DISCIPLINARY ORDERS AND REGULATORY DECISIONS

Transcription

1 DISCIPLINARY ORDERS AND REGULATORY DECISIONS Date published: 4 November 2015 Disciplinary orders Disciplinary Committee tribunal order 1 Mr Paul Gerard Retout FCA 2 Investigation Committee consent orders 2 Mr David Mark Newborough FCA 6 3 Mr Leigh Maurice Renak FCA 7 4 Mr Rajaram Waran FCA 7 5 Mr David John Bryant FCA 8 6 Mr Alan Duncan Green ACA 9 7 Mehta & Tengra 9 8 KJA Kilner Johnson Limited 10 9 Mr James Ritchie Kilner FCA Mr Brian James Whale FCA Barlow Andrews LLP 11 Regulatory orders Audit Registration Committee 12 Blandfords & Co Limited C B Heslop & Company Limited 12 1

2 DISCIPLINARY COMMITTEE TRIBUNAL ORDER 1. Mr Paul Gerard Retout [FCA] of Unit 4, Ffordd yr Onnen, Lon Parcwr Business Park RUTHIN, CLWYD, LL15 1NJ. A tribunal of the Disciplinary Committee made the decision recorded below having heard a formal complaint on 1 September 2015 Type of Member Member Terms of complaint 1. Between 15 January 2007 and 31 May 2009 Mr Paul Retout FCA dishonestly claimed fees of 59, from A LLP. Mr Retout is therefore liable to disciplinary action under Disciplinary Bye-law 4.1a. 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 Hearing date 01 September 2015 Previous hearing date(s) None Pre-hearing review or final hearing Complaint found proved Final Hearing Yes All heads of complaint proven Sentencing order Yes Exclusion Procedural matters and findings Parties present Represented Hearing in public or private Decision on service Documents considered by the tribunal Paul Retout Investigation Committee (IC) Ms Joester of ICAEW represented the IC 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 bundle together with documents from Mr Retout 2

3 Issues of fact and law 1. Mr Retout was a partner at A LLP during the period of the complaint. Between 15 January 2007 and 31 May 2009 he claimed fees and expenses from the company of 59, to which he was not entitled. In 2009 the company discovered the false claims and reported the matter to the police. Mr Retout was arrested in October 2009 and subsequently charged with four counts of theft and one of fraud. 2. Mr Retout denied the charges, and indicated a not guilty plea. The case was eventually listed for a contested trial in September In addition to the criminal charges A brought civil proceedings in the High Court against Mr Retout. These proceedings were concluded by Agreement in September 2013, immediately before the criminal trial was due to commence. 4. Prior to the commencement of the criminal trial on 24 September 2013 negotiation took place between the Crown Prosecution Service and Mr Retout and his counsel. The result of that negotiation was that Mr Retout pleaded to one count of fraud contrary to s1 Fraud Act The other counts on the indictment were left to lie on the file. They have not been proceeded with, and there is no indication that they will be proceeded with in the future. 5. Mr Retout entered a basis of plea, setting out the basis upon which he entered his guilty plea to the offence. In this document he admitted issuing a total of 13 invoices:- which were dishonest, in that he claimed fees for work which was either not done or done but not authorised in advance by A. The total amount obtained thereby was 59, His behaviour was agreed to be:- not fraudulent from the outset. He had carried out other legitimate work for A in 2008, 2007 and previously. 7. Mr Retout was found guilty of fraud on his own admission, and was subsequently sentenced to 16 months imprisonment. In sentencing the Judge commented that:- I ve already said that you were not acting dishonestly from the outset, but you became dishonest when you later invoiced and obtained money for work that you hadn t done and to which you were not entitled; money obtained from the partnership. You numerated in a different way from other parties who worked in that partnership. 8. The Judge took into account that the criminal proceedings had been protracted and that Mr Retout had settled civil proceedings, and had pleaded to the criminal pleadings immediately after settling the civil proceedings. 9. Mr Retout appealed against sentence, but his appeal was unsuccessful. Conclusions and reasons for decision 10. The tribunal found the complaint proven on Mr Retout s own admission. The tribunal took into account that the conviction of an indictable under s1 Fraud Act 2006 was conclusive evidence of the discreditable conduct for the purposes of Disciplinary Bye-law 4(1)(a), further to Disciplinary Bye-law Thus, in dishonestly claiming fees of nearly 60,000 from A Mr Retout has committed an act likely to bring discredit upon himself, the profession of accountancy and/or ICAEW and is therefore in breach of Disciplinary Bye-law 4(1)(a). 3

