At a hearing of the Disciplinary Tribunal of the Institute
of Chartered Accountants of New Zealand held in public
on 30 and 31 July 2007, at which the member was in attendance and represented by counsel, Sam Ming Chan, a fellow chartered accountant of Auckland, admitted amended particulars (a)(i), (a)(v), (c), (d), (e), (g), (h), (i), (j), (k),
(n), (o), (p)(i), (p)(ii), (q), (r) and (s) and pleaded guilty to charge (2).
Particulars (a)(ii), (a)(iii), (a)(iv), (b), (f), (l) and (m) were withdrawn and charges (1), (3), (4) and (5) were withdrawn.
The charges and particulars were as follows:
Charges
THAT in terms of the Institute of Chartered Accountants of New Zealand Act 1996 and the Rules made thereunder, and in particular Rule 21.30, the member is guilty of:
(1) (withdrawn);
(2) Conduct unbecoming an accountant; and/or
(3) (withdrawn);
(4) (withdrawn);
(5) (withdrawn).
Particulars
IN THAT in his role as a chartered accountant in public practice and in relation to a complaint by Mr X, the member:
(a) failed to action in a timely manner (in breach of Rule
10 of the Code of Ethics) numerous requests made by his client, including that he:
(i) failed to respond to Mr X’s questions regarding Company A Limited, as requested in emails
dated 19 September 2005 and/or 7 November 2005 and/or 12 December 2005 and/or 28 March
2006 and/or 3 April 2006; and/or
(ii) (withdrawn);
(iii) (withdrawn);
(iv) (withdrawn);
(v) failed to respond in a timely manner to emails from Mr X on 22 August 2005 and/or 29 August 2005 and/or 28 September 2005 and/or 16 November 2005 and/or 5 December 2005 and/or 3 April 2006, regarding issues arising in the preparation of the 2005 financial statements for a number of entities; and/or
(b) (withdrawn);
(c) failed to prepare in a timely manner a detailed imputation credit account reconciliation for Company B Limited, as requested by Mr T of Inland Revenue Department on 22 December 2005 and/or 7 February 2006 and as agreed at a meeting with Mr T on
8 February 2006; and/or
(d) failed to file the 2005 imputation credit account return for Company B Limited and/or Company A Limited in a timely manner and/or within the timeframes allowed by the Inland Revenue Department; and/or
(e) compiled financial statements for Company A Limited for the year ended 31 March 2005 that failed to contain an explanatory note for the reduction in share capital and the difference in equity at the end of the previous period and the start of the current period; and/or
(f) (withdrawn); and
in his role as a chartered accountant in public practice
and in relation to a complaint by the practice review board, the member:
(g) was a director of a company which had offered accounting services to the public, S. M. Chan & Partners CA Limited, which was placed into liquidation on
23 June 2005, owing $139,376.00 or thereabouts to the Inland Revenue Department; and/or
(h) was a director of a company which offered accounting services to the public, S. M. Chan & Partners Limited, which The Commissioner of Inland Revenue applied to put into liquidation on 12 May 2006; and/or
(i) allowed S. M. Chan & Partners CA Limited to cease trading with unpaid creditors and formed a new company with a similar name (S. M. Chan & Partners Limited) and continued to trade with assets purchased from
S. M. Chan & Partners CA Limited; and/or
(j) failed to file income tax returns for S. M. Chan
& Partners CA Limited for periods between 1 August 2004 and 23 June 2005 within the timeframe required; and/or
(k) failed to pay GST and PAYE owing by S. M. Chan
& Partners CA Limited within the timeframe required; and/or
(l) (withdrawn);
(m) (withdrawn);
(n) made an incorrect statement, in that he signed an attestation to the New Zealand Qualifications Authority (NZQA) in respect of School C Limited, that included a statement that his work was conducted in accordance with the professional engagement standards issued by the Institute of Chartered Accountants of New Zealand, when this was not the case; and/or
(o) made an incorrect statement, in that he signed an attestation to NZQA in respect of School C Limited, that included a statement that he had no relationship with the establishment other than in his role as an independent chartered accountant, when this was not the case as his firm also undertook compilation engagements for this client; and/or
(p) prepared a statement of financial position for School
C Limited as at 8 August 2003 that did not correctly present working capital and/or equity; in that:
(i) a bank balance of $88,352.00 in the name of a company director was included as a company asset; and/or
(ii) a shareholders current account balance of $257,104.00 was included as a component of equity; and/or
(q) failed to provide within 14 days information that was required by the professional conduct committee as set out in letters dated 6 November 2006 and 30 November 2006, in breach of Rule 21.4(b); and
in his role as a chartered accountant in public practice and in relation to a complaint, the member:
(r) failed to pay $8,000.00, being the monetary penalty ordered by the disciplinary tribunal on 3 October 2006, to the institute within the specified timeframe; and/or
(s) failed to pay $3,814.00, being costs and expenses ordered by the disciplinary tribunal on 3 October 2006, to the institute within the specified timeframe.
