The Adelphi, 1-11 John Adam Street, London WC2N 6AU. Severe Reprimand and costs to ACCA in the sum of

Transcription

1 CONSENT ORDER COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Patrick James Hartley Heard on: Thursday 22 June 2017 Location: Committee: Legal Adviser: The Adelphi, 1-11 John Adam Street, London WC2N 6AU HH Graham White (Chairman) Mr Alastair McFarlane OUTCOME: Severe Reprimand and costs to ACCA in the sum of DOCUMENTS BEFORE THE COMMITTEE The Committee received a bundle of papers, numbered pages The Committee also received a draft Consent Order, signed by Mr Hartley. ALLEGATIONS It is alleged that Patrick Hartley, ACCA Fellow and, at the relevant time, partner in the firm Edwards & Hartley; Allegation 1 a) Failed to refer in the accountant's reports signed by him for Firm A years ended 31 May 2012 and 31 May 2013 to the following breaches of the Advocates Account Rules 2008: i. The requirement for client accounts of a sole practitioner to be either in the advocate's name or in the practice name; ii. iii. iv. The improper withdrawal of money from client accounts (and related requirement to remedy promptly upon discovery), which led to insufficient money being held for clients; The requirement to reconcile the client cash accounts with balances shown on the statements at least every five weeks; The requirement for the principal to ensure compliance with (iii) above, rather than place reliance on the Reporting Accountant at year end.

2 b) His conduct set out at 1(a) above was contrary to the Fundamental Principle of Competence and Due Care. c) In light of the facts set out in Allegations 1(a) and 1(b) above, Patrick Hartley is guilty of misconduct. Allegation 2 a) Signed the Accountant's Reports referred to in Schedule 1 when he was not authorised to do so given, under the Isle of Man Law Society Advocates Accounts Rules 2008 [IMLS], members of the Association of Chartered Certified Accountants were not permitted to sign such reports. b) His conduct as set out at 2(a) above was contrary to the Fundamental Principle of Competence and Due Care. c) In light of the facts set out in Allegations 2(a) and 2(b) above Patrick Hartley is guilty of misconduct. BRIEF BACKGROUND 1. Mr Hartley is currently sole principal of ACCA firm Edwards & Hartley based in Douglas, Isle of Man. He has held a General Practising Certificate with ACCA since 24 February In June 2016, a complaint was received by ACCA from the Isle of Man Law Society (IMLS), the regulatory and professional body for Isle of Man Advocates, regarding the conduct of Edwards & Hartley. The complaint made reference to attaching 'three years of annual accountants' reports provided by Edwards & Hartley in respect of an Advocate's Practice' namely Person A of Firm A. The complaint letter stated: `In 2013 in respect of this practice, [IMLS] had cause for concern about the manner in which Client accounts were being operated, which concerns were not addressed in the Accountant's reports (and related correspondence) which had been submitted to [IMLS]'. 3. IMLS appointed another Accountant Company A to investigate the matters of concern and the reports provided by Company A laid out the breaches of the Advocates Accounts Rules 2008, none of which

3 had been highlighted in the accountant's reports submitted by Edwards & Hartley. 4 The complaint was sent initially by IMLS to ICAEW given the complaint was against Edwards & Hartley, which, at the time, was an ICAEW registered firm. 5. No disciplinary investigation relating to the conduct of Edwards & Hartley was pursued whilst IMLS took disciplinary proceedings against Person A. This culminated in the IMLS' Disciplinary Tribunal making findings against Person A following a hearing held over two days on 24 September 2015 and 26 November The Tribunal found that Person A had breached a number of accounts rules. The Tribunal subsequently fined him 4,000. As well as an order for costs, Person A gave an undertaking to the IMLS and its Tribunal that he would not operate a client account until the IMLS was satisfied sufficient and proportionate governance procedures were in place. 6. Following the Tribunal's decision, the matter was referred to ACCA. 7. Mr Hartley admits Allegation 1 and Allegation 2 and each of their particulars. 8. Mr Hartley has therefore admitted that his failings in Allegation 1 amounted to misconduct, and, as set out in Allegation 2(a), were contrary to the Fundamental Principle of Competence and Due Care. He further admitted that the conduct set out in Allegation 2(a) and it being contrary to that Fundamental Principle, also amounted to misconduct. 9. Mr Hartley accepted ACCA s proposed sanction of a severe reprimand. ACCA contended that this was the proportionate sanction reflecting the seriousness of Mr Hartley s misconduct and the discredit it brings to the association.

4 COMMITTEE S DECISION 10. Under Regulation 8(8) of the Complaints and Disciplinary Regulations 2014, the Committee has to determine whether on the basis of the evidence before it, it is appropriate to approve or reject the draft Consent Order. 11. The Committee noted that Under Regulation 8(12), it shall only reject the signed Consent Order if it is of the view that the admitted breaches would, more likely than not, result in exclusion from membership. 12. The Committee considered the seriousness of the breaches and the public interest which includes the protection of the public, the maintenance of public confidence in the profession and the declaring and upholding proper standards of conduct and performance. It balanced this against Mr Hartley s interests and his previous good character; his admission of the failures and misconduct; his cooperation with ACCA and his prompt ceasing of preparing and signing accountant s reports when informed he was not authorised to do so. 13. The Committee specifically agreed with the list of aggravating and mitigating factors listed at paragraph 46 and 47 of the draft Consent Order. 14. The Committee had regard to ACCA s Guidance for Disciplinary Sanctions. It was satisfied that there had been early and genuine acceptance of the misconduct and that the risk to the public from Mr Hartley continuing in practice was low. 15. For the reasons set out above, the Committee was satisfied that the admitted breaches would not be likely to result in exclusion from membership, and therefore there was no basis for it to reject the Consent Order under Regulation 8(12). The Committee noted the proposed Consent Order, and considering all the information before it was satisfied that it was an appropriate and proportionate disposal of this case and made the order consented to by both parties.

5 ORDER 16. The Committee, pursuant to its powers under Regulation 8, made an Order in terms of the draft Consent Order, namely that Mr Hartley be severely reprimanded and pay ACCA s costs of 1,777. Graham White Chairman 22 June 2017

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