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Becoming signatory on client bank account

I'm ICAEW and wonder if there are any rules or reasons preventing this - this is a client who wants me to act as a quasi FD.

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By Hansa
09th May 2012 12:50

Better to be a real FD (not Quasi)

I would be cautious particularly if there are no signing limits (eg if the director acting alone can spend without sanction).  

Might it not be better to offer to become a (real) FD - say for a fixed fee of £x per annum + fees per meeting attended.  At the same time the mandate could be changed to allow (say) £10k signing alone, otherwise two signatures.  

A lot depends on how well you know the client & his business.

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09th May 2012 12:52

ICAEW Annual Return

Asks a question about being a sole signatory on a client's account. DON'T even think it - it will be a red flag.

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By stt
09th May 2012 13:08

Thanks, but I wouldn't be the sole signatory (I take that to mean there are no other signatories, rather than I could sign a cheque with no other signature required; of course there would be a limit ).

So I may still be able to answer no to that question.

I would invoice for my time, although I appreciate IR35 could be an issue.

I was wondering of any other pitfalls that may arise.

 

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Why not speak to the ethics advisory? They should be about to tell in you 2 minutes which of the guidance notes covers this if when you searched ICAEW's site it didn't bring it up.

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By Hansa
09th May 2012 14:09

Why would IR 35 apply?

If you are in practice and have other clients, I cannot see why IR35 should apply. 

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By stt
09th May 2012 14:34

IR35 can apply on an engagement by engagement basis - the overall assessment does take into account the practice as a whole, but it is possible to be caught on some engagements and not others

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09th May 2012 14:09

Make sure there are validity

Make sure there are validity transaction controls in place to verify any cheque, which requires your signature

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10th May 2012 15:53

Insurance

I doubt your insurers would cover you for this.

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11th May 2012 11:46

Presumably it's not an audit client

Because, if it is, it would be very hard, in my view, to demonstrate there is no management threat under the Ethics standards. I think you have to think through the audit ethics implications quite carefully of, for example, your payroll department determining the amount of net pay to be paid by the client and put something on file in case the QAD comes to call.

For non-audit clients, I'm not aware of anything in the ICAEW code of ethics preventing this, but it does get a bit muddled between the concepts of independence (not compulsory) and objectivity (which is compulsory). You probably need to give the code a quick look.

No doubt David Winch may have something to say about the money-laundering implications (if you really want to get scary!)

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11th May 2012 11:47

Money laundering

You need to consider how the money laundering rules will apply.

In the ICAEW money laundering pack I use, one of the pointers to enhanced assessment of risk is where you are a cheque signatory.

 

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11th May 2012 12:14

Becoming signatory on client bank account

It could, with other things, make you a de facto director and so subject to duties and liabilities under the Companies Act 2006 and Insolvency Act 1986 and possibly subject to disqualification under the Company Directors Disqualification Act 1986.

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11th May 2012 12:23

do quasi and de facto not equal

shadow director?

 

If you are going to do it do it formally, properly and with all the protection you could possibly need.

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11th May 2012 12:31

Do quasi an dde facto not equal shadow director?

No - theyare invariably quite separate things. Also a person is not a shadow director by reason only that the directors follow his/her professional advice (IA 1986 s.251) 

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11th May 2012 12:25

Insurers

I presume the question is about your being given authority to sign cheques on a bank account held by a client of yours (as opposed to your being a signatory on a bank account held by your firm which is to be used for the banking of monies belong to the firm's clients).

I would check out your insurer's view on this.  They may be a bit twitchy about it!

Obviously if there is any criminality going on and you are a person operating the bank account then suspicion will fall upon you . . .

David

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By julie b
11th May 2012 13:06

Cheque signatory

I have done this for over 10 years and disclosed the position on the Annual Return to ICAEW and not had any come back from them.  I work remotely from the company and only pay invoices etc which have been approved by the directors and forwarded to me.  My signing limit is £10,000 (but in the early days it was £1000).  The company is audited by a separate firm.

I am also the Company Secretary but not a director.

 

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By stt
11th May 2012 14:03

Thanks..

..for all the replies

This is not an audit client, and is for an account in the client name, so not client monies as such (although it seems the client money regs do cover this scenario). I will likely decline - too much additional headache!

 

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