Since March 2021, the U.S. Public Company Accounting Oversight Board (PCAOB) has unleashed against ÎÚÑ»´«Ã½ accountants, levying numerous practice restrictions and hundreds of thousands of dollars’ worth of fines against nine Vancouver firms that audit public companies.
These penalties were issued under settlements in which the firms did not admit nor deny the serious violations alleged by board investigators.
The Canadian Public Accountability Board (CPAB)—the regulator for public company auditors—has taken enforcement action against five of them.
However, the Chartered Professional Accountants of British Columbia (CPABC), which is responsible for licensing and governing the 40,000 CPAs in this province, has not disclosed any of these enforcement cases on its website.
in a two-part series by Glacier Media documents this unprecedented U.S. enforcement action against ÎÚÑ»´«Ã½-based accounting firms.
And, as previously reported, while CPABC has issued four modest disciplinary notices citing PCAOB violations, those respondents are not named.
Were anybody checking the bona fides of, for example, accounting firm Hay & Watson on the CPABC website, they would have no idea that the U.S. board revoked its registration and barred its sole managing partner Essop Mia from being associated with any registered U.S. public accounting firm.
“Faced with an incomplete audit file and an upcoming inspection, Mr. Mia made the wrong choice in directing his staff to alter and backdate documents,” said Patrick Bryan, director of the PCAOB’s division of enforcement and investigations on September 13, 2022.
While CPABC does have a member and firm directory for the public, it does not contain any details on regulatory and licensing history.
When Glacier Media checked with CPABC to inquire about the standing and records of the accountants and firms under Canadian and U.S. restrictions, it was told by spokesperson Kerri Brkich nothing could be disclosed aside from what is stated on the website.
CPABC enforcement and disclosure policies are typified by anonymity, scant information and insignificant penalties—all of which have negative implications for ÎÚÑ»´«Ã½ consumers, says David Baines, a retired Vancouver Sun business columnist who monitors enforcement actions against ÎÚÑ»´«Ã½ accountants.
“The impression I get is that CPABC’s enforcement policies and practices are skewed to protecting members rather than consumers,” Baines said in an interview.
Other regulatory bodies such as the BC Securities Commission, the BC Financial Services Authority (BCFSA), the Law Society of BC and the Canadian Investment Regulatory Organization (CIRO) (which governs mutual fund dealers and stockbrokers) do not except in very rare circumstances anonymize or redact the names of respondents.
But CPABC does—and does so consistently.
Alleged misrepresentations, lies, theft, perjury, DUIs and more shielded from public
CPABC has two categories of enforcement cases. The first involves cases where a CPABC member reaches a settlement with the investigation committee. The second involves cases that are not settled, but rather go to a discipline committee for a decision on liability and penalty.
Last year, only two cases went to the discipline committee, and in both cases the respondents were named. During the same period, there were 34 investigation committee notices. In 31 of those cases, the respondents’ identities were not disclosed.
Most cases that are settled without naming the member involve minor infractions, but some are more serious.
Notice “2023 - #34 – A Member” states how an accountant serving as the CFO of a public company produced inaccurate financial statements, engaged in a personal conflict of interest with the company and misrepresented their audit firm’s business to the public. For the transgressions, the investigation committee recommended the accountant pay a $2,500 fine and attend an ethics course. The offending member is not named.
Notice “2022 - #4 – A Member” states how an accountant was asked by a client to resolve issues regarding foreign taxation and disability tax credits. The accountant did not communicate in a timely manner and when the client terminated the accountant, the accountant inappropriately accessed the then-former client’s taxation information with the ÎÚÑ»´«Ã½ Revenue Agency. For the transgressions, the investigation committee recommended a reprimand and for the accountant to pay a $2,000 fine and partial costs of $2,000. The offending member is not named.
These cases involve accounting infractions. Others relate to conduct that is unbecoming of the profession.
For example, discipline notice “2019 – 1. A Member” states a member voluntarily agreed to a 12-month suspension for the alleged professional misconduct of “deliberately and repeatedly lying under oath in divorce proceedings in the Supreme Court of British Columbia” and “tendering knowingly false witnesses in an attempt to deceive the court, and tampering with documents which the court ordered to be produced during the course of the proceedings.”
Discipline notice “2018 - #2 – A Member” states how an accountant got drunk and drove their vehicle at 100 kilometres per hour over the posted speed limit only to crash and kill someone.
The undated notice states “in order to resolve a disciplinary proceeding” the member agreed to a suspension until August 29, 2018.
