DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION. Heard on: 23 October and 5 December 2014

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1 DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mrs Ajda D jelal Heard on: 23 October and 5 December 2014 Location: ACCA Offices, 29 Lincoln s Inn Fields, London, WC2A 3EE (23 October 2014) and Chartered Institute of Arbitrators, 12 Bloomsbury Square, London WC1A 2LP (5 December 2014) Committee: Legal Adviser: Dr Vicki Harris (Chairman and Accountant), Mr Grahame Owen (Lay) and Mr John Walsh (Lay) Mr Robin Havard Persons present and capacity: Mr James Bewley (Case Presenter) and Miss Bernice Ash (Committee Officer) for the ACCA; Mrs Ajda D Jelal (Member) Observers: None PRELIMINARY APPLICATION APPLICATION TO AMEND ALLEGATION 2(a) 1. Mr Bewley on behalf of ACCA invited the Committee to amend Allegation 2(a) by deleting from the preamble the words in breach of the fundamental principle of integrity so that the preamble would read: (a) Pursuant to bye-law 8(a)(i), Ajda D jelal is guilty of misconduct having provided misleading information to ACCA in respect of continuity of practice arrangements in: 2. There was no objection from Mrs D jelal. The Committee decided that Mrs D jelal was not prejudiced by the proposed amendment and accordingly accepted it. 1

2 ALLEGATIONS 3. Allegation 1 (a) Pursuant to bye-law 8(a)(i), Ajda D Jelal is guilty of misconduct by reason of her failure to have in place a written Continuity Agreement between 2006 and 2013 in breach of Global Practising Regulation 11. Or (b) Pursuant to bye-law 8(a)(iii), Ajda D Jelal failed to have in place a written Continuity Agreement between 2006 and 2013 in breach of Global Practising Regulation Allegation 2 (a) Pursuant to bye-law 8(a)(i), Ajda D Jelal is guilty of misconduct having provided misleading information to ACCA in respect of continuity of practice arrangements in: (i) 2006; (ii) 2007; (iii) 2008; (iv) 2009; (v) 2010; (vi) 2011; (vii) (b) Your conduct in respect of Allegation 2(a) was: (i) (ii) Dishonest. Contrary to the Fundamental Principal of Integrity. 2

3 THE FACTS Written Continuity Agreement 5. On 12 April 2011, Ajda & Co had been the subject of an ACCA Compliance Review. The Review found that the firm had not had a written Continuity Agreement in place since Mrs D jelal was required to provide ACCA as soon as possible with a copy of a Continuity Agreement with another firm, in order to comply with Global Practising Regulation 11 (GPR 11) which requires a practising accountant to have in force a written agreement with another person to be responsible for the accountant s practice in the event of death or incapacity. 6. Despite numerous letters and s chasing Mrs D jelal for a copy of the Continuity Agreement, on 10 August 2012, she confirmed she would not be able to get a copy of the Continuity Agreement until September In an dated 18 December 2012 Mrs D jelal confirmed that she did not have any written Continuity Agreements for previous years. At the beginning, I made a verbal agreement with an accountant who was a close friend of the family and unfortunately, I didn t follow up the written agreement due to the close relationship and also because I only had a handful of clients. Since then I made an agreement with another firm who I have struggled to obtain written agreement from. Unfortunately, although I have chased it up several times since Mr Mukherjee s visit, I still never received it. 8. Despite promising to provide the requisite copy of the Continuity Agreement, Mrs D jelal had still not provided ACCA with a copy of any written Continuity Agreements by the date of this hearing. Practising Certificate Declaration 9. As part of the investigation into the matter, copies of Mrs D jelal s practising certificate ( PC ) renewal forms were obtained together with her initial PC application. 3

