Signed accounts

Signed accounts

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It is necessary to obtain and maintained signed accounts where the final agreement of a specific set of accounts is unambiguously confirmed by an clear trail of email correspondence?

I am an ICAEW member and have been used to getting accounts signed from time immemorial but I am wondering how necessary it really is.

Many thanks

Replies (23)

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Stepurhan
By stepurhan
14th Feb 2014 15:25

How unambiguously?

You have an e-mail saying accounts are approved. How will you prove which set of accounts are approved? With tax returns you can include the unique filing code in the subject line to agree back to a specific version of the return. You can't do the same for company accounts.

It's all about covering yourself. Best practice is to get a signed copy of the accounts, because that proves the specific version that has been approved.

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Replying to Jack the Lad:
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By John B Price
14th Feb 2014 15:44

What I am is that if I send

What I am suggesting is that if I send an email, attaching a pdf of a set of accounts, and say "are these accounts approved my good fellow?" and I get a reply saying "they most certainly are, old chap" then it is beyond doubt which accounts are being referred to and I have the copy of email I sent should any dispute arise. I think I am fully covered in such a case.

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Chris M
By mr. mischief
14th Feb 2014 15:32

Simples

How hard can it be?

You send an e-mail attaching the accounts - clearly marked "Draft 14 Feb 14" for example if they  are being sent today.  The client replies "I approve" which you then file in a separate little e-mail tab called "approvals".

You then e-mail the accounts marked, for example "Final 15 Feb 14" which are exactly the same as the "Draft 14 Feb 14" except in respect of the dates and the word final.

These e-mails are sent encrypted with a password which is not sent by e-mail but which only your client would know, unless they wanted to pass a few pleasant days trying to break the encryption.

If anyone can pick a hole in this approach, please get your pick out!

 

 

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By johngroganjga
14th Feb 2014 15:37

I agree.  I always get a

I agree.  I always get a signature.  But I am happy with scanned or faxed copies of signed pages.

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By TerryD
14th Feb 2014 15:58

Call me old-fashioned, but I'm with John here. While the above procedure does sound pretty foolproof (but them I'm totally ignorant about the myriad ways in which electronic communications can be doctored), I always get a signed copy which the client signs at the same time as the CT600 and representation letter. OK, it would be easy to remove the signed pages from that set of accounts and insert them into a different set........

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Stepurhan
By stepurhan
14th Feb 2014 15:59

Proof of which reply
I attach an e-mail sending a set of accounts.Client replies that they would like a few changesI make a few changes and reply sending a new set of accounts.They reply saying these accounts are approved. Being a tidy sort who doesn't like needlessly long e-mails. They remove all the back and forth from the reply, leaving just their response.

If later contested, how do you prove which set of accounts they agreed to? Sure, you can show that two sets of accounts have been sent out, and that on balance of probabilities it must be the second set that was approved. That's balance of probabilities, not proof. The disputing client then says that there was a third set sent out and they were approving that one. The lack of additional e-mails your side proves nothing. They can assert you deleted them to cover yourself when you realised you'd filed the wrong set.

The majority of the time this is not going to be a problem. Clients approve the accounts. Nobody contests anything. Everything goes on happily.

But on that rare occasion when there is a dispute, there is nothing in that reply that absolutely links back to a specific set of accounts. Unlike using the unique filing code to prove agreement to a specific tax return, a client can contest a generic "I approve accounts" response as long as they like. The lack of a trail their end is likely to prove a problem (no doubt their computer with have an unfortunate accident to explain that) but it is still trouble you don't need.

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Replying to Tornado:
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By John B Price
14th Feb 2014 16:17

Proof of which reply

I think the key point in your example is that the client removes the earlier correspondence from their reply. I agree that in such a case, their email is inconclusive. 

However, very few of my clients do that so I would normally have clear proof of which email they were replying to.

 

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By BigBadWolf
14th Feb 2014 16:07

E signatures

We use Echosign from Adode - there are other alternatives there - the e-signature is appended to the set of accounts you have sent out - and a clear audit trail is maintained.

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Replying to Ruddles:
Should Be Working ... not playing with the car
By should_be_working
14th Feb 2014 17:06

E-signing

BigBadWolf wrote:

We use Echosign from Adode - there are other alternatives there - the e-signature is appended to the set of accounts you have sent out - and a clear audit trail is maintained.

