A three year exclusion from the profession and £170,000 costs.
That is the terms of a settlement involving an investigation of a former finance director.
In the outcome of a disciplinary case against Hugh Bevan, former finance director of collapsed airplane parts manufacturer Aero Inventory plc, a settlement was reached between him and the Executive Counsel to the UK’s Financial Reporting Council (FRC), Gareth Rees.
This follows an investigation launched in 2011 by the profession’s disciplinary body, the Accountancy and Actuarial Discipline Board, which is part of the FRC, to look at the work conducted by Deloitte auditors and members of the ICAEW (Institute of Chartered Accountants in England and Wales) that were employed at Aero Inventory.
According to the FRC, Bevan has admitted that his conduct fell significantly short of the standards reasonably to be expected of him in that:
- he breached the ICAEW’s Fundamental Principles of Integrity and of Performance by including, within the financial statements for the financial year ended 30 June 2006, revenue and profit from the Garuda Transaction, being reckless as to whether the Garuda Transaction had taken place in that year;
- he breached the Fundamental Principle of Performance by failing to report to Aero Inventory’s board that if the Garuda Transaction should be included in the 2006 statements it should be reported as an exceptional item;
- and he breached the Fundamental Principles of Performance and of Professional Competence and Due Care in that, in consequence of the application of the “straight line discount” to the stock acquired under certain bulk purchase contracts, the accounts did not show a true and fair view of the state of affairs of Aero Inventory as of 30 June 2006, 30 June 2007 and 30 June 2008.
In reaching the settlement agreement, the Executive Counsel took account of the fact that Mr. Bevan’s behaviour was not dishonest or deliberate, and that Mr. Bevan had cooperated with the FRC, had a good disciplinary record, and had demonstrated contrition.
The parties agreed the following terms of settlement:
- Exclusion from the profession for 3 years
- A sum of £170,000 to be paid by Bevan as a contribution to the Executive Counsel’s costs.
Proceedings against Deloitte LLP and Mr. John Clennett, Audit Engagement Partner, are still ongoing.
For more background information on the investigation, click here.