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Disciplinary: Firm issuing unqualified audit reports fined £30,500

Accountancy firm Zaidi & Co has been hit with £30,500 fine and a severe reprimand after issuing unqualified audit reports for four different clients.
3rd Mar 2020
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As reported in February's ICAEW disciplinary report, the small London-based firm accepted a consent order from the ICAEW’s investigation committee based on the unqualified audit reports and not keeping the audit working papers for six years.

In addition to the £30,500 fine, Zaidi & Co has also been ordered to pay the investigation committee’s costs of £5,330.

The complaint dates back to four audit clients in March 2014 when Zaidi & Co did not conduct audits in accordance with international standards. In the case of all four audit clients, the investigation committee found that the firm did not obtain sufficient audit evidence.

The investigation committee pulled the firm up on its failure to keep evidence in regards to stock, other debtors, trade creditors, accrued income and amounts owed to group undertakings.

Zaidi & Co also faced three separate complaints on its failure to keep copies of the audit working papers for six years.

The firm’s failure to keep audit working papers dates back to the year ending 30 June 2011 for four entities. This continued the following year again for all four entities. But by the year ending June 2013, Zaidi & Co only failed to keep one of the entities’ audit working papers.

Zaidi & Co decided to accept the investigation committee’s consent order. By going down this route, the firm avoids a full disciplinary hearing and the case is concluded swiftly. However, the firm’s decision to accept the consent order also means it must agree to the £30,500 disciplinary fine.  

Chris Cope, solicitor/director of ANCS Ltd (an advisory service to accountancy practices) comments:

“The tariff applied when deciding upon a fine is to look at the annual audit fee and then to apply a multiple of that.

But a fine of £30,500 for a small firm seems to me to be unprecedented. Zaidi & Co also had to pay costs of over £5,000. If I had been advising Zaidi & Co, I would have suggested that the consent order be rejected and that the firm take their chance before the disciplinary committee.

An appearance before the disciplinary tribunal, with a strong plea in mitigation may well have resulted in a lesser fine.”

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

Replies (3)

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By Ian McTernan CTA
04th Mar 2020 12:02

There is a recurring theme here: small firms get hit by massive fines and costs, whereas larger firms get hit for smaller fines and costs that are nothing to them.

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Replying to Ian McTernan CTA:
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By Rgab1947
09th Mar 2020 12:22

Yup and top 4 very large audit firm is under investigation for fraud together with Lloyds.

Bet you they get off, if found guilty, with a modest fine.

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By optimist
04th Mar 2020 13:46

Am I being cynical when I wonder if these audit working papers ever existed?

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