Just over three years after his firm received a severe reprimand from the ACCA for issuing unqualified audit reports, a partner at an accountancy firm has received a severe reprimand and a hefty fine for the same complaint.
This time the sentencing order comes from the ICAEW, the accountant in question’s professional body.
Martin Hurren, who is one of two partners at his accountancy firm, accepted full responsibility for what he called “minor breaches of professional conduct”.
He added in a letter to the institute on 25 October 2018: “…having pleaded guilty under barrister instructions at the ACCA hearing, how could I possibly not accept the same position for the same offences at my own Institute hearing.”
One might wonder why Hurren was pulled up on the same issue by two different professional bodies, as if some sort of double jeopardy defence may prevent such charges.
But this was technically two different cases as Hurren’s firm was registered with the ACCA for audit work, while Hurren himself was an Institute member and fell under their jurisdiction.
While the ACCA did not hold any authority over Hurren, the ICAEW did rely on the ACCA’s disciplinary findings against the firm for the purposes of their investigation into Hurren. The crux of the ACCA’s disciplinary tribunal in October 2015 focused on the adverse findings made against Hurren’s firm following a monitoring visit from an ACCA senior practice reviewer conducted on 25 June 2012.
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The ACCA disciplinary committee heard how the reviewer had found a number of serious deficiencies in the quality of audit evidence for three companies. Furthermore, the ACCA disciplinary found that the firm had prepared and filed unaudited accounts of one company whose balance sheet exceeded the audit exemption threshold.
Hurren accepted that the audit work carried out in his practice fell to unsatisfactory levels and urged the ACCA that “no action should be taken against my partner in relation to the referral to Professional Conduct”.
When it came to the ICAEW tribunal, Hurren's full admission reduced the recommended £10,000 fine (see sanctions guidelines) by 10% to £9,000. The ICAEW based its figure on a number of aggravating factors such as Hurren not reporting the ACCA disciplinary committee’s findings and describing his failure to meet the audit standards required as “minor breaches of professional conduct”. On the latter point, the tribunal felt he lacked insight into the severity and consequences of his numerous failures.
In addition to the fine and severe reprimand, Hurren was also ordered to pay costs of £2,000 to the ICAEW.
Chris Cope, director of Accountants National Complaint Services Limited, comments
Big mistake not to attend the ICAEW disciplinary hearing. Whereas the severe reprimand was inevitable, it is possible that with strong mitigating representations, the fine could have been reduced. As mentioned in the Davis case, legal representation would have cost Mr Hurren nothing had he been a member of ADAS.
The delays in both cases are troubling. The original monitoring visit by the ACCA took place in June 2012. The firm was disciplined in October 2015, nearly three-and-a-half years later. The ACCA reported the outcome to the ICAEW. They were writing to Mr Hurren by 16th April 2016. And yet it was not until 31st October 2018 that the disciplinary proceedings were heard, three years after the ACCA had concluded matters.
The Disciplinary Committee was unimpressed by these delays and was not convinced by the need for such an intensive investigation. The Investigation Committee sought costs of £7,000. The Disciplinary Committee would have none of this. The figure was slashed by 71%. Mr Hurren was fortunate to save himself some £5,000.
Both the ICAEW and the ACCA need to get a grip on the delays which are now occurring far too frequently in carrying out investigations. This puts an intolerable burden on practitioners.
You can find out more about Chris Cope and the Accountants National Complaint Service by visiting their website here
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