Publicity notices

Robert Anderson Begg CA

Robert Anderson Begg CA, a member based in Dumfries, has been excluded from membership of ICAS, fined £10,000 and found liable for expenses totalling £7,917.11 following a Discipline Tribunal hearing in April 2025.

The Discipline Tribunal found Mr Begg guilty of professional misconduct on the following charges:

1.    Since October 2021, he failed to accommodate a follow-up check from ICAS’ Practice Monitoring Team, in breach of Regulations 4.1.2, 4.1.4 and 4.3 of ICAS’ Anti-Money Laundering (AML) Regulations, and;

2.    he failed to submit AML declarations to ICAS for the years 2022 and 2023, in breach of Regulation 4.3.1 of the AML Regulations

which constitutes a failure to comply with the fundamental principle of professional behaviour contained in Section 115 of the ICAS Code of Ethics.

Calum MacNeill KC, Discipline Tribunal Chair, commented: “This professional misconduct appears to have been deliberate and is characterised as ‘Very serious’. No defence or explanation was offered. The importance of ICAS members complying with anti-money laundering legislation and co-operating with ICAS’ monitoring team cannot be understated, as is demonstrated by this exclusion order.”

The Kelvin Partnership Limited

In terms of ICAS Rule 13.21, notice is hereby given that the ICAS Investigation Committee has found The Kelvin Partnership Limited (“the Firm”) liable to disciplinary action in respect of the following charges:

1. With regard to its audit of the financial statements of a Club for the year ended 30 April 2021, the Firm:

a. Failed to design and perform audit procedures to allow it to obtain sufficient appropriate audit evidence in respect of factorial fee expenditure and the use of a service organisation, in breach of International Standard on Auditing (UK) 500 “Audit Evidence”, paragraph 6;

b. Failed to reassess the risk of material misstatement at the financial statement and assertion levels due to new information obtained during the audit, in breach of International Standard on Auditing (UK) 315 “Identifying and Assessing the Risks of Material Misstatement Through Understanding of the Entity and Its Environment”, paragraph 31; and

c. Failed to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion in respect of operating costs in breach of International Standard on Auditing (UK) 500 “Audit Evidence”, paragraph 9,

which failures also constitute a breach of Regulation 3.10 of the ICAS Audit Regulations; and

2. Failed to carry out appropriate and sufficient customer due diligence measures for the Club, in breach of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, paragraph 28 and Regulation 4.16.1 of the ICAS Anti-Money Laundering Regulations.

Sanction
Under operation of Investigation Regulation 2.15.2, 2.15.4 and 2.15.5, the Firm has accepted an order of reprimand, with a financial penalty in the sum of £7,500 and a requirement to pay £5,000 towards ICAS’ costs of the investigation.

Commentary
• The Club was a timeshare owners’ club. 2021 financial statements for the Club were audited by the Firm, with the Firm issuing an unmodified audit report.

• In December 2021, ICAS received a complaint from a member of the Club which raised concerns about the audit work of the Firm. The complaint was referred to ICAS’ Investigation Committee, which made enquiries into the matter, including reviewing the Firm’s audit working papers. After due consideration, the Committee determined that there were aspects of the Firm’s audit work which fell below the standards expected.

• The day-to-day operation of the Club was carried out by a separate management company under the direction of a management committee, as set out in the Club’s constitution and a separate management agreement. The Firm accepted in early communications with ICAS that it had failed to obtain a copy of the management agreement during its audit.

• Without sight of the management agreement, the Committee did not consider that the Firm could fully understand the nature and significance of the services provided by the management company and the charging of costs by it to the Club.

• The Committee concluded that the Firm’s failure to obtain a copy of the management agreement amounted to a failure to adequately design and perform audit procedures to allow it to obtain sufficient appropriate audit evidence of factorial fee expenditure and the use of a service organisation, in breach of paragraph 6 of ISA 500.

• For charge 1(b), the Committee noted that the Firm had been put on notice of a dispute amongst the management committee members of the Club. While the (Investigation) Committee acknowledged that the dispute was ultimately a governance issue for the Club, it considered that this information ought to have led the Firm to revisit its risk assessment of the Club, particularly with regards to the risk of material misstatement due to management override of controls.

• While recognising that the Firm had recorded the existence of the dispute on its audit file, the Committee observed that there was no documentation to indicate that any reassessment took place. On balance, the Committee concluded that the Firm’s failure to reassess the risk of material misstatement arising from this new information was a breach of ISA 315, paragraph 31.

• In respect of charge 1(c), the complainer had raised concern that the Firm failed to properly investigate a possible overstatement of operating costs of the Club. While the Committee acknowledged that audit work had been performed by the Firm in this area, on balance, it considered that the Firm placed undue weight on the assertions of the management company in assessing whether there was any impact arising on the accounts. In particular, the Committee observed that there was insufficient evidence on the audit file to support that the Firm challenged the assertions of the management company. The Committee considered this deficiency in the Firm’s audit work amounted to a breach of ISA 500, paragraph 9, which requires the auditor to evaluate whether the information produced by the audit entity is sufficiently reliable for the auditor’s purpose.

• Finally, the Committee noted that while the Firm had obtained and documented some records to verify the identity of the beneficial owners of the Club, the records were not sufficient to meet the customer due diligence requirements of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“the Money Laundering Regulations”).

• The Committee acknowledged that it was a small audit, required under the constitution of the Club. However, this did not mean that the standards expected of the Firm as auditor were any less. The Committee views charges 1(a) and 1(c) as serious as the Firm failed to obtain sufficient appropriate audit evidence regarding material balances within the accounts. The Committee also noted that charge 1(b) related to an area of the audit identified as a significant risk (management override).

• Notwithstanding this, the Committee was of the view that the breaches were not intentional, dishonest, or deliberate. The Committee also noted that the Firm had resigned from the client on completion of the 2021 audit due to the potential impact of the ongoing dispute among the management committee members.

• In reaching its decision on sanction, the Committee had regard to the ICAS Sanctions Guidance. Overall, the Committee considered that the more substantial breaches related to deficiencies in audit work and so it was appropriate to base the sanction on the indicative sanctions set out in Part 3(C) and 3(D) of the Sanctions Guidance, which relate to audit work of a defective standard and a breach of applicable audit regulations, standards or guidance respectively. Taking account of all relevant factors, the Committee agreed that it was appropriate to offer a consent order for reprimand.

• The financial penalty takes account of various factors, including the need for deterrence and the financial resources of the Firm.