ACCA disciplinary/ members

There has been a marked increase during the last year or two with regard to costs imposed by the ACCA’s disciplinary tribunal. In March 2018, it was reported that a London-based accountant had been excluded from membership. In April 2016, he had attempted to deceive the ACCA by signing a practising certificate training record so that he could obtain a practising certificate. He was also ordered to pay costs amounting to an astonishing sum of £20,000.

Looking at the report of cases dating from February 2018, there were four cases where substantial costs were ordered against members. Two accountants had failed to cooperate with an investigation or provide an action-plan on how their firm would improve its audit procedures. They were each given a severe reprimand, a fine of £4,000 and ordered to pay costs of £6,505.

In another case of failing to cooperate fully with an investigation, the member was severely reprimanded with costs of £6,300.

Another certified accountant who had been convicted of two counts of fraud and three counts of false accounting, was excluded with costs of £8,000.

I have done some research with regard to ACCA costs. As recently as 2014, costs ordered ranged, on average, from between £1,000 and £3,000. Whatever the defendant is ordered to pay is entirely a matter for the tribunal’s discretion. If the tribunal is not satisfied that the costs claimed are reasonable, these will be reduced. My advice to defendants is that they should challenge costs, whenever these appear to be excessive.

The ideal situation is to have the benefit either of a legal fees insurance policy or ensure that your professional indemnity insurance policy covers disciplinary proceedings. Generally speaking, these policies will not only cover you for the professional fees that you incur (solicitors, barristers and experts), but also costs that have to be paid to the regulator. Nevertheless, these policies never cover any fine that may be imposed on the member or firm.

Accordingly, paying a modest amount by way of insurance premium every year, could, ultimately, save a huge amount of money in the unfortunate event that the accountant finds himself/herself before a disciplinary tribunal.

You don’t expect to be burgled and cannot comprehend that you would ever have a fire at home, but you would never dream of failing to insure your property against either eventuality. Why therefore is it that so many practising accountants simply do not have the benefit of adequate insurance cover?

Turning to the cases reported in April, an ACCA practitioner was excluded and ordered to pay costs of approximately £12,000 for failing, on multiple occasions, to provide the ACCA with information it had requested and also in respect of insufficient audit work.

The problem started when the ACCA advised the practitioner that she was to be subject to a monitoring visit. After some delay, the visit duly took place, only to find that the practitioner was absent, having suffered an accident. The visit was re-scheduled. On that occasion, the practitioner complained that she was ill-prepared and unwell. She was advised to put together an audit file for inspection. The visit was postponed until later that day. It was then discovered that there was no audit file and that the file produced simply consisted of accountancy schedules with little evidence of audit procedures being performed or evidence obtained.

There was then correspondence, most of which the practitioner ignored. When it came to the disciplinary hearing, the practitioner did not attend.

With regard to the costs order of nearly £12,000, it should be noted that the ACCA (like all other accountancy bodies) will take proceedings, enter judgment and enforce judgment in order to recover both fines and costs.

Another certified accountant had been convicted some ten years ago of conspiracy to cause actual bodily harm. At the time, he was neither a student nor a member. However, when he registered as a student, some five years later, he failed to disclose the earlier conviction. It was only when the individual applied for membership in 2017 that the conviction was disclosed by the student “to be on the safe side”.

The tribunal noted that when the conviction had occurred, the member had only been 17 years of age. The tribunal concluded that there was no risk of repetition.

The member was reprimanded and ordered to pay costs of £3,000. In fact, the ACCA had sought costs of £5,776. This figure was reduced substantially.

The member was also wise to be legally represented before the tribunal.

Another practitioner was given a severe reprimand, together with costs of £17,000 after he had signed audit reports, without performing the required audit work. In addition, in a 12-month period, on no less than 146 occasions, the practitioner had transferred money from client account in excess of the money held for the relevant client. Apparently, there had never been a deficiency on client account as the practitioner always ensured that he paid his own funds into client account, in expectation of the receipt of client funds. It is not permissible for a practitioner to put his own money into client account. Furthermore, there had been errors in the opening and closing balances which indicated that the practitioner had not maintained adequate records of the client monies held on client account, nor was there a regular reconciliation.

The committee found that the practitioner had run his firm’s accounts with a substantial misunderstanding of his obligations. The tribunal concluded that the practitioner’s lack of understanding suggested a more deep-rooted and systemic problem which was only uncovered on the monitoring visit taking place.

The ACCA had incurred costs of nearly £20,000. However, the tribunal decided that these should be reduced by £3,000, no doubt as a result of representations made by the practitioner’s barrister.

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