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Nine steps for managing an accountancy disciplinary investigation

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Do you have an investigation looming large over you? Kingsley Napley’s Julie Matheson goes through

the best ways to manage the process

AS AN ACCOUNTANT or technician, hopefully you will proceed through your career without becoming involved in any sort of disciplinary proceedings.

However, you are not immune from being the subject of a complaint from a client to your regulatory body.  Whether you are regulated by the ICAEW, ACCA, CIPFA, CIMA, ICAS or the AAT, there is always the possibility of an unwelcome approach by the disciplinary team of your regulator.

Each regulator has a duty, in the public interest, to investigate complaints against its members.  High profile complaints will usually be investigated by the Financial Reporting Council (FRC), which has a similar duty to consider all matters referred to it, with a view to deciding whether disciplinary proceedings are required. 

What should you do if a letter from your regulator appears on your doorstep?

 

1.      Firstly, don’t panic.  The accountancy regulators investigate a large number of complaints each year, many of which don’t result in a formal disciplinary hearing.  Keep calm, do not think the worst and consider the next steps carefully. It may be wise to take legal advice at this early stage as your actions from the outset can affect the ultimate outcome.  

 

2.      If the complaint relates to client work, ensure that you have access to all of the relevant files and make sure they are in a workable order.  This will allow you to consider the terms of the complaint in a logical manner.

 

3.      Prepare a note setting out your thoughts on the complaint.  You should make sure the note is stored on a personal drive (i.e. not your work computer).  You should also intend that the note is prepared for the purpose of seeking legal advice, as this would mean it could attract legal professional privilege.  It should therefore be marked as LPP, as then you cannot be required to disclose it for any other purpose.  This note will provide a very useful insight to your lawyer.

 

4.      Think about who you need to tell.  You may have a duty, under your contract of employment, to tell your employer, or indeed a responsibility to inform fellow partners if you are in a partnership.  If you are regulated by another regulator also, for example the FCA, you may be required to make a disclosure about the complaint.

 

5.      Consider whether a full response to the allegation is strictly required at an early stage.  Often a regulator will advise of a complaint but will not seek a definite response until later.  If so, it may be better to postpone your response until a later date, when further information has been forthcoming from the regulator and you understand the case against you more fully.

 

6.      That said, do not simply ignore the issue.  Most regulators have a provision with their disciplinary scheme which compels a member to comply with a disciplinary investigation.  Failing to do so could lead to a separate finding of misconduct against you.  Be compliant with the regulator and demonstrate that you are willing to cooperate in the process.

 

7.      Consider confidentiality – if you are asked to provide your file consider to what extent it can be provided.  It may contain confidential material which would make you think twice about handing it over – take advice on this if you are unsure.  Confidential aspects may require redaction or removal, with an appropriate explanation being advanced.  However, the first principle must be that you are as compliant as possible with your regulator – contemplate that first when determining whether information should be provided.

 

8.      Do not try to contact the complainant – this will rarely help as when the regulator has become aware of the complaint, it is likely to proceed with the investigation, even if the complainant seeks to withdraw the complaint.  Contacting the complainant could be seen as trying to undermine the process.

 

9.    Finally, do not automatically assume the worst.  Even if you do end up appearing before a disciplinary tribunal, this does not necessarily mean the end of your career.  Regulators have many sanctions at their disposal, ranging from a reprimand to erasure from membership.  Seeking early advice will allow you the best chance of a favourable outcome.

Julie Matheson is a partner specialising in regulatory issues for accounting professionals at Kingsley Napley LLP 

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