ACCA member Ian Shelton was today accused of being complicit in a fraudulent
invoice practice at Transbus International Limited today.
The Accountancy Investigation and Discipline Board kicked off its first
public hearing today, at which the complaints were laid.
Part one of a two-day hearing saw the financial controller take the stand, as
the AIDB accused Shelton of being dishonest.
Shelton argued in defence that he acted under the instruction of senior
managers, whom he assumed had ‘clearance’ to withhold money the company had
collected on behalf of the bank, in exchange for goods delivered.
The company, a subsidiary of listed Mayflower Plc, had a non-recourse invoice
discounting facility with HSBC known as ‘MIDFES’ – the terms of which were
subject to annual renewal letters, the tribunal heard.
The arrangement with HSBC amounted to Transbus having the right to claim for
monies for manufactured goods delivered to customers.
The bank paid this claim out to Transbus, which in turn collected the
customer-owed debt on behalf of the bank.
Shelton admitted that as financial controller at the Guildford premises of
the company from April 2001, he was aware that a junior employee had submitted
falsified spreadsheets to the bank, to project that customers had paid on dates
later than their actual payment dates.
This facilitated the practice of withholding the money from the bank and was
in breach of the MIDFES facility.
Shelton signed a claim form, submitted to HSBC, for payment of over £3m in
December 2003, despite the fact that customers had not been invoiced for the
In addition those invoices which related to the claim were for goods that had
either not yet been manufactured or not delivered by the time the claim was
HSBC was unaware of this and paid the claim.
Shelton admitted before the tribunal that he never directly checked with the
managers as to their ‘special clearance’ he assumed they had from the bank,
allowing the practice to continue.
He also admitted that – without the bank’s knowledge of paying for goods
which were not completely manufactured or delivered – the practice amounted to
dishonesty and misconduct.
When asked why he did not report the matter to authorities more senior than
himself, or even the auditors, Shelton said: ‘I deeply regret it… I should have
reported it. I wrongfully hoped the David Berry (former senior manager in the
finance division) would report it,’ he said.
Patrick Lawrence, representing the AIDB, said the evidence showed that there
was no doubt of Shelton’s complicity and serious misconduct.
The case continues tomorrow.
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