accountant dispute withholding information

accountant dispute withholding information

Didn't find your answer?

A company I am helping out in a voluntary capacity has the following predicament.

The company has a dispute over the fees/service with the accountants who prepared the last annual accounts. This is ongoing and does not look like it will be resolved in the very near future.

The last accounts have been audited by an independent auditor who has been paid in full for the work.

The company's Sage accounts software has not been updated with the correct opening balances for the current year.The 2014 accounts must be prepared, audited and filed with Companies House by the end of March 2015 to avoid a late filing penalty. To work out the balances manually will be extremely difficult as there were many post TB adjustments.

Understandably so, the now previous accountants have refused to provide the opening balance information.to the new accountants.

Is it however unreasonable to ask the independent auditor (who has been paid in full) to provide this information. To date they have refused to provide an opening trial balance and simply refers the client to the previous accountants.

The company is considering reporting the auditors to their professional body but I am not sure if his will achieve anything.

Any comments would be appreciated.

  

Replies (12)

Please login or register to join the discussion.

Euan's picture
By Euan MacLennan
11th Feb 2015 14:26

Shouldn't be too difficult

brash wrote:

To work out the balances manually will be extremely difficult as there were many post TB adjustments.

The number of adjustments is irrelevant.  All the new accountants need to do is to compare this year's opening balances in Sage with last year's statutory balance sheet and notes and process the journals required to adjust the opening balances in Sage for the balance sheet accounts, with the difference being posted to P&L reserves brought forward.  I appreciate that the statutory accounts show amounts to the nearest £, but discrepancies of a few pence are not going to affect the true and fair view.

Or the company could swallow its pride and pay the previous accountants in order to get the opening TB accurate to the last penny.

Thanks (1)
avatar
By TerryD
11th Feb 2015 15:30

Why is it unreasonable to ask the auditor? To comply with auditing/ethical standards, they must have provided the directors with a schedule of all adjustments that they made to the accounts that were presented to them.

Thanks (0)
Replying to Wanderer:
Stepurhan
By stepurhan
11th Feb 2015 16:44

Auditors don't make adjustments

TerryD wrote:
Why is it unreasonable to ask the auditor? To comply with auditing/ethical standards, they must have provided the directors with a schedule of all adjustments that they made to the accounts that were presented to them.
Auditors do not make adjustments. Auditors notify the errors they have found as a result of the audit. It is up to the directors to make any adjustments from these notified errors. If they do not, and the adjustments are not material, then the audit opinion is unaffected. 

But even if the auditor did provide a list of adjustments, that almost certainly would not be the whole story anyway. The accountants are likely to have made adjustments in preparing the accounts, so the accounts presented to the auditors would not match the Sage records either. The auditors may not have actually had to test the adjustment itself. For example, prepayments are calculated, and an adjustment is made for the movement from the previous year end. The auditors would check the prepayments themselves, not the movement.

It is therefore likely that the auditors would have to compile a schedule of adjustments in the same way as the client. Not unreasonable to refuse to do extra work unpaid really.

Thanks (0)
Hitch photo
By Kevin Kavanagh
11th Feb 2015 15:52

Why it's unreasonable to ask the auditor

The job of the auditor is to express an opinion on the accounts presented to them. I assume in this case the company required an audit, but the accountants were not registered auditors so completed the accounts and then 'farmed them out' to a registered auditor. Such auditor would have duly reported (presumably in this case giving an unqualified report?). Any necessary journal entries would be within the work of the accountants.

But as Euan rightly comments, any suitably able accountant should be able to amend the opening balances in a very short time - and you have got until the end of March!

 

 

Thanks (0)
avatar
By TerryD
11th Feb 2015 16:31

OK, but I don't see why the auditor should be so unco-operative. They must have the trial balance with which they were presented on their file, so why not release it? Rather than report the auditor to their professional body, you could always appoint a new auditor, and the old one would have to allow the old one access to their files.

However, as Euan says, you can easily recreate the opening TB - but if the differences are large, you might want to know why!

