I've been approached by an in house accountant for a ltd company, who require an audit. They've asked me to review their VAT returns on a quarterly basis, nothing else. Their current accountants prepare their VAT returns in addition to the year end audit, but the company are looking to bring this in house (with an external review) and by all accounts I'll be a cheaper fix to review their VAT returns prior to submission than the auditors while also adding a level of independence.
My gut feel is that I should approach the current auditors for professional clearance on just the VAT element. At least initially I'll need to liaise with them, and it seems the courteous thing to do. Any contradictory thoughts?!
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Yes, you should notify them that you have been asked to take on something that they currently do, as a matter of professional courtesy, but for goodness sake, please don't call it 'clearance'. I am fed up with people (not just you!) calling it this, when all that is required is a question as to whether there is any information that you should consider when deciding whether to accept an appointment. You are not asking for permission
Just about everyone still calls it a clearance letter, though! What is the proper name for it? Is there one? "Question as to whether there is any information that you should consider when deciding whether to accept an appointment letter" is a bit of a mouthful.
In Australia I think we called it an ethics letter, or similar.
Well, that's not bad, since ethics is the reason why it's demanded by the Institute. We could call it a courtesy letter, or perhaps a request letter, since you are asking for information of one kind or another. Anything but clearance, that really grates with me
Worth finding out if current auditors are registered as the tax agent for VAT.
Auditors will now need to audit your work so be aware you may need to account for your opinions
Frankly I would want to know from existing auditors that they approved of the plan before touching it with a bargepole, the last place I would want to be is between the ongoing auditor and their audit client.
I did work re management accounts/vat for certain clients after I left my previous firm, where other work for them continued with my previous firm, but I knew said firm, they knew me, the arrangement suited both, if in your scenario there was not consensus it sounds like a recipe for trouble.
I agree the relationship issue
The ought to be a saving in fees, but it may not be much as the audit firm now less involved with the day to day stuff and will not see the thing would would have been as issue as early as the could in the past