Previous Investigations & Complaints - Case Studies

Case 1

This complaint related to a member handling the accounts of a general store owner. There had been a long standing dispute in terms of the level of fees charged for the accountancy services provided, an implication of non-compliance with standard terms and conditions, and an accumulation of debt which caused significant financial problems to the complainant’s business.

A key issue was that there was the threat of legal action by the member against the complainant to recover the due debt. The member indicated that the case should be treated as sub-judice because legal action was pending. The complainant’s view was that the member was using the threat of legal action as a means of delaying investigations by the various professional bodies with which complaints had been lodged. Having taken legal advice, the decision of the Institute was to continue with the investigation.

The case went to a full hearing in November 2008. The sanction was to expel the member from the Institute on the basis of the following breaches of the Code:

• Exemplify the highest standards of professional behaviour and performance – no terms and conditions of business, no engagement letter, no statement of accounts issued on a regular basis, no agreement of costs, no reminders or discussions with his client, making him aware of his increasing liabilities.
• Strive for excellence at all times and keep up to date with best practice – The member decided not to adopt best practice as detailed in the ACCA 2004 Rule Book (his own industry), nor the values of the Chartered Management Institute Code.
• Remain accountable for my actions – In his correspondence with third parties the member appeared to accept no accountability, rather focusing blame on third parties all the time. 
• Foster a culture of openness and transparency, where issues may be addressed in a frank and timely manner –  The member had a professional duty to keep his client informed of the accumulating liabilities in an open and transparent manner. This appeared not to be the case and he had allowed liabilities to increase without giving a specific warning to his client over a number of years. 
• Customers – Ensure that I properly understand their interests and respond to them in a balanced manner – The member treated all customers in a homogenous manner – non issue of letters of engagement due to parochial reasons.  
• Ensure that I am aware of and comply with all relevant legislation and regulations –  Best practice was not followed as per ACCA Rule Book 2004 and the industry’s best practice. 
• Be honest, open and truthful in all external communications – The member did not overtly make his client aware of his growing liabilities. He had provided no evidence of terms and conditions, letter of engagement, or regular copies of statements showing statements of account to date or indeed what his costs would be. 
• Establish, maintain and develop business relationships based on mutual confidence and trust – The case correspondence clearly showed that confidence and trust between the parties deteriorated. There was an opportunity to work together to resolve the problem but matters took a very different course.

The member had been ‘threatening’ the complainant with legal action for over one year. The lack of action and constant deadlines could be construed as harassment.

The member appealed against the decision. An Appeal Committee was convened in February 2009, the outcome being to uphold the original sanction.

In June 2009 the Institute received a call from the complainant to confirm that the case had gone to court, but that the member had agreed to settle the outstanding liability by accepting £1k (ie significantly less than he had originally claimed). A confidentiality agreement was put in place, preventing comments on the case being made to the press.

Case 2

This case related to a member who was a Bursar at a private school. The complainant claimed that he had received a misleading invoice for payment of school fees. On receipt of an invoice, the complainant, who was ‘legally obliged’ to pay only 55% of the total school fees, submitted payment covering 55% of the invoiced amount. He was then told that the invoice itself had represented the 55% and therefore there remained a amount outstanding. The complainant indicated that this was a liability issue under the Trade Descriptions Act, because the invoice had not made this clear.

The member also responded during the preliminary investigation stage, stressing that the individual concerned was aware of the fees payable and had previously been invoiced on the same basis. The sum was paid in the first term, but not the second. The matter was now with the School Lawyers.

The investigators found that the case should not proceed to full investigation. The complainant had chosen not to follow the school’s complaints procedure. In addition, there were underlying issues relating to the complainant’s personal circumstances.

The member and complainant were therefore informed that the case was considered closed.

Case 3

The was the first complaint brought against a member of the Institute of Business Consulting under its own Code.  The complaint was based on perceived:

• ‘serious lack of professional conduct, illustrated by:
  • extreme focus on personal gain, ie getting paid more for doing less
  • aggressive and threatening behaviour, issuing ultimatums on a regular basis
  • willingness to act as a ‘mouthpiece’ for someone he though was an owner
  • complete disregard for company constitution, policies, rules and regulations
  • personal attacks and briefings behind the back of board members

• ‘lack of competence about the subject and related matters’.
  • Massive delay in delivering on promises and only delivering partially
  • Issuing final invoice 4 months prior to completion
  • No clue as to responsibilities as Director

The case went to a full hearing in June 2009.  The findings were published on 14 July, as follows, namely that a number of breaches of the IBC Code had been identified.  The reasons for the findings were:

1. On a number of occasions the member clearly adopted inappropriate language in his email correspondence with the complainant on matters relating to his work with the company concerned.
2. There was a certain degree of mitigation in the frustrations experienced by the member over a lengthy period of time, which were caused by underlying issues and dissensions amongst individual members of the Board.  These issues were outside the member’s control.  Nevertheless, the language adopted remained unacceptable and was not what was to be expected from a professional consultant and a member of the IBC.  The intemperate language used could and should have been avoided; it is not appropriate to the proper conduct of business.
3. The member acted initially on behalf of the whole company and its Board of Directors.  He subsequently appeared to have aligned himself with one individual Director.  This did not sit well with the member’s appointed role as a ‘Solomon’, ie someone who was to give impartial advice only if the Board found itself in an impasse and unable to come to a consensus decision to take the company forward.
4. The member’s appointment to the role of ‘Nominee Director’ did not and could not in law mean that he was expected, or required, to vote as directed by another member of the Board.  This was how the role appeared to have been interpreted by the member.  Evidence indicated that he began to act in the interests of one individual Director rather than the company as a whole.  This was contrary to the legally stated role of a ‘Nominee Director’.
5. In his actions as a Board member, therefore, the member did not understand, nor comply with, the legal definition and role of a ‘Nominee Director’.  This showed a clear lack of understanding of the responsibilities of the role.
6. Whilst there was mitigation in that evidence suggested that the member may have been misled by a particular Director and Shareholder of the company, this did not take away the individual responsibility on the member’s part to ensure that he was fully aware of the company constitution, the contents of the Shareholders’ Agreement, and Companies Act requirements.
7. There is evidence that, during the course of his involvement with the company, the member lost the confidence and trust of a number of Board members.  This adversely affected his working and business relationship with the company.

In the light of the breaches of the Code identified by the Panel, there was unanimous agreement that the member should be required to undertake an appropriate course of training and provide evidence of successful completion.  This training could be the IBC’s Certified Management Consultant award or an alternative course of training, which would include familiarisation with contract law and Director responsibilities, as set out in Companies Act legislation.  This training would be required to be completed within a period of six months from the date of the Hearing. 

It was further confirmed that, should (a) the member choose to resign from Institute membership, which he had indicated that he may do, or (b) his membership lapse due to non-payment of the subscription, there would be no future reinstatement of membership without a requirement for demonstrable evidence of training undertaken in the areas identified.