DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Nigel Bruce Holmes Heard on: 13 November 2014; 22 and 23 April 2015 Location: Committee: ACCA Offices, 29 Lincolns Inn Fields, London, WC2A 3EE Mr John Crawley (Chairman), Mr Patrick A Bragg (Accountant) and Mr Robin Hay (Lay) Legal Adviser: Persons present and capacity: Ms Lucia Whittle-Martin Ms Sarah Cawley-Wilkinson (ACCA Case presenter) Ms Bernice Ash (Committee Officer) 13 November 2014) Ms Kathryn Reece (Committee Officer) 22 and 23 April 2015 1. ACCA was represented by Ms Sarah Cawley-Wilkinson. Mr Holmes attended unrepresented. The Committee had before it a bundle of papers numbered 1 385, a service bundle numbered 1 21, an additional bundle numbered 22 26 and a further additional bundle numbered 27-28. PRELIMINARY APPLICATION 2. Mr Holmes applied under Complaints and Disciplinary Regulation ( CDR ) 9 (4) to place one document before the Committee. Miss Cawley- Wilkinson did not oppose the application.
3. The Committee allowed the application. The application concerned one letter dated 14 October 2014, written by Mr Holmes, in which Mr Holmes made various submissions. It did not involve the introduction of any new evidence. In the circumstances the Committee concluded that its inclusion would involve no prejudice to ACCA, would assist Mr Holmes in the presentation of his case and was in the overall interests of justice in that it would help all parties to understand Mr Holmes s submissions in advance of hearing the case. ALLEGATIONS Allegation 1 (a) Pursuant to bye-law 8(a)(i), Mr Holmes is guilty of misconduct in that he failed to respond to correspondence sent to him by Firm D in a timely manner and/or to provide the information requested by them, contrary to the Fundamental Principle of Professional Behaviour (as applicable in 2011 to 2013) or (b) Pursuant to bye-law 8(a)(iii), Mr Holmes is liable to disciplinary action in that he failed to respond to correspondence sent to him by Firm D in a timely manner and/or to provide the information requested by them, contrary to the Fundamental Principle of Professional Behaviour (as applicable in 2011 to 2013) Allegation 2 (a) Pursuant to bye-law 8(a)(i), Mr Holmes is guilty of misconduct in that between 23 July 2012 to 11 December 2012 and 4 March 2013 to 29 April 2013 he partially failed to co-operate fully with the investigation of the complaint by not responding to correspondence from Professional Conduct, contrary to
Complaints and Disciplinary Regulation 3(5)(b) (as applicable in 2012 and 2013). or (b) Pursuant to bye-law 8(a)(iii), Mr Holmes is liable to disciplinary action in that between 23 July 2012 to 11 December 2012 and 4 March 2013 to 29 April 2013 he partially failed to co-operate fully with the investigation of the complaint by not responding to correspondence from Professional Conduct, contrary to Complaints and Disciplinary Regulation 3(5)(b) (as applicable in 2012 and 2013). BRIEF BACKGROUND 4. Mr Holmes was a partner in an accountancy firm, Firm A. 5. Firm A once acted as accountants for Firm B. 6. Firm B was acquired by Firm C in July 2011; Individual B was the CEO of Firm C. 7. It was alleged that Individual A, the Group Financial Controller of Firm C, had advised Mr Holmes at a meeting on 24 November 2011 that accounts were required for the periods ended 31 August 2011 and 31 December 2011 by 31 January 2012. This was to enable Firm D, the auditors, to meet their 29 February 2012 deadline. 8. It was acknowledged by both parties that the deadline of 31 January 2012 would be difficult to achieve due to the burden of self-assessment tax work current at that time of year. However it was alleged by Individual A that Mr Holmes agreed that all requests would be met.
9. Mr Holmes did not supply the requested information by 31 January 2012. It was alleged that he failed to respond to emails and communication sent to him by Firm C and by their auditors, Firm D. 10. On 25 May 2012, ACCA received a complaint from Individual A concerning the conduct of Mr Holmes and an investigation was commenced both into his conduct regarding his dealings with Firm D and also his response to ACCA s enquiries. Allegation 1 11. It was alleged that Mr Holmes was asked to provide Firm D with specific information to enable them to complete the audit of Firm C. Ms Cawley- Wilkinson made it clear that in seeking to prove Allegation 1 she would be relying solely upon the correspondence from Firm D. This comprised two letters from Firm D, the first dated 7 December 2011 and the second dated 15 March 2012, in which Firm D requested the information. It was upon those two documents that Ms Cawley-Wilkinson relied. 12. She also identified which information requested by Firm D was relied upon by ACCA. This comprised (i) information regarding the overdrawn director s loan accounts (required by HMRC) and (ii) link documents, namely, documentation that linked the company s computerised accounting records (held on software known as SAGE) to the accounts that were to be subject to audit. 13. Mr Holmes was first asked by Firm D for information in a letter dated 7 December 2011. In a second letter date 15 March 2012 Firm D, having acknowledged a response to their first letter from Mr Holmes of 6 March 2012, requested further information. This second letter included the request for the two items identified by Ms Cawley-Wilkinson. It was alleged that Mr Holmes had failed to provide these documents.
