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 Martyn Gary Wheeler Heard on: 24 June 2015 Location: Committee: Legal Adviser: Chartered Institute of Arbitrators, 12 Bloomsbury Square, London WC1A 2LP Mr Ian Ridd (Chairman), Mr Allan Cook (Accountant), Mrs Eileen Skinner (Lay) Mr Andrew Granville Stafford Persons present and capacity: Mr Martyn Wheeler (Member) Ms Kayleigh Long (ACCA Case Presenter) Ms Amrita Tooray (Committee Officer) Mr Jocelyn Mocatta (Investigations Officer) Observers: PRELIMINARY APPLICATIONS 1. The Committee convened to consider a report regarding Mr Martyn Wheeler. The Committee had before it a bundle of papers (pages A to AD and 1 to 298), an additional bundle (pages 299 to 341) and a service bundle (pages 1 to 12). 2. During the course of ACCA's case Ms Long applied to amend allegation 2(b)(i) to change the start date of the allegation from 2001 to This was to reflect the wording of allegation 2(a), to which 2(b) was an alternative, and was to correct what was no more than a typographical error. Mr Wheeler did not object to the amendment. In light of the fact the amendment would clearly not be to his detriment, the Committee allowed Ms Long s application. ALLEGATIONS AND BRIEF BACKGROUND 3. Mr Wheeler faces the following allegations, as amended: Allegation 1(a) Pursuant to byelaw 8(a)(i), Martyn Wheeler is guilty of misconduct in that he made one or both of the following false statements to ACCA: (i) In a letter dated 2 December 2010 We do not sign accounts (ii) In an dated 23 May 2011 I cannot sign Accountants Report; but I do not do so. Allegation 1(b) It is alleged that Mr Wheeler s conduct as set out in Allegation 1(a)(i) and/or (ii) was: 1

2 (i) (ii) Dishonest Contrary to the Fundamental Principle of Integrity Allegation 2(a) Pursuant to bye-law 8(a)(i) Martyn Wheeler is guilty of misconduct in respect of any or all of the following: (i) (ii) (iii) (iv) From 2003 to 2014 he carried on public practice, without authorisation, contrary to Global Practising Regulation 3(1)(a) In 2003 and 2004 he was the sole proprietor of Wheeler Groves, a firm in which public practice was carried on, without authorisation, contrary to Practising Regulation 3(2) of Annex 1 to the Global Practising Regulations In 2005 he was the sole proprietor of Wheeler Groves, a firm in which public practice was carried on, without authorisation, contrary to Global Practising Regulation 3(2) Between 2006 and 2014 he was the sole proprietor of Wheeler Groves, a firm in which public practice was carried on, without authorisation, contrary to Global Practising Regulation 3(2)(a) Or Allegation 2(b) Pursuant to bye-law 8(a)(iii) Martyn Wheeler is liable to disciplinary action by reason of any or all of the following: (i) (ii) (iii) (iv) From 2003 to 2014 he carried on public practice, without authorisation, contrary to Global Practising Regulation 3(1)(a) In 2003 and 2004 he was the sole proprietor of Wheeler Groves, a firm in which public practice was carried on, without authorisation, contrary to Practising Regulation 3(2) of Annex 1 to the Global Practising Regulations In 2005 he was the sole proprietor of Wheeler Groves, a firm in which public practice was carried on, without authorisation, contrary to Global Practising Regulation 3(2) Between 2006 and 2014 he was the sole proprietor of Wheeler Groves, a firm in which public practice was carried on, without authorisation, contrary to Global Practising Regulation 3(2)(a) 4. Mr Wheeler was admitted as a Member of ACCA in 1991 and as a Fellow in He has never held an ACCA practising certificate. Since 1992 he has traded as Wheeler Groves. 5. It is alleged that between 2003 and 2014 Mr Wheeler carried on public practice without authorisation. Public practice includes signing or producing accounts for an individual, firm or company in circumstances where reliance is likely to be placed on them by a third party. Under Regulation 3 of the Global Practising Regulations ( PR ) no member shall carry on public practice either in his own name or that of a firm unless he holds a practising certificate authorising him to carry out the activity in question. 6. Mr Wheeler had been subject to a previous ACCA investigation relating to engaging in public practice without authorisation following a complaint made in During 2

