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 Simon Patrick Clarke Heard on: 23 July 2014 Location: Committee: ACCA offices, 29 Lincoln's Inn Fields, London WC2A 3EE Mr Christopher Chapman (Chairman), Mr Trevor Salmon (Accountant) and Ms Lynne Jones (Lay) Legal Adviser: Ms Valerie Charbit Persons present and capacity: Mr Alex Mills (Case Presenter on behalf of the ACCA) Ms Amrita Tooray (Committee Officer) Mr Jocelyn Mocatta (Senior Investigations Officer) Mr Luke Butcher (ACCA Admin Officer) Observers: None PRELIMINARY APPLICATIONS/SERVICE OF PAPERS 1. The Committee considered six allegations including allegations of misconduct and dishonesty. They relate to his non-disclosure of an Individual voluntary arrangement (IVA), to Mr Clarke s partners in an accountancy practice, ( the firm ) and also to ACCA. 2. ACCA was represented by Mr Alex Mills and Mr Clarke attended and was unrepresented. 3. The Committee had before it a bundle of papers numbering pages and a further bundle numbering pages In addition Mr Clarke supplied a bundle on the 22 July 2014 numbering pages The Committee also had a service bundle numbering pages ALLEGATIONS / BRIEF BACKGROUND 4. Mr Clarke was a partner in the firm. The partnership agreement between him and Mr N and Mr S is dated 31 (sic) September The complaint is made by the two other partners of the firm, Mr N and Mr S. Both say the Individual Voluntary Arrangement which Mr Clarke entered into with creditors on the 15 December 2008, was unknown to them until 19 July 2011 and certainly unknown to them at the time when they decided to enter into a partnership agreement. Mr N specifically states he and Mr S openly 1

2 discussed every partnership issue and he does not believe that Mr S would have kept such a matter from him. Both Mr N and Mr S allege financial loss as a result of having entered into a partnership with Mr Clarke because of his financial difficulties. 5. ACCA s Guidance for members facing financial difficulties indicates that if a member notifies ACCA that they have entered into an IVA it is unlikely that any further action will be taken and membership will almost certainly be unaffected by this event taken in isolation. ACCA submitted that Mr Clarke s situation is more serious because he failed to notify ACCA of the IVA. 6. ACCA has no record of any documentary notification and checks were made to see if any notification had taken place. Checks were made by ACCA with the Professional Conduct Department, the Membership Department and the Authorisation Department (pages 201, 195,199). s were also checked and there is no notification received by as far back as August In the course of the investigation Mr Clarke was asked specifically about two forms entitled Statement of Independence, Integrity and Confidentiality dated 1 January 2009 and a similar form dated 20 January 2010 (pages 37-39, ) ( the forms ) which Mr Clarke signed when he failed to disclose his IVA or disclose his credit history to Mr S or Mr N. The form related to his financial solvency and included questions relating to his financial integrity and reliability. 8. ACCA also considered the declarations Mr Clarke completed annually when renewing his practising certificate and submitting his Continuing Professional Development (CPD) to ACCA. The relevant dates in respect of declarations signed in respect of renewal of his practising certificate were 30 October 2009 and 15 November The relevant dates in respect of declarations signed in respect of the submission of annual CPD were 27 November 2009 and 18 November (allegations 3 and 4) 9. Within the bundle (pages 56-61) Mr Clarke set out the circumstances that caused his financial difficulties. 10. He stated that at the time he entered into the partnership agreement he told Mr S about it and that Mr S told him to keep it confidential from Mr N. He has also stated that he did not disclose his debts to Mr N because Mr N made it clear that he was not a fan of people who borrowed too much. Mr Clarke has supplied a note of a meeting on 3 September 2008, in which he says it is noted that he was waiting for money and therefore Mr S knew about his financial difficulties. 11. He states that his partners have made these complaints because they are seeking to gain further money from him because he left them for a better career opportunity. 12. Mr Clarke states that he believed that the firm dealing with his IVA told him that they would notify ACCA (Company C) and he therefore believed that ACCA had been notified and he had no need to disclose anything further due to the nature and sensitivity of the IVA. Mr Clarke states he regrets not checking that this had been done. 2

