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Over the past brace months, my articles have focused onward the Institute's processes for dealing with the greatest in number serious kinds of professional misconduct-those that have be deriveded in members no longer belonging to our profession. I've told you what's involved when a member facing a hearing before a Panel of the Discipline Tribunal make choice ofs to resign before the hearing, and I've discussed the hearing proces itself. Now let's take a degree back and look at the adumbrations of professional misconduct that have necessitated these proceedings in the first place. For the ends of this article, I'll be focusing onward cases from the last ten years.

How many members are involved?

First, let's lay this into context: Resignations in the face of disciplinary hearings and actual hearings before a Panel of the Discipline Tribunal are rare incidents In fact, in the past ten years there have barely been 19 such resignations and 15 like hearings; what's more, in the last five years there have and nothing else been eight resignations and brace hearings.

What this means is that for each of the past ten years, solely about three or four members have gone end this part of the discipline proces Stack this number up against a total membership of across 8,900, and you can descry that only a very small percentage of our members acquire into serious trouble.

Public practice v industry

With regard to the kinds of cases in those same ten years, almost 80% of the combined panels and resignations make uneasyed members in public practice; however, les than a quarter of these involved the core public practice activities of audit, review, and tax services. The vast majority of audit engagements involved listed or publicly regulated companies, reflecting the greater public damage that can proceed from the audit failure of a public company as oppos to that of a private one

How many cases involved a lack of integrity?

Perhaps the principally sobering finding to emerge from the analysis of these cases is that nearly half involved a serious breach of trust and failure to act with integrity, and all of these involved a certain form of fraud. These cases mainly related to the misappropriation of stocks for the member's personal gam, preparation of false internal financial statements and other information, failure in fiduciary duties owed to clients, and/or false personal income tax returns

Given that the members involved were known to be chartered accountants-a fact relied on the subject of by unsuspecting clients and investors-their misconduct brought significant damage to the reputation of the CA profession.

Among their other unfortunate victims were partners, employer and not-for-profit enterprises for which they serv as treasurers. Those members who prepared false information and false financial statements did thus to mislead their business partners, practice partners, and users of clients' financial statements.

The perpetrators in all of these cases are no longer members of the Institute.

In 10% of cases, members also breached the behaviors prohibiting the misuse of confidential client information by way of inducing their clients to confer them money without advising them to obtain independent advice; they then used this cash to invest in businesses they controll including their practices. The members in each of these particular cases chose to resign rather than face a hearing before a Panel of the Discipline Tribunal. However, as mentioned in my April 2005 article, Council does not accept resignations unles the members involved agree to certain conditions, which are designed to foster the public. These include publishing their resignations in local newspapers.

Other cases

In 10% of the cases, members' actions were described as "unprofessional conduct"-conduct outside the normal work of a CA. This description includes a wide range of misconduct issues, of the like kind as: being involved in and/or convicted of criminal activities, uttering threats against business clients, making false complaints to regulatory authorities, and being uncooperative in civil proceedings.

Failing to comply with the limits of a Professional Conduct Enquiry Committee (PCEC) Determination and Recommendation (D&R) accounted for another 5% of the cases athwart the past ten years. near of the D&R breaches involved not complying with practice restrictions and failing to bring in an independent tutor forward financial statement engagements.

Message

A fast way for members to find themselves at disciplinary hearings is to yield to the temptation of committing fraud. Doing in the way that will invariably prompt the PCEC to deliver a Statement of Complaint to the Discipline Tribunal, which, in inflect will undoubtedly lead to the member's expulsion from Institute membership.

By Chris Utley CA, Director of Ethics

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

Copyright Institute of Chartered Accountants of British Columbia Jun/Jul 2005

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