 

That's what we use as well. Since we introduced it only one client has (without rancour) decided to carry on with paper signing. The rest are either content or have been impressed with the process. (it's been especially useful for the inevitable near-deadline cases).

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Stepurhan
By stepurhan
14th Feb 2014 16:40

Still not 100% clear

You are still left with having to ask again for clients that do what I have described. Also what if you send two sets of accounts on the same day and use the same subject (e.g. Draft accounts 28/1/2014).

I will admit that I am setting out unusual scenarios here. My point is that, without the acceptance e-mail referencing something that appears on the accounts themselves, it will never be 100% proof the approval relates to a specific document. Barring a claim of outright forgery, a physical signature is unequivocal proof.

At the end of the day it is your choice. The signature is simply so that you have evidence that the client approved a particular set of figures. If you are happy that an e-mail trail achieves that aim, despite my caveats, that is your choice to make. I am not aware of a physical signature for the accountant's copy being anything other than accepted good practice.

Companies House legally require an original signature on submitted accounts. This is only a problem when you don't have online filing available, which you presumably do.

EDIT: By contrast, the e-signature referenced by BigBadWolf agrees to a specific set of accounts.

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Replying to Tornado:
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By John B Price
14th Feb 2014 16:50

Still not 100% clear

Many thanks for your comments. I will give it some thought

The only comment I would add is that emails are timed as well as dated so a reply which kept the original text would which leave no doubt as to which email was being replied to.

 

 

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Replying to DJKL:
Stepurhan
By stepurhan
14th Feb 2014 17:04

Really extreme scenario

John B Price wrote:
The only comment I would add is that emails are timed as well as dated so a reply which kept the original text would which leave no doubt as to which email was being replied to.
Really obscure this one. Did you know that some e-mail packages allow you to edit received e-mails? I believe the intention is to allow annotation by the recipient, but the potential for abuse is obvious.

Such abuse is tracable of course (editing is flagged and the original version will be in the ISP archives of received/sent e-mails) but a time on a printed-out e-mail isn't even absolute proof of anything.

But if things have got so bad that this insanely obscure point is being raised, I suspect proving a particular set of accounts was approved is the least of your problems. :-D

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Replying to Euan MacLennan:
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By John B Price
14th Feb 2014 17:54

Extreme senario

As you acknowledge, within a nanosecond of an email being sent multiple copies are stored all over the place, so, in extremis, the original content and time of sending could be established beyond peradventure.

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Euan's picture
By Euan MacLennan
14th Feb 2014 16:51

IRIS

If you produce your accounts in IRIS, you can upload them to their OpenSpace facility on the web.  The client approves whatever text you choose to specify and you get back an electronically signed version of the accounts which have been approved.

I have a feeling that IRIS were offering OpenSpace free to non-IRIS users as well, but I might be wrong.

 

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Chris M
By mr. mischief
14th Feb 2014 22:12

Getting silly

Given that there have been quite a few cases which have centred on supposedly forged signatures on supposedly approved accounts, this thread seems to be getting a bit OTT to me.

There are not multiple versions of the same accounts going out of this place on the same day, just 1.  Every single set is encrypted, I could be wrong but I strongly suspect that the percentage of the UK population who can forge a signature exceeds the percentage who can tamper with encrypted e-mails by a substantial margin.

No system is foolproof.  Some are more foolproof than others.

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Stepurhan
By stepurhan
15th Feb 2014 09:58

Nothing is foolproof

They always build a better fool.

The varied views have been fun, but the essential answer is go what you are happy with. The only vital part is getting approval (as opposed to just filing whatever you feel like). As long as you do that, how you do it is up to you.

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By petersaxton
15th Feb 2014 10:16

Forgery

Anything can be forged: paper, emails, online authorisations.

Anything that has been forged can be proved to be forged.

You just have to be reasonable.

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Derek French
By derek44
19th Feb 2014 12:59

Court of Law

The ultimate test is whether whatever you do would stand-up in a court of law. Portal-type electronic systems with good non-editable audit trails (dated and timed) will stand-up better than a looser email. Signed paperwork remains the 'tried and tested' proof of a client's approval. I would think that IF you had cause to suspect a client might be trying to do something silly, then making sure you protect yourself with a real signature is sensible.

