New client acceptance and professional clearance

New client acceptance and professional clearance

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Hi again folks,

I have had a quote accepted by our now new client for annual compliance work. There is an issue regarding the previous accountant. The client is a limited company and they have not had the March 2014 accounts finalised as yet. The previous agent has filed accounts with CH and HMRC without reviewing with the client (apparently to prevent the late filing penalties) but the accounts were not yet agreed and signed off.

I have had this experience before with this particular agent. I get the feeling they are either swamped with work they cannot handle or that the partner is nearing retirement and has lost interest in ethical issues. They seem to simply prepare draft accounts, file with CH and HMRC pre-deadline, then finalise the figures and refile again!

Without going into the ethical issues, I want to get started on my clients work for 31/03/15 year by getting the records and starting the analysis. The client has not yet informed them that they are leaving and are right in thinking they should get their accounts finished now (which they have paid for in full) before I send a professional clearance.

Are there any issues with starting some "bookkeeping" work now in advance of professional clearance being requested? Am I being too creative with the word "bookkeeping"? I don't think I am given that we cannot actually produce final accounts until opening balances are established. I propose doing a bank rec using the opening statement figure for now.

All advice greatly appreciated folks.

Replies (4)

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By Phil Rees
13th Apr 2015 15:11

There is no such thing as professional clearance

The process is merely a courtesy coupled with a request for information and copies of documents etc.

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David Winch
By David Winch
13th Apr 2015 15:31

The issue for you is that from your post it is fairly clear that you suspect (with good reason) that the other firm of accountants are dishonestly filing accounts with Companies House & HMRC which purport to be final accounts approved by the directors but are not.

The purposes for doing that are (a) to avoid late filing penalties being charged to the clients and (b) to avoid losing the clients & the fees from them.

I would view that as being a criminal offence.  Arguably it falls foul of both s2 Fraud Act 2006 (as fraud by false representation) and s17 Theft Act 1968 (false accounting).

Since you say you have come across this firm acting in that way before there are, at least arguably, grounds to suspect that the other accountants have benefited from their criminal conduct & are therefore engaged in 'money laundering'.

That in turn would leave you obligated to report the other firm of accountants to the NCA by submitting a Suspicious Activity Report under MLR 2007 / s330 PoCA 2002.

Food for thought!

David

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Kieran Phelan
By KPEM online
13th Apr 2015 15:34

Thanks........

Thank you Phil, I suspected that was the case anyway so I will arrange to get started on their bookkeeping work for now.

Thank you too David as always - food for thought indeed!

As a matter of interest, if NCA followed up on this at all, what would be the position/exposure of my new client? I would suspect no exposure given that they did not authorise these filings in any case.

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Replying to Wanderer:
David Winch
By David Winch
13th Apr 2015 15:41

Clients' exposure (not)

KPEM online wrote:

As a matter of interest, if NCA followed up on this at all, what would be the position/exposure of my new client? I would suspect no exposure given that they did not authorise these filings in any case.

I agree.  I cannot see any criminality on the part of the clients & I cannot see HMRC wanting to take any action against them in the circumstances.

David

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