Excluded accountant blames stupidity for client money breaches
A Dunbar-based ICAEW member has been excluded from the institute after holding money in his client bank account, which did not belong to one of his clients, and transferring money from this account into his firm’s business account.
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Bit harsh (given that he'd self-reported AND even paid voluntarily interest to the client for the brief period of 'borrowing') ... but his 'excuse' is itself stupid!
To claim that the reason you keep repeating the behaviour that you know is wrong (and for which you've been fined previously more than once) is due to your stupidity ... is a novel form of proof by example.
The punishment for the incident on it's own was harsh, but when historical issues were taken into account, it moves from being stupidity to deliberate actions and harsher penalties then become justified!
Best thing is to not repeat the same offence. Borrowing from the bank is cheaper than fines.
USA has the three stikes rule, but then their laws seem to be based on basketball and trying to bring back state sanctioned slavery. Prisoners make just so much for the military, electronics and others
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The previous incidents seem very strange to me anyway. Excluding him from membership, whilst the obvious penalty doesn't stop him continuing with similar breaches.
The previous incidents seem very strange to me anyway. Excluding him from membership, whilst the obvious penalty doesn't stop him continuing with similar breaches.
What an idiot.
I never really understand why accountants deal with client money in the first place.
Seems like asking for trouble to me.
I even send back to the customer any cheques my older clients (its always very old clients who do this) send to me to send to HMRC. Any stray payments for tax come my way, they go right back to the client same day. Doesn't happen very often, but usually they pay HMRC my fee, and us the tax or something daft.
It was in times past a service offered to clients that rounded out the "accountant" experience but itself added no value.
A bit like travel agents offering travellers cheques, the commission barely covered the admin and grief but you offered the service to sell the holiday and the insurance where the real profits lay.
These days I would never have dreamed of even having a client account in a practice.
p.s. A bit of a shame , Mr Ronan's firm is George Spratt's former firm in Dunbar, I applied to them in 1985 for an apprenticeship (no vacancy at the time) as I had just bought a cottage at Cove, a pretty little hamlet 8 miles down the coast from Dunbar.
Finally read the detail.
Odd
Complaint 1
In trouble because he held funds in HIS client account that some other accountant should have been holding. The owner of funds was not a client.
He was doing a favour for an accountant in confusion, with good intentions
Complaint 2
He took those funds out of the client account
Would a good legal guy suggest that he corrected the error?
In the old days I used to do solicitor's client accounts
Solicitors just could never get it right when they bought a house. The client account used
The clever one that understood that issue could not get it right because property bought with partner
Back to this case. He moved a comparatively small some for 10 days and paid 'client' a serious amount of interest
Not really at risk as the pension lump sum was coming, just not fast enough.
As others have said
Why have a client account? It is a millstone no matter how good the intension is of the practitioner.
Every error treated as if deliberate dubious activity.
Would there have been any breach of the code of ethics if the £5,000 had been paid in to the main account instead of the client account and then repaid to the other firm's client when called upon?
The guy admitted his error and cooperated with the tribunal, yet gets stung with over £9k in costs. Just how much work did the tribunal have to do to arrive at the decision? How do they justify the costs?
I hate these penalties. Cases reported here relate to older accountants who are already struggling so why not show a bit of compassion. £5 mil fine for big boys has little impact on their lives. £10k to a guy who has had to cash in his pension to keep going is draconian. He had clearly lost the plot at some point, why not just ask him to resign. Wonder how many other accountants are running an overdraft after 30/40 years in the game.
Yes, he repeatedly flouted the regulations and deserves to be punished but are these offences (where there was no personal gain) worse than signing a clean audit report for a FTSE company where it became pretty obvious later that said financial statements were far from being clean. I have seen members fined for such 'offences' but are they ever excluded?
Having a client account is a recipe for disaster, which is why I don't have one. Never touch client money!
This guy didn't learn his lesson after two previous breaches and for once I agree with the decision (but not the costs, which are always way too much).
typical ICAEW sledgehammer to a nut. a bizarre judgement on the facts. And the fines ridiculously high.