3 13. Evidence contained within the bundle indicates that the most recent IVA firm (Company B) understood from Mr Clarke that the previous IVA firm (Company C) had told him that notification to ACCA would be taken care of. There is no independent evidence from the previous firm (Company C) contained within the bundle and ACCA had not contacted Company C. 14. Mr Clarke admits that he did not notify ACCA of his IVA and ACCA were unaware until Mr N s complaint to ACCA (page 209) of the IVA. However he states that he believed that when he signed both the renewal forms for his practising certificate and CPD forms he did not have to disclose the IVA again because it s existence had already been disclosed and the declarations he signed said as much. 15. Mr Clarke says that when he signed the forms (allegations 3 and 4) there was an element of doubt in his mind but he was scared and in hindsight made an error of judgement for which he apologises. 16. Mr Clarke further states that he is financially solvent and in November 2013 he had been close to finalising his credit difficulties and IVA. 17. Mr Clarke is therefore charged with the following: Allegation 1 Pursuant to bye-law 8(a)(vii) Mr Clarke is liable to disciplinary action by reason of entering into an individual voluntary arrangement on 15 December Allegation 2 Pursuant to bye-law 8(a)(i) Mr Clarke is guilty of misconduct in that between 2009 and 2011 and in particular on or around (i) 1 January 2009 (ii) 20 January 2010 he signed a form relating to his being a partner of Company A headed Statement of independence, integrity and confidentiality in which he falsely declared he had not made any arrangement for the payment of a composition to creditors which was (a) (b) Dishonest Contrary to the Fundamental Principle of Integrity (as applicable in 2009 and 2010). Allegation 3 Pursuant to bye-law 8(a)(i), Mr Clarke is guilty of misconduct in that on or around 3

4 i) 30 October 2009 ii) 15 November 2010 he submitted to ACCA an application for renewal of his practising certificate in which he falsely declared that he had not been subject to any matters within the terms of bye-law 8 which was a) Dishonest b) Contrary to the Fundamental Principle of Integrity (as applicable in 2009 and 2010). Allegation 4 Pursuant to bye-law 8(a)(i), Mr Clarke is guilty of misconduct in that on or around i) 27 November 2009 ii) 18 November 2010 he submitted to ACCA an annual CPD declaration in which he falsely declared that he had not been subject to any matters within the terms of bye-law 8 which was a) Dishonest b) Contrary to the Fundamental Principle of Integrity (as applicable in 2009 and 2010). Allegation 5(a) Pursuant to bye-law 8(a)(i) Mr Clarke is guilty of misconduct by reason of failing to give written notice forthwith that he had entered into an individual voluntary arrangement contrary to Global Practising Regulation 12(2)(c), as applicable in or Allegation 5(b) Pursuant to bye-law 8(a)(iii) Mr Clarke is in breach of Global Practising Regulation 12(2)(c), as applicable in 2008, by reason of failing to give written notice forthwith that he had entered into an individual voluntary arrangement. 4

5 Allegation 6(a) Pursuant to bye-law 8(a)(i) Mr Clarke is guilty of misconduct by reason of his failure to inform ACCA of his individual voluntary arrangement, contrary to byelaw 10(b), as applicable in or Allegation 6(b) Pursuant to byelaw 8(a)(iii), Mr Clarke has breached byelaw 10(b), as applicable in 2008, by reason of his failure to notify ACCA of his individual voluntary arrangement. 18. At the start of the hearing, Mr Clarke admitted allegations 1, 2, 5a and 6a. Allegations 3 and 4 were denied. 19. Mr Mills accepted that if the Committee decided that Mr Clarke had an honest belief that ACCA were aware of his IVA at the time he signed the practising certificate renewal forms or the CPD forms then he could not be found to be dishonest nor would he be in breach of the fundamental principle of integrity. 20. Mr Clarke explained how he came to be in business with Mr S and Mr N. Mr Clarke told the Committee that he had paid the last instalment on his IVA in March 2014, and he was waiting for the final paperwork to be dealt with. 21. Since allegations 5(b) and 6(b) were lesser alternatives to allegations 5(a) and 6(a) there was no need for the Committee to decide upon those allegations. 22. The legal adviser advised the Complaints and Disciplinary Regulations have been amended as from 1. The 2014 version of the Regulations governs the procedure today but Mr Clarke s conduct must be judged against the regulations and standards that were in force at the relevant time. The Committee accepted that advice and referred to previous rules books for 2008, 2009 and 2010 which were copied in the bundle when considering Mr Clarke s actions and omissions. DECISION ON FACTS/ALLEGATIONS AND REASONS Allegation The Committee accepted that Mr Clarke had entered into an IVA and he was thereby a person liable to disciplinary action in accordance with bye-law 8(a)(vii). On the basis of the evidence contained in the bundle and on the basis of Mr Clarke s admission the Committee found allegation 1 proved. Allegation Mr Clarke admitted allegation 2 and that the signing of the forms was dishonest and contrary to the fundamental principle of integrity. He further admitted that this amounted to misconduct. The Committee accepted this admission. It further noted that Mr Clarke s signing of two forms which asked 5

