DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

Transcription

1 DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Shaun Fergus Doherty Heard on: Tuesday, 12 July 2016 and Wednesday, 13 July 2016 Location: Radisson Blu Hotel, Dublin Airport, County Dublin, Ireland Committee: Mr Graham White (Chairman) Mr Billjinder Sahota (Accountant) Mrs Eileen Skinner (Lay) Legal Adviser: Miss Juliet Gibbon Persons present and capacity: Ms Sarah Cawley-Wilkinson (Case presenter on behalf of ACCA) Mr Shaun Fergus Doherty (Member) Mr Paul Keane (Legal Representative) Ms Laura Graham (Legal Representative) Mr Matthew Caulfield (Legal Representative) Mr Richard Lorkin (Hearings Officer) Observers: None PRELIMINARY APPLICATIONS/SERVICE OF PAPERS 1. The Disciplinary Committee ( the Committee ) convened to consider three allegations made against Mr Doherty. The Committee had before it a bundle of papers numbered, pages 1-191, additional bundles, numbered pages , 248 and and a service bundle, numbered pages 1-16.

2 2. ACCA was represented at the hearing by Ms Sarah Cawley-Wilkinson. Mr Doherty attended the hearing and was represented by Mr Paul Keane. ALLEGATIONS Allegation 1 (a) Pursuant to bye-law 8(a)(i), Mr Doherty is guilty of misconduct in that he omitted to disclose in any or all of the following documents submitted to ACCA that the entities set out in Schedule 1 were audit clients of Company A: (i) Schedule given to Practice Monitoring senior compliance officer at monitoring visit on 23 October 2013 (ii) Audit Client Information 2012 form, signed on 2 February 2012 (iii) Audit Client Information 2013 form, signed on 25 February 2013 (b) Mr Doherty s conduct also in respect of any or all of allegations 1(a)(i) to 1(a)(iii) was: (i) Dishonest (ii) Contrary to the Fundamental Principle of Integrity (as applicable from 2012 to 2013) (iii) Contrary to Global Practising Regulation 14(2) (as applicable from 2012 to 2013) or (c) Pursuant to bye-law 8(a)(iii), Mr Doherty s conduct in omitting to disclose in any or all of the following documents submitted to ACCA that the entities set out in Schedule 1 were audit clients of Company A breached Global Practising Regulation 14(2) (as applicable from 2012 to 2013):

3 (i) Schedule given to Practice Monitoring senior compliance officer at monitoring visit on 23 October 2013 (ii) Audit Client Information 2012 form, signed on 2 February 2012 (iii) Audit Client Information 2013 form, signed on 25 February 2013 Allegation 2 (a) Pursuant to bye-law 8(a)(i), Mr Doherty is guilty of misconduct in that he signed the audit reports for the entities set out in Schedule 1, without having undertaken adequate audit work. (b) Mr Doherty's conduct also in respect of allegation 2(a) was: (i) Dishonest. (ii) Contrary to the Fundamental Principle of Integrity (as applicable from 2012 to 2013). (iii) Contrary to Global Practising Regulation 18(1) Annex 1 (as applicable from 2012 to 2013) (iv) Contrary to Global Practising Regulation 16(1)(a) Annex 2 (as applicable from 2012 to 2013). or (c) Pursuant to bye-law 8(a)(iii), Mr Doherty s conduct in signing the audit reports for the entities set out in Schedule 1, without having undertaken adequate audit work breached: (i) Global Practising Regulation 18(1) Annex 1 (as applicable from 2012 to 2013)

