This month’s disciplinary round up features a sole practitioner who was excluded after he failed to respond promptly to his clients and an ACCA member faces a massive fine of £41,000.
On hand to review the cases and offer his expert opinion is Chris Cope, who has acted for hundreds of accountants and is the founder of the Accountants Complaint Services Limited (ANCS).
Both cases from this month’s roundup are from the ACCA. Next week we will conclude this two part look at July’s disciplinary orders with the findings emerging from the ICAEW disciplinary orders.
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A sole practitioner who failed to respond promptly to his clients and complete their bookkeeping work has been excluded from the ACCA and ordered to pay over £10,000 in costs.
George Greer also admitted to not sending letters of engagement to four clients before commencing work.
On 20 February 2017, Greer’s client complained to the professional body after they instructed another firm to recreate the bookkeeping previously prepared by Greer, but they had been unable to get information from him.
The client’s new representatives first emailed Greer in November 2016, urgently seeking the client’s 31/5/16 year-end accounts with the Sage backups and bank statements. Over the next two months, Greer was chased a further ten times via email.
Emailing the ACCA on 23 May 2017, Greer blamed the high workload he experienced as a sole practitioner for not responding when the information was first requested.
Greer claimed that he was undertaking subcontract work for another accounting firm which required him to attend the client’s premises for a number of weeks. “As a result of this process, the service that I was able to provide to my clients was not as high as I would usually be able to provide,” wrote Greer.
“I have recognised this problem, however, and now do not undertake any more work for this particular firm. I now also employ a full-time employee in order to attempt to avoid this situation happening again.”
Greer’s failure to co-operate with the investigation also vexed the ACCA. The body first chased Greer on 19 September 2017 for documentary information, and again on 27 September. Greer responded on 11 October asking for an extension, but by the 18 October the ACCA had sent another letter to Greer requesting the information again.
The ACCA Committee excluded Greer after determining that his misconduct was “so serious that it was fundamentally incompatible with him being a member of ACCA”.
Chris Cope from the Accountants National Complaint Services said:
“Greer faced five allegations before the disciplinary committee, of which one was rejected and four were upheld. However, Greer did not attend the hearing, having been given every opportunity to do so and to advise whether he would be in attendance. The committee, not unfairly, decided to proceed in his absence. It is very odd that Greer decided not to attend the hearing, bearing in mind that he had submitted a defence in respect of some of the allegations. The others, he had admitted.
“The committee decided that, when considering sanction, there were aggravating features, namely:
- The adverse impact of Greer’s failings on his clients.
- The fact that the misconduct was repeated over a period of time.
- That Greer had agreed to provide documents on a number of occasions, but had not done so.
- The lack of insight or remorse into his failings.
“The only mitigating features were Greer’s previous unblemished record and the fact that he had made early admissions in respect of certain complaints.
“This type of case would normally result in a severe reprimand. However, such a decision would only apply if the committee was satisfied that there was no continuing risk to the public and that the member understood and appreciated the seriousness of his conduct, which was found to be wanting. The committee had no evidence to satisfy it on these two important points.
“The only sanction available to the committee above a severe reprimand was that of exclusion and that was the sanction imposed, together with costs and publicity.
“If Mr Greer had attended the hearing, whether in person or represented, there is no guarantee that the outcome would have been any different. However, I would be astonished if the committee were to have reached the same decision, despite being presented with oral argument by way of mitigation. Furthermore, Mr Greer’s defence could have been pursued before the committee and may have been successful.
“Failing to attend a hearing is a high-risk strategy. Even making a written submission does not guarantee a good outcome.
“It is significant that the committee noted that it had not received from Mr Greer any evidence of his current financial circumstances. And yet, in one of his communications to the ACCA dating from June 2017, he had said that he was concentrating his efforts on undertaking more profitable work in order to overcome the cash flow difficulties that were being suffered by his practice. Unfortunately, he did not elaborate on this. Had he done so, it is possible that the costs order ultimately made could have been reduced. Furthermore, by attending, he may have been able to make representations as to why the costs sought were excessive and again, that could have resulted in a reduction.
“The moral of the story is quite clear: those who are absent take an appalling risk.”
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As a result of ACCA member Neil Gibson’s failure to carry out the necessary investigations into a company’s assets and maintain his records as the joint administrator and joint liquidator, the ACCA ordered that he pay costs of £41,000.
Gibson was severely reprimanded by the ACCA as a result of the substantial number of complaints placed against him as an insolvency practitioner. His fitness to hold an insolvency licence will also be considered by the Admissions and Licensing Committee.
ACCA made a series of allegations against the member in respect of two insolvency cases. The first case was between 30 September 2009 and 13 August 2012, where Gibson was the lead liquidator but failed to provide evidence that the investigation was carried through to a conclusion.
The second case centred on a joint liquidation bank account, where Gibson did not sign the necessary documents, which delayed the opening of the account by 16 months.
At the start of the joint liquidation partnership Gibson and his partner did not agree on a clear division of responsibilities, such as who should be responsible for securing the books and records of the company.
At the time Gibson said that he would not be required to see the books and records himself. But since he was responsible for realising assets, the ACCA case was that he needed the books and records to help establish what assets there were.
Gibson, who had been a licensed insolvency practitioner for 16 years, told the Committee that he had never “been in this situation before”, and said his work has been inspected regularly by the body and the ACCA has never raised serious concerns before.
The ACCA originally applied for costs of £50,634.65 to cover the five day hearing but as the case was completed in three days the costs were reduced by one fifth.
Chris Cope from the Accountants National Complaint Services said :
“In fact, there were no less than 28 allegations against Gibson, of which 27 were upheld. Gibson attended the hearing in person, without representation. Nor did he call any expert evidence. Furthermore, the hearing lasted three days. One does have to question whether it was good tactics on the part of Gibson not to be represented, or to call an expert on his behalf.
“The sanction imposed was a severe reprimand. However, the committee did consider whether it should exclude from membership. In any event, Gibson being an insolvency practitioner, now has to convince the Admissions and Licensing Committee that he is fit to continue holding an insolvency licence. The Admissions and Licensing Committee must convene by 31st January 2019 in order to decide upon Gibson’s fitness. He would be well advised to be represented before that tribunal.
“On the subject of costs, I am astonished that the ACCA claimed costs of over £50,000. That was calculated on the basis of a five-day hearing. In fact, the matter was completed in three days. I fail to understand why the costs were only reduced by a fifth. However, Gibson made no submissions about the principle of costs, which I believe was a mistake. One should always make detailed submissions with regard to costs, particularly when the regulator is seeking such a large sum of money.
“The committee does not have the power to order an instalment programme. However, the member should, immediately following the hearing, write to the case manager, setting out details of his financial circumstances and offering to pay the costs (together with any fine) over a period of time. Generally speaking, regulators will not accept an instalment programme exceeding two years.”
You can find out more about Chris Cope and the Accountants National Complaint Service by visiting their website here.