Matthew Corrie features in Accountancy Daily Magazine: Don’t panic, an overview of and how to approach a disciplinary

Is your CPD up to date? Are your AML procedures fully compliant?  Have you had a client complaint? Have you received a letter from your regulator informing you that you are under investigation?

Thankfully, most members of the various accountancy bodies will never find themselves facing a disciplinary investigation by their regulator.   However, in what is rightly a heavily regulated profession, accountants and auditors have a plethora of technical standards to meet along with the duty to comply with the requirements contained within the byelaws and various codes of conduct and ethics which apply.  It is hardly surprising that significant numbers find themselves under investigation and, subsequently, the subject of disciplinary proceedings.

The purpose of this article is to consider common issues which arise, a summary of the process of a disciplinary investigation and proceedings and the approach accountants facing such an investigation can take to mitigate the risk involved.

There is massive variation in the sorts of issues which lead to investigations being commenced and proceedings pursued. These can range from complaints regarding the standard of work carried out to matters related to a member’s conduct in their personal life which nevertheless discredits the profession such as a conviction for a serious criminal offence.

Some of the sorts of behaviour which commonly result in investigation or even disciplinary action are: failures to have adequate AML processes in place or not adequately addressing issues identified at monitoring visits; not co-operating with a regulator in relation to the provision of information requested; providing incorrect or misleading information to a regulator; including inaccurate or false information on social media or in a C.V. or failing to make appropriate declarations in annual retentions.

Although there are variations to the exact processes followed by each of the accountancy bodies, their procedures are broadly similar in that they all:

  • notify the accountant concerned of the existence and nature of a complaint;
  • provide an opportunity to respond in writing to a complaint;
  • have a process by which it considers whether there is a case to answer;
  • have a process by which a case can, if appropriate, be disposed of by consent;
  • if there is a case to answer have a tribunal which can hear evidence and consider whether the matters alleged are proven, if so, whether they amount to a liability to disciplinary action and, if appropriate, sanction, publicity and orders for costs;
  • a mechanism of appeal.

Whilst no one can predict when a complaint might be made there are a number of steps which can be carried out to put oneself in the best position to avoid being involved in an investigation at all or to mitigate the consequences.  These include simple and easily achievable measures such as: being vigilant in completing your CPD; taking the time to check your AML procedures are up to date and compliant; co-operating with monitoring visits and responding promptly and adequately to any action points raised; familiarising yourself with the most up to date code of ethics and detailed consideration of whether to make any declarations in respect of yourself or others.   If you are in doubt as to the correct approach to a particular issue guidance can be sought from your regulator (many of the bodies have a technical advice or ethics helpline) or early legal advice can be obtained.

What should you do if you receive a letter from your regulator notifying you that a complaint has been received and an investigation into your conduct has commenced?

Do not panic.  The accountancy bodies do have wide ranging and potentially career altering powers if an allegation is proved and liability for disciplinary action established.  However, as set out above, there is a process in place which must be followed and an opportunity to respond to the complaint and engage in the process.  Moreover, not all complaints will be referred for consideration by a disciplinary panel and, even if they are, an adverse outcome is not inevitable.     

Do not ignore the letter.  Whilst it can be onerous and time consuming to respond and it may be tempting to bury your head in the sand, the worst thing you can do is not to engage fully with the process.   Each of the accountancy bodies has contained within its rules that members have a duty to co-operate and it is not uncommon for there to be additional allegations pursued in respect of non-cooperation.

Do carefully consider any response provided.  How you respond and the detail provided at each stage of proceedings is likely to have a considerable impact upon whether you can achieve the most favourable outcome in the circumstances.     

Bear in mind that any response you make can be referred to by the regulator at later stages in proceedings.  

Do not say anything misleading as this may come back to bite you in the form of an additional allegations of having made dishonest representations.

Do prioritise meeting deadlines.  If a matter is referred, there are strict procedural rules which set deadlines by which responses should be made and evidence served.  These must be met.  If it is not possible contact the regulator as early as possible to seek an extension.   

Do reflect on the nature of the conduct alleged and carry out relevant CPD.  There is likely to be a theme or focus of the complaint such as AML failures, honesty and integrity etc.  Whilst it may well be that matters are strongly denied notwithstanding this it is beneficial to be able to demonstrate that thought has been given to the nature of the concerns and that learning has been undertaken to address these.  

Do consider the wider picture.  It is essential that you consider the overall outcome you wish to achieve, a strategy to get there and whether this is realistic.  For example, it may be possible to deal with the complaint by making admissions and agreeing a sanction via a consent order or it may be that you wish to contest all matters alleged and go to a hearing.  Be aware that if a finding is made against you the regulators will generally be awarded their costs incurred in bringing proceedings and that any sanction ordered will almost inevitably be made public.

Given that disciplinary proceedings have the potential to lead to severe restrictions on your ability to practice or worse, you may wish to obtain specialist legal advice.  

Matthew Corrie specialises in professional disciplinary law across a range of sectors including acting on behalf of accountants in disciplinary proceedings and is able to accept instructions on a direct access basis.  Matthew is ranked in the Legal 500 and Chambers & Partners as a leading barrister in Professional Discipline and Regulatory law.