Disciplinary Notices

A Discipline Tribunal will be held within CA House, 21 Haymarket Yards, Edinburgh EH12 5BH at 10am on Thursday 16 January 2025 to hear an Interim Order Application in respect of Scott Richard Taylor CA, a member based in Tunbridge Wells.

A Discipline Tribunal will be held by video conference at 2pm on Monday 13 January 2025 to hear a complaint against Robert Anderson Begg CA, a member based in Dumfries.

Any member of the public who wishes to attend the hearing should contact tribunalsclerk@icas.com

Kenneth George LeMay CA, a Member based in Glasgow, has been issued with a severe reprimand, ordered to pay a financial penalty of £5,000 together with costs of £32,549 following:

1. A finding of unsatisfactory professional conduct in respect that he failed on eight occasions to respond to correspondence from Joint Liquidators of a limited company, in breach of the fundamental principle of professional behaviour contained in section 400.4E of the ICAS Code of Ethics.
2. A finding of professional incompetence in respect that while appointed as Liquidator of a limited company he failed to report clearly and accurately to the creditors of the company on the steps taken in relation to his investigations as Liquidator, in breach of: (a) The requirements contained in paragraphs 4(b), 16 and 17(e) of the Statement of Insolvency Practice 2, (b) The fundamental principles of integrity and professional competence and due care contained in sections 100.02 and 400.4A and 400.4C of the Code of Ethics, and
3. A finding of professional incompetence in respect that he failed to document his decision-making processes, investigations and conclusions appropriately, in breach of: (a) the requirements contained in paragraph 7 of Statement of Insolvency Practice 1, paragraph 18 of Statement of Insolvency Practice 2, (b) The fundamental principle of professional competence and due care contained in section 400.4C of the Code of Ethics.

Peter Anderson, Discipline Tribunal Chair, said “The first charge involved failures which were not just failures of administration. They required personal attention from the Defender himself. The failures discredit the profession. All professionals including insolvency practitioners must conduct themselves with courtesy and consideration for whose with whom they come into contact with when performing their work as is plain from the Code of Ethics 400.4E. In relation to the second charge, the four reports which the Defender made to creditors did not satisfy the obligations of Statement of Insolvency Practice 2. The Tribunal found that the reports were significantly deficient. It appears the Defender’s actions were largely if not entirely a result of carelessness, and a degree of impatience rather than cynical or deliberately deceitful. In relation to charge 3, there was failure to document decision making processes, investigations and conclusions sufficiently. There was a clear breach of Statement of Insolvency Practice 2, paragraph 18. The refusal to assist liquidators with the related transaction and insolvency was a significant failure and obstructed potential further actions for those fellow professionals.”

Mohammed Urfan Moughal CA, a Member based in Glasgow, has been issued with a severe reprimand and ordered to pay a financial penalty of £15,000 together with costs of £25,000 following a finding of professional misconduct by the Discipline Tribunal. In addition Mr Moughal was declared ineligible for any permit, licence, certificate or other authorisation in relation to the carrying out of audit work. The Tribunal also imposed as a condition of continued Membership or regulation by ICAS that he co-operate fully with all such enhanced monitoring of his practice, including site visits and inspections, as ICAS shall in its sole discretion deem necessary and appropriate.

The Complaint against him read that:

1. On 27 October 2015 he issued a letter of engagement on behalf of his firm to a limited company, to carry out this company’s audit work and thereafter undertook audit work for this company, prior to his firm being granted audit registration on 12 April 2016, in breach of Regulation 2.01 of the ICAS’s Audit Regulations and Guidance.
2. He made materially false and misleading statements to ICAS in respect that;
   a.  On 30 May 2017, he submitted his Firm’s Annual Return to ICAS for the period 31 March 2016 to 31 March 2017, which he incorrectly completed so that it disclosed that the Firm had no audit clients, when he knew that the limited company was an audit client of the Firm during this period.
   b.By letter dated 21 September 2017 to ICAS, he stated, “Whole firm review - no review has been carried out as there have been no audit clients”, when he knew that the limited company was an audit client of the Firm.
   c.On 26 September 2017, he stated to an Audit Monitor employed by ICAS, during a desktop review of the Firm’s audit practices and procedures, that the Firm had not signed any audit reports, when he knew that on 15 September 2016 he had signed the limited company’s audit report, on behalf of the Firm, for the year ended 31 December 2014.
   d.On 26 September 2017, he stated to the Audit Monitor that the Firm had not commenced any audit work and that he did not expect to sign an audit report until Spring 2018, when he knew that on 15 September 2016 he had signed the limited company’s audit report, on behalf of the Firm, for the year ending 31 December 2014, and the Firm had commenced audit work and would shortly sign this company’s audit reports for the years ending 31 December 2015 and 31 December 2016.
   e.When a report of the desktop review on 26 September 2017 was issued to the Firm by ICAS on 27 September 2017, which was based on his statement that the Firm had not signed any audit reports, he failed to take appropriate steps to dissociate himself from this statement and instead confirmed the accuracy of the information in this report in an email that he sent to ICAS on 5 December 2017, thereby placing the Firm in breach of its obligations under Regulations 2.08, 2.09A and 2.10A of the ICAS’s Audit Regulations and Guidance.
3. His actions as set out in charges 2(a) to (e) were dishonest.
4. He failed to ensure that the Firm complied with a condition imposed by the Authorisation Committee in January 2018, in terms of Regulation 7.01 of the Audit Regulations, in that he did not submit to the Authorisation Committee the results of an external cold review of the first audit that was signed by the Firm and did not cooperate with ICAS’s repeated requests for this information, thereby placing the Firm in breach of its obligations under Regulations 2.08,2.09A and 2.10A of the ICAS’s Audit Regulations and Guidance.

All of which actions or omissions were a breach of the fundamental principles of integrity and professional behaviour in sections 110.1, 110.2 and 150.1 of the ICAS Code of Ethics.

AND HE IS GUILTY of professional misconduct and/ or unsatisfactory professional conduct in terms of Rules 13.1, 13.5.1, and 13.5.2 of the ICAS Rules.

Mr Moughal admitted charges 1, 2 and 4 and was found guilty of charge 3 by the Discipline Tribunal.

Calum MacNeill QC, the Discipline Tribunal Chairman said, “After considerable deliberation and some hesitation we came to the view that a sanction less than exclusion would be sufficient to express the disapproval of the Tribunal of Mr Moughal’s conduct, to protect the public and to protect the reputation of ICAS.”

APPEAL TRIBUNAL

In a subsequent decision the Appeal Tribunal upheld an appeal by Mr Moughal to the extent of varying the order for payment of the financial penalty and costs. An appeal by the ICAS Investigation Committee on the grounds of undue leniency was dismissed.

Craig Murray Fotheringham, a Member based in Glasgow, has been issued with a Reprimand, fined £1,000 and found liable in expenses of £4,000 following a Discipline Tribunal hearing in July 2020.

The Discipline Tribunal found Mr Fotheringham guilty of professional misconduct in terms of Rules 13.1, 13.5.1, and 13.5.2 of the ICAS Rules in respect that he “failed to fully and promptly cooperate with the investigation of a complaint made to ICAS against him, insofar as he repeatedly failed to provide responses to correspondence issued to him on behalf of ICAS between February and September 2019, in breach of his obligations under Investigation Regulations 3.4 and 3.8.1, and Section 150.1 of the ICAS Code of Ethics.”

Peter Anderson, Discipline Tribunal Chairman, commented that “ICAS made efforts on 16 occasions to have Mr Fotheringham provide answers to issues raised by his former client. Mr Fotheringham admitted this and apologised unreservedly for ignoring correspondence from ICAS. In considering the appropriate penalty the Tribunal acknowledged that the Member had no prior infringement of disciplinary procedures.”

Billy Mark Ferguson, a member based in Dubai, has been excluded from Membership of ICAS and found liable in expenses totalling £48,063.50 following a Discipline Tribunal hearing in March 2020.

The Discipline Tribunal found Mr Ferguson guilty of professional misconduct in terms of Rules 13.1 and 13.5.1 of the ICAS Rules on the following charges:-

1. that he sent, or caused to be sent, messages to his employer ABC which contained false and misleading information, in respect that:
   (a) text messages were sent to his employer on four dates in 2016 wrongly stating that he was unable to work because of illness;
   (b) emails were sent to his employer on two occasions in 2016 wrongly stating that he was unable to work because of illness; and
   (c) an email was sent to his employer in 2017 stating he had died.
2. his conduct in connection with the termination of his employment with ABC fell below the standards required of him as a Chartered Accountant, insofar as he:
   (a) failed to give notice of his termination of his employment, and misled his employer by informing them instead that he was going on holiday;
   (b) failed to pay the balance of 10,553.93 Euros on his corporate credit card, which balance had been incurred in relation to personal expenditure, in doing so required his employer to pay the balance, and failed to repay that sum to his employer when called upon to do so; and
   (c ) failed to pay relocation costs and a relocation allowance totalling 3211.18 Euros to his employer when called upon to do so.
3. he misled his subsequent employer DE as to his previous employment with ABC insofar as he:
   (a) failed to disclose his employment with ABC, which was an audit client of DE, when applying for the job of Internal Audit Manager with DE; and
   (b) when asked by DE at a meeting in 2017 about his employment with ABC, misled them by claiming he was only sub-contracted to ABC from another employer and had never been employed by ABC.
4. he misled DE about his involvement with a firm of solicitors in respect that:
   (a) in an email to two employees of DE in 2017 he stated falsely and dishonestly that his family’s law firm were sending a letter to ABC on his behalf;
   (b) he created a letter purporting to be from said firm of solicitors, which misrepresented that they were engaged to act for Mr Ferguson in a dispute with ABC, and provided a copy of the letter to said two employees of DE in an email; and
   (c ) at a meeting with said two employees of DE he stated falsely and dishonestly that he was being represented by a named solicitor in a dispute with ABC.

Peter Anderson, Discipline Tribunal Chairman commented “The Tribunal was satisfied that each of the four charges would individually amount to professional misconduct. The conduct does indicate a level of dishonest behaviour over a period which reaches the level of very serious. It would be very serious for any individual to promote and insist upon false and misleading information in each one of the four sets of circumstances which form the charges. There were numerous breaches over a period of time; there was dishonesty and the conduct is indicative of widespread ethical weakness. Misrepresentations and deceptions were directed to third parties who suffered prejudice. Mr Ferguson derived personal gain. The deception was premeditated. All of that amounts to very serious professional misconduct.”

A subsequent appeal was refused.

Alexander McDougall, a member based in Edinburgh, has been excluded from membership of ICAS following a Discipline Tribunal hearing on 20th February 2019, subsequently upheld on appeal.

The Discipline Tribunal found Mr McDougall guilty of professional misconduct in terms of Rules 13.1 and 13.5.1 of the ICAS Rules in respect that ""he withdrew £10,200 from a bank account he held for a trust and paid this sum into his personal bank account, which actions were contrary to his duty as a trustee of the trust, insofar as this payment ( i ) was not made in the best interests of the trust; (ii ) and was made without the knowledge or approval of the other trustees, in breach of Sections 110.1, 120.1 and 150.1 of the ICAS Code of Ethics.”

Peter Anderson, Discipline Tribunal Chairman commented “The Tribunal reached the conclusion that for the member, Mr McDougall, to make unauthorised use of client’s funds, a client which is a charitable trust, is something which has to be regarded as very serious. It was not disclosed to the Trust at any point.

There was prejudice to the Trust, which was deprived of the benefit of its funds for a period of 18 months. There was personal gain to the member, Mr McDougall, because he was able to operate his personal bank account using client’s funds. There is clearly a breach of Section 110.1 of the ICAS Code of Ethics in relation to integrity; of Section 120.1 in relation to objectivity of the actions because he placed his own interests ahead of those of his client and finally, a breach of Section 150.1 in relation to professional behaviour. All of these matters are such that in the judgement of the Tribunal any member of the profession would regard the conduct as being serious and reprehensible.”

“Mr McDougall could not provide any valid explanation to the Tribunal for the cheque payment and said he had no recollection of the transaction due to health grounds. In the absence of any sufficient and satisfactory explanation from Mr McDougall, and in the absence of any sufficient medical evidence the Tribunal has to conclude that this was a deliberate act.""

A subsequent appeal affirmed the decisions of the Discipline Tribunal.

The Discipline tribunal imposed a financial penalty of £2000 and found Mr McDougall liable for costs. Upholding the appeal, the Appeal Tribunal found Mr McDougall further liable for the costs of the appeal, bringing the total award of costs to £7330.

