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November - Professional Conduct Tribunal
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2 November 2007 
 
David Mark Cunningham CA of Victoria 
 
On his own admission the Tribunal found a case established that Mr Cunningham was liable to disciplinary action in accordance with By-law 40(h), in that on 9 June 2006 he entered into a Personal Insolvency Agreement with his creditors under Part X of the Bankruptcy Act 1966.  
 
The decision of the Tribunal was that Mr Cunningham be reprimanded and required to pay $800 plus GST towards the costs of the disciplinary action. 
 

 
 
15 November 2007 
 
Jonathan Pye CA of New South Wales 
 
The Tribunal found a case established that Mr Pye was liable to disciplinary action in accordance with By-law 40(a), in that he failed to observe a proper standard of professional care, skill or competence in the course of carrying out his professional duties in that on 30 November 2000, he signed an unqualified audit report in respect of the financial statements of FAI Insurances Limited (“FAI”), a subsidiary of HIH Insurance Limited:
  1. when the financial statements included a $200 million preference share issue in the reported share capital without a note to the accounts being included disclosing that the share issue had not been approved or issued until after 30 June 2000;
    2.  
     
  2. having overlooked the inclusion of a note to the accounts making appropriate disclosure regarding the preference share issue referred to in 1. above;
    3.  
     
  3. when, had the matters referred to in 1. and 2. been taken into account, the financial statements would have reflected the true share capital position of FAI as at 30 June 2000 and that FAI was in breach of debt covenants it had given to financiers,
as a consequence of which Mr Pye entered into an enforceable undertaking with the Australian Securities and Investments Commission (“ASIC”):
  1. not to fulfil the duties and responsibilities of a registered company auditor, sign any audit reports until after 30 June 2007 and give to ASIC a statutory declaration that he has not signed any audit reports between May 2002 and 30 June 2007.
    2.  
     
  2. that for each of the first five times he is engaged to conduct an audit after 30 June 2007:
    3.  
     
    (a) he will appoint an registered auditor (“reviewing auditor”) approved by ASIC to conduct a review of his conduct of each of the audits; 
     
    (b) obtain a written statement from the reviewing auditor that each of the audits has been conducted to the standards of an auditor acting with due skill and competence; and 
     
    (c) not sign the audit report until he has provided ASIC with a copy of the statement from the reviewing auditor.
The decision of the Tribunal was that Mr Pye be reprimanded and required to pay $800 plus GST towards the costs of the disciplinary action. 
 
The reason for the Tribunal’s decision was that, having considered all the submissions put to it in writing and verbally, and whilst it accepted that Mr Pye’s oversight was, in the words of the Royal Commissioner, an honest mistake and not a result of bad faith or recklessness, that oversight did bring the Institute and the auditing profession into disrepute.  
 
 
 
15 November 2007 
 
Gregory Paul Sutton FCA of New South Wales 
 
On his own admission, the Tribunal found a case established that Mr Sutton was liable to disciplinary action in accordance with By-law 40(f), in that before accepting appointment as the auditor of a company he failed to request in writing of the existing auditor all information to enable him to make a decision as to whether the appointment should be accepted, in breach of paragraph 210.11.1(b) of APES 110. 
 
The decision of the Tribunal was that Mr Sutton be reprimanded and required to pay $800 plus GST towards the costs of the disciplinary action. The Tribunal also ordered that notification of its decision be given to appropriate professional bodies and regulatory authorities. 
 
 
 
23 November 2007 
 
Mark Aloysius Sheridan FCA of Queensland 
 
The Tribunal found a case established that Mr Sheridan was liable to disciplinary action in accordance with By-law 40(a), in that as the auditor of Premium Mortgage Income Fund (“the Scheme”) he failed to observe a proper standard of professional care, skill or competence in the course of carrying out his professional duties, in that he signed unqualified statutory audit report on the Scheme’s financial statements for the years ended 30 June 2003 and 30 June 2004 and unqualified statutory review reports on the financial statements of the Scheme for the half-years ended 31 December 2002, 31 December 2003 and 31 December 2004, as a consequence of which, in order to address concerns raised by the Australian Securities and Investments Commission (“ASIC”), he entered into an enforceable undertaking: 
  • that he will not accept any new appointments as auditor of listed companies or managed investment schemes for a period of twelve months;
    •  
     
  • to undertake continuing professional development in addition to the mandatory requirements;
    •  
     
  • for the review and supervision of selected audits; and
    •  
     
  • for monitoring and quarterly reporting on compliance with the enforceable undertaking.
The decision of the Tribunal was that Mr Sheridan be reprimanded, that his firm be subject to an Institute quality review as soon as practicable and that he be required to pay $800 plus GST towards the costs of the disciplinary action. In reaching its decision the Tribunal had regard to the terms of the enforceable undertaking with ASIC dated 15 May 2007.  
 
 
 
23 November 2007 
 
Troy Ian Reddell CA of Queensland 
 
On his own admission the Tribunal found a case established that Mr Reddell was liable to disciplinary action in accordance with By-law 40(b), in that on 26 July 2007 in the Brisbane District Court, having previously pleaded guilty to one charge of insider trading pursuant to section 1043A(1)(c) of the Corporations Act 2001 (Cth), he was convicted, fined $8,000 and ordered to pay a pecuniary penalty of $4,086.80. 
 
The decision of the Tribunal was that Mr Reddell be reprimanded and required to pay $800 plus GST towards the costs of the disciplinary action. In reaching its decision the Tribunal had regard to the judgment of the District Court of Queensland of 26 July 2007, in particular the comments made by the presiding judge, the publicity surrounding that decision and the effect on the member’s reputation. 
 
 
 
23 November 2007 
 
Vincent Gerard Donohue CA of Queensland 
 
On his own admission the Tribunal found a case established that Mr Donohue was liable to disciplinary action in accordance with:
  1. By-law 40(a), in that as the accountant for members of a family and their related entities (“the clients”) he failed to complete and lodge various tax returns resulting in the clients incurring various penalties and interest charges, together with additional accountancy fees for the completion of the work.
    2.  
     
  2. By-law 40(f), in that he failed to respond to a letter dated 11 October 2005 from the clients’ new accountant or promptly hand over client records, in breach of paragraphs 8 and 13 of Professional Statement F3 of the Code of Professional Conduct.
    3.  
     
  3. By-law 40(g), in that he failed to respond to letters dated 1 November 2005, 23 November 2005, 22 December 2005 and 4 April 2007 from the Professional Conduct Consultant concerning the complaint on behalf of the clients.
The decision of the Tribunal was that Mr Donohue be reprimanded, that his certificate of public practice be cancelled and that he be fined $500 for failing to respond to Institute correspondence in this matter. The Tribunal also ordered that Mr Donohue be required to pay $800 plus GST towards the costs of the disciplinary action.