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The Disciplinary Tribunal continues to be busy

Author: ICAEW

Published: 07 Apr 2021

Disciplinary update for April 2021 on recent disciplinary cases heard, including decisions and fines.

Among the recent cases heard were a firm which undertook regulated activities which were not incidental to, and did not arise from, and were not complementary to the provision of other professional services in breach of the DPB (Investment Business) Handbook. That firm also submitted inaccurate annual returns to ICAEW and failed to submit the results of an external DPB compliance review that had been ordered by the Investment Business Committee. The firm were severely reprimanded for two of the three issues and reprimanded for the other. They were also fined a total of £20,000 and required to pay ICAEW costs of over £9,000.

In another tribunal decision an ICAEW member was found to have lacked integrity in emailing documents from his work email account to his personal email address. He was excluded from membership, fined £2,500 and required to pay ICAEW costs of over £18,000.

Another ICAEW member was alleged to have been dishonest in drafting a company’s board meeting minutes showing decisions made by that board when in fact those decisions had not been made or, in the alternative, he had lacked integrity in doing so. The tribunal did not find he had been dishonest, but they did find he had lacked integrity and he was severely reprimanded, fined £2,500 and required to pay ICAEW costs of over £14,000.

The tribunal also imposed a severe reprimand and fine in respect of an individual for a breach of disciplinary bye-law 13 for failing to comply with a request to supply information during a disciplinary investigation. In another case an order was made that an ICAEW provisional member be ineligible to apply for re-registration as a provisional member after being found to have dishonestly manipulated audit working schedules by copying prior years audit schedules and making slight amendments to appear that she had done work that had not been done.

Two new settlement orders were approved 

In the first, an ICAEW member accepted exclusion and a requirement to pay costs of £9,000 in respect of a lack of integrity and seriously defective audit work. 

The second settlement order was accepted by a responsible individual (RI) who was severely reprimanded, fined £10,000 and required to pay costs of £3,478. He had signed an unqualified audit opinion in three different years on one company’s accounts when the audit had not been conducted in accordance with a mixture of ISA 320 (audit materiality), ISA450 (identification of misstatements during the audit) and ISA500 (audit evidence).

The Investigation Committee also remains busy and continues to deal 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. One of these resulted for one firm, in a severe reprimand, a fine of £50,000 and costs of £8,260 for failures in client asset auditing in a report to the Financial Conduct Authority.

There were also orders accepted by firms for a reprimand and fine of £2,800 arising from breaches of ISA500 (audit evidence), and in another case a reprimand and fine of £4,550 arising from breaching the requirements of ISA570 (going concern). 

An individual was reprimanded and fined £8,400 for signing audit reports for two entities when firstly the firm was not permitted to accept appointment as auditor because a network firm was appointed as an officer of the company for those clients and secondly there was a failure to comply with the requirements of ISA220 (quality control).

On more general conduct cases, a severe reprimand and fine of £4,500 was issued and accepted by a member following his disqualification as a director.

An ICAEW member accepted a reprimand, fine of £1,400 and costs of £3,317 for failing to comply with assurances given after a quality assurance visit, to make improvements in compliance with anti-money laundering obligations and communicating his firm’s basis of charging fees and complaints procedures to all clients. Another was severely reprimanded, fined £2,000 and required to contribute £2,000 towards costs for also failing to comply with assurances given following a quality assurance visit. In this case those assurances related to both client money and anti-money laundering requirements.

A third individual accepted an order that he be severely reprimanded and fined £4,900 and pay costs of £3,031 for multiple compliance breaches including not fulfilling assurances related to the Anti-Money Laundering Regulations, failing to notify clients of the firms basis of charging fees and complaints procedure, and also failing to provide PII details as required by the provision of service regulations, as well as submitting incorrect annual returns to ICAEW, using the description "chartered accountants" when not eligible, not notifying changes to the composition of the firm and failing to have an appropriate anti money laundering supervisor.

An employee was found to have lacked integrity for using his employer provided mobile phone in the communication of purchasing illegal drugs. He was reprimanded and required to pay costs of £2,890.