4 and/or (ii) Global Practising Regulation 16(1)(a) Annex 2 (as applicable from 2012 to 2013). Allegation 3 (a) Pursuant to bye-law 8(a)(i), Mr Doherty is guilty of misconduct in that he issued a Statutory Duty Report to the Central Bank dated 23 October 2012, in respect of Company B, without having undertaken the necessary work. (b) Mr Doherty's conduct also in respect of allegation 3(a) was: (i) Dishonest. (ii) Contrary to the Fundamental Principle of Integrity (as applicable in 2012). (iii) Contrary to Global Practising Regulation 16(2) Annex 2 (as applicable in 2012). or (c) Pursuant to bye-law 8(a)(iii), Mr Doherty s conduct in issuing a Statutory Duty Report to the Central Bank dated 23 October 2012, in respect of Company B, without having undertaken the necessary work, breached Global Practising Regulation 16(2) Annex 2 (as applicable in 2012). 3. The allegations were put to Mr Doherty who admitted the facts of Allegation 1(a) but not misconduct. Mr Doherty also denied Allegation 1(b) (i), (ii) and (iii) and Allegation 1(c) (i), (ii) and (iii). He admitted the facts of Allegation 2(a) to the extent that the appropriate documentation was not in place and that this amounted to misconduct. Mr Doherty denied Allegation 2(b) (i), (ii) and (iii) but admitted Allegation 2(b) (iv), the breach of Global Practising Regulation ( GPR ) 16(1)(a). He denied Allegation 2(c) (i) but admitted

5 Allegation 2(c) (ii), the breach of GPR 16(1)(a) to the extent that the appropriate documentation was not in place. Mr Doherty admitted Allegation 3(a), to the extent that the appropriate documentation was not in place and that this amounted to misconduct. He denied Allegation 3(b) (i) and (ii) but admitted Allegation 3(b) (iii), the breach of GPR 16(2), to the extent that the appropriate documentation was not in place. Mr Doherty admitted Allegation 3(c), the breach of GPR 16(2), save in respect of the company Firm 1. BRIEF BACKGROUND 4. Mr Doherty is a partner of Company A ( the firm ). He has been a member of ACCA for 35 years. The firm held audit registration with ACCA until July 2014 under which it was authorised to carry out audits in the United Kingdom and Ireland. 5. Mr Doherty commenced practice in 1985, together with his then partner, Mr 1, trading as Company C until Mr 1 was forced to retire from the practice in 2009 as a result of a terminal illness. Prior to Mr 1 s retirement the firm had been regulated by the Institute of Chartered Accountants in Ireland ( ICAI ) and Mr 1 had, in the main, been responsible for the administration of the firm and its adherence to regulatory obligations. 6. Mr Doherty was under severe professional and personal strain during the period His partner Mr 1 passed away in 2009; he had experienced difficulties when two of the senior employees in the firm left taking clients with them [Private]. In 2012 Mr Doherty was admitted to hospital on two occasions [Private]. 7. On 23 and 24 October 2013 the firm received its first monitoring visit from Practising Monitoring ( PMD ). The purpose of the visit was to monitor the conduct of the firm s audit and regulated work, to confirm its eligibility for registered audit status and to manage compliance with the Chartered Certified Accountants Global Practising Regulations 2003 ( the GPRs ). 8. Prior to the monitoring visit, Mr 2, the senior compliance officer ( SCO ) who carried out the visit, compiled a list, using a software system called FAME,