14. It was also alleged that whilst he had sent some correspondence, this was not sent in a timely manner. 15. Mr Holmes made representations in correspondence to ACCA. This correspondence was placed before the Committee in its entirety and will not be set out in full here. Allegation 2 The period 23 July 2012 to 11 December 2012 16. On 2 July 2012 ACCA wrote to Mr Holmes in regard to Individual A s complaint to ACCA. He was asked to answer questions arising from the complaint, together with a related matter identified by ACCA when reviewing Individual A s complaint. Mr Holmes was asked to respond by 23 July 2012. 17. In a letter dated 22 August 2012 ACCA chased this request, warned Mr Holmes of his duty to cooperate under the regulations, and set a new deadline of 12 September 2012. 18. In a letter from Mr Holmes to ACCA dated 6 September 2012 Mr Holmes stated: please find attached copies of correspondence with Messrs Firm D and Mr Individual B the CEO of Firm C As can be seen from this, all information requested by Messrs Firm D has now been supplied to them I trust this will now enable the complaint made by Individual A (not by Messrs Firm D I would point out) to be withdrawn and the case closed.
19. In a letter dated 13 September 2012 ACCA said that as Mr Holmes had not responded to the specific question put to him in the letter dated 2 July 2012, an allegation of failure to co-operate would be raised if a satisfactory response was not received by 4 October 2012. 20. In a letter from Mr Holmes to ACCA dated 1 September 2012 but received by ACCA on 5 October 2012 he responded to the questions asked in respect of Individual A s queries but it was alleged that he ignored the additional matter raised by ACCA in the letter of 2 July 2012. 21. By letter dated 23 October 2012 ACCA advised Mr Holmes to respond fully and warned him of his duty to co-operate. A new deadline of 13 November 2012 was set. ACCA posed an additional question in respect of Individual A s complaint. 22. By letter to ACCA dated 8 November 2012 Mr Holmes responded to the questions asked in respect of the additional matter raised. It was alleged that he ignored the further question asked in respect of Individual A s complaint. 23. By letter to Mr Holmes dated 13 November 2012 ACCA said that he had not responded to the request for information in respect of Individual A s complaint, and further reminded him of his obligation to co-operate with the investigation under Complaints and Disciplinary Regulation 3(5) and was asked to respond by 23 November 2012. 24. In a letter from Mr Holmes to ACCA dated 19 November 2012 he said he would provide the information to the company. However it was alleged that he then failed to provide a copy of the information to ACCA. 25. In a letter dated 26 November 2012 ACCA requested the information that Mr Holmes had allegedly failed to provide.
26. In an email to ACCA dated 28 November 2012 ACCA Mr Holmes said : As far as I am aware Individual A is withdrawing his complaint, as such, why are you still asking for copies of correspondence etc. when this should now not be necessary. 27. By letter dated 3 December 2012 ACCA asked Mr Holmes to respond by 10 December 2012 to each of the outstanding points raised in their letter dated 26 November 2012 by 10 December 2012. 28. In a letter from Mr Holmes to ACCA dated 6 November 2012 but received on 11 December 2012 Mr Holmes stated: I can confirm, that, I have responded to Individual A s letter dated 14 th September, 2012. However, I shall not be forwarding copies of this to you, as it contains personal information regarding Individual C the former owner of Firm B, that he does not want disclosed to any third party. 4 March 2013 to 29 April 2013 29. There was correspondence in January 2013 which was wholly redacted, and further correspondence referring to it in March 2013, which the Committee has disregarded. 30. In a letter dated 21 March 2013 ACCA forwarded emails to Mr Holmes from Individual A and Individual B, and stated that Individual B was not satisfied with Mr Holmes s response to him dated 7 November 2012. 31. In a letter to Mr Holmes dated 12 April 2013 ACCA, referring to Individual B s dissatisfaction with Mr Holmes s response, set out at length numerous queries concerning the company s accounts.
