Since the last update, three tribunal orders, six consent orders from the Conduct Committee, and two fixed penalties have been published.

In the first tribunal case a member was excluded, fined £7,000 and required to pay costs as a result of the complaints against them. Whilst an employee of a firm, they emailed a bookkeeper of a client of another firm, suggesting that false information was provided to Companies House, contrary to section 100.5(a) (Fundamental Principle of Integrity) of ICAEW’s Code of Ethics (effective 1 January 2011) and/or section 150.1 (Professional Behaviour) of ICAEW’s Code of Ethics (effective 1 January 2011).

This member also, whilst an employee of this firm, transferred data which was the property of their employer, to their personal device when they were not authorised to do so, contrary to section 150.1 (Professional Behaviour) of ICAEW’s Code of Ethics (effective 1 January 2011).

The second tribunal severely reprimanded a provisional member, fined them £7,000 and required them to pay costs as a result of them presenting to their employer a calendar invite, as evidence that a meeting had taken place, three years prior to their creation of the invite, intending staff to accept the calendar invite as contemporaneous evidence that the meeting had taken place.

This conduct was dishonest because they knew they had created the calendar invite three years earlier and that it was not contemporaneous evidence of the meeting taking place.

The third tribunal in this update considered a member who had firstly completed their employer’s annual ‘Fit and Proper, Independence and Confidentiality Declaration’ stating that: ‘I hold a practicing [sic] certificate and am a director in a company’ when the declaration was reckless and/or misleading because the member knowingly omitted to declare that they were the sole director and majority shareholder of a corporate accountancy practice. This conduct is therefore contrary to R111.2 (Integrity) of ICAEW’s Code of Ethics (effective 1 January 2020).

Secondly whilst an employee of a firm, this member transferred 29 items of data which was the property of their employer, to their personal email address from their work email address when they were not authorised to do so. This conduct was contrary to section 150 (Professional Behaviour) of ICAEW’s Code of Ethics (effective 1 January 2011 to 31 December 2019) and/or R115(Professional Behaviour) of ICAEW’s Code of Ethics (effective from 1 January 2020).

This member was reprimanded and required to pay costs but no fine was imposed.

The consent orders issued by the Conduct Committee resulted in orders that:

A firm was reprimanded and fined £22,750 for firstly issuing an unqualified audit opinion on the financial statements of a company which stated that the audit had been conducted in accordance with International Standards on Auditing (UK) when:

1. the firm failed to obtain sufficient appropriate audit evidence regarding the valuation of loan receivables; and/or
2. the firm failed to obtain sufficient appropriate audit evidence that capitalised intangible assets were recorded in the correct entity.

This was in breach of International Standard on Auditing (UK) 500 ‘Audit evidence’.

Secondly, the same firm issued an unqualified audit opinion on the financial statements of a plc which stated that the audit had been conducted in accordance with International Standards on Auditing (UK) when the firm failed to obtain sufficient appropriate audit evidence:

• regarding the valuation of loan receivables;
• that research expenditure was eligible for capitalisation within intangible assets; and
• that cashback incentives offered to existing investors with the purpose of attracting new investors were eligible for capitalisation within intangible assets.

This was in breach of International Standard on Auditing (UK) 500 ‘Audit evidence’.

Thirdly, the firm issued an unqualified audit opinion on the financial statements of another company, which stated that the audit had been conducted in accordance with International Standards on Auditing (UK) when the firm failed to obtain sufficient appropriate audit evidence that:

• research expenditure was eligible for capitalisation within intangible assets; and
• that cashback incentives offered to existing investors with the purpose of attracting new investors were eligible for capitalisation within intangible assets.

This was in breach of International Standard on Auditing (UK) 500 ‘Audit evidence’.

An insolvency practitioner (IP) was severely reprimanded and fined £14,000 and required to pay costs because on two occasions, in their capacity as Nominee of six proposed IVAs, they:

1. provided creditors with insufficient evidence to allow them to make informed decisions in relation to those IVAs in breach of paragraph 6 of Statement of Insolvency Practice 3.1 (effective between 1 July 2014 and 28 February 2023);
2. failed to ensure the debtors received appropriate advice in breach of paragraph 13 a) of Statement of Insolvency Practice 3.1 (effective between 1 July 2014 and 28 February 2023); and/or
3. failed to disclose sufficient information to identify the source of the six IVA referrals and any payments that were made to the work referrer firms in breach of paragraph 14 c) of Statement of Insolvency Practice 3.1 (effective between 1 July 2014 and 28 February 2023).

This insolvency practitioner, in their capacity as Nominee of six proposed Individual Voluntary Arrangements (IVAs), also failed, on two occasions, to provide creditors with information to allow creditors to form an understanding of the costs and expenses of the relevant IVA in breach of paragraphs 4 and 5 of Statement of Insolvency Practice 9.