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found John Cumberlidge CA, a former principal in Moose Accounting Limited and Moose Accounting (London) Limited (“the firms”), guilty of professional incompetence and professional misconduct on the following grounds:

1.Between around October 2020 and March 2022, whilst engaged to provide accountancy services to a client, he failed to pay adequate attention to the client’s affairs and/or failed to ensure that those working under his authority paid adequate attention to the client’s affairs, in respect that he/they:
a.failed to respond to correspondence from the client dated 9, 14, 16 June, 6 July, 2 and 6 August, 3, 8 and 14 December 2021, 6, 11, 17 and 27 January, 1, 4, 8, 10,15, 21 and 23 February, and 7, 9 and 17 March 2022;
b.failed to prepare the client’s self-assessment and company accounts by the end of October 2021 as agreed;
c.failed to respond timeously to requests for professional clearance dated 12 January 2022 and dated 17 March 2022 from the client’s new accountants; and
d.when preparing and submitting the client’s personal tax return for the financial year ended 31 April 2021, failed to ensure that the client received and approved the personal tax return prior to submission to HMRC
contrary to the fundamental principles of professional competence and due care, and professional behaviour, contained in sections R113 and R115 of the Code of Ethics.

2.Between March 2022 and March 2023, he failed to cooperate fully and promptly with the investigation of a complaint made to ICAS against him, in breach of his obligations under Investigation Regulations 3.4 and 3.8 and contrary to the fundamental principle of professional behaviour contained in Section R115 of the Code of Ethics.

3.He has been disqualified from acting as a company director on the basis that, while a director of Company A, he caused or allowed it to trade to the detriment of HMRC.  He failed to report his disqualification as a director, and resignation as director of Moose Accounting Limited and Moose Accounting London Limited, to ICAS, in breach of Regulation 3.1.1 of the Investigation Regulations and Regulation 4.6 of the Public Practice Regulations.

Sanction

Under operation of Investigation Regulation 2.15, Mr Cumberlidge has accepted an order of severe reprimand, payment of a fine of £9,000 and a requirement to pay £4,395 in respect of ICAS’s costs of the investigation.

Commentary

• In March 2022, ICAS received a complaint which raised concerns about the work of Mr Cumberlidge and his firms. The complaint was referred to ICAS’ Investigation Committee who made enquiries into the matter. After due consideration, the Committee determined that there were various aspects of the work which fell significantly short of the standards that would be reasonably expected of a Chartered Accountant. In particular, the Committee concluded that there had been a failure to respond to correspondence, a failure to complete work for the client within the agreed timescales and a failure to obtain the client’s approval before submitting their self-assessment to HMRC.
• Although not all of those failures were caused by Mr Cumberlidge, as the sole Chartered Accountant within the firms he was responsible for ensuring that those working under his authority were adequately supervised and paid adequate attention to the client’s affairs.
• Furthermore, during the investigation Mr Cumberlidge failed to respond fully and promptly to the Committee’s enquiries. All members of ICAS have a duty to cooperate with the investigation of a complaint: a failure to cooperate makes it difficult for ICAS to fully investigate the allegations and can itself be grounds for disciplinary action.
• Separately, it came to ICAS’ attention that Mr Cumberlidge had been disqualified as a company director by the Insolvency Service, with a director disqualification undertaking commencing on 1 March 2023. Members have a duty to self-report to ICAS anything which may render them liable to disciplinary action. In terms of the ICAS Rules, there is a presumption that a Member is guilty of professional misconduct if an order of disqualification has been made against him or a disqualification undertaking accepted. Mr Cumberlidge ought therefore to have informed ICAS of the disqualification undertaking but had failed to do so. Members also have a duty to inform ICAS of any change in the principals of a registered firm, but Mr Cumberlidge had failed to inform ICAS that he had resigned as director of the firms.
• The Committee was satisfied that the conduct in charge 1 amounted to professional incompetence and the conduct in charges 2 and 3 amounted to professional misconduct. In reaching its decision on sanction, the Committee had regard to ICAS’ Sanctions Guidance.  The level of sanction reflects the fact that there were various aggravating factors including (i) that the concerns related to a repeated course of conduct, with repeated failures over a lengthy period of time, (ii) a lack of understanding or insight into the issues concerned, (iii) a reckless disregard for legal and regulatory responsibilities, and (iv) a failure or refusal to take remedial action.  On the other hand, there had been (i) partial cooperation with ICAS’ investigation, and (ii) no evidence that the client had suffered financial loss as a result of the conduct, or that Mr Cumberlidge or his firms had gained financially or otherwise.

Date of decision: September 2024

Date of publicity: October 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Steven Balfour guilty of professional misconduct on the following grounds:

In May 2023, at Aberdeen Sheriff Court, he was found guilty of the criminal charges of:

1. taking, permitting to be taken or making indecent photographs or pseudo-photographs of children, contrary to the Civic Government (Scotland) Act 1982, Section 52(1)(a) as amended, and

2. causing an older child to look at sexual images, contrary to Section 33(1) of the Sexual Offences (Scotland) Act 2009, and communicating indecently with an older child, contrary to Section 34(1) of the Sexual Offences (Scotland) Act 2009,

which brings discredit to him, ICAS and the profession of accountancy. He has failed to adhere to the fundamental principle of professional behaviour contained in Section 115 of the ICAS Code of Ethics and is therefore liable to disciplinary action under ICAS Rule 13.1.2.

Sanction

Under operation of Investigation Regulation 2.15, Mr Balfour has accepted an order of exclusion from membership, and a requirement to pay £695 in respect of the costs of the investigation.

Commentary

• In July 2023, it came to ICAS’ attention that Mr Balfour had been convicted of two serious criminal charges in Aberdeen Sheriff Court and sentenced to 30 months imprisonment. The matter had received some press coverage.
• The ICAS Rules provide that a member shall be presumed to be guilty of professional misconduct if convicted in the United Kingdom of an indictable offence or sentenced to imprisonment on summary complaint.  The Investigation Committee concluded that the criminal conviction is prima facie evidence that Mr Balfour is guilty of professional misconduct, and that he is liable to disciplinary action.
• The Committee also concluded that Mr Balfour has breached the fundamental principle of professional behaviour as set out in section 115 of the ICAS Code of Ethics, in that he failed to avoid actions which he knew (or should have known) would discredit the accountancy profession.
• Mr Balfour’s conduct fell far below the standards that the public reasonably expects of Chartered Accountants and is incompatible with his continued membership of ICAS. As such, the Committee concluded that no lesser penalty than exclusion was appropriate.

Date of decision: June 2024

Date of publicity: June 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Lane guilty of professional misconduct on the following grounds:

On 12 May 2023, Mr Lane was convicted of the criminal offence of assault, which brings discredit to him, ICAS and the profession of accountancy.  He has failed to adhere to the fundamental principle of professional behaviour contained in Section 115 of the ICAS Code of Ethics and is therefore liable to disciplinary action under ICAS Rule 13.1.2.

Sanction
Under operation of Investigation Regulations 2.15.3 and 2.15.5, Mr Lane has accepted an order of severe reprimand and a financial penalty of £2,500 and to pay £1,680 towards the reasonable costs of the investigation.

Commentary

• Mr Lane notified ICAS of this matter.
• Mr Lane was convicted of assault at Edinburgh Sheriff Court on 12 May 2023 and was sentenced on 9 June 2023.  The sentence received by Mr Lane comprised a community payback order of 180 hours and a compensation order of £1,500.
• The ICAS Rules provide that a member shall be presumed to be guilty of professional misconduct if (a) convicted in the United Kingdom of an indictable offence, or (b) sentenced to imprisonment on summary complaint.
• The Investigation Committee concluded that Mr Lane’s conviction represents prima facie evidence that he is guilty of professional misconduct, and that he is therefore liable to disciplinary action.  In addition, the Committee considered that Mr Lane has breached the fundamental principle of professional behaviour, as set out in Section 115 of the ICAS Code of Ethics, in that he failed to avoid actions which he knew (or should have known) would discredit the accountancy profession.
• Taking account of the nature of the offence, and the harm to a third party, the Committee took an extremely serious view of the case – regardless of the fact that the behaviour occurred in a non-professional capacity. The Committee had little difficulty in concluding that Mr Lane’s conduct fell far below the standards that members of the public reasonably expect of Chartered Accountants.
• Taking account of certain mitigating factors, the Committee decided that the matter could be dealt with through a sanction falling just short of exclusion from ICAS membership, namely an order of severe reprimand and a financial penalty of £2,500.
• Members require to notify ICAS of criminal charges or convictions in terms of Regulation 2.2 of the ICAS General Regulations.

Date of decision: March 2024

Date of publicity: May 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Kevin McLeod, a CA member and licensed insolvency practitioner, guilty of professional misconduct (in relation to charges 1, 2 and 4) and unsatisfactory professional conduct (in relation to charge 3) on the basis of the following:

1. When acting in the capacity of appointed liquidator of Company A, he failed to ensure that the estate money was at all times held subject to appropriate financial controls, and to safeguard the estate funds from misappropriation in breach of the requirements contained in paragraphs 2, 4, 6, 8 and 9 of Statement of Insolvency Practice 11.
2. When acting as trustee in sequestration of Debtor B, he failed to properly and timeously renew an inhibition to protect the estate’s interest in the heritable estate, to the actual or potential prejudice to creditors, in terms of Section 39A of the Bankruptcy (Scotland) Act 1985, and in breach of the requirements contained in Part 2.25 of the Accountant in Bankruptcy’s Notes for Guidance for Trustees (relating to bankruptcies granted between 1 April 2008 and 31 March 2015, version 8).
3. When acting as trustee in sequestration of Debtor B, he failed to properly recover, manage and realise the debtor’s estate as required in terms of Section 3 of the Bankruptcy (Scotland) Act 1985.
4. As sole director of his insolvency practice, TDC Solutions Limited, he failed to submit to Companies House the statutory accounts for his business, for the accounting periods ending:
   (a)  31 March 2019;
   (b)  31 March 2020;
   (c)  31 March 2021;
   (d)  31 March 2022
   as required by Section 441 of the Companies Act 2006.

Charges 1 - 3 constitute a breach of Regulation 4.12 of the ICAS Insolvency Regulations, and Charges 1 - 4 constitute a breach of the fundamental principles of professional competence and due care, and professional behaviour, contained in the Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15, Mr McLeod has accepted an order of exclusion from membership and a requirement to pay £8,470 in respect of ICAS’ costs.

Commentary

• In August 2022, the Investigation Committee (“the Committee”) received a referral from the ICAS Authorisation Committee following an insolvency monitoring visit to Mr McLeod. The referral related to concerns regarding (i) a failure to safeguard estate funds when acting as an appointed liquidator (in particular, he was not a signatory to the estate account where the funds were held for several months) and (ii) a failure to renew an inhibition over a property timeously when acting as a trustee in sequestration. Both these failures were to the actual or potential prejudice of the respective creditors.
• While investigating these matters, the Committee identified further concerns in relation to Mr McLeod’s handling of the sequestration. In particular, the Committee found that Mr McLeod had failed to properly recover, manage and realise the debtor’s estate and had delayed in progressing the sequestration. It also came to the Committee’s attention that no statutory accounts had been filed with Companies House since December 2018 in respect of Mr McLeod’s own insolvency practice, TDC Solutions Limited. This is a basic statutory requirement that a CA should be familiar with.
• The Committee determined that these failures were such a serious departure from the standards to be expected of an ICAS member and licensed insolvency practitioner that they constituted professional misconduct in respect of Charges 1, 2 and 4 and unsatisfactory professional conduct in relation to Charge 3.
• In reaching its decision on sanction, the Committee had regard to the Common Sanctions Guidance for Insolvency Complaints. The following aggravating factors were identified: (i) an apparent lack of understanding or acceptance of the charges; (ii) actual or potential prejudice to third parties; and (iii) Mr McLeod’s poor disciplinary and regulatory history. One mitigating factor was identified, in respect that Mr McLeod’s insolvency licence was subject to a restriction which would reduce the risk of reoccurrence or repetition of the conduct in Charges 2 and 3. However, the aggravating factors significantly outweighed the mitigating factors. The Committee concluded that the totality of Mr McLeod’s conduct demonstrated several distinct, fundamental failings and was so significant and impactful that no lesser sanction than exclusion was appropriate.

Date of decision: February 2024

Date of publicity: April 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Tassib Hussain of Keystone Accountants & Business Advisors guilty of professional misconduct on the following grounds:

1. On 15 November 2023, in the crown court at Southwark, Mr Hussain pled guilty to, and was convicted of, the criminal offence of fraud by false representation, which brings discredit to him, ICAS and the profession of accountancy. He has failed to adhere to the fundamental principle of professional behaviour contained in Section 115 of the ICAS Code of Ethics, and is therefore liable to disciplinary action under ICAS Rule 13.1.2.
2. Between June 2021 and November 2023, Mr Hussain used the designatory letters CA and the term Chartered Accountant(s) to describe himself and his firm when his membership had been suspended by an interim order of the ICAS Discipline Tribunal, in breach of the terms of the interim order and the ICAS Rules.

