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Disciplinary orders round-up October 2020

The return of Disciplinary round-up: AWEB investigates two cases from this October involving allegations of money misconduct.

8th Dec 2020
Community Assistant AccountingWEB
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Disciplinary
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As always, Blake Morgan LLP consultant/solicitor Chris Cope gives his take and explains what accountants can learn from these cases.

Andrew Littlewood

The ACCA disciplinary committee has ordered member Andrew Littlewood to be excluded after defrauading his employers.

Head of Finance/Treasurer for a volunteer-run Community Interest Cooperation, Littlewood was the subject of complaints from the Chairman of the Cooperation who had noticed irregularities in the accounts.

The Chairman explained that Littlewood had been interviewed about these irregularities and had admitted that he had taken money for personal use. He had falsely accounted for the removed funds.

During September 2019, Littlewood accepted a caution from Bedfordshire Police, in relation to fraud by abuse of position. He had taken over £6500 from the company.

In accepting this caution, Littlewood became liable to disciplinary action. Being discreditable to the ACCA and the accounting profession as a whole, it is standard procedure to report to the ACCA any such cautions that might be received by an accountant. 

Littlewood later admitted that he was aware that he was required to immediately inform the ACCA of the caution and had failed to do so.

In December 2019, just three months after receiving the caution, Littlewood submitted a CPD Declaration to the ACCA in which he failed to disclose the caution.

Littlewood failed to attend the hearing this October. The Committee decided to hear the case in his absence. Littlewood had not sought an adjournment.

While the Committee was cautious about proceeding in Littlewood’s absence, he had written in advance that he would not be attending and would “fully accept the decision of the disciplinary committee”.

By way of mitigation, Littlewood confirmed that he had repaid the majority of the £6500. He also produced a reference from his present employer.

The ACCA Disciplinary Committee went on to order that Littlewood be excluded from membership, as well as ordering that he pay the sum of £7,713.50 by way of costs.

Chris Cope, solicitor and consultant to Blake Morgan LLP, solicitors, comments:

What is extraordinary about this case is that the Bedfordshire Police decided to offer Mr Littlewood a caution in respect of “fraud by abuse of position”.

He was an employee and a qualified accountant. He stole £6500 for his own personal use (he had financial difficulties) and had fabricated the company’s records in order to hide his crimes. Why did this not result in a criminal prosecution? Had the sum taken been under £100, then perhaps a caution may have been appropriate. As it was, the company (a volunteer-run community organisation) had only survived as a result of members making a number of loans. Note also that Mr Littlewood had only repaid a majority of the money taken.

Peter Pring

Chartered accountant Peter Pring has received a severe reprimand from the ICAEW, fined £12,000 and ordered to pay costs of £3480 after breaching the Code of Ethics, the Clients’ Money Regulations and the Money Laundering Regulations.

Firstly, Pring was found guilty of signing independent examiners reports whilst not qualified to do so, as he was not sufficiently independent.

He did this for five years, between March 2012 and March 2016.

Secondly, Pring allowed office money to be paid into a client account; the money was found to have no actual connection to any client.

Thirdly, Pring did not, over a period of four years, conduct ongoing monitoring of his business relationship with all clients.

Finally, Pring breached the Money Laundering, Terrorist Financing and Transfer of Funds Regulations by failing to ensure that customer due diligence measures were up to date.

Chris Cope comments:

In the second complaint, there is reference to Schedule 1 which sets out all the occasions when Mr Pring allowed office money to be paid into client account. However, this schedule is not published. It is impossible, therefore, to understand on how many occasions this occurred and what funds were involved.

Breaches of both the Client Money Regulations and the Money Laundering Regulations do tend to feature all too frequently in these reports. This would suggest that many practitioners are not sufficiently informed about these regulations. Perhaps there needs to be greater emphasis in both areas regarding CPD. If in doubt, check the regulations. Don’t assume you know all about the regulations which are revised on a regular basis.

If you are presently subject to a complaint or want more information about Chris Cope and Blake Morgan LLP, solicitors, you can visit their website here.

Replies (4)

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David Winch
By David Winch
09th Dec 2020 09:40

With regard to the police caution for theft and false accounting by an employed professionally qualified accountant, the decision not to pursue a formal prosecution through the courts is probably a reflection of the lack of resources (including police officers or civilian staff with appropriate knowledge).
Financial crime, although very common, is simply not a priority when compared with violent crime, sex offences, domestic burglary, etc, etc.
David

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Replying to davidwinch:
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By Justin Bryant
09th Dec 2020 13:54

Yes; and I wonder what % of BBL etc. frauds will not be prosecuted for the same reason. Well over 99% I reckon.

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Hallerud at Easter
By DJKL
09th Dec 2020 14:12

I find this one strange,

"Secondly, Pring allowed office money to be paid into a client account; the money was found to have no actual connection to any client."

Now it may have been to a particular client account, but it used to be common practice to carry a float of firm's money within a general client account to avoid issues like bank fees and charges reducing the funds held below the level of the credit balances . It also enabled paying small client disbursements before the funds for these were received from the client. Are these practices no longer allowed (well over twenty years since I had any real dealings with client monies) or is there likely something else unsaid but more sinister in this instance?

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Replying to DJKL:
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By Paul Crowley
10th Dec 2020 19:34

Same here
The point of separating funds was to avoid client funds subsidising overdrafts and becoming lost
This is not what the guy did, and whilst incorrect I cannot believe any client made a loss.
As client accounts get interest it sounds as is practitioner used the client account instead of a deposit account.
Not condoned, but hardly worth even commenting on.

The problem always is that ICAEW do not really give adequate details of what exactly is the real problem.

But as always ICAEW seem to go over the top
ACCA only ever seem to publish exam cheats and people taking unauthorised money
Worth a read of GUNGADIN on ACCA
Excluded for at least a year before being able to rejoin

file:///C:/Users/interview%20room/Downloads/131119-Gungadin-DC-Reasons%20Public%20(1).pdf

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