International yachting companies taken for ride by fudging accountant

An Auckland-based accountancy firm spent $150,000 in damage control after a senior accountant fudged the numbers on international client tax returns.

Shelley Williams was the fourth accountant to be struck off the New Zealand Institute of Chartered Accountant’s register this week.

The accountants' discliplnary tribunal was told by a director of Hayes Knight accounting firm that Ms Williams had failed to file tax returns for an international yachting company for four years, even though the client had been charged for preparation of the documents.  

GST returns were also filed without supporting documentation, were not filed on time, and in some instances figures had been “fudged” when Ms Williams tried to file them at the last minute.

The director, whose name was suppressed, told the tribunal Ms Williams had deliberately misled directors and had offered “plausible explanations” for any anomalies found.

“Given the senior position she held at Hayes Knight, it was her role to monitor the IRD filing percentages and report to me on clients with outstanding returns.

"She deliberately withheld from me about her own clients,” the director says.

The clients, from the professional yachting industry who Ms Williams had “close relationships with”, had followed her as she moved from one firm to the next.

It was on this basis that Hayes Knight had offered her the senior position as business services manager.

“She advised us they were predominantly offshore and that everything would be done via email and phone calls. We accepted this wouldn’t be a standard relationship,” the director told the tribunal.

He says clients would pay on time for every invoice raised, and other clients had been referred to her from the initial client, whose account and been totally neglected.

Significant hours for these offshore clients were charged and inflated on Ms Williams’s time sheet, which led to Hayes Knight thinking she was doing well. She was considered to be a “valuable team member”.

“There was no direct monetary benefit, but indirectly, she would have benefitted from her position being elevated within Hayes Knight,” the director says.

The tribunal was told that any correspondence relating to her clients went directly to her and not through directors.

“Shelley withheld correspondence received from the IRD in relation to the complaint regarding unfiled tax returns.”

In addition to the time spent investigating and dealing with affected clients, Hayes Knight recorded more than $150,000 worth of productive time to bring the files of the affected clients up to standard.

“This time was subsequently written off, and Hayes Knight has also paid IRD penalties and charges for several affected clients,” the director says.

While the firm has done everything it can to “put things right” with affected clients, some have moved to other accountancies.

Despite attempts to speak to the client whose tax returns had been neglected for years, he was not prepared to speak with Hayes Knight.

“He had obviously fallen out of love with Hayes Knight by then,” tribunal chairman Jim Hoare said.

 Ms Williams was ordered to pay full costs of $9155.