Sanction

Under operation of Investigation Regulation 2.15, Mr Hussain has accepted an order of exclusion from Membership.

Commentary

• In April 2021, the Financial Conduct Authority commenced criminal proceedings against Mr Hussain and a third party, for the offence of conspiracy to commit fraud by false representation.  The charges related to a series of mortgage applications made between January 2015 and March 2018.  It was alleged that Mr Hussain had created false employment documentation to support mortgage applications for clients with insufficient income.  As a result of the fraud, lenders granted mortgages to several applicants on a false basis, placing lenders at greater risk of loss. The total value of the mortgages applied for was circa £3.8 million.
• The matters in question occurred when Mr Hussain was a director of The Wizards of Abacus Limited, which traded as Keystone Chartered Accountants (now trading as Keystone Accountants & Business Advisors), based in Nottingham.
• In June 2021, the Discipline Tribunal granted an interim order suspending Mr Hussain from ICAS membership while the criminal proceedings were underway.  The order prevented Mr Hussain from referring to himself or his business as Chartered Accountants.
• In November 2023, Mr Hussain pled guilty to, and was convicted of, the indictable offence of fraud by false representation in the criminal proceedings.  The ICAS Rules provide that a Member shall be presumed to be guilty of professional misconduct if convicted in the United Kingdom of an indictable offence.  The Investigation Committee concluded that the criminal conviction is prima facie evidence that Mr Hussain is guilty of professional misconduct, and that he is liable to disciplinary action.
• The Committee also concluded that Mr Hussain has breached the fundamental principle of professional behaviour as set out in section 115 of the ICAS Code of Ethics, in that he failed to avoid actions which he knew (or should have known) would discredit the accountancy profession.
• Furthermore, there was evidence that Mr Hussain had publicly held himself out as a Chartered Accountant and traded his business under the designation ‘Chartered Accountants’ during the period when he was suspended from ICAS membership. The Committee concluded that this was a breach of the interim suspension order and the ICAS Rules.
• The Committee considered that the facts of the case are extremely serious, in that they involve: (i) financial impropriety by a Chartered Accountant in public practice, (ii) an abuse of a position of trust, and (iii) prejudice or potential prejudice to a third party. Mr Hussain’s conduct fell far below the standards that the public reasonably expects of Chartered Accountants and is incompatible with his continued Membership of ICAS. As such, the Committee concluded that no lesser penalty than exclusion was appropriate.

Date of decision: January 2024

Date of publicity: February 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Mr Graham Bridgeford of James Milne & Co (trading as James Milne Chartered Accountants), a CA member, guilty of unsatisfactory professional conduct on the basis of the following:

(i) While engaged to act as an accountant to Firm A, Mr Bridgeford failed to respond to correspondence from an executor in respect of the said business’ accounts (in order to assist with the winding up of an estate) as requested in their correspondence dated 3 October, 19 October, 15 November, 1 December and 16 December 2022 contrary to the fundamental principles of professional competence and due care and professional behaviour, contained in sections R113 and R115 of the ICAS Code of Ethics.
(ii)  By not responding in writing to correspondence from the Case Officer dated 22 March, 5 April, 3 May, 10 May, 15 June and 22 June and also failing to respond to telephone calls made to Mr Bridgeford by the Case Officer on 10 May and 6 June 2023, he failed to co-operate fully with the investigation of the complaint to ICAS in breach of Regulation 3.4 of the ICAS Investigation Regulations.

Sanction

Under operation of Investigation Regulation 2.15, Mr Bridgeford has accepted an order of reprimand, payment of a financial penalty of £2,000 and a requirement to pay £2,925 as a contribution towards ICAS’ costs.

Commentary

• On 26 January 2023, ICAS received a complaint from an executor of an estate, who raised concerns about Mr Bridgeford’s conduct while preparing the final accounts for Firm A that formed part of an executry.  In particular, the executor was concerned that Mr Bridgeford had failed on several occasions to respond to his correspondence requesting information related to Firm A’s accounts.
• Separately, the Committee was disappointed to note that Mr Bridgeford had failed to respond to correspondence from ICAS while investigating the matter, with correspondence going unanswered until a letter from the Convenor of the Committee was issued to Mr Bridgeford in June 2023 reminding him of his duty to co-operate.   Mr Bridgeford then failed to respond to a further deadline set by ICAS.
• On responding to the complaint, Mr Bridgeford advised ICAS that there were personal circumstances which had affected his ability to respond. Nonetheless, the Committee was of the view that Mr Bridgeford still had a duty to respond to ICAS as his regulator and to act professionally and diligently in all engagements.
• While acknowledging that the information requested by the executor has since been provided to Firm A’s new advisors, the Committee considered that Mr Bridgeford’s failure to provide this in a complete and timely manner breached the requirements of the ICAS Code of Ethics which requires members to act with diligence and professionalism in all client work.
• Further in failing to respond to ICAS, Mr Bridgeford was in breach of Investigation Regulation 3.4 which places a duty on members to co-operate fully and promptly with the investigation of a complaint.
• The Committee concluded that Mr Bridgeford’s conduct fell below the standards to be expected of an ICAS member, and that he was guilty of unsatisfactory professional conduct.
• In determining the appropriate level of sanction, the Committee had regard to the explanation provided by Mr Bridgeford for his failings, concluding that an order of reprimand was sufficient to allow it to issue a caution as to future conduct.
• The Committee considers that the finding should serve as a reminder to all CAs of the need for the investigation of a complaint by ICAS to be treated with priority.

Date of decision: December 2023

Date of publicity: January 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Ms Sandra Gault, formerly of SBP Accountants, guilty of professional incompetence on the basis of the following:

“On 30 August 2021, she signed the Independent Examiner’s Report to the Trustees of Association A (“the Association”) for the period ended 31 May 2021, when she failed to properly carry out the Independent Examination, insofar as she failed to ensure that the accounts, including the Trustees’ Annual Report, were correctly prepared in accordance with The Charities Accounts (Scotland) Regulations 2006 (as amended) and Charities SORP (FRS 102) ‘Accounting and Reporting by Charities: Statement of Recommended Practice’, in breach of the fundamental principle of professional competence and due care contained in section R113.1 of the Code of Ethics.”

Sanction

Under operation of Investigation Regulation 2.15, Ms Gault has accepted an order of reprimand.

Commentary

• In October 2021, ICAS received a complaint from a third party which raised concerns about the disclosures within the accounts of the Association for the period ended 31 May 2021.  The accounts had been prepared and independently examined by Ms Gault.
• The Association is a Scottish Charitable Incorporated Association (SCIO).  Prior to incorporation, the work of the SCIO was carried out through an unincorporated association.  The complaint raised concerns that Ms Gault, as independent examiner, had failed to ensure that the accounts of the Association (i) included all information required under Scottish charity legislation and (ii) were in the appropriate statutory format, with particular reference to the transfer of funds and assets from the previous unincorporated association.
• Responding to the complaint, Ms Gault advised that the 2021 accounts of the Association had required to be corrected on account of the disclosure errors.  In preparing an amended set of accounts, the trustees had agreed to prepare simplified receipts and payments accounts, rather than the fully accrued accounts that were the subject of the concerns.
• While the Committee acknowledged that Ms Gault subsequently prepared an amended set of accounts that mainly rectified the disclosure errors noted by the complainer, the Committee expressed concern that the exercise to amend the accounts had been prompted by the receipt of the complainer’s concerns.  Had it not been for the intervention of the complainer, the original accounts would have been filed with the Office of the Scottish Charity Regulator (OSCR) and available to the public on request.
• The Committee observed that the role of the independent examiner is to independently scrutinise a charity’s accounts, therefore playing a key part in maintaining public trust and confidence in charities.  In this instance, the Committee considered that the accounts were materially misstated by the impact of the transfer of funds from the previous unincorporated association.
• Overall, the Committee was disappointed to note that Ms Gault had not shown the competence required to prepare the accounts on behalf of the charity.  The accounts contained fundamental and basic errors that were not acceptable, especially where a charity had chosen to entrust the role of independent examiner to a CA.
• While acknowledging that the errors were limited to a single client engagement and one financial period, taking account of the number of errors, the Committee considered that Ms Gault’s failings fell within the definition of professional incompetence.  The Committee was therefore content that a disciplinary sanction should be applied and that an order of reprimand was sufficient to address the level of seriousness of the errors, which warranted a stronger sanction than a caution, but where the element of ongoing risk is considered to be relatively low.
• Acknowledging that Ms Gault appeared to have been experiencing difficult personal circumstances at the time the errors were made, the Committee decided that no financial penalty should be applied.
• The Committee considers that this case serves as a reminder to all CAs undertaking independent examination work for charities to ensure that they act diligently and in accordance with the professional standards as required by section 113 of the ICAS Code of Ethics.

Date of decision: November 2023

Date of publicity: January 2024

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Kevin McLeod, now of AABRS Limited, a CA member and licensed insolvency practitioner, guilty of professional misconduct on the basis of the following:

1. When acting as Trustee in fifteen Protected Trust Deeds, he:
   a.failed to timeously submit statutory accounts and Form 4s to the Accountant in Bankruptcy, in breach of paragraph 8.1 of Statement of Insolvency Practice 3A, and
   b.failed to administer the cases diligently and timeously.
2. When acting as Trustee in seven bankruptcies, he:
   a.failed, in five of the bankruptcies, to timeously submit statutory accounts to the Accountant in Bankruptcy, in breach of paragraph 5.3 of the Accountant in Bankruptcy’s Notes for Guidance for Trustees and
   b.failed, in three of the bankruptcies, to timeously submit statutory proposals for the discharge of the debtors, in breach of paragraph 2.22 of the Notes for Guidance for Trustees.
3. When acting as the appointed liquidator in eleven corporate insolvencies, he failed to timeously submit Forms 4.5 and 4.6 to the Accountant in Bankruptcy for filing, as required under the Insolvency (Scotland) Rules 1986 (ISR).
   
   Each of the failures set out above also constitutes a breach of Regulation 4.12 of the ICAS Insolvency Regulations, and the fundamental principles of professional competence and due care, and professional behaviour, contained in the Code of Ethics.
4. He dishonestly stated to ICAS that he had submitted statutory forms to the Accountant in Bankruptcy timeously, which constitutes a breach of the fundamental principle of integrity contained in the Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15, Mr McLeod has accepted an order of severe reprimand, payment of a fine of £5,000 and a requirement to pay £13,400 in respect of ICAS’ costs.

Commentary

• In March 2020, ICAS received a complaint from the Accountant in Bankruptcy (AiB) which raised concerns about Mr McLeod’s conduct and the administration of his insolvency caseload.  The concern related to his work as a sole practitioner trading as TDC Solutions Limited.  The AiB alleged that no statutory filings had been received in many of the cases for a number of years and their attempts to contact Mr McLeod to bring the filings up to date had been unsuccessful.
• The complaint was referred to the ICAS Investigation Committee to carry out an investigation into the allegations.  Mr McLeod disputed the allegations, claiming that the filings had been submitted to the AiB timeously.  The Committee carried out an extensive investigation including a review of his insolvency files.  Although the files appeared to show that most of the filings had been submitted timeously, the AiB’s position was that they had not been received.  On balance, and taking account of all the available evidence, the Committee reached the view that the filings had not been submitted to the AiB when they appeared to have been.  That being the case, the only conclusion the Committee could draw was that Mr McLeod had been dishonest.
• The Committee also concluded that Mr McLeod had not administered his personal insolvency cases diligently and timeously, for example by not discharging debtors or seeking his own discharge timeously, and by delaying payment of final dividends.
• The Committee determined that these failures were such a serious departure from the standards to be expected of an ICAS member and licensed insolvency practitioner that they constituted professional misconduct.
• In reaching its decision on sanction, the Committee had regard to the Common Sanctions Guidance for Insolvency Complaints.  The seriousness of the sanction reflects (i) that the concerns related to a repeated course of conduct, with repeated breaches over a number of appointments and a lengthy period of time, (ii) an apparent lack of understanding or acceptance of the charges, (iii) potential prejudice to third parties, and (iv) a finding of dishonesty.  Dishonesty is said to come at the top end of the spectrum of seriousness of misconduct, and the Committee gave serious consideration to seeking Mr McLeod’s exclusion from ICAS Membership or the withdrawal of his insolvency licence.  However, the Committee concluded that there were mitigating factors which justified a lower sanction, including (i) difficult personal circumstances and (ii) no evidence that he gained financially or otherwise from his actions. The Committee was also reassured that Mr McLeod is no longer a sole practitioner and has since joined a larger firm.

