Disciplinary decisions: Big fines hit accountants’ pockets
AccountingWEB rounds up the last batch of disciplinary decisions from 2019, which includes some substantial fines for accounting firms and an accountant disciplined for something that happened outside the office.
December’s ICAEW disciplinary decisions spans 36 pages and unusually this month the one single tribunal decision is vastly outnumbered by 13 Investigation Committee consent orders, nine fixed penalty orders, six Audit Registration Committee decisions, and one cessation of membership.
Reviewing the headlines and offering his expert commentary is Chris Cope, solicitor and director of Accountants National Complaint Services Limited.
Big fines hit accountants’ pockets
The unwanted accolade of biggest fine this month went to MSR Partners LLP (formerly known as Moore Stephens LLP) who were hit with a hefty fine of £21,000 and costs of £9,693 to pay for client money regulation breaches.
Not only were MSR Partners dealt this substantial fine but the firm also received a severe reprimand.
MSR Partners agreed to the consent order after the Investigation Committee found four examples where the firm did not comply with client money regulations.
In one example between 6 June 2011 and 23 June 2016, the firm permitted funds to be withdrawn from the client bank account on 24 occasions for 16 clients which were greater than the credit balance held for those clients.
And in another, between 1 January 2011 and 19 January 2017, the Investigation Committee discovered 96 occasions where the firm held funds for 30 clients in excess of £10,000 for more than 30 days, and in addition to this, failed to pay the money into a client bank account designated by the name of the client.
MSR wasn’t the only firm this month to be saddled with a big fine. Not far behind them with a piggy-bank-breaking consent order fine was Leigh Goodwin, who was fined £17,500 and ordered to pay costs of £5,049.
The Lichfield-based ACA was pulled up on the 28 September 2016 audit report he issued on the consolidated financial statements of a limited company.
The areas which caught the Investigation Committee’s attention concerned Goodwin’s failure to obtain sufficient evidence for the group’s transition to FRS 102, the appropriateness of its use of the going concern assumption in the preparation of the financial statements, and the accuracy of the consolidation adjustments.
Chris Cope writes:
|Breaches of the client money regulations seem to be becoming all too frequent. Failing to transfer funds in excess of £10,000 to a designated account if held for more than 30 days has caught out many a firm. Due to a failure to monitor account balances, it is all too easy to breach the regulations. All firms need to keep a close eye on the regulations, together with money held on client account. No one wants to acquire a disciplinary record due to a simple oversight.|
A blast from the disciplinary past
Elsewhere, Meacher-Jones & Company is also back in the disciplinary news.
Regular readers of this column may remember the firm’s managing director David Meacher-Jones was handed a severe reprimand by the ICAEW disciplinary tribunal back in March 2018.
At the time, the Institute rejected Meacher-Jones’ excuse that he didn’t receive the letter that revoked his audit registration before he signed two audit reports.
This time, though, Meacher-Jones & Company didn’t go to the disciplinary tribunal; instead, the firm was hit with a fixed penalty order. The ICAEW Investigation Committee ordered that the Chester-based firm pay a fixed penalty of £1,409 after the firm used the description ‘Chartered Accountants’ when a director was not actually an ICAEW member or affiliate.
Chris Cope writes:
|I have considerable reservations about these new fixed penalty orders. They originate from the case manager and are subsequently endorsed by the Investigation Committee. I am uncomfortable about a case manager (who has investigated the case) having the power to sanction. Note that these FPOs do not include costs. But consent orders do. Hardly surprising that so many accountants are readily accepting FPOs in order to avoid costs – no less than nine cases reported last month.|
Being a chartered accountant doesn’t stop when you leave the office
And finally, a consent order included in December’s disciplinary decisions acts as a reminder to accountants that they represent the profession beyond the walls of their accountancy office.
The Investigation Committee found that Cheltenham-based FCA David Roper had been convicted of failing to stop following a road accident which injured another person.
As a result of the accident on 19 January 2018, Roper now pay costs of £1,230 and has a reprimand against his name.
Chris Cope writes:
|Road traffic accidents are now appearing on a regular basis. In the ‘old days’, the Institute would only take action in cases where death was caused by dangerous driving. Now, a failed breath test can result in a disciplinary record.|
And finally, Chris Cope has some thoughts arising out of two cases reported in November 2019.
|Please read the 15-page report of the case involving Devshi Chothani. He faced eight complaints, one of which involved dishonesty. These were serious allegations. Chothani had the sense to attend the hearing but he was not represented. Astonishingly, he was given a severe reprimand and a fine of £11,000.Please then turn to the case of Richard McCann who was disciplined the previous day. Unwisely, he did not attend the hearing. Three and a half years before, he had been convicted of assaulting a woman. The assault was one of ABH and was of a domestic nature.
The court gave McCann community service. McCann expressed remorse, references spoke highly of him and he disclosed that he had had mental health issues. After spending seven and a half months in custody on remand, the judge considered that the offence was unlikely to be repeated.
McCann had been in an abusive relationship for ten years and was described to the court as a ‘broken, battered and bruised man’ who had been pushed to breaking point. He had been remanded in custody for his own safety from his wife. The disciplinary tribunal had evidence of a long-standing medical condition, which means he's unfit for work.
As he cannot mentally cope on his own, McCann now lives with his parents who are also in ill health. He has no savings, yet he provides for his ex-wife and child.
He had worked hard to achieve his qualification, which he very much wanted to retain. And what sanction was imposed? Exclusion, plus costs of over £6000.
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