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Disciplinary update: March 2022 newsletter

Author: ICAEW

Published: 03 Mar 2022

Since the last newsletter 3 tribunal findings and an appeal order have been published as well as 10 consent orders issued by the Investigation Committee.

An Appeal panel dismissed the appeal of a member against a tribunal sanction that he be severely reprimanded, be subject to a ‘paid for’ QAD visit within a set timescale and that he pay the Investigation Committee’s costs. That tribunal had found multiple Practice Assurance breaches including failing to fulfil assurances, failing to cooperate, breaching Client Money Regulation 10, failing to have an external review undertaken and failing to pay for a follow up visit by QAD.

The member did not attend the appeal hearing and the appeal panel also ordered that he pay the costs of the appeal.

A tribunal excluded a member, fined him £15,000 and required him to pay costs having found that he failed to comply with:

  • Regulation 20(h) of the Clients’ Money Regulations, in that he withdrew money from his firm’s client money bank accounts without written authority of the relevant client.
  • Regulation 13 of the Clients’ Money Regulations, in that he failed to ensure that money in excess of £10,000 for any one client held for more than 30 days was paid into a separately designated bank account in the name of the relevant client.
  • Regulation 21 of the Clients’ Money Regulations, in that he caused or permitted funds to be withdrawn from the firm’s client account which were greater than the credit balances held for the relevant client.

All the above regulations were breached on multiple occasions.

Another tribunal declared a provisional member unfit to be a member and required him to pay costs following his admission to submitting to a firm to apply for a position of ACA trainee, both a CV in which he dishonestly stated that he had a 2:1 degree in Mathematics, and dishonestly providing a falsified university degree certificate which stated that he held a Bachelor of Science in Mathematics when he knew he did not hold that qualification.

And in a third tribunal case a member was reprimanded, issued a financial penalty of £3,500 and required him to pay a contribution to costs following his admission to:

  • Signing financial statements for one year end when the exchange gains and losses were included as a creditor in the financial statements which was not in accordance with paragraph 8 of the Statement of Accounting Practice 20 because the exchange gains and losses should have been recognised as part of the profit or loss for that year.
  • Signing the financial statements for the following year when the exchange gains and losses were included as a debtor in the financial statements which was not in accordance with section 12 of the Financial Reporting Standard 102 because the exchange gains and losses should not have been recognised in the financial statements for that year.

The Investigation Committee made the following orders by consent:

A large firm was reprimanded and fined £60,000 having signed unqualified audit reports in two consecutive years on the financial statements of each of two companies which stated that an audit had been conducted in accordance with International Standards on Auditing (UK and Ireland) when the audit had not been conducted in accordance with International Standard on Auditing (UK and Ireland) 500 ‘Audit Evidence’, because in one year the auditor had failed to obtain sufficient appropriate audit evidence with regards to the existence and/or valuation of stock.

Two members were both individually severely reprimanded and fined £14,000 for engaging in practice:

  • contrary to student regulations,
  • with no practising certificate (once he would have been eligible to obtain one),
  • with no professional indemnity insurance,
  • then with insufficient indemnity insurance,
  • without ensuring his companies were registered with an Anti-Money Laundering Supervisor as required by the Money Laundering Regulations 2007 and then 2017.

He also allowed clients’ money to be paid into a standard `office bank account instead of a Clients’ Money Bank Account breaching Client Money Regulation 10. One of the two also held himself out as a chartered accountant when not entitled to do so for a period of 3 months.

A member was severely reprimanded and fined £10,500 because he was responsible for the preparation of the accounts of a company over seven consecutive years when they were incorrect because variously across each of those years all or some of the below applied:

period ended 31 December 2012, which were incorrect because:

the related party disclosure note states that the purchase of the share capital of “B” Ltd
from a director, Mr “X”, was at arm’s length when this was not correct and the accounts also:

  • did not include sufficient disclosure for related party transactions as required by FRSSE 2008,
  • did not include sufficient disclosure for holdings in subsidiary undertakings as required by FRSSE 2008,
  • did not include a provision for the impairment of the investment in “B” Ltd,
  • did not include a provision for the impairment of the balance due from “B” Ltd.

Another member was severely reprimanded and fined £9,000 following multiple breaches of the DPB and PA regulations in that:

  • He was advised on 22 November 2018 that his firm was ineligible to hold a DPB licence under regulation 2.03b of the DPB (Investment Business) Handbook because a corporate principal did not hold DPB affiliate status, and he failed to cooperate with ICAEW to correct this.
  • He failed to comply with assurances he had given on both DPB and PA QAD visits.
  • He failed to respond to PA closing meeting notes.

A firm was reprimanded and fined £8,000 for failing to identify and ensure consolidated financial statements were prepared for “X” Limited group for four consecutive years in breach of Section 399 of the Companies Act 2006.

A member was severely reprimanded and fined £5,000 for failing:

  • To fulfil 4 separate assurances given on a Practice Assurance visit.
  • To comply with paragraph 7 of the Money Laundering Regulations 2007 and / or paragraph 27 of The Money Laundering, Terrorist Financing and Transfer of Funds (information on the payer) Regulations 2017 as he did not apply customer due diligence measures on all clients.
  • To comply with regulation 24e of the Clients’ Money Regulations in that he did not keep clients’ money records which showed details of all transactions on each clients’ ledger account which would easily identify the balance held for each client and which reconciled to the total of clients' money held in the client bank accounts.

A member was severely reprimanded and fined £4,532 as a result of engaging in public practice as a without holding a practising certificate contrary to Principal Bye-law 51a, then as the only ICAEW member who was a principal in his firm, used the description ‘Chartered Accountants’ for that firm when it was not entitled to as it was not a member firm, and lastly failed to comply with the Money Laundering Regulations because his firm was not supervised by an appropriate anti-money laundering supervisory authority.

A member was reprimanded and fined £3,000 for submitting his firm’s ICAEW annual return for three consecutive year which contained, in each year, multiple errors in relation to the status of the firm’s principals.

A member was reprimanded having driven a motor vehicle in a public place after consuming so much alcohol that he exceeded the prescribed limit.

Each of the above consent orders came with a requirement to pay costs

Access further details on these cases.

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