6 clear questions relating to his credit history which he had ticked in the negative was dishonest and not straightforward particularly as at the time he signed the forms he had already entered into the IVA. 25. The Committee concluded that this amounted to misconduct because it brought discredit upon him and upon the accountancy profession because it is expected that an accountant would be expected to be honest on any form about such matters. It therefore found allegation 2 proved. 26. The Committee further concluded that since Mr Clarke admitted deceiving Mr S and Mr N by signing the forms he was unlikely to have told Mr S that he was about to enter into an IVA. The Committee could not conclude on the evidence before it, the extent of any discussions between Mr S and Mr Clarke in relation to Mr Clarke s financial circumstances; however this did not impede its decisions on the allegations. Allegation The Committee noted that Mr Clarke signed a declaration on applications for renewal of a practising certificate which was in the first person regarding a declaration made that he had informed ACCA of all relevant matters which included the IVA. At both material times the professional conduct department had not received any notification from Mr Clarke or his IVA advisers of the existence of the IVA. 28. The Committee considered the letter (page 68) supplied from Company B which included information that they no longer had a working relationship with Company C, that it was not Company B s policy to contact professional bodies of individuals entering into IVA s but they had understood from Mr Clarke that he believed that Company C had informed ACCA on his behalf. The Committee found that he was naive in not checking that Company C had done so. 29. Mr Clarke gave evidence that he believed that Company C had informed ACCA about his IVA. Mr Clarke accepted in evidence that he should have checked that the notification to ACCA had taken place and checked that Company C had notified ACCA. 30. The Committee noted that the burden of proof was on ACCA and it noted that ACCA have not provided evidence from Company C to prove that they did not tell Mr Clarke they would inform ACCA on his behalf. Mr Clarke was undoubtedly going through a stressful time and had employed professional advisors on his behalf. He told the Committee that he had tried to contact Company C but had not been able to do so. The Committee concluded it was more likely than not that Mr Clarke honestly believed that Company C had notified ACCA on his behalf and so when he signed the declarations (allegations 3) he had done so honestly. 31. The Committee did not consider that because Mr Clarke had admitted dishonesty on allegation 2 that he was more likely to have been dishonest on allegations 3 and The Committee therefore found Allegation 3 not proved. 6

7 Allegation When Mr Clarke submitted his annual CPD declarations he signed a slightly different declaration which was a less personal obligation (page 189). For the same reasons as set out above the Committee decided there was a lack of evidence to disprove the evidence and belief of Mr Clarke that he believed ACCA already were aware of his IVA and that it had been informed by Company C. 34. The Committee therefore found Allegation 4 not proved. Allegation 5(a) 35. Mr Clarke admitted that he should have given written notice to ACCA about the IVA he had entered into. He further admitted misconduct. The Committee noted that the obligation to inform ACCA of an IVA forthwith meant that Mr Clarke had failed to do so. He had thereby deprived ACCA s ability to make a risk assessment and accordingly this brought discredit upon Mr Clarke and the accountancy profession into disrepute. 36. The Committee therefore decided on the basis of the evidence contained within the bundle and on the basis of Mr Clarke s admission that this allegation was proved. Allegation 6(a) 37. Mr Clarke admitted he had failed to inform ACCA of the IVA he had entered into. He further admitted misconduct. The Committee noted that the obligation to inform ACCA of an IVA forthwith meant that Mr Clarke had failed to do so. He had thereby deprived ACCA s ability to make a risk assessment and accordingly this brought discredit upon Mr Clarke and the accountancy profession. SANCTION AND REASONS 38. ACCA informed the Committee that there were no previous disciplinary findings against Mr Clarke. The Committee proceeded on the basis that Mr Clarke had been of previous good character. 39. The Committee noted that allegation 2 included dishonesty and allegations 2, 5(a), 6(a) include misconduct. 40. Mr Clarke informed the Committee that he had told each of the referees that he was facing a disciplinary tribunal but he did not inform them of the nature of the allegations. The Committee took into account the positive references Mr Clarke provided (pages ) 41. Mr Clarke told the Committee he currently has his own company which is involved in marketing. His annual income is between 45,000-55,000. He is married with two children. He owns a home with a mortgage and owns four other properties, his share of the equity within all the properties is 100,000. 7

