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Disciplinary: Accountant refuses to return former clients’ money

The ICAEW has severely reprimanded a sole director of an accountancy practice following two separate cases where former clients inadvertently paid money into his office account totalling almost £8,000 and refused to return the money.

16th Mar 2020
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According to February’s ICAEW disciplinary orders, London-based Nemchand Proag was on the receiving end of disciplinary action and ordered to pay costs of £8,000 after two instances of keeping money that had been mistakenly paid into his business account over the course of a couple of months in 2015.

The highest sum of money retained was £7,200, while the other complaint is a comparatively smaller sum of £300.

Complaint one

The first complaint dates back to September 2015 when a former client – the bookkeeper of her son’s company – accidentally transferred £300 into Proag’s account. She explained to Proag the error and asked him to return the funds, but when she went to his office to collect the cheque, he did not answer the door despite his car being there.

She said Proag did not answer her calls but his assistant did contact her to say the accountant was advised by his bank that he did not need to return the money. However, Proag disputes this version of events.

The out of pocket client then pursued the case with the FRC. By this point, the bank accepted its error and repaid the £300.  

Following a severe reprimand from the ACCA, Proag has since accepted that the money was paid into his account and made a £300 donation to the accounting charity CABA.

However, Proag defended his actions by explaining that he thought the payment was towards the outstanding invoice.

Complaint two

Proag was pulled up again by the ICAEW for another similar incident in September 2015, only this time the client transferred £7,200 via BACS payment to Proag’s business bank account.

Again, the client realised his mistake and contacted his bank, and like the other complaint, he attempted to speak with Proag but was told he wasn’t there – despite claiming to hear him in the background.

The client tried various methods of retrieving his money including sending a letter via special delivery and getting his company’s bank to chase Proag. By November 2015, the client eventually tracked the accountant down through his mobile but Proag said he didn’t want to get involved.

The bank couldn’t offer anymore solace as they couldn’t retrieve the funds without the accountancy firm’s authority. At this point, the client brought the matter to the attention of the ACCA and ICAEW. The disciplinary tribunal then heard how Proag handed a cheque for the full amount to Clacton Police to return to the client.

Conclusion

In his defence to the ICAEW disciplinary tribunal, Proag blamed these complaints on the unprecedented stress in his personal and professional life and staffing problems due to high staff turnover.

But Proag apologised to both professional bodies and asked if could extend his apologies to the affected parties with an ex gratia payment to make up for the inconvenience caused, in addition to another £100 donation to CABA.

Echoing the ACCA’s prior verdict, the ICAEW concluded that in both separate cases Proag had acted foolish in refusing to “accept the obvious over a period of months” in not returning the money. The ICAEW disciplinary committee ordered Proag to pay the collective costs of £8,000 but did not demand any other financial penalties.

Chris Cope, director of Accountants National Complaint Services Ltd, comments:

Readers will note that both individuals who, inadvertently, paid money into Mr Proag’s office account, were not clients of his. One had been. The other was the mother of one of Mr Proag’s clients.It is also significant that the cheques were paid into Mr Proag’s office account within days of each other (the 3rd and 7th September 2015). Mr Proag repaid the substantial sum (£7,200) within three and a half months. He did not repay the lesser sum (£300) for two and a half years.

There was some justification for retaining the £300. C owed money to the practice. Mrs B was C’s mother. She had previously paid his bills. Mr Proag believed that Mrs B was paying the latest outstanding invoice.

The sum of £7,200 is rather more difficult to understand. It was paid into Mr Proag’s office account by mistake. The payor had been a client of his, but was no longer. The report does not tell us why Mr Proag prevaricated, other than that it was a time of unprecedented stress in his personal/professional life, according to his barrister.

It is also unusual that there was no fine. However, we are not told of his financial circumstances.

It seems very unsatisfactory that, with regard to the £300, whereas the bank had reimbursed the complainant, Mr Proag donated the money to CABA. It seems odd that the bank would not accept reimbursement.

Obviously, Mr Proag took the disciplinary proceedings very seriously. He was represented by Queen’s Counsel – no doubt paying mega fees.

I am not sure that we have had all the facts on this one. I remain somewhat suspicious as to why this should have happened twice in the same month.

If you are presently subject to a complaint, you can call the Accountants National Complaint Services Limited for advice (01769 581581) or visit their website here.

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