Date of decision:  June 2023

Date of publicity: July 2023

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Ronan Anthony Duffy of McCambridge Duffy LLP, a CA Member and licensed insolvency practitioner, guilty of unsatisfactory professional conduct on the basis of the following:

Contrary to the Insolvency Code of Ethics, and in particular sections 2130, R2312.9 and R2312.10, Mr Duffy failed to create sufficient written contemporaneous records of his ethical considerations when identifying, evaluating and responding to a potential threat to the fundamental principles, while appointed as Supervisor in an Individual Voluntary Arrangement.

Sanction

Under operation of Investigation Regulation 2.15, Mr Duffy has accepted a Caution, and a requirement to pay £3,400 as a contribution towards ICAS’ costs.

Commentary

• In October 2021, ICAS received a complaint from a debtor in an Individual Voluntary Arrangement (“IVA”), who raised concerns about the conduct of Mr Duffy whilst engaged as Supervisor in the IVA.  In particular, a company in which Mr Duffy was a shareholder had transferred money to the debtor both before and after the IVA was signed.
• Mr Duffy advised that he was initially unaware of the transfer of money and, on learning about it, he took steps to evaluate whether it gave rise to any threats to compliance with the fundamental principles in the Code of Ethics (“the Code”), including discussing the matter with a fellow insolvency practitioner. However, Mr Duffy admitted that he did not document his ethical considerations as required under the Code.
• The Investigation Committee concluded that, although the transfer of money did not constitute an actual conflict of interest, it could give rise to a perceived conflict of interest, and it was therefore important to follow the requirements in the Code.  The Code states that insolvency practitioners must be able to justify their actions and are expected to be able to demonstrate the steps that they took and the conclusions that they reached in identifying, evaluating and responding to any threats, both leading up to and during an insolvency appointment, by reference to written contemporaneous records.
• Mr Duffy sought to argue that he could not make a file note of his ethical considerations at the time because his paper file was inaccessible due to lockdowns in the early stages of the Covid-19 pandemic.  However, the Committee considered that written contemporaneous records could have been in any form, including electronic, and access to the paper file was not necessary.
• The Committee concluded that, in failing to document his ethical considerations, Mr Duffy’s conduct fell below the standards to be expected of an ICAS member and he was therefore guilty of unsatisfactory professional conduct.
• In reaching its decision on sanction, the Committee had regard to the Insolvency Service Common Sanctions Guidance.  The Committee concluded that there had been an inadvertent breach of the Code, and there were several mitigating factors including (i) full co-operation with ICAS’ investigation, (ii) the absence of any loss of monies to the insolvency estate and/or any third parties and (ii) evidence of remorse and insight into the issues concerned.

Date of decision:  May 2023

Date of publicity: May 2023

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Louis Edward Drake of Reading, England guilty of unsatisfactory professional conduct on the basis of the following:

During a Test of Professional Expertise assessment on 16 May 2022, he committed plagiarism by taking another person’s intellectual effort and presenting it as his own in answer to questions 1 and 4 of the assessment, contrary to Section 3.1 of the ICAS Exam Terms and Conditions, and the fundamental principle of integrity in the ICAS Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15, Mr Drake has accepted an order of reprimand, payment of a fine of £1,000 and a requirement to pay £1,000 as a contribution towards ICAS’ costs.

Commentary

• Mr Drake is training to become an ICAS CA through the apprenticeship programme. As part of the programme, Mr Drake undertook an end-point assessment on 16 May 2022.  The assessment was an open book exam based on reflective statements, requiring a critical examination of the relevant professional experience obtained in the last 12 months, the skills and behaviours used, and the lessons learned.
• ICAS uses plagiarism detection software to check assessment responses for plagiarism. The software showed that his response to question 1 was nearly identical to a previous submission by another student in a previous exam diet.  In addition, the findings showed that his response to question 4 overlapped with the same previous submission, with approximately half of the text being highlighted by the software. The ICAS Exam Board determined that Mr Drake’s assessment result should be set to a Fail, and referred the matter to the Investigation Committee to consider whether his conduct gave rise to a liability to disciplinary action.
• The Committee noted that Mr Drake had admitted copying his assessment answers from another student’s past paper.  He had signed a declaration to say that the answers were his own work and not copied from any other person’s work, which was not true.  This brought his integrity into question.  The Committee was satisfied that his conduct amounted to plagiarism as defined in ICAS’ Academic Integrity Policy.  The Committee therefore concluded that Mr Drake’s conduct fell below the standards expected of him as a CA Student and that he was guilty of unsatisfactory professional conduct.
• On enrolment with ICAS, all CA Students undertake to comply with ICAS’ Rules and Regulations and uphold the ethical and professional standards of ICAS.  The Investigation Committee will treat seriously any departure from those standards.
• In reaching its decision on sanction, the Committee had regard to the ICAS Sanctions Guidance, which sets out indicative sanctions for ethical breaches.  Mr Drake’s conduct demonstrated a lack of integrity which is serious and concerning.  However, there were also several mitigating factors which the Committee took into account when reaching its decision, including (i) full co-operation with ICAS’ investigation, (ii) evidence of good practice both before and since the issues occurred, and (ii) evidence of remorse and insight into the issues concerned.
• Ethics and academic integrity are the cornerstones of what it means to be an ICAS Chartered Accountant (CA), and the foundation for trust in the accountancy and finance profession.  By taking effective and proportionate disciplinary measures, ICAS seeks to uphold the highest academic standards and ensure the quality of the CA qualification.

Date of decision:  February 2023

Date of publicity: March 2023

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Mohammed Urfan Moughal, a CA Member and principal of the firms Jackson Moughal Limited and Jackson Moughal Audit Limited (“the Firms”), guilty of professional misconduct on the following grounds:

As the sole principal of the Firms, he failed to ensure that breaches of the requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 were addressed within a prompt timescale, in breach of Regulations 4.1, 4.2, 6.4.4, and 6.4.5 of ICAS’ Public Practice Regulations.

Sanction
Under operation of Investigation Regulations 2.15.2, 2.15.4 and 2.15.5, Mr Moughal has accepted an order of reprimand, payment of a financial penalty of £4,000 and £3,042 in respect of the costs of ICAS' investigation.

Commentary

• Mr Moughal has been a member of ICAS since 2000. He is the sole principal of the Firms and holds a practising certificate.
• In October 2018, a practice monitoring visit was conducted by ICAS to assess (among other things) the Firms’ compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).  The visit identified that there were several instances in which Mr Moughal had failed to ensure that adequate anti-money laundering (AML) processes were in place in the Firms, including:
  • Mr Moughal had not completed and submitted a whole firm risk assessment for each of the Firms, to identify and assess the risks of money laundering and terrorist financing to the Firms’ businesses.
  • There was no formal AML policy for the Firms, documenting the policies, controls and procedures in place to mitigate and manage effectively any risks of money laundering and terrorist financing.
  • There was insufficient evidence that a comprehensive, regular AML compliance review had been undertaken for the Firms.
  • There were concerns over the quality and consistency of customer due diligence documentation recorded on client files.
  • There was insufficient evidence that regular staff training on AML obligations had been provided and that staff had understood the content.
• These failures constituted breaches of the MLRs.  The ICAS Authorisation Committee wrote to Mr Moughal on 13 March 2019 asking him to rectify the breaches by 30 June 2019.   Although some action was taken to remedy certain of the breaches in the interim, he did not fully rectify the breaches until May 2020.  In failing to ensure that the breaches of the MLRs were rectified promptly, Mr Moughal also failed to comply with certain provisions of ICAS’ Public Practice Regulations which require Members and Firms to cooperate fully and promptly with the Authorisation Committee and the Practice Monitoring team.
• The Authorisation Committee referred the matter to the Investigation Committee.  In determining the matter, the Investigation Committee considered that the work involved in rectifying the MLR breaches was not complex and ought to have been achievable within the initial three-month deadline set by the Authorisation Committee.  The Practice Monitoring team had provided Mr Moughal with templates to assist him in doing so.  Although Mr Moughal had cited pressures of work, the Committee agreed that CAs running their own practice must be aware of their regulatory responsibilities and ensure that they have adequate time and resource to meet these in full.
• The Committee had regard to the ICAS Sanctions Guidance when determining the appropriate sanction.  It was noted that Mr Moughal was facing some difficult personal circumstances at the time of the breach, and that a further practice monitoring visit to the Firms has since been carried out which did not disclose any significant AML failures.  However, the Committee was concerned that Mr Moughal had demonstrated a reckless attitude to AML compliance and did not appear to understand the importance of the follow-up actions he was asked to implement after the initial monitoring visit.  The Committee therefore concluded that his conduct represented a serious departure from the standards expected of an ICAS member. The conduct was sufficiently serious to constitute professional misconduct.
• As part of its commitment to be an effective supervisory body for anti-money laundering, ICAS will take disciplinary action where there is evidence of a failure by its supervised entities and individuals to adequately meet their AML obligations.  By taking effective and proportionate disciplinary measures, ICAS ensures the protection of the public interest, and the maintenance of public confidence in the profession of accountancy and proper standards of conduct and competence in relation to AML compliance.

Date of decision:  October 2022

Date of publicity: December 2022

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found RSM UK Audit LLP (“the Firm”) guilty of professional incompetence and of failing to adhere to the Regulations governing the regulation of Firms in respect of the following charges:

With regard to its audit of the financial statements of Company A for 2017, the Firm:

1. Failed to undertake audit work set out in its audit planning in respect of sensitivity analysis of the financial forecasts prepared by management for going concern assessment purposes, in breach of ISA 330 ‘The Auditor’s Responses to Assessed Risk’, paragraph 28 (c) and ISA 570 ‘Going Concern’ paragraph 9(a).
2. Failed to exercise professional scepticism in respect of the role of a third party in the Company’s cashflow forecasts, in breach of ISA 200 ‘Overall Objectives’, para 15, ISA 240 ‘Fraud’, paragraph 12, ISA 570 ‘Going Concern’ paragraphs 12D-1 and 9(a).
3. Failed to record responses to assessed risks in respect of potential management manipulation and disruption, which are a breach of ISA 330 ‘The Auditor’s Responses to Assessed Risks’, paragraph 28.

Which failures constitute professional incompetence and a breach of Regulation 3.10 of the ICAS Audit Regulations.

Sanction

Under operation of Investigation Regulation 2.15.3, 2.15.4 and 2.15.5, the Firm has accepted an order of severe reprimand, with a financial penalty in the sum of £80,000 and a requirement to pay £56,654 towards the costs of the investigation.

Commentary

• The 2017 financial statements for Company A were audited by the Firm. The Firm issued an unmodified audit report in respect of such statements. Within twelve months of signing the audit report, the directors of the Company appointed administrators.
• The Firm identified going concern as a significant risk during audit planning.  The Firm’s going concern audit programme, within the audit planning section of the file, specifically included steps for the audit team to consider forecasts covering a minimum period of twelve months from the date of the signing of the financial statements supported by (amongst other things) sensitivity analysis,  in terms of (i) the Company’s directors preparing cashflow forecasts supported by sensitivity analysis; (ii) the Firm obtaining the Company’s profit and cashflow forecast and sensitivity analysis on which the directors based their assessment; and (iii) the Firm confirming that such analysis was consistent with the assumptions made by the directors in producing the forecasts.
• ICAS received an expert report. On review of the Firm’s audit files the expert did not find sufficient evidence of sensitivity analysis being applied to the Company’s cashflow forecasts either by management or the Firm. In particular, the expert did not accept that the revised forecasts prepared by the Company for going concern purposes, as obtained and scrutinised by the Firm, constituted sensitised forecasts. The Committee agreed with the expert in this regard.
• While recognising that the applicable ISA at the time did not include a requirement for an auditor to carry out sensitivity analysis, the Firm’s going concern audit programme included steps for the audit team to consider forecasts supported by (amongst other things) sensitivity analysis, as outlined above. The Committee was of the view that it would have expected the Firm to have received and reviewed sensitised forecasts as part of its assessment of going concern, particularly where the Firm had identified going concern as a significant audit risk and where there was limited covenant headroom within the forecasts provided by the Company, notwithstanding that such limited headroom was considered by the Firm.
• The Committee was of the view that this was crucial to the sufficiency of audit evidence to enable the Firm to conclude on the adequacy of the procedures undertaken by the directors in determining the appropriateness of the application of the going concern basis of accounting, including the existence of any material uncertainties.
• Notwithstanding the audit work performed by the Firm in relation to the revised forecasts and in relation to going concern more widely, the Committee considered that the Firm had failed to undertake audit work specifically in respect of a review of sensitised forecasts for going concern purposes, and that this was a deficiency in the Firm’s audit work, which constituted a breach of ISAs 330 and 570.
• In respect of the second charge, the Committee noted that the Firm failed to adequately document its assessment of the role of a third party in assisting the Company to prepare its cashflow forecasts, with particular reference to the potentially biased role of the third party. While there was no evidence that such bias on the part of the third party had occurred, the Committee concluded that the failure to adequately document its assessment was in breach of ISAs 200, 240 and 570.
• For charge three, the Committee found that the Firm failed to adequately document its responses to the specific risks identified by it, including the risk that external factors may cause management to manipulate the financial statements and the risk that management may attempt to disguise financial instability. Again, while there was no evidence of actual manipulation, nor evidence of capability or competence concerns over the actual forecasts and financial statements prepared by management, the Committee concluded that the Firm’s failure to adequately document its responses to the risks constituted a breach of ISA 330.
• The Committee acknowledged that the breaches did not indicate systemic weaknesses in the Firm’s audit approach.
• When assessing sanction, the Committee took account of the Firm’s full cooperation throughout the investigation. The financial penalty takes account of various factors, including the need for deterrence and the financial resources of the Firm.

