The accountancy practice which oversaw the books of Axiom Ince in its final years has been fined for incompetence, it has emerged.

The Institute of Chartered Accountants in England and Wales (ICAEW) issued a £2,200 fine against north London firm Adrian C Mansbridge & Company and ordered it to pay £2,200 costs.

The sanction was issued in May, but was revealed today in a blog post by campaigning tax lawyer Dan Neidle.

The ICAEW’s decision notice states that in January 2023, Adrian C Mansbridge & Company prepared unaudited filleted financial statements for an unnamed limited company for the year to 31 March 2022. The document stated that the company was entitled to exemption under the Companies Act which allowed it not to carry out a full audit of its financial position.

The ICAEW said: ‘By failing to identify that X Limited were not entitled to such exemption, Adrian C. Mansbridge & Company demonstrated professional negligence by performing professional work incompetently to such an extent, as to fall significantly short of the standards reasonably expected of a member firm.’

The regulator has not revealed whether ‘X Limited’ is Axiom Ince.

It is not in doubt that, in its accounts for 2021/22, Axiom DWFM Limited (as it was known before it was renamed Axiom Ince) claimed an exemption as a small company from a full audit. This was despite Axiom appearing not to meet the required criteria of employing fewer 50 people and reporting gross assets of no more than £5.1m. The filleted accounts recorded that assets were £7.6m in 2022 and had been £5.3m in 2021. Axiom employed 98 people in 2022 and 63 people in 2021.

In the 2021/22 Axiom accounts, Adrian C Mansbridge said: ‘You consider that Axiom DWFM Limited is exempt from the statutory audit requirement for the year.

‘I have not been instructed to carry out an audit or a review of the financial statements of Axiom DWFM Limited. For this reason I have not verified the accuracy or completeness of the accounting records of information and explanations you have given to me and I do not, therefore, express any opinion on the statutory financial statements.’

Neidle speculated that there could be potential for the SRA compensation fund to recover some of its losses from Adrian Mansbridge & Co’s insurers. He added: ’The ICAEW should review its disciplinary processes. The way it’s applying its anonymity policy does not make sense, and there is something seriously wrong with the penalty applied in this case.

'And Companies House should have automated measures in place to detect companies which unlawfully fail to file audited accounts.'

Neidle also described the accounting firm's failure as a 'missed opportunity' for the solicitors regulator, and therefore a 'double regulatory failure'. 

The SRA was already investigating Axiom Ince in early 2023, he points out, an investigation that included a forensic investigation of the firm’s accounts. 'It seems there was no check of the firm’s statutory accounts,' he stresses.  'The SRA therefore didn’t identify that the firm had failed to file audited accounts – a red flag that would have justified immediate action. Instead, Axiom Ince was permitted to remain in business until October 2023.

'The Legal Services Board’s report into Axiom Ince’s failure, written by Carson McDowell, is very critical of the SRA’s investigation, and in particular of the SRA’s insufficiently thorough checks of the firm’s accounts in early 2023. However the report does not mention the SRA’s failure to identify the lack of audited accounts. We infer that Carson McDowell missed this point.'

 

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