32. A letter from Mr Holmes to ACCA dated 24 April 2013 is entirely redacted. In a further letter dated 30 April 2013 Mr Holmes confirmed that he would be supplying no further information to Individual B. 33. It was submitted by ACCA that by failing adequately to answer the questions put to him by ACCA Mr Holmes had partially failed to co-operate with ACCA s investigation into his conduct. NO CASE TO ANSWER 34. At the close of ACCA s case the Committee decided to exercise its discretion under CDR 11 and consider whether there was a case to answer. Miss Cawley-Wilkinson and Mr Holmes were invited to make submissions on the point. 35. In considering whether there was a case to answer the Committee adopted the test set out in the case of R v Galbraith [1981] 1 WLR 1039 as adapted by the comments made in the regulatory case of R v R (Dr Alan Tutin) v General Medical Council [2009] EWHC 553. 36. The Committee therefore worked on the basis that if there was no evidence which could prove an essential element of an allegation, there would be no case to answer. However if there was some evidence which, taken at face value, could prove each essential element, there would be a case to answer. Allegation 1 37. The evidence before the Committee relating to this allegation consisted of a number of documents: the letter from Firm D dated 7 December 2011 advised Mr Holmes that they had been appointed auditors and tax advisers, and requested various documents and other information albeit unspecified. The letter
asked for various documents and other information albeit unspecified, relating to Firm B. It did not set a date or deadline for the provision of a response. An email from Individual A to Mr Holmes dated 13 January 2012 asked him to confirm that you have now responded to our auditors Firm D. A letter from Mr Holmes to Firm D dated 9 February 2012 stated, inter alia: the records to enable these accounts to be prepared were not received in our offices until 25 January 2012 @4.45pm a completely different timescale to that originally discussed. Further he assured Firm D that the accounts for the year ending 30 th November 2011 together with all other information requested would be forwarded during the week commencing 13 th February 2012. An email dated 1 March 2012 in which Individual A stated it has come to my attention that you have not yet provided the information that Firm D have requested. An email dated 5 March 2012 in which Individual A stated it is imperative that you supply the requested information as soon as possible. An email dated 19 March 2012 from Individual A to Mr Holmes saying I understand Firm D have now received some information from you. I have today been informed that they have recently written back to you with a few more questions. An email dated 20 March 2012 from Mr Holmes to Individual A stating
I received Firm D s letter [of 15 March] at 3pm today so your chase up email arrived before the actual request Mr Holmes reiterated that his firm was not supplied with the information and records required until 25 January 2012. The second letter from Firm D to Mr Holmes dated 15 March 2012 stating we refer to your letter of 5 March, when you forwarded us various items of information. Mr Holmes s letter of 5 March 2012 was not before the Committee. The letter of 15 March 2012 from Firm D raised enquiries which apparently amounted to new requests for information and asked for various documents concerning the 2010 and 2011 accounts. These included the information regarding the loan accounts and the link documents. Again it specified no date or deadline for a response. An email from Individual A to Mr Holmes dated 3 April 2012 stating that he understood that Firm D had still not received a response to their letter sent on 15 March 2012 An email dated 5 April 2012 from Mr Holmes to Individual A in which he raised various queries as to how Firm D were going about their tasks. In this email he strongly denied that Firm D had been unable to contact him on numerous occasions by telephone and suggested that Firm D were making work to generate fees. A letter dated 18 April sent by Mr Holmes to Individual A saying further to our telephone conversation of 5 April I am pleased to set out the following in respect of your request to supply information to Firm D.
