Accountants' Error

Accountants' Error

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Dear All

A small company based in London, started in 2010 with a boutique accountant to do the books. In 2011, the company expanded and had an offshore lender that required a full audit for the company. The company left the boutique accountant and went to a well known Accountancy firm due to their reputation.

The Accountants were hired to do the Audit and Monthly management accounts and failed in the following areas.

- Company's debtors balance was overestimated by a huge amount. This was picked up in the Audit conducted in 2013 (for 2012 accounts), but the director wasn't informed about this and this was left to sit on the books. This was then picked up in 2014 when a new bookkeeper took over and identified. (The previous bookkeeper wasn't an accountancy student so he couldn't identify these, he himself made big errors.)

- The accountants, in their management account, failed to provide for Withheld tax on interest to the offshore lender. This was an error on behalf of company's internal bookkeeper because he didn't know how to do CT61 returns and pay HMRC. It was left pending until the new bookkeeper arrived but the WHT wasn't provided for on the books for 2 years and amount was huge.

- The accountants failed to provide for Exchange loss when repaying the Eur Loan. The loss amounted to 20K. Instead of charging the loss to PnL, the liability was reduced. This was again charged right at the end of 2013 by the new bookkeeper.

As a result of the above, the company's profits were hugely overestimated and plunged right back down in the end of 2013 as they were charged by the new bookkeeper. The director had given out bonuses and took dividends during the year but the reserves position was negative after correcting these errors.

As mentioned, the accountants are a huge firm and charged huge fees during the year 2013. And when the new bookkeeper identified these flaws, the accountants were asked for explanations, for which they provided nonsense explanations and taking no blame. They then charged us £19000 plus VAT for answering our questions.

We have obviously left them and are disputing the invoices. Would someone be kind enough to give us a view if we can dispute and complain to ICAEW for their negligence.

Your help will be most appreciated.

Replies (15)

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By occca
20th Oct 2014 13:34

Speak to the ICAEW

Hi

If you have concerns you need to ask the accountants for the PI details and speak to the ICAEW

You will probably need to involve a lawyer

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By johngroganjga
20th Oct 2014 13:45

Other way round.

First question is whether you have suffered a financial loss you wish to recover.

If so consult a lawyer.

If you have suffered no loss but just want to complain about sub-standard work that's a matter for an ICAEW complaint - it's not a legal matter and nothing to do with the accountants' PI policy. You won't need a lawyer.

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By JCresswellTax
20th Oct 2014 14:08

One question

Whats a boutique accountant?

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Replying to ireallyshouldknowthisbut:
By JCresswellTax
20th Oct 2014 14:25

So I

[*** wrote:
]

JCresswellTax wrote:

Whats a boutique accountant?

Small accountancy practice, picked up this word from my boss, I hope it's a real word.

run a boutique accountancy practice? Well I never!...

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Replying to Matrix:
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By dumbass
20th Oct 2014 14:31

.

JCresswellTax wrote:

[***]]</p> <p>[quote=JCresswellTax wrote:

Whats a boutique accountant?

Small accountancy practice, picked up this word from my boss, I hope it's a real word.

run a boutique accountancy practice? Well I never!...

[/quote]

What's wrong with a Boutique Practice? Nice people, more time for issues, competent employees, fair fees? We regret going to the big firm more than anything.

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Replying to paul.benny:
Euan's picture
By Euan MacLennan
20th Oct 2014 15:40

Yes, but ...

[*** wrote:
]

What's wrong with a Boutique Practice? Nice people, more time for issues, competent employees, fair fees? We regret going to the big firm more than anything.

Presumably, your boutique accountants were not registered as statutory auditors, so you had to change to a firm of auditors - it is just that you picked the wrong firm.

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Replying to Mistres:
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By dumbass
20th Oct 2014 15:54

.

Euan MacLennan wrote:

[quote=[***]]

What's wrong with a Boutique Practice? Nice people, more time for issues, competent employees, fair fees? We regret going to the big firm more than anything.

Presumably, your boutique accountants were not registered as statutory auditors, so you had to change to a firm of auditors - it is just that you picked the wrong firm.

[/quote]

Agreed

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By ireallyshouldknowthisbut
20th Oct 2014 14:17

.

@Jcresswell, its a small firm that somehow gets away with charging "big 4" fees.  Strange concept but some firms seem to be able to make that business model stand up. Presumably for the sort of small business under the audit threshold who then appoint "well known firms" to do their audit. 

 

To the original poster:

The ICAEW wont get involved in fee disputes. But you can always not pay the bill and ask them to take you to court, they might be having a punt.  Bit of a risk of course given they sound pretty heavy weight. Ordinarily you would not expect to pay for accountants explaining their computations. It depends very much on your contract and how exactly they have spent £19k explaining a couple of figures to you.  Something doesn't stack up here.  But when you agree to pay crazy day rates it wont take long. 

 

 

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By petersaxton
20th Oct 2014 16:11

Small?

and there was me thinking I was a small one man band!

I didn't know you "estimated" debtors! I've always calculated them.

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Replying to Tim Vane:
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By dumbass
20th Oct 2014 16:22

.

petersaxton wrote:

and there was me thinking I was a small one man band!

I didn't know you "estimated" debtors! I've always calculated them.

That's exactly what they did. The new bookkeeper, calculated them to the exact penny, thats how he found out the extra bit.

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By coolmanwithbeard
20th Oct 2014 23:30

Hmmm


My wardrobe wouldn't pass muster if I called myself a boutique accountant. My choice of music may qualify me as a disco accountant... 

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By The Innkeeper
21st Oct 2014 05:04

@op
With respect there are two sides to every story and the truth. We only have your side of the story .

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By dumbass
21st Oct 2014 06:07

Assume
I wanted an opinion assuming my story was true.

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By User deleted
21st Oct 2014 07:18

There must be an engagement document that you signed with your old accountants. If you read through you will see that there is a complaint procedure already laid down. Just follow the procedure. Whilst It does look like a case of negligence, and therefore, you may have a reason to complain to ICAEW, the accountants may have their own reasons too. 

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By MissAccounting
21st Oct 2014 10:02

Sounds like an excuse to buy more shoes now I know Im officially a boutique accountants!  I also presume they must be tax deductable too! 

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