And, several errant ÎÚÑ»´«Ã½ accountants have come to the attention of other regulatory bodies, yet their identity is shielded from the public on CPABC’s website.
Notices “2021 - #16 – A Member” and “2021 - #17 – A Member” tell of accountants who “asserted to the Law Society that they were licensed by CPABC” to perform trust reports, when in fact they were not. The members accepted a reprimand and were fined $500 and $800, respectively.
CPABC also shields respondent names when accountants are disciplined elsewhere.
Discipline notice “2022 - #3. A Member” tells of an accountant who resigned from another provincial CPA body but who had also practiced in ÎÚÑ»´«Ã½
“The Member misappropriated client funds of at least $454,173.00 ‘into their own bank account.’”
Public records from the Chartered Professional Accountants of Saskatchewan show Leanne Irene Berglund misappropriated $454,173 from a church and daycare in Saskatchewan and was subsequently banned by that regulatory body.
Under rare circumstances, CPABC does have a public notice website, which is where Berglund’s name is listed—although it merely notes she is a former member.
Another accountant in notice “2022 - #7 – A Member” ran an unlicensed property management company, according to the BCFSA. The investigation committee recommended the member accept a reprimand and pay expenses of $2,577.
Given CPABC policies, the public cannot be certain which accountant this is. However, publicly available records from BCFSA show accountant Yiu Keung (“Anthony”) Ng and Kitsilano Management Ltd. paid a $100,000 fine to the BCFSA in December 2021 for conducting unlicensed property management.
“Mr. Ng used his company and position as a Chartered Professional Accountant, a Chartered General Accountant, and a Notary Public to manage up to 23 rental properties in and around Vancouver on behalf of overseas clients, contrary to” the Real Estate Services Act, stated BCFSA.
There is nothing on the CPABC identifying Ng’s misconduct, although he is actively listed on the member directory.
While some disciplinary actions do identify respondents, another CPABC policy and practice is to redact the names of some of those offending members after two years.
“2021 - #1 – A Member and a Firm” originally stated Charlton & Company Chartered Professional Accountants conducted “insufficient” work on a mutual fund.
The firm accepted a reprimand and the member, Robert Charlton, agreed that his practice licence be permanently cancelled.
The investigation committee determined five code of conduct violations, including “false or misleading documents and oral representations.”
“The Firm’s audit work to assess the fair value of the investment was insufficient and was not in accordance with generally accepted auditing standards. The firm’s working papers were inadequate and improperly dated,” the notice now states.
The only way for the public to identify Charlton or his firm in the since-anonymized case would be to use the website archive service waybackmachine.com.
Accountants can ‘quietly ride into the sunset’: Baines
Charlton’s disciplinary case highlights another CPABC policy and practice that is unique among regulatory agencies: Rather than taking Charlton to a hearing for a full public airing, CPABC will often allow members to agree to a suspension or resign without a hearing or any admissions.
Other examples include the case of Burnaby accountant Hao (Leslie) Shen, who “resolved” a disciplinary proceeding in 2021 by voluntarily relinquishing his licence after he denied allegations that he misappropriated “for his personal use significant funds of a former employer, a publicly traded company, while he was employed as its chief financial officer,” according to a 2021 CPABC notice.
Since handing in his licence, Shen has faced similar allegations from another public company. On May 14, Zijin Mining Group Co. Ltd. filed a civil lawsuit against Shen, alleging Shen defrauded the company of hundreds of thousands of dollars. Shen has denied all the allegations in both cases, according to court filings, and there have been no findings of liability.
And such is the case of accountant Peter Pang who, in 2018, agreed to a voluntary one-year suspension without admitting to allegations he used property jointly owned by a client as collateral for a personal mortgage without knowledge and consent from the client.
However, in 2019, Pang provided business accounting services while suspended and was expelled in 2022, according to a relatively rare hearing decision that found him ungovernable and in contempt of the profession. Pang was also fined $25,000.
In 2018, Verne J. Burden of Sooke was an accountant who faced allegations of professional misconduct, including misappropriating funds from a client of the firm, and misappropriating revenue and capital from the firm. Burden did not admit to the allegations but resigned from the profession. No hearing was held and CPABC states Burden may no longer identify as an accountant.
In 2019, John Scott Adams of Kelowna also handed in his licence and avoided a hearing to determine the numerous alleged breaches of the CPA Code of Professional Conduct, including committing fraud and preparing false financial statements to cover it up.
