Exclusion avoided for historic audit complaints

The case

We were first approached by NA shortly before the disciplinary hearing in September 2020. Originally, he had intended to represent himself, but, having spoken to the case presenter, he discovered that, due to two previous findings of misconduct, he faced the prospect of exclusion from membership and therefore decided to obtain legal advice and representation. We made an urgent application for an adjournment, the client agreeing to pay the Institute’s costs thrown away as a result of such a late application. The application was granted and the case was adjourned.

NA faced 13 complaints of breaching audit regulations. Prior to our instructions, NA had admitted the historic audit complaints. Our advice was that he had been right to admit them.

The final hearing before the Disciplinary tribunal was conducted remotely. The tribunal noted that NA was no longer authorised to act as an independent auditor.

The complaint which had been made five years ago, was from NA’s successor as auditor. The successor had complained to the Institute that NA’s audit work was defective.

The audit reports signed by NA were historic dating from December 2009 to August 2012 inclusive.

The previous findings of misconduct also related to audit failings. One dated from June 2009 and the other from September 2012. These failings occurred during the same period when the subject matter of the complaints arose. The tribunal considered the Sanctions Guidelines and noted that the starting point was exclusion and a Category C financial penalty.

It considered that there were aggravating factors in that there had been repeated failures and previous sanctions relating to audit work.

Mitigating factors

We made an extensive submission by way of mitigation on behalf of NA. The tribunal noted that the audit complaints were historic, that a satisfactory QAD report was carried out in July 2012, that there had been delays on the part of the Institute in carrying out the investigation, that there was no evidence of any losses, that NA was no longer authorised to carry out audit work, there had been satisfactory hot file reviews and the absence of any defective work in the last eight years. All of the complaints, both previous and present, were audit-related. NA had expressed remorse and indicated that at the time of the audit work, he felt out of his depth.

What Blake Morgan did

We would cite two notable achievements in this matter. Firstly, that we managed to obtain an adjournment literally at the last minute in respect of the original hearing date. Secondly, as a result of the mitigation put forward, we avoided what would otherwise have been inevitable exclusion from membership, taking into account NA’s double disciplinary record. It was a satisfactory outcome, that he should be given a severe reprimand and a fine of £7,500.

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