about accountants' references

about accountants' references

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This is one of the matters in the profession that really "stink" and I think it is the responsibility of the professional bodies to change the status to shift the onus of providing references from their bodies to the Revenue (government), banks (where the client bank accounts are held) and so on. I think it is totally unfair for accountants to put on the line qualifications, careers, personal assets etc and live with a constant risk, especially since there is no additional reward for the risk involved, so that somebody else (e.g. the broker) will benefit from our work and time and make a nice commission at our expense. As if that risk and hassle is not enough, we are constantly risk losing the client (e.g. our livinghood) if the bank does not give the loan (for any reason- not always associated with the reference). This is outrageous in my eyes and it's about time the associations to which we pay so much monies did something to protect their members. Does anybody share the same strong views on this? Any ideas how accountants can move in an organized manner to deal with this?
james

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By AnonymousUser
16th Apr 2008 16:08

Be careful when charging
Although you should always charge when carrying out work for a client I would urge caution when charging for a reference.

The ICAEW advice given in the Audit and Assurance Faculty technical release Audit 2/01 advises with regard to such reports as follows:

"Accountants do not carry out any specific procedures in order to make the type of reference covered in this statement and this is made clear in the reference. To avoid the possibility of an implied contract, accountants do not charge any additional fees for the reference and they disclaim, in writing, any liability for providing the reference. ..."

This advice may have been updated since the technical release was issued.

I make a point of sending a copy of the reference to the client so that they know it has been provided but do not specify on any invoice the fact that a reference has been given. I do charge for it but absorb the fee in the overall total.

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By newmoon
16th Apr 2008 14:55

References need to be worded carefully to manage your risk.
I am quite sympathetic with James on this one, although as with most things in accountancy practice, it is all about risk management.
The ICAEW produced guidance on this area in Audit 2/01 'Income Reference Requests' and were even helpful enough to example report wording!
There have been updates to this subsequently, but I don't think there have been any changes to the wording.
I have the wording saved as an Autotext in Word and use this as the template guide for ALL references given.
As far as the preprinted forms sent out by banks, lenders and letting agents, I usually ignore them and reply in a wording that I am comfortable with.
If I do use the lender's form I have my discliamer statement on a Trodat rubber stamp and on it goes.
If I don't like a particular question I don't answer it, and I always think 'what is my potential risk, and what is my likely reward', and keep in mind that the clients that want you to push the truth most, are usually the ones that will dump you at the slightest whim ...and often without paying! Good clients are the ones that respect your integrity.
References take time, and sometimes lots of time, and if you don't like doing it for free you need to charge! Virtually all our work is done on a fixed fee basis, but our engagement letters include the clause 'For non routine work we will quote you in advance of undertaking the work. This includes items such as mortgage and other written references (where we operate a fixed price of £40 plus VAT per reference) ...'
Hope that helps!

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By AnonymousUser
16th Apr 2008 03:54

Accountants' references
How about just a brief write-up of existing professionally qualified accountants' profile be put up in the professional bodies' website. If not, just a skeleton one would do as found in the ACCA website.

Since Philip Turnbull is wanting to crusade for protecting the term 'accountant' - putting public interest first, I would like to suggest that we all get to read Philip Turnbull's opinion before deciding any further.

Philip Turnbull has a thread put up on protecting the term 'accountant' in the accountingweb and also his comments is found in accountancyage.

Over to Philip Turnbull.

By the way, I support Philip Turnbull's idea and accountants' references be found in the respective professional bodies' website.

Also, those deregistered ones due to malpractice and financial fiascos should be reported in all professional bodies' websites too. Also people claiming to be, say, ACA members, but are not as they are either never one ACA before or deregistered due to fraudulent practices, should also be published in the respective professional bodie's (ICA) website. This is to protect the general public by this transparency move of PUBLIC INTEREST and PUBLIC CONCERN so that no employers falls into hiring such frauds or rogue accountants claiming to belong to a professional body they don't qualify.


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By neileg
15th Apr 2008 13:59

Risk?
If giving these references is exposing a professional to excessive risk, then it's the professional that's getting it wrong.

Acting for any client involves risk, but it's the procedures you adopt, the information you provide and the conditions or caveats you place on that information that controls that risk. I don't see how a mortgage reference is in essense any different from a business plan, a set of accounts or a tax return in terms of risk assessment, and risk minimisation.

And yes, of course, it's not a service that is provided free of charge. If you use value pricing, you may consider that this is a component of the service level already being paid for, or if you are more time based in your charging, you'd need to render a fee.

It's all business.

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By NeilW
15th Apr 2008 12:02

Charge 'em
You have to start charging for using your experience, not for cranking the handle. Cranking the handle can be (and will be) done by well trained monkeys.

In this case you are being asked for an opinion. If you were a Barrister that would be a £5K bill!

NeilW

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DougScott
By Dougscott
14th Apr 2008 20:58

Charge!
Well James if I were you I would charge for the reference - that's what I do!

And who do you know who has been sued over a reference?

Lighten up Jimmy as we say in Scotland!

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By User deleted
14th Apr 2008 18:49

Agree totally with Andy!
Having earlier posted disagree completely with Andy on another thread, I now say he couldn't be anymore right!!

Come on James, lighten up fella

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By User deleted
14th Apr 2008 18:09

Is it about about having the right cover in place?
I don't think it's about having the right cover in place! Who in his right mind would want to be sued because he has enough PII in place? By the way James I do have right PII, being a member of a regulated association (ACCA) and we do have some really effective procedures here (having being awarded a quality control award) and you are invited James to check their adequacy (as you seem to be the expert on procedures). I am talking about working for nothing and being unfairly taken for granted and being hassled and being time wasted so that somebody else will have their nice commission. End of story.

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By User deleted
14th Apr 2008 17:01

It's the way it is
Hard ball it with client and broker- I gave up years ago being concerned about this. Tell it as it is - your info is based upon what you have and no more - make it clear - move on

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By User deleted
14th Apr 2008 16:15

I do agree but....
I've picked up clients this way aswell

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By User deleted
14th Apr 2008 16:11

Are you drunk Andy?
if you fail to see the problem with these references!

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By skylarking
14th Apr 2008 15:44

See your doctor, James
It sounds as if your blood pressure is really up.
State that the information you provide is made in good faith and with care from documents and information supplied by your client (unless you are the auditor) but that you will not liable for any loss suffered by anyone seeking to rely on it. Then open a bottle of red and sip a well-earned half-glass. Works every time.

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