4 10. In her initial application for a PC dated 5 May 2006, Mrs D jelal stated that she had:. made arrangements complying with GPR 11 for the continuity of my practice in the event of my death or incapacity.. Mrs D jelal signed the application confirming that the information given in this form is true, accurate and complete... The Committee noted that GPR 11 required a written Continuity Agreement and that this was a condition for the issue of a PC. 11. In her application for the renewal of her PC for the years 2007 to 2011, Mrs D jelal named Firm A as the firm with which there was a Continuity Agreement in place and, in saying so, confirmed her compliance with GPR 11 on which ACCA relied. 12. In her 2012 PC renewal form, Mrs D jelal stated that her continuity of practice agreement was with Firm B. This renewal form was completed on 9 January This was almost nine months after the ACCA Compliance review and when she was fully aware of the requirement for there to be a written continuity arrangement. 13. For each online renewal application from 2007 onwards, the Professional Conduct Department obtained copies of the conditions that Mrs D jelal would have ticked to indicate compliance with the requirement for a written Continuity Agreement. Each of the conditions which Mrs D jelal represented had been complied with stated I have made arrangements complying with GPR 11 for the continuity of my practice in the event of my death or incapacity. Details of the continuity arrangements are provided in the appropriate part of the form. Each of the conditions also confirmed that this document is an integral part of the [relevant year] renewal form. A false or misleading statement on any part of the renewal form may constitute grounds for disciplinary action being taken against you and/or your firm. Evidence and submissions from Mrs D jelal 14. Mrs C s evidence: Mrs D jelal called a witness, Mrs C. She gave evidence to the effect that in July/August 2006, when Mrs D jelal was trying to complete the form applying for a PC, Mrs C had contacted Person A on behalf of Mrs D jelal. Person A had previously undertaken Mrs C s 4

5 accounting and tax work and she regarded him as a friend. She had asked him if he would enter into a Continuity Agreement with Mrs D jelal to which Mrs C said he had agreed in principle. It was left that Mrs D jelal would follow this up by speaking directly with Person A to finalise arrangements. When it was put to Mrs C that Person A had denied all knowledge of any agreement in place and said that he had not had any direct dealings with Mrs D jelal, Mrs C claimed that Person A was not telling the truth. However, she then accepted that as she was not present, she did not know whether there was a telephone conversation between Mrs D jelal and Person A. 15. Mrs D jelal s evidence: Mrs D jelal told the Committee that she had spoken to Person A who had agreed that she could put his name on her application for a PC and that they would sort out the details thereafter. However, she could not recall whether thereafter, she had any contact with him. 16. As for the arrangement with Firm B, Mrs D jelal stated that she had been thinking of changing the arrangement from Firm A to Firm B at the time of the ACCA visit in April 2011 when the importance of obtaining a written agreement had been emphasised to her. However, it was not until about December 2011 i.e. some seven months later, that Mrs D jelal met with Person D of Firm B to try and agree the matter. Mrs D jelal then sought to obtain a written agreement from Firm B and chased them several times. However, none was forthcoming and eventually on 16 September 2014, just before this hearing, Person D, who was not herself a qualified accountant, indicated that Person B, who was the only person in Firm B entitled to sign a Continuity Agreement, was unable to do so. 17. Ms D jelal stated that she never intended to mislead anyone and believed Firms A and B to be the firms who had agreed to provide continuity of practice. She accepted that the agreement was not in writing. Mrs D jelal did not believe the documents misled ACCA by including Firms A and B in the application for, and renewal of, her PC. Other documentary evidence 18. Documentary evidence from Person A: In a letter dated 20 June 2013, Firm A stated that they had no knowledge of any agreement being in place 5

6 with Mrs D jelal. In a telephone conversation with ACCA on the same day, Person A of Firm A confirmed that there had never been a continuity of practice agreement in place with Mrs D jelal or her firm. He stated that if such an arrangement had been in place, a record of the same would be in the file, but there was no record of such an arrangement having ever been in place. According to Person A, he did not have any direct dealings with Mrs D jelal. This was confirmed in a letter of the same date. 19. Documentary evidence from Person B: By letter dated 19 July 2013, Person B of Firm B confirmed that, although the possibility of entering into a Continuity Agreement had been discussed with Mrs D jelal, no terms had ever been agreed. DECISION ON FACTS/ALLEGATIONS AND REASONS Allegation 1(a) Decision: proved 20. Mrs D jelal had admitted that she had failed to have in place a written Continuity Agreement between 2006 and 2011 and the Committee found that this amounted to misconduct. Reasons 21. The Committee considered that the requirement to have in place a written Continuity Agreement was set out clearly and unambiguously in GPR 11. In the Committee s view an oral agreement was not an acceptable substitute. This was pointed out to Mrs D jelal during the Compliance visit and her attention was drawn specifically to it in the report and in the subsequent correspondence between her and ACCA. 22. The Committee noted that the existence of a Continuity Agreement was an important professional obligation for a practising accountant. It provided clients with protection in the event of their accountant becoming unable to handle their affairs. Mrs D jelal s failure to comply with this requirement was below the standard expected of a practising accountant. This was not an 6

