DISCIPLINARY ORDERS AND REGULATORY DECISIONS

Transcription

1 DISCIPLINARY ORDERS AND REGULATORY DECISIONS Date published: 4 December 2013 Disciplinary orders Disciplinary Committee tribunal orders 1 Mr Michael Christopher Thorpe ACA Mr David Lawrence Thebridge FCA Mr Richard John Pollett [FCA] Mr allan John Speakman FCA Mr Adam Kenneth Woricker ACA Appeal Committee panel orders 6 No publicity of name 21 Cessation of Membership 7 List of members who have been cessated from membership 24 Investigation Committee consent orders 8 No publication of name 24 9 Mr Robert Andrew Dawes FCA Mr Trevor Harris FCA Mr Elliot Harry Green FCA 25 1

2 Regulatory orders Audit Registration Committee regulatory penalties and withdrawals 12 The LK Partnership LLP KPMG Audit plc Goodwin Shaw 26 2

3 DISCIPLINARY COMMITTEE TRIBUNAL ORDERS 1 Mr Michael Christopher Thorpe ACA of 12 Highfield Court, Wombwell, BARNSLEY, SOUTH YORKSHIRE, S73 8JJ. A tribunal of the Disciplinary Committee made the decision recorded below having heard a formal complaint on 18 September 2013 Type of Member Member Terms of complaint The complaint is that Mr Michael C Thorpe is liable to disciplinary action under Disciplinary Byelaw 4.1(a): if in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy; because: 1. Mr M Thorpe ACA prepared management accounts for A for the six months ended 30 September 2001 that were misleading in respect of the following ways: a. The accounts showed that capital of 320,000 had been introduced during the period by Mr B when this was not introduced until October 2001; b. Mr Thorpe made a round-sum adjustment to turnover and debtors of 25,000 that was unsupported; c. A 60,000 debit balance relating to a VAT bond was included in the accounts that was unsupported. 2. Mr M Thorpe ACA prepared management accounts for A for the years ended 31 March 2002, 2003 and 2004 that were misleading in respect of the following ways: a. Mr Thorpe made material round-sum adjustments to turnover and debtors/wip that were unsupported; b. Bank borrowings and other creditors, including amounts owed to Mrs C, were materially misstated; c. A 60,000 debit balance relating to a VAT bond was included in each years accounts that was unsupported; d. Other overhead items, including entertaining, library costs, bank charges and sundry expenses included unsupported round-sum adjustments. 3

4 3. Mr M Thorpe ACA issued an unqualified Accountant s Report to the Law Society in respect of A (the firm) for the year ended 31 March 2002, when the firm had failed to comply with the Solicitors Accounts Rules (SAR) as follows: a. the firm had not retained the necessary periodic client ledger reconciliations; b. the checks carried out by Mr Thorpe at the two reporting dates of 30 September 2001 and 31 March 2002 were not properly performed as a full listing of client balances was not available at 30 September 2001; c. the review of client files to ensure supporting documentation was available to evidence all transactions was not properly carried out; d. the firm wrongly deposited partner s capital of 150,000 from Mr D and 150,000 from Mr E into the client account in January 2002; the funds did not appear as a reconciling item on the 31 March 2002 client account reconciliation; and were not transferred to the office account until April 2002; e. material receipts from Mrs C that were recorded in the office account each year were not properly investigated. 4. Mr M Thorpe ACA issued an unqualified Accountant s Report to the Law Society in respect of A (the firm) for the year ended 31 March 2003, when the firm had failed to comply with the Solicitors Accounts Rules (SAR) as follows: a. the firm had not retained the necessary periodic client ledger reconciliations; b. the checks carried out by Mr Thorpe at the two reporting dates of 30 September 2002 and 31 March 2003 were not properly performed as a full listing of client balances was not available at 30 September 2002; c. the review of client files to ensure supporting documentation was available to evidence all transactions was not properly carried out; d. material receipts from Mrs C that were recorded in the office account each year were not properly investigated. 5. Mr M Thorpe ACA prepared misleading accounts for A for the year ended 31 March 2003 that disclosed profits of 103,999 that had been understated by 100,000. Hearing date 18 September 2013 Previous hearing date(s) Pre-hearing review or final hearing Complaint found proved All heads of complaint proven None Final Hearing Yes No Sentencing order Severe reprimand; fine of 6,000 4

