ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS. Heard on: Wednesday 29 March 2017

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1 ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Conor Patrick Gavin FCCA Heard on: Wednesday 29 March 2017 Location: The Adelphi, 1-11 John Adam Street, London WC2N 6AU Committee: Mr Andrew Popat CBE (Chairman) Mrs Andrea White (Accountant) Mr George Tranter (Lay) Legal Adviser: Miss Juliet Gibbon Persons present and capacity: Mr Conor Patrick Gavin (Member) Mr James Pretsell (Mr Gavin s Legal Representative) Mr Mohammed Ismail (Case Presenter) Ms Pamella Ramphal (Hearings Officer) Observers: None PRELIMINARY APPLICATIONS/SERVICE OF PAPERS 1. The Admission & Licensing Committee ( the Committee ) convened to consider an application by ACCA to consider the eligibility for audit registration of Mr Conor Patrick Gavin's firm, Conor Gavin & Co ( the firm ), and to consider the standard of audit work found at the first monitoring visit on 28 September Mr Gavin is the sole practitioner of the firm. Person B is employed as a bookkeeper in the firm.

2 2. The Committee had before it a bundle of papers, numbered pages 1-86, an additional bundle of papers, numbered pages 87-89, and a service bundle, numbered pages ACCA was represented by Mr Mohammed Ismail. Mr Gavin attended the hearing and was represented by Mr James Pretsell. APPLICATION/BRIEF BACKGROUND 4. The matter first came before the Committee on 30 January 2017 when it determined not to proceed in Mr Gavin s absence, having initially refused his application for an adjournment on [PRIVATE] that had been made by on the morning of the hearing [PRIVATE]. 5. On 30 January 2017 the Committee made directions for Mr Gavin to supply the Hearings Officer with the following information within 14 days of service of the decision: a) A statement of his position if he disputed any aspect of the Compliance Officer s report; b) Any documentary evidence or witness statements he wished to draw to the Committee s attention at the next hearing; c) Independent [PRIVATE] to hold a Practising Certificate and the standard of audit work found during the monitoring visit to the firm on 28 September Mr Gavin had not previously supplied any of the above information to be put before the Committee at today s hearing. He has, however, provided [PRIVATE] for the Committee to consider today together with a brief personal development plan. 6. The firm s audit registration commenced on 2 November The purpose of the first monitoring visit to the firm on 28 September 2016 was to confirm its eligibility for registered auditor status and to monitor compliance with the Chartered Certified Accountants' Global Practising Regulations 2003 ( the

3 GPRs ). The firm had signed 18 audit reports in the last 24 months. The Compliance Officer inspected three audit files on the day of the monitoring visit. 7. The Compliance Officer found that the firm had not established any 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) ( the ISAs ). It did not appear that the firm had attempted to carry out its audit work in accordance with the requirements of the ISAs. As a result ACCA considered that Mr Gavin, as principal of the firm, had breached section b of the Code of Ethics and Conduct and may not be considered a fit and proper person under GPR 8(1)(iv) because he had committed a material breach of an applicable regulation. SUBMISSIONS MADE ON BEHALF OF ACCA 8. Mr Ismail, on behalf of ACCA, submitted that the firm had not established any quality control policies and its procedures were not adequate to ensure that it conducted audits in accordance with the ISAs. The three audit files inspected showed little evidence of compliance with ISAs. The firm had not used an audit programme on any of the files. The working papers comprised accounting schedules containing little audit evidence. As a result the Compliance Officer reached the view that the audit opinion was not adequately supported by the work performed and recorded. 9. Mr Ismail submitted that the failings of the firm were serious and wideranging. He referred the Committee to the Compliance Officer s report and the fact that there had been deficiencies in the following areas: (a) International Standard on Quality Control (b) Terms of audit engagements (c) Acceptance and continuance (d) Communication of those charged with governance (e) Understanding the entity and its environment (f) Planning (g) Documentation (h) Evidence

4 (i) Opening balances (j) Analytical procedures (k) Related parties (l) Subsequent events (m) Management and representations (n) Communicating deficiencies in internal control (o) Overall review of financial statements (p) Going concern (q) Reporting 10. Mr Ismail referred to Mr Gavin s breaches of ISA 210, 220, 230, 240, 250, 260, 265, 315, 330, 500, 510, 520, 550, 570, 580 and submitted that Mr Gavin and the firm had breached GPR (Annex 2) 16(1)(a) in that there had been a failure to comply with the ISAs in the conduct of audit work. There were deficiencies in planning, control and recording of audit work and, in all of the files examined, the audit opinion was not adequately supported. 11. Mr Ismail submitted that Regulation 5(1)(f) and 5(1)(g) of the Authorisation Regulations 2014, as amended, ( the Regulations ) were relevant in this case as Mr Gavin had committed a number of breaches of the regulations and may not be considered a fit and proper person to hold a Practising Certificate with audit qualification. 12. The Committee was invited by Mr Ismail to withdraw Mr Gavin s Practising Certificate with audit qualification and to issue him with a Practising Certificate. The Committee was also invited to withdraw the firm s auditing certificate on the basis that, whilst this was a first monitoring visit, the standard of the firm s audit work was very poor and it had made little or no attempt to comply with the ISAs. Mr Ismail referred the Committee to the Guidance for Regulatory Orders Eligibility for Certificates or Licences and Unsatisfactory Outcomes to Monitoring Visits ( the GRO ). SUBMISSIONS MADE ON BEHALF OF MR GAVIN 13. Mr Pretsell, on behalf of Mr Gavin, informed the Committee that Mr Gavin did not take issue with the findings made by the Compliance Officer at the monitoring visit and fully admitted his failings. He submitted that there were

