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Transfer to new accountant

Should I be honest ?

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I have been very lucky having nice clients. I know we all have one that tests our patience.  I have just came across my one which I am still reeling from.

I am so so angry at the way I have been treated by one particularly client after just going going out of my way to help her after she came me in desperate need. She also owes me some money but not really bothered about that.

The client records were all over the place and she couldn't explain any of the transactions - it is a fairly large business (Ltd).  I feel sorry for the accountant who will take over whom I will try to help.

I just want say as part of the professional clearance  - "I like to bring your attention the client record keeping is very poor and they are very disorganised neither can they explain any transactions that are considered material".    Its not defamatory as I have evidence of shoddy record keeping and client has actually agreeing to my points of poor record keeping. Is that too harsh as the new accountant has the right to know and also cover my back since we did our best in very difficult circumstances due to poor records which caused delays in the fling of the accounts.

 

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Caroline
By accountantccole
30th Sep 2020 15:34

I've dealt with similar by including a paragraph in the disengagement letter highlighting the issues that will need to be resolved and then refer new accountant to that letter

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Replying to accountantccole:
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By JimLittle
30th Sep 2020 16:48

Ok but the new accountants would not normally receive the disengagement letter ?

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Replying to JimLittle:
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By Paul Crowley
01st Oct 2020 18:59

But new accountant knows its existence if you refer it, these letters are recommended.

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By Geoff56
30th Sep 2020 15:40

We always used to talk about professional clearance but now isn't it "circumstances which might influence our decision as to whether or not to accept this appointment" or something like that. My guess is that you don't want to put off the prospective new accountant, to the extent that they don't take this person off your hands. If you don't want to say anything formally, you could always consider a friendly word on the phone; assuming the client has given you permission to reply to the new accountant's enquiries.

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By Anonymous.
30th Sep 2020 15:43

This has been discussed before and I think the answer is probably no as far as putting anything in writing about the ex-client.

I'm not in practice but I would go for the thinly veiled message along the lines: "I was delighted when Ms X told me she no longer required my services and will be more than happy to do whatever I can to hand over responsibility to you as soon as possible".

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By ireallyshouldknowthisbut
30th Sep 2020 15:47

Some correspondants on here will say different, but I would speak to the incoming accountant and let them know the score. Do to others as you would have done to you.

Id be wary what you put in writing, but you could perhaps include your cover letter with the accounts prior to signature which I can only assume formally outlined the deficiencies you identified. If you know the accounts suck, I would point out exactly where to the incoming accountant so its not you who gets blamed.

A "and we wish you the very best of luck" is another polite way to mention they are a nightmare.

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Replying to ireallyshouldknowthisbut:
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By JimLittle
30th Sep 2020 17:02

My main objective is to protect myself from any comeback from this former client as I wouldn't be surprised if she gets the new accountant to find fault with my work. We struggled because of the ineptitude of the client.

I am trying to ascertain what maybe deemed controversial and land me in hot water. I don't think mentioning poor records is defamatory or controversial when the client has agreed with my statement. Perhaps I am missing the point. I have read my accountancy body guidelines on professional clearance which is ambiguous and probably needs a revamp for clarity

I don't understand the rigid approach with professional clearance letters I damn right would like to know if a new client could spell trouble especially those ones that are completed disorganised or have a split personality !

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Psycho
By Wilson Philips
30th Sep 2020 15:48

In writing, stick to the facts. But nothing to stop you from picking up the telephone to the new agent.

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Replying to Wilson Philips:
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By JimLittle
30th Sep 2020 17:08

I am not comfortable calling another accountant about a former client as you don't know what the reaction will be. They may just think its sour grapes. I am hoping the new accountant calls me.

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By I'msorryIhaven'taclue
30th Sep 2020 15:58

JimLittle wrote:

She also owes me some money but not really bothered about that.


Well you should be! Include that in your letter to the new accountant, as it'll speak volumes (not to mention expose the client's untrustworthy nature).
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Replying to I'msorryIhaven'taclue:
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By 356B
30th Sep 2020 16:43

That's right. Always appeal to an accountant's baser instinct.

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Replying to I'msorryIhaven'taclue:
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By JimLittle
30th Sep 2020 17:05

Yes will mention this point. I may go after the debt after all.

