News Column

CIPFA Statement on Former Member Mr Andrew Tremaine

July 15, 2014



LONDON, July 15 -- The Chartered Institute of Public Finance and Accountancy issued the following news release:

On the 9 to 12 December 2013 the Disciplinary Committee of the Chartered Institute of Public Finance and Accountancy ("CIPFA") heard allegations against Mr Andrew Tremaine.

ATTENDANCE

Mr Tremaine did not attend the Disciplinary Committee hearing. He was not represented in his absence.

THE FACTS*

The facts in this case concern Mr Tremaine's actions whilst the Head of Financial Services /Director of Corporate Resources and s151 Officer at Restormel Borough Council ("the Council") (from 2001 to February 2008), when he had overall responsibility for the Treasury Management (TM) function, and his actions whilst Chief Executive of the Council (from February 2008).

It was found that Mr Tremaine:

* In 2006/7 and 2007/8 failed to report to the Council with due care and diligence in that reports were unclear, did not provide elected members with sufficient information on the scale, nature and risks of planned investments and contained information and recommendations not in accordance with the Guidance issued by the Office of the Deputy Prime Minister and the CIPFA TM Code;

* In 2006/7 had responsibility for 26 individual investments made in breach of the Council's investment criteria; authorised 9 investments (totalling GBP 14,000,000) in bodies which did not have the minimum credit rating required by the Council's TM Statement, and authorised 2 investments which exceeded the Council's one year investment limit;

* In 2007/8 was responsible for the Council's TM function when it made; 14 investments in bodies which did not have the minimum credit rating required by the Council's TM Policy Report ("TMPR"), 2 investments which exceeded a one year investment limit in breach of the Council's policy, 4 transactions which breached investment limits for a single institution set out in the TMPR and 15 investments where documentation was incomplete or inaccurate; and

* In 2007/8 authorised; one investment in a bank whose credit rating was below the level required in the TMPR, 2 investments for which incomplete documentation was provided (totalling GBP 1,500,000) and one investment in a bank which caused the total investment to be GBP 2,250,000 above the limit set in the TMPR.

In addition, it was found that Mr Tremaine had failed to:

* implement a control framework to prevent investments being made which breached the Council's investment policy including not ensuring that TM Practice documentation was up-to-date, failing to ensure clarity regarding the identification of authorised signatories and the level of challenge required by an authorising officer, and not ensuring that possible/actual breaches of policy were recorded;

* ensure that a timely and comprehensive report was presented to the Council following the failure of Landsbanki Islands which caused GBP 4 million of the Council's funds that had been invested in breach of the Council's policy to be put at risk;

* be sufficiently conversant with the legal and regulatory issues affecting the TM activities of the Council;

* ensure that a system existed to expose investment decisions to rigorous analysis; and

* ensure that the Council received a competent service based on the then current developments in TM practice, legislation and technique.

In respect of the above matters Mr Tremaine was found to have been in breach of the:

* CIPFA Standard of Professional Practice ("SoPP") (September 2002) - Standard of Care and General Principles

* SoPP (September 2002) - Treasury Management

* CIPFA's Statement on the Role of the Finance Director in Local Government, and

* The International Federation of Accountants Code of Ethics

BREACH OF PROFESSIONAL STANDARDS

By breaching his professional duties Mr Tremaine was found to be in breach of CIPFA Bye-Law 23(b) - in that he had breached one or more of CIPFA's guides to conduct, principles or rules.

Mr Tremaine was also found to be in breach of CIPFA Bye-Laws 23(c) and 23 (d) in that, by failing to follow applicable standards and failing to ensure, in accordance with those standards, that a proper framework of financial control was in place and operating effectively, he had conducted himself in such a way so as prejudicially to affect the status, reputation or welfare of the Institute and, by his misconduct, brought discredit on himself, the Council, the Institute and the profession of accountancy.

SANCTION AND RELEVANT CONSIDERATIONS

The Disciplinary Committee imposed a 12 month suspension order.

In reaching its decision the Committee took account of the fact that the case involved wide ranging, continuing and sustained breaches of professional duties, that his failures resulted in a significant proportion of the Council's funds being placed at a level of risk that had not been accepted by the Council, that responsibility for the failure primarily rested with him and that there was very little before the Committee which indicated that Mr Tremaine appreciated the scale of his failures or the risk that flowed from them.

The Committee also took account of mitigating factors including Mr Tremaine's previous good character, that the misconduct was not dishonest and that he was not well served by audit on which he placed significant reliance.

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