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 Mahe Heard on: 20 January 2015 Location: Committee: Legal Adviser: Persons present and capacity: ACCA Offices, 29 Lincolns Inn Fields, London, WC2A 3EE Mr Graham White (Chair), Mr Ian Threadgold (Accountant) and Mr Garrett O Reilly (Lay) Mr David Marshall Miss Sarah Cawley-Wilkinson (Case Presenter) Ms Kathryn Reece (Committee Officer) 1. The Committee heard an allegation of misconduct against Mr Mahe. Miss Cawley-Wilkinson appeared for ACCA. Mr Mahe attended by telephone and represented himself. PRELIMINARY APPLICATION 2. At the start of the hearing Miss Cawley-Wilkinson was invited to particularise the facts said to amount to misconduct. She formulated an amendment to the Allegation which the Committee allowed. It was satisfied that Mr Mahe would not be prejudiced. ALLEGATION AND BRIEF BACKGROUND 3. Mr Mahe is a sole practitioner. His firm is Chandler Backer & Co. He and his firm used to hold audit qualifications but these were relinquished in January On 6 July 2011 the Regulatory Assessor had made an order in relation to Mr Mahe s audit work as a result of unsatisfactory monitoring visits. The relevant provision of the order required Mr Mahe to have all future audit work on three nominated clients reviewed by a training company before reports were signed ( hot reviews ). One of the companies was Company A. Mr Mahe has never disputed that he signed an audit report for Company A on 1 May 2012 without having submitted it for hot review.

2 5. Accordingly he faced the following Allegation (as amended): Allegation Pursuant to bye-law 8(a)(i) Mr Mahe is guilty of misconduct by failing to comply with a decision made by the Regulatory Assessor on 6 July 2011 in that he did not have the audit file for Company A for the year ending 30 June 2011 hot reviewed prior to signing the audit report on 1 May DECISION ON FACTS AND ALLEGATION AND REASONS 6. At the start of the hearing Mr Mahe formally admitted the facts set out in the Allegation and the Committee found them proved. The Committee went on to consider, as a matter of judgment, whether the facts found proved amounted to misconduct. Mr Mahe gave information about the circumstances in which his breach of the order occurred, in both written and oral submissions, which the Committee accepted. The Committee found him to be consistent and credible. He has cooperated fully with ACCA s investigation and has been frank in his admissions. 7. Mr Mahe said that although he had known that Company A was subject to hot reviews, he never expected that he would have to perform another audit for that company. He expected it to be dissolved. In the event he was approached unexpectedly by the company s administrators and asked to perform an urgent audit to put the company into good standing. He estimated that he had about a couple of weeks to do this. He says that he completely overlooked the requirement for hot review. He did not think about the order that had been made. He did not realise that he was in breach of the order until the next monitoring visit in October He said that it was not an intentional disregard of the order. It was an innocent mistake. He pointed out that he was a sole practitioner and he accepted with hindsight that he had been under-resourced. The Committee is aware that Mr Mahe has some medical problems but there was no evidence offered that these had been a causative factor. 8. The Committee accepted that Mr Mahe had not been dishonest and had not acted in wilful disregard of his professional regulator, nor was he reckless. It accepted that he may have overlooked the regulatory order when auditing Company A. On the other hand he was well aware of the importance of the regulatory order at the time when it was imposed, not least because he had

3 previously been subject to an order for hot reviews. In these circumstances, there was an obligation on him to make reliable arrangements to ensure that the order would be complied with should one of the nominated clients be audited. He had staff to assist him and he could have put measures in place to ensure that they assisted him in complying with the order. He admitted that no relevant procedures were documented. The error made by Mr Mahe was only about six months after the order was made. Furthermore, Mr Mahe had very few audit clients. His failure to bear the order in mind when doing the audit was inexcusable. 9. The Committee considered that Mr Mahe s failures brought discredit to ACCA and to the profession. They tended to undermine the system of regulation and therefore affected public confidence in that system. The Committee concluded that the facts found proved were properly categorised as misconduct. The Committee found the Allegation proved. SANCTION AND REASONS 10. The Committee heard that the Admissions and Licensing Committee had made an order in February 2014 imposing conditions should Mr Mahe apply for an audit certificate in future. Apart from that, there are no previous ACCA findings against him. Mr Mahe told the Committee, and it accepts, that he has been a member of ICAEW since 1980 and that there had been no disciplinary proceedings against him by that body. 11. Mr Mahe gave the Committee further information about his personal circumstances, including evidence heard in private about his health. 12. The Committee considered the options available to it in increasing order of seriousness, taking account of ACCA s Guidance for Disciplinary Sanctions. 13. The Committee has the power to take no further action. As already stated, the misconduct in this case tended to undermine the system of regulation and therefore affect public confidence. Although the misconduct in this case had no direct adverse consequences, the Committee considered that an order of some kind was necessary to mark the importance of complying with regulatory orders. 14. The next available sanction relevant in this case is admonishment. Virtually all of the factors set out in the guidance are present in this case. The misconduct had no direct effect. There was no known loss or adverse effect to any

4 individual person. Mr Mahe admitted his breach of the order at the earliest opportunity. He understood the seriousness of the matter and had apologised. This was an isolated incident which was not deliberate. Since the incident Mr Mahe has relinquished his auditing certificate. So he has taken corrective steps and no issue about the quality of his subsequent work arises. Mr Mahe did not submit any references or testimonials. However, the Committee took account of the fact that its finding of misconduct is the only such finding in a long career. 15. In addition the Committee took into account that Mr Mahe s misconduct had not been for personal gain and that his health and pressure of work had been factors. 16. The Committee did not consider that Mr Mahe presented a risk to the public and ACCA did not suggest that he did. The Committee noted that there was an order in place from the Admissions and Licensing Committee which would meet any concern about Mr Mahe resuming audit practice. 17. The Committee concluded that the misconduct in this case was at the lower end of the scale and that admonishment would be a sufficient sanction to mark the seriousness of this case. COSTS AND REASONS 18. Miss Cawley-Wilkinson applied for costs amounting to 2,675. Mr Mahe did not oppose the order. The Committee considered that ACCA had been successful and should be awarded its costs. It determined that the amount claimed was reasonable. It awarded costs as claimed. PUBLICITY 19. 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 to, and discretion in exceptional circumstances to direct that the relevant person is not named. 20. The Committee concluded that there were no exceptional circumstances in this case. It ordered that a news release be issued to ACCA s website and to the local press referring to Mr Mahe by name.

5 Graham White Chairman 20 January 2015