The Financial Reporting Council (FRC) today announces the outcome of the disciplinary case relating to Mr. Timothy Whiston (former Finance Director and latterly Chief Executive Officer) and Mr. John Whelan (European Financial Director and latterly Group Finance Director) of iSoft Group plc. Both are members of the Institute of Chartered Accountants in England and Wales (ICAEW).
Settlements agreed between the Executive Counsel to the FRC, Gareth Rees QC, and both Mr. Whiston and Mr Whelan have been approved by the FRC independent Tribunal. Mr Whiston and Mr Whelan have admitted that their conduct fell significantly short of the standards to be expected of a Member and breached the Fundamental Principle of Integrity in that they:
- Recklessly caused or permitted iSoft to recognise £22 million of revenue from an unsigned contract with the Irish South Eastern Health Board in its group interim accounts for the period ended 31 October 2003, when there was no legitimate basis for such recognition;
- Recklessly caused or permitted iSoft to recognise £16.9 million of cash in its group interim accounts for the period ended 31 October 2003, when there was no legitimate basis for such recognition;
- Recklessly caused or permitted iSoft to recognise the Irish revenue in its financial statements for the period ended 30 April 2004, when there was no legitimate basis for such recognition;
- Recklessly caused or permitted the continued recognition of the Irish revenue in the iSoft group interim accounts for the period ended 31 October 2004, when there had been no legitimate basis for such earlier recognition; and
- Recklessly caused or permitted iSoft to recognise £17.08 million of cash in its group interim accounts for the period ended 31 October 2004, when there was no legitimate basis for such recognition.
The parties have agreed the following terms of settlement:
- Exclusion from the ICAEW for a recommended period of 8 years;
- A sum of £50,000 to be paid by Mr. Whiston as a contribution to the Executive Counsel’s costs.
- No order as to costs in relation to Mr. Whelan.
Formal Complaint: John Whelan, Timothy Whiston (PDF)
Settlement Agreement: John Whelan (PDF)
Settlement Agreement: Timothy Whiston (PDF)
Notes to editors:
1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
2. In relation to disciplinary matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process are:
- Decision to investigate
- Decision whether to bring disciplinary proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal
- Tribunal hearing
- Determination and imposition of sanction and/or costs orders
The FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.
Investigations are conducted by Executive Counsel and the Professional Discipline team within the Conduct Division. If disciplinary proceedings are commenced, Executive Counsel delivers a complaint to the Conduct Committee. The Conduct Committee then instructs the Convener to appoint a Disciplinary Tribunal.