An insolvency practitioner was severely reprimanded and fined £13,500 because they had, as Supervisor of an Individual Voluntary Arrangement, failed, for over six months, to deal with a change in financial circumstances properly and in a timely manner, in breach of the Fundamental Principle of Professional Competence and Due Care as set out in the Insolvency Code of Ethics (effective from 1 May 2020).

And in their capacity as Nominee of the same Individual Voluntary Arrangement, they failed to provide creditors with information to allow them to fully understand and consider the costs and expenses in breach of paragraphs 6 of Statement of Insolvency Practice 3.1 and/or 4 and 5 of Statement of Insolvency Practice 9.

Another insolvency practitioner was severely reprimanded and fined £10,000 because in their capacity as Joint Administrator of a company, they failed to comply with the requirements of Statement of Insolvency Practice 16 (SIP16) (effective from 30 April 2021) as follows:

• failing to adequately explain to creditors why the Joint Administrators’ proposals were not issued to creditors with the SIP16 statement;
• failing to provide a statement explaining the statutory purpose pursued, confirming that the transaction enables the statutory purpose to be achieved and that the outcome achieved was the best available outcome for creditors as a whole in all the circumstances;
• failing to provide full details of alternative options considered, both prior to and within formal insolvency by the insolvency practitioner and the company, and on appointment the 
  administrator with an explanation of the possible outcomes;
• failing to provide a detailed narrative explanation as to why the pre-pack was pursued and why it was beneficial for creditors;
• failing to provide full details of charges registered against the Company;
• failing to adequately explain to creditors how long preadministration marketing activities lasted, the nature of the marketing process undertaken and why the Joint Administrators deemed the marketing to have been adequate;
• failing to disclose details of the professional qualifications of the valuers and confirmation that they have confirmed their independence and that they carry adequate professional 
  indemnity insurance
• failing to provide full disclosure of the valuations of assets and an explanation of the value achieved of the assets compared to those valuations;
• failing to disclose that no valuation had been obtained for the goodwill/intangible assets and explain the reasons why;
• failing to clearly explain to creditors how the sale proceeds had been apportioned;
• failing to disclose the identity of the Purchaser of the assets, who was connected to the director; and/or
• failing to append the Evaluator’s report to the SIP16 statement or the Joint Administrators’ Proposals.

In doing so, they failed to comply with the fundamental principle of professional competence and due care, R2103.1 in the Insolvency Code of Ethics (effective from 1 May 2020).

A member was severely reprimanded and fined £3,800 because they failed, for a period of nine years, to notify the Members’ Registrar of ICAEW of their appointment as director of a practice, as required by the following regulations:

1. within 10 business days as required by Practice Assurance Regulation 9 (effective 1 January 2008 until 30 June 2019);
2. within 10 business days as required by Practice Assurance Regulation 13 (effective from 1 July 2019); and/or
3. within 28 days as required by the Information to be supplied by members Regulation 3 (effective from 1 December 2010).

Also for a period of 10 months, as principal of this practice, they failed to ensure that their firm was supervised by an appropriate anti-money laundering supervisory authority contrary to Regulation 8, and Parts 1—6 and 8—11  of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (effective from 26 June 2017).

Thirdly, for a period of 11 months this member, as principal of this practice, failed to comply with the Professional Indemnity Insurance Regulations in that they permitted their practice to engage in public practice without professional indemnity insurance, contrary to Regulation 3.1 of the Professional Indemnity Insurance Regulations (effective from 1 January 2014).

Fourthly, this member on behalf of their other practice incorrectly completed seven years of ICAEW annual returns contrary to Practice Assurance Regulation 8 (effective 1 January 2008—30  June 2019) and Practice Assurance Regulation 12 (effective 1 July 2019).

A member was reprimanded and fined £5,000 because for a period of just over five months, in their capacity as trustee over an individual’s estate, they failed to take reasonable care:

1. to clarify whether a sum of £310,000 paid to a company constituted full and final settlement of that company’s security;
2. to ensure they took appropriate steps to deal with the remaining estate, to the detriment of that company; and/or
3. failing to comply with the fundamental principle of professional competence and due care, R2103.1(b) in the Insolvency Code of Ethics (effective from 1 May 2020). 

All the above consent orders also included a requirement to pay costs.

The first fixed penalty order published related to driving an electric scooter in Germany, although they had not been in a condition to drive due to previous consumption of alcohol, contrary to section 316(1) and (2), section 44, section 69, section 69a, section 69b German Criminal Code. The equivalent UK offence being one of having consumed alcohol in excess of the prescribed limit contrary to s 5(1)(a) Road Traffic Act 1988.

The second related to drink driving in the UK.

Further details can be found on our Disciplinary Database or please visit our Public Hearings page.