Regulatory penalties

In terms of Regulation 5.33 of the ICAS Insolvency Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £11,500 to the Insolvency Practitioner Michael Reid in respect of the following three issues:

1. A failure to maintain adequate and compliant time records as required by Statement of Insolvency Practice 9;
2. A failure to review or verify employee claims against payroll or other appropriate documentation, and to notify the Redundancy Payments Service that claims were not verified; and
3. A failure to document investigation work to support conclusions reached, including investigations into the validity and potential misuse of a Bounce Bank Loan.

In calculating the level of penalty, the Committee consulted the Sanctions Guidance which is shared by the Insolvency RBSs, and reached the following conclusions:

Issue 1: The Committee categorised this as a “Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations thereunder” as noted in part 9 of table 1 in the sanctions guidance. The Committee assessed the level of seriousness of the conduct as “less serious”, on the basis that there was no evidence of any prejudice to creditors or other third parties as a result of the failure to maintain adequate time-recording records. The Committee therefore determined that the starting point sanction of £1,500 should be applied.

Issue 2:. The Committee categorised this as a “Failure to comply with the fundamental principle of professional competence and due care” as noted in part 3 of table 2 in the sanctions guidance. Verification of employee claims is an important issue given the potential for fraudulent activity and the Committee would have expected the IP to be aware of his responsibilities in this area. The Committee assessed the level of seriousness of the conduct as “serious” and determined that the starting point sanction of £5,000 should be applied.

Issue 3: The Committee categorised this as a “Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations thereunder” as noted in part 9 of table 1 in the sanctions guidance. The Committee assessed the level of seriousness of the conduct as “serious”, noting that there was very little evidence of investigation work carried out in the cases which were reviewed. The Committee would have expected the investigation work to be more comprehensive and to have included a review of bank statements and other relevant records. This work should also have been documented. The Committee therefore determined that the starting point sanction of £5,000 should be applied.

Date: December 2024

In terms of Regulation 5.33 of the ICAS Insolvency Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £7,500 to the Insolvency Practitioner Laurence Factor in respect of the following two issues:

1. Failure to hold estate funds in individual estate accounts, as required by Statement of Insolvency Practice 1; and
2. Failure to investigate the validity and potential misuse of a Bounce Back Loan.

In calculating the level of penalty, the Committee consulted the Common Sanctions Guidance which is shared by the Insolvency RBSs, and reached the following conclusions:

Issue 1: The Committee categorised this as a “Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations thereunder” as noted in part 9 of table 1 in the sanctions guidance. The Committee assessed the level of seriousness of the conduct as “serious”, as it was more than an inadvertent mistake. The starting point penalty for an offence at this level is £5,000. In mitigation, the Committee noted that there was no evidence of any loss of monies to the insolvent estates and/or any third parties as a result of the estate funds not being held in separate estate accounts.  The Committee therefore concluded that an appropriate penalty was £2,500.

Issue 2: The Committee categorised this as a “Failure to comply with the fundamental principle of professional competence and due care” as noted in part 3 of table 2 in the sanctions guidance. The starting point penalty for an offence at this level is £5,000. The Committee did not consider that there were any aggravating or mitigating factors which would justify a departure from the starting point.  The appropriate penalty was therefore decided to be £5,000.

Date: December 2024

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,000 to the audit-registered firm of Nelson Gilmour Smith Limited (Firm number 4422).

The firm has acknowledged that it failed to comply with Regulations 4.01, 4.04, and 4.05 of the Audit Regulations in so far the firm allowed an individual to sign audit reports over X Limited on 6 June 2023 and Y Limited on 24 September 2023, when the firm was aware or ought to have been aware that the individual did not hold Responsible Individual status at the date of signature and was therefore not authorised to sign such reports.

Date: October 2024

In terms of Regulation 5.33 of ICAS’ Insolvency Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £3,500 to a licenced Insolvency Practitioner, Penny McCoull, in respect of the following four issues:

1. A failure to take appropriate steps to verify the information provided by a claims management company before submitting claims to the Redundancy Payments Office.
2. In two appointments, there was insufficient evidence of (a) appropriate action to recover books and records from directors, (b) a proper investigation Covid-related loans, and (c) a reasonable level of work and consideration on the files (contrary to the principles in SIP 2).
3. Pre-appointment fees were drawn in four CVLs without the necessary approval from creditors, in breach of Rule 6.7 of the Insolvency (England and Wales) Rules 2016.
4. Unsatisfactory delays in the payment of a dividend to creditors in one case, with a lack of progress reports.

Issues 1, 2, and 3 occurred while Mrs McCoull was employed by McLaren Insolvency Practitioners Limited, whilst issue 4 arose through work in her own practice, ASM Recovery.

