As regular readers will know, one of the talks I regularly present to accountants and tax advisers around the UK addresses Negligence claims and what you can do to avoid these.

Early on in the talk I know that I shock some of my audiences when I spend a few minutes talking about Forgery and fraud.  I outline the relevant law, the penalties and some of the activities that fall with this remit.  I explain the relevance of this and how it relates to the rest of the material being addressed.

I was reminded of this when reading the Sunday Times report about legal action being taken against Izodia’s professional advisers.  The paper’s reporters predicted this outcome almost exactly two years ago.

The claim was lodged last Friday and apparently names the law firm’s company secretarial arm as a defendant.

“According to the claim, a Fladgate partner “signed a forged and fraudulent minute purporting to record a board meeting of Izodia [that never took place]”. The partner is also alleged to have said that at the “meeting”, three individuals were directors of Izodia when they were not. The “meeting” was said to have authorised the opening of a bank account with RBS International through which money was siphoned off by [“serial crook Gerald Smith”].”

In my talk I explain that a top litigation lawyer told me that the most common reason that accountants get involved with illegal acts is that they are too focused on trying to help their clients to realise the implications.   Backdating a document is but one example of how a fraudulent document may be created. It’s a crime under the Forgery and Counterfeiting Act 1981 and such crimes qualify for a prison sentence.

As I note during my talk – the consequence of such allegations would be even worse than in respect of a negligence claim. And if a disgruntled client is unable to purse a negligence claim against you, then you want to ensure they aren’t in a position to allege that you’ve been involved in any criminal activity.  Such activities would include the creation, copying or using false instruments or the making of false representations.

I have written a 10,000 word ebook drawn from my talk on How to avoid professional negligence claims, containing tips and risk management advice for accountants in practice. You can buy the book or download a summary for free here>>>