5 Procedural matters and findings Parties present Represented Hearing in public or private Decision on service Documents considered by the tribunal Mr M Thorpe ACA Mr Thorpe was represented by solicitors (Richard Nelson LLP) and by Counsel (Mr David Morris). The IC was represented by Tracey Owen of Counsel. The hearing was in public. In accordance with regulations 3-5 of the Disciplinary Regulations, the tribunal was satisfied as to service. The tribunal considered the documents contained in the Investigation Committee s (IC s) bundle together with character references and a statement of means from Mr Thorpe. The Investigation Committee s (IC s) case 1. The defendant s firm had a client which was a firm of solicitors called A. A longstanding client since 1988, the defendant became A s engagement partner in April He prepared its management accounts, year end partnership accounts and was the firm s Reporting Accountant for the purposes of the Solicitors Accounts Rules. 2. Between 2002 and 2004, A suffered unauthorised expenditure of over 1,300,000. In January 2011, A s Senior Partner was found guilty of six counts of theft from his firm. His wife was also charged with theft but was unfit to stand trial. Mr B was sentenced to prison for a term of seven years. 3. The thefts from A by Mr B and, it is alleged, his wife, took place while the defendant was A s accountant. 4. The acts and defaults particularised in the complaint, and which relate to the abuse of A by Mr B and, it is alleged, his wife, were committed recklessly by the defendant, who showed a reckless indifference to the risks associated with his role and responsibilities. While no allegation of dishonesty is made against the defendant, he closed his mind to any professional scepticism that he ought to have shown, preferring instead to take on blind trust what he was told by his client. He deliberately failed to inquire as to numerous irregular and odd transactions. Because of this, Mr B and allegedly his wife, were able to steal from A. These are the fundamental causes of the acts and defaults of the Defendant, which are particularised in the complaint and which breach Disciplinary Bye-law 4.1 (a). Issues of fact and law 5. There is one complaint with five heads. At the commencement of the proceedings, the defendant admitted heads 2, 3 and 4. The IC adduced no evidence in support of heads 1 and 5. The tribunal found heads 2, 3 and 4 proved on the defendant s own admission. The tribunal found heads 1 and 5 not proved. The tribunal found the complaint proved, overall. 5

6 Conclusions and reasons for decision 6. It is not alleged, and neither does the tribunal find, that the defendant has acted dishonestly. However, it is plain on the facts which the defendant has admitted, that for a prolonged period of time, the defendant conducted himself with such an absence of professional scepticism and enquiry, and with such recklessness and naivety, that he failed properly to carry out his professional duties towards his client. In thrall to the Mr B and Mrs C, his failures resulted in, or at least contributed towards, the facility with which Mr B and, allegedly his wife, plundered A for their own gain. The defendant failed to engage the very skills and judgments which are designed to protect clients from such criminal behaviour. This is serious professional misconduct. Matters relevant to sentencing 7. The tribunal heard from the defendant in mitigation, as well as from his Counsel. The tribunal considered the Guidance on Sentencing and saw no reason to depart from that, and was satisfied that no lesser penalty should be imposed. The tribunal considered exclusion as a possible penalty, but, taking the mitigation into account, considered that to be too severe. 8. Mitigating factors were: (i) the defendant s contrition; (ii) his clean disciplinary record; (iii) his admission of liability; (iv) the fact that the defendant was deceived by Mr B and his wife and was given false and misleading information by them; (v) the fact that in 2002, the defendant inherited A as a client and with that client, the vexed situation that existed within it at the time. The tribunal also placed weight on the defendant s current means. The fact that the IC did not proceed with two of the five heads of claim was also taken into account, and was considered on the question of costs. 9. Aggravating factors were: (i) the prolonged and repetitive nature of the misconduct of the defendant (including repeated acts of naivety, recklessness, and a disregard of professional scepticism and enquiry); (ii) the defendant s continual disregard of opportunities to confer with his partners and share any concerns; that is, to help himself. Sentencing Order 10. Severe reprimand; Fine of 6,000; Costs of 4,000. The total of 10,000 is to be paid in 24 monthly instalments. The first instalment of 420 is to be paid on 1 November 2013, and equal instalments thereafter with the final instalment to be 340. Decision on publicity 11. Publication with name. Chairman Accountant Member Non Accountant Member Mr Ian Walker FCA Mrs Marianne Neuhoff FCA Mr Peter Williamson Legal Assessor Mr Dominic Spenser Underhill

7 2 Mr David Lawrence Thebridge FCA of 76 Jerrard Drive, Sutton Coldfield, West Midlands, B75 7TJ. A tribunal of the Disciplinary Committee made the decision recorded below having heard a formal complaint on 25 September 2013 Type of Member Member Terms of complaint The complaint is that Mr David Lawrence Thebridge is liable to disciplinary action under Disciplinary Bye-law 4(1) (a) in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy because: 1. Mr D Thebridge FCA on behalf of his firm issued audit reports dated 7 September 2010 and 27 September 2010 for B for the year ended 31 March 2010 and C Limited for the year ended 31 March 2010 respectively, when the firm had failed to comply with an assurance given to ICAEW on 15 February 2010, to arrange for external hot file reviews to be carried out in respect of the next two charity audits completed by the firm and to submit the results of the reviews to ICAEW within 1 month of their completion. 2. Mr D L Thebridge FCA, on behalf of his firm issued an audit report dated 12 September 2011 for B for the year ended 31 March 2011, when the firm had failed to comply with an assurance given to the ARC on 21 April 2011, to arrange for an external hot file review to be carried out in respect of the first charity audit completed by the firm under the clarified International Standards on Auditing and to submit the review results to ICAEW within 1 month of the completion of the review. 3. Mr D L Thebridge FCA, on behalf of his firm, failed to respond to ICAEW correspondence dated 19 September 2011, 25 November 2011, 12 December 2011 and 22 December 2011, contrary to an undertaking given to the ARC on 21 June 2011, confirming that a response would be given to ICAEW correspondence by the deadline specified, or if no date is specified, within 14 days of receipt. Hearing date 25 September 2013 Previous hearing dates Pre-hearing review or final hearing Complaint found proved All heads of complaint proven Sentencing order None Final Hearing Yes Yes Severe Reprimand A fine of 5,000 Costs of 4,600 (all payable by instalments of 800 per month, starting on 1 November 2013). 7

