The Financial Reporting Council (FRC) announces the outcome of the disciplinary case against Mazars LLP (“Mazars”) and Richard Karmel, a partner of Mazars.
A settlement agreed between the Executive Counsel to the FRC, Gareth Rees QC, Mazars and Mr Karmel was approved by the FRC Tribunal on 25 July 2014. Mazars and Mr Karmel admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member Firm and Member as pleaded in the amended Formal Complaint in relation to their engagement to provide advice to the Trustee of the First Quench Pension Fund in respect of a proposed replacement of First Quench Retailing Limited as the sponsoring employer, and the advice given by them in that regard.
The parties agreed the following terms of settlement:
A Fine of £750,000 to be paid by Mazars, adjusted from £850,000 to reflect the admissions made by Mazars (in accordance with paragraphs 57 and 59 of the FRC’s Sanctions Guidance);
Mazars to receive a Severe Reprimand;
A sum of £1,120,000 to be paid by Mazars as a contribution to the Executive Counsel’s costs of, and incidental to, the investigation and the Formal Complaint;
A Fine of £50,000 to be paid by Mr Karmel, adjusted from £57,000 to reflect the admissions made by Mr Karmel (in accordance with paragraphs 57 and 59 of the FRC’s Sanctions Guidance);
Mr Karmel to receive a Severe Reprimand;
A sum of £80,000 to be paid by Mr Karmel as a contribution to the Executive Counsel’s costs of, and incidental to, the investigation and the Formal Complaint.
Paul George, FRC Executive Director of Conduct said:
“This outcome sends a clear message to all accountants and accountancy firms carrying out advisory work that not only do they have a responsibility to carry out their professional work diligently and in accordance with the applicable technical standards but that they must consider the different and opposing commercial interests of all those involved.
Accountants must not allow undue influence of others to override their professional judgements and they must have a clear understanding of who their client actually is. The result in this case demonstrates our commitment to ensure the standards of the profession are upheld so that it can justifiably secure public confidence.”
Notes to editors:
The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
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