Disciplinary: Partner excluded over client loan breaches
An accountancy partner has been excluded from his professional body after getting two employees to witness the signing of a loan agreement when the loan signatories were not present.
The ICAEW has excluded accountancy partner Roger Nyman, who had an unblemished 30-year record at the time of the complaint. The Institute also slapped him with a fine of £4,000 and ordered him to pay the disciplinary tribunal costs of £14,662
According to the disciplinary case notes, Nyman could have witnessed the document himself but, “for whatever reason, chose not to do so”.
Blaming personal difficulties which impaired his judgment, Nyman was “extremely remorseful for his actions.'' He has since retired from practice, he said in his defence, which means he is unlikely to come into contact with clients in the future.
As a result of witnessing the loan agreement, the tribunal heard how one of the employees is also now the subject of disciplinary proceedings.
The Stanmore-based partner admitted to the tribunal - albeit only once a date for a contested hearing had been set -that he made a series of loans to his client (A) who had become a friend. The loans were in order to help the client, who was apparently facing bankruptcy,
The first complaint against Nyman dates back to 2010, when he made a series of loans to client A totalling £35,000 to assist with a property transaction. At the time, no loan agreement was put in place.
In the same year, Nyman facilitated a £90,000 loan transaction between a personal tax client of his (B) and client A. Nyman had introduced the two and was involved in drafting the documents.
This was the loan transaction supposedly executed in the presence of two employees when neither client was present at the signing.
The fallout continued as Nyman failed to include the loan interest on client A’s tax return for five years, despite being the one overseeing the arrangement. The defective tax returns from 2010 onwards were later rectified.
On top of all this, questions were being asked about another £75,000 Nyman received from the client as to whether it was a gift or the loan repayment.
What’s more, Nyman didn’t declare the loans or gift arrangements to show his firm’s independence.
The ICAEW disciplinary tribunal viewed the fact Nyman implicated two employees in witnessing the loan agreement without the signatories as “the most serious of all the admitted complaints” and deemed it a breach of the fundamental principle of integrity.
“It is vital that such documents are properly signed and witnessed, and a member engaged in any practice which derogates from this important principle substantially erodes confidence in the profession as a whole,” the tribunal concluded.
Chris Cope, director of Accountants National Complaint Services Ltd, comments:
Prior to 2010, lending money to a client or receiving a loan from a client was forbidden. Since 2010, both are permissible provided that the accountant can satisfy the regulator that his independence is in no way impaired. A practising accountant should exercise considerable care before becoming involved in any loan transaction. The motto adopted should also be – if in doubt, don’t.
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