8 Parties present Represented Hearing in public or private Decision on service Documents considered by the tribunal Mr Thebridge appeared in person Mr Benjamin Jowett appeared on behalf of the Investigation Committee ( IC ). As above. The hearing was in public. In accordance with regulations 3-5 of the Disciplinary Regulations, the tribunal was satisfied to service. The tribunal considered the documents contained in the IC s bundle, together with a supplementary bundle which contained documents provided by Mr Thebridge. Introduction 1. Mr Thebridge was at the relevant time a partner at E Limited; at that time E Limited was a five director firm. Three of the other directors had been appointed as responsible individuals. As they were not aware of the matters that are the subject of this Complaint, the IC ultimately (after initially bringing the complaint against the firm) decided to bring the claim against Mr Thebridge personally. Background 2. In October 2005, the Quality Assurance department of ICAEW ( QAD ) visited E Limited and produced a report to the Audit Registration Committee ( ARC ). This was followed up with another visit and report in July 2007, which also resulted in a report to the ARC and in December 2009, when it was concluded that the audit work of Mr Thebridge and another director was of a good standard, but that of a third director showed a number of failings. 3. However, as the third director was due to retire, the ARC decided to allow the firm to retain its audit registration. This was communicated to Mr Thebridge by way of a letter dated 22 January The letter stated the continuation was on the basis of the firm s agreement to submit the results of an external hot review file of the next two charity audits within one month of their completion. 4. On 15 February 2010, Mr Thebridge acknowledged the letter of 22 February 2010, thereby agreeing to the terms proposed (the First Assurance ). 5. Mr Thebridge carried out the following charity audits: i. B report signed on 7 September No hot file review was undertaken. ii. iii. C Limited report signed on 27 September No hot file review was undertaken. D report signed on 20 October An external hot file review was undertaken which indicated a number of areas of concern. 6. On 6 August 2010, prior to reports being signed, Mr Thebridge had ed ARC stating that the B audit was nearing completion and would be sent for external hot file review. Despite chasing by (4 and 22 October 2010) and phone (3 November 2010 and 22 October 2010), Mr Thebridge did not respond to ARC s requests for updates. 8

9 7. Mr Thebridge has thus acted in breach of the First Assurance, which is the first head of complaint. 8. By way of a letter dated 22 March 2011, Mr Thebridge sent ARC the C cold file review and D hot file review. He apologised for the undue delay and explained that he had personal issues relating to the health of his mother. He stated that it had been impossible to fit in a hot file review of C because of pressure from his client and an external reviewer could not be found in time. He stated that a cold file review could not be carried out as the reviewer who had attended the firm in February 2011 was not a charity expert. Finally, he stated that the flaws in the D Limited accounts had been rectified prior to signature. 9. At its meeting on 6 April 2011, ARC decided to continue the firm s audit registration subject to the following conditions: (a) (b) (c) that it provide a written undertaking to reply to correspondence from ICAEW by the deadline specified or if no date is specified, within 14 days of receipt; that the first charity audit completed under the charity ISAs must be subject to external hot file review with the review results being submitted to ICAEW within a month of the review being completed; and that the firm would receive a follow-up QAD visit should the results of the hot file review be unsatisfactory or in the event of undue delay. 10. On 21 April 2011, Mr Thebridge accepted these conditions, thereby giving a Second Assurance. Further, in a letter dated 21 June 2011 he provided a further undertaking to respond to ICAEW s correspondence within 14 days. 11. On 10 May 2011, an investigation case manager wrote to the firm about its failure to comply with the First Assurance. On 19 June 2011, Mr Thebridge replied with a number of explanations. In a letter dated 22 July 2011, in response to the proposed complaint wording sent on 11 July 2011, Mr Thebridge provided further explanation. In summary, the key explanations in both letters were as follows: a. The timetable for work on the audit for both B and C in July 2010 had slipped. b. Birmingham City Council had brought forward the deadline for arts funded applications. c. He did not feel able to ask the clients to delay their AGMs at which the accounts would be approved due to the ICAEW asking for an external review. d. He acknowledged that with hindsight he should have consulted with ICAEW prior to signing any audit reports without having undertaken a hot file review but at the time it had not occurred to him to do so. e. He has been closely involved with both his and his wife s elderly mothers due to their mental health and age related conditions, which led him close to a complete nervous breakdown in f. The agencies which the firm usually used for file reviews did not have charity experts available at the time. g. The first charity audit was subject to external review and stated that, in hindsight, he should have discussed the situation with ICAEW. 12. Between September 2011 and January 2012, ICAEW wrote and ed Mr Thebridge on numerous occasions trying to ascertain the status of the audits on the three charities. However, he did not provide a clear response. Consequently, ICAEW did a search on companies house which revealed the following audits: 9