6 of all the limited companies for which the firm had filed accounts at Companies House ( CH ) and the Companies Registration Office ( CRO ). 9. At the start of the monitoring visit Mr Doherty provided the SCO with a list of the firm s audit clients. The SCO noticed that there were several omissions from those companies referred to on the FAME list. He requested a full list of audit clients from Mr Doherty who then provided an amended list. 10. Mr Doherty admitted to the SCO that he had not carried out adequate audit work prior to signing the audit reports for the 14 additional clients. 11. The SCO also noticed during the monitoring visit that Mr Doherty had issued a Statutory Duty Report to the Central Bank in respect of an insurance broker client without having completed the required work. 12. Each year members with a practising certificate with audit qualification must inform ACCA of the names of all their audit clients on the form ACCA Audit Firms Audit Client Information (UK) [year]. The PMD obtained copies of Mr Doherty s Audit Client Information forms for the years 2012 and 2013 and compared it to the FAME list and the list of audit clients provided to the SCO at the start of the monitoring visit on 23 October The clients listed at Schedule 1 were omitted from the list provided to the SCO and from the Audit Client Information forms provided to ACCA by Mr Doherty for the years 2012 and 2013, despite the fact that Mr Doherty had signed audit reports in respect of these clients the previous year. 14. In correspondence with ACCA Mr Doherty said that in 2012 he had produced a list of his core audit clients and had reproduced this list in 2013 adding just one more client. He accepted that the list did not contain all the firm s audit clients but stated that this was in error and had been as a result of his carelessness. 15. In a letter, dated 11 June 2014, Mr Doherty admitted that some audit work was completed for each file but was not adequately documented as is required. He also stated In no way seeking to excuse my failure for not

7 fully carrying out the audit work or adequately documenting the audit work carried out for each of the companies. SUBMISSIONS ON BEHALF OF ACCA 16. In respect of Allegation 1 Ms Cawley-Wilkinson, on behalf of ACCA, submitted that Mr Doherty had deliberately omitted reference to the firm s audit clients, as set-out in Schedule 1 to the Allegations, in the list provided to the SCO and in the Audit Client Information forms for 2012 and 2013 and, in so doing, he was guilty of misconduct, had acted dishonestly and in breach of the Fundamental Principle of Integrity ( the FPI ) and GPR 14(2). 17. In respect of Allegation 2, Ms Cawley-Wilkinson, on behalf of ACCA, submitted that Mr Doherty had signed the audit reports for the firms set out in Schedule 1 without having undertaken adequate audit work. Ms Cawley- Wilkinson submitted that this fell far short of the standards required of an accountant and amounted to misconduct. She further submitted that the conduct was dishonest, contrary to the FPI and in breach of Regulations 18(1) of Annex 1 and 16(1)(a) of Annex 2 of the GPRs. 18. In respect of Allegation 3, Ms Cawley-Wilkinson, on behalf of ACCA, submitted that Mr Doherty had issued a Statutory Duty Report to the Central Bank in respect of a client without having undertaken the necessary work and that this was a serious breach of his professional duty and amounted to misconduct. She also submitted that Mr Doherty s conduct was dishonest; in breach of the FPI and contrary to Regulation 16(2) of the GPRs (Annex 2). 19. In her final submissions Ms Cawley-Wilkinson submitted that Mr Doherty was not a credible witness and that he had been inconsistent in his evidence to the Committee. She relied on the following: (1) the scale of the audits not disclosed, being 14 of the 18 audit clients which represented ¾ of his total audit clients, and that Mr Doherty had signed audit reports for two of the undisclosed clients just two months before the visit and 19 days before the visit had been confirmed by ACCA; (2) the nature of the clients (3) up to six of the firm s audit clients required an audit as a result of losing exemptions as a result of Mr Doherty s inaction which should have made them more memorable or less forgetful; Mr Doherty did not disclose the

8 audit clients until directly challenged when he had to come clean because of the FAME report; (4) Mr Doherty s case was that he had compiled the list from the Audit Client Information forms for 2012 and 2013 but the name of a company not on the 2013 form had been included on the list of audit clients prepared for the SCO so this could not be correct; (5) there had been audit work carried out on that client s file and (6) there had been no adequate audit work carried out on the 14 undisclosed audit clients files leading to the inevitable conclusion that Mr Doherty was keen not to disclose them to the SCO MR DOHERTY S EVIDENCE 20. Mr Doherty had prepared a detailed written Statement of Defence/Mitigation for the Committee. He also gave evidence to the Committee. 21. Mr Doherty admitted the underlying facts of Allegation 1 but denied misconduct, dishonesty, breach of the FPI and breach of GPR 14(2). He admitted the facts of Allegation 2 and that his conduct amounted to misconduct but he denied that he had been dishonest or in breach of the FPI. He also admitted a breach of the GPR (Annex 2) 16(1)(a). Mr Doherty also admitted the facts of Allegation 3 and that his conduct amounted to misconduct. He denied that he had been dishonest or in breach of the FPI. He admitted breach of GPR (Annex 2) 16(1)(a). 22. Mr Doherty told the Committee about the extremely difficult personal circumstances he had gone through during the period In respect of Allegation 1 Mr Doherty stated that when he provided the list of audit clients to the SCO at the monitoring visit he had been aware that ACCA would have had access to the FAME software which listed all the limited companies for which a firm had filed audit reports at CH and the CRO. 24. Mr Doherty stated that the Audit Client Information form for the UK and Ireland for 2012, which was correct at that time, had been used as a precedent for preparing the 2013 forms. An additional client had been

