At a hearing of the disciplinary tribunal of the Institute of Chartered Accountants of New Zealand held in public
on 26 November 2007, at which the member was in attendance and represented by counsel, Kwok-Chi (Paul) Tsui, a chartered accountant of Auckland, admitted particulars (a), (b), (c) and (d) and pleaded guilty to charges (2) and (3). Charge (1) was withdrawn.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(1) (withdrawn);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) incompetence in a professional capacity that has been of such a degree and/or so frequent as to reflect on his fitness to practise as an accountant and/or tends to bring the profession into disrepute; and/or
(3) breaching the Rules and/or the Code of Ethics, specifically Rule 20.6(d) and/or the fundamental principle of Integrity (Rule 2) and/or the fundamental principle of Competence (Rule 7 and/or 8) and/or the fundamental principle of Quality Performance (Rule 9 and/or Rule 11).
Particulars
IN THAT
In his role as a chartered accountant in public practice, the member:
(a) In relation to Institute A:
(i) undertook assurance work in the form of an attestation to the New Zealand Qualifications Authority (NZQA) dated 18 August 2006 and in doing so failed to comply with the practice review board's directive in accordance with Rule 20.6(d) not to do so, pursuant to their letter to him dated
8 March 2005; and/or
(ii) failed to prepare sufficient documentation to carry out an assurance engagement, being a professional attestation for NZQA dated 18 August 2006, in breach of Review Engagement Standard, RS-1; and/or
(iii) made a false or misleading statement, in that he signed an attestation to NZQA dated 18 August 2006 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, in breach of the fundamental principle of integrity; and/or
(iv) made a false or misleading statement, in that he signed an attestation to NZQA dated 18 August 2006 that included a statement that he had no relationship with the entity 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, in breach of the fundamental principle of integrity; and/or
(b) In relation to Company B:
(i) failed to make proper enquiry and/or prepare appropriate documentation to support numerous transactions in the compilation of the 2005 financial statements in breach of Compilation Standards' 6 (Documentation) and/or 7 (Perusal) and/or the fundamental principle of quality performance; and/or
(ii) prepared an income tax return based on the financial statements that contained the entries referred to in Particular (b)(i), in breach of TG-1 and/or EG-2; and/or
(iii) incorrectly filed the 2005 income tax return IR4, including the annual imputation return, and in doing so demonstrating a breach of TG-1 and/or EG-2 and/or the fundamental principle of quality performance; and/or
(iv) failed to produce in a timely manner the supporting documentation and source documents required by the professional conduct committee pursuant to letters dated 29 January 2007 and/or 15 February 2007 and/or 20 March 2007; and/or
(c) In relation to the compilation engagement for Company C:
(i) failed to maintain sufficient documentation to substantiate the inventory balance of $358,616.00 as at 31 March 2003, in breach of Compilation Standards' 6 (Documentation) and/or 7 (Perusal) and/or the fundamental principle of quality performance; and/or
(ii) failed to make proper enquiry into expenses introduced through a credit to the shareholder's current account in the 2002 and/or 2003 financial statements, where the amount reported as shareholder's drawings was significantly lower than appeared reasonable in breach of Compilation Standards' 6 (Documentation) and/or 7 (Perusal) and/or the fundamental principle of quality performance; and/or
(iii) prepared an income tax return based on the financial statements that contained the entries referred to in Particular (c)(i) and/or (c)(ii), in breach of TG-1 and/or EG-2;
(d) Failed to address a number of issues raised by Practice Review in the review completed in August 2004, in breach of the fundamental principle of competence and/or the fundamental principle of quality performance and/or the statement of compilation engagement standards.
Reasons
The tribunal noted that the member has not been charged with misconduct or negligence but only incompetence. There is no suggestion of lost money or client complaints and the tribunal has taken this into account.
But the incompetence has been exhibited repeatedly over many years and despite the assistance of practice review.
It goes beyond mere technical non-compliance and is so significant as to reflect on the member's fitness to practise and this tends to bring the profession into disrepute.
The member has relied on information furnished by clients without any real knowledge of whether it is true or false.
The member's inability to satisfactorily answer the questions put to him by the professional conduct committee and the practice review board reinforce the level of his incompetence.
The tribunal is gravely concerned with the protection of the public.
Orders of the Tribunal
(a) 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 Kwok-Chi (Paul) Tsui be cancelled.
(b) Pursuant to Rule 21.33 of the Rules of the Institute of Chartered Accountants of New Zealand, the disciplinary tribunal ordered that Kwok-Chi (Paul) Tsui pay to the institute the sum of $14,000.00 (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 and the cost of
the publicity.
In accordance with Rule 21.35 of the Rules of the Institute of Chartered Accountants of New Zealand, the decision of the disciplinary tribunal will automatically be published
in the Chartered Accountants Journal and on the institute's website, and the tribunal directed that the decision be published in the New Zealand Gazette and the New Zealand Herald 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 the abbreviated version of
the notice of decision with reference to the full decision
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.
Dated this 28th day of November 2007.
R. J. O. HOARE, Chairman, Disciplinary Tribunal.