7 isolated failure, but continued for more than six years. When it was drawn to her attention some three years ago and she was required by her professional regulator to remedy it, she did not do so, blaming others for her failures. She had failed to support the protection of her clients by repeatedly not complying with the Regulation. These failures were discreditable to her and her firm and were likely to bring the Association and the accountancy profession into disrepute. For these reasons, the Committee decided this was misconduct as set out in bye-law 8(c). Mrs D jelal aggravated matters by failing to carry out the instructions of her regulator and remedy the matter when this was specifically drawn to her attention. Allegation 1(b) 23. As this was in alternate to Allegation 1(a) it did not need any further consideration (and had in any event been admitted by Mrs D jelal) Allegation 2(a) (i) to (vii) Decision: proved 24. Mrs D jelal had signed her practising certificate application and renewal forms confirming that, in compliance with GPR 11, she had in place written Continuity Agreements. Nevertheless, there were no such written continuity agreements. The Committee decided that Ms D jelal had misled ACCA into believing that there was a written Continuity Agreement in place in each of the years alleged. The Committee found this amounted to misconduct. Brief Reasons 25. The Committee found the evidence of both Mrs D jelal and Mrs C to be unreliable. Mrs C had difficulty in recalling the chronology of events and in any event could not verify that there had been any conversation between Mrs D jelal and Person A. It also noted that Mrs C was not wholly independent of Mrs D jelal. 26. For her part, Mrs D jelal was unable to recall any details of the Continuity Agreement she claimed existed. On balance, the Committee concluded that 7

8 there was no reason for Person A to provide misleading information. Even if a conversation had taken place between Mrs D jelal and Person A, then on Mrs D jelal s own account, there was, at best, only an indication of a willingness in principle to provide such support. The essential terms of such agreement were never discussed, let alone agreed. 27. Whether or not an oral agreement existed, at no stage has a written Continuity Agreement been supplied to ACCA. Furthermore, Person A of Firm A had confirmed that there had never been a continuity of practice agreement in place with Mrs D jelal or her firm. As far as Firm B is concerned, although the possibility of entering into a Continuity Agreement had been discussed with Mrs D jelal, as at 19 July 2013, no terms had been agreed. At best there was an agreement to agree. This was not a Continuity Agreement as required by the Regulations. 28. It was admitted by Mrs D jelal that she did not have a written Continuity Agreement in place since 2006 and this was the position up to and including The Committee took account of what was said by Ms D jelal in her submissions, in her of 12 September 2014 and her letter of 29 September 2014 and its attachments which demonstrated her attempts to obtain a written Continuity Agreement. The Committee found that, in December 2011, she knew of the requirement for the Continuity Agreement for 2012 to be in writing. In any event, any professional accountant should have taken care to be aware of the provisions of GPR 11 before the completion of important documents on which ACCA would be invited to rely. Mrs D jelal was also informed directly by ACCA of that requirement as long ago as April Mrs D jelal had been given every reasonable opportunity to rectify the position. 29. Continuity Agreements are required in order to protect clients in the event that their accountant is unable to continue working for them for a period of time. They are a basic requirement for all firms of Chartered Certified Accountants. It is particularly important that they are in place for sole practitioner practices because of the lack of other accountants within the firm that could take on an individual accountant s work should they be unable to work. Having a written agreement in place is designed to remove 8

9 any ambiguity as to who would take over work in such circumstances and has always been a requirement under Global Practising Regulation The Committee considered that Ms D jelal s continued failure over a period of many years to comply with her regulatory obligations which were designed for the protection of the interests of clients represented a serious breach of the Regulations. Furthermore, in signing the form for renewal each year of her PC she confirmed her compliance with the Regulation. However, she had not complied. Therefore, she was misleading ACCA, her regulator. 31. In doing so, the Committee concluded that Mrs D jelal s behaviour amounted to misconduct. To mislead her regulator in such a serious matter must bring discredit on herself, ACCA and the profession. Allegation 2(b)(i) and (ii) Decision 32. The Committee found these two allegations proved. Reasons 33. Between 2006 and 2011, at its very highest, there was only an indication from Person A that he would enter into a Continuity Agreement to enable Mrs D jelal to submit an application for a PC in 2006 which was compliant with GPR11. Mrs D jelal accepted in cross-examination that no substantive details had been agreed. It was, at best, merely an agreement to make a Continuity Agreement. It was also noteworthy that Mrs D jelal had stated that she had signed the application in 2006 knowing that no agreement was in place, but that she.wanted to crack on and get the application completed so I could commence working. 34. Mrs D jelal then submitted renewal applications over the next five years knowing that no written agreement was in place. Indeed, at no stage over that period had she had any contact with Person A. 9

