Share this content

Problem with a client. What would you do?

Problem with a client. What would you do?

Didn't find your answer?

Dear all, I would very much appreciate your opinion. Client, a small property investment company, habitually gets suppliers to charge personal properties repairs to the company and I have evidence to prove it. In this case the amount involved is £31k which represents 1.7% of total assets and 7% of total net assets.When pointed out whilst preparing accouns that such expenditure would be treated as personal he became very abusive as a result of which I resigned. However accounts are done and I have a dilemma. Should I not finanlise the accounts, give him draft acs because of the disagreement and let the new accountant deal with it? Or should I just leave the disputed amount in debtors, finanlise the accounts file them and give a good explanation to the new accountant as to the nature of the disputed amount in debtors? I would like to hear your opinion. Thank you.

 

Replies (33)

Please login or register to join the discussion.

avatar
By Wanderer
03rd Dec 2020 14:43

You've resigned, do no more, consider a SAR if appropriate. Inform new accountant of reason for change after getting (ex) client's permission to pass on information. Do not inform new accountant if you file a SAR.

Thanks (3)
Replying to Wanderer:
avatar
By MGD
03rd Dec 2020 14:55

Thank you for your response. The work was already done when i resigned, apart from the disputed amount. I won't pass any information until I am contacted by the new accountant. In fact I won't release any information at all until my fees for the work done have been paid.

Thanks (0)
avatar
By graemeban123
03rd Dec 2020 14:45

You have stated you have already resigned.

Why would you consider doing anymore work for the client?

I would write off your time spent on preparing the accounts to date and put it down to experience.

From what you have said the client would not be happy if you try to adjust the accounts in anyway to show the true position and would no doubt not be willing to sign them off. So you wouldn't be able to file them as they have not been approved and very liking not get paid for the work.

Just be happy you have got rid of them and walk away.

Thanks (0)
Replying to graemeban123:
avatar
By MGD
03rd Dec 2020 14:58

Thank you for your response. This was my dilemma. I wasn't going to sign accounts knowing they don't present a true & fair view. I can assure you I won't be writing off any of my time. Until my fees are paid in full, no information will be released to the new accountant. And the new accountant will know why I resigned.

Thanks (1)
Replying to MGD:
avatar
By thomas34
03rd Dec 2020 16:05

Spot on, that's exactly how I'd act but you may find that your regulatory body (if relevant) will be on the side of the ex-client and insist upon you releasing information to the new agent. This would mean you spending possibly more unpaid time if the ex-client won't pay his bill.

Thanks (1)
Replying to thomas34:
avatar
By MGD
08th Dec 2020 12:19

Spoke to the ICAEW and it is a matter for the law and not the Institute.

Thanks (0)
Giraffe
By Luke
03rd Dec 2020 14:48

Yes I agree with the previous posters. It is galling to have to write off your time so far, but that is what I would do too. It is the least stress option in the long term.

Thanks (2)
Replying to Luke:
avatar
By MGD
03rd Dec 2020 15:03

Thank you for your response.

Thanks (0)
avatar
By OldParkAcct
03rd Dec 2020 14:48

You have resigned, so you should not be doing anymore work. You cannot just choose to finalise accounts and file them without the directors approval.
Just send the handover information when the new accountant is appointed. Hopefully you have been paid in advance.

Thanks (0)
Replying to OldParkAcct:
avatar
By MGD
03rd Dec 2020 15:01

Thank you for your response. I am aware that I can't file accounts without the director's approval. I would have explained how I treated the disputed amount if I decided to finalise the accounts but I didn't want to do that hence my dilemma. Thanks for your help.

Thanks (0)
Avatar
By I'msorryIhaven'taclue
03rd Dec 2020 15:00

Besides CT & personal expenditure issues, is there a VAT issue as well?

Thanks (0)
Replying to I'msorryIhaven'taclue:
avatar
By MGD
03rd Dec 2020 15:03

No vat. Property investment co dealing with residential properties not registered for vat. Thank you

Thanks (0)
Replying to MGD:
Avatar
By I'msorryIhaven'taclue
03rd Dec 2020 15:21

You're welcome :)

Thanks (0)
avatar
By frankfx
03rd Dec 2020 15:19

What will you say in your disengagement letter?

Do you have doubts on the veracity of prior year accounts?

Could the abusive client argue that you were aware should have been aware that similar transactions populated prior accounts?

Does the £31000 hit the PAYE fan?
Perhaps od. DLA. P11D

A domino effect ensues.

Have a word with your professional body , if only to cover yourself .