5 no concerns about Mr Gavin s general practice as an accountant and that Mr Gavin had acknowledged his failings and reflected on the findings. He submitted that Mr Gavin had taken positive steps to improve his audit work. Mr Pretsell informed the Committee that Mr Gavin had a previous unblemished record. 14. Mr Pretsell told the Committee that Mr Gavin had installed a new audit software programme that provided a detailed formal structure so that in effect the audit is monitored by the programme in order to ensure compliance with the regulations. Mr Gavin had also sought mentorship and assistance from a colleague, Mr A of Firm B who provided continuity for his firm. Mr Pretsell submitted that these were the kind of steps that a Compliance Officer may have recommended after a first monitoring visit. 15. Mr Pretsell invited the Committee to impose conditions on Mr Gavin s and the firm s audit certificates. He said that Mr Gavin would be willing to have the audits referred to a training company for external review and would comply with any condition imposed by the Committee. Mr Pretsell submitted that the imposition of stringent conditions would be sufficient to protect the public interest, maintain public confidence in the profession and maintain proper standards of conduct. DECISION AND REASONS 16. The Committee heard and accepted the advice of the Legal Adviser and the submissions made by Mr Ismail, on behalf of ACCA, and Mr Pretsell, on behalf of Mr Gavin. The Committee paid due regard to the GRO. 17. The Committee had regard not only to the contents of the Compliance Officer s report, but also to the documents put before it by Mr Gavin and the submissions made on his behalf by Mr Pretsell. The Committee bore in mind Regulation 5(3) of the Regulations that provides: In determining whether to exercise its powers under regulation 5(1) or 5(2) above the Admissions and Licensing Committee shall have regard to such matters as it considers relevant. Without limitation, in determining whether the holder of a certificate is a fit and proper

6 person, the Admissions and Licensing Committee shall have regard to all or any of the matters referred to in the Practising Regulations. 18. The Committee bore in mind Paragraph of the GRO and acknowledged that its function was to take appropriate action for the future to ensure that Mr Gavin maintained proper standards of conduct, thereby maintaining public confidence in the profession, and that its function was not to discipline Mr Gavin or the firm for any past wrongdoing of which he or it may be culpable. 19. In reaching its decision on what, if any, order was appropriate to impose, the Committee weighed the interests of Mr Gavin and the firm against the need to protect the public interest, maintain public confidence in the profession and maintain proper standards of conduct. 20. Mr Gavin was the sole practitioner in the firm with auditing qualification and, therefore, he was responsible for the deficiencies identified by ACCA during the monitoring visit. Mr Gavin was required to meet the high standards for those holding audit registrations in order to maintain public confidence in the profession. 21. The Committee noted the proposals put forward by Mr Gavin to ensure that he carried out the firm s audit work satisfactorily in the future. Mr Gavin had not provided any evidence in support of the remedial action he had taken and had not called Mr A to give evidence on his behalf. The Committee considered that Mr Gavin s personal development plan was vague, lacked substance and didn t properly address the deficiencies in his practice. It noted that Mr Gavin had not attended any relevant audit training courses and had not provided the Committee with evidence of any online courses that he had undertaken. 22. The Committee considered the deficiencies in Mr Gavin s and the firm s audit work to be very serious and wide-ranging. It did not consider that the imposition of conditions on the audit certificates would be sufficient to protect against the risk to the public were Mr Gavin to continue carrying out audit work.

7 23. The Committee determined that withdrawal of Mr Gavin s auditing qualification and the firm s registration was the only appropriate order in this case. It bore in mind the principle of proportionality but determined that any lesser order would not protect the public interest, maintain public confidence in the profession or maintain proper standards of conduct. 24. The Committee considered the reputational and financial impact that the removal of Mr Gavin s auditing qualification may cause him but was satisfied that the need to protect the public and the wider public interest outweighed Mr Gavin s interests. 25. Accordingly, the Committee determined to make an order withdrawing Mr Gavin s Practising Certificate with audit qualification and the firm s auditing certificate and to issue Mr Gavin with a Practising Certificate. It also considered that any future re-application for audit registration by Mr Gavin, or by a firm in which he is the principal, should be referred to the Admissions and Licensing Committee which will not consider the application until Mr Gavin has attended a practical audit course, approved by ACCA, and, following the date of this order, passed paper P7, Advanced Audit and Assurance of ACCA s professional examinations. ORDER 26. The Committee made the following order pursuant to Authorisation Regulation 5(2)(f) and 5(2)(g) that: i. Mr Gavin s Practising Certificate with audit qualification and Conor Gavin & Co s auditing certificate be withdrawn and Mr Gavin be issued with a Practising Certificate. ii. Any future re-application for audit registration by Mr Gavin or by a firm in which he is 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, passed paper P7, Advanced Audit and Assurance, of ACCA s professional examinations.

8 EFFECTIVE DATE OF ORDER 27. The Committee decided that the order should take effect from the date of the expiry of the appeal period, namely 21 days from service of the written notice of the decision, unless Mr Gavin has given notice of appeal in accordance with the Appeal Regulations prior to the expiry of the period. Mr Andrew Popat CBE Chairman 29 March 2017