PracticeAuditDisciplinary body wins its first case

Disciplinary body wins its first case

Accountancy's watchdog bounces back after its debut Mayflower defeat last year to successfully bring complaints against McClure Watters

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

Related Articles

Auditors will shoulder disproportionate burden of disciplinary action under new FRC regime

Audit Auditors will shoulder disproportionate burden of disciplinary action under new FRC regime

2y Andrew Howell
Baker Tilly faces FRC investigation over Tanfield Group audit

Audit Baker Tilly faces FRC investigation over Tanfield Group audit

4y Naomi Rainey, Writer
FRC closes investigation into KPMG BAE audit

Accounting Firms FRC closes investigation into KPMG BAE audit

4y Richard Crump, Writer
FRC deaf to profession's howls over fine calculations

Accounting Firms FRC deaf to profession's howls over fine calculations

5y Rachael Singh, Writer
FRC to use firms' revenues to calculate disciplinary fines

Audit FRC to use firms' revenues to calculate disciplinary fines

5y Rachael Singh, Writer
AADB closes investigation into E&Y Equitable Life actuary

Audit AADB closes investigation into E&Y Equitable Life actuary

5y Richard Crump, Writer
Profession up in arms over AADB fine calculations

Audit Profession up in arms over AADB fine calculations

5y Rachael Singh, Writer
FRC receives green light to reform its structure

Audit FRC receives green light to reform its structure

5y Rachael Singh, Writer