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The Financial Reporting Council (FRC) today announces the outcome of the disciplinary cases relating to Mr John Anthony Mehigan, Mr Philip Collins and Hillier Hopkins LLP, respectively members and a member firm, of the Institute of Chartered Accountants in England and Wales (“ICAEW”), in connection with its investigation into The Cup Trust, a UK registered charity. The FRC investigations relate to the establishment and operation of the charity and related tax planning issues, and the preparation and audit of the financial statements for the years ended 31 March 2010 and 31 March 2011.

The case against Mr Mehigan relates to his conduct as a director of Mountstar (PTC) Ltd, the corporate trustee of the Cup Trust during the relevant period. The case against Mr Collins and Hillier Hopkins relates to the audit of the charity’s financial statements for 2010 and 2011.  Hillier Hopkins was engaged to carry out the audit, and Mr Collins was the engagement partner in each year. Hillier Hopkins and Mr Collins were not involved in the establishment and operation of the charity nor were they involved in the design and implementation of the tax planning schemes operated by the charity.

Settlements agreed between Executive Counsel to the FRC, Gareth Rees QC, and Mr Mehigan, and separately between Executive Counsel and Mr Collins and Hillier Hopkins have been approved by a legal member of the independent Tribunal Panel.

Mr Mehigan has admitted that his conduct fell significantly short of the standards to be expected of members of the ICAEW and amounted to breaches of the ICAEW’s Fundamental Principles of Objectivity and Professional Competence and Due Care. Mr Collins and Hillier Hopkins have each admitted that their conduct fell significantly short of the standards to be expected of members of the ICAEW and amounted to breaches of the ICAEW’s Fundamental Principles of Professional Competence and Due Care. 

The parties have agreed the following terms of settlement:

Mr Mehigan

• Exclusion from the profession for a recommended period of 10 years;
• A fine of £70,000; and
• A sum of £80,000 to be paid as a contribution to the Executive Counsel’s costs.

 Mr Collins

• A reprimand;
• A fine of £20,000; and
• A sum of £20,000 to be paid as a contribution to the Executive Counsel’s costs.

 Hillier Hopkins

• A reprimand;
• A fine of £100,000; and
• A sum of £100,000 to be paid as a contribution to the Executive Counsel’s costs.

 Gareth Rees QC, Executive Counsel to the FRC, said,

"The administration of charities, and the operation of tax avoidance schemes, are both matters where professional accountants should be aware of the heightened level of public interest in their work, and consequently the importance of complying scrupulously with ethical and competence standards.  The lengthy period of exclusion for Mr Mehigan reflects the seriousness of his failure to exercise independent judgment when making key decisions on behalf of the charity.  The admissions made by Mr Mehigan, Hillier Hopkins and Mr Collins have resulted in a significant saving in time and costs which has been taken into account in the agreed sanctions.”

Notes to editors:

1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and 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 enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
    
2. In relation to enforcement matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process under the Accountancy Scheme are:

• Decision to investigate
• Investigation
• Decision whether to bring enforcement proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal
• Tribunal hearing
• Determination and imposition of sanction and/or costs orders

Under the Accountancy Scheme the FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.

The criteria are specified in paragraph 5(1) of the Accountancy Scheme. A Member or Member Firm shall be liable to investigation under this Scheme only where, in the opinion of the Conduct Committee the matter raises or appears to raise important issues affecting the public interest in the United Kingdom and there are reasonable grounds to suspect that there may have been Misconduct or it appears that the Member or Member Firm has failed to comply with any of his or its obligations under paragraphs 14(1) or 14(2) of the Scheme.

Investigations are conducted by Executive Counsel and the Enforcement division.

3. All Press enquiries should be directed to:

• Peter Timberlake, Head of Communications, on telephone: 020 7492 2397/ 07768 502332, or email: p.timberlake@frc.org.uk.
• Rita Carolan, Communications Manager, on telephone: 020 7492 2307/ 07428 149096 or email: r.carolan@frc.org.uk.
• Alana Sinnen, Communications Manager, on telephone: 020 7492 2395/ 07949 005526 or email: a.sinnen@frc.org.uk.