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Two banned on ICAEW audit charges

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8th Feb 2011
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Two accountants have been banned by the ICAEW for violating its requirements for registered auditors.

As detailed in the institute’s February disciplinary report (PDF) Mohammed Aslam, of Ilford-based Ahmed Aslam & Co, was banned for a minimum of two years and hit with £2,000 in costs for issuing a 2006 audit report in the firm’s name when it wasn’t registered as an auditor.

The breach was uncovered during a May 2008 practice assurance visit in which the reviewer uncovered accounts for a mobile phone company accompanied by an audit report signed by Aslam. The turnover of company “X” had risen from £5.2m in 2004 to £19.4m in 2005 on the basis of just 37 transactions.

A number of deficiencies were identified in the audit paperwork in the accounts themselves including:

  • No record of board approval was included on the balance sheet
  • Incorrect formatting and headings in the balance sheet and profit and loss account.
  • No cross referencing to notes on the balance sheet or P&L
  • Inconsistent use of brackets and signs on numbers.
  • Fixed Asset categories and movements not fully analysed
  • No explanation of the basis of depreciation.

The working papers were “superficial in their completion”, the ICAEW tribunal noted, alongside the the firm’s explanation that they had been rewritten after being damaged in storage. The audit report included no reference to the risks associated with the mobile phone industry, nor to the continual VAT repayments that had attracted the close attention of HMRC. “X” Limited ceased trading shortly after the 2005 accounts were issued.

The complaint was proven on the basis of the defendant’s admission that he believed as a chartered accountant he was entitled to sign audit reports. “This demonstrated a very worrying lack of awareness of professional rules and legislative requirements,” the ICAEW tribunal noted and was compounded by the deficiencies identified in the audit work carried out.

Stuart Saward of Blackheath-based Lovett Charles & Co was excluded for a minimum of two years and landed with £1,640 costs after failing to comply with a series of “hot file” audit reviews demanded by the ICAEW following a 2008 reprimand and £700 fine for operating without professional indemnity insurance.

Following that decision, Lovett Charles was only able to retain its audit registration if it complied with a number of conditions, including external hot file reviews, but Saward failed to do this on five separate occasions documented by the ICAEW tribunal.

By neglecting these obligations, Saward was “irresponsible” and guilty of serious professional misconduct that undermined the firm’s quality control. The tribunal rejected his explanation that he signed audit reports without the hot file reviews and their results being obtained because of time pressure.

A third ICAEW member, Yiu Kai Tsang, was banned for five years and fined £15,000 (plus £2,495 costs) after admitting insidider dealing, for which the Hong Kong Institute had already fined him HK$1m.

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Replies (9)

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By farrcorfe
09th Feb 2011 13:26

What price qualifieds?

As has been suspected in the recent debate on qualified/unqualified, the whiter than white members of the Institutes can fall down on the job just as easily as experienced accountants outside the fold. Thank goodness the Institute's monitoring processes uncovered poor practise - perhaps the tip of the iceberg?

T. W. Farrcorfe

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By rgudoi
09th Feb 2011 16:04

AN AUDIT FIRM FINDS ONE OF ITS SENIOR AUDTORS TAKING TO i'M NOT

Hi it is due to lack of professional ethics that the accouncy profession suffers from. The entire audit fraternity should ensure qwuality standards in the practice. I do also agree that this is not the first time such orrganisations  are caught pants down.......................

Auditors an accountants must enhance best corporaye  governanace as foresaid.

 

Accountancy practioners I beleive prove the fact that not all accountants hold any certified accountancy program. Some of those who do alot of work, suffer the burden of dictatioship yet they are not qualified with an accounting profession. It is therefoee a shame for the accountancy profession.

 

Regards,

Richard G.

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By deltaforceaccountant
09th Feb 2011 16:22

How many are out there?

The unauthorised "auditors" were picked up on a QAD visit. Good, but we know that the  professional bodies are only responsible for regulation of their members, though it would be in their interests consider the prevalence of non-member unauthorised "auditors". Is there some other body that checks audit firm names as per audited accounts submitted to Companies House against a list of authorised firms? Is there a government body that deals with offenders? It's not Cardiff CID is it?  But why leave it to governments, isn't there some marketing tool that trawls through filed accounts and identifies which firms audit which companies? Could these be published online, and an army of accountingwebbers trawl could through it over a few lunchtimes?  The results could be published by next week?

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By jonbryce
09th Feb 2011 16:36

Unregistered auditors
You can report any audit reports you find that are signed bu unregistered auditors to Companies House. As far as I can gather, they ask the company to resubmit the accounts but don't take any action against the "auditor".

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By tobri
10th Feb 2011 08:56

"....FINDS ONE OF IT SENIOR AUDTORS TAKING TO i'M NOT WTH OUTDEN

Precisely! What could be clearer than that? 

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Lamb
By Rehan1
10th Feb 2011 20:37

Not Enough

The Very first company should have been permanently excluded

from practising, as, 2 years banned and 2000 pounds is a joke

punishment.

It is very basic knowledge that Auditor must be registered.

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By peterlashmar
11th Feb 2011 09:29

Auditors banned - 2

The fines and bans imposed do seem paltry for what should be very serious offences but there is no mention of costs charged which are normally disclosed in ICAEW's reports.

What I find to be quite worrying is the length of time these have taken to come to light - they all seem to be about 3 years. Somewhat faster judgement would be useful and give reassurance to users of audited accounts.

Peter Lashmar

Lashmars Tax Accountants

11.02.2011 (nice symmetry to the date today)

 

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By Eve 2206
12th Feb 2011 19:25

Flouting the regulations...!

This is a timely reminder to those of us who want to set up our own practices - don't take shortcuts.  As qualified accountants we are aware of the rules and regulations for practising, whether as just an accountant or as accountant and auditor.

It would be tempting to opt out of the professional body and set up as an 'accountant' but to put other accountants at risk of getting a bad name because of poor quality work is not an option to me and many others.  Those regulations are there for a reason and should be observed.  If you can't get a practising and audit certificate then it's because you don't know enough.

These accountants were greedy and that sort of thing can give all of us a bad name.

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By joaudit
25th Jun 2012 20:13

Well done to ICAEW

I like to appreciate the work of the QA Review Team and the ICAEW diciplinary team for doing what should be done in these circumstance, the question of adequacy or sufficiency of the weight of punishment is secondary.

Let all members within the finnacial information supply chain heed the message in this action and begin to put their practice in good professional stead.

The related QA Review Team should please continue with their good work to restore sanity,integrity and credibilty to our noble profession.

Thank yu.

Johnson Oluata

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