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Disciplinary update: December 2022


Published: 11 Jan 2023

Take note of the latest disciplinary cases to ensure you or your firm are not making similar mistakes.

Since the last update in November, 2 appeal decisions and 9 tribunal orders have been published as well as 27 consent orders issued by the Investigation Committee and 4 fixed penalty orders.

A selection of these cases are set out below or further details can be found via ICAEW's Disciplinary Database.

In one of the appeal decisions a provisional member had appealed against the sanction of being declared unfit to become a member for creating a false letter in support of an application for car finance. The appeal was dismissed.

In the other appeal a member had challenged both the decision and accompanying sanction for complaints related to their competence in dealing with a client’s VAT affairs and also in relation to the manner in which they had dealt with HMRC staff. The appeal was upheld in part and as a result the tribunal decision of a severe reprimand was substituted with a reprimand. The original costs order stood.

A member was excluded and severely reprimanded, fined £10,000 and required to pay significant costs. They were found to have lacked integrity and been dishonest in failing to declare output tax of £18,000 on a sale of intellectual property by a company they controlled when they knew the equivalent input tax had been reclaimed by the purchaser, who they also controlled. The member had also failed to co-operate with the ICAEW investigation.

A member was excluded and required to pay costs as a result of their convictions for:

  • One count of breaching a Sexual Harm Prevention Order contrary to section 103l of the Sexual Offences Act 2003 
  • Three counts of failing to comply with notification requirements of the Sex Offenders Register contrary to section 91(1)(a) and (2) of the Sexual Offences Act 2003
  • One count of possessing an extreme pornographic image contrary to section 63(1) (7)(d) and 67(3) of the Criminal Justice and Immigration Act 2008 
  • One count of distributing an indecent photograph/pseudo-photograph of a child contrary to section 1(1)(b) and 6 of the Protection of Children Act 1978 
  • One count of possessing a prohibited image of a child contrary to section 62(1) and 66(2) of the Coroners and Justice Act 2009 
  • Five counts of possessing indecent photographs/pseudo-photographs of a child contrary to section 160(1) (2A) and (3) of the Criminal Justice Act 1988

And three months later at the same court for:

  • One count of fraud by false representation contrary to section 1 of the Fraud Act 2006
  • Two counts of breaching a Sexual Harm Prevention Order contrary to section 103l of the Sexual Offences Act 2003

A member was excluded from membership and required to pay costs following their conviction for the indictable offence of cruelty to a person under 16, contrary to section 1 (1) of the Children and Young Persons Act 1933.

An affiliate member was severely reprimanded, fined £10,000 and required to pay costs for multiple and varied audit failings in signing audit reports for two clients across four years.

In another tribunal, a member was severely reprimanded, fined £5,000 and required to pay costs following a finding that they had provided tax planning advice in respect of the buy-back by Firm ‘A’ of Mr ‘B’s shares that was incorrect and / or incomplete in that:
  • The company purchase of own shares by way of a loan from Mr ‘B’ was not in accordance with section 691(2) of the Companies Act 2006 resulting in the transaction being void and Mr ‘B’ remaining a shareholder.
  • The tax calculations provided were based on not disclosing the proceeds of the share disposal at the time of the disposal but on the basis of treating the loan repayments to Mr ‘B’ as dividend income when Mr ‘B’ was selling the shares that would receive the dividends.
  • No advice was provided on structuring the share buyback so that Mr ‘B’ could benefit from the tax efficiencies of capital treatment afforded by s1033 of The Corporation Tax Act 2010, including Entrepreneurs’ Relief.

A second complaint relating to issues with the preparation of the accounts of firm A was found not proved.

A member was severely reprimanded, fined £5,000 and required to pay costs for a lack of competence in firstly issuing an unqualified audit report on the financial statements of a company which had been prepared in accordance with the small companies regime and Section 1A of FRS 102, when the entity was not a small entity. 

And secondly for issuing that unqualified audit report which stated that the audit had been conducted in accordance with International Standards on Auditing (UK) when the audit was not conducted in accordance with:

  • International Standard on Auditing (UK) 510 ‘Initial Audit Engagements—Opening Balances’
  • International Standard on Auditing (UK) 315 ‘Identifying and Assessing the Risks of Material Misstatement Through Understanding of the Entity and Its Environment’
  • International Standard on Auditing (UK) 500 ‘Audit evidence’ International Standard on Auditing (UK) 570 ‘Going Concern’

A tribunal severely reprimanded a member and fined them £5,250 with a requirement to pay costs for failing to provide information and explanations required under Disciplinary Bye Law 13.

A member was reprimanded, fined £3,000 and required to pay costs as they had prepared the financial statements of ‘A’ for the year ended 31 December 2019 when they did not comply with Financial Reporting Standard 102 “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” including the provisions of Section 1A “Small Entities” in a number of areas.

The 27 Orders published that were made by the Investigation Committee (23 against members and 4 against firms) consisted of 19 severe reprimands and 8 reprimands. All came with a requirement to pay costs and 21 of the 27 also included a fine. Those fines ranged from £2,100 to £38,500 and the issues dealt with included audit independence, inadequate audit work, tax compliance, convictions and sharing internal audit training materials in passing assessments.

Four fixed penalties were issued, one for riding an e scooter after consuming alcohol in excess of the prescribed limit, two for engaging in public practice without professional indemnity insurance and one for not securing the minimum level of professional indemnity insurance following a cessation of public practice