3 the course of that investigation Mr Wheeler wrote the letter and that are the subject matter of allegation On 2 December 2010 Mr Wheeler wrote to ACCA in response to a request about the services he provided and, in particular, whether he signed accounts or reports on accounts. In that letter he said as follows: Many local businesses really only require their records to be sorted out and developed up to the Trial Balance stage, and have no real need for a full set of accounts, signed off by a firm, and consequently I have attracted work from the established local firms, to their obvious displeasure. They see me taking business, they see that I do not have a practising certificate, and then they complain to you. Wheeler Groves is not a company, but simply me operating as a sole trader offering an accountancy service. We offer book-keeping, vat, payroll and associated services. Over time more limited companies have used our services. I (sic) the Company Secretary for many organisations and am Director of several. We do not sign accounts, we do not conduct audit work and we do not offer tax advise, or provide tax strategies not do we even calculate peoples tax. The only occasions where I sign accounts are where I act as an officer of the company and do so either as Company Secretary or as a Director. 8. On 20 May 2011, an investigations officer ed Mr Wheeler enclosing a copy of ACCA s fact sheet Do I need a practising certificate? He was advised to note that the production of any accounts, tax return, or reports concerning any person s (individual, sole trader, unincorporated body or a firm) financial affairs where reliance is likely to be placed on them by a third party is expressly described as public practice and requires the member to hold a practising certificate. 9. Mr Wheeler responded in an dated 23 May 2011 stating: The majority of our work is corporate and I am permitted to prepare accounts, though as you correctly say, I cannot sign an Accountants Report; but I do not do so. The work that we do for sole traders is book-keeping, some paye and vat, and we take this up to trial balance. This is what most small traders require. They do not need published accounts, Accountants Reports and the associated accountant s fees running into thousands of pounds. 10. On 11 November 2011 the investigations officer closed the investigation without any further action being taken. Though she considered that a number of the activities that Mr Wheeler engaged in fell within the definition of public practice, in particular attending VAT investigations, she concluded that the matter was not sufficiently serious to be taken to a disciplinary hearing. She noted that Mr Wheeler had given an undertaking to limit his firm s activities to payroll, VAT and bookkeeping until he had obtained a practising certificate. 11. Following a complaint received in April 2013, ACCA carried out a search of accounts filed at Companies House. This revealed that between May 2006 and January 2011 twelve sets of accounts for limited companies had been filed carried a statement headed Accountants Report which had been signed by Mr Wheeler. 3

4 12. In addition, on 15 September 2011 and 18 August 2014 Mr Wheeler signed Independent Examiners Reports ( IERs ) for the year end accounts for an unincorporated trust ( the Trust ) as Martyn Wheeler FCCA, Chartered Association of Certified Accountants. He also prepared, but did not sign, IERs for the Trust in 2012 and An IER is used by charities, as well as other organisations, which do not require an audit to provide an assurance to the trustees, beneficiaries and the public that the accounts have been reviewed by an independent person. 13. Mr Wheeler was Company Secretary to B Ltd, a small company with a turnover of about 120,000, from April 2001 to September A letter of engagement, dated 6 March 2001, includes a list of Accountancy Services that Mr Wheeler was proposing to provide to the company, including Annual accounts... for submission to the Board of Directors. Prior to a change in the rules in 2003, a member without a practising certificate was permitted to prepare accounts. 14. During the period of his appointment, B Ltd s minutes consistently make reference to Mr Wheeler presenting the accounts at the AGM and to him or his firm being reappointed as accountant (and sometimes, erroneously, auditor) for the forthcoming year. 15. Mr C, a director of B Ltd and the complainant in this case, told ACCA that the role Mr Wheeler played included the following: He presented the Accounts [at AGMs], having prepared them in advance and had them agreed by the Board. He would generally talk through various issues relating to them, and answer any further questions from shareholders. Accounts have until 2012 been prepared by Mr Wheeler... and approved verbally by the directors at a Board meeting in the presence of Mr Wheeler. Deliberately or otherwise it is now obvious that neither Mr Wheeler or the director charged with finance have allowed their names or signatures to appear on the accounts for many years. 