9 included on the UK form. He stated that the list of audit clients provided to the SCO had been prepared by reference to the Audit Client Information forms for 2012 and 2013 with the addition of two further audit clients, which Mr Doherty said he had added from memory. He told the Committee that he had been careless in compiling the forms but had not intended to deceive ACCA. He said that all the entities omitted from the lists prepared for ACCA would have been on the FAME software print-out. 25. Mr Doherty stated that he had prepared the accounts for the missing audit clients and, although there were no audit files, he considered that he had had sufficient information from preparing the clients accounts to provide an audit opinion. He said that most of the clients were relatively small companies and that he had been content that the accounts were correct and reflected the true financial position of the companies. He said that a number of the companies set out at Schedule 1 had only become audit clients by default because of the late filing of returns with the CRO and that ordinarily they would not be required to have an audit. He accepted that he had been responsible for the late filing of the returns. 26. Mr Doherty maintained that he had in fact carried out a substantial amount of the work required for the audits despite the fact there were no audit files for the companies set out in Schedule 1. He accepted, however, that he was in breach of the ISAs in signing the audits and that he was aware that it was important to evidence the audit work carried out. Mr Doherty told the Committee that his intention had been to return at a later stage to complete the audit files. 27. Mr Doherty said that he was an honest person who had not set out to deceive ACCA. He told the Committee that he was held in high regard with his clients, the banks and the Revenue. SUBMISSIONS ON BEHALF OF MR DOHERTY 28. Mr Keane, on behalf of Mr Doherty, reminded the Committee of Mr Doherty s unchallenged evidence in relation to the period of professional and personal upheaval and stress that he had experienced between 2009 and 2013 and his consequent [Private] health difficulties.

10 29. Mr Keane stressed that the Committee should consider Mr Doherty s belief at the time that he gave the various lists to ACCA. He submitted that Mr Doherty had genuinely believed the lists to be correct at the time. Mr Keane further submitted that there had been sufficient time between the notification of the monitoring visit and the actual visit for Mr Doherty to have remedied the situation by creating audit files for the clients. He submitted that the fact he had not done so demonstrated that this was a genuine error on Mr Doherty s part and not a deliberate intention to deceive ACCA. Mr Keane reminded the Committee that Mr Doherty had been aware that it was ACCA s practice to access FAME software prior to a monitoring visit and, therefore, would have known that he would be caught out straight away. This, he submitted, demonstrated that Mr Doherty could not have been aware of the audit clients at the time he compiled the list for the SCO. Mr Keane submitted that Mr Doherty had cooperated with the SCO immediately the error had been brought to his attention. 30. In respect of Allegation 2 Mr Keane submitted that whilst Mr Doherty admitted misconduct in failing to document the work he had done, he did not admit that conduct was dishonest or in breach of the FPI. He submitted that Mr Doherty had done sufficient work to justify his audit opinion in the reports despite the fact that the work was not documented on audit files in respect of the companies set-out at Schedule In respect of Allegation 3, Mr Keane submitted that Mr Doherty had been satisfied from his knowledge of the company s accounts that it was solvent. He accepted that in issuing the Statutory Duty Report to the Central Bank without having undertaken the necessary work, Mr Doherty was guilty of misconduct. He submitted, however, that Mr Doherty s conduct had not been dishonest and did not amount to a breach of the FPI. 32. Mr Keane referred to Mr Doherty s positive good character. He informed the Committee that Mr Doherty had been a member of ACCA for 35 years during which time there had been no complaints from any of his clients. Nor had he previously been the subject of any disciplinary proceedings. He referred the Committee to the numerous testimonials produced by Mr Doherty that attested to his positive good character. He also referred the