In that letter, which consists of some 2 pages, Mr Holmes said that he was not responding to questions 3 to 5 until payment of his fee account. There was a further and final letter from Mr Holmes to Firm D dated 6 September 2012 and a letter to Individual B dated 7 November 2012, responding to Individual B s detailed letter of enquiry dated 14 September 2012. 38. The Committee considered whether the evidence, taken at its highest, could prove each essential element of the allegation that Mr Holmes had failed - to provide information requested by Firm D and/or - to respond to correspondence sent to him by Firm D in a timely manner. 39. The Committee first considered whether there was any evidence that Mr Holmes had been asked by Firm D to provide information, and if so whether he had failed to do so. The allegation did not specify that he had failed to provide it to Firm D, as opposed to Individual A and Individual B, and the Committee approached the matter on the basis that for this purpose Firm D, Individual A and Individual B should be treated as one entity. 40. There is no doubt that Mr Holmes had been asked by Firm D to provide information. This was to be found in two letters from Firm D to Mr Holmes dated 7 December 2011 and 15 March 2012. It appears that Mr Holmes s letter of 6 March 2012 was a satisfactory response to the first letter but as already noted the Committee does not have a copy of that letter. In their second letter Firm D made some 10 requests of Mr Holmes for documents and information. The Committee confined its consideration to the two listed requests relied on by Ms Cawley-Wilkinson namely: (i) an analysis of the
directors overdrawn loan accounts and (ii) a copy of the link documents for us to get from the Sage records to the accounts figures. 41. The Committee considered whether there was prima facie evidence that Mr Holmes had failed to provide the requested analysis of the director s overdrawn loan accounts, and concluded that there was no such evidence. It was clear that Mr Holmes had responded to this request by explaining, at Paragraph 2 on the second page of his letter dated 18th April 2012: PDM s Individual B agreed with Individual C and myself that no analysis or breakdown of Individual C s loan account would be required on the takeover. There was no evidence before the Committee that the information requested was available to be provided, and therefore Mr Holmes had not failed in his duty. 42. The Committee then considered whether there was prima facie evidence that Mr Holmes had failed to provide the link documents. In the same letter dated 18 th April 2012, Mr Holmes did not provide this information, and he made no reference to this request. In his final letter dated 7 November 2012, to Individual B in response to Individual B, Mr Holmes stated the following: As to supplying information to tie up the figures to the SAGE records, I would answer as follows: 2011 accounts After obtaining copies of the accounts from Companies House signed by yourself on 21 September 2012, it is clear, that, these have been completely reworked by Messrs Firm D and a balance sheet only shows the same figure and share capital, in the sums of 18,000 and 10 respectively, as those prepared by my firm. As such, any adjustments made by my firm are totally irrelevant. It appears from this correspondence that Mr Holmes did not supply the link documents requested and the Committee has therefore concluded that there is a case to answer.
43. The Committee next considered whether Mr Holmes had failed to respond to correspondence sent to him by Firm D in a timely manner. Mr Holmes responded to Firm D s enquiries on five occasions over a period of more than 7 months: namely by letters dated 9 February 2012, 5 March 2012, 6 September 2012 to Firm D directly and by letters dated 11 April 2012 and 7 November 2012 to Individual A and to Individual B respectively. 44. The two letters from Firm D mention no time scale or deadline, and there is no evidence before the Committee as to what an appropriate time scale should have been in the circumstances of this case. However Mr Holmes s final response, to the detailed letter from Individual B, was some 8 months after the second letter from Firm D and he offered no explanation for this delay. Accordingly the Committee concluded that there is a case to answer in relation to failing to respond in a timely manner. 45. The Committee therefore found that there was a case to answer in respect of Allegation 1. Allegation 2 46. The Committee considered whether there was evidence which, taken at face value, could prove each essential element of the allegation that Mr Holmes had failed in part to cooperate fully with the investigation of Individual A s complaint. 47. The correspondence between ACCA and Mr Holmes is voluminous and in some instances ACCA s enquiries of Mr Holmes extend over several pages of a letter. Much of this concerns communications and correspondence with Individual A and Individual B which arose after Individual A s complaint, and includes repeated requests to Mr Holmes to answer matters raised in correspondence from these parties. The Committee has not found it possible to relate much of this material (both the enquiries raised by ACCA on behalf of Individual A and/or Individual B
and Individual B s detailed enquiries of Mr Holmes) to the items of information requested by Firm D on 15 March 2012. 48. On the basis of the documents before it the Committee concluded that whilst it might be said that Mr Holmes had not provided all the information that ACCA had requested, it could not be said that he had failed to respond to correspond with them. 49. Accordingly the Committee found that there was no case to answer in respect of Allegation 2. THE DEFENCE CASE 50. Mr Holmes in making is submissions relied upon the points raised in his letter dated 14 October 2014, namely: Firm D had never sent a letter or statement of complaint At the time of the complaint Mr Holmes was the junior 30% partner in the business with no control over final decisions made by the firm Certain pages of the documentation were of particular importance The complainant had not been involved in the takeover proceedings His partner had instructed him to limit his involvement in the takeover due to non payment of fees, which was outside his control DECISION ON ALLEGATION 1 51. Mr Holmes s final response was not submitted until some 8 months after the second request from Firm D. However he had acted in the course of extensive and discursive correspondence from a number of different
