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crossed fingers behind back | accountingweb | accountant excluded after failing to act on assurances
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Accountant excluded for failing to act on promises

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An accountant, who promised he would resolve breaches but failed to act for eight years, has been excluded by the ICAEW and ordered to pay costs of £8,500.

13th Jun 2023
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An uncooperative Northampton-based accountant, who assured the Institute of Chartered Accountants in England and Wales (ICAEW) that he would resolve breaches identified in a 2011 practice assurance review, has been excluded by the institute after another review eight years later discovered those issues still unresolved, plus additional money laundering regulation breaches.

According to June’s disciplinary orders, accountant Roger Bagshaw has been excluded from the ICAEW and ordered to pay costs of £8,250. He failed to take the corrective steps he had assured the institute he would take following a practice assurance review in July 2011 – and the complaints snowballed from there.

The disciplinary tribunal heard how Bagshaw faced further complaints after a practice assurance review in 2019, which raised concerns over unresolved issues around data protection, notice of engagement terms and provision of service regulations from 2011. The review identified further issues around complying with anti-money laundering regulations. 

And the complaints kept coming as Bagshaw continuously failed to provide requested information, and failed to submit his annual ICAEW return. 

The tribunal concluded that from the first practice assurance review in 2011 to the practice assurance review in 2019, Bagshaw had eight years to act on the assurances given to the closing record following the visit, but he failed to do so. 

Bagshaw failed to cooperate with the investigation and did not provide any of the information requested, despite verbal assurances that he would. This pattern of uncooperative behaviour continued until the point of his exclusion.  

Quality assurance department review

Bagshaw’s firm was pulled up by ICAEW after a visit by the Quality Assurance Department (QAD) in October 2019, which identified a number of issues, such as breaches in the anti-money laundering (AML) regulations due to the firm having no firm-wide risk assessment, no client due diligence evidenced and insufficient AML training. 

The 2019 practice assurance review also uncovered breaches that still had not been resolved after a 2011 review, despite Bagshaw giving assurances to ICAEW that he would take action in two areas.

  • He did not register with the  Information Commissioner’s Office (ICO), and 
  • he did not issue engagement letters to communicate complaints policy, basis of fees and personally identifiable information (PII) details.

In 2011 he told the QAD that he was applying for registration with the ICO and that he had decided to issue clients with engagement letters to alert them of their engagement terms and provision of service regulations. However, none of these assurances came to pass. 

Plenty of assurances, but no action

Bagshaw would continue his trend of inaction following the 2019 practice assurance meeting. Despite receiving the QAD closing meeting notes and acknowledging the receipt of correspondence from the Regulatory Practice Group (RPG) and QAD, Bagshaw didn’t give either a substantive reply. 

Both RPG and QAD repeatedly chased Bagshaw from October 2019 via emails, telephone calls and Royal Mail recorded delivery correspondence but it wasn’t until 15 July 2020 that Bagshaw emailed RPG back. He said he had problems with his landline and provided a mobile number and said he would deal with outstanding matters. But no further responses came from Bagshaw and the situation was referred to the Professional Conduct Department (PCD) by the start of October 2020. 

The investigation committee said Bagshaw provided no explanation for his failure to provide information other than having a backlog of client work to complete. 

Meanwhile, the Public Accounts Committee (PAC) decided that Bagshaw should have another practice assurance meeting on 11 February 2021, which was paid for by his firm. 

Then on 2 March 2021, the PCD spoke with Bagshaw and reported that the accountant was confused during the call as to whether he had previously spoken to the PCD case manager but again assured them that he would respond to their requests. 

RPG chased Bagshaw about the QAD meeting in February 2021, while the PCD continued to press him for his responses, but they reached a dead end in July 2021 when the email address on his members’ record was no longer valid and the PCD’s email with documents attached was returned as undelivered. 

The PCD wrote to Bagshaw again to inform him that his members’ records were out of date and it is a requirement to keep them up to date. 

Closing record

In addition to the ongoing issues from the practice assurance review, the follow-up visit in February 2011 presented more problems for the practitioner. A report prepared by the QAD was sent to Bagshaw, yet he failed to respond to the closing record. 

Then there was the issue of his ICAEW annual return. The firm’s annual return was due by 31 August 2020 and after no sign of completion the PCD chased, requesting to know why it was not submitted. Bagshaw didn’t respond to these requests and as of February 2022, the firm’s 2020 annual return remained outstanding. 

