Mr Smith, a chartered accountant and former employee of the ICA, was fined pounds 1000 and ordered to pay pounds 2,150 costs by an ICA disciplinary tribunal. But he escaped expulsion from the organisation and a ban on working as an accountant because of the "positive contribution" he has made to the profession. Mr Smith resigned from his safe Beaconsfield seat before the last election after he admitted taking at least pounds 18,000 from Harrod's boss Mohamed al Fayed in return for lobbying on his behalf.
The ICA's decision has outraged leading members of the profession as well as grass roots members who fear Mr Smith's behaviour could bring accountancy, and the ICA into disrepute.
"It's an absolute disgrace" said Phil Showhet, an ICA member and leading consultant in practice development for accountancy. "If this isn't bringing the profession into disrepute then I don't know what will."
Another Yorkshire-based accountant, who declined to be named, said he was furious over the decision because Smith had broken one of the sacred rules of the profession - he didn't declare the pounds 18,000 for tax purposes.
"Tax evasion, as opposed to avoidance, is a criminal offence and it is a rule of the ICA that anyone found guilty of it should be stripped of his membership. If I had tried to hide pounds 500 and been found out, I would have been drummed out of the profession. Smith seems to have got away with it because of his political contacts."
Their outrage was echoed by Accountancy Age, the profession's leading trade publication, which this week published a leader savaging the ICA decision and is holding a poll of its readers asking if they think the former MP should be expelled. "There can have been few cases in recent times when so eminent an accountant was seen so publicly to have fallen below the standards of integrity expected of the profession," said the Accountancy Age leader. The magazine has been inundated with letters from angry readers, some who have been fined similar amounts by the ICA for lesser offences such as failing to answer a client's letter.
The Institute explained pounds 1,000 was the highest penalty it could impose because the events took place before it revised its rules increasing its powers to fine.
There was a similar outcry in 1992 when Richard Stone, then head of corporate finance at Coopers & Lybrand, and colleague Michael Jordan were found guilty of professional misconduct by the ICA over the Polly Peck scandal which disgraced entrepreneur Asil Nadir. The two men were also both fined pounds 1,000 but not struck off.
Mr Showhet said he believed the time has now come for a seperate, independent regulatory body to be established for accountancy. "I don't think it is possible to be an adequate trade body and regulate yourself" he said.