10 i. B report signed on 12 September ii. C report signed on 3 October iii. D report signed on 3 October On 19 September 2011 and 5 October 2011, ICAEW wrote to Mr Thebridge seeking an update. He replied on 10 October 2011 explaining that the hot file review had been undertaken and he was awaiting the formal report which he expected by the end of the week. 14. On 25 November 2011 and 12 December 2011, ICAEW sent reminder s to Mr Thebridge. On 22 December 2011, ICAEW wrote advising that if he had not responded by 20 January 2012, the matter would be referred to the ARC. No response was received. 15. On 25 January 2012 Mr Thebridge was advised that the failure to reply to s sent on 25 November 2011 and 12 December 2011 and the letter dated 22 December 2011 amounted to a breach of the Second Assurance, which is the third head of the complaint. He was invited to explain why he was discussing a hot file review in his of 10 October 2011 when, by this time, he had already signed the three audit reports listed above. 16. He was advised that these matters would be reported to the ARC on 29 February 2012 and was invited to make further representations. However, he did not respond. On 29 February 2012, the ARC passed Mr Thebridge s failures to comply for investigation. 17. On 20 March 2012, the case manager wrote to Mr Thebridge and received a response on 4 May 2012 from his solicitor, who explained that a hot file review had been undertaken on the audit file for B for the year ended 31 March 2011 but the results had not been forwarded to ICAEW in the one month timeframe. 18. On 16 May 2012, ICAEW received a copy of the B hot file review. However, it was dated 7 October 2011 when audit report had been 12 September The file review includes comments on the additional work that should be recorded before the file could be signed off, even though the audit report had already been issued. ICAEW asked Mr Thebridge and his solicitor for an explanation but none was forthcoming despite chasing letters. 19. On 2 August 2012, the complaint wording was confirmed to Mr Thebridge. The hearing 20. Following the dealing with the preliminary matters, the tribunal asked Mr Thebridge if he admitted the complaint. He admitted all three heads of the complaint in full. Mr Jowett then took the tribunal through the background of the case and made submissions on each head of complaint. 21. The tribunal offered Mr Thebridge the opportunity to respond. He explained that his memory of events was somewhat hazy and said that he had no further points to make other than those relating to mitigation. Later he made the following points in mitigation: (a) (b) (c) (d) (e) he had been under immense emotional strain due to the poor health of his mother; he had been under pressure from the client to sign off on the reports; his drawings had been down; his role in the firm had been under pressure; there were a number of bad debts from major clients; 10

11 (f) (g) (h) he admitted to having lost his judgment; he simply could not face dealing with ICAEW s letters and kept putting off replying; he thus buried his head in the sand; and he realises now that he should not have done so and that he made critical mistakes. 22. The chairman then asked Mr Jowett if Mr Thebridge had a disciplinary history. He confirmed that he did not and made an application for costs. Conclusions and matters relevant to sentencing 23. The tribunal referred itself to the Guidance on Sentencing (August 2013). It considered that the relevant section of the guidance was Section 9 (Audit), (J), Breach of an undertaking. It decided that Mr Thebridge s breach fell within j 2 : reckless/serious negligence. 24. In terms of aggravating factors, the tribunal took into account the fact that Mr Thebridge had failed to follow up clear recommendations of the QAD and that when a hot file review revealed serious errors, he should have realised that there were deficiencies that needed to be addressed. Further, it was not acceptable simply to bury one s head in the sand. The tribunal took into account all the mitigating factors highlighted by Mr Thebridge. In particular, it took into account the following: a. Mr Thebridge had very difficult personal circumstances at the time; b. he was no longer carrying out audits; c. he had admitted to the breaches at an early point; and d. he had shown contrition for his actions. Sentencing Order 25. The tribunal ordered as follows: (a) Mr Thebridge is issued with a severe reprimand. (b) Mr Thebridge is to pay a fine of 5,000. (c) Mr Thebridge is to pay the IC s costs assessed at 4,600. The total of 9,600 is to be paid in 12 monthly instalments. The first instalment of 800 is to be paid on 1 November 2013 and equal instalments thereafter. Decision on publicity Publication with name. Chairman Accountant Member Non Accountant Member Mr Ian Walker FCA Mr Martin Ward FCA Ms Mary Kelly Legal Assessor Mr Jonathan Lewis

12 3 Mr Richard John Pollett [FCA] of H M Prison, The Wolds, Everthorpe, Brough, North Humberside, HU15 2JZ. A tribunal of the Disciplinary Committee made the decision recorded below having heard a formal complaint on 25 September 2013 Type of Member Member Terms of complaint The complaint is that Mr Richard John Pollett is liable to disciplinary action under Disciplinary Byelaw 4(1)(a). in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy because: Between 1 December 2001 and 31 December 2009, Mr R J Pollett FCA conspired to defraud such individuals as might be prepared to hand over monies to him for investment purposes by dishonesty and was convicted on indictment of conspiracy to defraud at Bradford Crown Court on 13 August 2012 Hearing date 25 September 2013 Pre-hearing review or final hearing Complaint found proved All heads of complaint proven Sentencing order Procedural matters and findings Parties present Represented Hearing in public or private Decision on service Documents considered by the tribunal Final Hearing Yes Yes Exclusion no readmission within 10 years. Costs of 2,575 None Mr Benjamin Jowett the Investigation Committee ( IC ) As above. The hearing was in public In accordance with regulations 3-5 of the Disciplinary Regulations, the tribunal was satisfied to service. The tribunal considered the documents contained in the IC bundle together with a letter from Mr Pollett dated 19 June