sources, and had compiled the five documented responses to Firm D cited by the Committee earlier in this determination. 52. Accordingly the Committee found the allegation that Mr Holmes had failed to respond to correspondence sent to him by Firm D in a timely manner not proved. 53. In considering whether Mr Holmes had failed to provide the information requested by Firm D, namely the link documents, the Committee noted that the first item requested by Firm D in their letter of 7 December 2011 was a copy of the company s accounts for the year ended 30 November 2010. 54. Firm D in their letter to Mr Holmes dated 15 March 2012 referred to a letter from him dated 5 March 2012. This letter is not before the Committee. However the Committee has made reasonable inference from the evidence before it that Mr Holmes must have sent the accounts to Firm D under cover of his letter of 5 March 2012. The Committee s reasons for drawing this inference are as follows: Firm D do not repeat the request for the accounts in the letter of 15 March 2012 They raise in some detail a query concerning a tax return which HM Revenue & Customs had apparently never processed, it being a return that would follow on from the completion of the accounts To enable them to resubmit the tax return Firm D went on to raise four specific requests for information, the financial details of which could only have been drawn from the 2010 accounts Firm D also request a copy of the link documents, and given the location of this request in the structure of the letter (above a subheading headed 2011 accounts ) the Committee has inferred that the documents concerned relate to the 2010 accounts
55. In these circumstances the Committee is satisfied that the link documentation was available to Mr Holmes to send to Firm D. However he did not produce this information and in failing to do so the Committee is satisfied that he is in breach of his professional obligations. 56. The Committee next considered whether this failing amounted to misconduct and concluded that, as a single incident, it did not do so. It did not fall sufficiently far below the standards to be expected of an accountant acting in the circumstances faced by Mr Holmes. Although there was the potential for Mr Holmes s behaviour to have caused loss or other adverse consequences, there was no evidence that it had in fact done so. 57. Accordingly the Committee found Allegation 1 (a) not proved. 58. The Committee then considered whether the failing found proved amounted to a breach of the Fundamental Principle of Professional Behaviour and concluded that it did. By failing to respond to Firm D reasonable request Mr Holmes had demonstrated a lack courtesy and consideration. Accordingly the Committee found Allegation 1 (b) proved. SANCTION 59. The Committee bore in mind that its task was not to be punitive but to protect the public, maintain confidence in the profession and maintain proper standards of conduct. It accepted that it needed to act proportionately, balancing the need to protect the public interest against the interests of Mr Holmes. It took into the account the relevant Guidance for Disciplinary Sanctions. It had regard to Mr Holmes s good character. 60. The Committee approached the question of sanction on the basis that there had been some degree of acrimony following the take over of the companies and the change of professional representation.
61. The Committee gave some weight to Mr Holmes s lengthy unblemished career, and the fact that this had been an isolated incident. 62. The Committee first considered whether to take no further action but concluded that this would not be in the public interest as the breach had involved a failure to supply important information. Such a breach requires a sanction. 63. The Committee next considered an admonishment and concluded that this would be insufficient for the same reason together with the fact that there had been no admission of the fact found proved. 64. The Committee next considered a reprimand and concluded that this would be the appropriate and proportionate sanction in the circumstances of this case. The breach had been sufficient to prompt a formal complaint that had the capacity to bring the profession into disrepute. The Committee was satisfied that Mr Holmes had been well placed to supply the information that he had failed to provide, that the information was important to the incoming auditors and that his failure did not appear to have been mere oversight. However Mr Holmes has not sought to minimise the importance of adhering to his obligations. Furthermore this had been a single incident in a long unblemished career. The Committee did not consider that Mr Holmes presented a risk to the public, and it was the judgement of the Committee that a reprimand would be sufficient to maintain confidence in the profession and maintain proper standards of conduct. 65. The Committee considered the possibility of a severe reprimand and concluded that this would be disproportionate in the light of the fact that misconduct had not been proved.
COSTS 66. ACCA applied for costs in the sum of 5365. Ms Cawley-Wilkinson accepted that it might be appropriate for this sum to be reduced in the light of the Committee s findings. 67. The Committee decided that the sum should be reduced to reflect the fact that the majority of the findings had been found not proved. 68. Accordingly the Committee decided to make an order for costs in the sum of 750. EFFECTIVE DATE OF ORDER 69. The order will come into effect after the period of 21 days. PUBLICITY 70. 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, and discretion in exceptional circumstances to direct that the relevant person is not named. The Committee ordered that a news release be issued to ACCA s website and to the local press as soon as practicable referring to Mr Holmes by name. Mr John Crawley Chairman 23 April 2015