CIPFA statement concerning member Jeremy Kay

10-06-2016

On 1 and 2 March 2016 a Disciplinary Committee of CIPFA, the Chartered Institute of Public Finance and Accountancy, heard allegations against Mr Jeremy Kay.

Attendance

Mr Kay did not attend the hearing and was not represented in his absence. He had previously been in communication with CIPFA about the issues concerned in his case and had responded to, and admitted, all of the allegations.       

Background 

Mr Kay had been a CIPFA member since April 1992 and was a Finance Manager at Trafford Council ('the council') from 2007 until May 2014. From April 2013 he provided financial support services to adult social services ('Adults') within the Children, Families and Wellbeing Directorate ('CFW'). Part of his role was the production of monthly revenue budget reports and the monitoring of the budget for CFW (Adults) ('the Budget') which was the council’s largest spending area.

On a number of occasions between September 2013 and late March 2014 concerns were raised about the Budget position. Mr Kay variously indicated that other officers were aware of there being an overspend (if not the details of it) and that the situation was in hand. Although meetings were held in early 2014 to try to understand Mr Kay’s Budget figures, by March 2014 Mr Kay had not addressed the concerns raised. In late March the director of finance was alerted to concerns about the difference between the actual financial position and Budget monitoring reports. Subsequent investigation disclosed discrepancies totalling £3.6m arising from adjustments made by Mr Kay.   

The Committee's findings on the facts alleged

The Committee found that Mr Kay in his financial reporting of the Budget had knowingly made inaccurate adjustments totalling £1.5m in respect of learning disabilities and £2.1m in respect of public health. These adjustments were made by Mr Kay with the deliberate intention of masking the true financial position. He intentionally misled the council.

In respect of the learning disability adjustments, Mr Kay made assumptions without appropriate consultation and despite being aware that it had been agreed that caution should be exercised and that savings had provisionally been allocated elsewhere. He could not explain his assumptions when asked to do so by the director of finance in April 2014.

The Committee found that, in acting as he did, Mr Kay was being intentionally misleading and dishonest and was in breach of the Institute’s Code of Ethics which required him to act with honesty and integrity. Mr Kay’s actions, so late in the financial year, deprived the council of the opportunity to implement a timely recovery plan and were, therefore, damaging to the financial position of the council.     

Although finding that it did not excuse his actions, the Committee noted that there had been little challenge of Mr Kay by budget holders. It seemed that Mr Kay’s past satisfactory performance, his seniority and the esteem in which he was held by his colleagues and employer had resulted in his being left unchallenged. In the view of the Committee, this may have explained why Mr Kay assumed responsibility for making assumptions on his own and without consultation when he clearly should not have done so.       

The Committee's findings on the alleged breach of professional standards

The Committee found that Mr Kay, by acting in breach of the Code of Ethics, was in breach of CIPFA’s Bye-Law 23(b).

Mr Kay was also found to be in breach of CIPFA Bye-Law 23(c), in that he had conducted himself in such a way so as prejudicially to affect the status, reputation or welfare of the Institute.

By his actions Mr Kay was also found to be in breach of Bye-Law 23(d). He had acted in a manner which had brought, or was likely to bring, discredit on himself, his employer, the Institute or the profession of accountancy.

Sanction and relevant considerations

The Committee determined to expel Mr Kay from the Institute.

The Committee took into account Mr Kay’s previously unblemished record, commendations he had provided, that his actions were out of character and that he had been a valued employee. He had not been the subject of management challenge in relation to aspects of the matters concerned in the case in a way that he possibly should have been. There had been no fraudulent activity or personal gain by Mr Kay. However, the Committee found that Mr Kay’s actions were serious breaches of the Institute’s Bye-Laws. There was an intention to mislead his colleagues and the ouncil and dishonesty. He had brought the profession into disrepute through his actions which were incompatible with Institute membership.

The Committee imposed a costs order against Mr Kay.