Themes that were identified in the recent disciplinary cases ranged from poor reporting, lack of integrity and professionalism, improper use of professional descriptions and inappropriate handling of client monies.
Tribunal Committee tribunal order
- Failure to make disclosures to tax authorities, failure to ensure compliance with Practice Assurance Regulations, and failure to comply with AML regulations
A member was found to have acted dishonestly and without integrity for:
- Claiming funds under the Coronavirus Job Retention Scheme (‘CJRS’) for employees who continued working while furloughed; and
- Preparing and submitting accounts and corporation tax returns which were wrong; and
- Not submitting P11Ds when they knew there was an overdrawn director’s loan account.
The same member was found to have acted without integrity by not submitting self-assessment tax returns to disclose their rental income.
The same member failed to notify the Members’ Registrar of ICAEW of changes to the firm’s structure and did not ensure appropriate anti-money laundering (AML) supervision was in place for the firm.
The same member also submitted to ICAEW annual returns for the firm which contained inaccuracies and omissions.
Tribunal Committee settlement orders
- Incorrect tax returns
A member submitted incomplete Self Assessment Tax Returns on behalf of their client when they knew that some income was absent/understated and the returns did not indicate that they contained provisional or estimated figures.
- Criminal conviction
A member was convicted by an overseas court of negligence causing a death.
- Failure to cooperate with an investigation
A member failed to cooperate promptly and/or fully with an ICAEW investigation.
- Unauthorised signing of audit reports and associated documentation failings
A member signed audit reports as the Senior Statutory Auditor when they were not appointed to that role, and failed to document the extent and timing of their reviews of any or all the documents involved in those audits.
- Failure to disclose information to HMRC
A member sent correspondence to HMRC on behalf of clients that did not disclose all material facts and considerations relevant to the position being presented.
- Inaccurate timesheet entries
A member submitted timesheet entries presented as an accurate record of work completed when the work had not been carried out on the stated dates.
- Unapproved study leave and exam compliance
A provisional member took study leave that had not been approved by their employer and/or failed to follow instructions relating to exam entry/withdrawal processes. Disciplinary sanction was imposed.
Conduct Committee consent orders
- Failure to ensure AML supervision and notification
A member failed to ensure their firm was supervised by an appropriate AML authority and also failed to notify ICAEW of changes in their firm’s activities within the required timeframe.
- Failure to provide information during an investigation
A member failed to provide requested information and documents during an investigation, as required by Investigation and Disciplinary Regulations.
- Issuing inaccurate reports
A member issued accountant’s reports stating that certain procedures had been performed when they had not, resulting in severe reprimands and financial penalties.
- Clients’ Money Regulations breaches
A member breached a number of Clients’ Money Regulations, including holding client money in excess of permitted limits without proper segregation, failing to reconcile client accounts, and withdrawing amounts exceeding client balances.
- Improper use of professional descriptions and failure to ensure AML supervision
A member allowed his firm to use the description ‘Chartered Accountants’ when not eligible to do so, and also failed to ensure AML supervision of their firm during specified periods.
- Incorrect financial statement preparation/accounts and corporation tax filings
A member was responsible prepared and submitted unaudited financial statements that were incorrect because they did not disclose overdrawn directors’ loan accounts, and for submitting associated corporation tax returns that were incorrect in how those positions were reported. The member also contacted HMRC without prior client authorisation.
- Practising without required authorisations and related compliance failures
A member engaged in public practice without holding a practising certificate and without the minimum level of professional indemnity insurance. The member also failed to notify ICAEW within the required timeframe of the creation of new entities and failed to ensure that AML supervisory arrangements were in place for those entities.
- Audit reports signed without appropriate Responsible Individual authorisation
A member signed audit reports on behalf of a firm when not an authorised Responsible Individual for that firm.
- Incorrect financial statements
Various members and firms were found to incorrectly prepare and submit statements that were not in accordance with the Companies Act 2006, Financial Reporting Standard, International Standards on Auditing (UK and Ireland) and/or United Kingdom Accounting Standards, including insufficient or no disclosure for Going Concern.
Audit quality concerns due to insufficient audit evidence and weak audit documentation
A member prepared and submitted unaudited financial statements with errors and missing disclosures.
Tax relief claims not filed by statutory deadlines
A member was responsible for preparing and submitting tax relief claims and failed to ensure filings were correctly made by the statutory deadlines.
Defective audit work
A firm issued audit opinions when the audit work conducted was not undertaken in accordance with ISA 500 and ISA 230 in respect of revenue, debtors, and stock.
AND
Another firm issued audit opinions when the audit work conducted was not undertaken in accordance with ISA 500 and/or ISA 230 in respect of stock, accruals, current asset investments, trade debtors, and revenue.
AND
Another firm issued audit opinions when the audit work conducted was not undertaken in accordance with ISA 500 in respect of credits arising from the waiver of intercompany balances, ISA 570 and ISA 720 in respect of going concern disclosures, and ISA 700 in respect of disclosure in relation to a transaction undertaken during the year The firm also failed to ensure that the financial statements complied with FRS 102 regarding a loan transaction.
Incorrect audit exemption statement and valuation error
A firm produced its own financial statements stating it qualified for audit exemption when it did not, and the financial statements contained a material error relating to the valuation of trade debtors.
- Client Money Regulations breaches
A member failed to ensure compliance with Client Money Regulations by allowing client monies received by the firm not to be paid into a client bank account immediately.
Conduct Committee fixed penalty orders
- Professional indemnity insurance
A member engaged in public practice without the minimum required professional indemnity insurance.
- Practising without a certificate
A member engaged in public practice without holding a practising certificate.
- Improper use of professional descriptions
A member’s firm used the description ‘Chartered Accountants’ when not eligible to do so.
- Practising without a practising certificate
A member engaged in public practice without holding a practising certificate.
AND
Another member engaged in public practice without holding a practising certificate.
- Use of the description ‘Chartered Accountants’ when not eligible and practising without a practising certificate
A member engaged in public practice without holding a practising certificate and also allowed their firm to use the description ‘Chartered Accountants’ when not eligible.
Key themes
- Failure to make required disclosures to tax authorities
- Failure to co-operate with ICAEW
- Regulatory compliance breaches including the failure to have professional indemnity insurance and breaches of the anti-money laundering regulations.
- Improper use of professional descriptions
- Failure to meet practice compliance
- Lack of care and attention to audit quality and audit authority
- Poor financial reporting quality in unaudited accounts
- Insufficient tax compliance and professional conduct in tax
- Lack of integrity and professionalism
- Inappropriate handling of client monies
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