11 Committee to the case of Hugh David Bryant v Law Society [2007] EWHC 3043 (Admin) and the weight that the Committee should place on Mr Doherty s good character when determining whether or not he had acted dishonestly. Mr Keane further submitted that at the time Mr Doherty had provided the forms and list to ACCA he had believed them to be correct and, therefore, he had not acted dishonestly or in breach of the FPI. He further submitted that Mr Doherty had not been in breach of GPR 14(2) because ACCA had accessed the FAME software and therefore had the information it required to complete its monitoring process and quality assurance efficiently. DECISION ON FACTS AND REASONS 33. The Committee accepted the advice of the legal adviser. It was referred to the objective and subjective test for dishonesty derived from the criminal case of R v Ghosh [1982] EWCA Crim 2, as adapted for regulatory purposes in the case of Twinsectra Limited v Yardley & Others [2002] UKHL 12. The Committee was aware that in order to find dishonesty it must be satisfied on the balance of probabilities that Mr Doherty s conduct was dishonest by the ordinary standards of reasonable and honest people and that, on the balance of probabilities, Mr Doherty himself would have realised that, by those standards, his behaviour was dishonest. 34. The Committee did not find Mr Doherty to be a credible witness. For example he had responded to questions in respect of his preparation for the monitoring visit by indicating that he had undertaken preparation in accordance with the ACCA s Monitoring Visits UK checklist. He stated that he had done everything set out on the checklist save for item number 10 which required him to list clients on which the firm has issued any form of audit report (or report to a regulator) within the 24 months prior to the monitoring visit, whether or not the firm still holds the appointment. The Committee considered that Mr Doherty had, therefore, been fully prepared for the monitoring visit despite him previously stating that he had not been fully prepared for the visit. He confirmed that he had collated all of the relevant information required on the checklist except for the audit client work. It considered that Mr Doherty had been evasive in the way he had answered some of the questions put to him. At the monitoring visit he

12 informed the SCO that he had issued audit reports without carrying out any audit work, which he had confirmed in his amended list of audit clients. In his evidence to the Committee, however, he appeared to resile from this position stating that he had in fact carried out the majority of the audit work in respect of the audit report from the clients accounts files. The Committee, therefore, found that Mr Doherty s evidence was inconsistent and lacked credibility. Allegation 1 (a) (ii) not proved / Allegation 1(a) (i) and (iii) - proved 35. In respect of Allegation 1(a)(ii), the Committee was not satisfied that ACCA had proved on the balance of probabilities that the 2012 Audit Client Information form, signed by Mr Doherty on 2 February 2012, was incorrect. In respect of Allegation 1(a) (i) and (iii). However, having heard Mr Doherty s evidence, the Committee was satisfied that Mr Doherty knew that the clients set out in Schedule 1 were audit clients and that he deliberately did not include them on the Audit Client Information 2013 form and on the schedule given to the SCO at the monitoring visit on 23 October The Committee noted that as at the date of signing the 2013 Audit Client Information form Mr Doherty had signed audit reports for nine audit clients not previously disclosed to ACCA. He had, in fact, signed audit reports for two audit clients just twelve days prior to completing the Audit Client Information form for The Committee found it inconceivable that Mr Doherty would have forgotten about these audit clients so quickly. In the circumstances, the Committee was satisfied that Mr Doherty had been aware of the 14 audit clients and had deliberately tried to deceive the SCO at the monitoring visit by failing to disclose them. The Committee determined that it was more likely than not that this was because Mr Doherty had been aware that the audit work for the 14 clients had not been adequate and that he had not prepared audit files in respect of the 14 clients. 37. The Committee determined that Mr Doherty s conduct had fallen far short of the standards expected of a professional accountant and had brought discredit on Mr Doherty, the Association and the profession. It was satisfied on the balance of probabilities that Mr Doherty s conduct in omitting to

