Last week's landmark ruling in the High Court battle between Deloitte and the JDS and Accountancy Age could prove to be a turning point in regulation, as the profession's watchdog looks to strengthen its position in public interest cases
The current disciplinary scheme for accountants could undergo significant change as a result of a High Court ruling last week, which lifted a temporary injunction on the body and Accountancy Age granted to Big Four firm Deloitte.
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Joint Disciplinary Scheme lawyers believe aspects of the ruling could encourage accountants to use confidentiality rules in the scheme’s regulations as a means to block the details of an investigation from being published.
Sources at the JDS have pinpointed the controversial regulation 52 as a rule they believe the watchdog needs to strengthen as a result of the ruling. A meeting scheduled for next month will be used to review the confidentiality regulation.
The High Court judgment will also be pored over by the JDS’ replacement, the Accountancy Investigation and Discipline Board, after its executive counsel Cameron Scott confirmed he would be examining the ruling in detail.
‘Potentially, this could have quite a big effect on the AIDB. We could face a similar challenge,’ he said.
The High Court judgement delivered by Mr Justice Laddie came in response to attempts by Deloitte to prevent the JDS executive counsel Chris Dickson and Accountancy Age from publishing a press release on complaints the watchdog was bringing against the Big Four firm in relation to its work at casino group Capital Corporation and the failure of UK chairman Martin Scicluna to ensure one of his former partners was reported to the ICAEW.
Dickson laid complaints against Deloitte, alleging it ‘acquiesced’ in the face of Capital’s misleading amendments to disclosures the firm had recommended the casino group make to the market in its 1996 interim statement. At the same time the JDSalleges Deloitte ‘failed to resign as auditor’.
A complaint was also laid against Scicluna, alleging that he failed to report former partner Stephen Ives to the ICAEW. Ives was fined £87,000 and expelled from the ICAEW last November for fraudulently obtaining a Range Rover from Capital and manipulating Deloitte’s books to conceal what he had done.
A Deloitte statement said: ‘After a five-year JDS investigation, no complaint has been laid in respect of the audits of the financial statements of Capital Corporation. We therefore objected to having unsubstantiated and groundless allegations aired in public before even the commencement of the tribunal process.’ It went on to say that it considered the JDS’ complaints to be wrong.
Last week’s publication of the press release brings to an end a six-year investigation into Capital and the chartered accountants working for Deloitte and the company itself. An independent Joint Disciplinary Tribunal will be appointed to hear the complaints.