Thanks (0)
Replying to frankfx:
avatar
By MGD
03rd Dec 2020 15:38

Thank you for your response. It all started this year. We were keeping a very close eye. No s455 because there is enough in the director's loan account to offset the personal expenditure against.

Thanks (0)
Replying to MGD:
By tonyaustin
08th Dec 2020 10:17

If the client is owed money by the company, how do you know he did not have the work charged to the company as a way of repaying his loan? Has he asked for the expenses to be deducted from rental income? Did he disguise the expenditure in any way?

Thanks (0)
avatar
By Paul Crowley
03rd Dec 2020 18:24

Do not finalise
Take the dubious figure to director's loan, before sending out any draft accounts to new agent. Mark them draft
Explain to new agent your reasons
Let new agent have the discussion and take responsibility

Thanks (1)
Replying to Paul Crowley:
avatar
By MGD
07th Dec 2020 10:24

That's exactly what I have done. Thank you very much for your response.

Thanks (0)
Replying to MGD:
avatar
By Paul Crowley
07th Dec 2020 18:56

Pleasure

Thanks (0)
ALISK
By atleastisoundknowledgable...
04th Dec 2020 07:45

WRT the handover info, I’d move the disputed costs to DLA before passing over.

Thanks (0)
Replying to atleastisoundknowledgable...:
avatar
By MGD
07th Dec 2020 10:26

Exactly what I have done. Thank you for your response.

Thanks (0)
Replying to RoughCollie:
avatar
By MGD
07th Dec 2020 10:37

Thank you very much for your comments. They will ask why and I won't lie to them. They will know the truth.

Thanks (0)
avatar
By mumpin
04th Dec 2020 11:45

You talk about T&F. Is it an audit job? If so, why?
If not, what are you signing and for whom?
I make assets only £1.8m on what you've written.

Thanks (0)
Replying to mumpin:
avatar
By Wanderer
04th Dec 2020 12:11

Fairly sure accounts have to show a T&F view whether or not audited (yes I know about FRS105!) and a professional accountant can't be involved in the preparation of accounts that they KNOW don't show a T&F view.

Thanks (0)
Replying to Wanderer:
avatar
By MGD
07th Dec 2020 10:27

Absolutely! Thank you for your response.

Thanks (0)
Replying to mumpin:
avatar
By MGD
07th Dec 2020 10:35

Not an audit but an accountant can't sign any set of accounts, audited or not, in full knowledge there is fraud involved. Besides we have to prepare tax comps for HMRC based on these accounts. It doesn't matter if accounts are audited or not & whatever the size of the company.

Thanks (0)
Replying to MGD:
avatar
By mumpin
07th Dec 2020 16:22

I very rarely sign any accounts.
What I do is prepare accounts based on information and explanations supplied to me by my client.
Then the client demonstrates her approval by signing them.
Maybe I've misunderstood, but it sounds as though the client pays your bill but you're on the HMRC team.
Don't you have a clear conflict of interests?

Thanks (0)
Replying to mumpin:
avatar
By MGD
08th Dec 2020 12:04

I believe you totally misunderstood the point. Accounts are never signed by us unless discussed at a meeting, approved signed and dated by the client. In this case we have evidence that the company's funds were used to renovate personal properties and the client is not approving the accounts unless we agree to and ignore his fraud. How have you come to the conclusion that we work for HMRC? Very sorry but our work is not dictated by clients.

Thanks (0)
Replying to mumpin:
avatar
By meadowsaw227
08th Dec 2020 12:28

Interesting stance to take.
I hope HMRC are not reading this !

Thanks (0)
By paddy55
08th Dec 2020 12:09

The client wanted you to prepare false accounts. The client was abusive. These two combined would furnish sufficient reason for you to terminate the association. You were willing to continue the association and complete the work if the client remedied the above problems. You are entitled to be paid at least for the work done to date and possibly for the whole job as its non-completion was not your fault. Raise an invoice and send it to the client. Consider suing in the Small Claims Court if your invoice is not paid. The client is unlikely to defend the action as he would not want his crooked dealings exposed to the world.

Thanks (2)
Replying to paddy55:
avatar
By MGD
08th Dec 2020 12:25

Thank you ever so much for your advice. Most appreciated.

Thanks (0)
avatar
By Red Volvo
08th Dec 2020 17:59

Do all accountants have clients attempting fraud?

I have never responded before, how do I conceal my identity if I do.

J13

Thanks (0)
Replying to Red Volvo:
avatar
By Paul Crowley
08th Dec 2020 18:41

Unless Red Volvo is your real name, you have concealed your identity
All replies are attributed
Anon is only for Ops to ask a sensitive question
To contribute more you merely amend the Anon question, best by adding EDIT above the new information

Thanks (0)
Share this content