13 disclose the audit clients set-out in Schedule 1 of the allegations to the SCO and to ACCA on the Audit Client Information form 2013 amounted to misconduct. Allegation 1(b) (i), (ii) and (iii) - proved 38. Having found that Mr Doherty had knowingly and deliberately failed to disclose the 14 audit clients to ACCA and the SCO, the Committee was satisfied, on the balance of probabilities that according to the standards of reasonable and honest people, that what he had done was dishonest and that he, on the balance of probabilities, would have realised that by those standards his conduct was dishonest. 39. The Committee also found that Mr Doherty had breached the FPI. Also, GPR 14(2) puts a duty on a member to supply ACCA with all the information necessary to enable it to complete its monitoring and enforcement process and quality assurance programme efficiently. Mr Doherty had, in the Committee s determination, breached this regulation by failing to disclose the 14 audit clients on the 2013 Audit Client Information form. Allegation 1(c) (i), (ii) and (iii) no findings 40. Allegations 1(c) (i), (ii) and (iii) were drafted in the alternative to Allegations 1(a) and (b) and the Committee was not, therefore, required to make any findings in respect of these allegations. Allegation 2(a) proved 41. Mr Doherty admitted that he had signed the audit reports for the firm s audit clients, as set out in Schedule 1, without having undertaken adequate audit work and that this amounted to misconduct. 42. The Committee found, however, that in his evidence Mr Doherty had attempted to persuade the Committee that he had in fact carried out the audit work required but had not documented the work in an audit file for each client. The Committee found that this was inconsistent with what Mr Doherty had previously represented to the SCO during the visit. He had also

14 written to the PCD following the visit when he had stated some audit work was completed for each file but was not adequately documented as is required In no way seeking to excuse my failure for not fully carrying out the audit work. In his evidence to the Committee, however, he stated that most of the audit work had been done from the clients accounts files to enable him to sign the audit reports, although he had not set up audit files for the clients. The Committee was not persuaded, however, that this was the case and it concluded that Mr Doherty would have been aware that he had not done the requisite audit work prior to signing the audit reports. 43. The Committee was, therefore, satisfied that Mr Doherty had not carried out the requisite audit work for each of the 14 audit clients on Schedule 1 and, by signing audit reports for those clients when he had failed to undertake adequate audit work, his conduct had fallen far below that expected of a professional accountant and had brought discredit to him, the Association and the profession. The Committee was satisfied that Mr Doherty s conduct amounted to misconduct. Allegation 2 (b) (iii) not proved / Allegation 2 (b) (i), (ii) and (iv) proved 44. The Committee was satisfied, on the balance of probabilities, that what Mr Doherty had done in signing the audit reports without doing adequate audit work would be, according to the standards of reasonable and honest people, dishonest and that, on the balance of probabilities, he would have realised that by those standards his conduct was dishonest. The Committee also found that in acting dishonestly Mr Doherty had breached the FPI. The Committee determined that as all the audit clients on Schedule 1 were Irish then GRP Regulation 16(1)(a) applied and that Mr Doherty had also been in breach of this regulation. 45. The Committee determined that GPR 18(1) did not apply to the firm s Irish clients and, therefore, it found Allegation 2(b) (iii) not proved.

