Professional Clearance Letters

Have you ever had a useful response

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Since POCA made much discussion between accountants of concerns around money laundering illegal, has anyone ever received useful information as a result of professional clearance letters?

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By johngroganjga
30th Jan 2018 15:12

I would say that a standard response saying there are no professional matters etc. was very “useful” to have. But I suspect you mean “exciting” rather than “useful”. If so, I have nothing to share with you, but perhaps I have led a sheltered life.

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By ShayaG
30th Jan 2018 18:47

If there was a professional matter which another accountant should consider before accepting an appointment I for one certainly wouldn't disclose it, and I draw no comfort at all from other accountant's similar protestations of ignorance of such matters!

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By bernard michael
30th Jan 2018 15:38

I've had some interesting "off the record" conversations

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By ShayaG
30th Jan 2018 18:48

Interesting.... I would be po-faced, particularly as tipping off is a criminal offence.

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Red Leader
By Red Leader
30th Jan 2018 15:39

No, I think professional clearance is a waste of everyone's time. Asking for the handover info is not, though.

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ALISK
By atleastisoundknowledgable...
30th Jan 2018 22:22

Red Leader wrote:

No, I think professional clearance is a waste of everyone's time.

Agreed

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By Maslins
30th Jan 2018 17:11

What do you mean by "useful"?

To my mind the useful bit is the accounting/tax data that they hopefully send alongside it.

The professional clearance bit itself is a bit redundant IMHO, though occasionally a previous accountant's carefully worded response has basically pre-warned us that the client is a pain by reading between the lines. Similarly we've given a few carefully worded responses too.

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By ShayaG
30th Jan 2018 18:15

Useful in the sense that it does what it says on the tin - bring to your attention matters you should consider before accepting the appointment. I'm all for handover info (of course!) . It's interesting that you have had "carefully worded responses" - all I've ever seen is template form letters.

The letter itself seems to be simultaneously too optimistic about the other accountant's professional and legal position and too pessimistic about the incoming client being suspicious simply by virtue of switching accountant.

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By andy.partridge
30th Jan 2018 17:46

I always tell the new firm what I think. It's one of the joys of losing a client.

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By ShayaG
30th Jan 2018 18:16

Then you are a braver accountant than me!

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Red Leader
By Red Leader
30th Jan 2018 18:33

I choose to be prudent. "Prudence with a purpose."

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By WhiteRose
30th Jan 2018 19:12

All very boring stuff except for once, very early on, when the other accountant phoned me. We had a most useful conversation and I declined the appointment. For ever grateful!

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ALISK
By atleastisoundknowledgable...
30th Jan 2018 22:24

I think that I’d wonder why the other accountant didn’t want to lose the client!

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By WhiteRose
31st Jan 2018 01:45

I’d only started my practice a few months previously, client saw my ad and got in touch, previous accountant was old school, very straight, and he phoned to basically say that as much as he would like to get rid of the client he wouldn’t wish him on anybody and certainly not on a new start-up. It was quite a long conversation, and I found out a few things afterwards about client that made me realise I had had a lucky escape.

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By WhiteRose
31st Jan 2018 01:48

Duplicate

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By mabzden
02nd Feb 2018 10:44

There have been three occasions when I've warned incoming accountants about clients. One heeded my warning and refused the appointment. Another ignored it and went on to have big, Court-case level problems. The third rang me up to tell me I was the crook and how dare I say his beautiful new client was fiddling his taxes.

So I probably won't bother in the future. The majority of incoming accountants can't see past the new fee income.

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By leon0001
02nd Feb 2018 11:03

Just the useful assurance that the requested information and records will be forwarded once our invoices dated........ have been settled and we have received payment of special postage or courier fees in advance.

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By leon0001
02nd Feb 2018 11:15

And when I was at a major audit firm, after a tough competition, we acquired an up and coming client who wanted to go on the AIM. The existing local accountants were incredibly helpful. They handed over everything they had, including ALL their files, almost as if they couldn't wait to be shot of these people.
I learned more about sharp practice and fraud on that one job than I ever had before or since. Unfortunately, it ruined my promotion chances.
Fast forward to the final meeting where my manager had to physically restrain the partner, who was about to thump the client for lying to his face.

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Flag of the Soviet Union
By thevaliant
02nd Feb 2018 13:58

Well!

