ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

Transcription

1 ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Bennett Nnakwue Ene of Accounts Center Associates Limited Heard on: Tuesday 15 September 2015 Location: The Charted Institute of Arbitrators, 12 Bloomsbury Square, London, WC1A 2LP Committee: Mr John Wilson (Chairman, Accountant), Dr Hazel Bentall (Lay) and Mr Barry Picken (Lay) Legal Adviser: Mr Alastair McFarlane Persons present and capacity: Mr Jamie Hunt (Case Presenter on behalf of ACCA) and Mr Ene (Member) and Ms Poonam Patel (Committee Officer) 1. ACCA was represented by Mr Hunt. Mr Ene was present and represented himself. The Committee had before it a bundle of papers numbered pages 1-14, and additional bundles, numbered pages and and a service bundle numbered 1-8. SERVICE OF PAPERS 2. The Committee was satisfied that service had been effected in accordance with the Authorisation Regulations 2014.

2 BRIEF BACKGROUND 3. Accounts Center Associates Limited is the incorporated sole practice of ACCA member, Mr Ene FCCA. The firm was visited on 15 April 2015 on the order of the Regulatory Assessor. This was a second monitoring visit following an unsatisfactory outcome to the firm s first monitoring visit in October The April 2015 visit was to confirm that the firm had complied with the Regulatory Assessor s decision of March 2013 as well as to confirm compliance with the Chartered Certified Accountants Global Practising Regulations 2003 (GPRs). 4. At the October 2012 visit, no audit clients were disclosed by Mr Ene to the compliance officer. A search of Companies House records subsequently revealed that Mr Ene had held an audit appointment for one client since Further, Mr Ene confirmed in January 2015 in writing that he had not accepted any audit appointments. By failing to disclose the existence of the audit appointment Mr Ene had breached PR 19(1), which requires holders of an auditing qualification to supply ACCA with all necessary information so that ACCA can comply with its obligations under the Companies Act. 5. At the April 2015 monitoring visit, the compliance officer found that the firm had not established quality control policies and its procedures were not adequate to ensure that it conducted audits in accordance with the International Standards on Auditing (UK & Ireland) (ISAs). There was a blank copy of the work programme in most sections of the audit file and there was almost no record of any audit work. There were serious and widespread deficiencies in the audit work. 6. The compliance officer found that Mr Ene and the firm had breached PR18(1)(a) in that they failed to comply with the International Standards on Auditing (UK and Ireland) in the conduct of audit work. There were deficiencies in the planning, control and recording of audit work and in the case examined the audit work performed and recorded was not adequate to support the audit opinion.

3 ACCA S POSITION 7. ACCA submitted that an order was appropriate given the extent of the failings including that Mr Ene had supplied inaccurate information to ACCA over a prolonged period and that in all the circumstances he was not a fit and proper person to hold a practising certificate with audit qualification. It contended that the proportionate approach would be to remove the practising certificate with auditing qualification and the firm s auditing certificate and then issue Mr Ene with a practising certificate, which it contended would achieve public protection whilst allowing the disciplinary process to proceed. Mr ENE S POSITION 8. Mr Ene accepted that he had not disclosed his audit client to ACCA on his renewal forms between 2010 and 2015 or to the Compliance Officer at the 2012 Monitoring visit. He accepted that he should have done. He stated that he had not done so as he believed that the Charity A engagement was to be a "review engagement" rather than an audit. He was under the impression that non-statutory audits were not part of the ACCA Practice Monitoring". He explained that this misunderstanding led to him not declaring these audit clients on his renewal forms. Further, Charity A client was well below the Charities Commission turnover threshold and that with this client he was "focused more" on the need to get their accounting in order. He stated that given this misunderstanding he did not knowingly give false information to ACCA and his omission of the audit client was "entirely inadvertent". He maintains that he is a "fit and proper" person to hold a practising certificate, had made a mistake and now has a full understanding of the rules and what is required by ACCA. He undertakes that if he is allowed a second chance he will sign up for ACCA run practical audit workshops and follow any recommendations made by the Committee. He added that he has ended the Charity A engagement following the April 2015 monitoring, is seeking suitable training from training firms and wishes to keep his Audit Registration. 9. Further, Mr Ene did not disagree that the quality of his audit work was not adequate, stating that he did not have the practical know-how of how to put files together. He accepted that his failure to comply with the hot review process was also because his understanding was that Charity A was not an

4 audit client. Finally, he apologised for his errors which he emphasised were inadvertent as opposed to wilful. He contended that a suspension of his auditing qualification was appropriate. DECISION ON APPLICATION AND REASONS 10. The Committee had regard to the submissions made by Mr Hunt on behalf of ACCA and Mr Ene on his own behalf. The Committee received and accepted the Legal Adviser s advice. It had regard to the Guidance for Regulatory Orders. It noted that whilst the contents of ACCA s report for the hearing were largely not disputed by Mr Ene, any order had to be proportionate in the circumstances. 11. The Committee considered that there were significant deficiencies in the audit work undertaken by Mr Ene. Further, he had repeatedly failed to inform ACCA that he had an audit client. His explanation as to how this occurred shows a singular lack of understanding of the relevant regulations. His failure to comply with the Regulatory Assessor s requirement for hot reviews was based on a misplaced understanding of what was an audit. The Committee noted Mr Ene s own acceptance of the poor quality of his work. The Committee considered the failings were so significant that there would be a risk to the public if audit work were allowed to continue. 12. The Committee considered that the following order was proportionate. It would provide sufficient protection to the public and maintain confidence in the profession. ORDER 13. The Committee made an order pursuant to Authorisation Regulation 5(2) and 6(15) that: i. Mr Ene s practising certificate with audit qualification and the firm s auditing certificate be withdrawn and he be issued with a practising certificate; and

5 ii. any future re-application for audit registration by Mr Ene, or by a firm in which he is a principal, must be referred to the Admissions and Licensing Committee, which will not consider the application until he has attended a practical audit course, approved by ACCA and, following the date of this order, pass paper P7, Advanced Audit and Assurance of ACCA s professional examinations PUBLICITY 14. 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 a discretion as to which publications the news release should be sent, and discretion, in exceptional circumstances, to direct that the relevant person is not named. Mr Ene submitted that he was concerned at the impact upon his firm s reputation with the local community. The Committee was not persuaded that these facts reach the threshold for exceptional circumstances. The Committee thought it fit to make an order for publicity, by way of a news release to the ACCA website and to the local press referring to Mr Ene and his firm by name. Mr John Wilson Chairman 15 September 2015