4 Matters relevant to sentencing 12. Mr Retout had no prior disciplinary record. He had indicated an intention to admit the complaint from an early stage in ICAEW s investigation. 13. Mr Retout had explained the circumstances of the criminal investigation, criminal proceedings and conviction in seeking to argue that he had only pleaded guilty to fraud in order to avoid further significant legal costs and in the hope of the case being dropped and avoiding imprisonment. He maintained his innocence. 14. The tribunal was however bound to treat the fact of the conviction as proof of an act likely to bring disrepute the profession of chartered accountancy, Mr Retout and the Institute. He had moreover admitted in his plea of guilty to the Crown Court, that he had acted dishonestly, albeit not from the outset of the work for A. As such the tribunal did not consider it appropriate to sentence on any other basis than that his actions were deliberate. 15. The tribunal noted the following mitigation. Whilst in prison, he had set up seminars on managing tax affairs. He was now involved with the individual stakeholder forum by invitation from the HMRC. The tribunal understood that he provided tax assistance to prisoners through a Community Interest Company he had set up and that he was passionate about the work he was doing for offenders. The tribunal was very impressed with the steps he had taken to put his life back on track and to make a positive contribution to civil society. 16. In addition, the tribunal noted that the conviction did not involve members of the public; this had arisen from an internal partnership set of affairs. 17. Against this mitigation, the tribunal noted that there were aggravating features in that he had been in a position of trust, it had not been an isolated incident and had involved a significant amount of money fraudulently obtained. 18. The tribunal was of the view that this was a very serious matter and that a conviction for fraud would inevitably bring the profession, Mr Retout and ICAEW into disrepute. Dishonest conduct on his part meant that he could not be seen as fit to be a chartered accountant and there was no other sanction than exclusion from membership which was warranted. The tribunal did equivocate on this issue and whether in particular his very valuable work with offenders meant that he should remain in membership and be encouraged in the work and his rehabilitation. Overall however, it decided that the confidence of the public in the profession of chartered accountancy required that he be removed from membership. 19. The tribunal noted that the Guidance on Sentencing indicated that where there had been a conviction involving dishonesty, the recommended period before any application for readmission should be considered was not before ten years. However, the tribunal took the view if the good work continued and Mr Retout s conduct proved exemplary, the Institute may look favourably on an application for readmission significantly earlier than this period. The tribunal pointed out however that ICAEW would not be bound in anyway by these comments. 20. The tribunal also took into account his mitigation in deciding that he should not be fined and should not pay any costs (also taking into account his limited means). Sentencing Order 21. The tribunal took into account its Guidance on Sentencing. It excluded him from membership but imposed no fine and did not order him to pay any costs. 4

5 Decision on publicity 22. Publicity with names. Chairman Accountant Member Non Accountant Member Mr Richard Farrant Mr Michael Barton FCA Mr Martin Ward FCA Legal Assessor Ms Melanie Carter

6 INVESTIGATION COMMITTEE CONSENT ORDERS 2. Mr David Mark Newborough FCA Consent order made on 29 September 2015 With the agreement of Mr David Mark Newborough of 5 Prospect Place, Millennium Way, Pride Park, Derby, DE24 8HG, the Investigation Committee made an order that he be reprimanded, fined 6,530 and pay costs of 6,193 with respect to a complaint that: 1. On 26 March 2008 Mr D Newborough FCA issued an unqualified audit report on behalf of his firm, X Limited, on the financial statements of Y Limited for the period ended 31 December 2007, causing the firm to be in breach of Audit Regulation 3.10, as the audit had not been conducted in accordance with: i. International Standards on Auditing (UK & Ireland) 500 Audit Evidence in that he failed to obtain, and document, sufficient appropriate audit evidence in respect of current asset investments stated at 11m; and, ii. International Standards on Auditing (UK & Ireland) 620 Using the Work of an Expert in that he failed to evaluate the professional competence or appropriateness of the expert s work as audit evidence to be able to draw reasonable conclusions on which to base the audit opinion. 2. On 26 March 2008 Mr D Newborough FCA issued an unqualified audit report on behalf of his firm, X Limited, on the financial statements of Z plc for the period ended 31 December 2007, causing the firm to be in breach of Audit Regulation 3.10, as the audit had not been conducted in accordance with: i. International Standards on Auditing (UK & Ireland) 500 Audit Evidence in that he failed to obtain, and document, sufficient appropriate audit evidence in respect of current asset investments stated at 11m and, ii. International Standards on Auditing (UK & Ireland) 620 Using the Work of an Expert in that he failed to evaluate the professional competence or appropriateness of the expert s work as audit evidence to be able to draw reasonable conclusions on which to base the audit opinion