Last January, Adams was handed an 18-month conditional sentence for theft over $5,000. Adams admitted that as treasurer of the Kelowna Minor Lacrosse Association, he wrote himself $124,000 worth of cheques between 2014 and 2016 for home renovations and to pay taxes.
Another former accountant, Vasant Patel, has faced numerous civil claims and outside regulatory action against him without CPABC making any determinations of fact in a hearing.
On June 2, 2020, the Mutual Fund Dealers Association of ÎÚÑ»´«Ã½ (MFDA) (now CIRO) barred Patel from conducting securities-related business in any capacity and fined him $25,000.
Patel was cited as having played a key role in an alleged high-profile, illegal real estate marketing scheme that left some buyers in Langley with significant financial losses.
In 2020, in a rare non-anonymized ruling (following media reports on Patel), a CPABC committee initially recommended Patel accept a reprimand “taking into account the sanctions MFDA had levied.”
Patel agreed to voluntarily relinquish his licence in 2022 to avoid a hearing and any further determinations of fact concerning his activities in real estate.
But Patel still faces a BCFSA hearing in November for allegedly offering real estate services without a licence.
Baines said CPABC is not considering CPA clients, who likely want “a full airing of the facts, a determination on liability and an appropriate penalty.
“Allowing offending members to quietly ride into the sunset is not justice. It is a disservice to clients, especially if those clients are thinking about suing the member,” said Baines.
“Secondly,” said Baines, “deterrence is a key component of regulation. If a case is properly processed, other members will have a good idea of what happened and what the consequence will be if they commit similar infractions. If a case is quietly swept under the rug, there is no deterrence value.
“Thirdly, if members are allowed to abort disciplinary proceedings by resigning—especially without any explicit admissions of wrongdoing—it will be much easier for them to avoid negative publicity and/or to explain away their misconduct and re-establish themselves in the business community and commit more financial transgressions. And if their names are redacted—as CPABC commonly does—it will be even easier,” he added.
CPABC’s policy of not pursuing a hearing or disciplinary action if a licence is relinquished contrasts sharply with the approach of other regulatory bodies, namely the Law Society of BC, BCFSA and CIRO—all of which proceed with hearings to determine facts and issue fines against errant members who had already ceased to be members.
BCFSA pursued a hearing against former real estate agent Gina Takhar, who had surrendered her licence in 2020. However, last March, BCFSA cancelled Takhar’s licence and fined Takhar $55,000 for findings of professional misconduct via a consent order.
Last January, CIRO pursued a hearing against former TD Bank manager Jennifer Beh. Although Beh departed TD Bank, investigators with the regulator pursued Beh in order to determine what happened. Beh was fined $50,000 and barred from the securities industry.
In 2022, the Law Society of BC disbarred lawyer Aaron Murray Lessing for a second time, with the society panel explaining why it continued to pursue its hearing: “A second disbarment would be in the public’s interest and would enhance the public’s confidence in the disciplinary process by underscoring the seriousness of [Lessing’s] misconduct.”
Administrative fines such as those levied against Takhar and Beh contrast sharply against the relatively sparse ones levied against accountants in ÎÚÑ»´«Ã½
Between 2019 and 2023, CPABC—with 40,236 members—had issued $135,000 worth of fines, whereas in Ontario—which has 99,337 members accountants—$2.1 million worth of fines were levied.
CPABC responds
CPABC CEO Lori Mathison declined an interview and to comment on any aspect of CPABC’s policies and practices.
CPABC also told Glacier Media it could not make its public representatives available for privacy reasons.
Brkich, CPABC’s spokesperson, said in an email that “even when someone relinquishes their membership, if it is in the public interest, CPABC will pursue an investigation.”
However, CPABC records show that its investigations rarely lead to full public hearings.
Brkich added: “At any stage of the investigation and discipline process, a disciplinary matter may be resolved through a resolution agreement. These agreements are consensual and require approval by the CPABC board, which also has public representatives.
“As these agreements are generally used in the more serious cases, they usually include suspension or cancellation of membership in CPABC and are made public.”
CPABC is not the only regulator in the industry to face criticism for a lack of transparency in its disciplinary process.
The CPAB pursued similar disclosure policies as CPABC until 2023, when rules resulted in publicizing “significant” enforcement action.
The changes occurred after a lengthy public consultation process.
“Investors and other commentators outlined that increased disclosures would increase public accountability and pressure on firms to improve audit quality,” CPAB said at the time.
Whether CPABC follows suit remains to be seen.
