Auditor’s Valentine plans uncovered

AccountingWEB.co.uk has uncovered a remarkable document that reveals one auditor's meticulous approach to the risks and rewards of Valentine's Day.

The Valentine's Day Planning Checklist leaked to the site takes a structured approach to romatic communications and gift-giving at this time of year. “Success in any endeavour – whether financial, professional or romantic – depends on good planning,” it advises. For clarity of planning, the objects of affection are referred to as “clients”.

The process starts by identifying a target subject: “This may be a given with well established clients, but requires careful management and “Chinese Walls” precautions in multi-client engagements,” the planner notes.

The usual Know Your Client paperwork and ID/residence checks are recommended for new prospects - and first-hand confirmation rather than photocopied documentary evidence are advised.

Next comes an an analytic review 10 days ahead of "V-Day" to classify the relationship according to a number of characteristics, which feed through to an overall risk assessment of the relationship. The critieria covered include:

• Long term/short term Sustainability and going concern tests apply here.
• Matrimonial/casual Failure to differentiate the client’s objectives on this score could result in short-term frustration with the latter category; an inappropriate approach in the case of the former carries the risk of costly litigation.
• Emotional/physical “Tone” is an important consideration here. Failure to strike the right balance on this scale could jeopardise your relationship with the client.
• High maintenance/low maintenance The key component in your cost calculations. The liabilities associated with high maintenance relationships need to be offset against the expected returns over the full client relationship lifecycle.
• Pro-active/reactive Are you seeking to effect or enhance your relationship with the prospect or client? Or is the engagement more of a defensive manoeuvre to minimise disciplinary action or unwanted attention? In each of these cases, appropriate levels of confidentiality and anonymity will need to be applied.
• Male/Female Equal Opportunities regulations may restrict action on this front, but for operational purposes, it may help to consider “hard” assets such as technology, bottled products and sporting goods for the former and “soft” offerings (floral tributes, stuffed toys, or travel and entertainment-based incentives) for the latter.

The risk assessment proces is designed to grade the clients according to the risk profiless associated with each of these factors. Actions and controls should be put in place to mitigate any factors that manifest themselves during the planning process and the scale of Valentine’s offerings should be adjusted accordingly. As an indicative guide, the planner suggests the following approaches for the four main client grades:

A Grade (Low risk/high reward with low maintenance requirements) - The ideal client for accountants seeking a satisfying, high margin relationship. Floral tributes, dinner & a movie or spontaneous gifts/surprises from your tailored client schedule are appropriate here.

B Grade (High risk/high reward with high maintenance requirements) - A transfer of high-value asset categories (jewellery, vehicles, property) could generate impressive returns, but retain receipts and ownership documentation should your plans go awry, particularly if alcohol features in your plan.

C Grade (Low risk/low reward with low maintenance requirements) - As with all client grades, procurement (V-Day minus 3) and postal dispatch (V-Day minus 1) of a Valentine’s card is advised. Flowers, chocolates and gifts related to client hobbies and interests are suitable; assess current market rates for appropriate investment levels (eg M&S £20 Valentine's dinner deal).

D Grade (High risk/low reward with high maintenance requirements) - Consider recycling unwanted Christmas gifts.  However, a high risk/high maintenance client at the extreme end of the reactive profile may necessitate changes of mobile phone number, address or identity, which would require extra time and resources.

Completion procedures
Carry out a comparison of budgeted to actual results and review unanticipated errors. As part of the final assessment, consider whether to seek re-appointment next year, and amend working papers accordingly.

NB All of the action points and analytical processes in this Valentine’s Day planner are predicated on a suitable Letter of Engagement being in place.

To read the full text of the secret auditor’s Valentine’s Day Planning Checklist, visit our Accountants humour and fun group. Has the checklist covered every base, or do you have evidence to support or contradict its processes and recommendations? Feel free to add your Valentine’s Day ideas, case studies and action points!