A Member held a public practice licence and invested in an investment opportunity along with clients, friends and business associates (the “Investors”). The Member:
- accepted funds from Investors for this investment through the Firm’s trust account before forwarding the funds to the promoters of the investment.
- discussed the investment with the Investors, and circulated confusing financial information about the investment to the Investors.
- performed assurance engagements for one Investor and as such, did not possess the necessary objectivity and independence to perform the engagement.
Unbeknownst at the time to the Member, the investment was a fraudulent scheme perpetrated by others. The financial information which the Member forwarded to the Investors was also fraudulent. The Member and the other Investors sustained substantial losses and no funds have yet been recovered.
During the investigation, the Member voluntarily sold their public practice and cancelled their practice license.
The Investigation Committee determined the Member contravened the CPABC Code of Professional Conduct as follows:
201.1 - Maintenance of the good reputation of the profession
202.1 - Integrity and due care
202.2 - Objectivity
204.1 - Independence – Assurance and specified auditing procedures engagements
205 - False or misleading documents and oral representations
207 - Unauthorized benefits
210.1&.2 - Conflicts of interest
212 - Handling property of others
217.3 - Endorsements
The Committee recommended the Member:
- Agree to not reapply for a public practice licence; and
- Agree to the publication of a notice on the CPABC website that they are no longer a public practitioner.
In making this recommendation, the Committee took into account information concerning the Member’s personal circumstances.