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Audit manager excluded after overclaiming expenses

1st Jul 2019
Practice Editor AccountingWEB
In association with
Share this content
Pile of Receipts
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An experienced EY audit manager who improperly claimed over £2,000 in expenses on meals, snacks and alcohol over a four-month period has been excluded from the ICAEW and ordered to repay costs of £13,000. 

Through over-claiming expenses of £2,564.82 Ricky Vadera also lost his job. Before the ICAEW disciplinary tribunal, he fully accepted that he had acted dishonestly, but as part of his defence, he also laid blame on the culture of expense claims within the firm.  

Vadera’s high level of expenses caught the attention of the firm during a comparison exercise, when the description of the expenses he provided did not match the receipts he produced. Other expenses outside the firm’s travel and expenses policy were ‘bundled’ with other receipts.

Suspicion surrounding Vadera’s high level of expenses sparked an internal investigation, which led to a disciplinary meeting in November 2015. During this meeting Vedara was found to have over-claimed expenses. The amount he owed was deducted from his final salary.

Broken down, the June to October 2015 expenses included £796.51 for meals, £141.43 on snacks and £858.38 on alcoholic drinks.

Vadera claimed he ‘bundled’ his expenses together with other receipts as a consequence of time pressures. However, the investigation committee argued that the sheer number of expenses suggested that the bundling “goes further than carelessness or mistakes”.

Rather, the committee found the mis-description of items and incorrect allocation to be dishonest, given that Vadera understood the travel and expenses process.  

The tribunal, considering the code of ethics obligation for members to be straightforward and honest, found “Vadera has not been straightforward, open or transparent in his handling of his expense claims and would have known the importance of doing so for the purpose of claiming money back from his employer. Indeed, it was his duty to be so.”

Combined with Vadera’s admissions, the tribunal unhesitatingly concluded that the 64 separate claims were carried out dishonestly and decided that the proportionate sanction was exclusion.

The tribunal also ordered Vadera to pay the investigation committee’s costs of £13,000 in 11 monthly instalments.

Chris Cope, solicitor/director of Accountants National Complaint Services Limited, said:

The internal disciplinary hearing took place in November 2015. Mr Vadera was sacked. The ICAEW disciplinary hearing was not convened until June 2019, some three and a half years later.

No explanation for this delay is given. I assume that the firm would have reported Mr Vadera immediately following the hearing in November 2015.

This is yet another case which has taken an inordinate amount of time to reach the disciplinary committee.

Committees need to be much more critical of delays on the part of the regulator. If the regulator fails to provide a reasonable explanation for the delay, the costs sought against the defendant should be slashed.

The tribunal is now chaired by a Queen’s Counsel. There are three who take it in turns to chair disciplinary hearings. May I very respectfully suggest that they each take a critical look at delays on the part of the regulator, together with the massive costs which are now being incurred on a regular basis.

However, in all fairness, the disciplinary committee in Mr Vadera’s case did seek representations from both parties on the subject of costs and decided that £13,000 was a reasonable figure.

Unfortunately, the report does not tell us how much was originally sought.

If you are presently subject to a complaint, you can call Chris Cope for advice (01769 581581) or visit his website

Replies (18)

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By Richard Grant
02nd Jul 2019 07:28

I've always wanted to know what is the method for enforcing these costs and penalties. Surely if someone has left or been expelled from the relevant body they could walk away and not pay and I can't see that there would be any remedy via the courts. (Just something I wondered for the last 30 years since I was a student.)

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Replying to Richard Grant:
David Winch
By David Winch
02nd Jul 2019 10:32

My understanding is that by joining ICAEW and continuing to be a member one is in a contractual relationship (between the member & ICAEW). Part of that contract is an agreement to pay penalties and costs (even after exclusion). So enforcement is as for any debt due under a contract.
David

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Replying to davidwinch:
Richard Hattersley
By Richard Hattersley
02nd Jul 2019 13:21

A spokesperson from a professional body has contacted us to say:

“When you join a professional body, you enter into a contract with them and agree to abide by their rules. These rules usually say that if an investigation or disciplinary proceedings have started against you then (a) you cannot resign until these are concluded; (b) that you agree that you will be responsible for any financial costs awarded against you; and (c) you agree to pay any fines imposed on you. This contractual obligation remains valid even if you are excluded from membership as a result of disciplinary action. The professional body, therefore, has an enforceable debt which it can, and usually will, pursue through the civil courts.”

