Birds of a feather
An accountancy partner has been excluded from his professional body after getting two employees to witness the signing of a loan agreement when the loan signatories were not present.
The ICAEW has excluded accountancy partner Kingfisher, who had an unblemished 30-year record at the time of the complaint. The Institute also slapped him with a fine of £4,000 and ordered him to pay the disciplinary tribunal costs of £14,662
According to the disciplinary case notes, Kingfisher could have witnessed the document himself but, “for whatever reason, chose not to do so”.
Blaming personal difficulties which impaired his judgment, Kingfisher was “extremely remorseful for his actions.” He has since retired from practice, he said in his defence, which means he is unlikely to come into contact with clients in the future.
As a result of witnessing the loan agreement, the tribunal heard how one of the employees is also now the subject of disciplinary proceedings.
The practitioner admitted to the tribunal – albeit only once a date for a contested hearing had been set -that he made a series of loans to his client (A) who had become a friend. The loans were in order to help the client, who was apparently facing bankruptcy,
The first complaint against Kingfisher dates back to 2010, when he made a series of loans to A totalling £35,000 to assist with a property transaction. At the time, no loan agreement was put in place.
In the same year, Kingfisher facilitated a £90,000 loan transaction between a personal tax client of his (B) and A. Kingfisher had introduced the two and was involved in drafting the documents.
This was the loan transaction supposedly executed in the presence of two employees when neither client was present at the signing.
The fallout continued as Kingfisher failed to include the loan interest on A’s tax return for five years, despite being the one overseeing the arrangement. The defective tax returns from 2010 onwards were later rectified.
On top of all this, questions were being asked about another £75,000 Kingfisher received from the client as to whether it was a gift or r the loan repayment.
What’s more, Kingfisher didn’t declare the loans or gift arrangements to show his firm’s independence.
The ICAEW disciplinary tribunal viewed the fact Kingfisher implicated two employees in witnessing the loan agreement without the signatories as “the most serious of all the admitted complaints” and deemed it a breach of the fundamental principle of integrity.
“It is vital that such documents are properly signed and witnessed, and a member engaged in any practice which derogates from this important principle substantially erodes confidence in the profession as a whole,” the tribunal concluded.
My comments are as follows:-
Prior to 2010, lending money to a client or receiving a loan from a client was forbidden. Since 2010, both are permissible provided that the accountant can satisfy the regulator that his independence is in no way impaired. A practising accountant should exercise considerable care before becoming involved in any loan transaction. The motto adopted should also be – if in doubt, don’t.
A showbiz tax accountant whose clients include actors and musicians has been severely reprimanded for flouting seven County Court Judgments made against his firm totalling £21,370.
The ICAEW has hit Chaffinch with a severe reprimand, a fine of £3,000 and ordered him to pay costs of £2,790.30 for two separate disciplinary cases which both related to unsatisfied County Court Judgment (CCJ) debts.
The tribunal heard how the seven outstanding CCJs ranged from the first in January 2016 for £1,324, to the most recent lodged on 9 May 2018 for £10,010.
Throughout the ICAEW’s investigation, Chaffinch remained resolute that all outstanding CCJs were satisfied. He first called the ICAEW on 26 July 2018 to explain that at that point all but one of the debts had been settled and he was in the process of disputing the final CCJ worth £10,010.
Yet Chaffinch did not provide the Institute with any evidence to back his claim and such evidence presented to the contrary did little to quash the ICAEW’s line of questioning.
The ICAEW continued to pursue confirmation that the CCJs had been satisfied in late October 2018, but Chaffinch did not respond to formal requests.
It wasn’t until March 2019 that Chaffinch picked up the phone to the ICAEW. But this was the last time he spoke to the ICAEW. He was not present at the tribunal and did not have any representation.
During the telephone call in March 2019, Chaffinch claimed that it would take three to six months to get proof from the courts that he had satisfied the judgments.
The ICAEW then discovered in June 2019 that all CCJs except one worth £1,628 were unpaid. On top of that, another updated search report identified another unpaid judgment debt for £4,229 from March 2019.
The tribunal concluded in both cases that Chaffinch had not responded to the ICAEW’s request to support his assertion that the CCJs were satisfied with any evidence at all.
Had Chaffinch provided the ICAEW with this supporting information, the tribunal said he could have avoided disciplinary proceedings. Instead, he was hit with a severe reprimand and fine.
My comments would be:-
I am bewildered by this case. There were numerous CCJs which is bad enough. Most were never satisfied which is even worse. The member said that they had been satisfied, which appeared to be untrue. He produced no evidence, which seems very odd, that the majority of the CCJs had been satisfied. He failed to attend the hearing. As Lord Sugar would say ‘you’re fired’ or, in this case, surely the outcome should have been ‘you’re out’.