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News December 2016 Formal Complaint and admission of Misconduct relating to ICAEW members and a member firm in connecti

Formal Complaint and admission of Misconduct relating to ICAEW members and a member firm in connection with RSM Tenon Group Plc

14 December 2016

PN 71/16

The Financial Reporting Council’s (FRC) Executive Counsel has delivered a disciplinary Formal Complaint in connection with the conduct of PricewaterhouseCoopers LLP (PwC), Nicholas Boden (PwC’s Senior Statutory Auditor and Audit Engagement Partner) and Russell McBurnie (RSM Tenon Group plc’s (RSM Tenon) former Finance Director) in relation to the preparation, approval and audit of the financial statements of RSM Tenon for the year ended 30 June 2011.

The Complaint alleges that Mr Boden and PwC failed to act in accordance with the fundamental principle of professional competence and due care contained in the ICAEW Code of Ethics (the Code) in relation to the audit of the financial statements of RSM Tenon, and that their conduct fell significantly short of the standards reasonably to be expected of a member or member firm of the ICAEW. 

The Complaint further alleges that Mr McBurnie failed to act in accordance with the fundamental principles of integrity and professional competence and due care contained in the Code in relation to the preparation and approval of the financial statements of RSM Tenon, and that his conduct fell significantly short of the standards reasonably to be expected of a member of the ICAEW.

The respondents are members and a member firm of the ICAEW.

Following an admission of Misconduct by Andrew Raynor (RSM Tenon’s former Chief Executive Officer) the Executive Counsel has also agreed a settlement, which has been approved by a legal member of the independent Tribunal Panel. Mr Raynor has admitted that his conduct fell significantly short of the standards reasonably to be expected of a member of the ICAEW in relation to the approval of the financial statements of RSM Tenon and that he failed to act in accordance with the fundamental principle of professional competence and due care contained in the Code.  Mr Raynor admitted that he failed to obtain the necessary level of assurance required of a Member, in relation to the accounting treatment of bonus accruals and a lease, to sign off on the financial statements of RSM Tenon on the basis that they were in accordance with applicable accounting standards and represented a true and fair view of the state of affairs of the company.

The Executive Counsel and Mr Raynor agreed the following terms of settlement:

  • A fine of £40,000 reduced to £26,500 after mitigation and a settlement discount;
  • A Reprimand;
  • A sum of £50,000 to be paid by Mr Raynor as a contribution to the Executive Counsel's costs. 

Notes to editors:

  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
  2. In relation to enforcement matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process under the Accountancy Scheme are:
  • Decision to investigate
  • Investigation
  • Decision whether to bring enforcement proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal
  • Tribunal hearing
  • Determination and imposition of sanction and/or costs orders

Under the Accountancy Scheme the FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.
 
The criteria are specified in paragraph 5(1) of the Accountancy Scheme. A Member or Member Firm shall be liable to investigation under this Scheme only where, in the opinion of the Conduct Committee the matter raises or appears to raise important issues affecting the public interest in the United Kingdom and there are reasonable grounds to suspect that there may have been Misconduct or it appears that the Member or Member Firm has failed to comply with any of his or its obligations under paragraphs 14(1) or 14(2) of the Scheme.

Investigations are conducted by Executive Counsel and the Enforcement division.

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