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What happens if there ARE professional reasons?

I have just received a clearance letter from an accountant asking if there are any professional reasons they should be made aware as to why they shouldn't accept the appointment of an ex-client.

In my opinion there ARE as he was basically trading insolvent when I left him - he had maxed his creditors out and was taking every penny he could for himself.

I've never had this situation before when just about to reply to a clearance letter and wondered if any other members have and how I should respond?

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08th Jan 2013 17:03

Firstly, do you have your (ex) client's written consent to your communicating freely with the new accountant whom he has approached?

If not then either (i) obtain that consent or if that is not possible (ii) write to the new accountant saying you do not have your (ex) client's consent to respond fully (and saying no more than that).

If you do have consent then spell out your concerns to the new guy.

Of course if you consider that the (ex) client was acting dishonestly (in effect defrauding creditors by trading whilst insolvent and without reasonable prospect of avoiding insolvent liquidation) then you need to consider making a report to your MLRO (or if that's you, to SOCA) under MLR 2007 / s330 PoCA 2002.

David

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By BKD
08th Jan 2013 17:20

The wrong question

Whilst I agree with David's comments (whioch goes wothout saying) it sounds as though the new agent is using old wording. Current practice is not to ask, as it were, whether there are any reasons why appointment should not be accepted, but to ask for any information that should be considered when deciding whether or not to accept. The two are quite different - in the past, I would not have said that the director's actions were sufficient reason not to accept appointment (if that is what the new agent as asked) but under current practice, I would certainly consider it information worth passing on - subject, as David says, to the ex-client's consent to communicate.

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08th Jan 2013 17:52

The letter

wasn't from a firm of Chartered Dinosaurs was it? by any chance.

Staggers me how out of date they are.

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08th Jan 2013 20:26

Rather large
Chip on your shoulder there mouse 007....

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08th Jan 2013 21:07

Well

Since that particular part of the guide to professional ethics changed some 20 years ago (well before the introduction of "Practice Assurance"), it does tend to hack me off a bit when regulated firms don't appear to be er regulated.

Bet they are still using SAGE too.

Mission for 2013 - target ICAEW - (don't jump to any conclusions, you will be wrong)

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08th Jan 2013 21:09

... well...
... funnily enough they are Sage accountants, as proudly displayed on their letterhead...

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08th Jan 2013 22:06

Thanks jaybee

that confirmation just made my day

you can always spot them a mile off

 

ipads will never catch on

 

Mission for 2013 - target ICAEW - (don't jump to any conclusions, you will be wrong)

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08th Jan 2013 21:45

Childhood trauma!?
Did a chartered accountant steal your calculator when you were little!?

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08th Jan 2013 22:05

Nope, is this YOU?

 

Mission for 2013 - target ICAEW - (don't jump to any conclusions, you were wrong)

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08th Jan 2013 22:19

Why stop there....
Maybe after targeting ICAEW you should go after anyone who is taller than you?

Maybe anyone who went to private school!?

Love a bit of inverted snobbery!!

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09th Jan 2013 00:10

only when i'm lying down

ron burgandy wrote:
Maybe after targeting ICAEW you should go after anyone who is taller than you? Maybe anyone who went to private school!? Love a bit of inverted snobbery!!

 

Um, I'm chartered and went to (very posh) private boarding school but, yes, I do hate snobs

 

so there

 

Mission for 2013 - target ICAEW - (don't jump to any conclusions, you were wrong again)

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10th Jan 2013 20:22

Subjective
A business may be trading insolvently but if it has an honest belief that they will trade out of the temporary position then that's not necessarily a problem, don't forget that whilst us accountants know the rules best the directors will usually know their business best.. Obviously any Ltd Co. accounts should show a going concern note but otherwise I'd say any person reading the accounts should be able to draw their own conclusions.
I personally wouldn't include a warning in the clearance letter.

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15th Jan 2013 11:43

if he is already an ex client

why are you wasting your time?

 

Just write back saying you dont act.

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15th Jan 2013 13:23

waste of time

Don't waste your time or energy...

just give them the carry over information (basic) and ignore the other bits....trying to do the right thing will just give you a headache.

No one cares if they were trading insolvent either fraudulently or wrongfully. This is largely a toothless piece of legislation as it is hardly ever used.

As David say's above....consider a report....as you might get in trouble for not telling teacher....not that the information in your report will be put to any use either.....so is more a demonstration that you were doing what you were supposed to do when you get a visit.

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