Two errant accountants

A dismissed accountant at his “wit’s end” slipped off with his former employer’s client list and sent a disparaging email detailing the firm’s HMRC inspection and their “negligence” in preparing a client’s VAT return.

Ernest Walrus received a severe reprimand from the ICAEW after a bitter falling-out with his employer triggered him to take a client list and email at least ten of his former firm’s clients with the subject line: “Have they screwed up your accounts?”

Walrus conceded to the ICAEW disciplinary tribunal that he now realises he made a “huge and inexcusable mistake” and that he is ashamed of his actions. He said at the time of sending the email he was “being hounded by debt collectors and was struggling to make ends meet”.

‘If you want a real accountant…’

Walrus sent the email including these words three months after his employer terminated his employment due to performance concerns in December 2014.

In the email, Walrus outlined an HMRC inspection from 2013 where he claimed the “so-called accountants” had been “negligent” in preparing a client’s VAT returns for two years and that the client now owes £25,000 in unpaid VAT.

“[The accountancy firm] made a mess of [the client’s] accounts. What have they done to yours?” he wrote. “Believe me, is the tip of the iceberg … If you want a real accountant, I will be pleased to assist you”

Then, he signed off the email: “Who do you want working on your accounts? Ernest Walrus ACA CTA or ‘[Mr E from the accountancy firm]’ TWAT?”

His former employer reported the incident to the ICO, the police, and asked that Walrus destroy the information – not least because they contended that the email disclosed confidential information about a client.

Walrus maintained to the tribunal that the content of the email was truthful and the accounts filed at the FSA public register support his stance. Although he accepted that he was “not in his right mind” when he sent the email, he insisted that he did not gain any clients from the correspondence.

Lapsed membership

The final complaint the tribunal considered concerned Walrus incorrectly describing himself on his CV as a member of the ICAEW.

Shortly after his fractious dismissal, Walrus told the tribunal that he was struggling with debt and could only find short-term, low-paid jobs. He therefore let his ICAEW membership cease on 11 July 2014.

However, he had “carelessly” described himself on the CV sent to recruitment agencies and potential employers as an ICAEW Chartered Accountant.

The ICAEW got wind of this incorrect description and in a telephone conversation with the Professional Conduct Department, Walrus admitted that his present employer wasn’t aware of his lapsed membership and feared he may lose his job if they found out.

Although he agreed to discuss it with them in July 2016, his employers were not aware that his membership had ceased when they checked his reference in September 2016.

He later confessed to the tribunal that he was embarrassed that he could not afford the ICAEW membership fee and regretted not discussing this with his employers at the time.

The decision

The ICAEW tribunal recognised the unhappy domestic and financial circumstances that led to the defendant moving back home and becoming increasingly responsible for his unwell mother and viewed most of the complaints against Walrus as coming under the less serious category.

The ICAEW disciplinary tribunal considered a severe reprimand with no financial penalty a proportionate sanction. Having considered Walrus’ financial means, he was ordered to repay costs in the sum of £6,000.

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This is one of those cases where a personal appearance before the tribunal, without legal representation, is advisable. That should not be interpreted as an indication that the defendant ought not to be legally represented, which is, of course, their right. However, the tribunal needs to hear from the defendant in person. He would be expected to explain his conduct, describe why he did it, apologise and state his circumstances at the time. Details regarding his present employment, health, finances and domestic situation would also be helpful.

 

An accountant went off the grid when the ICAEW tried contacting him after he failed to submit a client’s tax return and another client’s R&D claim.

Edward Manatee was required to appear before the ICAEW disciplinary tribunal twice on the same day in respect of two separate cases where he failed to cooperate with the ICAEW’s investigation team.

The ICAEW disciplinary tribunal concluded that “it was not open to [Manatee] simply to choose not to engage with the investigation against him” and imposed a severe reprimand and a combined fine of £10,000.

Things didn’t bode well for the client in the first complaint when Manatee missed several appointments and they were unable to make contact with him.

But despite Manatee collecting the necessary documents on 24 January 2017 to submit the client’s self assessment tax return before the deadline, the client could not get a hold of him again before the 31 January filing deadline to check their tax liabilities.

Manatee reappeared in April 2017 to hand the client his fee note for the preparation of the 5 April tax return and to inform them of their liabilities. But two months later, the client was hit with another bill to pay, only this time it was an HMRC penalty notice for failure to submit the tax return. Manatee would later put this down to a “portal failure”.

But this was the last the client heard from Manatee. He did not provide the submission receipt or reply to the client’s request for a refund of his fee or a reimbursement of the HMRC penalties. The client has since appointed a new accountant – and Manatee has not replied to their professional clearance requests either.

It was a similar story in the second complaint when another client engaged Manatee to submit their R&D claim, which was important for their company’s cash flow. After being supplied with the information prepared by a third party, Manatee did not answer the client’s emails or telephone calls.

Again, the client engaged a new accountant, but the tribunal heard that Manatee still hasn’t responded to the handover request.

The ICAEW’s Professional Conduct Department didn’t have much luck either, with Manatee failing to communicate with the case manager on the investigation or respond to the letters requesting an explanation for the allegations made against him.

Both tribunals took into account the concurrent cases and fines, but neither considered it necessary to reduce the costs sought as each case was unrelated.

In addition to the severe reprimand and two separate £5,000 fines, the tribunal in the tax return case ordered Manatee to pays costs of £2,516.17 and in the R&D tax relief case, the tribunal levied costs of £1,171.67.

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Oh dear! What a tale of woe. And, more particularly, how damaging to the reputation of the accountancy profession and the standing of chartered accountants.

If I had been a member of the disciplinary tribunal I would have directed that Mr Manatee receive a Monitoring Unit inspection as soon as possible. However, the chances are that he will cease to be a member for non-payment of the fines and costs – totalling £13,688. Mr Manatee did not see fit to attend the hearing. Presumably, he no longer values his qualification. In the good old days, a representative of the local District Society would drop in to see whether the practitioner was in need of help.

 

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