Seriousness of complaints

The heart of the disciplinary tribunal goes back to the original practice assurance review in 2011, which started a pattern of lack of cooperation and failing to take action on his assurances to ICAEW. 

The investigation committee underlined the seriousness of the complaints during the sanctioning of Bagshaw. “Bagshaw has not cooperated with the PCD and not complied with assurances given to the QAD or cooperated with the PAC.” 

The investigation committee brought five complaints against Bagshaw. 

  • Failure to respond to the practice assurance closing record following a review in 2019
  • Failure to fulfil assurances given to ICAEW staff following QAD visit
  • Failure to respond to the practice assurance closing record following a review in 2021
  • Failure to submit the 2020 ICAEW annual return
  • Failure to submit the 2021 ICAEW annual return.

The disciplinary tribunal found all five complaints proved. Considering all the complaints in totality, the tribunal concluded that due to the number of them combined with their severity, the most appropriate sanction was an exclusion order. 

However, the tribunal considered the size of Bagshaw’s firm and the severity of the sanction and decided against enforcing an additional financial penalty. 

Alongside the exclusion order, Bagshaw was ordered to pay costs in the sum of £8,500 within 21 days.

Replies (16)

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By Hugo Fair
13th Jun 2023 16:55

Not another one ... at least I assume that it's not just one of the previous cases being recycled?

It's really not edifying viewing ... reading it feels akin to having a jolly day out with the family down at the local abattoir!

Sounds like there's no doubt he 'failed to engage' but yet again that seems to be treated as a crime more heinous than any form of bad (let alone fraudulent) practice.
It may not matter to ICAEW but were any clients harmed (or even complaining) and were any of the professional services delivered found to be deficient?

Whilst a sad story, what gets my goat is the PB's attitude and (lack of) proportionality:
* having decided on an exclusion order (which the defendant may even regard as a blessing), they "considered the size of Bagshaw’s firm and the severity of the sanction and decided against enforcing an additional financial penalty" (hooray) ...
* BUT demanded payment of costs in the sum of £8,500 AND within 21 days!

Have they forgotten who funds their debatable spending (rhetorical question)?

Thanks (5)
Replying to Hugo Fair:
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By paul.benny
14th Jun 2023 06:36

Hugo Fair wrote:
... were any clients harmed (or even complaining) and were any of the professional services delivered found to be deficient? ....

That's a slightly specious argument, Hugo. We mandate MoT testing of older cars to ensure they are not unsafe. Testing ensures that major faults get fixed and prevents potential collisions.

Although MoT tests are an imperfect analogy, practice assurance - at least in theory - protects clients. I can be penalised for not having a valid MoT certificate even though my car is fault-free. And the same for accountants who fail their practice assurance.

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Replying to paul.benny:
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By Hugo Fair
14th Jun 2023 10:08

Your underlying point (the necessity of a testing/checking regime) is obviously true ... but not relevant to the point which (I thought) I was making.

I was clear that he had transgressed - and I never said he shouldn't have been checked or penalised.
What I object to is the "demanded payment of costs in the sum of £8,500 AND within 21 days" ... as harsh and not commensurate with their overall findings.

ICAEW had already removed his ability to continue practising and appear to have recognised his relatively impoverished state (having "considered the size of Bagshaw’s firm and the severity of the sanction and decided against enforcing an additional financial penalty").
And yet they feel it reasonable to hit him with ludicrous costs + to be paid 'now'.

Using your analogy, that would like the garage hiring expensive briefs (to make the case for the MoT failure) and then charging those costs to the unfortunate car owner.

As you say, an imperfect analogy, since the ICAEW is a member's organisation ... that shouldn't show favour to its members (through undue leniency) but NOR should it use its members' funds to charge them for carrying out one of its duties (especially where those have been contracted out at very high rates).

As per the other stories about them right now (regarding past retention of fines, and the CEO's pay-off), they seem a little cavalier with members' monies.

Thanks (3)
Replying to Hugo Fair:
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By Andrew Mitchell
18th Jun 2023 15:22

The payoff to the ex CEO is outrageous!

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Replying to paul.benny:
Cleethorpes beach
By UpTheMariners
14th Jun 2023 16:44

I think what many of us get frustrated with is that these things they have pick the Accountant up aren't really things that "protects clients" They're box ticking stuff. How many accountants peddling disguised remuneration tax avoidance schemes did the ICEAW pick up on before HMRC came down on it?