Date of decision: June 2022

Date of publicity: July 2022

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Ian Scott McGregor, a CA member, and formerly a principal of Grainger Corporate Rescue and Recovery Limited, liable to disciplinary action on the basis of the following:

“Between 19 April 2018 and 12 March 2020, when acting as trustee in the sequestrations of seven individuals:

1. he failed to identify that the sequestrations ought to have been applied for and administered in
   the Republic of Ireland;
2. he failed to carry out adequate investigations into the reasons for the debtor’s insolvency and the debtor’s liabilities, assets and income, to allow him to fulfil his functions as trustee under the Bankruptcy (Scotland) Act 2016;
3. when suspicions arose that an offence had been committed, failed to report his suspicions to the Accountant in Bankruptcy as required in terms of Section 50(3) of the Bankruptcy (Scotland) Act 2016; and
4. he failed to comply with the provisions of section 5.1 of the CCAB Anti-Money Laundering Guidance for the Accountancy Sector relating to customer due diligence,

in breach of the fundamental principles of professional competence and due care and professional behaviour contained in Sections 400.4(c) and 400.4(e) of the Code of Ethics.”

Sanction

Under operation of Investigation Regulation 2.15, Mr McGregor has accepted an order of severe reprimand, payment of a fine of £12,500 and a requirement to pay £23,740 as a contribution towards ICAS’ costs.

Commentary 

• In April 2020, ICAS received a complaint from the Accountant in Bankruptcy (AiB) which raised concerns over Mr McGregor’s administration of seven bankruptcy cases for which he was the court appointed trustee. All seven bankruptcy cases involved debtors who were Republic of Ireland nationals and had the same petitioning creditor.
• Although sequestration had been awarded in Scotland on the basis that the debtors resided there and there was a minimum level of debt in Scotland, the AiB subsequently identified that the debtors were not resident in Scotland and had sizeable debts due to creditors in the Republic of Ireland. The AiB successfully petitioned for the bankruptcies to be recalled in January 2020, on the basis that a majority in value of the creditors reside in a country other than Scotland and that it is more appropriate for the debtor's estate to be administered in that other country, in terms of section 30(2)(b) of the Bankruptcy (Scotland) Act 2016 (“the Act”).
• Following a review of Mr McGregor’s files, the Committee concluded that there were concerning and obvious similarities between the bankruptcies that should have alerted him to the fact that Scotland was not the appropriate jurisdiction.
• While the Committee acknowledged that Mr McGregor may have relied to an extent on the initial award of sequestration by the Court, it noted that this did not absolve him from the responsibility of carrying out investigations post appointment. With reference to his files, the Committee concluded that Mr McGregor failed to demonstrate that he had carried out adequate investigations into the reasons for the debtors’ insolvency, their assets, liabilities, residential status and income to enable him to comply with his statutory obligations under Section 50(1) of the Act.
• In respect of the third charge, while noting Mr McGregor’s position that he had identified concerns regarding the bankruptcies shortly before recall, the Committee noted that his files did not document his consideration of the concerns, nor his reasons for not reporting his suspicions to the AiB. The Committee therefore considered that Mr McGregor had breached his statutory duty under Section 50(3) of the Act to report to the AiB where he has reasonable ground to suspect that a debtor has carried out an offence.
• With reference to Mr McGregor’s Anti-Money Laundering procedures, the Committee determined that he had failed to carry out an adequate risk based approach to determining the degree of customer due diligence required and that there were demonstrable errors in the recording of the dates of verification of identity for certain debtors. The Committee concluded that these were sufficiently serious to amount to a breach of the guidance contained in CCAB Guidance.
• The Committee considered that the performance of Mr McGregor’s work fell so significantly short of the standards expected as to constitute professional incompetence.
• In reaching its decision on sanction, the Committee had regard to the Common Sanctions Guidance. The seriousness of the sanction reflects (i) that the concerns related to a repeated course of conduct over multiple bankruptcies and over a sustained period of time and (ii) the potential prejudice to third parties had actions not been taken by the AiB to petition for recall.

Date of decision: January 2022

Date of publicity: February 2022

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Derek Alan Jackson of GCRR Limited, a CA member and licensed insolvency practitioner, liable to disciplinary action on the basis of the following:

"Between 21 March 2019 and 12 March 2020, when acting as trustee in the sequestrations of three
individuals:

1. he failed to identify that the sequestrations ought to have been applied for and administered in the Republic of Ireland,
2. he failed to carry out adequate investigations into the reasons for the debtor’s insolvency and the debtor’s liabilities, assets and income to allow him to fulfil his functions as trustee under the Bankruptcy (Scotland) Act 2016,
3. when suspicions arose that an offence had been committed, he failed to report his suspicions to the Accountant in Bankruptcy as required in terms of Section 50(3) of the Bankruptcy (Scotland) Act 2016, and
4. he failed to comply with the provisions of section 5.1 of the CCAB Anti Money Laundering Guidance for the Accountancy Sector relating to customer due diligence,

in breach of the fundamental principles of professional competence and due care and professional behaviour contained in Sections 400.4(c) and 400.4(e) of the Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15, Mr Jackson has accepted an order of severe reprimand,
payment of a fine of £7,500 and a requirement to pay £13,870 as a contribution towards ICAS’ costs.

Commentary

• In April 2020, ICAS received a complaint from the Accountant in Bankruptcy (AIB) which raisedconcerns about Mr Jackson’s administration of three Scottish bankruptcy cases for which he was the court appointed trustee.
• Although sequestration had been awarded in Scotland on the basis that the debtors resided in Scotland and there was a minimum level of debt in Scotland, the AIB subsequently identified that the debtors were not resident in Scotland and had sizeable debts due to creditors in the Republic of Ireland. The AIB successfully petitioned for the bankruptcies to be recalled in January 2020, on the basis that a majority in value of the creditors reside in a country other than Scotland and that it is more appropriate for the debtor's estate to be administered in that other country, in terms of section 30(2)(b) of the Bankruptcy (Scotland) Act 2016 (“the Act”).
• Following a review of Mr Jackson’s files, the Committee concluded that there were concerning and obvious similarities between the bankruptcy cases which he ought to have identified and which would have alerted him to the fact that Scotland was not the appropriate jurisdiction.
• While the Committee acknowledged that Mr Jackson may have relied to an extent on the initial award of sequestration by the Court, it noted that this did not absolve him from the responsibility of carrying out investigations post appointment. With reference to his files, the Committee concluded that Mr Jackson failed to demonstrate that he had carried out adequate investigations into the reasons for the debtors’ insolvency, their assets, liabilities, residential status and income to enable him to comply with his statutory obligations under Section 50(1) of the Act.
• In respect of the third charge, it was clear that Mr Jackson had sufficient information in his possession to have raised concerns with the AIB that the debtors were seeking insolvency procedures in the wrong jurisdiction in order to escape responsibility to repay their debts and retain their assets in the Republic of Ireland. There was no evidence in Mr Jackson’s files to suggest that he had concerns or that he had considered reporting them.
• With reference to Mr Jackson’s Anti-Money Laundering procedures, the Committee determined that he had failed to take an adequate, risk based approach to determining the degree of customer due diligence required and that there were demonstrable errors in the recording of the dates of verification of identity for certain debtors. The Committee concluded that these were sufficiently serious to amount to a breach of the guidance contained in CCAB Guidance.
• The Committee considered that the performance of Mr Jackson’s work fell so significantly short of the standards expected as to constitute professional incompetence.
• In reaching its decision on sanction, the Committee had regard to the Common Sanctions Guidance. The seriousness of the sanction reflects (i) that the concerns related to a repeated course of conduct over multiple bankruptcies and over a sustained period of time and (ii) the potential prejudice to third parties had actions not been taken by the AiB to petition for recall.

Date of decision: January 2022

Date of publicity: Ferbuary 2022

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Gareth G Curle, a CA member, and principal of Curle & Co, liable to disciplinary action on the basis of the following in his capacity as accountant to Company A:

1. In preparing a corporation tax return for Company A for the year ended 30 April 2016, he allowed the amortisation of goodwill which Company A acquired from Company B to be included as a tax-deductible expense, when he knew, or ought to have known, that this was not an allowable expense under the applicable legislation.
2. Between June 2017 and July 2018, in relation to an investigation into Company A’s corporation tax return for the year ended 30 April 2016, he engaged in correspondence with HMRC which he knew, or ought to have known, (i) included statements which were false or misleading, (ii) included information furnished recklessly, and/or (iii) omitted or obscured information required to be included where such omission or obscurity would be misleading.
3. Between June 2017 and July 2018, in relation to an investigation by HMRC into Company A’s corporation tax return for the year ended 30 April 2016, he failed to ensure that his files included appropriate documentation of: (i) instructions from Company A’s directors, and (ii) communications to the directors in respect of the investigation.
4. On or around 19 October 2016, he caused or permitted his firm to prepare an accountant’s certificate for a client, and submit it to a financial institution, stating that they had been a client of the firm for five years and including financial information for a company of which they were a director, when he knew, or ought to have known, that the content of the certificate was: (i) false or misleading, and/ or (ii) furnished recklessly.

With reference to the first charge, Mr Curle was found to be guilty of professional incompetence under ICAS Rule 13.1.1. With reference to the remaining charges, it was held that he breached the fundamental principles of integrity and professional behaviour contained in Section 110.1, 110.2 and 150.1 of the ICAS Code of Ethics, and was thereby guilty of professional misconduct under ICAS Rule 13.1.2.

Sanction

Under operation of Investigation Regulation 2.15, Mr Curle has accepted an order of severe reprimand, payment of a fine of £7,500 and a requirement to pay £4,000 as a contribution towards ICAS’ costs.

Commentary

• In July 2019, ICAS received a complaint from the director of Company A (“the Company”).  The complaint followed an HMRC enquiry into the corporation tax return of the Company for the year ended 30 April 2016, which led to HMRC deciding that a deduction for an amortisation charge for goodwill was not allowable.  Mr Curle was responsible for the preparation of the corporation tax return.
• Following a review of Mr Curle’s files for the engagement, the Committee concluded that the corporation tax return prepared by Mr Curle was incorrect, insofar as the amortisation charge was wrongly included as a tax allowable deduction.
• However, of more concern to the Committee was Mr Curle’s communications with HMRC on behalf of the Company during its enquiry, which included the presentation of amended documents to HMRC, in an attempt to secure a tax saving on behalf of the Company.
• The Committee concluded that the evidence available from Mr Curle’s working paper files supported that the original documents were an accurate representation of events.
• The Committee observed that Mr Curle, as tax agent for the Company, had a responsibility to serve his client’s interests whilst upholding the profession’s reputation and the need to take account of the wider public interest.  This included an obligation at all times to act in accordance with the fundamental principle of integrity in the ICAS Code of Ethics.
• The Committee did not accept Mr Curle’s response that he was acting on the instructions of the directors of the Company in presenting the amended documents, noting that Mr Curle’s working papers files did not evidence such instructions.  Notwithstanding this, the Committee considered that even if it could be proved that the client gave such instructions, there was no evidence in the working paper files to suggest that Mr Curle challenged the client on these instructions.
• Ultimately, the Committee did not consider that it was necessary to establish that Mr Curle was solely responsible for the information presented to HMRC to determine the allegation, rather it was enough to demonstrate that he had been associated with the information by presenting it to HMRC.  In particular, the Committee observed that it was reasonable to conclude that HMRC obtained additional confidence from the information presented by Mr Curle as a Chartered Accountant, by virtue of his assumed experience, integrity and general reputation.
• The Committee considered that Mr Curle’s actions in presenting the information to HMRC was in breach of the fundamental principles of integrity and professional behaviour.
• In respect of the fourth charge regarding the accountant’s certificate, the Committee noted that Mr Curle accepted that the certificate was inaccurate but sought to argue that it was in draft form only, had been prepared by a qualified accountant, and had not been provided to the financial institution.
• While the Committee acknowledged that there was no clear evidence to support that Mr Curle had knowledge of the completed certificate, nor that the financial institution had relied upon it for the purposes of advancing mortgage funds, on balance it concluded that there was sufficient evidence to support that the certificate had been sent to the lender.
• The Committee considered that, as the sole principal of his firm, Mr Curle was ultimately responsible for the submission of an inaccurate certificate and decided that this was sufficient to establish a breach of the fundamental principles of integrity and professional behaviour.
• The seriousness of the sanction reflects (a) that the concerns did not relate to a single breach of the Code, but rather three instances over a sustained period of time and (b) the potential prejudice which could have been caused to HMRC and the lender (the potential prejudice arising in the event that they might otherwise have relied on the information presented by Mr Curle).

