Disciplinary update: January / February 2021
The Disciplinary Tribunal was busy during Q4 2020 dealing with the backlog of tribunal hearings caused by the COVID-19 pandemic.
Among the cases it heard were a series of complaints against a member who put himself in a conflict of interest position while acting for two parties on other ends of a construction contract even after friction emerged between them and who then administered a website which published derogatory comments about one of those clients. The Tribunal also found proven complaints that he had lied about his involvement in the website to his line manager and had destroyed computer records relating to it after the client had threatened litigation. The member was expelled and ordered to pay ICAEW’s costs.
Another member was expelled by the Disciplinary Tribunal after it found proved complaints relating to him associating himself (by acting as treasurer) with a charity which had participated in a ‘wholly unethical’ scheme relating to business rate relief and also complaints relating to his failure to disclose to the charity’s independent examiner details of significant litigation from local authorities to recover the relief.
The Tribunal also imposed severe reprimands on firms/partners in respect of a series of breaches of Client Money Regulations and for a breach of disciplinary bye-law 13 for failing to comply with a request to supply information during a disciplinary investigation.
Two settlement orders were approved. In the first, a member accepted a severe reprimand for having accessed a laptop without permission and also set up social media profiles to send Snapchat, Instagram and Twitter messages while impersonating other people including other members of staff. In the second, a member accepted a severe reprimand in relation to a number of complaints including preparing financial statements showing insufficient distributable reserves for the dividends declared in breach of section 830 of the Companies Act 2006, where dividends declared in excess of distributable reserves were not accounted for as a liability to repay and where the financial statements provided insufficient disclosure for related party transactions.
The Investigation Committee was also busy in Q4 2020 holding more meetings than usual and dealing with a wide variety of conduct matters.
Consent orders were issued and accepted by firms in relation to a number of complaints about poor audit work which related to breaches of ISA 320 (audit materiality), ISA 230 (audit evidence) and ISA 450 (evaluations of misstatements identified during the audit). In one case, a financial penalty of £241,700 was imposed. Consent orders were also offered and accepted by firms in two cases where independence concerns were identified. In one case, one of the firm’s partners was a trustee in a trust which had a financial interest in an audit client and in another case a network firm had been appointed as an officer of the company in the year when the firm’s audit partner signed the audit opinion.
Consent orders were also made against an IP for failing to terminate an IVA in a timely manner, failing to issue an IVA termination certificate in a timely manner, failing to act in accordance with resolutions passed at a creditors’ meeting to terminate an IVA and misleading the subject of an IVA as to whether or not her IVA could be concluded.
On more general conduct cases, a severe reprimand was issued and accepted by a firm for failing to comply with assurances given after a Quality Assurance visit, to make improvements in its compliance with its anti-money laundering obligations and Clients’ Money Regulations (CMRs). Another severe reprimand and a fine of £10,150 was accepted by a firm for complaints relating to breaches of the CMRs including a failure to credit bank interest, payments being made from client bank accounts in excess of the funds credited to them and bank charges being withdrawn from client accounts.
Fixed penalty orders were issued by Professional Conduct on behalf of the Investigation Committee in respect of a variety of conduct including a breach of the Jersey COVID-19 rules (failing to self-isolate when instructed to do so), convictions for driving under the influence of alcohol, failing to comply with an assurance to the Practice Assurance Committee and engaging in public practice without holding a practising certificate.