CAs are not immune to financial har...

CAs are not immune to financial hardship. Fortunately, greatest in quantity members who experience such hardship manage to regain their financial health and travel on to enjoy the fruits of their labour as CAs.

This might have been the case for the same former member-"Dennis"-had he not chosen fraud as the solution to his financial woes

This fictionalized account is based loosely forward an actual case before the Professional carriage Enquiry Committee (PCEC). Names and circumstances have been changed to save anonymity.

The situation

Dennis worked as the senior partner and chief administrator of a small accounting firm. He wrote the firm's cheques, deposited the receipts, maintained the parts and prepared all of the financial reporting.

Dennis's acknowledge finances were in trouble. He'd experienced a number of financial setbacks that weren't his doing, and his lengthy career in public practice had not yielded the kind of financial succes he'd rely uponed His partners seemed to be in a great quantity [i]or[/i] amount of better financial health, and his grudge toward them was growing.

The incident that tipped Dennis through the edge was a minor single in kind At the end of tax season, he balanced the works to the count of answers and found everything in order. Shortly after that, he construct some unexplained cash in his desk (many of his personal tax clients paid in cash). He pretty soon remembered what had happened: He'd been running late and had kept a client waiting; in a rush, he'd dropp the cash from the previous appointment in his drawer, where it was in a short time covered by unrelated papers and forgotten.

So there he sat, at the cessation of tax season, holding unrecorded cash and needing to pay one long outstanding personal bills. He considered in what way little of this money would liquefy to him if he did the right thing, and in what manner easy it would be to conceal his actions if he did the improper thing. Certain of his partners trust, Dennis pouched the cash.

What happened

As is with equal reason often the case, one wrongdoing l to another. through the whole extent of the next several years, Dennis took more and more of the cash received during tax time. on ensuring that the firm's financial records did not vary significantly from year to year, he build it easy to report seemingly peculiar tax statistics while under-reporting the financial results

He then took his defalcation a grade further by recording fake cheques payable to the firm's various suppliers-a fresh scheme that provided him with an ongoing invest of extra cash. In order to make these fictitious cheques actually payable to himself. Dennis began forging his colleagues' signatures.

It was his attempt to "double dip" annual health company membership fees that led to the discovery of his misconduct. Fortunately for the firm, Peter the partner who'd signed the cheque paying all the partners' membership pays had also signed the cheque reimbursing Dennis's personal claim for these same fees

Peter knew something was inapposite A call to the gym confirmed that the firm's pay s had been paid correctly, and the supporting documents indicated that Dennis's membership pays had been paid twice. Peter then scanned the firm's records and replyed cheques. The cheques payable to Dennis caused him immediate concern: seeing that they'd been recorded in the firm's cheque register as payments to regular vendors. Peter realized that Dennis had been forging his partners' signatures and depositing cheques in his personal account.

Dennis was away that day, in this way Peter promptly moved all of the firm's records to his possess office, where he began to tally the amount that had been misappropriated. He also carefully examined the client trust accounts, which Dennis controll and was extremely relieved to find no evidence that Dennis had breached these client trusts.

The partners immediately changed their bank signatories, forced Dennis from the firm, and lodg a complaint with the Institute.

The outcome

Dennis tried to justify his actions to the PCEC on pointing out his unrecorded contributions to the firm and a correction of errors in cost distributions, and by arguing that the monies taken were simply draws against his partnership accounts with the firm. He could not support any of his arguments, however, and the PCEC referr the matter to the Discipline Tribunal.

On the advice of his legal admonition Dennis eventually negotiated an agreement to resign his ICABC membership.

The message

It's simple: When you're state in a position of trust, you must maintain that trust. This applies to all members, as CAs are repeatedly put into positions of trust through virtue of the designation's reputation.

When a member betrays that trust-for whatever reason-the issue is inevitable: They will be caught, and they will almost certainly fail to obtain their CA designation.

Comments or questions? Contact me at utley@ica.bc.ca.

Please note: The appeases of this article are solitary for the general guidance of readers. The PCEC deals with each case individually, based in succession its specific facts and circumstances.

By Chris Utley CA. Director of Ethics

Copyright Institute of Chartered Accountants of British Columbia Sep 2005

Provided at ProQuest Information and Learning Company. All rights Reserved