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Replying to nick farrow:
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By Carolynne
19th Feb 2014 13:12

Signed Hard Copies every time for me!

derek44 wrote:

The ultimate test is whether whatever you do would stand-up in a court of law. Portal-type electronic systems with good non-editable audit trails (dated and timed) will stand-up better than a looser email. Signed paperwork remains the 'tried and tested' proof of a client's approval. I would think that IF you had cause to suspect a client might be trying to do something silly, then making sure you protect yourself with a real signature is sensible.

 

This is my opinion also.  If your computer blows up, you may have a back up I know.  But having a hard copy is complete evidence.  In the scenario of a client under investigation (and it only needs 1 person in your whole working life), who owns up to some undeclared income lets say, who then denies they agreed that particular CT600 went in.  I know which one (between email and hard copy) that would stand up in court to PROTECT YOU from any criminal proceedings.  Besides, is it not a good way of keeping in touch, face to face, with your client.

I looked at one of these electronic signature packages,but being a smaller practice, the annual cost came to more than I spend on my accounting package per year.  It was just too expensive for me.  

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Replying to drakeltd:
Should Be Working ... not playing with the car
By should_be_working
19th Feb 2014 14:35

Expensive?

Carolynne wrote:

...

I looked at one of these electronic signature packages,but being a smaller practice, the annual cost came to more than I spend on my accounting package per year.  It was just too expensive for me.  

Echosign is free for up to 5 signed documents a month, or a little over £100 a year for unlimited signatures. An additional benefit is that fact that the data is in the cloud, so if your computer blows up or the office floods there is still a backup. No, I'm not an Adobe salesman, just a satisfied customer with satisfied clients.

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Replying to EnglishRose:
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By Carolynne
19th Feb 2014 18:29

That's very interesting information to hear, thanks for letting us all know about the costs of this which is much more affordable for the smaller user. 

I still like my safety blanket of a hard copy and seeing the client, to go through the figures with them face to face though. 

Although your own pc could go on fire, the cloud is a good second choice, as long as they don't have a fire or the company go bust at the same time as your own fire - all this I know is far fetched, but in this eventuality I would always have my nice hard copy in my fireproof cabinet.  Perhaps I am just too risk adverse.

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Replying to drakeltd:
By redman7
20th Feb 2014 06:29

re

Carolynne wrote:

derek44 wrote:

The ultimate test is whether whatever you do would stand-up in a court of law. Portal-type electronic systems with good non-editable audit trails (dated and timed) will stand-up better than a looser email. Signed paperwork remains the 'tried and tested' proof of a client's approval. I would think that IF you had cause to suspect a client might be trying to do something silly, then making sure you protect yourself with a real signature is sensible.

 

This is my opinion also.  If your computer blows up, you may have a back up I know.  But having a hard copy is complete evidence.  In the scenario of a client under investigation (and it only needs 1 person in your whole working life), who owns up to some undeclared income lets say, who then denies they agreed that particular CT600 went in.  I know which one (between email and hard copy) that would stand up in court to PROTECT YOU from any criminal proceedings.  Besides, is it not a good way of keeping in touch, face to face, with your client.

I looked at one of these electronic signature packages,but being a smaller practice, the annual cost came to more than I spend on my accounting package per year.  It was just too expensive for me.  

I can't think of running my practice without electronic approvals (I use Iris OpenSpace). The time saving makes it a no brainer. And it shows my clients I am on the ball with regards to technology, which is one of my USP's as I work with lots of young creative types.

With regards to backups - as with all my files, I have the pdf's with the approval signature on my server, backed up in dropbox, backed up on an external hard drive with change history, on my pc and on my laptop as well as online on OpenSpace. I hope I'm covered!

 

 

 

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By Cloudcounter
19th Feb 2014 23:13

Signed copies might prove nothing

Do you get the client to sign every page of the accounts?

I happens quite often that the balance sheet for a limited company spills over onto a second page, which contains only a paragraph or two of the Companies Act blurb and the signature.

Anybody could get an account signed and then alter figures in the first page of the balance sheet.  Anybody who signed the account could claim that wasn't the balance sheet that was signed.

And even if the signature is on the numbers page of the balance sheet, figures in the profit and loss could be altered.

"Proof" may not be what it seems or is claimed to be.

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