13 Service 1. Mr Pollett is currently in prison. On 17 June 2013, Mrs Diane Waller of ICAEW, posted a letter to Mr Pollett giving him notice of the hearing. On 19 June 2013, he responded stating that he was unable to attend a hearing, not that I would have attended in any event. On this basis the tribunal was satisfied as to service. Background 2. On 13 August 2012, Mr Richard Pollett, who is now around 71 years old, was convicted on indictment of conspiracy to defraud and making a false or misleading statement and was sentenced to six and a half years imprisonment. The particulars of the offence were are that he (together with an accomplice ) claimed to individuals that monies handed to them would be invested on their behalf. They represented that the investments would be, at all times, guaranteed and secured and returned immediately 14 days notice and after a minimum period of three months and that the investments would achieve a minimum return of 1.5% per month, equating to 18% per annum, with a 2% bonus if invested for a year. 3. The scheme took in excess of 10 million from around 120 investors of which only 4 million was returned to them. Mr Pollett was found to have taken 850,000. The scheme which had been put in place was a Ponzi fraud. 4. The sentencing judge made a number of comments about Mr Pollett of which the following are particularly relevant Mr Pollett: (a) was a common criminal through and through; (b) had defrauded a number of his friends and family; (c) was a junior partner with great vigour; (d) enabled the scheme to operate successfully through his reassurance and presence as a respectable chartered accountant; and (e) abused and betrayed the high standing and respect and trust that a chartered accountant rightly can call upon as he stands in front of those he advises. 5. On 12 December 2012, Mr Pollett wrote to ICAEW setting out why he considered his conviction to be wrong and explaining why he had had three different lawyers on his case. He highlighted what he considered to be errors / inaccuracies in the judge s sentencing remarks. He claims that he did not target investors; rather they were clients of his who he introduced to Mr A. He says that his role as a chartered accountant was not key as it had been running for several years with a number of people investing without having met him. The Hearing 6. Mr Jowett outlined the IC s case. He pointed out that under Disciplinary Bye-law 7.1 a conviction for an indictable offence (which Mr Pollett s was) is conclusive evidence of the commission by a member of an act or default as mentioned in disciplinary Bye law 4(1)(a). He submitted that the tribunal must therefore accept the conduct underlying the conviction as conclusive evidence of the commission of conduct which renders Mr Pollett liable to disciplinary action. 13

14 7. Mr Jowett did however provide the tribunal with a document from the Court of Appeal, Criminal Division, granting Mr Pollett leave to appeal against both his conviction and sentence. Permission was granted sometime in November However, the tribunal had not been provided with any update. Mr Jowett pointed out that Mr Pollett had not sought any adjournment pending any such appeal. 8. Hence, the tribunal found that the conviction remained in place and DBL 7.1 applied. 9. Having found the complaint to be proved, the chairman asked Mr Jowett as to Mr Pollett s disciplinary history. Mr Jowett confirmed that he had none and made an application for costs. Conclusions and matters relevant to sentencing 10. The tribunal had the certificate of conviction before it. It referred itself to the Guidance on Sentencing (August 2013). It considered that Mr Pollett s misconduct fell into Section 8 ( Acts of dishonesty / criminal convictions ) and thus merited exclusion. The tribunal considered whether it was appropriate to order Mr Pollett additionally to pay a fine. It noted that under section 22 ( Guidance on exclusion ) a fine could be made only in the most exceptional cases. However, it did not consider that this case merited a fine. 11. Although not strictly part of the Order, the tribunal recommended that no application for readmission to membership be entertained by ICAEW before 10 years from the date of this Order. Sentencing Order 12. The tribunal ordered as follows: (a) Mr Pollett is excluded (b) Mr Pollett must pay the IC s costs assessed at 2,575. Decision on publicity Publication with name Chairman Mr Ian Walker FCA Accountant Member Mr Martin Ward FCA Non Accountant Member Ms Mary Kelly Legal Assessor Mr Jonathan Lewis

15 4 Mr Allan John Speakman FCA of 62 Priory Road, Sale, Cheshire, M33 2BT. A tribunal of the Disciplinary Committee made the decision recorded below having heard a formal complaint on 22 October 2013 Type of Member Member Terms of complaint The complaint is that Mr Allan John Speakman FCA is liable to disciplinary action under Disciplinary Bye-law 4.1.a in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy because: On or around the end of June 2011, Mr A Speakman FCA signed the audit report on the financial statements of A Plc. for the year ended 31 December 2010 when: a. he had not controlled or supervised the audit work; b. he did not have the appropriate authorisation from the firm to sign the report; c. he did not know whether the audit work had been completed; in addition d. he backdated the audit report to 7 May 2011; and e. signed the report in such a way that it appeared to have been signed by Mr B the responsible individual in respect of the audit. Hearing date 22 October 2013 Previous hearing date Pre-hearing review or final hearing Complaint found proved All heads of complaint proven Sentencing order Parties present Hearing in public or private Decision on service Documents considered by the tribunal None Final Hearing Yes Yes Severe Reprimand Fine of 2,000 Costs of 1,500 Mr Jowett for the Investigation Committee ( IC ) Mr Speakman The hearing was in public In accordance with regulations 3-5 of the Disciplinary Regulations, the tribunal was satisfied to service. The tribunal considered the documents contained in the IC s Bundle as well as documents provided before the hearing. 15

