DEALING WITH DISCIPLINE

DEALING WITH DISCIPLINE

Presented By

Roisin Bennett

Reddy Charlton

Solicitors

12 Fitzwilliam Place

Dublin 2

Tel: 353 1 661 9500

Fax: 353 1 678 9192

Email: [email protected]

Web: www.reddycharlton.ie

Outline

• Regulation of Accountants

• Overview of Disciplinary Process

• Disciplinary Committee

• Admissions and Licensing Committee

• Common Causes of Complaints

• New Areas of Complaint

Regulation of Accountants• Not regulated by statute• Various accountancy bodies within Ireland and

various regimes in operation• ACCA regulatory regime operated from London

ACCA created Regulatory Board in 2008

ACCA Regulatory Board

• ACCA Bye Laws• Code of Ethics and Conduct• Statutory Controls in Companies Acts and

IFSRA• International Standards on Auditing• ISQCs

ACCA Regulation

Purpose - Protection of the public

Overview of ACCA Regulatory ProcessDisciplinary Committee

Deals with specific breaches in bye laws

Imposes orders and fines on members/firms to show public how serious conduct was

Has power to exclude members

Admissions and Licensing Committee

Deals with defective work practices and procedures

Takes appropriate action for the future to protect public

Has power to withdraw practising certificate of member

Stage 1Investigation Stage

Stage 2Assessor Stage

Stage 3Referral to Disciplinary Committee

Stage 4Disciplinary Committee & Decision

Stage 5Appeals

Overview of ACCA

Regulatory Process

Sources of Complaints

• Clients

• Report from ODCE or Companies Office to ACCA

• Following an unsatisfactory monitoring visit from ACCA

Stage One - Investigation Stage• Investigating Officer is appointed• Correspondence issued• Treat complaint seriously• Co-operate with Investigating Officer• Respond in a timely manner and accurately• Take professional advice if required

Critical stage in the processAdmissions made at this stage often prove fatal

Stage Two - Assessor Stage• Assessor makes decision whether matter

should be referred to Disciplinary Committee or Admissions and Licensing Committee

• Assessor’s report is sent to member for comment and to allow member to make written representations

Important opportunity for member to engage and try to have matter dealt with

Stage 3 – Assessor’s decisionTo refer or not to refer?

Assessor can decide:• There is no case to answer• There is a case to answer and

the matter is referred to the Disciplinary Committee

• The matter can rest on file• The matter is referred to the

practice monitoring department

Stage 4 - Disciplinary Committee Hearing

• Independent of ACCA• 5-6 people on panel• Majority are non

accountants • Hearings are in public

and are recorded• Case presenter appears

for the ACCA

• Attendance is crucial• Shows you respect the

importance of the role of the committee

• Shows your commitment to your career and the profession

• Gives committee an opportunity to evaluate your appearance and general demeanour

Disciplinary Committee Hearing

To defend or not to defend?• This needs to be considered

carefully• Take advice on the merits of

defending• Increased costs in preparing for

defence of the case for member and ACCA

• If defence unsuccessful member responsible for both sets of costs

• The committee has no jurisdiction to award costs against ACCA

Has complaint been proven?

Have the facts been proven against the member?

Have the facts breached the relevant bye law referred to in the

complaint?

Pre Empting the Decision

• Review guideline disciplinary sanctions

• Consider what view committee likely to come to

• Package a set of proposals in mitigation– Highlight previous clear record

– Once off issue

– No loss to public

– Evidence of financial position

Previous History

• After plea in mitigation is made– Clerk will inform committee of any previous

disciplinary orders made against member– Committee come to their decision

Decision of Disciplinary Committee

• Orders– No further action– Admonishment– Reprimand– Severe Reprimand– Exclusion/Removal

from Register

• Fine• Costs and publicity

What happens next?