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Replying to Richard Hattersley:
Lone Wolf
By Lone_Wolf
02nd Jul 2019 14:07

Thankfully I adhere to my golden rule of staying poor so that pursuit of any such fine would be fruitless.

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7om
By Tom 7000
02nd Jul 2019 10:15

£13k costs and no job.... and you'll never work again...
How do costs get so high?

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Replying to Tom 7000:
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By BlueNose1812
02nd Jul 2019 10:33

Tom 7000 wrote:

£13k costs and no job.... and you'll never work again...
How do costs get so high?

By charging £350 per hour to sit on the committee ?

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By swatt66
02nd Jul 2019 10:43

With 3 1/2 years backlog of work and such high "costs", I don't suppose the disciplinary would even need to dream of fiddling their own expenses.
Also the legal profession gives the title "costs" to their remuneration whereas we mortals submit fee invoices.
Was the matter so complex that it needed such an expensive and rarely-available team?

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By alltaxedout
02nd Jul 2019 11:15

Talk about theft! You’d think it would be an open and shut case, concluded within a short time. I even have pity for the guy. Nicked a few bob and lost his job. That’s bad but to have this hanging over you is not good. Murder suspects are dealt with more quickly.

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7om
By Tom 7000
02nd Jul 2019 11:44

I suppose if in the unlikely event this ever happens to you and you know it was coming in 2014 and it was going to take 5 years, you have that time to buy a practice/ company set it up, get it running efficiently to generate some cash as you will never be an employee again....
last minute get out of jail card.

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By N.Krishnaswamy
02nd Jul 2019 12:47

Delay perhaps because one of the big Four was involved. It took more than 7 years in India for ICAI disciplinary committee to punish PWC in Satyam Fraud case.(That too without any monetary punishment) Whereas PCAOB punished them within 2 years with a fine of $100,000 and excluding the PWC India from certifying accounts according to FASB standarsds for 2 years.

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By Ian McTernan CTA
02nd Jul 2019 15:58

Another case, another huge costs award.

These costs might be appropriate when taking a case against some partner earning £1m++ but against an individual? No sense of scale.

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By North East Accountant
03rd Jul 2019 08:21

He could always become an MP!

Mind you they might have a word with him for not claiming enough.

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By AnnAccountant
03rd Jul 2019 09:26

He will be setting up soon as a non-qual and coming on here with simple tax queries for everyone to answer.

Ironically, the current system means that those who need a keener eye kept on them get no eye kept on them at all.

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Replying to AnnAccountant:
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By A Jones
28th Jul 2019 21:53

Looking at his linkedin page he is now a " Financial Services Consultant/Contractor specialising in the Insurance market".

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By Dandan
03rd Jul 2019 13:39

Cannot help feeling sorry for the guy.

£13k costs ..and that is after he has lost his job and being struck off.

There is a expense culture problem everywhere ; where alcoholic drinks are routinely claimed and private expenditure too. Remember the MPs? They thought it was the norm and then they became scapegoats during a "clean-up" initiative.

There must be more to this case. I suspect he was unpopular with colleagues and became fall guy. I would bet that if a sample of audit managers' expense claims (those working for global firms) were to be scrutinised we would find similar situations.

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Replying to Dandan:
7om
By Tom 7000
03rd Jul 2019 13:43

Do you think so... I would never ever do that.
If you aren't getting enough pay go work somewhere else...

stealing a few bob and losing your certificate....well you deserve to lose it for being that stupid....

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By Nick Graves
02nd Aug 2019 11:19

Reminds me of a time long ago when three of us managed to spent almost all of the (seriously under-quoted) audit budget on expenses.

We'd had a very miserable week lodging in a rainy Brum, two of us were undergoing relationship breakdowns at the time and how were we to know that the Chinese restaurant we wandered into on the last night was the most expensive in the city? It was barely average at best.

We offered to pay towards it, but I think the partner was quietly impressed by our sterling efforts and declined.

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By Nick Graves
02nd Aug 2019 11:20

Reminds me of a time long ago when three of us managed to spent almost all of the (seriously under-quoted) audit budget on expenses.

We'd had a very miserable week lodging in a rainy Brum, two of us were undergoing relationship breakdowns at the time, the other was mid-conveyance and how were we to know that the Chinese restaurant we wandered into on the last night was the most expensive in the city? It was barely average at best.

We offered to pay towards it, but I think the partner was quietly impressed by our sterling efforts and declined.

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