Defending Accountants and Accountancy Firms

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The Senior Managers and Certification Regime (SM&CR)

Faced with an FRC, ICAEW, ACCA or other accountancy disciplinary or regulatory investigation? Our specialist accountancy defence lawyers are able to offer you advice and support.

We are top ranked in Chambers and Partners and the Legal 500. We understand the implications that an investigation can have on you, your firm, your professional life, and your family.

Adopting a strategic approach when you have received a notice of a complaint from your regulator is vital from the outset. Doing so will allow the greatest possibility of securing a favourable outcome. Please contact us to speak to one of our specialist lawyers who will be able to guide you through the process.

For firms

We advise accountancy firms which are subject to some form of intervention by their regulator. This can be due to a routine compliance inspection, or when the regulator has instigated a formal disciplinary investigation. We provide sensible, tactical and commercial advice to resolve the regulator’s issue. We advise on proceedings brought by the following regulators:

Financial Reporting Council (FRC)

FRC disciplinary proceedings can be daunting and complicated. Our Frequently Asked Questions on the Accountancy Scheme and the Audit Enforcement Procedure provide some guidance. Please also contact us for more tailored advice.

We have significant experience in FRC investigations, having historically advised the FRC on cases brought under its Accountancy Scheme. We now exclusively act on behalf of firms and individuals regulated by the FRC. We use our acquired knowledge to provide high quality advice on a range of issues surrounding FRC regulation, including:

how to respond to an adverse FRC Audit Quality Review (AQR) outcome;
proceedings brought by the FRC under its Audit Enforcement Procedure (AEP);
proceedings brought by the FRC under its Accountancy Scheme;
responding to formal requests for information;
entering into ‘Constructive Engagement’ under the AEP;
preparing for and representation at an FRC interview;
responding to an Investigation Report;
negotiating an FRC settlement;
responding to a proposed Formal Complaint;
preparation for and representation at an FRC disciplinary tribunal panel hearing;
publicity that may arise from FRC proceedings.

Institute of Chartered Accountants in England and Wales (ICAEW), Association of Certified Chartered Accountants (ACCA) or Institute of chartered accountants of Scotland (ICAS)

Our answers to Frequently Asked Questions provide guidance on ICAEW and ACCA processes. For more detailed and tailored advice, plea se contact us.

The ICAEW, ACCA and ICAS’s supervision of firms can cause anxiety for accountants and auditors. For audit firms, an adverse outcome from a Quality Assurance Department (QAD) or Practice Monitoring Directorate (PMD) visit can lead to increased scrutiny of a firm’s practices. In more complex cases, it can lead to a referral through the regulator’s disciplinary process. A complaint against a firm from an aggrieved party can lead to an intensive investigation by the ICAEW, ACCA or ICAS investigation, leading to resourcing, financial and emotional pressures.

Our expert lawyers can guide the firm through the complexities of the investigation process. We can seek to avoid disciplinary action by the regulator through early intervention, or provide targeted advice to the firm to assist it in defending whatever allegations it faces. We provide advice on the following types of issues:

dealing with the ICAEW or ACCA during QAD or PMD visits, especially where the firm has some concerns about the potential outcome of the review;
dealing with an ICAEW disciplinary investigation or ACCA disciplinary investigation, should the ICAEW or ACCA conclude that the work reviewed during the QAD/ PMD visit is not satisfactory;
responding to complaint letters brought by clients, to seek to avoid them making an unmerited complaint to the firms regulator; or assisting the firm in determining whether a disclosure to the regulator is necessary in the circumstances;
responding to all correspondence from the ICAEW, ACCA or ICAS, during the course of a disciplinary investigation under the regulator’s bye-laws, including information requests;
preparing detailed responses to Investigation Reports to seek to secure a dismissal of a case, or a minor sanction, including a Consent Order, at the Investigation Committee stage;
preparation for an ACCA, ICAEW or ICAS disciplinary hearing before a Disciplinary Committee, including providing guidance for witnesses, drafting technical legal arguments, analysing and constructing a defence case, carrying out advocacy and providing advice on the merits of success;
whether you should appeal a case to the Appeal Committee, drafting of legal arguments and advice on procedure;
the circumstances under which a case should proceed under the Fitness Committee Regulations.

Under the bye-laws of the ICAEW, ACCA, ICAS, CIMA and CIPFA, regulated accountants have a duty to report other members if they believe that an act/ omission may amount to misconduct. A failure to do so may amount to misconduct in itself. You can find some guidance on a member’s duties here. Please contact us for bespoke advice if you have any further questions.

For accountants and insolvency practitioners

Receiving a notification of a complaint from one’s regulator, or facing an accountancy body's tribunal panel, can be stressful and distressing. Often providing a detailed and measured response to an initial letter can bring the matter to a close. However, many cases proceed through a full investigation, and a small proportion are referred for consideration at a full disciplinary committee hearing.