15 Allegation 2(c) (i) and (ii) no findings 46. Allegation 2(c) (i) and (ii) were drafted in the alternative to Allegation 2(a) and (b) and the Committee was not, therefore, required to make any findings in respect of these allegations. Allegation 3(a) proved 47. Mr Doherty admitted that he had issued a Statutory Duty Report to the Central Bank in respect of Company B, an insurance broker client, without having undertaken the necessary work. Section 27B of the Central Bank Act 1997 places a duty on auditors to make a written report to the Central Bank of Ireland. This report is known as a Statutory Duty report. The report contains a statement that no matter has come to the attention of the auditor during the course of the audit that gave rise to a duty to report to the Central Bank of Ireland. Mr Doherty had not carried out adequate audit work in respect of this client and, therefore, was not in a position to make such a statutory declaration. This was a serious failure and the Committee was satisfied that Mr Doherty s conduct fell far below that expected of a professional accountant, brought discredit on him, the Association and the profession and amounted to misconduct. Allegations 3(b) (i), (ii) and (iii) proved 48. In his evidence Mr Doherty attempted to persuade the Committee that he had carried out sufficient work to be in a position to issue the Statutory Duty Report to the Central Bank of Ireland. The Committee determined, however, that Mr Doherty had not carried out the necessary work and, therefore, was not in a position to issue the report. The Committee concluded that Mr Doherty would have been aware of this when he issued the report to the Central Bank. In the Committee s view this was a serious breach. There is a statutory duty on auditors to issue Statutory Duty Reports. Such reports should set out that all the client s systems, procedures, complaints and client accounts are effective. Mr Doherty had not done the necessary work and was not, therefore, in a position to make such representations. The purpose of issuing a Statutory Duty report is to inform the Central Bank of

16 Ireland that the client has complied with the legislation. The Committee determined that, having not done the necessary work, Mr Doherty was not in a position to know if this was the case or not but he had still issued the report. 49. The Committee was satisfied, on the balance of probabilities, that what Mr Doherty had done in issuing the statutory report without doing the necessary work to be aware that it was correct, would be, according to the standards of reasonable and honest people, dishonest and that he, on the balance of probabilities, would have realised that by those standards his conduct was dishonest. The Committee also found that Mr Doherty had breached the FPI. The Committee determined that as the audit clients set out in Schedule 1 were based in Ireland then GRP Regulation 16(2) applied and Mr Doherty had also breached this regulation. Allegation 3(c) (i) and (ii) no findings Allegation 3(c) (i) and (ii) were drafted in the alternative to Allegation 3(a) and (b) and the Committee was not, therefore, required to make any findings in respect of these allegations. SANCTION AND REASONS 50. The Committee took into account the submissions of Ms Cawley-Wilkinson, on behalf of ACCA, and the submissions of Mr Keane, on behalf of Mr Doherty, together with the written representations that Mr Doherty s solicitors had previously provided to the Committee. 51. The Committee accepted the advice of the legal adviser who referred it to Regulation 13 of the Complaints and Disciplinary Regulations 2014, as amended, and to ACCA s Guidance for Disciplinary Sanctions (April 2016). In considering what sanction, if any, to impose the Committee took account of the principle of proportionality. It 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, maintain public confidence in the profession and in ACCA and to declare and uphold proper standards of conduct and

17 behaviour. The Committee considered the available sanctions in increasing order of severity. 52. The Committee considered the aggravating and mitigating features of the case. The Committee found the following to be aggravating features: a. Mr Doherty had deliberately omitted listing audit clients from both the Audit Client Information form sent to ACCA in 2013 and from the Schedule given to the SCO immediately prior to the monitoring visit in an attempt to deliberately mislead his regulator so this was repeated conduct; b. Mr Doherty had signed audit reports for 14 clients without having undertaken the necessary audit work so this was repeated misconduct; c. There was potential for harm to clients and third parties. 53. The Committee found the following to be mitigating features: a. Mr Doherty had been through a number of years of personal and professional difficulties [Private]; b. Mr Doherty had made full disclosure of all his audit clients once asked to do so by the SCO; c. Mr Doherty had adhered to good practice in all other respects and is considered by his clients and peers to be a good accountant and an asset to the firm; d. Mr Doherty was a man of positive good character with no previous disciplinary findings against him during his 35 years as a member of ACCA; e. Mr Doherty had provided the Committee with 8 references from clients and professionals testifying to his previous good character; f. Mr Doherty had expressed remorse and apologised for his actions; g. There was no harm or financial loss to any of the firm s clients or to any third party, including the Central Bank; h. Mr Doherty s conduct had not been motivated by profit; i. Mr Doherty had cooperated with ACCA throughout its investigation and engaged in the proceedings.

