A former client of ours has emailed, a little concerned as to the advice they have been given by another local accountant.
This was a one Director company, girlfriend as employee.
New accountants advised them to create an alphabet share structure, B shares to girlfriend
No change made to Articles, no consideration of Employment securities and PA holdings case.
Entered on BS as 'Revaluation reserve- bonus share issue'
Not sure whether to help and reply to the email, or let them get on with it.
Thoughts please?
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Replies (13)
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I think you should steer clear, although it does depend partly on the circumstances in which you ceased to act.
I would respond by saying that “I might have advised differently but as I am no longer aware of your full circumstances I cannot comment further. If you have any concerns you should raise these with your current adviser.”
You don't act for them, someone else does. You should reply politely saying you are unable to comment and they need to address their queries to the current agent.
The director became involved in another business ( much larger than their current business) who had a different accountant. The other company director had three other businesses with the accountant and they wanted all the business with one accountant
Edited to add- the other accountancy firm are much larger than us, but also unregulated.
@Murphy1 re: your edit - that offers a golden opportunity not only to get you off the hook but also, by way of a bonus, score a zillion points. Could you perhaps add to what Wilson suggested by constructing an appendage along the lines of:
Such arrangements are not normally encouraged or promoted by [insert name of your own professional body], and it might help facilitate evaluation of this proposal if you are able to ascertain just which professional accountancy or taxation body the proposing firm belong to.
Bullseye!!
As others have said politely decline to comment. You can't respond because you no longer act for this client. You are not aware of their current circumstances and you've no idea what discussions the new accountants have had with your ex client. You don't want to get dragged into a protracted argument with the new accountants.
Maybe if former client had contacted you with the idea before it happened, a discussion was possible.
But it has happened
Nothing good will come from any discussion with former client.
You did not hear the conversations that took place.
@ murphy1 (OP)
(1) If I correctly interpret your initial question, the shares have already been issued (for which the former client will have signed off the relevant paperwork) and the Financial Statements finalised (and thus signed off by the client also). That timing aspect is key inasmuch as clearly the former client has received some form of advice SUBSEQUENTLY, from a source unknown to you, to cast doubt upon all those actions. On those grounds alone, and since the client has not enlightened you as to the source(s) of that subsequent advice, I would personally steer well clear.
(2) If, as I assume, you are a member of a reputable governing body, you will be aware that it would be in BREACH of ethical regulations to render professional services (which would include commenting substantively on the former client’s email) without first fully completing the necessary formalities in being engaged to act (again) for the former client.
I would respond on the lines of:-
“In thanking you for your email of xx/xx/xxxx, I regret that, as I no longer act as your accountant, I am precluded (as a member of xxxxxxx) from commenting substantively upon the concerns outlined in your email. It is not readily clear from your email whether you have expressed those concerns to your current accountants: if not, I would recommend your doing so.
Kind regards.”
Basil.
Thanks all.
Just to add, though of no significance to my original question, the said firm are technically insolvent, and have two previous companies that they traded through, now dissolved.
Accounts due this year are late!!
Key words here : FORMER WAS
And as you are absolutely clueless as to what was FULLY advised by New Accountant why create a rod for your own back ?
As per the above post, you don't know the full advice given. You don't act for this client anymore so no need to be wasting any time.
And answers advising point scoring about belonging to a professional body are very petty.