16. Mrs A, who was Chair of the Board of Directors of B Ltd until 2012, stated as follows in a letter addressed to the Committee: More than 95% on Mr Wheeler s activities were book keeping, vat and payroll. After the year end Martyn compiled the values to be used in the accounts... Martyn was given instruction and did NOT participate in the construction of these accounts. He did not hold himself out to be anything other than a book keeper. 17. It is alleged by ACCA that preparing and signing accounts filed at Companies House, preparing IERs and the work Mr Wheeler did for B Ltd all fall within the definition of public practice (allegation 2). 18. In response to the allegations, Mr Wheeler has given the following accounts and explanations in correspondence: 18.1 In a letter dated 28 August 2014 he said that following the previous investigation he has embraced the advice he was given by ACCA and has not as Wheeler Groves signed any documents intended for use by third parties. In respect of the accounts filed at companies house he 4

5 said that, apart from the Trust, they were all historic and that he had ceased working for almost all of those companies In response to a request for comments about the list created from Companies House information he said We provide numbers at trial balance level to clients, and it is up to them to create their accounts. I the numbers to them and afterwards they create their accounts. I will ensure that they remove our name from future sets of accounts. We were not aware that this was happening. I cannot be held responsible for where others write our name... ( , 5 June 2014). It is accepted by ACCA that preparing accounts up to trial balance stage does not amount to public practice My original understanding in 1990, under the rules that existed at the time, was that I could never sign a Balance sheet, I could never sign Wheeler Groves, I could never sign a report which would hold myself out to be an accountant in public practice. At the time I was permitted to prepare accounts and I understood I that I was able to confirm that I had done so. By 2005 this had changed and I was advised that preparing accounts and confirming the fact was not permitted and as a result I immediately stopped... I was not signing what I understood to be An accountants report, being signed in the firms name and presented on the Balance Sheet (letter, 22 September 2014) The only occasions where I sign accounts are where I act as an officer of the company and do so either as Company Secretary or as a Director (letter, 2 December 2014) In respect of the IERs for the Trust he said he acted on a purely voluntary basis at the request of a friend and did not charge any fee. (Letter dated 28 August 2014). The investigations officer accepted that this would be classed as an honorary report, but pointed out to Mr Wheeler he must comply with the conditions in Global Practising Regulation (PR) 4.4, one of which is that he must state he is acting on an honorary basis. Mr Wheeler replied I acknowledge and am grateful for your advice that I ought to have indicated that I was the honorary reporting accountant. I was aware of the general remit for me to be able to sign this report but I was ignorant of the rule which you have brought to my attention (letter, 22 September 2014) Regarding the complaint by Mr C, he said I am entitled to prepare accounts up to trial balance level, which is what I did. Thereafter my function was that of a clerk or typist. The Board of Directors of [B Ltd] are very particular about the form, construction, wording, format and contents of their accounts. I would present them with my calculations at a Board Meeting and they would debate and thereafter direct me as to how exactly they wanted them disclosed, what notes they wanted, how those notes should be worded, what figures needed to be analysed and what figures needed consolidating. The accounts were not and could never be signed by me, nor did they bear my name or the name of wheeler groves. (Letter, 25 June 2013) In a letter to Mr C dated 21 March 2013 he pointed out that B Ltd s accounts were signed by AW, a firm of accountants and that he only 5

