ICAEW severely reprimands disciplined accountant full of excuses

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A lost laptop, not receiving post, and a busy tax return season were some of the excuses accountant Michael Watson used when he failed to cooperate with an ICAEW request.

In a disciplinary tribunal, the Gloucestershire-based FCA was hit with a severe reprimand, fined £5,000 and ordered to provide the ICAEW with the requested information within a month of the disciplinary tribunal or his practising certificate would be withdrawn.

The Professional Conduct Department (PCD) first started an investigation into Watson following a referral from the practice assurance committee. The investigation related to potential breaches of client money and money laundering regulations.

The PCD’s investigation covered Watson’s compliance with holding of client money, the administration of client and office accounts and whether customer due diligence and risk assessments were being carried out on clients. But they ended up spending the majority of their time chasing Watson for information.

From the start of the investigation in September 2016, Watson responded with excuses. In the 12 months from October, he claimed that he wasn’t receiving letters by post and for the PCD to email him instead. However, he later claimed that he’d lost his laptop too.

Watson continued his failure to comply with the PCD’s requests into 2017. However, the threat of disciplinary action did rouse him into action.

The day after, the PCD threatened disciplinary action, Watson replied blaming difficulties with the post in his office building and that the PCD’s correspondence had only just come to his attention.

But no information was forthcoming. In January 2018, Watson said that it looked like he would have to cease trading. And then the next month he responded to a formal request saying that he had been busy preparing tax returns and accounts.

But by March 2018, the Professional Conduct Department escalated the matter to the ICAEW’s Investigation Committee.

When the matter appeared before the disciplinary tribunal, Watson’s previous disciplinary history came to light. In 2014, he was severely reprimanded for failing to allow a quality assurance visit.

There was another finding made against Watson in 2006, but too much time had passed for that to be considered relevant for sanction.  

Because Watson had not offered any information to the PCD, the tribunal imposed a severe reprimand and a £5,000 fine, in addition to the costs of £3,587.

The Tribunal also ordered Watson’s practising certificate could be suspended if he failed to provide the information requested.

Chris Cope of Accountants National Complaint Services Limited said:

So what does a regulator do about a practitioner who simply fails to cooperate and instead produces an endless stream of excuses, particularly one with a double disciplinary record?Usually, the sensible tactic to adopt is to phone a partner in the firm and request his intervention on the basis that the problem relates to the firm as well as the individual. But what action can a regulator take with a sole practitioner?

Two suggestions. Firstly, every practitioner must have an alternate, namely another practitioner available to take over the running of the practice in the event of death or illness. If approached by PCD, the alternate might be able to help. This could resolve the problem at minimum time/expense to the Institute.

Alternatively, PCD could contact the practitioner’s Support Member who could give advice.

The problem with both these suggestions, which have been adopted in the distant past, with good results, is that this could be regarded as a breach of data protection legislation. The practitioner’s consent would be needed before sensitive information about him was passed on to third parties.

Such are the consequences of well-meaning legislation.

All that PCD can do is to continue to write to the practitioner or, better still, phone him and have a frank discussion.

I doubt whether PCD makes as much use of the telephone as we did when I worked there many years ago.

Elsewhere in this May’s disciplinary orders, a Halifax-based firm was spared the need for a disciplinary tribunal when it accepted a £7,000 fine and costs of £5,000 after it issued a number of unqualified audit reports.

Riley & Co agreed to the Investigation Committee’s consent order and reprimand. The Investigation Committee’s case against the firm dates back to November 2010 when Riley & Co failed to include details of a property gifted to the company and disclose sufficient details of charitable expenditure.

Its failure to do this resulted in the company incorrectly claiming exemption from audit.

But that was not the only case where Riley & Co did not comply fully with the methods and principles of the Accounting and Reporting by Charities: Statement of Recommended Practice (SORP).

Again in 2012, Riley & Co issued an unqualified audit report that was not in accordance with the SORP. The Investigation Committee found that the financial statements failed to disclose sufficient details of charitable expenditure and there was insufficient audit evidence.

The Investigation Committee also uncovered unqualified audit reports in 2013, 2014 and again in 2015. Each time the firm issued reports on the financial statements of a limited company that failed on the same point: insufficient details of charitable expenditure.

Chris Cope of Accountants National Complaint Services Limited said:

This case involved breaches of audit regulations dating from as long ago as 2010 and as ‘recently’ as 2015. Such delays are really quite intolerable. However, we are not told why it has taken so long for these matters to be investigated and publicised. 

It may be that the issues have been identified as a routine monitoring visit. Perhaps, that is an indication that such visits ought to take place at a greater frequency. From the firm’s perspective, it must be galling for such historic matters to be publicised, particularly if, as one should assume, the firm’s audit standards today are fully compliant.

If you are presently subject to a complaint, you can call Chris Cope for advice (01769 581581) or visit his website

About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.

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28th May 2019 09:58

A third suggestion might be much heavier fines rather than tar the whole industry with the same brush.

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28th May 2019 09:58

Firstly, every practitioner must have an alternate, namely another practitioner available to take over the running of the practice in the event of death or illness.

This is a great idea in theory but at a recent meeting most practioners admitted that although they were appointed as alternates they would have little spare time to step in if required. This along with "how am I going to get paid" were also other topics that were covered.

Generally most institutes charge more to firms with more that one partner/ director, I am sure to keep members from leaving. I pose the question though is this a fair way to act, particularly as practioners are getting older and for other points mentioned by Chris Cooper

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28th May 2019 10:32

What stops him saying he doesn’t care about the practicing certificate and removing any ICAEW reference from his website, letterhead, email and so on.

He can still practice as an unqualified accountant can without the ICAEW having control over this.

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By raju m
to Lesser Tax
28th May 2019 14:49

He cannot do audits etc.

He can do all non-audit and tax work

Raju M

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29th May 2019 10:12

who in their right mind would want to undertake audits?

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31st May 2019 09:08

Extract above
'The investigation related to potential breaches of client money and money laundering regulations.'

Thats THE WAY Watson, go BIG.

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