Widespread Gross Negligence

 

BLOG 227

 

WIDESPREAD GROSS NEGLIGENCE?

 

 

When I joined the Institute of Chartered Accountants in 1965, it was a members’ organisation.  In theory it still is, but it doesn’t feel like it.  It feels like an institution that exercises control over its members.

 

This was brought home to me by a recent article in Accountancy Age (our online version of the Sun) headed “Sole practitioner excluded after widespread gross negligence”.  The article was written in conjunction with a Solicitor who specialises in professional disciplinary cases and what caught my eye was the closing comment that “Had Mr Dyer been better advised, a more favourable outcome may well have been achieved”.  Surely gross negligence is a very serious matter and legal advice cannot somehow reduce the seriousness.

 

The ICAEW publishes a summary of disciplinary cases, so I looked it up.  Mr Dyer, a sole practitioner in Nottingham, qualified in 1969, which means he is well over 70.  Most accountants that age who are still in practice tend to be semi-retired, not actively looking for new clients, but continuing to service a few long-term clients who have been with them for years.  I would expect Mr Dyer to fall into that category.  There had been no previous complaints about him to the Institute and the complaint in question was not a complaint by a client but a complaint by the Institute itself.  Furthermore, Mr Dyer admitted all the complaints against him, which normally attracts leniency from a Tribunal as it reduces the length of the hearing.  The complaints were:

 

1.      That he had not complied with the Institute’s Client Money Regulation account when the Institute first investigated him in 2016. He no longer handles clients’ money at all, so these were very historic failures.

 

2.      He did not carry out proper risk assessments under the Money Laundering Regulations.  The Institute (or the ICAEW as it now brands itself) takes it role as a regulator very seriously as it is afraid of losing its right to regulate its members.  As it is unlikely that Mr Dyer took on many new clients, this probably boils down to that he did not carry out periodic risk assessments on clients that he had known for years and was probably very close too.  I suspect that the reality is that he did so unconsciously, and his real sin was that he did not document that he had done so.

 

3.      He prepared accounts for a limited company that did not reflect the format prescribed by Financial Reporting Standard FRS 102.  It was noted that he did not use accounts production software (I suspect that he is digitally challenged like me) and had he done so most of the mistakes would not have occurred.  It is noteworthy that Companies House do not seem to have complained.  Nor does the client concerned, who was probably pleased to get accounts that he could understand, appear to have done so.

 

So, it appears that, like many of my generation, Mr Dyer is not very good at documenting what he does and keeping up to date with modern standards.  There appears to be no suggestion that he is not a good accountant in other respects or that his clients have any concerns over his competence.  There is no suggestion that any of his clients have been disadvantaged.

 

Yet the Tribunal decided that “any order which allowed Mr Dyer to retain his membership would damage the reputation of the profession and would not be adequate to protect the public”.  What public?  It is likely that Mr Dyer’s clients are happy with his work and will continue to use him whether or not he is a Chartered Accountant.  It is unlikely that anyone who is not a client would have sought to become one.  Before looking at this case, I had never heard of Mr Dyer and I suspect nobody else has other than his long-term clients.  So how does throwing him out of the Institute protect the public?  Indeed, how would anyone have associated Mr Dyer FCA with “the reputation of the profession” prior to the disciplinary hearing?

 

When the ICAEW was a member’s organisation, someone in the Institute would have had a quiet word with a good practitioner in Nottingham and asked them to see if they could help Mr Dyer to apply current standards.  Today, they hide behind GDPR and claim that they cannot reveal his plight to another practitioner without breaching GDPR – that is not of course the case as they could have asked Mr Dyer if he wanted them to link him up with another practitioner.

 

I feel very sad.  I do not think that stripping of his membership and, I suspect, as a result, his dignity, an old man who has practised conscientiously to the best of his ability for over 50 years but as he aged has not kept fully up to date, is either necessary or appropriate to protect my reputation as a Chartered Accountant.  On the contrary, it seems to me to emphasise how little the ICAEW today cares about its members.  That is not to say that those who transgress should not be disciplined.  But in a situation where an old man is struggling to cope with the modern world, a little sympathy and assistance would not have gone amiss.

 

 

ROBERT MAAS