Accountants often face disciplinary proceedings from one of the six regulators who protect the professions. The chartered accountant disciplinary process addresses allegations of misconduct in technical matters relating to the following areas:
- Actuarial practice
Accounting regulations also address general misconduct issues in the management of a practice, or issues such as the commission of criminal offences or other anti-social behaviour, including posting offensive material on social media.
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Jeremy Barnett is experienced in the field of professional discipline, having represented a number of accountants, solicitors, IFAs, company directors and healthcare professionals before disciplinary bodies and the higher courts. For four years he was a board member of the AADB and currently advises and speaks on the regulation and practice in respect of crypto currencies and other emerging technologies.
The Financial Reporting Council [FRC]
The overarching regulator is now responsible for enforcement of audit requirements under the Audit Enforcement Procedure. They will investigate matters relating to the audits of Public Interest Entities (PIEs being listed entities, credit institutions and insurance institutions) AIM- listed companies with a market capitalisation in excess of £200m and Lloyds Syndicates. Although other audit related investigations have now been delegated to the recognised supervisory bodies such as the ICAEW, the FRC can still reclaim a case if it chooses to do so. The disciplinary board was formerly known as the Accountants and Actuaries Disciplinary Board [AADB]. A useful process guide to the enforcement procedure is available here.
Recent decisions involve cases concerning major firms of accountants including:
Grant Thornton – After a former senior partner providing services under a consultancy contract faced criticisms over eight audits in the course of four years, a severe reprimand and £4m fine (discounted to £3m) were imposed.
KPMG – The firm and a senior auditor admitted misconduct in relation to the financial statements of Ted Baker PLC. The firm was fined £3m (discounted to £2.1m) and a severe reprimand and costs were imposed. The auditor fined £80k (reduced to £46,800).
PWC – A settlement agreement against the firm and former audit partner, in relation to the 2014 audits of BHS and Taveta Group, resulted in a fine of £10m, a severe reprimand, conditions and undertakings against the firm and a fine of £500k. The former partner was also reprimanded.
EY – A regulatory settlement was reached with the firm and a member in relation to Tech Data Management. The firm was fined £2,750,000 (reduced to £1,800,000) and received a reprimand. The member was fined £90,000 (reduced to £59,000) and received a reprimand.
Institute of Chartered Accountants in England and Wales (ICAEW)
The ICAEW have always conducted disciplinary hearings and cover all areas of practice including fees, audit, failure to deal with correspondence, poor work and advice etc. There is a general duty for firms and practitioners to report case of misconduct, which often calls for legal advice.
Chartered Institute of Management Accountants (CIMA)
Cases often relate to poor performance and the provision of accountancy services with an appropriate and valid practising certificate. Lack of integrity often forms the basis for charges.
Recent decisions of the Disciplinary Committee can be found here.
Chartered Institute of Public Finance and Accountancy (CIPFA)
CIPFA has 14,000 members and is the professional accountancy body for people in public finance who work in various organisations where public money needs to be effectively and efficiently managed. Hearings can relate to accountancy issues or matters of public interest where there has been a conviction or another finding of dishonesty or lack of professional ethics.
Recent cases include allegations of fabricating information on tender documentation and falsification of material in respect of an application for admission.
Institute of Chartered Accountants in Ireland (ICAI)
The Institute’s regulatory and disciplinary obligations derive from both statute and its own bylaws and regulations. Cases relate to wide ranging matters of misconduct but are aimed at protecting clients, investors, and those who rely upon the profession to provide accurate information. These matters also relate to personal conduct which affect the reputation of the profession. Recent decisions of the Tribunal can be found here.
Association of Chartered Certified Accountants (ACCA)
ACCA are one of the busier regulators in this field, as this is truly a global professional organisation, with over 100,000 members and over 130,000 students around the world Disciplinary hearings often relate to allegations of examination misconduct and are notoriously difficult to conduct, often relying upon material that is not supported on oath from distant jurisdictions.
Institute of Chartered Accountants of Scotland (ICAS)
ICAS is also an international professional organisation, where one third of the members work in business, and many work for the ‘big four’ accountancy practices, as well as smaller firms around the world.
The Royal Charter was originally granted to the Society of Accountants in Edinburgh and the supplementary Charter of 1951 was granted when the Institute of Accountants and Actuaries in Glasgow and the Society of Accountants of Aberdeen joined.
The current rules were amended in August 2018, and are supplemented by a number of regulations dealing with public practice, investigations, client monies, CPD, examinations, admissions and the tribunal regulations. Click here for more details.
The Institute and Faculty of Actuaries (IFoA) Regulation Board
IFoA’s purpose is to help instil confidence of the public and other stakeholders in actuaries and their work by developing a quality framework, promoting the observance of high standards and building relationships with other stakeholders.
Disciplinary cases involving actuaries range from highly technical allegations, requiring expert evidence, to numerous cases involving examination misconduct by student members.
Recent decisions can be found here.