7 3. Mr Leigh Maurice Renak FCA Consent order made 29 September 2015 With the agreement of Mr Leigh Maurice Renak of PO Box 107, Borehamwood, Hertfordshire, WD6 3NX, the Investigation Committee made an order that he be reprimanded, fined 3,000 and pay costs of 1,286 with respect to a complaint that: 1. Between 14 August 2006 and 17 December 2013 Mr L M Renak FCA failed to comply with a written assurance he had given on behalf of his firm, X Limited, that he would: a. issue a suitable letter to current clients notifying them of the firm s complaints procedure; b. issue a suitable letter to new clients, on acceptance, notifying them of the firm s complaints procedure; and c. obtain passports or utility bills for directors of clients. 3. Between 15 December 2007 and 17 December 2013 Mr L M Renak FCA failed to establish and maintain appropriate risk sensitive policies and procedures relating to money laundering, and in doing so failed to comply with Practice Assurance Regulation Mr Rajaram Waran FCA Consent order made on 5 October 2015 With the agreement of Mr Rajaram Waran of Carlton House, Maundrell Road, Calne, Wiltshire, SN11 9PU, the Investigation Committee made an order that he be reprimanded, fined 2,650 and pay costs of 2,105 with respect to a complaint that: Mr Rajaram Waran FCA used confidential contact details of approximately 30 clients of X Limited when he was not authorised to do so

8 5. Mr David John Bryant FCA Consent order made 5 October 2015 With the agreement of Mr David John Bryant of North Houghton Mill, North Houghton, Stockbridge, Hampshire, SO20 6LF, the Investigation Committee made an order that he be severely reprimanded, fined 10,050 and pay costs of 4,539 with respect to a complaint that: 1. Mr D Bryant FCA issued an unqualified report, on the financial statements of X Limited for the year ended 31 December 2006 causing the firm to be in breach of Audit Regulation 3.10, as the audit had not been conducted in accordance with International Standards on Auditing (UK & Ireland) 500 Audit Evidence in that he failed to obtain and document sufficient appropriate evidence in respect of the bank balances, to be able to draw reasonable conclusions on which to base the audit opinion. 3. Mr D Bryant FCA issued an unqualified audit report on the financial statements of X Limited for the year ended 31 December 2006 in the name of Y & Co when he was not a principal or employee of that firm. 4. Mr D Bryant FCA issued an accountants report on the financial statements of X Limited for the year ended 31 December 2007 in the name of Y & Co when he was not a principal or employee of that firm

9 6. Mr Alan Duncan Green ACA Consent order made on 5 October 2015 With the agreement of Mr Alan Duncan Green of Verna House, 9 Bicester Road, Aylesbury, Buckinghamshire, HP19 9AG, the Investigation Committee made an order that he be severely reprimanded, fined 4,750 and pay costs of 1,330 with respect to a complaint that: 1. Mr A Green ACA, following a QAD visit on 7 June 2007, confirmed on behalf of his firm that: a. he had written to my bank and am awaiting their confirmation in respect of obtaining a letter from the bank confirming the status of the client bank account b. The annual review has now been carried out and will be part of the ACR in future in respect of the annual Clients Money Regulation compliance review but at a subsequent QAD visit carried out on 1 July 2014 it was found that the matters had not been addressed. 2. Mr A Green ACA inaccurately completed the following annual returns : X & Company at 31 October 2007 X & Company at 30 November 2008 Y Accountancy Ltd at 30 June 2010 Y Accountancy Ltd at 31 October 2011 Y Accountancy Ltd at 30 September 2012 Y Accountancy Ltd at 31 October 2013 in that he stated that an annual review of compliance with the Clients Money Regulations had been carried out when this as not the case Mehta & Tengra Consent order made on 7 October 2015 With the agreement of Mehta & Tengra of 24 Bedford Row, London, WC1R 4TQ, the Investigation Committee made an order that the firm be severely reprimanded, fined 5,750 and pay costs of 1,755 with respect to a complaint that: Between 30 July 2009 and 3 June 2014 Mehta & Tengra failed to comply with Regulation 8 of the Money Laundering Regulations 2007 as the firm had failed to conduct ongoing monitoring of the business relationship it has with all clients

