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International yachting companies taken for ride by fudging accountant

An Auckland-based accountancy firm spent $150,000 in damage control after a senior accountant fudged the numbers on international client tax returns.

Shelley Williams was the fourth accountant to be struck off the New Zealand Institute of Chartered Accountant’s register this week.

The accountants' discliplnary tribunal was told by a director of Hayes Knight accounting firm that Ms Williams had failed to file tax returns for an international yachting company for four years, even though the client had been charged for preparation of the documents.  

GST returns were also filed without supporting documentation, were not filed on time, and in some instances figures had been “fudged” when Ms Williams tried to file them at the last minute.

The director, whose name was suppressed, told the tribunal Ms Williams had deliberately misled directors and had offered “plausible explanations” for any anomalies found.

“Given the senior position she held at Hayes Knight, it was her role to monitor the IRD filing percentages and report to me on clients with outstanding returns.

"She deliberately withheld from me about her own clients,” the director says.

The clients, from the professional yachting industry who Ms Williams had “close relationships with”, had followed her as she moved from one firm to the next.

It was on this basis that Hayes Knight had offered her the senior position as business services manager.

“She advised us they were predominantly offshore and that everything would be done via email and phone calls. We accepted this wouldn’t be a standard relationship,” the director told the tribunal.

He says clients would pay on time for every invoice raised, and other clients had been referred to her from the initial client, whose account and been totally neglected.

Significant hours for these offshore clients were charged and inflated on Ms Williams’s time sheet, which led to Hayes Knight thinking she was doing well. She was considered to be a “valuable team member”.

“There was no direct monetary benefit, but indirectly, she would have benefitted from her position being elevated within Hayes Knight,” the director says.

The tribunal was told that any correspondence relating to her clients went directly to her and not through directors.

“Shelley withheld correspondence received from the IRD in relation to the complaint regarding unfiled tax returns.”

In addition to the time spent investigating and dealing with affected clients, Hayes Knight recorded more than $150,000 worth of productive time to bring the files of the affected clients up to standard.

“This time was subsequently written off, and Hayes Knight has also paid IRD penalties and charges for several affected clients,” the director says.

While the firm has done everything it can to “put things right” with affected clients, some have moved to other accountancies.

Despite attempts to speak to the client whose tax returns had been neglected for years, he was not prepared to speak with Hayes Knight.

“He had obviously fallen out of love with Hayes Knight by then,” tribunal chairman Jim Hoare said.

 Ms Williams was ordered to pay full costs of $9155.

More by Melody Brandon

Comments and questions

"Shelley Williams was the fourth accountant to be struck off the New Zealand Institute of Chartered Accountant’s register late yesterday afternoon."

gosh that was a busy afternoon- 4 struck off in a couple of hours!

"Business does better with a member of NZ Institute of Chartered Accountants"... yeah right!

At least NZICA makes serious and thorough efforts to investigate complaints and has a disciplinary tribunal that imposes penalties and is prepared to strike off members... select an accountant who isn't Chartered or another profession such as reportedly Real Estate agents (particularly with conflicts of interest) and see how your complaint gets dealt with.

Hopefully the current Law Commission review of the Incorporated Societies Act 1908 will remove the ability of professional bodies to write their own rules which they then use to cover up complaints about members

Yes I agree - at least the NZ Institute of Chartered Accountants Act 1996 provides for the disciplinary tribunal and the Professional Conduct Committee to provide transparency on the investigation and process of dealing with complaints.

The 4 guilty parties from all accounts deserved censure and being struck off - for what it's worth, at least these and the other tribunal and PCC findings are public and rigorous.

Select any professional who is not bound by an Act and see how your complaint is dealt with. Would be interesting to do a quick survey of Governing Bodies and see which ones have never upheld a complaint against a member.

Hopefully the current Law Commission review of the Incorporated Societies Act 1908 will remove the ability of professional bodies to write their own rules which they then use to cover up complaints about members

Agreed the Institute of directors, CPA (the other accounting body) The Taxagents institute of NZ are all other bodys you can choose members from, they all have ethics and complaints process but you don't see them in news much!!!

Hahah you think this is bad, you should see how dodgy my accountant is

Another "Trusted Professional"!

There's about 10000 of them in NZ

If 100 are struck off that is still only one per cent

Probably compares to lawyers and coppers and would lag well behind Beehive occupants in terms of bad apples per capita

Problem is they see the client living the high life and want to replicate it

The firm has something to answer for too

Ask the Institute of Directors how many of its members who were directors of failed companies have been struck off their membership. The answer is ZERO not one never no matter how many failed companies they have governed

Just because a company failed, does not mean its directors failed to meet their responsibilities under the Companies Act. The Registrar of Companies is responsible for disciplining company directors - not the IoD, which is not a regulatory body. Directors do not have to be members of the IoD to become directors. Only about 5% of company directors belong to the IoD.

If you have been involved with complaints to the Law Society,you will be aware that they are an old boys network,whereas NZICA are very strong in their procedures.

Isn't the Law Society bound by statute regarding handling of complaints? Unlike most, The New Zealand Planning Institute being a good example.

It would be far better that the Govt regulate Accountants and Lawyers than their own.
Level the playing field and make them more accountable

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