The Committee noted the starting points in the Common Sanctions Guidance and was satisfied that a regulatory penalty was appropriate in the circumstances, with a single penalty applied to cover the four issues. In calculating the level of penalty, the Committee consulted the Common Sanctions Guidance and did not identify any aggravating factors to take into consideration. In mitigation, the Committee considered the steps which Mrs McCoull has taken to try and resolve the issues (including repayment of fees), the absence of evidence to suggest a loss of monies to the insolvency estates and/or any third parties, and the fact that she would no longer be working for McLaren Insolvency Practitioners.

In terms of Regulation 3.4 of the Public Practice Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £2,000 to Ms Clare Donnelly of NoTwelveAccouting Ltd, on the basis that since 2020 she provided accountancy and related services without a Practising Certificate, in breach of the said Regulations

Date – 3 September 2-24

In terms of Regulation 5.30 of ICAS’ Public Practice Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £4,000 to the member, Mr Ebrahim A Sidat of AMS Accountants Group Ltd.

Regulation 3.1 of ICAS’ Public Practice Regulations requires that a member must hold, or be specifically exempt from holding, a practising certificate (PC) in order to engage in practice in the UK. Regulation 3.4 confirms when members will be considered to be engaging in practice, with one provision being their appointment as a principal in a firm providing accountancy or related services.

Mr Sidat has accepted that he was in breach of the Regulations from 2014 until 2022, during which period he was a director of entities providing accountancy or related services.

The Committee was satisfied that a regulatory penalty was appropriate in the circumstances, with the level of the penalty reflecting the fees which Mr Sidat would have paid to ICAS for a PC during the period in question.

Account was taken of mitigating factors, including an apparent misunderstanding on Mr Sidat’s part regarding his separate membership of the Chartered Institute of Taxation, and also the fact that he was proactive in applying to ICAS for a PC in 2022.

Date – 21 August 2024

In terms of Regulation 7.14 (a) of the Audit Regulations and Guidance 2022, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £500 to the audit-registered firm of R Zoltie & Co (Firm Number F3449). The firm has acknowledged that it failed to comply with Audit Regulation 2.10A, which states:

“A Registered Auditor must provide such returns, statements or other information as considered necessary and in a form decided by the Registration Committee” in that it omitted an audit client from the audit client list and Firms Annual Return provided to ICAS.

The Firm has acknowledged that, in relation to this, it also failed to comply with the following Audit Regulations:

* Audit Regulation 3.03, which states that: 'A Registered Auditor must consider its independence and ability to perform the audit properly and record this before it accepts appointment or reappointment as auditor';

* Audit Regulation 3.10, which states that: 'A Registered Auditor must comply with the auditing standards and the quality management standards'; and

* Audit Regulation 3.19, which states that: A Registered Auditor must make sure all principals and employees involved in audit work are aware of and comply with these regulations, the Act, any relevant rules and regulations issued under the Act and any procedures established by the firm.'.

Date – 2 May 2024

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £750 to the audit-registered firm of Johnston Smillie Limited (Firm Number F0273). The firm has acknowledged that it failed to comply with Regulation 3.02 of the Audit Regulations and Guidance, which states:

“A Registered Auditor must act in accordance with the fundamental principles set out in the Code of Ethics issued by Council and the ethical standards”,

in so far as the Firm’s Responsible Individual acted for a period of more than ten years without implementing appropriate safeguards and communicating with those charged with governance, as required by Section 3 of the Ethical Standard for Auditors (Revised Ethical Standard 2019).

Date – 4 March 2024

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £750 to the audit-registered firm of Yates Business Solutions Limited (Firm Number F3333). The firm has acknowledged that it failed to comply with Regulation 3.02 of the Audit Regulations and Guidance, which states: “A Registered Auditor must act in accordance with the fundamental principles set out in the Code of Ethics issued by Council and the ethical standards”, in so far as the Firm carried out non-audit work for an audit client which did not comply with the requirements contained in Section 5 of the Ethical Standard for Auditors (Revised Ethical Standard 2019).

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance applicable from 5 December 2022, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,500 to the audit-registered firm of Simmers & Co (Firm Number F0493), in respect that the Firm acknowledged that it failed to comply with an external cold file review condition imposed by the Authorisation Committee under Audit Regulation 7.01 of the Audit Regulations and Guidance.

On 15 August 2023 the Authorisation Committee determined that three ICAS firms were each liable to pay a regulatory penalty of £250 in respect of their failure to pay their AML licence fees timeously, in breach of Regulation 4.2 of the AML Regulations. On this occasion the Committee agreed not to identify those firms so charged.

In terms of Regulations 5.23 & 5.24 of the Public Practice Regulations, notice is hereby given that the ICAS Authorisation Committee applied a regulatory penalty of £2,000 to Mr Gavin Simpson of Cloud Finance and Accounting Ltd on the basis that since at least December 2018 he was the sole director of a practice which provided accountancy or related services without holding a Practising Certificate, all in breach of the said Regulations.

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance applicable from 1 January 2021, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,500 to the audit-registered firm of Gibson McKerrell Brown LLP, in respect that the Firm acknowledged that it failed to comply on a timely basis with an external cold file review condition imposed by the Authorisation Committee under Audit Regulation 7.01 of the Audit Regulations and Guidance.