Using your MOT analogy for me the scenario is like them saying your car has failed it's MOT because it doesn't have a mandatory "I LOVE THE ICAEW" bumper sticker.

Eight years later...

We've noticed your car still doesn't have a "I LOVE THE ICAEW" bumper stick even though you promised you'd put one on.

What makes matters worse you failed to file a form to say "I'm sorry I don't have a mandatory "I LOVE THE ICAEW" bumper sticker on my car" which is a particularly heinous crime.

Then issuing a statement saying the ICAEW has a robust system which protects the public, and here's an example of how good a job we do.

Thanks (1)
By Moonbeam
14th Jun 2023 09:44

A member of the public would wonder what use the accountancy bodies are if they don't check that deficiencies identified earlier are quickly corrected.
So much time was wasted on both sides. Maybe the ICAEW is due a fine for incompetence as well.

Thanks (7)
By Nebs
14th Jun 2023 10:12

8 years before ICAEW carried out a further review, after faults are discovered? Are they training to work for HMRC.

Thanks (6)
Replying to Nebs:
David Winch
By David Winch
14th Jun 2023 10:39

In relation to a small firm my understanding is that ICAEW will typically operate on an 8 year review cycle. The faults found first time around were not of a very serious nature & the practitioner said he was fixing them.
The good news for other small firms supervised by ICAEW is that ordinarily you will only get reviews every 8 years.
David

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Replying to Nebs:
By ireallyshouldknowthisbut
14th Jun 2023 17:57

Well all you get is asked if you have done them. To which you naturally say "yes".

Clearly if you lie about that then you are going to get a rulering.

Ignoring the ICAEW seems to go down about as well you might imagine. One does wonder however what is behind all of this and many other similar cases.
Is is an arrogant accountant for whom the rules do not apply? ie a Boris Johnson type.
Or an overworked and/or depressed accountants who needs help?
Or a well into dementia and needs some help retiring and selling up? We just don't know.

My guess is a lot of the last two, and not much of the former. ICAEW are in a tricky position as they need to keep the rules abided by but when people are not responding and not getting back you just dont know if its arrogance or a real issue.

I get this with clients who you are chasing for stuff and ghost you. You don't know if they are in hospital or just mucking you about.

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By AndrewV12
14th Jun 2023 10:35

The investigation committee brought five complaints against Bagshaw.

Failure to respond to the practice assurance closing record following a review in 2019
Failure to fulfil assurances given to ICAEW staff following QAD visit
Failure to respond to the practice assurance closing record following a review in 2021
Failure to submit the 2020 ICAEW annual return
Failure to submit the 2021 ICAEW annual return.

Okay, you could argue the above are a pain in the Jacksie, but we all have to do them in some form, once you get behind you are a goner, unless you are really prepared to put the shoulder to the wheel..

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By geoffmw1
14th Jun 2023 10:59

Unless he has audit clients all that this will do is to have another unregulated accountant competing with those who comply and have associated costs. Is there any way in which this particular matter could have been resolved through the court system?

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Replying to geoffmw1:
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By BryanS1958
14th Jun 2023 11:21

Perhaps this just shows that we are fools for complying and having associated costs.

None of my clients would know the difference if I stopped being a member. It is only 'useful' (read necessary) for a few regulated areas such as audit, or for some references, etc.

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By Husbandofstinky
14th Jun 2023 11:27

Easy low hanging fruit as ever.

Not disputing the issues or the outcome whatsoever - the usual compliance....

Job done and yet more 'fine' money for the ever expanding ICAEW reserves.

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By I'msorryIhaven'taclue
14th Jun 2023 20:07

I thought throwing in the failure to register with ICO charge and other pinching a policeman’s helmet type charges of minor significance served only to distort the fundamental issue and dilute any assurance message that might otherwise have been conveyed. Petty, vindictive, and trumped up: all grist to the mill, perhaps; but (in the words of the immortal Iron Lady) people don’t like that sort of thing.

Do HMRC-registered practitioners undergo any such practice assurance checks, I wonder? Or, if having obtained their gcse in motor mechanics, are they left unhindered to MOT your Jag and my Beamer?

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By Calculatorboy
14th Jun 2023 23:19

ICAEW Gauleiters at it again ...Zeig.

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By Calculatorboy
14th Jun 2023 23:22

8 year cycle ? I'm keeping my head down in the bunker

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