The Financial Reporting Council (FRC) has announced 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.”