Date of decision: June 2021

Date of publicity: July 2021

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Geoffrey A Joseph, a CA member, and principal of Geoffrey Joseph & Co, liable to disciplinary action on the basis of the following, in respect of his work as independent examiner of a charitable trust (“the Trust”):

For each of the years ended 31 March 2018 and 31 March 2019, your work as independent examiner of the Trust fell below the standards expected of a reasonably competent independent examiner, insofar as you failed to ensure that the examinations were performed in accordance with the legal and regulatory framework for independent examinations in England and Wales, including the provisions of the Charities Act 2011 and the Directions given by the Charity Commission for England and Wales under section 145(5)(b) of the 2011 Act, thereby breaching the fundamental principle of competence and due care contained in Section 130.1 of the ICAS Code of Ethics.

Sanction

Under operation of Investigation Regulation 2.15, Mr Joseph has accepted an order of reprimand, payment of a fine of £1,000 and a requirement to pay £1,700 towards the costs of ICAS’ investigation.

Commentary

• In November 2019, ICAS received a complaint from a third party which raised concerns about the work of Mr Joseph in his capacity as independent examiner of the Trust.  In particular, the complainer drew attention to a number of possible errors or omissions in the format and disclosure of the Trust accounts for the year ended 31 March 2018.
• Responding to the complaint, Mr Joseph advised that the 2018 accounts had required to be corrected and resubmitted to the Charity Commission on account of disclosure errors in the accounts prepared by the Trust.
• As part of the investigation of the matter, ICAS reviewed Mr Joseph’s work in carrying out the independent examinations for the Trust for the years ended 31 March 2018 and 2019.
• Having carefully considered Mr Joseph’s work, the Committee determined that there were various aspects of his work which fell below the standards which would be reasonably expected of a Chartered Accountant undertaking an independent examination.
• In particular, the Committee noted Mr Joseph’s failure to prepare documentation to show that the examination was performed in accordance with the Directions set out in the Charity Commission for England and Wales’ ‘Independent examination of charity accounts: Directions and guidance for examiners’ (“the Directions”).
• In respect of the 2018 independent examination, Mr Joseph had been appointed at a late stage to assist the Trust in meeting its regulatory requirements.  The Committee acknowledged that he acted with a view to helping the Trust, and had not intentionally sought to disregard the requirements of the Directions.
• However, the Committee considered that Mr Joseph appeared to have failed to keep up to date with the regulatory requirements and responsibilities of the examiner in relation to the scrutiny of accounts.
• It was therefore necessary to balance the good intentions of Mr Joseph with the clear public interest attached to carrying out an appropriate examination of a Trust, particularly one that benefits from public monies.
• Taking these factors into account, the Committee considered that the matter could be appropriately disposed of by way of the sanction accepted by Mr Joseph.

Date of decision: March 2021

Date of publicity: April 2021

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Robert L H Crawford, a CA member, and principal of Jeffrey Crawford & Co, liable to disciplinary action on the basis of the following, in respect of his work as independent examiner of a charitable trust (“the Trust”):

1. Mr Crawford failed to adequately evaluate whether he was sufficiently independent of the Trust, or its Trustees, prior to undertaking the independent examination of the Trust for each of the years 2009, 2010 and 2011.

2. When undertaking independent examinations of the Trust for the years 2009 and 2010, Mr Crawford failed to adequately identify, evaluate, or document issues which ought to have caused him to (i) issue a qualified independent examiner’s report in accordance with Regulations 11(3)(f) and 11(3)(g)(i) of the Charities Accounts (Scotland) Regulations 2006, and/or (ii) make a report to OSCR under Section 46(2) or 46(3) of the Charities & Trustee Investment (Scotland) Act 2005, namely:

(a) low levels of charitable grant-making;

(b) payments and loans made to trustees and connected parties;

(c) sums owed to and by the Trust’s subsidiary investment company by trustees and connected parties;

(d) an unsecured, interest-free loan made to the Trust’s subsidiary investment company;

(e) questions over the Trust’s governance, with no evidence of meetings, collective decision-making, or independent trustees; and

(f) a decision by a trustee to allow the Trust’s subsidiary investment company to incur an unnecessary corporation tax charge in the sum of £40,887.

3. Prior to finalising the accounts for a related limited company, for the year ended 31 May 2010, Mr Crawford failed to ensure that the director of the company had provided sufficient documentation to allow Mr Crawford to assess whether there had been any significant post balance sheet transactions.

Sanction

Under operation of Investigation Regulation 2.15, Mr Crawford has accepted an order of severe reprimand, payment of a fine of £7,500 and a requirement to pay £8,500 as a contribution towards ICAS’ costs.

Commentary

In December 2018, ICAS received a report which raised concerns over Mr Crawford’s conduct in relation to one of his clients (“X”), who had recently accepted criminal charges of embezzlement and was awaiting sentencing.

While Mr Crawford had acted for X for many years in different capacity, the report to ICAS focused on his work as independent examiner for a charitable trust (“the Trust”) for which X was the principal trustee.

In 2012, it was discovered that X had sold the main asset of the Trust and had used the sums for personal benefit, rather than for the benefit of the Trust. This was the embezzlement for which X had been convicted.

It is important to emphasise that it has not been suggested by anyone that Mr Crawford was aware of the embezzlement before the event, or that he assisted X in any criminal activity. He discharged his reporting obligations after the embezzlement came to his attention and assisted the investigating authorities in their inquiries.

However, having carefully considered Mr Crawford’s work as independent examiner of the Trust (with file reviews and the engagement of an expert), the Investigation Committee determined that there were various aspects of his work which fell below the standards which would be reasonably expected of a Chartered Accountant undertaking an independent examination.

Across each of the charges, the Committee considered that Mr Crawford failed to adequately consider his obligations under the relevant legislation and the ICAS Code of Ethics.

As listed in the second charge, there were various ‘red flags’ which should have triggered extra caution on Mr Crawford’s part. Whilst the Committee accepted that Mr Crawford had, over time, raised concerns with X, it considered that, when faced with X’s responses and inaction, Mr Crawford ought to have had more regard to the interests of the Trust and other third parties.

In particular, the Committee considered that there was no reasonable explanation for Mr Crawford’s failure to (i) qualify his independent examiner’s report, or (ii) report to OSCR under the relevant legislation at an earlier point.

In reaching this conclusion, the Committee was careful not to conclude that Mr Crawford’s actions or inactions caused or allowed the embezzlement to occur.

The seriousness of the sanction reflects the number of failings over a sustained period of time, as well as the higher public interest with the involvement of a charitable trust.

Date of decision: February 2021

Date of publicity: February 2021

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found that Mr Andrew Clark is liable to disciplinary action on the basis of the following:

1. Between December 2016 and April 2017, Mr Clark failed to adequately identify, evaluate, or manage threats to the fundamental ethical principles which arose through his conduct in connection with a supplier company, which company was a key supplier to Mr Clark’s employer, Company A, and whose contract was being renegotiated at that time.
2. In 2016, Mr Clark allowed corporate funds to be used to pay for a charity auction prize for use in a personal capacity, in breach of the fundamental principles of ‘integrity’ and ‘professional behaviour’ in Sections 110 and 150 of the ICAS Code of Ethics, as well as a breach of his responsibilities as a Member in Business under Section 300.8 of the Code.

Sanction

Under operation of Investigation Regulation 2.15, Mr Clark has accepted an order of severe reprimand, payment of a fine of £3,000 and a requirement to pay £2,000 as a contribution towards the costs of ICAS’ investigation.

Commentary

• The issues in question were brought to the attention of ICAS in June 2019, through a complaint by an officer of a Local Authority. Concerns were raised over Mr Clark’s conduct in his previous role as director of Company A, to which the Local Authority had outsourced various work and services.
• The first charge concerned Mr Clark’s conduct in relation to a supplier of Company A between December 2016 and April 2017, during which time, the Local Authority was renegotiating the terms of the supplier’s agreement (of which fact the Member was aware).
• The Adjudication Committee considered that, during this period, Mr Clark failed to adequately identify, evaluate, or manage threats to the fundamental ethical principles which arose in his dealings with the supplier.
• In particular, the Adjudication Committee reviewed email correspondence which showed that the Member received or sought from the supplier actual or potential benefits (e.g. a potential job for a family member, hospitality, and free car hire).
• Regardless of the level of the benefits, or whether they were ultimately received, the Adjudication Committee considered that it ought to have been clear to the Member that, as a senior employee of Company A, he should not have placed himself in a position where a third party might reasonably perceive that he either obtained, or sought to obtain, benefits from a supplier who had a keen interest in maintaining favour with a contractor.
• In addition, Mr Clark engaged in email correspondence with the supplier regarding the renegotiation of the contract with the Local Authority. While Mr Clark argued that his involvement had no impact on the contract negotiations, the Adjudication Committee considered that any level of discussion should have been avoided.
• In relation to the second issue, Mr Clark had used corporate funds belonging to Company A to pay for a £1,000 charity auction prize which was subsequently used by him in a personal capacity, with no repayment to Company A.
• Mr Clark asserted that this was an innocent oversight on his part. The Committee considered that if he intended to use the prize in a personal capacity, he ought to have paid for it from personal funds on the night of the auction. Failing that, it was then incumbent on him to ensure that the money was repaid at the earliest opportunity. If Mr Clark’s failure to repay the money was not intentional, it was extremely careless and/or reckless.
• The Committee considered that each of the breaches of the Code of Ethics were sufficiently serious as to support a finding of professional misconduct.
• In determining sanction, the Adjudication Committee noted that, with regard to the first charge, Mr Clark had accepted during the investigation that he ought to have acted differently. With regard to the second charge, it noted that Mr Clark has offered to repay the money to the Local Authority.

Date of decision:  January 2021

Date of publicity: February 2021

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Alan Speed, a CA Member and director of McKenzie Accountants Limited, guilty of unsatisfactory professional conduct on the following grounds:

“When preparing and submitting the personal tax returns for Mr C for the financial years ended 5 April 2011 to 5 April 2016, he failed to ensure that the client received and approved their personal tax returns prior to submission to HMRC, which represents a breach of the fundamental principle of competence and due care contained in Section 130.1 of the ICAS Code Ethics, as well as a failure to follow the applicable relevant guidance in the Professional Conduct in Relation to Taxation (as varied from time to time)”.

He is therefore liable to disciplinary action under ICAS Rule 13.1.3.

Sanction

Under operation of Investigation Regulation 2.15, Mr Speed has accepted an order of reprimand and a requirement to pay £2,050 towards the costs of ICAS’ investigation.

Commentary

• Mr Speed acted as accountant and tax adviser to Mr C, from around the year 2000 until the preparation of his tax return for the year ended 5 April 2016.
• Mr Speed produced evidence to support his position that he provided copies of paper tax returns to Mr C for signature prior to submission to HMRC, up to and including the tax year ended 5 April 2008.
• It is understood that Mr Speed then moved over to online submission of tax returns for Mr C for the year ended 5 April 2009. Mr Speed accepts that, for the years ended 5 April 2009 to 2016, he did not provide Mr C with copies of his tax returns for approval either in advance of, or following, online submission to HMRC. Rather, Mr C was only provided with copies of his business accounts and related tax computation following submission to HMRC.
• The Committee observed the Professional Conduct in Relation to Taxation (“PCRT”) (applicable 4 January 2011) paragraph 3.21 which states the following in respect of tax returns: “A member should obtain the client’s approval of the return in writing, which includes via email.” The Committee noted that subsequent editions of the PCRT contain a similar requirement.
• While the Committee noted Mr Speed’s position that his actions were to ensure the client met the relevant filing deadlines, the Committee did not accept that practical difficulties in obtaining approval from a client to their tax return was a reasonable excuse for not complying with the requirement of the PCRT. The Committee observed that it is a fundamental step that a client approves their tax return. This is for the protection of the client, who is ultimately responsible for its contents. It is also in the interests of the Member, who has relied upon the accuracy and completeness of information provided by the client in preparing the return.
• The Committee concluded that the failure to adhere to the guidance in the PCRT amounted to a breach of the fundamental principle of competence and due care contained in Section 130.1 of the Code of Ethics, determining that the breach of the Code and PCRT were sufficiently serious to meet the threshold for unsatisfactory professional conduct.