18 54. The Committee first considered taking no further action in this case. It was in no doubt, however that to do so would fail to mark the gravity of Mr Doherty s dishonesty, misconduct and breaches of the Regulations and would undermine confidence in ACCA as a regulator. 55. The Committee took into account the substantial mitigation put forward on Mr Doherty s behalf, as set out above. In particular it took into account that Mr Doherty had made early admissions to some of the allegations; he had cooperated fully with ACCA; engaged in these proceedings and he was a man of previous good character with no previous disciplinary findings against him during his 35 years as a member of ACCA. 56. The Committee was in no doubt that a sanction was required to mark the gravity of Mr Doherty s misconduct. It determined that the sanctions of admonishment and reprimand would not meet the seriousness of Mr Doherty s dishonest misconduct. 57. The Committee also considered that a severe reprimand would not be an appropriate or sufficient sanction. Mr Doherty s conduct had been, in the Committee s view, a deliberate attempt to mislead his regulator and third parties. It was, in the Committee s determination, serious misconduct and Mr Doherty had acted dishonestly on more than one occasion. Dishonesty, especially in the workplace, is not the conduct expected of a professional accountant. 58. In the Committee s determination, Mr Doherty s deliberate attempt to mislead his regulator and his dishonest conduct in signing the audit reports and the Statutory Duty Report without having undertaken the necessary audit work, amounted to conduct that was fundamentally incompatible with him remaining a member of ACCA. 59. The Committee, therefore, determined that the appropriate and proportionate sanction was to exclude Mr Doherty from membership of ACCA. In the Committee s view such a sanction was necessary to maintain public confidence in the accountancy profession and ACCA as the regulator. The Committee did not consider, however, that the order for exclusion should be combined with an order that no application be made for

19 readmission until the expiry of a specified period given the substantial mitigation put forward by Mr Doherty. ORDER 60. Mr Doherty shall be excluded from membership of ACCA. EFFECTIVE DATE OF ORDER 61. The Committee considered that in the particular circumstances of this case it was not necessary in the public interest for the Committee to order that Mr Doherty be excluded from membership of ACCA with immediate effect. The Committee, therefore, ordered that the order excluding Mr Doherty from membership of ACCA shall take effect following the date of the appeal period referred to in the Appeal Regulations (being 21 days after Mr Doherty has been provided with the written statement of the reasons for the decision of the Committee), unless notice of appeal is given prior to the expiry of this period. COSTS AND REASONS 62. Ms Cawley-Wilkinson, on behalf of ACCA, applied for costs in the sum of 3, The Committee took into account the submissions made by Mr Keane, on behalf of Mr Doherty, as to Mr Doherty s financial means and, in particular, the loans of 480,000 that Mr Doherty is currently repaying. The Committee also took into consideration Mr Doherty s detailed Statement of Financial Position which showed that his monthly expenditure exceeded his income. 63. The Committee was satisfied that the sum of 3,470 was a reasonable sum but, having taken into account the severe financial difficulties that Mr Doherty is currently experiencing and the likely effect that this order will have on his professional status in the future, it determined that there should be no order for costs made against Mr Doherty.

20 ORDER 64. There shall be no order for costs. Mr Graham White Chairman 13 July 2016