The FRC has announced exclusions from the accountancy profession for three former executives of AssetCo plc, after a Disciplinary Tribunal found they had committed Misconduct in relation to the preparation and approval of the company’s financial statements for the financial years ended 31 March 2009 and 31 March 2010. Please see FRC AssetCo report here.
John Shannon (former Chief Executive Officer) has been excluded for 16 years, Raymond “Frank” Flynn (former Chief Financial Officer) for 14 years and Matthew Boyle (former Financial Controller) for 12 years. Additionally, fines of £250,000, £150,000 and £100,000 respectively have been imposed.
AssetCo was an AIM-listed fire and rescue services business that provided fire engines to the London Fire Brigade. As a result of the Misconduct, AssetCo substantially restated its financial statements in 2011 (£146m reduction in assets, £25m reduction in profit) and significant loss was caused by the collapse in share price from 60p to 1.75p.
The dishonest conduct of management was concealed. The FRC opened its investigation in late 2014.
The FRC’s Executive Counsel brought a total of 27 allegations of Misconduct against Mr Shannon, Mr Flynn and Mr Boyle before the tribunal. The tribunal, chaired by Sir Bernard Eder, made findings of misconduct in relation to all of them. These included findings of dishonesty and failing to act in accordance with core standards of integrity, objectivity and competence, which related to dealing with company funds, the preparation of financial statements, and the recognition of fictitious assets and revenue. The tribunal also found that they had each misled the auditors, Grant Thornton UK LLP.
Claudia Mortimore, interim Executive Counsel at the FRC, said,
The misconduct of the three accountants in this case is the most serious the FRC has put before a Tribunal. In addition to the financial harm caused to the company and to many investors, the actions of these individuals have damaged public confidence in the profession. The Tribunal has recognised this and it is reflected in the imposition of lengthy periods of exclusion (being the longest ordered to date), as well as substantial financial penalties. These sanctions should send a clear message that the manipulation of financial statements, and in particular dishonesty, will be dealt with robustly