Date of decision: December 2020

Date of publicity: January 2021

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Turner Accountancy Limited (“the Firm”) liable to disciplinary action for failing to adhere to the Regulations governing the regulation of Firms, on the following basis:

Following the appointment of a new principal on 1 April 2018, the Firm failed to adhere to its obligations under ICAS’ Audit Regulations as follows:

1. Between 1 April 2018 and 27 June 2019, the Firm did not satisfy the eligibility requirements for audit firms in Regulation 2.03, insofar as the Firm had a principal who did not satisfy the eligibility criteria in Regulation 2.03(a).
2. The Firm failed to notify ICAS of the appointment of the new principal within 10 business days, in breach of Regulation 2.11(b).
3. The Firm’s annual return to ICAS to 31 August 2018, as submitted on 27 September 2018, did not list the new principal as a director of the Firm, thereby failing to provide accurate information to ICAS in accordance with Regulation 2.10A.

Sanction

Under operation of Investigation Regulation 2.15, the Firm has accepted a caution, with a financial penalty of £1,000 and a requirement to pay £900 towards the costs of the investigation.

Commentary

• When finalising an audit monitoring visit undertaken in October 2018, it came to the attention of ICAS that, on 1 April 2018, the Firm had appointed a director who was neither a member of ICAS, ICAEW, ICAI or ACCA, nor an ICAS Affiliate.
• This failure placed the Firm in breach of the three provisions of the Audit Regulations which are set out in the charge.
• The Firm immediately accepted the breaches, with the director being granted Affiliate status by ICAS on 27 June 2019.
• The breaches were originally considered by ICAS’ Authorisation Committee, which offered to resolve matters through a regulatory penalty in the sum of £1,000; however, the Firm rejected the offer, arguing that the failures amounted to “a lapse in an administrative matter”, with regulatory action being a disproportionate response.
• This refusal of the penalty led to a referral being made to the Investigation Committee, which considered the information provided by the Authorisation Committee, as well as the representations of the Firm.
• The Investigation Committee determined that the breaches did require a formal sanction, taking account of (a) the importance of the eligibility provisions in the Audit Regulations, (b) there being breaches of three separate Regulations, and (c) the period of time in which the eligibility provisions were not being met by the Firm.
• While accepting that the breach was of a technical nature, with little (if any) impact on the Firm’s clients, the Investigation Committee determined that it was sufficiently serious to create a liability to disciplinary action under ICAS Rule 13.7.3 (“a failure to adhere to these Rules or to Regulations or other guidance governing the regulation of Firms”).
• In reaching the decision, the Investigation Committee considered that there is a reasonable expectation that firms and CAs are aware of their regulatory obligations.

Date of decision: July 2020

Date of publicity: August 2020

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found RSM UK Audit LLP (“the Firm”) guilty of professional incompetence and of failing to adhere to the Regulations governing the regulation of Firms.  The following charges concern the Firm’s audit of the financial statements of Company A (“the Company”):

1. In its audit of the Company’s financial statements for 2016, the Firm failed to (a) identify a disclosure error where client forward exchange contracts were disclosed as trade payables and receivables, when the contracts met the definition of derivative financial instruments under International Accounting Standard 39 (Financial Instruments: Recognition and Measurement), and ought to have been disclosed as such; (b) identify an inconsistency in the Company’s financial statements where client forward exchange contracts were disclosed as trade receivables but valued as derivatives; and (c) adequately apply professional scepticism by not considering the disclosure of client forward exchange contracts, instead relying on the previous practice of treating client forward exchange contracts as trade receivables and trade payables.
   
   Which failures constitute professional incompetence, and which breach:
   
   (i) Paragraph 15 of ISA 200 (Overall objectives of the independent auditor and the conduct of an audit in accordance with International Standards on Auditing); and
   (ii) Regulation 3.10 of the ICAS Audit Regulations.
2. In its audits of the Company’s financial statements for the years 2016 and 2017, the Firm failed to (a) identify errors in the valuation of derivatives for 2016 and 2017; (b) reconcile the population of client forward exchange debtors and creditors to the financial statements; and (c) with respect to 2016, confirm the relevant buying and selling currencies  in order to gain sufficient assurance that the valuation of the contracts was correct, leading to it failing to detect material misstatements of the Company’s 2016 and 2017 financial statements.
   
   Which failures constitute professional incompetence, and which breach:
   
   (i)Paragraphs 9 and 11 of ISA 500 (Audit evidence); and
   (ii)Regulation 3.10 of the ICAS Audit Regulations.

Sanction

Under operation of Investigation Regulation 2.15, RSM UK Audit LLP has accepted an order of severe reprimand, with a financial penalty in the sum of £75,000 and a requirement to pay £29,300 towards the costs of the investigation.

Commentary

• The 2017 financial statements of the Company recorded a prior year adjustment in respect of the results of the Company for 2016.  The adjustment reclassified amounts relating to client forward exchange contracts initially recorded in the 2016 financial statements of the Company as trade receivables and trade payables and subsequently reclassified in the comparative figures in the 2017 financial statements as derivative financial assets and derivative financial liabilities respectively.
• The reclassification had no impact on the reported income statement of shareholders’ funds, as the amounts included within trade receivables and trade payables were already measured at fair value.
• The client forward exchange contracts were held to meet the definition of financial derivatives as set out in International Accounting Standards and should therefore have been classified as derivatives within the 2016 financial statements.
• The Company’s 2018 financial statements recorded a further material prior year adjustment in respect of the valuation of derivative financial assets and liabilities in 2017, 2016 and earlier years.
• The 2016, 2017 and 2018 financial statements for the Company were audited by the Firm. The Firm is authorised by ICAS to undertake audit work in the UK.
• ICAS received an expert report from an individual with extensive experience of the audit of financial derivatives. Based on a review of the relevant extracts of the Firm’s audit files, the report identified areas of concern.
• With the cooperation of the Firm, ICAS’ Investigation Committee carefully analysed the concerns which had been identified, to assess whether they presented grounds upon which to find a liability to disciplinary action. In addition to considering ICAS’ Rules and Regulations, the Committee reviewed the standards which are relevant to the audit of financial derivatives.
• At the conclusion of the Committee’s investigation, the Firm acknowledged that its audit work for the Company had not met the standards which would reasonably have been expected. It accepted a consent order for the charges and sanction set out above.
• The Committee acknowledged that the breaches were restricted to one area of the balance sheet, however it considered that the balance sheet area affected related to a core part of the Company’s business and a key area of audit risk.  In particular, it noted that the sums involved in Charge 2 were material.
• Overall, the Committee considered that the breaches were indicative of a weakness in the Firm’s audit of the valuation of derivative financial assets and liabilities for this client, particularly with reference to the fact that the prior year adjustment in the 2018 Financial Statements related to a material adjustment to the valuation of financial derivatives in 2017, 2016 and earlier years.
• While the Committee accepted the Firm’s reasons for the errors occurring, the existence of the errors indicates that the Firm’s internal review procedures were inadequate in relation to the specific matter.  The Committee was however pleased to hear that changes in the Firm’s procedures have led to improvements in these areas.
• When assessing sanction, the Committee took account of the Firm’s acceptance of the charges, and its cooperation throughout the investigation. The financial penalty takes account of various factors, including the need for deterrence and the financial resources of the Firm.

Date of order: May 2020

Date of publicity: May 2020

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found Mr Millar guilty of professional misconduct on the following grounds:

Between 2007 and 2008, in his role as the sole director of a limited company, he failed to exercise either appropriate independent judgement, or reasonable skill, care and diligence, in breach of his fiduciary and/or statutory duties as a director, and the fundamental principles of ‘professional competence and due care’ and ‘professional behaviour’ in the ICAS Code of Ethics. He also failed to properly follow the provisions in Section 330 of the ICAS Code of Ethics for acting with sufficient expertise in business.

He is therefore liable to disciplinary action under ICAS Rule 13.1.2

Sanction

Under operation of Investigation Regulation 2.15, Mr Millar has accepted an order of exclusion from Membership and a requirement to pay £3,625, which is half of the reasonable costs of the investigation.

Commentary

• In 2007 and 2008, Mr Millar was the sole director of a limited company, which had largely been dormant since its incorporation several years earlier. Its annual return referred to the company’s purpose as being ‘other monetary intermediation’.
• The company had formal credit agreements in place with two other companies which authorised lending of up to £5 million and $25 million respectively.
• Evidence provided to the Investigation Committee purported to show a significant amount of financial activity involving the company in May and June 2007, with sums being borrowed considerably in excess of the agreed credit limits, and apparently invested in other companies.
• Doubts were subsequently raised over the company’s financial activity (and the activities of related companies), with extensive investigations undertaken by third parties.
• The Investigation Committee draws no conclusions on the wider concerns which have been raised, with its focus restricted to Mr Millar’s actions and omissions as a company director and a Chartered Accountant.
• Limited companies are a vital part of the national economy, and it is therefore very important that they are properly run by directors who abide by their statutory and fiduciary duties.
• In addition to what is legally required of an individual acting as a director, there are heightened expectations of the level of conduct that ICAS and the general public would expect of Chartered Accountants occupying such roles.
• Mr Millar ought to have carefully scrutinised his company’s financial activity in 2007 and 2008 given (i) the lack of prior activity, (ii) the financial restrictions of the credit agreements which were in place, and (iii) the apparent urgency of the activity.
• However, the Investigation Committee was disappointed to note from the comments made by Mr Millar over the course of its investigation that he claims not to have been very involved with the significant financial activity, and that he was shocked to find out the apparent scale of it at a later date,
• Based on its understanding of the facts, it appeared to the Investigation Committee that Mr Millar had abrogated his responsibilities as a director, letting someone else run his company instead.
• Mr Millar’s comments during the investigation showed that he accepted that he should have been more involved and diligent in respect of his company.
• The Investigation Committee considered that it is a very serious omission for any company director not to be sufficiently involved or diligent in respect of its operations, but of greater concern where the director is a Chartered Accountant. It was clear that Mr Millar failed to meet his fiduciary and/or statutory duties as a director.
• In addition, the Investigation Committee considered that Mr Millar failed to act in accordance with the ICAS Code of Ethics (with particular reference to the fundamental principle of professional competence and due care in Section 130, and also the provisions applying to Members in business in Section 330).
• ICAS has been brought into disrepute through Mr Millar’s actions and omissions. There has been a serious departure from the standards expected of a CA. As such, the Investigation Committee determined that the most appropriate and proportionate sanction was an order of exclusion from ICAS Membership.

Date of decision: April 2020
Date of publicity: May 2020

Charge

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found William White, a CA Member and former director of W White & Co Limited, guilty of professional misconduct on the following grounds:

1)In advising a client, Mr P, on the basis by which the business and assets of Company A (of whom Mr P was the sole director) should be acquired by a newco, Company B (of whom Mr P was also a director), he failed to comply with his obligations in Section 220 of the Code of Ethics, in respect that he failed to identify and take steps to reduce or eliminate a conflict of interest arising from the competing interests of his clients Company A, Company B, and Mr P.

2)When acting as adviser to Company A, he failed to have regard to the interests of Mrs M, a shareholder of Company A, and in doing so breached the obligation contained in Section 221.7 of the Code of Ethics.

3)On 28 September 2015, following discussions with Mr P, he sent an email to Mrs M regarding the financial position of Company A in the accounting year ended 30 April 2015 which:

a)incorrectly stated that a financial provision and bad debt had contributed to the poorer financial position of Company A in the accounting year ended 30 April 2015, and

b)omitted to mention that
i)some of the assets of Company A had been transferred to Company B in 2014, and
ii)Company A had essentially not been trading for most of the accounting year ended 30 April 2015,

in breach of Section 110.1 and 110.2(c) of the Code of Ethics.  He is therefore liable to disciplinary action under ICAS Rule 13.1.2 and 13.5.1.

Sanction

Under operation of Investigation Regulation 2.15, Mr White has accepted an order of severe reprimand, payment of a fine of £7,500 and a requirement to pay £9,300 towards the costs of ICAS’ investigation.