Reasons
The member has admitted the particulars and pleaded guilty to the charge. There are four elements to these proceedings – the first being the liquidation of S. M. Chan & Partners CA Limited, owing money to the Inland Revenue Department, the non-filing and non-payment of returns, GST and
PAYE; the second being the NZQA attestation report particulars; the third the timeliness of responses to Mr X’s requests; and the fourth the dealings with the institute and the professional conduct committee.
The tribunal finds it unacceptable for a public practice certificate holder offering tax services to the public to fail
to file their own tax returns, fail to account for PAYE and GST, and cause the company to cease trading leaving debts owing to the Inland Revenue Department. The tribunal finds the attestation certificate particulars of concern but minor relative to other matters.
In terms of responses to Mr X’s complaints – whilst there
may have been a reply to queries, these failed to provide a response, that is the provision of the requested information. These are more significant than the attestation issues but taken as a group, not of overwhelming consequence.
The fourth relates to the member’s dealings with the institute, and here the tribunal must have regard to the fact that this is the member’s third appearance before the tribunal on similar matters.
Orders of the Tribunal
(a) Pursuant to Rule 21.31(b) of the Rules of the Institute of Chartered Accountants of New Zealand, the disciplinary tribunal ordered that Sam Ming Chan be suspended from membership of the institute for three years.
(b) Pursuant to Rule 21.31(d) of the Rules of the Institute of Chartered Accountants of New Zealand, the disciplinary tribunal ordered that the certificate of public practice held by Sam Ming Chan be suspended for three years.
(c) Pursuant to Rule 21.33 of the Rules of the Institute of Chartered Accountants of New Zealand, the disciplinary tribunal ordered that Sam Ming Chan pay to the institute the sum of $35,000.00 (inclusive of GST) in respect of the costs and expenses of the hearing before the disciplinary tribunal and the investigation by the professional conduct committee.
In accordance with Rule 21.35 of the Rules of the Institute of Chartered Accountants of New Zealand, the disciplinary tribunal directed that the decision of the tribunal be published in the Chartered Accountants Journal, the New Zealand Gazette, the New Zealand Herald and on the institute’s website with mention of the member’s name and locality.
The publicity in the Chartered Accountants Journal, the New Zealand Gazette, and on the website will be the full version of the notice of decision, and the version in the
New Zealand Herald will be an abbreviated version of
the notice of decision with reference to the full decision being on the institute’s website.
Right of Appeal
Pursuant to Rule 21.41 of the Rules of the Institute of Chartered Accountants of New Zealand, which were in force at the time of the original notice of complaint, the member may, not later than 14 days after the notification of this tribunal to the member of the exercise of its powers, appeal in writing to the appeals council of the institute against the decision.
No decision other than the direction as to publicity shall take effect while the member remains entitled to appeal or while any such appeal by the member awaits determination by the appeals council.
R. J. O. HOARE, Chairman, Disciplinary Tribunal.