Thanks (0)
avatar
By lechiffre
11th Feb 2015 16:39

Disputed fees

In my experience the professional bodies say that the accountant should rely on the legal system to collect fees/resolve disputes and not prejudice the client's affairs by not releasing information... it is only a question of copying and posting a few journal sheets surely?

If the dispute is reasonable in your view... get tough with the accountants. If not, the client should pay up and get the info.

Personally I cannot see why the auditor should not release a TB and copies of lead schedules for a contribution to costs.

Thanks (0)
By petersaxton
11th Feb 2015 16:42

Don't understand

I don't understand why the auditor doesn't give you sufficient information either.

Thanks (0)
Glenn Martin
By Glenn Martin
11th Feb 2015 16:56

Its a business choice.

They have to weigh up whether paying a fee to the accountant to get the info is going to be better than incurring fines then still having to pay the accountant. The likelihood is that if it goes to court the accountant will be due some money so you are likely to come away owing him nothing, even if you do you will be stuck with your own time costs. If you cannot cobble together the opening position. Pick up the phone to the old accountant, agree a fee that if you turn up with the payment they will give you the information in exchange for the info then both get on with your own lives. Remember there is always 2 sides to every story. Clients coming to you in dispute with previous agent don't always tell you the truth.

Thanks (0)
avatar
By User deleted
11th Feb 2015 19:25

Thanks for all the comments.

The dispute is for over £4k of fees which it is unlikely to be paid at the moment. The accountants have refused to pass over the information to the company so we are in a stalemate position.

The final accounts have creditors of over £200k and it is not possible to work out what most of these accurately refer to from the statutory figures to bring forward in the current year.

It is looking very much like an educated guess will be required for the opening balances but how will the new auditors feel about this ? 

 

 

 

 

 

Thanks (0)
Replying to Wilson Philips:
Stepurhan
By stepurhan
12th Feb 2015 08:54

Most?

brash wrote:
The final accounts have creditors of over £200k and it is not possible to work out what most of these accurately refer to from the statutory figures to bring forward in the current year.
Sorry, are you saying that there is £200k of creditors in the accounts and you have virtually no creditors in the Sage records? Because that seems a little unlikely to me.

The full statutory accounts will have some breakdown of the creditors, so it won't just be a case of a £200k figure you have no idea about anyway. In reality, you should be able to narrow down the differences fairly well. Some adjustments, such as the accountant's calculation for corporation tax, you should be able to pin down accurately. I would expect you to be able to get reasonably close on most figures.

I'm not saying that just having the adjustments would not make your life easier. But your protests are starting to sound a lot more like you don't even want to try.

Thanks (0)
Replying to Wilson Philips:
avatar
By lechiffre
12th Feb 2015 08:59

Get tough with the accountants

brash wrote:

The dispute is for over £4k of fees which it is unlikely to be paid at the moment. The accountants have refused to pass over the information to the company so we are in a stalemate position.

I would be giving them 14 days notice that unless the journals and TB are received by then you will be reporting them to the ICAEW or whoever their body is.

They should hand over the information and rely on pursuing the debt through the courts if they believe it is a valid claim.

Thanks (0)
avatar
By TerryD
12th Feb 2015 15:58

Auditors don't make adjustments

Stepurhan is quite correct, of course. To avoid getting too technical, I was using the term "audit adjustments" in its layman sense of meaning the list of misstatements that the auditor identified and was bound by auditing standards to communicate to the appropriate level of management in order that said misstatements could be corrected. Commonly, this list includes the corporation tax provision and various errors discovered which will already have been discussed with management and their verbal agreement obtained for the auditor to alter the accounts accordingly. This list will need to be formally approved and so is presented to management, often under the heading "audit adjustments", and often along with the list of uncorrected misstatements.

I agree that in this case the intervention of the firm of accountants might well mean that there were no "audit adjustments". Nevertheless, the auditor must have in his file a copy of the trial balance that was presented to him to audit, and I still don't see that the retrieval and passing on of that document would require more than five minutes chargeable time.

Thanks (0)