New Client in dispute with old accountant

New Client in dispute with old accountant

Didn't find your answer?

Client has been paying on a monthly basis and recently old accountant has terminated the engagement with the client.  

The Client through the monthly fee has paid for statutory accounts and Corporation Tax Filing.  The Statutory Accounts have become overdue.  

The old accountant is refusing to file the accounts and Corporation Tax return - not sure why maybe there is a lot to sort out as the accounts are a mess.

What action can the client take to make their former accountant files the accounts which they have paid for.  The client is obviously worried as it is overdue and may take time to resolve.

I cannot take over until everything is sorted as the book-keeping seem in disarray too which the old accountant has been carrying out.

Replies (12)

Please login or register to join the discussion.

By Moonbeam
16th Sep 2014 13:56

Put it in writing to client

There is likely a good reason why client has been sacked by previous accountant. Whatever it is you will be the last to know the true facts at least until you start work. I bet he has informed the client of his reasons. Could it possibly involve money laundering/ failure to prepare correct VAT returns etc?

If I were you I would write to the client telling them you cannot intervene in his dealings with his previous accountant. (You don't know exactly what contract the client has signed and no-one will pay you for any time and effort wasted in this area.)

Make it clear what you can take over now -if anything - and the consequences for late filing of accounts. This sounds as if it could really eat into your time.

If you do decide to take on eg current year work like payroll or bookkeeping make sure you get paid monthly and up to date for all such work.

If it's going to be messy and murky is it really worth the hassle?

 

Thanks (0)
avatar
By sanjay100
16th Sep 2014 14:08

Reason for termination

Thanks Moonbeam for the excellent advice

I have seen the letter from the old accountant and the termination is due to lack of response/communication from the client.  The client has told me why they have not responded since the old accountants only done the book-keeping every six months and trying to remember everything was difficult for them 

Yes I will not intervene but just want to know what course of action is available to the client

It is messy and having just had a look at the book-keeping its going to take a while to sort out as there just seems quite a few errors.

Anyway, I have a call with the old accountants soon about transitioning so I am sure they will enlighten me.  

 

Thanks (0)
avatar
By Jekyll and Hyde
16th Sep 2014 16:13

You may need to reflect on this situation some more....

.... in that upon reading this my initial thoughts were how on earth can the accounts be filed unless they have been signed and approved by the client, without the previous accountant potentially preparing misleading accounts. How can the client sign and approve the accounts unless they know the answers to the queries raised by the accountant. 

This may well be a PITA client as it would appear the engagement doesn't fit with the clients needs and if the book keeping was prepared monthly I suspect the fee would not fit with the clients expectations.

With respect to book keeping produced by the old accountant, it seems from your response that this will never get sorted as the accountant asked questions to which the client could not answer.

 

Thanks (0)
Replying to tonyglasbey:
avatar
By sanjay100
16th Sep 2014 19:25

can't remember

Jekyll and Hyde wrote:

.... in that upon reading this my initial thoughts were how on earth can the accounts be filed unless they have been signed and approved by the client, without the previous accountant potentially preparing misleading accounts. How can the client sign and approve the accounts unless they know the answers to the queries raised by the accountant. 

This may well be a PITA client as it would appear the engagement doesn't fit with the clients needs and if the book keeping was prepared monthly I suspect the fee would not fit with the clients expectations.

With respect to book keeping produced by the old accountant, it seems from your response that this will never get sorted as the accountant asked questions to which the client could not answer.

 

I think it is difficult for clients trying to remember transactions six months ago.  It done on a timely basis then the client can answer.  Thats their argument

Yes the book-keeping has been taking them longer than expected hence partly the reason for termination.  They did not understand the client plus I think the old accountant had a enough on their plate hence the delays

Thanks (0)
avatar
By andy.partridge
16th Sep 2014 16:34

Doesn't sound good

What commitment is the client giving you that there won't be the same communication problems. What procedures are in place to ensure the same issues don't resurface with you?

