A tribunal severely reprimanded a firm, fined it £4,000 and required it to pay costs following:
- failure to cooperate with ICAEW and its staff carrying out functions under the Practice Assurance scheme, as required by the Practice Assurance Regulations; and
- failures under the DPB (Investment Business) Regulations to demonstrate to ICAEW that it was compliant with Regulation 4.15 of the DPB (Investment Business) Handbook and failing to deal with ICAEW in an open and co-operative manner.
The same tribunal also severely reprimanded a member at the same firm, fined her £2,000 and required her to pay costs as a result of her failure to provide information or explanations required under Disciplinary Bye Law 13.
A provisional member was declared unfit to become a member by a tribunal and required to pay costs (but no separate financial penalty). This was as a result of him producing audit working
papers on eight different audits which he signed off as a record of audit work he had undertaken, when he knew he had not undertaken the work as documented. Rather he had deliberately copied all or part of the working papers from the previous year and changed the dates to make it appear that the work had been completed by him in the current year. This conduct was found to be dishonest.
A settlement was agreed and order made where a sole practitioner and her firm were both severely reprimanded, she was fined £15,000, the firm fined £85,000 and both were required to pay significant costs as a result of:
- Failures to comply with the requirements of Ethical Standard 1 in relation to multiple audits by: (a) Accepting and/or continuing appointment as auditor in circumstances where the threats to its independence could not be reduced to an acceptable level; or (b) failing, adequately or at all, to identify threats to its independence and/or implement safeguards to reduce such threats to an acceptable level and/or communicate the threats and safeguards identified to those charged with governance.
- Issuing multiple audit opinions which expressed the opinion that the financial statements showed a true and fair view of the LLPs’ affairs and of the profit and loss account for the period then ended when the financial statements did not show a true and fair view because they did not disclose a First Tier Tribunal’s conclusion that the financial statements of the Sample LLPs had not complied with Generally Accepted Accounting Practice in the UK.
- Failing to carry out the audits in accordance with the requirements of International Standard on Auditing 230 (audit documentation).
Both the sole practitioner and the firm also accepted detailed conditions including hot file reviews and follow up monitoring visits over the next three years.
The Investigation Committee made the following orders by consent.
A firm was severely reprimanded and fined £45,900 having issued an unqualified audit opinion on the financial statements of ‘A plc’. The audit opinion stated that the audit had been conducted in accordance with International Standards on Auditing (UK and Ireland) when it had not been conducted in accordance with: a. ISA 500 ‘Audit Evidence’ (the firm failed to obtain sufficient appropriate audit evidence in relation to accruals), And/or b. ISA 230 ‘Audit Documentation.
In the following year’s audit for the same client, the firm issued an unqualified audit opinion when the audit again was not conducted in accordance with ISA 500 ‘Audit Evidence’, this time in that it failed to obtain sufficient appropriate audit evidence in relation to foreign exchange gains.
A firm was reprimanded and fined £10,850 for issuing an unqualified audit opinion on the
financial statements of a client for two consecutive years 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) 500 ‘Audit Evidence’. because the auditor failed to obtain sufficient appropriate audit evidence regarding the completeness and/or valuation of trade creditors in both years and for the first year the existence and/or valuation of goods in transit as well.
A member was severely reprimanded and fined £24,500 because, for a period of four years he failed to ensure that his two firms complied with The Money Laundering Regulations 2007:
- paragraph 20(1)(a) & (e) in that he did not establish and maintain appropriate and risk sensitive policies and procedures relating to customer due diligence measures and ongoing monitoring and risk assessment and management.
- paragraph 20(1)(f) in that he did not monitor and manage their compliance with The Money Laundering Regulations 2007.
- paragraph 7 in that he did not ensure that appropriate and complete customer due diligence measures were applied to all of their clients.
He also incorrectly completed the ICAEW annual return in multiple ways over a number of years,
stating that the firm was using the description Chartered Accountants when it was not entitled to, that the firm was a member firm, that ICAEW was the firm’s anti-money laundering supervisor and that it did not handle clients’ money when this was not the case.
Finally he breached Clients’ Money Regulations:
- 9 – not obtaining a letter from their bank confirming the terms of opening the clients’ money bank accounts).
- 11 -as up-front fees from clients were banked into the clients’ money bank accounts.
- 20A -failing to ensure that clients’ money was returned to the client promptly as soon as there was no longer any reason to retain those funds.
- 21- failing to ensure that the sum of the credit balance held for all clients was at least equal to the total balance held in all client bank accounts.
- 23 -failing to ensure that his firm had withdrawn monies payable to the firm from the clients’ money bank accounts as soon as reasonably practicable.
- 25 -failing to evidence a reconciliation of the client bank account at least every five weeks).
- 27B -failing to carry out and document annual Clients’ Money Regulation compliance reviews.
A member was severely reprimanded and fined £20,000 for failing to comply with Clients Money Regulations:
- Regulation 21 because, on 10 occasions, he caused or permitted funds to be withdrawn from his firm’s client account which were greater than the credit balances held by the firm.
- Regulation 11 because, on 79 occasions, he paid funds into the client bank account which were personal funds and not Clients’ Money.
- Regulation 9(b) as he failed to notify the bank in writing to ask them to confirm the trust status of the client bank account.
- Regulation 27(b) as he failed to ensure that his firms carried out and documented, at least annually, a review to consider if they had maintained systems to enable them to comply with the Clients’ Money Regulations.
- Regulation 25 of the Clients’ Money Regulations as he failed to complete reconciliations for multiple client accounts at least once every five weeks.
He also failed to co-operate with the Practice Assurance Committee.
In a separate case another member was severely reprimanded and fined £9,000 for multiple breaches of Client Money Regulations 13, 19, 21, 23, 24 and 25.
A firm was severely reprimanded and fined £19,500 in relation to failures in Corporate Tax compliance for a client and the declaration of a profit on a property disposal as well as preparing and submitting to Companies House accounts for the same client and three others when they did not comply with UK Generally Accepted Accounting Practice (UK GAAP) for the following reasons:
- The accounting policy disclosure note in respect of depreciation was incomplete.
- The balance sheet comparative figures were incorrect.
- The freehold land and buildings shown on the balance sheet have been incorrectly classified.
Another firm was severely reprimanded and fined £13,650 for failing to fulfil an assurance given to QAD following a Practice Assurance visit as well as breaches of Client Money Regulations 9B, 22 and 25.
In two unconnected cases members were subject to consent orders because they failed to provide information, explanations and documents requested by a letter issued in accordance with Disciplinary Bye-law 13. Both were severely reprimanded and one was fined £7,500, the other £6,000.
Another firm was severely reprimanded and fined £4,000 for failing to comply with paragraph 7 of The Money Laundering Regulations 2007 in that they did not ensure that appropriate and complete customer due diligence measures were carried out for three clients.
A member was reprimanded and fined £5,000 because he was responsible for the preparation of the accounts of a client for 7 years which were incorrect in that dividends declared in excess of distributable reserves were not accounted for as a liability to repay.
An Insolvency Practitioner was reprimanded and fined £1,000 for failing to submit monthly progress and closure case updates in a timely manner, as required by the Insolvency Licensing Committee.
A member was reprimanded because she failed to ensure that her firm, was registered with an Anti-Money Laundering supervisor as required by the Money Laundering Regulations 2017.
Each of the above consent orders came with a requirement to pay costs.
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