16 Findings on preliminary matters None Introduction 1. Mr Speakman was a principal in a firm. He was a designated Responsible Individual ( RI ) within the firm until December The reason he ceased to be an RI is not related to this matter. Background 2. In December 2011, the firm was subject to a Quality Assurance Department ( QAD ) visit. QAD produced a report following its visit. Subsequently, the firm provided QAD with a copy of a letter dated 15 February 2012 from Mr Speakman to Regulatory Support, self-reporting the fact that he had signed an audit report for a client where he was not the designated RI. Mr Speakman did not provide any reason as to why he or the firm failed to report this matter until February The firm conducted its own internal investigation into why Mr Speakman had signed the audit report. The firm s Audit Compliance Principal provided a copy of their final report on 6 December The report set out the following findings. Mr Speakman was the client relationship partner for A Plc. However, another principal in the firm, Mr B, was the appointed RI for this client. At a Board meeting held on 6 May 2011, the directors signed and approved the financial statements for the year ended 31 December They also indicated in the financial statements that the audit report was signed at the same time (the date of the Board meeting). The accounts were then printed and circulated to some 4,500 of A s members, prior to the AGM that was scheduled for 1 July On 25 June 2011, Mr Speakman attended another Board meeting to discuss various nonaudit matters and he became aware that the directors did not have a copy of the financial statements that was signed by the auditors. 6. The deadline for filing of A s financial statements for the year ended 31 December 2010 was 30 June As Mr Speakman could not get hold of Mr B, he signed the audit report and submitted the financial statements to Companies House on 29 June It is difficult to make out what the signature on the report represents but it is not Mr Speakman s signature as it appears in other documents. Mr Speakman did not date the audit report on the date that he signed it (around June 2011) but backdated it to 7 May In early July 2011, Mr B realised that he had not filed A s financial statements, made enquiries and discovered that the accounts had already been filed with Companies House with an audit report signed apparently in his name. The firm took disciplinary action against Mr Speakman. 8. Mr Speakman made representations in letters dated 20 July 2012, 16 August 2012 and 20 September He explained that he had dealt with this client for 15 years in various positions. As client relationship partner, he was informed that the accounts would be available for the directors to approve at their board meeting on 6 May Hence, he believed that the audit work was concluded in early May It was at a meeting at the end of June 2011 that he discovered that the client did not have signed accounts. He tried to speak to Mr B but was unable to do so. He signed the audit report himself believing that the audit was complete and in order for the client to be able to file its accounts with Companies House by the statutory deadline. 16

17 9. Mr Speakman s justification for his actions was that he found himself in a difficult position with the client, who he thought would not understand why he was unable to sign the audit report. At the time he was also under considerable pressure dealing with other clients. He was unfortunately involved in a car accident on 27 June 2011 which he considers may have affected his judgment. 10. He claims that he backdated the report because he believed that the RI would have completed all of the audit work before the board meeting to approve the accounts and prior to the accounts being sent for printing (if there was an issue then the printing of the accounts would have been delayed and the AGM re-arranged to a later date). 11. However, in retrospect, having had longer to think about it, Mr Speakman accepted that it was clear he had made an error of judgement when he signed the audit report. 12. On 11 January 2013 ICAEW s case manager wrote to Mr Speakman and invited his final representations. He did not respond. The complaint wording was subsequently amended and Mr Speakman was notified of the change of the complaint wording when a copy of the IC report was sent to him. The IC s Written Submissions 13. It was of great concern that Mr Speakman signed the audit report when he had not controlled or supervised the audit work, was not authorised by the firm to sign it and in signing the audit report, did not know whether the audit work had been completed. The fact that he had backdated the report was also a serious matter, not to mention that it appears to have been signed in Mr B s name. 14. Mr Speakman would have been aware that he was not permitted to sign the audit report for this client but appears to have ignored the firm s procedures and signed it anyway. He also failed to take adequate steps to check whether the audit work had been completed, instead relying on the fact that accounts had been circulated to members in advance of the AGM as being indicative that the audit work had been done. 15. However, the IC noted that Mr Speakman has been disciplined by the firm for his actions and that he is no longer a RI within the firm. Furthermore, Mr Speakman has accepted that it was an error of judgment which was he attributes to the pressure he faced to ensure the client did not miss its Companies House filing deadline. The Hearing 16. Mr Speakman admitted the Complaint. Mr Jowett took the tribunal through the facts of the matter and repeated the IC s written submissions. The Chairman then invited Mr Speakman to make any submissions that he may have. Mr Speakman began by apologising. 17. His primary points were as follows. First, he denied that he had in any way tried to pass off the signature as being that of Mr B : he stated that he had signed it in the name of the firm. Second, it was unfair to claim that he had signed the audit report when he knew little about it. He explained that he actually had a great deal of knowledge about this client having dealt with it for 20 years (he was the RI for around eight years before he moved because of the firm s rotation policy). As the client relationship partner, he still attended meetings, knew the nature of the client well, was involved in the preparation of accounts and was able to give direction to the auditors. Whilst he accepted that he should not have signed the report, he wanted to make it clear that he had done so on an informed basis. He confirmed that he would not have done so if he had been able to locate Mr B. 17

