Case Studies
A Professional Lifeline To Accountants

 

1) Alfred - Extreme delay in dealing with an estate.

 

 

However, for unclear reasons that apparently owed something to a complicated land purchase order and failure by Alfred to open an estate bank account, it was not until 2001 that probate was granted, but distribution of the assets was still incomplete by April 2009. It was also unclear why at any time in 28 years, Alfred had not agreed that the work be dealt with by another practice.

 

The deceased's son in law had been in correspondence with the ICAEW about the delays over some five years and made a formal complaint in 2008.

 

Alfred was not represented at the DC. There was no mitigation. Alfred was surely fortunate in that the order by the DC was confined to a severe reprimand and a penalty of £7800 and an order to complete the necessary work within six months. The DC declined to agree to a request for no publicity.

 

2) Edwin - Assisting a client to avoid VAT liabilities.

 

 

Edwin did not attend the hearing and was unrepresented. He was excluded from membership for at least five years and ordered to pay a penalty of £4K.

 

Of some interest was the reference by the DC in its report to an unpublished caution accepted by Edwin in 2003 for failure to adhere to normal courtesy and consideration on totally unrelated matters. The DC considered this order, but gave "negligible" weight to it. As a caution is unpublicised, it should not have been referred to in the DC report. Has the Legal Assessor slipped up?

 

3) Edmund - Falsely claiming that he had submitted a Share Option Scheme to HMRC.

 

 

However, the AC reduced the penalty to £6500 from £7500 and agreed to generous repayment terms and no AC costs because of Edmund's financial circumstances.  

 

4) Richard - Acted improperly on behalf of a client in the dissolution and formation of companies simply to evade tax and made false statements to Companies House that eight companies had overseas interests when he well knew this was incorrect.

 

The client was initially quite unaware that by Richard's actions he had become a party to tax evasion and on discovery ordered Richard to restore matters to their original state and pay the tax penalty incurred.

 

By stating incorrectly that the eight companies had overseas interests, the companies concerned improperly gained additional time for filing their accounts.

 

Richard denied the complaint and represented himself before the DC. The Committee upheld the complaint, considered exclusion but confined its order to a severe reprimand and a penalty of £7200 which appears lenient for matters involving serious issues of integrity.

 

5) John- Signing a Mortgage application form without consideration of content.

 

John knew nothing about the client and on behalf of an absent colleague, signed the form prepared by an independent mortgage broker. He did so without considering the ICAEW guidance which was issued in 2001.

 

On behalf of the applicant, who had in fact never been a client of John's firm at all, it was stated she had been in business as an antique dealer for 26 years, that her profits were over £75K for the last 3 years and that she would be able to meet new financial demands of £1300 per month. In fact the client was 75 years of age with an income of £750 per month who had not worked for 25 years and had never been an antique dealer.

 

On the form it was stated that John's firm had acted for the client for 20 years which was longer than his firm had existed.

 

The consequences of the mortgage application were catastrophic for the applicant and having lost her home, she was now living in sheltered accommodation. 

 

John represented himself and could only offer as a defence that the signature was a forgery and that he was in Spain at the date on the form, neither of which was accepted by the DC.

 

John was excluded from membership with a penalty of £13K, the DC believing that the matter was sufficiently serious to warrant a penalty higher than the normal starting point.

 

6) James -Supplying misleading information in relation to a claim for damages.

 

Following a motor accident in 2000, James prepared papers to claim for damages which included a supporting CV which incorrectly said that his former accountancy practice had been successful, that he had been employed by A Limited and had been offered employment by B and C.

 

In fact his former accountancy practice had been profitable for some time but had collapsed following James's conviction in 1993 for unlawful wounding, and indeed James had himself then entered into an IVA.

 

 

They were concerned about the latter in particular and whilst taking into account James's current and likely future health, they ordered that he be severely reprimanded with a penalty of £9250. He had been legally represented (by your editor) on a matter which could perhaps have justified exclusion.

 

7) Charles - Preparation of accounts relevant to a possible AIM listing which knowingly included material misstatements.

 

Charles' employer was significantly understaffed to deal with an antiquated method of recording stock, the results of which were incorporated into the company’s statutory accounts although Charles suspected that the real figure was much lower. 

 

He was present at the DC hearing and was legally represented, but the DC excluded him from membership for two years and levied a penalty of £5K. The main grounds for mitigation appeared to be the extreme stress under which Charles was then operating and worry that if he objected to what he believed might be false accounting, his job was at risk. Both matters were further emphasised before the AC at which Charles and his legal representative (your editor) were also present.

 

However, the AC dismissed Charles' appeal and ordered him to pay further costs of £1666.

 

This is a very clear case where the member should have consulted a Support Member when he would no doubt have been put in touch with appropriate ethics advisers.

 

8) Philip- Disqualification under CDDA for 9 years.

 

 

Philip and his legal representative (your editor) were present and he was seemingly very fortunate in that there were other past disciplinary cases where a nine year disqualification had led to exclusion.   

 

9) William- Disqualification under CDDA for 6 years.

 

 

10) Francis- Failing to reply to ICAEW correspondence for over 3 months. 

 

 

Reprimand and a penalty of £2600.

 

11) Albert - Failing to reply at all to ICAEW Correspondence.

 

 

12) Adrian - Failing to reply to ICAEW Correspondence [the fact of which had not been advised to his partner].

 

Severe reprimand and a penalty of £3900 plus £1100 for an aborted appeal. The existence of the correspondence, and the failure to deal with it punctually, had earlier been concealed from his partner who had also been disciplined by the DC for the same matter. The latter's appeal had now been successful but the additional appeal costs of £1100 would be born by Adrian.

 

13) Victor and Victor & Co - Stating incorrectly that he had no audit clients, failing for over eight years to honour an agreement to obtain a cold file review and issuing three unqualified audit reports when there had been significant failures to follow International Auditing Standards.

 

The DC found that there had been unacceptable delays and attempts to mislead the ICAEW, that the audits had been conducted to "lamentable" standards and excluded Victor from membership for at least four years with a total penalty of £14800. The AC reduced the total penalties to £6800 and the exclusion to two years with no AC costs.

 

Only at the AC was Victor present and represented. Mitigation advanced in relation to Victor’s financial position helped reduce the disciplinary penalties.