• Formal letter issues from disciplinary committee• Statement of written reasons follows

– This will include a form of application for permission to appeal

• There is a strict 30 day period for leave to appeal• Right to appeal is only permitted if the Chairman of

Appeals Committee grants leave to appeal

Stage 5 - Appeal Committee• Uphill battle• It is not a re hearing of the

matter• Must shows substantive

grounds of appeal• Only witnesses permitted will

be those with new evidence

Overview of ACCA Regulatory ProcessDisciplinary Committee

Deals with specific breaches in bye laws

Imposes orders and fines on members/firms to show public how serious conduct was

Has power to exclude members


Deals with defective work practices and procedures

Takes appropriate action for the future to protect public

Has power to withdraw practising certificate of member


• Complaints originate with Professional Conduct Department or Practice Monitoring Department

• Audit and insolvency work referred to Regulatory Assessor

Regulatory Assessor

• The Regulatory Assessor can:– Say no action is necessary– Impose conditions on holder of a certificate– Refer the case to the admissions and

licensing committee

• The Regulatory Assessor cannot withdraw or suspend a certificate.

Admissions and Licensing Committee Hearing

• Independent of ACCA

• Same format as disciplinary committee

• Hearings are in public and are recorded


Formulate proposals showing:– How incident was a once

off or on one file– Plan for the future that this

will not happen again– Previous good record– How public are not at risk


The following options are available:– No order– Order placing conditions on firms or

individuals certificates– Suspension or withdrawal of firm’s or

individual’s certificate or licence

Appeal from Admissions and Licensing

• Same format as appeal from disciplinary committee

• 30 day period for leave to appeal

• Most appeals are unsuccessful

Common Complaints Audit Work• Admissions and Licensing

– Deficiencies in audit work

• Disciplinary – Failure to report Indictable Offences Under Section

194(5) of the Companies Act 1990– Failure to make reports in respect of regulated

entities under Financial Services Acts

Common Complaints Deficiencies in Audit Work

• Usually very basic errors giving rise to problems

• Poor systems on pre planning, documenting and concluding audits

• Recognising the risk involved in audit work

• Recognising the risk with certain audit engagements

Common ComplaintsFailure to Report

Only arises when and only when:

• Auditor forms an opinion• During the course of an audit• That there are reasonable

grounds• That the company has

committed an indictable offence

Common Complaints Section 31 Companies Act 1990

• Member liable to disciplinary action for breach of fundamental principle of competence and care and misconduct for delay in filing a report with ODCE

• complex piece of legislation• Knowledge of directors no longer relevant• Guidance from ODCE says they are monitoring cases of

post July 2009 intercompany loans

Section 31

Held in this case that member had no case to answer

Is the offence an indictable one?

If not then no obligation to report

Common Complaints Reporting of Section 202 Offences

• Complaint from ODCE to ACCA• Auditor disciplined as a result of Section 202

Report because previous audit reports had been qualified but no report made to ODCE

• Complaint from ODCE sought to look back at earlier years

• Early intervention in this case resolved the matter

New Complaints Conflict of Interest Cases

• Growing number of complaints in this area• Signing audit report when ineligible to do so• These are treated very seriously by

Disciplinary Committee – guideline order is exclusion

New ComplaintsBreach of Undertaking

• Undertaking given to Practice Monitoring Department/Professional conduct department

• Undertaking not adhered to e.g. hot reviews

• Member/firm liable to disciplinary action• Treated very seriously by disciplinary

committee

New complaints Complaints by Liquidators

• This is a new area of complaint as a result of recession

• Obligation on auditor to furnish books and records to liquidator

• Complaint of no co-operation by auditor

New Complaints - Insolvency of Companies

• Reports by liquidators to ODCE where they uncover failure to report in previous years by auditors

• Fraudulent trading• Books and records• Non holding of EGMs

New Complaints - Insolvency

• In the UK a number of complaints arising where accoutant is acting in management of a creditor’s IVA

• Proposed Personal Insolvency Bill

• Role of accountant as personal trustee

• Liabilities of personal trustee

Summary

• Post celtic tiger now living in a regime of increased regulation

• More demands being put on professionals

• Business is down• Important not to compromise standards

as a result

Summary

• If faced with a complaint take advice immediately

• A problem shared is a problem halved

• Formulate a solution

• Procrastination makes things worse

Tel: (01) 6619500 Email:[email protected]

DisclaimerThis information is for guidance purposes only. It does not constitute legal or professional advice. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. No liability is accepted by Reddy Charlton for any action taken in reliance on the information contained herein. Any and all information is subject to change.

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DEALING WITH DISCIPLINE