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Copy of engagement letters and bills

Request as a client to accountant for copy engagement letter and papers

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Hi everyone

member in practice and also a director of another property management company for office block where we reside 

Former property agents for the management company were appointed by the developers.  Developers went bust in 2017 (sure you can guess who!) and all freeholders became members and a board appointed.

Former agents engaged a firm of accountants to prepare accounts.     Agents were fired in 2018 for being crap.  
 

Agents and accountants both refused to hand over backups of accounts software.  Professional clearance handover was also limited 

So my question - 

I've requested from the accountants a copy of their engagement letter and last 5 years bills.  This is in my capacity as a director.   They are refusing to supply as arguing that the agents were their client and not the management company.  All bills however were addressed to the management company.

Firm is ACCA regulated.

Are they obliged to provide these?

 

Replies (10)

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RLI
By lionofludesch
17th Nov 2021 15:07

I vote yes.

1. How can agents be the client ? They're agents !

2. The basic accounting records belong to the company. They are not the accountants' working papers.

Ask the accountants to check with their professional body. Tell them if not, you will.

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By Paul Crowley
17th Nov 2021 15:21

Agree
Records belong to the company

Agents a member of ARMA?
https://arma.org.uk/

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paddle steamer
By DJKL
17th Nov 2021 15:27

I think they need a refresher in agency law if they think they owe no legal duty to the Principals. I am here presuming that the management company legally existed during the period with the developer holding a right to run it and it did not just come into existence subsequently.

I am being cautious as up here it is not uncommon for developers to hold control for a period post development re the appointment of a management agent but we tend not to have management companies, instead common areas management tends to be via a Deed of Condition and rights via the Deed tend to require to be passed to a managing agent, so the D of C is itself in place prior to the first say flat sale, the purchaser being bound by its terms.

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RLI
By lionofludesch
17th Nov 2021 15:36

In a wider context, I can see this being an increasingly common problem.

► Client asks accountants to maintain records.

► Accountants claim records are their working papers.

► Client ends up with no accounting records.

Depressing, really.

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Replying to lionofludesch:
paddle steamer
By DJKL
17th Nov 2021 15:52

Very- and such a pain.

The Accountants in this case , presumably witholding books to somehow cover their own arses ,seem daft, especially as there is actually no suggestion in the initial post that the accountants needed sacked, but if they carry on as they appear to be carrying on they no doubt, like the managing agents, will get the heave.

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Replying to DJKL:
RLI
By lionofludesch
17th Nov 2021 16:04

DJKL wrote:

Very- and such a pain.

The Accountants in this case , presumably witholding books to somehow cover their own arses ,seem daft, especially as there is actually no suggestion in the initial post that the accountants needed sacked, but if they carry on as they appear to be carrying on they no doubt, like the managing agents, will get the heave.

Aye, but, in the days where paper books were written up with biros, nobody thought about claiming the books were the accountant's working papers.

Why should software be different ?

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paddle steamer
By DJKL
17th Nov 2021 16:50

Biros are a tad modern.

My Dad's office in the early 80s still had , in one of the attic rooms, one high slope top desk with a bottom lip across it to stop the ledger sliding down and with an inkwell top right.

I do take your point though, to me the books are the client's property.

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Replying to DJKL:
RLI
By lionofludesch
17th Nov 2021 18:29

DJKL wrote:

Biros are a tad modern.

My Dad's office in the early 80s still had , in one of the attic rooms, one high slope top desk with a bottom lip across it to stop the ledger sliding down and with an inkwell top right.

Quill pen ?

Those sloping desks were great. Much better for your back. Don't know why they went out of fashion.

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By Paul Crowley
17th Nov 2021 16:52

Having dealt with this kind of stuff before, what you experience now is in fact normal, par for the course.
Managing agents are never cooperative and will be unwilling to pass anything over.
It is not the accountants holding onto records, it will be the agent.
I have never yet come across managing agents using accountants to prepare records. It is much more often the other way around, agent preparing the accounts for accountant to rubber stamp.
Agents will pretend that they are regulated and can only pass information onto another regulated management agent and that their regulatory body agrees.

The issue is, was there a genuine bank account in the name of the company (as in not a designated agent" client" account?
If so just get the bank statements from the bank

Accountants
Do not make their life difficult as there probably was no seperate engagement letter
Why asking for the bills going that far back?
Would it be because the accounts show large fees
Agent probably inflated them as extra fees for preparing the records or indeed the accounts given to the accountants
As you have no good records it would be pointless challenging the past fees. Those fees were paid by the agent and agreed and authorised by the director signing the accounts

Why would you want all that stuff if it was not to cause trouble and challenge
That is what the accountants are thinking

Do not think my firm has ever been asked for a copy of an engagement letter and a list of past invoices that long EVER

Engagement letters are good practice but not compulsory
Avoid the perception of a witch hunt and they will probably be more helpful

The dates make no sence
Agents sacked 2018 but accountants continued. Very rare
Agents usually have a preferred accountant that does all their stuff

Are you requesting details for the five year up to 2018?
Why is it essential now? Why did directors wait that long?

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By Paul Crowley
18th Nov 2021 10:49

Reread this This morning

A Back up probably not useful and accountant probably does not hold one
Reason is the Property management agents tend to use industry specific or bespoke software.
One I acted for used Access
Not yet seen one using Sage, Xero or QB. Only seen one ever using ordinary spreadsheet system, But a bespoke system all interlocking
I would keep my working papers, TB and the IRIS stuff
All papers returned to agent

When clients moved agents, I very rarely got any continuity request from next accountants.
When appointed as new accountant, I rarely got answers from old accountants and just accepted over time that being ignored was normal.
I assume that the accountants were sacked when the agents were sacked

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