Worthington Nicholls auditor fined £450,000

UK: Accountant Paul Newsham has been banned from the profession for three years and his former employer fined £450,000 following an investigation into audit failings at building services firm Worthington Nicholls.

The Financial Reporting Council (FRC) tribunal made 35 findings of misconduct against Mr Newsham in relation to the audit of the financial statements of Worthington Nicholls Group plc and its predecessor businesses for the financial years ended 30 September 2005 and 2006, and the audit of the interim financial statements for the six months ended 31 March 2006, prior to its admission to AIM in June 2006.

The tribunal found that Mr Newsham’s conduct fell significantly short of the standards reasonably to be expected of a member of the ICAEW in that he failed to act in accordance with the ICAEW’s code of ethics fundamental principle of professional competence and due care, and additionally that in respect of seven of the allegations relating to the interim 2006 audit he acted recklessly.

Mr Newsham’s employer HWCA was fined £225,000 with a further £225,000 to be paid as a contribution to the executive counsel’s costs.

The case involves the 2006 AIM listing by Worthington Nicholls, now named Managed Support Services Plc. The flotation raised around £20m but in September 2007, the shares were suspended and shareholders warned to expect a £6.5m asset write-down.

In May 2012, former Worthington Nicholls finance director Timothy Hunt was stripped of his licence and excluded from the ICAEW for six years, following a FRC investigation and disciplinary hearing. He was found guilty of producing misleading interim accounts in June 2007, including £770,000 turnover for which there was no evidence.