18 18. Mr Speakman then repeated his points in mitigation. The tribunal found the complaint proved on admission. Mr Jowett confirmed that Mr Speakman did not have a previous disciplinary record. He applied for the IC s costs. The tribunal then retired to consider its decision. Conclusions and Sentencing 19. The tribunal referred itself to the Guidance on Sentencing (August 2013). It considered that the relevant section of the guidance was section 9 (Audit) E (Audit Reports signed by a non- RI). It considered that Mr Speakman s actions fell within e 1 in that there was no denying that his action had been deliberate. 20. The tribunal considered that the fact that he had previously been an RI and thus should have known the significance of signing the report to be an aggravating factor. Further, it considered that Mr Speakman should have sought help within his firm, perhaps by speaking to the manager partner, before taking such drastic action. 21. The tribunal took into account a number of mitigating factors, including all of those raised by Mr Speakman. Additionally, it noted that his actions had been motivated by anxiety to act in the best interest of the client and that there was no subsequent need to amend the accounts that he had wrongly signed. It noted that he had already been disciplined and fined by his firm and acknowledged that he had self-reported. 22. In those circumstances, the tribunal decided to make an order for a fine of 2,000 with a severe reprimand. Sentencing Order 23. The tribunal ordered as follows: (a) Mr Speakman is given a severe reprimand. (b) He is ordered to pay a fine of 2,000. (c) He is ordered to pay the IC s costs assessed at 1,500 The total of 3,500 is to be paid by twelve monthly instalments. The first instalment of 300 is to be paid by 1 December 2013 with ten equal instalments of 300 thereafter and a final payment of 200. Decision on publicity Publication with name Chairman Accountant Member Non Accountant Member Mr Ian Walker FCA Mr Martin Ward FCA Mr Richard Farrant Legal Assessor Mr Jonathan Lewis

19 5 Mr Adam Kenneth Woricker ACA of Ashliegh, Main Road, Woodham Ferrers, Chelmsford, CM3 8RN A tribunal of the Disciplinary Committee made the decision recorded below having heard a formal complaint on 22 October 2013 Type of Member Member Terms of complaint The complaint is that Mr Adam Kenneth Woricker is liable to disciplinary action under Disciplinary Bye-law 4.1.c committed a breach of the bye-laws or of any regulations or has failed to comply with any order, direction or requirement made, given or imposed under them because: From 4 April 2013 until 24 June 2013 Mr A Woricker ACA has failed to respond in full to a letter dated 15 March 2013 issued under Disciplinary bye law 13. Hearing date 22 October 2013 Pre-hearing review or final hearing Complaint found proved All heads of complaint proven Sentencing order Procedural matters and findings Parties present Hearing in public or private Decision on service Documents considered by the tribunal Final Hearing Yes Yes Reprimand Fine of 1,300 Costs of 1,049 None Mr Jowett for the Investigation Committee ( IC ) The hearing was in public In accordance with regulations 3-5 of the Disciplinary Regulations, the tribunal was satisfied to service. The tribunal considered the documents contained in the IC s Bundle and supplementary correspondence. Service 1. At the outset of the hearing, the Chairman asked Mr Jowett for proof of service. Mr Jowett provided copies of an sent on 21 October 2013 by Mr Woricker. The title of the referred to the hearing date. On that basis, the tribunal was satisfied as to service (Mrs Waller of ICAEW had also provided a witness statement as to service). 19

20 The Complaint 2. The complaint is that Mr Woricker had failed to reply to ICAEW s letter dated 15 March The letter was written following a number of letters written to Mr Woricker and a telephone conversation with him on 30 January 2013, when he confirmed he would reply to ICAEW s correspondence. 4. The underlying complaint relates to a concern that Mr Woricker is engaged in public practice but does not have professional indemnity insurance cover. Mr Woricker does have a practising certificate. Conclusions and Sentencing 5. Mr Woricker had provided most of the information sought from him by way of his of 21 October The Complaint was taken as read and the tribunal found it to be proved. Mr Jowett informed the tribunal that Mr Woricker did not have a disciplinary record and made an application for costs. 7. The tribunal referred itself to the Guidance on Sentencing (August 2013). It considered that the relevant section of the guidance was Section 14 (Failure to cooperate generally and to comply with a DBL13 requirement). Further, it considered that the response had been provided between the date of the IC preferring the complaint and the date of the hearing. In terms of aggravating factors, the tribunal noted that the information had been provided at the very last minute. 8. The tribunal saw no reason to depart from the Guidance on Sentencing and ensured that no lesser penalty than the one made was appropriate. Accordingly the tribunal considered it appropriate to give Mr Woricker a reprimand and fine of 1,300. Sentencing Order 9. The tribunal ordered as follows: (a) Mr Woricker is given a reprimand. (b) He is ordered to pay a fine of 1,300. (c) He is ordered to pay the IC s costs assessed at 1,049. Decision on publicity Publication with name Chairman Accountant Member Non Accountant Member Mr Ian Walker FCA Mr Martin Ward FCA Mr Richard Farrant Legal Assessor Mr Jonathan Lewis

21 APPEAL COMMITTEE PANEL ORDERS 6 No publicity of name A panel of the Appeal Committee made the decision recorded below having heard an appeal on 7 November 2013 Type of Member: Member Date of meeting of the Disciplinary Committee Tribunal (DCT): 16 July 2013 Terms of complaint found proven before the DCT: The complaint was that the member is liable to disciplinary action under Disciplinary Bye-law 4(1)(b) because he: performed his professional work or the duties of his employment, or conducted his practice, inefficiently or incompetently to such an extent, or on such a number of occasions, as to bring discredit on himself the Institute or the profession of accountancy. because: 1 The member failed to properly attend to the tax affairs of certain clients in that he failed to submit to HM Revenue & Customs the clients tax returns for certain specified years. 2 The member failed to respond to a subsequent professional enquiry and request for handover information letter from another firm of accountants. Decision of the DCT: The DCT imposed the following sanctions: a) Reprimand; b) a remedial order under Disciplinary Bye Law 23.1b, that the defendant repay the fee charged to the clients of ; c) a fine of 1,200; and d) costs of 1,200. Grounds of appeal: The fact that the appellant was suffering from chronic depression at the relevant times should have been treated as a defence to the charges rather than merely as mitigation. Decision of Appeal Panel: The appeal was treated as an appeal against the sanction imposed, which was reduced to a fine of

