Disciplinary tribunal findings on a well-known Belfast accountancy practice have been made public, along with criticism of business figures involved in the case.
Accountancy firm McClure Watters and co-founder Rollo McClure have been fined a total of £12,000 in relation to inadequate audit work on a taxpayer-funded enterprise body. They also agreed to pay costs of £60,000.
The penalties were disclosed in the official report on the |proceedings, published yesterday. It was strongly critical of the directors of the enterprise body, the now defunct Emerging Business Trust (EBT).
The McClure Watters disciplinary case was heard by a tribunal in London last month, following an investigation by the Accountancy and Actuarial Discipline Board, the official watchdog for the profession.
EBT was established with public money in 1996 to provide loans to fledgling firms.
It ceased operating in 2005 amid an investigation into conflict of interest issues.
These involved prominent business couple Teresa and Michael Townsley. Mrs Townsley was a director of EBT and her accountancy firm MTF administered EBT's operations.
A venture fund offshoot of Emerging Business Trust made investments in two firms linked to Mr Townsley.
The conflict of interest probe led to a damning report on EBT in May 2006 by the House of Commons Public Accounts Committee.
This in turn led to the role of McClure Watters as EBT's auditors between 1998 and 2002 being examined by the Accountancy and Actuarial Board.
The tribunal report stated that McClure Watters and Mr McClure admitted shortcomings in annual audits. This included failing to properly address the issue of how EBT was dealing with bad and doubtful debts.
They also accepted that their audits of the EBT venture fund offshoot should have disclosed “related party transaction” details — the investments in the two firms connected to Mr Townsley.
Mr McClure, who is now retired, was the McClure Watters partner responsible for the EBT audits.
He accepted a fine of £6,000 from the Accountancy and Actuarial Board case, as did McClure Watters itself. McClure Watters is now part of the FGS finance company.
The disciplinary tribunal panel report stated that Mr McClure had placed “great reliance” on representations made by Mrs Townsley. She had held senior roles in a number of public bodies, including Government agency Invest NI.
“She was someone of high repute in Northern Ireland and someone from whom one would expect to receive accurate and truthful information if asked for it,” the report stated.
The panel further said that representations by Mrs Townsley on bad debt provision “frequently proved to be untrue”.
The report also noted that the directors of EBT collectively had “enough professional ability and experience to have been able to choose suitable accounting policies at the outset and they should have done so”.
It added: “Whilst it is fair to say that the auditors failed it is abundantly clear that the directors also failed. Indeed their culpability is probably greater than that of the auditors.
“One must question the suitability of the directors, or at least some of them, to be directors of a company particularly one that is dependent on public funds. They will, no doubt, consider their position.”
A separate Accountancy and Actuarial Board investigation into the Townsleys has still to be completed.