Most of the members whose cases hav...

Most of the members whose cases have inspired articles for this rounded pillar have never (at least, not yet) reappeared onward the PCEC radar. However, a number of members have appeared before the PCEC more than once

Jack* was the same of these repeat offenders, with three cases unfolding in just pair years. All three cases involved relatively minor actions matters, but in each case, the PCEC determined that Jack had breached the authoritys and recommended that he pay a small fine and the charges of the investigation.

With his track record, it was no great surprise when Jack subsequently appeared before the PCEC one time again. This next case, however, involved a to a great degree greater breach of conduct.

The situation

The nearest complaint was lodged by a regulator. It disturbed Jack's failure to detect a public company's outrageous "pump and dump" scam in his initial audit of the company. The investigation revealed that management and outsiders had carefully orchestrated a fraudulent possessions acquisition for the "pump" and had also manipulated the information given to Jack for his audit.

What happened

The PCEC could not support a determination that Jack had failed in his duties according to not detecting the fraud, nor that he had participated in the scam. further Jack was hardly home free-the audited financial statements were sated of holes, indicating that he lacked knowledge of his client and its history, plane though historical information was readily available in its regulatory filings during the audit period.

Here's a partial summary of the deficiencies in the financial statements:

* The company described all issued shares as "issued for cash." In fact, they were all issued for services and acquisitions;

* The shareholders approved a share consolidation. The audited statements did not disclose by what means this had been done;

* The company jot downed into a number of "marketing" contracts. The financial statements failed to disclose these contracts;

* Pursuant to the year-end, the company opt to issue shares to pay marketing contracts. The company then failed to disclose these later transactions;

* The company pierceed into contracts for legal and marketing services. The contracts provided for payment according to the issue of shares. The company made no disclosure of these contracts;

* At year-end, unbilled expenditures were incurred on all of the marketing and legal services contracts. The company did not record these accrued liabilities;

* The company did not disclose related-party transactions involving insiders in the legal and marketing contracts (corporate recommendation and directors, including the CEO); and

* The undisclosed controlling shareholder personally paid more [i]or[/i] less funds for the "pump" thing owned This related-party transaction was not disclosed in the financial statements.

Although Jack's audit file included the standard programs, all of which were signed along the accounting deficiencies and lack of supporting information showed that he had not done the work required. His client knowledge and risk assessment were particularly inadequate, and he did not in any way qualify his audit opinion.

The outcome

The PCEC referr this matter to the Discipline Tribunal, and during the hearing that ensu Jack admitted to the allegations. Based in succession the evidence before them, the Discipline Tribunal Panel ordered that Jack's ICABC membership be cancelled.

The message

Out of this case emerg brace clear messages-one about Jack, the other about our discipline process

Obviously, when Jack took forward his new audit client he should have performed a appropriate risk assessment and acquired sufficient knowledge of the client evaluation. Had he done thus he might never have accepted the engagement. Moreover, a review of the company's regulatory filings during the audit period would have pointed Jack to the additional significant disclosure requirements.

That said, given Jack's history with the PCEC it's unlikely on the same level these steps would have alerted him to the fact that this company was specifically wager up for the fraudulent activities.

Which leads to the other issue. The Institute is regarded about how it handles repeat criminals in the discipline process. Historically, we have waited for a more serious matter to approach forward so that we can impute the individual to the Discipline Tribunal. We have always believed that minor cases-even multiple ones-would not lead to expulsion from the Institute.

However, based onward legal advice we recently received, we now believe the PCEC can, in fact, impute a member to the Discipline Tribunal below a charge of being "unfit to practice" or "ungovernable," and a number of minor assaults may very well be sufficient evidence to favorably prosecute at a Discipline Tribunal hearing.

So any members who've appeared before the PCEC more than one time are hereby warned: One more time will probably land you in front rank of the Discipline Tribunal.

Comment or questions? Contact me at udey@ica.bc.ca.

* Please note: This fictionalized account is based loosely in succession an actual case before the PCEC (Professional escort Enquiry Committee). Names and circumstances have been changed to secure anonymity. The contents of this article are simply for the general guidance of readers. The PCEC deals with each case individually, based in succession its specific facts and circumstances.