8 42. The Committee noted that the Guidance for Disciplinary Sanctions (2013) indicates allegations of dishonesty undermine trust and confidence in the profession and that only in exceptional circumstances should a finding of dishonesty result in a sanction other than striking off. 43. The Committee decided that there was limited insight shown by Mr Clarke as he did not appear to understand the seriousness of the allegations found proved or admitted and because when giving evidence before the Committee he appeared to lack an appreciation of the effect of his conduct on others including the wider public and public interest. 44. The Committee decided no further action was inappropriate for the number of allegations found proved including three findings of misconduct and one finding of dishonesty. 45. The Committee next considered the factors relevant in order to impose a sanction of admonishment and found that this sanction was not an appropriate sanction in respect of the allegations found proved. 46. The Committee next considered a reprimand. It noted amongst the factors outlined for a reprimand in the Guidance for Disciplinary Sanctions was for conduct of a minor nature and decided the majority of the factors mentioned were not present and that this sanction was therefore inappropriate 47. The Committee next considered whether a severe reprimand was appropriate. The Committee decided that the misconduct was intentional, particularly in relation to allegation 2. The Committee decided it had insufficient information to determine properly whether there was financial loss caused to Mr S and Mr N. It further concluded that since Mr Clarke had limited insight into his misconduct this sanction was not appropriate or sufficient. 48. The Committee found that Mr Clarke had a previous good disciplinary record. He had committed three separate instances of misconduct. Mr Clarke cooperated with the investigation. However it decided that a severe reprimand was insufficient because of the serious nature of the allegations and because there were three findings of misconduct one of which included dishonesty. 49. The Committee noted that the dishonesty in allegation 2, was approximately 5 years ago but was only brought to light by the complaint of Mr N. The signing of two forms which were dishonest and a breach of integrity meant that public confidence would be undermined if Mr Clarke was allowed to continue to remain a member of ACCA. The Committee noted the guidance set out at E2 in the Guidance for Disciplinary Sanctions was applicable in this case. The Committee decided that the proportionate sanction was exclusion. COSTS AND REASONS 50. The Committee took into account Mr Clarke s financial circumstances. It further took into account the fact that the costs applied for by ACCA were incurred solely in respect of the allegations which the Committee considered 8

9 and that much of the costs were in relation to proving allegation 2 which Mr Clarke had only admitted today. 51. The Committee decided to order costs of 3000 to be paid by Mr Clarke to ACCA. It reduced the amount of costs on the basis that two of the allegations were found not proven. It concluded that 3000 was not an unreasonable amount for ACCA to seek in costs in order to prove allegations 1,2, 5(a) and 6(a). EFFECTIVE DATE OF ORDER 52. The Committee heard there was no interim order in this case. The Committee did not consider that there was a risk to the public and therefore it decided that the effective date of the order would be at the conclusion of any appeal period and that it was not necessary to direct that the order for exclusion should take immediate effect. PUBLICITY 53. ACCA s regulations require ACCA to publish the Committee s finding and orders by way of a press release, as soon as practicable. The Committee has a discretion as regards which publications the press release should be sent to and a discretion in exceptional circumstances to direct that the relevant person is not named. Neither party made submissions that there were exceptional circumstances. The Committee found no exceptional circumstances in this case. 54. It ordered that the press release should be issued to ACCA s website and to the local press, referring to Mr Clarke by name. Mr Christopher Chapman Chairman 23 July