Disciplinary body wins its first case

The disciplinary body for accountants has won its first case in a disciplinary tribunal after bringing a complaint against Belfast firm McClure Watters.

The complaint from the Accountancy and Actuarial Discipline Board (AADB) was brought over its audit work on Emerging Business Trust (EBT), a publicly-funded body set up in 1996 to provide start-up capital to small firms in Northern Ireland.

McClure Watters was alleged to have been slow to uncover bad debt within EBT, and the AADB told the tribunal that 'there were aspects of the audit work that left a lot to be desired'. The firm accepted the criticisms of its work, though the Tribunal's chairman Anthony Evans did accept that McClure had been lied to by its client.

The tribunal accepted a 'carecraft agreement' signed by the AADB and McClure, which in effect saw the firm admit its failings and agree a level of sanction with the AADB. The full conclusion to the case is expected to be published by the Tribunal after Christmas. However, the AADB confirmed partner Rollo McClure was fined £6,000 and reprimanded. McClure Watters was fined an additional £6,000 and ordered to pay costs of £60,000.

The complaints related to the audits of EBT accounts for the years 30 September 1998 to 30 September 2002 and the accounts of the EBT venture fund for the year ending 30 September 2001.

Michael and Teresa Townsley, directors of MTF Chartered Accountants, the firm that managed EBT and its fund, are currently under separate investigation for their roles in the company's collapse.

The case was brought following EBT's liquidation in 2005. A number of separate investigations took place into EBT's affairs before and after its collapse, including a PwC investigation into bad debts the company ran up.

Executive counsel for the AADB, Cameron Scott, said after the hearing he was satisfied with the way in which the case has been handled. 'Once we'd done the investigation we wrote to the firm concerned and told them what we had found and asked whether they accepted the criticisms,' he said. 'They quibbled with a few things but, by and large, accepted those criticisms. I think it was a responsible way to deal with the case and it's nice to get a successful outcome.'

The conclusion is in marked contrast to the AADB's previous case, that of Mayflower, which the AADB lost. That landed the board with a legal bill of £1m. Scott agreed that the collaborative approach taken in this case represented the best way of conducting future cases where possible.

Further reading:

Watchdog lays complaints against McLure Watters

AADB calls for power to conduct its own investigations

Watchdog urged to axe disciplinary costs plan