10 8. KJA Kilner Johnson Limited Consent order made on 15 October 2015 With the agreement of KJA Kilner Johnson Limited of Network House, Stubs Beck Lane, Bradford Cleckheaton, West Yorkshire, BD19 4TT, the Investigation Committee made an order that the firm be severely reprimanded, fined 9,300 and pay costs of 1,593 with respect to a complaint that: On 28 March 2014 KJA Kilner Johnson Limited issued an audit report on the financial statements of X Ltd for the year ended 31 December 2013 when: a) the accounts did not comply with Financial Reporting Standard (FRS) 12 Provisions, contingent liabilities and assets as: significant termination payments were not provided for at the balance sheet date; and a second termination payment was not disclosed within the financial statements. b) the audit was not conducted in accordance with International Standard on Auditing (UK and Ireland) 500 Audit Evidence in that the firm failed to obtain sufficient appropriate audit evidence in order to draw reasonable conclusions in respect of contingent liabilities Mr James Ritchie Kilner FCA Consent order made on 15 October 2015 With the agreement of Mr James Ritchie Kilner of Network House, Stubs Beck Lane, Bradford Cleckheaton, West Yorkshire, BD19 4TT, the Investigation Committee made an order that he be severely reprimanded, fined 3,450 and pay costs of 1,130 with respect to a complaint that: Mr James Kilner FCA inaccurately completed the 2013 and 2014 annual returns for his firm, X Limited, as he stated that the firm had completed an Annual Compliance Review (ACR) during the period covered by the return when this was not the case

11 10. Mr Brian James Whale FCA With the agreement of Mr Brian James Whale of Suite 1, Alban House, 22A The Common, Hatfield, Hertfordshire, AL10 0ND, the Investigation Committee made an order that he be severely reprimanded, fined 4,000 and pay costs of 1,318 with respect to a complaint that: 1. Between 1 January 2008 and 8 March 2015 Mr B Whale FCA, engaged in public practice without holding a practising certificate contrary to Principal Bye-law 51a. 2. Between 1 January 2008 and 20 January 2015 Mr B Whale FCA engaged in public practice without professional indemnity insurance contrary to Regulation 3.1 of the Professional Indemnity Insurance Regulations Barlow Andrews LLP Consent order made on 20 October 2015 With the agreement of Barlow Andrews LLP of Carlyle House, 78 Chorley New Road, Bolton, BL1 4BY, the Investigation Committee made an order that the firm be severely reprimanded, fined 12,000 and pay costs of 3,880 with respect to a complaint that: 1. Barlow Andrews LLP failed to comply with regulation 13 of the Clients Money Regulations because they held funds in excess of 10,000 in the Royal Bank of Scotland Client Account Number for ten clients and Royal Bank of Scotland Client Account Number for one client for more than 30 days and did not pay the funds into a Client Bank Account designated by the name of the client or by a number or letters allocated to that account. Full particulars are set out in a letter sent to the firm on 5 December 2014 (Appendix 1). 2. From 1 January 2010 to 30 June 2014, Barlow Andrews LLP failed to comply with regulation 14c of the Clients Money Regulations because they did not ensure interest earned of was paid or credited to the clients, or treated as instructed by the client in writing. 3. Barlow Andrews LLP failed to comply with regulation 25 of the Clients Money Regulations because they have not, at least every five weeks, reconciled the total balances on its Royal Bank of Scotland Client Account Number with the corresponding credit balances held for clients. 4. Barlow Andrews LLP failed to comply with regulation 21 of the Clients Money Regulations because funds were withdrawn from the Royal Bank of Scotland Client Account Number for six clients and Royal Bank of Scotland Client Account Number for 22 clients which were greater than the credit balance held for that client. Full particulars are set out in a letter sent to the firm on 5 December 2014 (Appendix 2 and 3)

12 REGULATORY DECISIONS AUDIT REGISTRATION COMMITTEE ORDER 15 SEPTEMBER Publicity statement Blandfords & Co Limited, 284 Station Road, Harrow, Middlesex, HA1 2EA, has agreed to pay a regulatory penalty of 2,000, which was decided by the Audit Registration Committee. This was in view of the firm s admitted breach of audit regulation 6.06 in that the firm incorrectly completed its annual returns by confirming that annual cold file reviews had been conducted and that a record of the results had been retained when this was not the case ORDER 15 SEPTEMBER Publicity statement C B Heslop & Company Limited, 1 High Street, Thatcham, Berkshire, RG19 3JG, has agreed to pay a regulatory penalty of 1,500, which was decided by the Audit Registration Committee. This was in view of the firm s admitted breach of audit regulation 3.01 in that an entity owned by principals in the firm, acted as company secretary to one of the firm s audit clients for the yearended 31 December All enquiries to the Professional Conduct Department, T +44 (0)