10 35. Finally, in relation to the renewal application for 2012, Mrs D jelal had been told explicitly by ACCA of the importance of a written Continuity Agreement. This was to be contrasted with earlier years when she claimed she was unaware of the GPR11 requirement for the Continuity Agreement to be in writing. Notwithstanding that, she had included Firm B in her renewal application for 2012, some eight months after the meeting with Mr Mukherjee, when she knew that no such written agreement was in place. 36. By the standards of reasonable and honest people, knowingly signing a false declaration as accurate would be regarded as dishonest. The Committee was in no doubt that, for the 2012 PC renewal, Mrs D jelal knew that signing that declaration as true was dishonest. 37. For the same reasons, the Committee found that Mrs D jelal acted in breach of the Fundamental Principle of Integrity in that, in submitting the 2012 PC renewal form, she had submitted documents to ACCA knowing them to be false. SANCTION AND REASONS 38. The Committee carefully considered what sanction, if any, to impose taking into account all the evidence it had received, ACCA s Guidance for Disciplinary Sanctions (2013) and the principle of proportionality. It accepted the legal advice from the Legal Adviser. 39. The Committee had considered very carefully what had been written and said by Mrs D jelal in mitigation, albeit there was little material of which the Committee could take account other than an apology from Mrs D jelal at the hearing. The Committee noted that there were no previous findings against her. 40. The Committee considered the available sanctions in increasing order of severity having decided that, due to the seriousness of its findings, it was not appropriate to conclude the case with no order. 41. The Committee was mindful of the fact that its role was not to be punitive and that the purpose of any sanction was to protect members of the public, 10

11 maintain public confidence in the profession and in ACCA and to declare and uphold proper standards of conduct and performance. 42. Having considered the nature of the allegations found proved which included an allegation of dishonesty, the Committee concluded that an admonishment would not adequately reflect the seriousness of the Committee s findings. Mrs D jelal had not shown substantive insight into her failings. These were not isolated incidents and corrective steps were not taken promptly. 43. For the same reasons, the Committee judged that a reprimand would not be sufficient to mark its findings. There had been no timely remediation of her shortfalls. Mrs D jelal had shown a flagrant disregard for GPR 11 over a long period; and even when her attention was specifically drawn to its provisions, she continued to ignore them. 44. The Committee considered that even a severe reprimand would not be sufficient to mark the seriousness of Mrs D jelal s failings. She had misled ACCA, her regulator, for several years and she had failed to protect her clients over a long period. In 2011, her conduct was not only in breach of the regulations, but also dishonest. 45. Mrs D jelal s conduct represented a serious departure from the required professional standards. It was imperative that ACCA was able to rely on the accuracy and truthfulness of the information contained in documentation submitted by Mrs D jelal. She paid scant regard to those requirements. When ACCA directed her to comply promptly, she failed to do so. 46. Mrs D jelal had not satisfied the Committee that she demonstrated sufficient and genuine remorse for her behaviour nor had she shown adequate insight into the seriousness of her conduct which included misleading her own regulator. Furthermore, this did not represent an isolated incident and the breaches of the relevant regulations had extended over a number of years. All these failures from were aggravated by her dishonesty in

12 47. The Committee was satisfied that this sort of behaviour was fundamentally incompatible with remaining a member of ACCA. 48. In the circumstances, the Committee concluded that the only sanction which was appropriate, proportionate and sufficient was to exclude Mrs D jelal from membership of ACCA in order to maintain standards and to protect the public interest. COSTS AND REASONS 49. The Committee concluded that ACCA should be awarded costs against Mrs D jelal. ACCA had applied for costs of 2, The Committee noted that ACCA did not seek any costs relating to the second day of hearing. Having considered the fact that the allegations had been found proved and taking account of the fact that Mrs D jelal s had declined to provide full information as to her means, in exercising its discretion, the Committee considered the claim for costs to be reasonable and awarded costs to ACCA in the sum of 2, EFFECTIVE DATE OF ORDER 50. Taking account of the seriousness of its findings, the Committee decided that, in accordance with Regulation 19(1)(b) of the Complaints and Disciplinary Regulations, it was in the interests of the public that the order should take effect immediately. PUBLICITY 51. ACCA s Regulations require ACCA to publish the Committee s findings and orders by way of a news release naming the relevant person as soon as practicable. The Committee has discretion as to which publications and news release should be sent and discretion in exceptional circumstances to direct that the relevant person is not named. The Committee judged there were no exceptional circumstances in this case. The Committee ordered that a news release be issued to ACCA s website and to the local press, referring in both to Mrs D jelal and her firm by their full names. 12

13 Dr Vicki Harris Chairman 5 December