Why discipline is not just a matter for ICAS
1 Feb 10
It is true, many people have not yet heard of the AADB, but CAs in particular should be aware of this important body
It is true, many people have not yet heard of the AADB, but CAs in particular should be aware of this important body.
The AADB is the independent investigative and disciplinary body for accountants and actuaries in the UK. The Companies legislation requires ICAS to be a member of an independent investigation and disciplinary scheme in relation to serious matters affecting the public interest in the UK.
The AADB’s role is the investigation and, where appropriate, hearing by a disciplinary tribunal of public interest cases. The normal channel of reference to the AADB for “public interest” cases will be the accountancy or actuarial body concerned.
The Scheme was set up in the aftermath of Enron and replaces the Joint Disciplinary Scheme (the JDS). New provisions of the Scheme will come into force shortly and they will include a power to conduct preliminary enquiries, prior to a decision on whether to investigate.
The new power should allow the AADB to focus quickly on those cases which cause most public concern.
Costs for the investigation and discipline of such cases are significant and one case alone could cost at least £1m. The relevant professional body which has a member or member firm caught up in the investigation has to pay for the costs of investigation, and ultimately prosecution, at the AADB Discipline Tribunal.
Currently, ICAS has an interest in two of the cases listed on the AADB site and a third case is likely to be commenced shortly.
These cases present ICAS with a significant financial exposure and hence this is the reason all working members in the UK were asked to pay an AADB levy in the 2010 Annual Return.
On the basis that cases may run on for a three or four year period, the levy may have to be set and collected on an annual basis with the Annual Return.
The cost, therefore, to members if they are involved in a disciplinary case could be significant as defence costs will have to be funded.
Members in practice will have professional indemnity insurance and members in business may be covered by Directors and Officers Insurance which should include provision for regulatory proceedings. ICAS is, however, reviewing insurance arrangements at present.
Robust discipline, both at institute and public level, is vital to maintain confidence in the profession.
Vivienne Muir is executive director, regulation and compliance, with ICAS.