6 signed the accounts in his own name in his capacity as company secretary The process by which accounts are prepared is as follows: we sort records and perform general bookkeeping up to trial balance level. That is where our accounting involvement in the process ends. I present this to the Directors who then decide if they accept these values, and also how they want these values expressed. In the case of [B Ltd] this involved meetings and s with Directors who would decide whether any value required more analysis or consolidation, and where they would appear, the wording that would accompany the value and any notes, and the wording and disclosure in the notes. Once all the directors were in agreement then we would type up whatever they had decided. Our final act is that of a copy typist, no more. We do not add anything to the accounting process after the TB stage. At the AGM the Directors present the accounts which they have taken responsibility for preparing. I do not believe that I require a practising certificate in order to type up documents legitimately created by a director ( , 5 June 2014). DECISIONS ON ALLEGATIONS AND REASONS 19. The Committee considered the documents before it, the evidence it had heard from Mr Wheeler, the submissions made to it by both parties and the advice of the Legal Adviser. The Committee bore in mind that the burden of proving an allegation rests on ACCA and the standard to be applied is proof on the balance of probabilities. 20. The Committee first considered allegation 1(a). Mr Wheeler did not dispute that he wrote the letter and referred to. He told the Committee that the statement that we do not sign accounts was true. He contended that there was a difference between an accountant s report and a set of accounts. In the instances in question, the accounts had been signed by the directors of the company concerned, and not by Mr Wheeler. 21. In respect of the of 23 May 2011, he agreed that his wording had been sloppy. However, taken in the context of the telephone conversation that he was responding to in this , he contended it was not a false statement. 22. The Committee had a number of examples in the papers of documents headed Accountant s Report which he had signed which were filed at Companies House. Ms Long submitted that signing an accountant s report is what an accountant does when he signs off accounts. Therefore it was wrong for him to tell ACCA both that he did not sign accounts as well as that he did not sign accountant s reports 23. In respect of the letter of 2 December 2010, it is of significance that immediately after the words in question he refers to company accounts being signed by an officer of the company. It may be a somewhat technical distinction between signing accounts and signing an accountant s report, but he was communicating with his professional body. Therefore it would not be unreasonable for someone in his position to assume the difference was understood. Therefore the Committee cannot find that the statement set out in allegation 1(a)(i) was false. 24. In respect of 1(a)(ii), the Committee again considered it was important to understand what Mr Wheeler himself was referring to when he used the term Accountants Report in the of 23 May That term certainly appears within the accounts 6

7 filed at Companies House. However, Mr Wheeler s evidence is that the term means a report in which an accountant is giving a value judgment on a financial statement. He gave examples to the Committee, which he contrasted with what he described the rather pointless statement in the company accounts with which he had been involved. Of significance, in the Committee's view, was Mr Wheeler s letter to ACCA of 20 November In this letter, which was written many years before these allegations were made, he makes it clear that he regards an accountant s report as something which expresses an opinion about a set of accounts or about a client, customer or company. The Committee was prepared to accept this explanation was consistent with the way the phrase can be used in the normal course of business. Therefore, the Committee could not be satisfied that the words Mr Wheeler used in the context he was using them were necessarily inaccurate or false. 25. The Committee therefore found allegation 1(a) not proved on the basis it could not be satisfied that the statements made in 1(a)(i) or 1(a)(ii) were false. As a consequence it follows that 1(b) is not proved. 26. In respect of allegation 2, Mr Wheeler accepted that he had engaged in public practice in the period between 2003, when the rules were changed, and 2011, when the previous investigation was concluded. He accepted that he had been wrong to sign the so-called Accountants Reports in the accounts filed at Companies House. However, he said had not done so again after the first investigation had concluded. 