The missing clients
Last month we heard about a decision involving a senior partner who presided over a client loan agreement signing without either client being present. And this month, one of the employees who ‘witnessed’ the signing of the loan agreement was put in front of the ICAEW disciplinary tribunal.
Adam Mercury, who was head of tax planning at the firm, confirmed to the tribunal that it was his signature on the loan agreement. And while he couldn’t argue that the handwriting on the agreement was indeed his own, he claimed that he had no recollection of signing the agreement as a witness.
But the loan agreement for £100,000 between two of the firm’s clients did indeed carry Mercury’s signature along with his qualifications as a chartered accountant and address claiming that he witnessed the clients’ signatures.
There was a second person who ‘witnessed’ the non-signing of the loan agreement between the clients, but since that person is not a member of the ICAEW, their identity is not disclosed in the disciplinary documents.
So how did Mercury’s signature appear on the document? Was there foul play at hand? While Mercury doesn’t believe that anyone added his signature, he did suggest that there is that possibility.
He explained that since he wouldn’t sign a document without first reading it, it is possible that the agreement may have been covered by other documents when he signed it.
Mercury informed the tribunal that he had learnt a lesson from this incident and would take greater care over what he signs in the future.
The tribunal viewed Mercury’s involvement as a “reckless act on his part” and would “have expected [Mercury] as a chartered accountant and a responsible professional person to have taken care in appending his signature as a witness to such a document”.
For his involvement, Mercury now has a severe reprimand on his record and a fine of £3,000 to pay, along with the costs of £5,347. But Mercury got off somewhat lighter than the firm’s senior partner who was excluded and ordered to pay a fine of £4,000 and the disciplinary costs of £14,662.
This is an odd case. On the one hand, Mr Mercury admitted that the signature on the loan agreement was his. On the other, he asserted that he had no recollection of signing the agreement as a witness. The loan agreement is dated 1 April 2011. The Disciplinary Committee hearing took place on 16 July 2019, some eight years later. One can readily understand that few people are likely to recall whether they witnessed an agreement made some eight and a quarter years before. It would appear that the disciplinary tribunal had written evidence from the principal of the firm (and presumably Mr Mercury’s boss) that he had instructed Mercury to sign. On the other hand, Mr Mercury told the tribunal, in writing, that he would, in principle, never sign an agreement without first reading it. He had no recollection of doing so.
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Big fines hit accountants’ pockets
The unwanted accolade of biggest fine this month went to Venus & Mars LLP (V/M) who were hit with a hefty fine of £21,000 and costs of £9,693 to pay for client money regulation breaches.
Not only were V/M dealt this substantial fine but the firm also received a severe reprimand.
V/M agreed to the consent order after the Investigation Committee found four examples where the firm did not comply with client money regulations.
In one example between 6 June 2011 and 23 June 2016, the firm permitted funds to be withdrawn from the client bank account on 24 occasions for 16 clients which were greater than the credit balance held for those clients.
And in another, between 1 January 2011 and 19 January 2017, the Investigation Committee discovered 96 occasions where the firm held funds for 30 clients in excess of £10,000 for more than 30 days, and failed to pay the money into a client bank account designated by the name of the client.
Breaches of the client money regulations seem to be becoming all too frequent. Failing to transfer funds in excess of £10,000 to a designated account if held for more than 30 days has caught out many a firm. Due to a failure to monitor account balances, it is all too easy to breach the regulations. All firms need to keep a close eye on the regulations, together with money held on client account. No one wants to acquire a disciplinary record due to a simple oversight.
The ICAEW Investigation Committee ordered that the Saturn & Co pay a fixed penalty of £1,409 after the firm used the description ‘Chartered Accountants’ when a director was not actually an ICAEW member or affiliate.
I have considerable reservations about these new fixed penalty orders (FPOs). They originate from the case manager and are subsequently endorsed by the Investigation Committee. I am uncomfortable about a case manager (who has investigated the case) having the power to sanction. Note that these FPOs do not include costs. But consent orders do. Hardly surprising that so many accountants are readily accepting FPOs in order to avoid costs – no less than nine cases reported last month.
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Being a chartered accountant doesn’t stop when you leave the office
A consent order included in December’s disciplinary decisions acts as a reminder to accountants that they represent the profession beyond the walls of their accountancy office.
The Investigation Committee found that Philip Neptune had been convicted of failing to stop following a road accident which injured another person.
As a result of the accident on 19 January 2018, Neptune now must pay costs of £1,230 and has a reprimand against his name.
Road traffic accidents are now appearing on a regular basis. In the ‘old days’, the Institute would only take action in cases where death was caused by dangerous driving. Now, a failed breath test can result in a disciplinary record.
And finally, a case reported in November 2019. Three and a half years before the disciplinary hearing, James Jupiter had been convicted of assaulting a woman. The assault was one of ABH. It was of a domestic nature. The court gave Jupiter Community Service. Alcohol was involved. Jupiter had had mental health issues. He had expressed remorse. References spoke highly of him. He had spent seven and a half months in custody on remand. The judge considered that the offence was unlikely to be repeated. The disciplinary tribunal had medical evidence before it – a long-standing medical condition was described. He had been in an abusive relationship for ten years. He was described to the court as a ‘broken, battered and bruised man’. He had been pushed to breaking point. He had been remanded in custody for his own safety from his wife. He now lives with his parents as he cannot mentally cope on his own. He cares for his parents who are in ill health. He is not fit to work. He has no savings. He provides (somehow) for his ex-wife and child. He had worked hard to achieve his qualification, which he very much wanted to retain. And what sanction was imposed? Exclusion, plus costs of over £6000.
Unbelievable. Unwisely, he did not attend the hearing. And had no legal representation which, of course, he could not afford.