ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

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1 ADMISSIONS AND LICENSING COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Andrew Nicholas Passer Heard on: 29 October 2015 Location: ACCA Head Offices, 29 Lincoln s Inn Fields, London WC2A 2EE Committee: Mrs Judith Way (Chairman), Mr John Hamilton (Accountant) and Ms Helen Kitchen (Lay) Legal Adviser: Andrew Granville Stafford Persons present and capacity: Mr Andrew Passer (Member) Mr Hamish Common (ACCA Case Presenter) Ms Sophie Cubillo-Barsi (Committee Officer) Observers: None PRELIMINARY 1. The Admissions and Licensing Committee ( the Committee ) convened to consider a report relating to Mr Andrew Nicholas Passer FCCA. Mr Passer appeared without representation. ACCA was represented by Mr Common. 2. The Committee had received prior to the hearing a bundle of papers (pages 1 to 11), an additional bundle (pages 12 to 23) and a service bundle (pages 1 to 14). At the hearing two further bundles of documents were presented in evidence: pages 24 to 41 which contained extracts from the audited accountants for Club A Limited and pages 42 to 57 which contained a compliance questionnaire which Mr Passer completed on 25 May APPLICATION AND BRIEF BACKGROUND 1

2 3. Mr Passer is a Fellow of ACCA and was admitted to membership in He is a sole practitioner trading as Passer & Co ( the Firm ) and has a practising certificate with audit qualification. 4. The Committee was invited to consider making an order under Regulation 5(2) of the Chartered Certified Accountants Authorisation Regulations 2014 ( the Authorisation Regulations ) in respect of Mr Passer s audit certificate. ACCA invited the Committee to withdraw Mr Passer s audit registration on three grounds: (i) that he appears to have supplied false, inaccurate or misleading information concerning the holder of the certificate to ACCA (Reg 5(2)(b)); (ii) that he has committed a material breach of a rule or regulation to which he was subject in the carrying on of the activities to which the certificate relates (Reg 5(2)(f)); (iii) that he is not a fit and proper person to hold a certificate within the meaning set out in the Global Practising Regulations ( GPRs ) (Reg 5(2)(g)). In determining whether someone is a fit and proper person to hold a certificate the Committee can take into account whether he has given ACCA false, inaccurate or misleading information. 5. The Firm was subject to desktop monitoring by ACCA in respect of its audit work in At that time the Firm had no audit clients. 6. Mr Passer stated on his annual returns for the years 1999 to 2010 inclusive that the firm had no audit clients, save for the years 2002 and 2004 when the returns disclosed one audit appointment. 7. ACCA carried out a monitoring visit to the Firm on 7 June The compliance officer found deficiencies in the Firm s audit work although overall concluded that, subject to increasing PII cover, the Firm satisfied the requirements for registered auditor status. The compliance officer s report gave guidance on how the deficiencies may be remedied and contained a warning that failure to do so may jeopardise the Firm s audit registration. 8. The Firm was subject to desktop monitoring in ACCA s case is that Mr Passer gave ACCA an undertaking on 25 May 2009 that neither he nor his firm carried out 2

3 any audit work and did not hold any audit appointments at that time. ACCA s case is that this undertaking was false in that: the Firm had continued to act as auditor to Club A Ltd and in particular Mr Passer had signed the audit report for the year ended 30 September 2013; the Firm had acted as auditor to B Ltd for the year ending 30 June In its of 21 May 2015, ACCA told Mr Passer that he must have available at the monitoring visit files of all audits undertaken in the last 24 months. The monitoring visit took place on 30 June ACCA's case is that: Mr Passer informed the compliance officer that he had not carried out the audit of Club A Ltd since 2006 and that the signature on the 2013 accounts was not his. He said that the audit report may have been submitted in error as this was not an audit assignment and that an employee may have signed his name on the report; Mr Passer said he had shredded the files for B Ltd for the years 2008 and It is alleged that Mr Passer has breached the following GPRs: Practising Regulation 19(1) in Annex 1 to the GPRs which requires holders of an audit qualification to supply ACCA with all necessary information to comply with its statutory duties under the Companies Act GPR 14(2) which requires a member to supply ACCA with all the necessary information to enable it to complete its monitoring process effectively. Section B6 of the Code of Ethics and Conduct ( CEC ) which requires a member to retain audit working papers for a minimum period of seven years. Section of the CEC which provides that an accountant shall not be associated with reports or returns which contain a materially false or misleading statement. DECISIONS ON APPLICATION AND REASONS 11. The Committee heard submissions from Mr Common and Mr Passer. During the course of his submissions, Mr Passer made it clear to the Committee that he wished 3

4 to relinquish his audit qualification. He told the Committee that he currently had not audit clients and was not intending to renew his audit qualification at the end of the year. After an adjournment to allow instructions to be taken, Mr Passer clarified that he was inviting the Committee to exercise its power under Authorisation Regulation 5(2)(a) to withdraw his audit certificate. Mr Common confirmed that ACCA would not oppose this application and would, if the application were granted, invite the Committee not to make any findings in respect of its application under Regulations 5(2)(b), (f) and (g). 12. The Committee acceded to Mr Passer s application. The Committee bore in mind its duty to act in the public interest. Whilst there are serious allegations in this case, the Committee considered that the public would be adequately protected by an order which removes Mr Passer s qualification to do audit work. The Committee was aware that the allegations in this case concerning the supplying of false information to ACCA are subject of a separate disciplinary investigation. The Committee considered that the appropriate forum to deal with such allegations, if there is a case to answer in respect of them, is the Disciplinary Committee. Allowing Mr Passer s application would afford the necessary protection for the public and would not prejudice either party s case in any subsequent disciplinary hearing. 13. The Committee was invited by Mr Common to exercise its power under Regulation 6(18) of the Authorisation Regulations to specify a minimum period within which Mr Passer may not re-apply for audit registration. Mr Passer did not oppose the application in principle and indicated that he did not intend to do audit work again. The Committee therefore decided it was appropriate to exercise this power and directed that no future application for audit registration be considered for a minimum period of 18 months so that Mr Passer can reflect on his audit practice. ORDER 14. The Committee ordered pursuant to Authorisation Regulation 5(2)(a) that: i. Mr Passer s practising certificate with audit qualification and his firm s auditing certificate be withdrawn upon his own application and he be issued with a practising certificate; and 4

5 ii. No future re-application for audit registration by Mr Passer or by a firm in which he is principal would be considered for a period of at least 18 months from the date of this order. EFFECTIVE DATE OF ORDER 15. Mr Passer told the Committee that he currently has no audit clients and that he did not object to the order coming into effect immediately. The Committee therefore considered it was in the public interest to direct that this order shall take immediate effect. PUBLICITY 16. The Authorisation 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, as to what form the news release shall take and, in exceptional circumstances, to direct that the relevant person is not named. 17. Mr Passer contended that the effect that local publicity would have on his practice was an exceptional circumstance justifying anonymity. The Committee did not agree, particularly as the news release can make clear that Mr Passer still holds a practising certificate. Therefore the Committee ordered that a news release be issued to ACCA s website and to the local press referring both to Mr Passer and his firm Passer & Co by name and making it clear that his qualification to act as an auditor was withdrawn at his request by the Admissions and Licensing Committee and that he retains a practising certificate without audit qualification. Mrs Judith Way (Chairman) 29th October