Disciplinary: ACCA accountant excluded after inadequate responses

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An accountant who provided “woefully inadequate” responses to an ACCA investigation and withheld documents from a client has been excluded from the ACCA and ordered to pay £27,000 in costs.

The main thrust of the complaints, which consisted of eight allegations in total, was Adrian Thompson’s refusal to hand over his former client’s files, or co-operate with his new accountants or even handle the ACCA’s investigation in an “open and straightforward manner”.

The ACCA found that Thompson did not have the right to retain the documents and should have returned them promptly, and that he was under a duty to provide the new accountant with the requested information.

The committee found that Thompson knew he was misleading in his assertion that “all records were sent to [the client]” after the ACCA reviewed his booking out sheets – accordingly, the committee found he had acted dishonestly.

Complaint: Not returning client’s documents

The relationship between Thompson, who practiced under Adrian Thompson & Co, and his then client broke down in late 2015 after a dispute over outstanding fees. Over the next two and a half months, the client sent Thompson 13 emails to resolve the outstanding invoices, and also sent emails addressing the issue of dividends from his limited company. Thompson failed to assist.

Later, Thompson produced a letter dated 8 August printed on the firm’s notepaper as proof that he responded, but the ACCA investigation questioned the veracity of the letter’s date.

Despite the content not reflecting any other correspondence during that time or Thompson not referring to this letter in any subsequent correspondence, this allegation was not proven.

On 20 October 2016, the client and his brother alerted Thompson that they were instructing a new accountant and that he should return all the files in his possession. Thompson refused to provide reasonable transfer information and said: “once cleared funds have been received your papers will be available for collection”.

ACCA picked up the case after the client complained on 13 January 2017. Thompson reiterated that all records had been returned and that he had responded to all correspondence up until the contested 8 August letter.

ACCA requested additional information, but Thompson responded saying that “we have difficulty in understanding each other’s letters” and offered to meet face-to-face.

Complaint: Failure to cooperate fully with ACCA investigation

Thompson faced another complaint concerning his failure to cooperate. He failed to cooperate fully with five pieces of ACCA correspondence from 9 February to 28 April 2016.

Speaking to the investigating officer on 12 February 2016, Thompson reasoned that there were few questions he could answer and doing so would open him up to “other action”.

The ACCA’s case presenter Emily Healy-Howell recognised that Thompson had made partial responses to the ACCA’s enquiries, but those responses was “woefully inadequate” and acted to “frustrate the investigation”.

Thompson was “controlling and measured” in his responses and could have “provided much fuller explanations”, concluded Healy-Howell.  He replied to only 7 of the 42 questions asked in the first letter, for example. 

Sanctions and conclusions

But this was not the first time Thompson had been subject to disciplinary proceedings. He previously received a severe reprimand (January 2015) for committing assault by beating, failing to disclose his conviction for assault and failing to return CPD and practising certificate renewal forms.

Because Thompson’s “wide-ranging” misconduct was so significant the committee concluded that exclusion was the only appropriate action.

“Thompson had demonstrated no insight or remorse,” the committee said. “He had failed to deal with his regulator in an open and straightforward manner. On two occasions he breached his duty to co-operate with his regulator. His failure to comply with his professional duties to his clients could have resulted in them suffering financial loss.”

Expert view: Chris Cope, solicitor and director of Accountants National Complaint Services Limited

This was a fairly complex case. The reasons for decision of the disciplinary committee run to no less than 153 paragraphs. One can therefore only pick out certain relevant points. Firstly, this was a two-day hearing which was concluded in June 2018. There had previously been two adjournments, although it is not clear from the papers whether those adjournments were sought by Thompson or the ACCA.Thompson did not attend the hearing. He had previously tried to resign his membership of the ACCA, but this was refused as he was subject to complaint/investigation.

It would appear that, approaching the hearing, Thompson refused to accept any communications from the ACCA. Of course, a member does not have to attend a disciplinary hearing. He would be entitled to make a written submission. However, Thompson’s case was sufficiently complex that it was very much in his best interests that he should attend and perhaps have been legally represented. Nevertheless, it seems clear that Thompson no longer wished to remain a member of the ACCA and had concluded that there was no point attending the proceedings.

The complaint was made in July 2015. It is surprising, therefore, that it took three years to get to the disciplinary committee. It is a little troubling that it was not until January 2016 (six months after the complaint was received) before the ACCA wrote to Thompson requesting his representations. This seems to be an inordinate length of time. Of course, before writing to the member, the regulator must engage with the complainant and obtain information and perhaps answers to questions. In my view, the ACCA should have written to Thompson at a much earlier date.

At one point, Thompson wrote to the ACCA telling the case manager that he did not understand the ACCA’s letters and wanted a meeting. The ACCA declined. Of course, one has to accept that a regulator cannot be expected to meet every member under investigation. Nevertheless, this may have been one of those cases where a meeting, at an early date, might have avoided much of the subsequent acrimony and non-cooperation on the part of Thompson. All regulators should be prepared to meet some of their members who are under investigation, as opposed to conducting an inquiry simply through correspondence.

Thompson refused to provide information to the ACCA on the basis of client confidentiality, a threat of legal proceedings from the client and his money laundering obligations. The case presenter when appearing before the disciplinary committee said that none of this “stood up to scrutiny”. It is difficult to understand the basis of Thompson’s contention, but if he genuinely believed that he should not be providing information to the ACCA, he would have been well advised to have instructed lawyers to represent his interests.

