carrying out further investigation.
Similar behaviour occurred in November 2016 when he encouraged a junior member of staff within the audit team to take steps to change a sample. Had the staff member followed his advice, they would have also breached the firm’s audit procedures.
In agreeing to the consent order, Khounsombath was given a severe reprimand together with costs of £3,573. There was no fine.
Chris Cope, solicitor consultant to Blake Morgan, solicitors:
We must assume that Mr Khounsombath was a member of the ICAEW and not a student or affiliate. The report makes no reference to whether or not Mr Khounsombath was qualified. I suspect that this was a complaint raised by the firm for whom Mr Khounsombath was employed. I assume that his employment was terminated. Nevertheless, it is very difficult to comment on these cases where so little information is disclosed. It would be helpful if some background information was provided. Then, we might all benefit from understanding rather more about the case.