Commentary

• Mr White acted as accountant and tax adviser to Mr and Mrs M. He also acted for Company A, whose directors were Mr M and Mr P. They held equal shares in Company A.
• In May 2013, Mr M died. His wife inherited his 50% shareholding in Company A. Mr P became the sole director of Company A. Mr P attempted to acquire Mrs M’s shareholding in Company A but negotiations failed. Mr White acted for Mr P in those negotiations and was aware that the parties had obtained significantly different valuations for Mrs M’s shareholding.
• In around January 2014, Mr White assisted and advised Mr P to incorporate a new company, Company B. The business and some of the assets of Company A were transferred to Company B. Mr White valued the assets for the purposes of the transfer. Mrs M was unaware of the incorporation of Company B and the transaction between Company A and Company B. Company A subsequently ceased trading in 2014.
• In September 2015, having had sight of the accounts for Company A for the year ended 30 April 2015, Mrs M wrote to Mr P requesting an explanation for the reduction in the recorded turnover and assets. Following discussion with Mr P, Mr White replied to Mrs M referring to a change in market circumstances and advising that Company A was being tidied up with limited further trading. Mr White did not advise Mrs M that the company had stopped trading or that the business had been transferred to Company B. In 2016, the Company was dissolved. Mrs M did not receive any consideration for her shareholding.
• The Committee determined that Mr White had failed to manage a conflict of interest which arose because of the conflicting interests of his clients Company A, Mr P, Mrs M, and Company B. Mr White should have had regard to the interests of Mrs M (as a shareholder of Company A) when giving corporate finance advice to Company A. It ought to have been clear to him that the incorporation of Company B and transfer of business and assets would be likely to deplete the value of Mrs M’s shareholding and was contrary to her interests.
• The Committee was concerned that no attempts were made by Mr White to mitigate the threats arising from the conflict of interest by putting in place safeguards, e.g. by obtaining Mrs M’s informed consent to act for both parties, or by introducing another partner or senior individual in the firm to act for Mrs M, with information barriers being erected to maintain confidentiality.
• The Committee considered Mr White ought to have been aware Company A had ceased trading early in the financial year ended 30 April 2015 and that this was the main reason for the deterioration in Company A’s financial position in that year, not detrimental market conditions. The Committee therefore determined that Mr White had breached the fundamental principle of integrity contained in Section 110 of the Code of Ethics.
• The Committee concluded that Mr White’s conduct represented a serious departure from the ethical standards which Chartered Accountants are expected to observe. The conduct was sufficiently serious to constitute professional misconduct.

Date of decision: March 2020
Date of publicity: April 2020

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found the firm of Scott Moncrieff liable to disciplinary action on the following basis:

That on 24 November 2017 and 12 November 2018, Scott Moncrieff (“the firm”) caused or permitted a partner of the firm to prepare and sign the audit report (in the firm’s name) for a client, for the years ended 31 July 2017 and 31 July 2018, when the firm was aware, or ought to have been aware that, in terms of Regulations 4.01 and 4.04 of the Audit Regulations, the partner was not authorised to sign such reports on behalf of the firm.

Sanction

Under operation of Investigation Regulations 2.15.2 and 2.15.4 and 2.15.5, the firm has accepted an order of reprimand, with a financial penalty of £2,000, and a requirement to pay £1,200 towards the reasonable costs of the investigation.

Commentary

• Following an ICAS monitoring review in 2019, it was brought to the attention of the Committee that, on 31 July 2017 and 31 July 2018, a partner of the firm signed audit reports for a Scottish University (“the client”) when he was not a Responsible Individual (“RI”) for audit purposes.
• As a Scottish-registered charity, the client fell within the scope of The Charities Accounts (Scotland) Regulations 2006, with Regulation 10(2) providing that its audit must be signed by someone who is eligible to act as an auditor under the Companies Act (an RI).
• The Committee noted that the client had to have its audit reports re-signed accordingly and that the firm had undertaken the necessary work to facilitate this. The Committee was satisfied that there had been no concern raised over the content of the audit report in general, other than the signatory issue.
• The Committee considered that the failure to ensure that the client’s audit was signed in accordance with the legislation was sufficiently serious as to render the firm liable to disciplinary action,
• Given the importance of an audit report for the client (and third parties), the Committee considered that the firm has an important responsibility to ensure that individuals signing audit reports on behalf of the firm are appropriately qualified and authorised (as set out in ICAS’ Audit Regulations).
• The Committee was disappointed that while the issue of eligibility had been discussed in each of the years, the requirements of the legislation were not correctly applied.
• In determining the sanction, the Committee took account of the firm’s early acceptance of the failure, and also its assurance that new procedures have been put in place to ensure that the failure will be not be repeated.
• The case serves as a reminder to all audit-registered firms to take care to ensure that all employees – partners included – are appropriately authorised to undertake regulated activities, as even accidental breaches may lead to disciplinary action being taken.

Date of decision: February 2020
Date of publicity: April 2020

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Malcolm Shepherd, a CA Member and director of Malcolm Shepherd & Co Ltd, guilty of professional misconduct on the following grounds:

1. On 12 February 2019, Mr Shepherd lodged a Form DS01 with Companies House seeking to have a company struck off the company register. In doing so, he failed to act in accordance with instructions he had agreed with the company’s director, in or around 14 January 2019, namely that he would not submit this form until a corporation tax repayment matter had been finalised.
2. By not responding to a letter issued to him by the company director on 17 June 2019, he has failed to ensure that a complaint received from a client was adequately dealt with.
3. By failing to respond to correspondence issued by an ICAS Case Officer on 10, 16 July and 16 August 2019, he has failed to co-operate fully with the investigation of a complaint to ICAS.

Sanction

Under operation of Investigation Regulations 2.15.2, 2.15.4 and 2.15.5, Mr Shepherd has accepted an order of reprimand, with a financial penalty of £2,000 and an order to pay £1,250 towards the costs of the investigation.

Commentary

• In January 2019, Mr Shepherd agreed a set of instructions with a company director, whereby he was directed to finalise a corporation tax repayment for the director prior to submitting a Form DSO1 to strike off the director’s company from the company register.
• However, an application to strike off the company was lodged, prior to the corporation tax repayment being processed. This meant that the assets in the company were effectively frozen, with the director then requiring to re-instate the company to the company register.
• The company director contacted Mr Shepherd by letter on 17 June 2019 to raise the problem, however no response was provided, leading to the complaint to ICAS.
• Mr Shepherd then failed to respond to communications from ICAS in respect of the complaint. He later accepted that he had received copies of the relevant correspondence and apologised for not having dealt with the matter. He also acknowledged that he was responsible for the error with the strike-off action.
• With regards to the first head of complaint, the Committee accepted that a mistake had occurred; however, more concern was expressed over Mr Shepherd’s failure to respond adequately to the company director and then ICAS.
• In determining the appropriate level of sanction, the Committee noted that Mr Shepherd had taken full responsibility for his actions, accepted his failings and apologised. It also took account of Mr Shepherd having confirmed that he would take remedial action to ensure that the company director was not financially prejudiced.
• The Committee highlights the importance for all Members, CA Student Members, Affiliates and Firms of cooperating fully and promptly with the investigation by ICAS of a complaint received.

Date of decision: January 2020
Date of publicity: February 2020

Charges

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee (“the Committee”) has found Michael Donnelly and the firm of Atkinson Donnelly LLP liable to disciplinary action on the following basis:

On 21 August 2017, Michael Donnelly signed the audit report of Company A for the year ended 31 January 2017, when both he and Atkinson Donnelly LLP (“the Firm”) were aware, or ought to have been aware, that he was not authorised to sign such report on behalf of the Firm.  This action constitutes a failure to act in accordance with the Audit Regulations as follows:

(i)Audit Regulation 4.04 (in respect of Mr Donnelly); and
(ii)Audit Regulations 4.01, 4.02c and 4.05 (in respect of the Firm).

Mr Donnelly has been found guilty of professional misconduct, with Atkinson Donnelly LLP found to have failed to adhere to the Rules and Regulations governing the regulation of firms by ICAS.

Sanction

Under operation of Investigation Regulations 2.15.3 and 2.15.4 and 2.15.5, Mr Donnelly and the Firm have each accepted separate orders for:

• Severe reprimand;
• A financial penalty of £2,000; and
• A payment of £700 towards the reasonable costs of the investigation.

Commentary

• Mr Donnelly is a partner in the ICAS audit registered firm, Atkinson Donnelly LLP.
• Following an ICAS audit monitoring review, it was brought to the attention of the Committee that on 21 August 2017, Mr Donnelly signed the audit report of Company A when he was not a Responsible Individual (“RI”) for audit purposes, nor had he, or the Firm, submitted an application for him to become a RI.
• The Committee noted that Mr Donnelly did not hold the relevant audit qualification and would therefore not have been granted RI status even if an application been submitted by the Firm’s audit compliance principal.
• The Committee observed the wording of Audit Regulation 4.04 which states: “Only responsible individuals can be responsible for an audit and sign an audit report.”  In addition, it noted that Audit Regulations 4.01, 4.02 and 4.05 place an obligation on the Firm’s audit compliance principal to ensure that only appropriately qualified and authorised individuals can sign audit reports in their name on behalf of the Firm.
• The Committee determined that the Member and Firm’s actions and omissions were in breach of the Audit Regulations and that in each case, their actions were sufficiently serious to find them liable to disciplinary action.
• While the Committee accepted that there may have been a misunderstanding on both the Member and Firm’s part as to the eligibility of Mr Donnelly to sign the report, it could not accept that such a misunderstanding was acceptable or reasonable in the circumstances.
• Given the importance of an audit report for a company (and third parties), the Committee considered that the onus is on the Member to ensure that he or she has been formally authorised before engaging in relevant activity.  Similarly, the Committee considered that the Firm has a separate and equally important responsibility to ensure that individuals signing audit reports on behalf of the Firm are appropriately qualified and authorised.
• In determining the sanction, while the Committee took into account that there was no evidence that the breach was intentional, it expressed concern that the actions of each party indicated a lack of due attention to important regulatory requirements.
• The case serves as a reminder to all Members and Firms to take care to consider whether the Rules and Regulations require them to hold additional authorisation to undertake regulated activities, as even accidental breaches may lead to disciplinary action being taken.

Date of decision: September 2019
Date of publicity: October 2019

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Authorisation Committee has withdrawn the practising certificate of John Cumberlidge CA, a former principal in Moose Accounting Limited and Moose Accounting (London) Limited (“the firms”) which are based in Birmingham. Mr Cumberlidge is therefore no longer entitled to engage in practice, as defined by ICAS’ Rules and Regulations. The withdrawal of the practising certificate – effective from 31 May 2024 - was based on the disqualification of Mr Cumberlidge as a company director by the Insolvency Service, which commenced on 1 March 2023. ICAS has also withdrawn its anti-money laundering supervision of the firms.

From 1 January 2023, Mr Morgan formerly of Active Corporate Audit LLP is no longer an ICAS member. At the point of his ceasing to be a member, Mr Morgan was subject to an unresolved investigation. As a consequence, Mr Morgan is no longer allowed to call himself a Chartered Accountant or use the designatory letters CA.

On 13 December 2022, ICAS’ Authorisation Committee decided to withdraw the practising certificate of Iain Morgan CA, a principal in the firms Active Corporate Audit LLP and Argentum Advisory LLP, which are based in Glasgow. The withdrawal of the practising certificate – effective as of 5 January 2023 – was based on repeated failures by Mr Morgan to submit to Practice Monitoring visits, which are a requirement under ICAS’ Public Practice Regulations. Mr Morgan is therefore no longer entitled to engage in practice, as defined by ICAS’ Rules and Regulations.

The Investigation Committee has accepted the resignation of Mr Kennedy of KCD Chartered Accountants. At the point of resignation, Mr Kennedy was subject to an unresolved investigation. Whilst ICAS’ default position is that Members under investigation shall not be allowed to resign, the Investigation Committee varied the position in this case on account of Mr Kennedy’s ill health, which was supported by medical evidence. As a consequence of his resignation, Mr Kennedy is no longer allowed to call himself a Chartered Accountant or use the designatory letters CA.

In accordance with ICAS Rule 3.13, Robert Thomas Andrew Walker (also known by the name Robin Walker), of Robin Walker Accountants LLP, 31 The Square, Cumnock, Ayrshire, KA18 1AT ceased to be a member of ICAS on 7 February 2019 because of his personal insolvency. When his Membership ceased, Mr Walker was subject to an unresolved disciplinary investigation.

The Investigation Committee has accepted the resignation of Brian Christie. At the point of resignation, Brian Christie was subject to an investigation into his professional work whilst carrying out accounting and taxation services for a client. Whilst ICAS’ default position is that Members under investigation shall not be allowed to resign, the Investigation Committee varied the position in this case on account of Brian Christie’s ill health, which was supported by medical evidence. As a consequence of his resignation, Brian Christie is no longer allowed to call himself a Chartered Accountant or use the designatory letters CA.