In the event, the committee concluded that Thompson was guilty of wilful non-cooperation.

Although he claimed a lien on papers with regard to outstanding fees, the committee concluded that he did not have the right to retain possession of client papers. Again, appearing before the tribunal, Thompson would have had an opportunity to justify his position. In principle, an accountant can retain papers, when there are outstanding fees.

There was one feature that the committee thought was particularly deplorable, namely Thompson’s threat to the client that he would write to HMRC if his fees were not paid.

One of the factors that influenced the committee in deciding to exclude was that there was no evidence that any corrective steps had been taken by Thompson.

Finally, there is the matter of costs. The costs sought by the ACCA amounted to nearly £30,000, an astonishing sum. This was reduced to £27,000 principally due to one of the complaints being found not proved.

It is a sorry state of affairs that an individual who had been a member of the ACCA for 21 years, decided to give up on his qualification and not to engage with the disciplinary process. This was certainly one of those cases where the member would have been well advised to attend the hearing and in view of the complexity of the matters for consideration and the number of complaints, Thompson would have been well advised to be legally represented.

The ACCA is now claiming costs of a far greater magnitude than would have been the case four or five years ago. It is now not unusual to read of cases where the costs ordered against the member exceed £10,000. Is there anything that a member of the ACCA can do in order to avoid being hit with a massive costs order? The answer to that question is to ensure that the professional indemnity insurance policy covers the member in respect of disciplinary proceedings and that the policy should also cover the member in respect of the regulators’ costs. Insurers will never cover the member in respect of a fine.

If Thompson had had such a policy in place, his insurers would not only have underwritten the legal fees that he would have incurred before the disciplinary committee, but they would also have paid the ACCA’s costs of £27,000.

The moral of the story is to ensure that you have adequate insurance cover not only simply in respect of proceedings for negligence.

You can find out more about Chris Cope and the Accountants National Complaint Service by visiting their website here.

About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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03rd Sep 2018 16:38

Given his previous form, I'm surprised the accountant didn't try to beat the fees out of the client.

May as well be hanged for a sheep as a lamb!

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By mabzden
05th Sep 2018 11:54

Many moons ago I made a complaint to the ACCA about one of their members. I found them to be a shambles, with missed deadlines, lost evidence, ignorance about their own rulebook and lots of excuses, both about their own failings and those of their member.

So I'm not surprised to read the criticisms of the ACCA by Chris Cope above.

I am, however, pleasantly surprised so see they actually took action over this member. Admittedly it took several years, and the chap had to hide his criminal record, threaten a client and forge paperwork to stir them into action.

I'm sure there are many very, very good ACCA members out there. But, in my experience, the organisation's disciplinary process is a joke, and they're far too lenient with the bad apples.

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05th Sep 2018 14:50

What happens if Thompson refuses to pay the fine? Is it enforceable in a court of law?

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05th Sep 2018 15:24

Yes it is. The member contractually agrees as part of membership to submit himself/herself to the Regulatory process with all it entails. So ACCA could sue him for non-payment.

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05th Sep 2018 16:12

Every sympathy in respect of the outstanding invoices.
Unlike proper courts of law where the 'previous' is not disclosed, one wonders what the outcome might have otherwise been.

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06th Sep 2018 10:22

This is ludicrous, how can anyone be fined £27,000 for failing to pass on records and not attend a hearing.

Bearing in mind he was owed fees.

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By cfield
06th Sep 2018 12:07

What are "booking out sheets" supposed to be? Is this yet another antiquated ritual we're supposed to be performing according to ACCA rules?

Most client records are provided online these days so I'm surprised there was anything to return.

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By mabzden
to cfield
06th Sep 2018 12:39

What, you've never heard of booking out sheets? Me neither...

Following on from my post above, the ACCA person I dealt with didn't have the slightest clue about accountancy, tax or working in practice. At one point they (supposedly a senior investigator) said they would go off and ask a colleague "who knows about accountancy" to find out what information is contained in a set of accounts.

Maybe the answer was booking out sheets?

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06th Sep 2018 12:18

Thinking about it, if a client is very slow in providing the records and information can I charge £27,000 for preparing a set of accounts and a day long meeting.

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06th Sep 2018 15:14

The costs claimed in these cases seem crazy. £30,000!!

Maybe if it was a major accountancy firm then such a claim for costs would be reasonable, but for a small firm?

Surely the costs should be measured against turnover- so the bigger firms pay proportionally the same in fines and costs as the little firms.

As it is, the whole system is completely biased against the small practice to the benefit of the largest.

Whole case should have been much better handled by both sides, with the ACCA helping resolve the fee dispute rather than throwing the book at the guy who then obviously was disgusted with 'his' Institute taking the client's side and then compounded everything leading to the case and a big costs award to the ACCA.

I wonder if the fee dispute was ever resolved...

The point about insurance is very well made, I bet quite a few of us are checking our policies today!

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24th Sep 2018 08:09

Although I have to be careful what I say due to this case now going through the proper courts I can give this advice to members of the Acca.

When returning clients records it is no longer good enough to send them recorded delivery. Even though you may have to drive 300 miles. Take them to the client and get them to sign individually for each price of paper.

If you are not paid for work. You must continue working for a client. Non payment of fees is no reason to stop work.

If your professional body want you to commit a criminal act by interfering with a police or DTI investigation or breaching an injunction. So be it that’s what they expect.

A professional body may handle stolen documentation without worry.

Oh yes and if you suffer a medical condition and tell a professional body in confidence. Do not expect them to keep it confidential

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