We'd like to know about the intervening bits to get to that point.

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By alan.rolfe
02nd Feb 2018 11:23

I think it would be great if the professional bodies gave guidance on the format of the clearance document, including a summary of fee payment times.

This would give an impartial way to help tell how quickly the potential client will pay your bill before you get in too deep!

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Flag of the Soviet Union
By thevaliant
02nd Feb 2018 14:02

Don't often see clearance letters, but the two I recall:

One sent - warning new accountant they wouldn't get paid. New accountant took them on anyway and got shafted themselves down the line.

One received - no problems, but an off the record call followed a few weeks later warning that client was very poor with record keeping and problems lay ahead - audit did indeed reveal significant problems (client went bust during audit).

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By mabzden
02nd Feb 2018 14:45

I would say the moral of this thread is: "if the outgoing accountant takes the time and trouble to warn you about the client, then you should listen".

Just out of interest, there's a lot of talk about people not having the courage to speak up or referring to secret "off-the-record" phone calls. Why do they have to be off the record?

I would say the whole point of the professional clearance exercise is to ask the outgoing accountant whether the client is honest, cooperative and pays their bills.

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By thevaliant
02nd Feb 2018 16:04

I suspect it's elements of:

"I might get sued if someone sees this"
"I don't want to be too harsh"

So accountants say little.

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By mabzden
02nd Feb 2018 16:37

I fully accept your point. But has anyone ever been sued in connection with a request for professional clearance?

I've just had a look at the professional guidelines for the CIoT and it says:

"The objective of the communication ... is to ensure that:

The incoming adviser is fully aware of all factors that may be relevant to acceptance of the appointment and the effective handling of the client’s tax affairs.

The incoming adviser is fully aware of all factors that may have a bearing on ensuring full disclosure of all relevant facts to HMRC."

So if someone is dishonest, disorganised or difficult to deal with, you're required to disclose this to the new accountant. If you don't do so you're breaking the professional guidelines (I assume other bodies have similar rules).

In my experience accountants have very little clue about handover rules and requirements.

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By JDBENJAMIN
02nd Feb 2018 14:45

I'm not the slightest bit coy about what I say in reply to professional enquiries. If the client is a troublemaker, I say exactly why, and if they are likely to try not paying, I say that. As long as you can back up what you say if needs be, there is no possible comeback. What you say is protected by qualified privilege, so provided it is neither a malicious nor reckless falsehood, you can say whatever you think appropriate.

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By bernard michael
02nd Feb 2018 16:11

Or is it that they don't want to say too much in case the client decides to stay

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Man of Kent
By Kent accountant
02nd Feb 2018 17:26

I had a discussion on this topic at lunch with some fellow AWebbers yesterday.

I received a 'useful' clearance letter from outgoing account which was factual. Referred to a number of matters on which client had ignored/questioned advice.

I found this useful and a heads up for what the new client may be like. Issue arose a little later where I had to firmly direct client on a certain matter, he was fine after being told the way it was.

A few weeks later I sacked a client who then appointed a top 10 firm as his accountant (in football terms this is like getting a transfer from the Isthmian League to The Premier League).

Client ignored where I pointing out mistakes made in bookkeeping , vat returns. (He qualified for sacking on the grounds of being a liar and a bull [***] - but not a cheapskate)

Primarily as an [***] covering exercise I pointed out a number of errors in clients bookkeeping and vat returns which had been corrected in stat accounts, which Premier League accountant should be aware of.

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By andy.partridge
02nd Feb 2018 17:45

My (limited) experience of Premier League accountants is that they choose not to play by FIFA rules but their own.

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By mabzden
02nd Feb 2018 18:05

OMG, my experience is the exact opposite. I used to work for a big firm and they were paranoid about doing anything remotely wrong that could damage their (very valuable) reputation.

It's the small firms who can play fast and loose with the rules, sometimes because they don't actually know what they are.

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By andy.partridge
03rd Feb 2018 09:31

I understand that at an individual level, but at a corporate level I think commercial concerns take priority.

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By North East Accountant
05th Feb 2018 08:52

One time after sending out usual professional transfer letter outgoing accountant rings me up by return.

Says he resigned months ago, after discovering a fraud, and tells me client has been fraudulently ripping off HMRC.

We declined to accept instructions and am so grateful to ex accountant now that the "client" is serving time at HM pleasure.

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