22 Procedural matters and findings: 1 The appellant appeared on his own behalf, and Mr Ben Jowett appeared for the Investigation Committee (IC) 2 The hearing was in public. Reasons for decision: 1 The appellant appealed against the decision that the DCT reached on 12 June 2013, in his absence, on charges under Disciplinary Bye-law 4(1)(b) of (1) failing properly to attend to the tax affairs of certain clients and (2) failing to respond to communications from other accountants subsequently engaged by those clients in place of the appellant. The appellant had effectively admitted these charges. The DCT took into account as an aggravating factor that the clients had lost a material amount of money as a result of the appellant s failure to attend to their tax affairs, and as a mitigating factor that the appellant had been suffering from chronic depression. The sanctions imposed by the DCT were that the appellant be reprimanded, that he repay to the clients a fee of , and that he pay a fine of 1,200 and costs of 1, The appellant appealed by letter dated 17 July 2013, arguing in essence that the fact that he was suffering from depression was not only mitigation, but a complete defence to the charges, which he contended should have been dismissed accordingly. However, at the hearing of the appeal the appellant immediately agreed that this ground of appeal was unsustainable. He accepted the analogy that was put to him that if he had been charged with the criminal offence of driving without insurance, and had failed to renew his insurance because he had been suffering from depression, he would still have been convicted of that offence, and depression would have been mitigation only. 3 We accordingly treated the appeal as an appeal against the sanctions imposed by the DCT. On the face of it, those sanctions were well within the discretion of the DCT, and ordinarily the Appeal Panel (AP) would without hesitation uphold those sanctions. However, the circumstances of the case as they appeared at the appeal hearing were quite different from the circumstances as they appeared to the DCT, through no fault of the DCT. Ben Jowett as advocate on behalf of the Investigation Committee conceded that the AP has a discretion to reduce a sanction without having to find that the DCT was in error, if satisfied that different circumstances need to be taken into account. So we stress that we consider that the decision of the DCT cannot be faulted, and that nothing in these reasons is to be read as critical of the DCT. 4 We are satisfied that the appellant s depressive illness was the reason he did not appear before the DCT. Indeed, it clearly required impressive courage for the appellant to appear before the AP at all. He told us with obvious sincerity that his illness had come as a shock to him, after a considerable time in which he had not understood that he was ill. He was obviously very remorseful at having let his clients down. Since realising that he was ill he has voluntarily reduced his practice, and even when clients have been recommended to him, he declines to act for them if he feels unable to cope. He is receiving treatment for his illness, and he realises that he must continue with that treatment. He has repaid to the clients the fee of he was ordered by the DCT to repay. We were convinced that he is currently doing his best to cope, and is succeeding. 22

23 5 These are very different circumstances from those that the DCT had before them. Having seen the appellant, it seems to us to be right to take a very much more lenient view of him than the DCT took of him in his absence. This is not intended to encourage other members of ICAEW who have failed to deal with their clients affairs and have failed to answer correspondence to argue that they must have been suffering from depression. In this case we were left in no doubt that this appellant is entirely genuine. 6 In the exceptional circumstances of this case, and although we do not in any way criticise the DCT s approach as regards the reprimand, fine and costs it imposed, we nevertheless believe it to be just and appropriate to replace the DCT s sanctions with an order simply that the appellant pay a fine of 100, and a direction that there be no publicity identifying the appellant. Chairman Accountant Member Accountant Member Accountant Member Mr Peter Susman Mr Christopher Harrison FCA Mr Kevin Mawer FCA Mr David Ingram FCA Non Accountant Member Ms Lesley Cartwright

24 CESSATION OF MEMBERSHIP 7 The following individual has ceased to be a member because of failure to pay outstanding fines and costs: Mrs Catherine Ann-Marie Baynes of Southampton The ICAEW takes all necessary steps including legal proceedings to recover the money it is owed. INVESTIGATION COMMITTEE CONSENT ORDERS 8 NO PUBLICATION OF NAME Consent order made on 1 November 2013 With the agreement of a member, the Investigation Committee ordered that the member pay costs of with respect to a complaint that: On 14 May 2013 the member entered into an Individual Voluntary Arrangement (IVA) under the provisions of the Insolvency Act The Committee directed that the member should not be identified by name when the order is publicised Mr Robert Andrew Dawes FCA Consent order made on 8 November 2013 With the agreement of Mr Robert Andrew Dawes of 7 Kenton Mews, Bristol, BS9 4LT, the Investigation Committee made an order that he be reprimanded, fined 6,000 and pay costs of 1,800 with respect to a complaint that: Mr R Dawes FCA was subject to a conflict of interest in that he assisted with the preparation of a Business Profile dated July 2007 in connection with the refinancing of X Limited but failed, in or around November 2007, to disclose to the commercial finance brokers involved or other parties that he had a material claim against the company of, circa, 80,