Taking early advice is essential. Our specialist lawyers can guide you through the process. We advise on proceedings brought by the following regulators:

Financial Reporting Council (FRC)

FRC proceedings can be daunting and complicated. Our Frequently Asked Questions on the Accountancy Scheme and Audit Enforcement Procedure may provide some guidance. Please also contact us for more tailored advice.

how to respond to an adverse Audit Quality Review (AQR) outcome;
proceedings brought by the FRC under its Audit Enforcement Procedure (AEP);
proceedings brought by the FRC under its Accountancy Scheme;
responding to formal requests for information;
entering into ‘Constructive Engagement’ under the AEP;
preparing for and representation at an FRC interview;
responding to an Investigation Report;
negotiating an FRC settlement;
responding to a proposed Formal Complaint;
preparation for and representation at an FRC disciplinary tribunal panel hearing;
publicity that may arise from FRC proceedings.

Institute of Chartered Accountants in England and Wales (ICAEW); Association of Certified Chartered Accountants (ACCA); institute of chartered accountants of Scotland (ICAS); Chartered Institute of Public Finance and Accountancy (CIPFA); and Chartered Institute of Management Accountants (CIMA)

Our answers to Frequently Asked Questions provide overarching guidance on the regulatory regimes in place, and the process of a disciplinary investigation. For more detailed and tailored advice, please contact us.

We have significant experience of defending accountants, auditors and insolvency practitioners before all of the UK accountancy regulatory bodies. We provide advice on all issues from the notification of a complaint to the final Disciplinary Committee hearing. Examples of the types of issues we advise on include:

self-reporting obligations, when a member may have committed misconduct, and how best to make any relevant disclosures;
obligations to report other members where there is a suspicion of misconduct;
responding to preliminary correspondence from the regulator, with a view to bringing a spurious or vexatious complaint to a close;
responding to all correspondence from the regulator during the course of a disciplinary investigation under its bye-laws, including information requests;
preparing detailed responses to Investigation Reports to seek to secure a dismissal of a case, or a minor sanction at the Investigation Committee stage;
preparation for a disciplinary tribunal, including guidance for witnesses, drafting technical legal arguments, analysing and constructing a defence case, carrying out advocacy and providing advice on the merits of success;
whether to appeal to an Appeal Committee, advice on the merits of success and the drafting of legal arguments;
the circumstances under which a case should proceed under the Fitness Committee regulations.

FOR LOCAL AUTHORITY FINANCE DIRECTORS AND CHIEF FINANCE OFFICERS

We understand the significant challenges that local authorities face in respect of their financial management and audit obligations. We also appreciate that the COVID-19 pandemic has placed additional pressure on local authorities which were already under substantial financial strain.

A key concern for Finance Directors and Chief Finance Officers (CFO) in local authorities is often their strict legislative responsibility to keep ‘adequate accounting records’, as required by section 3(1) the Local Audit and Accountability Act 2014.

Difficulties can develop if a local auditor considers that a “public interest report” (PIR) should be made on any matter coming to their attention during the audit. In these situations, it is crucial for Finance Directors and CFOs to seek early advice in order to ensure accurate representations are made on their behalf, and on behalf of the local authority and councillors.

Where serious failings are alleged to have taken place resulting in a PIR, the Finance Director or CFO may also face a referral to their regulatory body and a potential disciplinary investigation.

We have significant experience in representing local authority Finance Directors and CFOs in relation to preparing representations supporting their position during the PIR report preparation process, and also in disciplinary investigations arising out of adverse conclusions made in PIRs. We provide detailed advice and support at each step in the process, to seek to mitigate any professional or reputational damage.

If you would like advice on your position or have any questions or concerns, please contact us as early as possible.

Recent cases

Advising a mid-tier accountancy firm in FRC disciplinary proceedings under its Audit Enforcement Procedure in relation to the audit of a well-known high street retail brand;
advising a silver-circle firm on proceedings brought by an overseas equivalent of the FRC;
acting for a client under investigation by the FRC pursuant to its Audit Enforcement Procedure relating to the audit of a listed company dating back to 2016/2017;
representing several audit firms on proceedings brought under the ICAEW’s or ACCA’s Disciplinary bye-laws in relation to failings identified in the ICAEW’s QAD visit or the ACCA’s PMD visit;
providing advice to an accountancy firm in an ICAEW disciplinary investigation in respect of alleged incorrect accounting treatment under FRS 12;
advising a firm of Insolvency Practitioners on proceedings brought by the ICAEW in respect of several alleged breaches of the regulations;
advising accountants and firms on disciplinary proceedings due to the carrying on of public practice without a practising certificate;
representing CFOs in public practice in a CIPFA investigation, with a view to ceasing the investigation before a CIPFA disciplinary hearing;
advising ICAEW, ACCA and CIMA regulated accountants who have received criminal convictions, including custodial sentences;
advising a student member of CIMA in relation to a CIMA disciplinary investigation, culminating in a CIMA hearing;
providing advice on the duty to disclose material under the ICAEW’s bye-laws when doing so would breach a contractual agreement;
advising a student member of the ICAEW on proceedings brought to an ICAEW disciplinary hearing due to an alleged lack of integrity, in which we secured the lowest possible sanction and a vastly reduced costs order;
representing an accountancy firm in relation to a self-reporting of suspected misconduct due to the receiving of referral fees, in which we assisted the firm in avoiding a formal ICAEW complaint and ICAEW investigation.