THE FRC has banned disgraced former Aero Inventory finance director Hugh Bevan from practicing for three years and slapped a £170,000 fine on the ICAEW member.
It marks the latest twist in the long-running saga of AIM-listed Aero, a wholesaler of aircraft parts. It was placed into administration in November 2009, after its shares were suspended when issues concerning the valuation of its stock emerged.
KPMG was appointed as administrators after the wholesaler said it had unearthed issues with its stock meaning it was likley to breach its non-financial covenants on its debt.
The FRC launched a complaint in January against Bevan, auditors Deloitte and its audit partner John Clennett in connecction to the audit and preparation of the financial statements of Aero and a subsidiary between 2006 and 2007. Proceedings against Deloitte and Clennett are still ongoing.
In reaching a settlement with Bevan, the accounting and auditing watchdog said it had taken account of the fact that Bevan’s behaviour was not dishonest or deliberate, and that he had cooperated with the FRC, had a good disciplinary record, and had demonstrated contrition.
Bevan admitted that his “conduct fell significantly short of the standards reasonably to be expected of him” in several key areas. This included breaching the ICAEW’s principles of integrity and performance by including, within the financial statements for the financial year ended 30 June 2006, revenue and profit from the Garuda Transaction, being reckless as to whether the transaction had taken place in that year.
He further breached the ‘’fundamental principle of performance’ by failing to report to Aero Inventory’s board that if the Garuda Transaction should be included in the 2006 statements it should be reported as an exceptional item.
Bevan also breached its ‘fundamental principles of performance and of professional competence and due care’ in applying the “straight line discount” to stock acquired under certain bulk purchase contracts. The impact was that the accounts did not show a true and fair view of the true state of affairs of Aero Inventory as of 30 June 2006, 30 June 2007 and 30 June 2008.
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