Gone to ground

Excluded practitioner goes off the grid during ICAEW investigation

A sole practitioner’s continuous failure to respond to a Quality Assurance Department (QAD) visit resulted in exclusion from the ICAEW.

S’s decision not to engage with the QAD visit not only cost him his professional membership, but he must also bear the full costs of the tribunal of £5,488 and a financial penalty of £5,000.

The trouble started for the sole practitioner when he failed to submit the pre-QAD visit questionnaire. A subsequent onsite visit discovered that he had not carried out an AML risk assessment as part of the client due diligence procedures, nor had he fulfilled periodic reviews of the firm’s compliance with AML regulations.

But as the reminders kept coming, S did not budge and did nothing to rectify the two areas of action. With S keeping quiet on the matter, the issue was referred to the ICAEW’s PAC in June 2017. The Practice Assurance Committee (PAC) set S until 5 January 2018 to respond.

It wasn’t until 25 January 2018 that the Essex-based practitioner provided information via email, but by that point, the PAC had already met and referred the case to the Professional Conduct Committee (PCD). The PAC instructed S to pay for a follow-up QAD visit.

Falls off the grid

The tardy practitioner didn’t see eye-to-eye with this follow-up visit on 31 May 2018 and felt his emails adequately resolved the issue. The meeting ended up being put on hold. S was told that the visit could not be cancelled since he had not yet demonstrated compliance.

From that point, S went to ground and did not respond to any communications from the Institute. Requests from the PAC for S to provide AML and CDD information were ignored in June and again in September, while efforts to contact him by letter and phone call worked to no avail.

Another QAD visit was arranged in December 2018, but the reviewer abandoned the visit after being left outside the closed door without an answer from the sole practitioner.

The tribunal viewed S’s failure to respond as “wilful and deliberate” and “was symptomatic of his attitude toward his own professional body”.

Taking into account S’s failure to engage with the Institute, the tribunal felt that the only sanction available to them was exclusion.

Chris Cope comments:-

Here is a clear case of a sole practitioner no longer wishing to remain a chartered accountant. No problem with that. But why incur a liability of over £10,000 in doing so? Once the enquiry has started, resignation is not an option. The ICAEW can and will refuse to accept a member’s resignation. Best, therefore, to cooperate and once the QAD is satisfied, then resign. With regard to the outstanding £10,488, the Institute will pursue payment and take legal proceedings. Once judgement is obtained (which will include interest and costs), full enforcement measures will be taken.

I do find it difficult to understand the reason why disciplinary tribunals decide to impose a fine in addition to excluding the individual from membership. Is not this a double punishment? Magistrates would never impose a prison sentence and a fine as well.

Another blunder

In other news, a Greatham-based accountant who claimed for reinvestment relief when the client was not eligible has accepted a consent order of £10,000 and a severe reprimand.

C faced three complaints that she made the claim on 2015-16 self-assessment tax returns in respect of two clients. The Investigation Committee decided that she knew or should have known the clients were ineligible.

In the third complaint, the Investigation Committee flagged another blunder where C omitted capital gains from the tax return which was the same tax return in which she had made the reinvestment error.

In accepting the consent order, C comes away with a hefty fine and severe reprimand but avoids going to a disciplinary tribunal.

Chris Cope comments:-

A great pity that C did not approach me for advice. By accepting the consent order, C has admitted liability. Both clients will be informed of the decision and can use the consent order in a negligence claim. But did C obtain the approval of her insurers before accepting the consent order? I doubt it. Insurers could avoid liability on both claims on the basis of a material failure to disclose.

What C should have done was to have rejected the consent order and taken the case to the Disciplinary Committee. Her insurers would almost certainly have underwritten the legal costs of representation at the disciplinary hearing.

The message is simple. NEVER accept a consent order without first discussing the matter with your insurers. If they agree that you can accept the consent order, ensure that your insurers confirm their advice in writing.

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