Accountant Yau Min Chan ‘misused’ more than $400k of client money; wiped from professional register

Auckland accountant Yau Min Chan dishonestly used more than $400,000 of clients' money. Photo / 123rf

An accountant who misused more than $400,000 of clients’ money, including funds meant to pay Inland Revenue on their behalf, has had his name wiped from the profession’s register.

Yau Min Chan claimed the conduct, described by a disciplinary tribunal as “misconduct of the most serious nature”, was never intentional but the result of “sloppy” business.

“Whatever mistakes I made, I have fixed,” the Auckland man told NZME.

The disciplinary tribunal of the New Zealand Institute of Chartered Accountants (NZICA) recently found him guilty of professional misconduct for breaching the institute’s rules and code of ethics and for supplying false or misleading information.

It said in a decision released last month that the amount of money involved, and the frequency and the period over which the misuse occurred, placed Chan’s conduct at the “most serious end of the scale” of professional misconduct.

Chan was admitted as a chartered accountant in June 1985 and has held a Certificate of Public Practice since 1989. But his membership of the institute has now been terminated and his name removed from the Register of Members.

Chan claimed his misuse of client funds was never intentional. Photo / 123rf

The 69-year-old, who came to New Zealand from Malaysia 47 years ago as a student, told NZME he does not plan to appeal the decision.

“I’ve accepted the decision - that’s it. I’m getting old now; I just want to sell my business, retire and disappear.”

Chan said he had “fixed his mistakes” by repaying all money owed.

The disciplinary process was triggered by Chan coming forward in July last year to self-report improper conduct, including that he’d received client funds into a bank account that was not a valid trust account, and misappropriating clients’ money.

His lawyer Steve Keall said the case stood apart from other misconduct cases, and that Chan had not faced any claims or complaints from clients in connection with this matter.

“The findings made by the tribunal result from an initial self-disclosure by Mr Chan, without which he would not have faced any charges at all,” Keall said.

During a preliminary investigation, Chan made additional disclosures about his further misuse of client funds, and in March this year the case was referred to the profession’s Disciplinary Tribunal.

It confirmed in its decision last month that Chan had either repaid or otherwise accounted for most of the money held or misappropriated, except for two amounts which he was unsure how to deal with.

Keall told NZME both situations had now been resolved, which meant that no client money was owed to anyone.

The details of the charges brought by the NZICA included that Chan, who operated the business YM Chan Chartered Accountants, “misappropriated client monies of at least $417,685″ by failing to ensure money received by clients was paid into a proper trust account.

He also failed to keep clients’ money separate from personal and/or practice funds and had made payments of $34,991 to, or on behalf of a company of which he was the sole director and held shares as a trustee.

Chan denied any money had been misappropriated.

“That suggests I have taken the money and spent it on other things,” he told NZME.

The tribunal said Chan “frequently drew” from the firm’s office account to meet his personal and practice expenses, which meant client money became intermingled with Chan’s personal and business funds.

In one instance Chan was entrusted with blank cheques signed by a client to pay wages, GST, PAYE and other expenses for a farm she owned, but Chan used the cheques to pay funds into his accounts, some of which were withdrawn for his personal use, the tribunal said.

The amounts came to more than $125,000, including $34,991 to meet the expenses of an unrelated business client of which Chan was trustee.

On another occasion, Chan billed a client twice for the same work, for which he paid himself with the signed blank cheques he held on her behalf.

The charges also related to his using the funds of a client without authority, and retaining client money in bank accounts he operated for longer than was reasonably necessary, including $40,000 belonging to two clients, which was the balance of funds deposited late in 2016 as part of a relationship property settlement.

Chan agreed to hold $150,000 on behalf of two clients from the sale of their property, pending the resolution of differences between them.

After agreed payments totalling $110,000, the remaining balance of $40,000 was held in Chan’s “client funds account”, despite it not being a proper trust account.

Chan said at the time he had been unable to take instructions as the clients, who lived overseas, were no longer in contact with each other or with him.

The tribunal said the District Court provided for such situations, but Chan had not invoked this process.

It said the money should not have been received by Chan in the first place as he did not have a properly constituted trust account, and the clients being in dispute gave rise to a conflict of interest.

A further $281,000 of various clients’ money meant for tax payments was held in bank accounts operated by Chan, some of which was not repaid for five years.

In March 2019 two clients paid Chan $54,404 to meet their tax obligations, which was not paid to Inland Revenue, or otherwise accounted for, the tribunal said.

This was paid into Chan’s office account, and intermingled with other funds, including for his personal use.

Chan told NZME it had happened because “sometimes he got confused”.

The tribunal said that as well as the dishonesty involved, such conduct severely undermined the trust and integrity which clients and the public expected of a chartered accountant, particularly one in public practice.

Chan was also ordered to pay $29,000 in costs and hearing expenses.

Tracy Neal is a Nelson-based Open Justice reporter at NZME. She was previously RNZ’s regional reporter in Nelson-Marlborough and has covered general news, including court and local government for the Nelson Mail.