As for the agreement with the old accountant - do you know for certain that the client has already paid for the accounts to be done? Does he think he has according to the letter of engagement or is he putting his own interpretation on things?

Apart advising the client to look out his LofE and quote it back to the former accountant if he still believes he is correct I would keep out of it.

Thanks (0)
Replying to Justin Bryant:
avatar
By sanjay100
16th Sep 2014 19:32

process

andy.partridge wrote:

What commitment is the client giving you that there won't be the same communication problems. What procedures are in place to ensure the same issues don't resurface with you?

As for the agreement with the old accountant - do you know for certain that the client has already paid for the accounts to be done? Does he think he has according to the letter of engagement or is he putting his own interpretation on things?

Apart advising the client to look out his LofE and quote it back to the former accountant if he still believes he is correct I would keep out of it.

I have told them that I will set up a process so that I will get the documents quickly and will expect replies to my queries quickly.  They are hiring more staff whom I will liaise with.  They seem decent enough people.  Whatever happened I think it was a communication breakdown on both parties.  The client has also been dealing with a rather junior person which has not helped matters.  It is a challenge and it is messy and do have spare capacity to take it on.  Its going to be really hard for the first few months but should settle down.  I have sorted out bigger messes before.

Thanks (0)
avatar
By Jekyll and Hyde
16th Sep 2014 16:35

BTW
I am not on the side of previous accountant as it would appear that they could have done more initially to highlight to client how the accounts are prepared and what the client needs to do to assist. It isn't good enough to just hand over invoices as items will need to be discussed.

For me this is a classic case of client and accountant bring at fault for the current situation as neither used foresight to prevent this from happening. seems the accountant was happy to take the money!

Thanks (0)
Replying to Tax Dragon:
avatar
By sanjay100
16th Sep 2014 19:37

no help

Jekyll and Hyde wrote:
I am not on the side of previous accountant as it would appear that they could have done more initially to highlight to client how the accounts are prepared and what the client needs to do to assist. It isn't good enough to just hand over invoices as items will need to be discussed. For me this is a classic case of client and accountant bring at fault for the current situation as neither used foresight to prevent this from happening. seems the accountant was happy to take the money!

client has received no advice or help whatsoever and rarely saw the accountant.  I know there are two sides to every story and only heard one side at the moment.

I will stay out but probably will cause delays as they fight out who is going to file the accounts which I understand they have already paid for. The client is already asking me what to do if they do not file the accounts.  If I file then it will be very expensive for them as the accounts do not make sense.

Thanks (0)
Replying to lionofludesch:
Avatar
By I'msorryIhaven'taclue
17th Sep 2014 04:37

Fatally Flawed?

sanjay100 wrote:

client has received no advice or help whatsoever and rarely saw the accountant.  I know there are two sides to every story and only heard one side at the moment.

I will stay out but probably will cause delays as they fight out who is going to file the accounts which I understand they have already paid for. The client is already asking me what to do if they do not file the accounts.  If I file then it will be very expensive for them as the accounts do not make sense.

You're being lined up to file the accounts, Sanjay. You may not realise it yet, but your new client has already decided to get you to "complete" the accounts. Which is why he is asking you "what to do if they [the old accountants] do not file the accounts". You're being sounded out.

For what it's worth, my advice would be to only agree to file the abandoned accounts if you prepare them from scratch, and are paid accordingly. That may lose you the client, as what he no doubt wants is someone to pick them up as they are, perhaps tweak them a bit, and then file obediently. There are two things wrong with that approach:

i. The old accountant may well have presented the client with a list of queries that the client is unable or unwilling to answer; perhaps something fundamental to the accounts such as the firm's financial procedures (or lack of them), a suspected overdrawn director's loan account, unexplained transactions, and so on. I'm sure you get the idea. Clients normally grind every last ounce of work from their accountants - why is your client giving up on his in spite of having already paid? Is it because that accountant is standing firm over some issue that renders the draft accounts fatally flawed?