27. Indeed, ACCA s case was that the only public practice activity that Mr Wheeler engaged in subsequent to 2011 was signing the IER for the Trust in Mr Wheeler accepted that this had been a mistake on his behalf. He accepted that he had in fact been warned not to do this in the investigation closure letter in 2011, but said he had not taken that part of the letter on board. 28. Mr Wheeler admitted that he carried on public practice up to 2011, and he was clearly right to make this admission. Further, it is clear that in respect of the IER he had committed a breach of GPR, and although this may have been a relatively minor breach, what he did amounted to carrying on public practice. Therefore subparagraphs (i) to (iv) of allegation 2(a) are made out. 29. The Committee went on to consider whether these matters amounted to misconduct. In the view of the Committee the activities up to 2011, in respect of the accounts filed at Companies House, clearly did. The length and the repeated nature of the breaches pointed clearly in that direction. Furthermore, over much of the period that these breaches were occurring Mr Wheeler was under investigation by ACCA for doing exactly these type of things. Despite that he made little or no serious effort to find out whether what he was doing was permitted by ACCA s Rules. 30. However, in the Committee s view the threshold of misconduct was not crossed in respect of signing the IER for the Trust. Though it is right that ACCA had given him a warning in respect of this, the breach was not sufficiently serious to justify a finding of misconduct. 31. Therefore the Committee finds allegation 2(a) made out on the basis that between 2003 and 2011 he carried out public practice without authorisation. 34. As allegation 2(b) is put on the basis it is an alternative to 2(a), the Committee did not need to separately consider or make a finding on 2(b). 7

8 SANCTION AND REASONS 32. In light of its findings on allegation 2(a), the Committee considered what, if any, sanction was appropriate and proportionate. It took into account the mitigation advanced by Mr Wheeler and ACCA s Guidance for Disciplinary Sanctions. The Committee bore in mind that the purpose of sanctions was not punitive but to protect the public, maintain confidence in the profession and declare and uphold proper standards of conduct and behaviour. 33. The Committee decided it was not appropriate to make no order given its finding that Mr Wheeler s actions amounted to misconduct. It therefore considered the available sanctions in ascending order of severity. 34. The Committee decided that the appropriate sanction was a severe reprimand. There is clearly a public interest in making it clear that it is not acceptable for a member to engage in public practice without proper authorisation. Against that, the Committee accepted that, with one minor exception, Mr Wheeler had corrected the error of his ways after and as a direct result of the previous investigation. The matters for which the Committee had to sanction Mr Wheeler were therefore of some antiquity. Further, and more importantly, there was no evidence of repetition and nor were there any previous disciplinary findings against him. 35. The Committee did not consider that admonishing Mr Wheeler or simply reprimanding him would sufficiently mark the conduct in question. However, it did not find there was any reason to fine Mr Wheeler or exclude him from membership. 36. The Committee therefore orders that Mr Wheeler be severely reprimanded. COSTS AND REASONS 37. ACCA applied for costs in the sum of 3,756. The Committee considered that, in principle, in light of the findings it made Mr Wheeler should pay at least some costs. It took in to account the evidence about his means, the extended length of the investigation, his co-operation with it and the fact that allegation 1 had not been made out. In all the circumstances it considered that 2,500 was the appropriate amount and made an order that Mr Wheeler pays costs to ACCA in that amount. EFFECTIVE DATE OF ORDER 38. The order will come into effect from the date of expiry of the appeal period, namely after 21 days from service of this written statement of the Committee s reasons for its decision, unless Mr Wheeler gives notice of appeal in accordance with the Appeal Regulations prior to that. PUBLICITY 39. 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 the news release should be sent and discretion in exceptional circumstances to direct that the relevant person is not named. Despite the submissions of Mr Wheeler, the Committee did not find that there were any exceptional circumstances in this case. The Committee ordered that a 8

9 news release be issued to ACCA s website and to the local press referring Mr Wheeler by name. Mr Ian Ridd Chairman 24 June