In situations where recruiting the ...

In situations where recruiting the right folks is proving difficult for those of you in public practice, especially during the busy season, it may pretend like a good idea to hire a former CA-after all, they've had the same training as you and can principally likely be counted on to do a religious job. But did you know that the Institute has certain requirements that must be met before you can hire a former CA? Our member "Bill" didn't, and this oversight extreme pointed up giving him quite a headache.

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

The situation

Bill had a small practice that was doing extremely well. Not-for-profit society audits were his particular niche, and his expertise in this area was recognized in the community. Unfortunately, the resources extremityed to accommodate his business's putting out were scarce, and he had a great deal of difficulty recruiting sufficient staff.

So it was with relief that Bill discovered a take back from Joe, a former ICABC member who had-at least upon paper-an extensive audit background. Convinced of Joe's proficiency, Bill hired him forward the spot and enlisted him to plan the December year-end audits.

But Bill's brains of relief was short-lived. Not drawn out after hiring Joe, he ran into single of the Institute's senior staff members at a cocktail party. Bill told her about his staffing crunch and about his hap in having hired a former member. The Institute staffer immediately recognized the name of Bill's newest employee from a discipline case that had originateed in his expulsion from the profession. What alarmed her chiefly was the fact that Joe had been disciplined for a number of serious audit failures, even now here he was, auditing again!

When Bill heard the conformity to fact [i]or[/i] reality he was shocked. He cogitation Joe had resigned from the Institute voluntarily. Joe had told him he'd simply gotten f up with paying the annual membership dues

Needles to say, Bill left the cocktail party in a les than festive humor And he soon felt calm worse when he learned about Bylaw 311 which states: "A member engaged in the practice of public accounting must not engage or carry on the practice of public accounting with a suspended member or a former member omit with the prior consent of Council. " He was particularly affected about the requirement for "prior consent"

What happened

Even after reading the details of Joe's discipline case, Bill decided that he still wanted to give his novel employee a chance. After all, the firm was still experiencing a staffing crunch and Joe had performed well to such a degree far.

As per Bylaw 311 Bill made an application to Council, recognizing that he should have done in the way that prior to having employed Joe in the first place.

Council was none too pleased with Bill's application. Although they were indeed disturbed that the application was retroactive, Council members were more bear uponed that Bill was potentially putting the profession's reputation at risk by dint of hiring Joe to undertake audit work.

This matter had also get to to the attention of the PCEC which examineed into Bill's tardy application.

The outcome

Council ultimately co-operationed to the hire, but barely on the condition that: a) Joe's work be restricted to non-assurance activities as it was as notice to readers and tax go [i]or[/i] come backs and b) Bill closely supervise his work each step of the way.

The PCEC determined that Bill had breached Bylaw 311 yet recommended only an anonymous reprimand since he had taken gradations to remedy the problem as in a short time as he'd become aware of the bylaw.

Bill accepted Council's condition and the PCEC's recommendation. Ultimately, however, he erect that Joe had been revealed of the profession so lengthy that his accounting and tax knowledge were no longer up-to-date. Bill reconsidered the situation and decided to put to hire him go after tax season was over

The message

Before you hire a former member, make confident you obtain the prior assent of Council.

I recognize it might not always be apparent that a do job-work applicant is a former member, on the other hand this only makes it more important that you exercise the adapted due diligence in the hiring proces Bylaw 311 is there to shelter you as a current member of the Institute.

In this case, it certainly saved Bill from what could have been a a great quantity [i]or[/i] amount of bigger headache down the line.

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

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 Sep 2004

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