Incidentally, that's also a reason not to get involved in any dispute between your client and his ex-accountants, who might well have fulfilled the obligations for which they were paid by preparing draft accounts - if the client has indeed elected to walk away rather than resolve any "delicate" matters essential to their completion then that's hardly their fault.

ii. Alernatively, maybe the ex-accountant is as bad as the client makes out: behind with the the bookkeeping, and lax over the accounts. In which event the draft accounts are likely to be fundamentally flawed.

     

Thanks (1)
Replying to lam_ac:
avatar
By sanjay100
17th Sep 2014 10:45

perceptive

I'msorryIhaven'taclue wrote:

sanjay100 wrote:

client has received no advice or help whatsoever and rarely saw the accountant.  I know there are two sides to every story and only heard one side at the moment.

I will stay out but probably will cause delays as they fight out who is going to file the accounts which I understand they have already paid for. The client is already asking me what to do if they do not file the accounts.  If I file then it will be very expensive for them as the accounts do not make sense.

You're being lined up to file the accounts, Sanjay. You may not realise it yet, but your new client has already decided to get you to "complete" the accounts. Which is why he is asking you "what to do if they [the old accountants] do not file the accounts". You're being sounded out.

For what it's worth, my advice would be to only agree to file the abandoned accounts if you prepare them from scratch, and are paid accordingly. That may lose you the client, as what he no doubt wants is someone to pick them up as they are, perhaps tweak them a bit, and then file obediently. There are two things wrong with that approach:

i. The old accountant may well have presented the client with a list of queries that the client is unable or unwilling to answer; perhaps something fundamental to the accounts such as the firm's financial procedures (or lack of them), a suspected overdrawn director's loan account, unexplained transactions, and so on. I'm sure you get the idea. Clients normally grind every last ounce of work from their accountants - why is your client giving up on his in spite of having already paid? Is it because that accountant is standing firm over some issue that renders the draft accounts fatally flawed?

Incidentally, that's also a reason not to get involved in any dispute between your client and his ex-accountants, who might well have fulfilled the obligations for which they were paid by preparing draft accounts - if the client has indeed elected to walk away rather than resolve any "delicate" matters essential to their completion then that's hardly their fault.

ii. Alernatively, maybe the ex-accountant is as bad as the client makes out: behind with the the bookkeeping, and lax over the accounts. In which event the draft accounts are likely to be fundamentally flawed.

Thanks for the advice

The Accounts are flawed in a number of ways debtors, creditors and other control account seem too high.  The Directors loan account which is in debit again that doesn't seem right either.  No draft accounts have been produced as yet.

Yes most likely I will have to file which isn't ideal as have to go into the deep end.  My client needs to have a meeting with the accountants but I too need to speak to the old accountants and maybe I will get a clearer picture.  

I have come across various conniving and dishonest people in my time but I truly believe this client is being upfront and honest what is happening.  They have not tried to hide anything from me.  I do trust them.  Its just a communication breakdown that has happened and both parties are responsible hence the issues in the accounts.  Some clients just seem clueless about accounting matters and just draft then suddenly find themselves in the pickle.  I can't just walk away from them - anyway someone else from the accounting fratenity will need to pick up the pieces

The only way to rectify is to get the end of year balances correct and make various adjustments. Then make sure robust procedures are in place.

Starting from scratch just will take far too long as the problem seems to stem over a period of two years.  

 

 

 

 

Thanks (0)
avatar
By Jekyll and Hyde
16th Sep 2014 20:16

how can accountants file corporate accounts..
...that have not been approved and signed by the director (on behalf of the board). It is not allowed. or are you saying client has already approved and signed statutory accounts?

Again I will repeat myself, how can the accountant finalise accounts if they have unanswered queries. those queries will need to be resolved.

For me it is quite simple. Get the queries resolved and agree final adjustments to the accounts.

Thanks (0)
avatar
By Ahmed Afraz
17th Sep 2014 10:25

 meet with old accountant;

 meet with old accountant; make sure that client is well aware of the meeting.

Thanks (0)