Date: 24 November 2022

C L Middlebrook (Middlebrooks Business Recovery and Advice)

In terms of Regulation 5.33 of the Insolvency Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,000 to the Insolvency Practitioner Mrs C L Middlebrook (Middlebrooks Business Recovery and Advice), in respect that the Practitioner has acknowledged that they failed to comply with  Insolvency Regulation 4.12 in that insolvency work had not been undertaken in full compliance of all relevant UK legislation, standards or regulations, as there had been unauthorised pre-appointment remuneration drawn on two cases and failure to comply with Statement of Insolvency Practice 11.

Date: 11 March 2022

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance effective from 1 January 2020, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,500 to the audit-registered firm of The Kelvin Partnership Limited (Firm Number F0745), in respect that the Firm acknowledged that it failed to comply with an external cold file review condition imposed by the Authorisation Committee under Audit Regulations 7.01 of the Audit Regulations and Guidance.

Date: 14 February 2022

In terms of Regulation 7.14 (b) of the Audit Regulations and Guidance effective from 1 January 2020, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,500 to the audit registered firm of Milton Avis LLP (Firm Number F3783), in respect that the Firm acknowledged that it failed to comply with an external hot file review condition imposed by the Authorisation Committee under Audit Regulations 7.01 of the Audit Regulations and Guidance.

Date: 2 July 2021

In terms of Regulation 5.23 of the Public Practice Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,000 to the firm of Stewart Accounting Services Ltd (Firm Number F3865), in respect that the Firm has acknowledged that it failed to comply with Sections 4; 9; and 11 of the Client Money Regulations.

Date: 8 December 2020

In terms of Regulation 5.23 of the Public Practice Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £1,000 to the firm of Annette Ferguson Ltd (Firm Number F3499), in respect that the Firm has acknowledged that it failed to comply with Section 4 of the Professional Indemnity Insurance Regulations.

Date: 30 September 2020

In terms of Regulation 7.14 (b) of the Audit Regulations 2017, notice is hereby given that the ICAS Authorisation Committee has applied regulatory penalties in the sums of £1,000 and £500 to the audit-registered firm of Ronan AMR Limited (Firm Number F2360), in respect that the Firm has acknowledged that it failed to comply with Audit Regulation 2.10A, which states that: 'A Registered Auditor must provide such returns, statements or other information as considered necessary and in a form decided by the Registration Committee’' in that it (a) did not adhere to a previous condition imposed by the Committee; and (b) omitted an audit client from the audit client list and Firms Annual Return provided to ICAS.

The Firm has acknowledged that, in relation to this, it also failed to comply with the following Audit Regulations:

• Audit Regulation 3.03, which states that: 'A Registered Auditor must consider its independence and ability to perform the audit properly and record this before it accepts appointment or reappointment as auditor';
• Audit Regulation 3.05, which states that ‘A Registered Auditor must always conduct audit work properly and with integrity’;
• Audit Regulation 3.10, which states that: 'A Registered Auditor must comply with the auditing standards and the quality control standards';
• Audit Regulation 3.17, which states that ‘A Registered Auditor must make arrangements so that all principals and employees doing audit work are, and continue to be, competent to carry out the audits for which they are responsible or employed’ and
• Audit Regulation 3.19, which states that:' A Registered Auditor must make sure all principals and employees involved in audit work are aware of and comply with these regulations, the Act, any relevant rules and regulations issued under the Act and any procedures established by the firm'.

Date: 10 July 2020

In terms of Regulation 7.14 (b) of the Audit Regulations 2017, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £500 to the audit-registered firm of Watson & Company (Firm Number F2734), in respect that the Firm has acknowledged that it failed to comply with Audit Regulation 6.06, which states that: 'In carrying out its responsibilities under regulation 6.02, the Registration Committee, any sub-committee, the registering Institute's staff, or a monitoring unit, may, to the extent necessary for the review of a firm's audit work or how it is complying or intends to comply with these regulations, require a Registered Auditor or applicant for registration to provide any information, held in whatever form (including electronic), about the firm or its clients and to allow access to the firm's systems and personnel' in that it omitted an audit client from the audit client list provided to ICAS Audit Monitoring during an audit monitoring visit.

The Firm has acknowledged that, in relation to that aforementioned audit client, it also failed to comply with the following Audit Regulations:

• Audit Regulation 3.03, which states that: 'A Registered Auditor must consider its independence and ability to perform the audit properly and record this before it accepts appointment or reappointment as auditor':
• Audit Regulation 3.10, which states that: 'A Registered Auditor must comply with the auditing standards and the quality control standards'; and
• Audit Regulation 3.19, which states that:' A Registered Auditor must make sure all principals and employees involved in audit work are aware of and comply with these regulations, the Act, any relevant rules and regulations issued under the Act and any procedures established by the firm'.

Date: 10 July 2020