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Disciplinary orders round-up August 2018
This month's disciplinary roundup features an "excessive and disproportionate" fine halved and a student who in a desperate attempt to save his career forged a medical certification.
Providing his expert commentary to the decisions is Chris Cope, who has acted for hundreds of accountants and is the founder of the Accountants Complaint Services Limited (ANCS).
Both cases this week are from the ICAEW. Next week we will conclude this month's two-part disciplinary roundup with a fairly complex ACCA investigation where an accountant withheld documents from a client.
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The ICAEW’s appeal panel has dismissed a West Yorkshire accountant’s attempt to overturn the disciplinary committee’s findings. But he succeeded in having his “excessive and disproportionate” £50,000 fine halved.
Accountant Christopher Dix argued that the disciplinary committee was wrong to find the first complaint proved and had treated the second as if it was a complaint of dishonesty. However, the panel disagreed with these submissions.
In April 2017, the ICAEW disciplinary tribunal severely reprimanded Dix with a fine of £50,000, when upholding five complaints. The five complaints can be summarised as follows:
- Failed to be straightforward and honest in his professional and business relationships as he failed to disclose to his co-director, payment arrangements he had made with a client.
- Between July 2009 and June 2010 allowed the sum of £8,000 due to be paid to the accountancy practice of which he was a director, to be paid into a personal bank account and thereafter to be improperly retained by him.
- Issued an audit report when he knew that his firm was not a registered auditor (two counts).
- Permitted abbreviated accounts to be filed when the client was not so entitled to do so because an audit report had been attached (two counts).
The majority of the appeal panel felt the disciplinary tribunal’s verdict was justified – although their reasoning differed.
The investigation committee had denied any suggestion of dishonesty on the part of Dix. Had dishonesty been the subject of the misappropriation of client money, Dix would have been looking at exclusion as a sentencing order.
Dix’s improper retention of money was considered “indefensible”, while his claim that he was entitled to these sums against the expenses he was due from his firm was branded “contrived and unbelievable”.
The appeal panel concluded that the disciplinary committee was correct to consider these cases as deliberate wrongdoing.
As Dix is a sole practitioner of limited means, the panel reduced the fine. Dix was also given additional time to pay the costs and fine as the original decision was “wrong in principle and unfair”. Instead of paying £50,000 within 30 days of service, Dix now must pay £25,000 within one year.
Chris Cope, solicitor and director of Accountants National Complaint Services Limited, said:
I have to declare an interest in that I represented Dix before the Disciplinary Committee. On appeal, Dix was represented by David Bradly of Counsel, instructed by me.
The principal objective in challenging the decision of the Disciplinary Committee was to reduce the fine of £50,000 and to obtain time to pay. The Disciplinary Committee had refused to allow Dix time to pay the fine of £50,000 or the costs of £16,720. That meant that he would have to find the sum of £66,720 within 30 days – an impossible task. We also appealed against some of the findings.
Although we were not successful with regard to challenging the findings, the fine was reduced by 50% and, furthermore, Dix was given 12 months in which to discharge the fine and costs. That, clearly, was a much more reasonable outcome than had been decided by the Disciplinary Committee. It is significant that the Appeal Committee decided that the fine of £50,000 had been both excessive and disproportionate.
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An ICAEW student has admitted forging a medical certificate in a desperate effort to save his career.
Prasath Sabanathan failed the professional examination in June 2016 and, again, the following month. In order to establish whether he should be allowed to sit the examination for the third time, Sabanathan’s employers required him to take a mock examination and attend a review meeting, before a deadline. He did not do either, explaining that the reason was due to ill health and that he had visited his GP about gastritis. This was untrue.
Then in September 2016, Sabanathan falsified a medical certificate, allegedly from his GP, which he had created on his computer. This document was presented to his employer.
As a result, Sabanathan faced two complaints before the disciplinary committee, alleging dishonesty.
The ICAEW tribunal imposed a severe reprimand on Sabanathan. The tribunal took into account that Sabanathan had been desperate to save his career, that he had been unwell (but not for gastritis), that he had only been a student member for a few months, his relative youth, early admission and insight into his wrongdoing.
The tribunal concluded that, although serious, the facts did not warrant an order that Sabanathan be declared unfit to become a member. Sabanathan must also pay tribunal costs in the sum of £3,840 by 12 monthly instalments.
Chris Cope of ANCS Ltd said
Sabanathan, who attended the hearing without representation, was extraordinarily fortunate that he was not declared unfit to become a member, particularly as he faced two counts of dishonesty. Nevertheless, the issues were interrelated and were, no doubt, treated as a single incident.
You can find out more about Chris Cope and the Accountants National Complaint Service by visiting their website here.