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By John Isabel
30th Sep 2020 16:49

I wouldnt be bothered with a parting shot. What's the point.

Around here most of the partners at various firms know each other. Certainly i know several. Some im quite friendly with, most im fairly neutral on and one i dont like.

If i liked the new guy i might give him an off the record heads up by phone. If it's the bell end nearby i'd be chuckling a bit to myself when i sent my handover pack. All the others id just handover and move on.

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Replying to John Isabel:
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By JimLittle
30th Sep 2020 17:04

Its not a parting shot really just to let the new accountant whats in store with them. Also the client is devious and will try to make things difficult so just protecting myself as well.

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By John Isabel
30th Sep 2020 21:25

Do you know the new accountant? If not why let them know what’s in store? They might not experience the problems you have - and if they do then they’ll work it out soon enough.

As for protecting yourself - you’ve already lost the client and if they are going to slag you off then you’ve more to fear from them doing it down the pub or golf course than to their new accountant.

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Replying to John Isabel:
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By JimLittle
30th Sep 2020 21:57

I don't know the new accountant though they seem polite - they are IFA. As for protecting myself its from the view if the new accountant starts to questions my work as it was a difficult engagement from the start due to poor records and in hindsight I could have been a little meticulous if there was the time hence why I want to put that clause in to at least give an indication what I went through. I may still go after the outstanding fees.

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Replying to JimLittle:
By Silver Birch Accts
02nd Oct 2020 13:59

You state '' they are IFA'' is this relevant to their ability to do the job.

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Replying to Silver Birch Accts:
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By Southwestbeancounter
02nd Oct 2020 14:09

Or by saying 'they are IFA' are they really a financial adviser rather than an accountant?

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Replying to Silver Birch Accts:
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By JimLittle
02nd Oct 2020 14:38

Institute of Financial Accountants (IFA). First time I have come across anyone from IFA.

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Red Leader
By Red Leader
30th Sep 2020 17:45

Beware of unintended consequences. The new accountant could be so put off by what you say that they decide not to take on the client!

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By Tosie
30th Sep 2020 17:50

If you know and respect new accountant a quick call will work better than putting things in writing. The client will deny everything and it is very time consuming defending every action. If accountant starts sending queries then that is time to explain any shortcomings in accounts. The quicker you get rid of such clients the quicker you can get on with enjoying your life. You have done everything possible to produce accurate accounts and a decent accountant will very quickly get the picture.

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Replying to Tosie:
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By JimLittle
30th Sep 2020 18:43

I can see you point. I really don't want hear and see anything related to this client as puts me on edge including any emails this new accountant copies the client. Client will quickly jump on anything which she did recently without any understanding. Neither I want to have the new accountant sending ongoing queries with client copied in. I rather deal with new accountants by phone on questions related to the accounts as quicker to resolve and prevents any misunderstanding.

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Replying to JimLittle:
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By Matrix
30th Sep 2020 18:51

If the new accountant is emailing you and copying the client then it sounds as if the prof clearance stage has passed.

You need to put it behind you (other than the fee chasing), don’t let clients get you down or worry about what the incoming accountant thinks. Do something positive like getting testimonials from existing clients who do appreciate you and don’t look back.

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Replying to Matrix:
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By JimLittle
30th Sep 2020 21:46

Yes you are correct I am making a mountain out of a molehill and trying to second guess what the accountant and new client will do next which is increasing the anxiety.

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Replying to JimLittle:
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By Tosie
02nd Oct 2020 10:29

You are not making a mountain out of a molehill. Most of us know what you are going through and would share your anxiety. Good Luck, you are not the problem she is.

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By Southwestbeancounter
02nd Oct 2020 14:15

We've, no doubt, all been there as some clients are just bad apples and get under our skin!!

I've been in business over 30 years and rarely get one these days as I have learnt to be much firmer with them when I (hopefully!) spot the signs but 10 years ago one couple was giving me an awful time and I'd still have nightmares about them even now if I let myself!!

The trouble is you're compassionate about your work which is a good thing but not if it then gets to you! Let the incoming accountant know subtly what the client is really like, as others have suggested, get it off your desk now and have a jolly good relaxed weekend! Monday will feel a lot better then!!

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Replying to Southwestbeancounter:
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By JimLittle
02nd Oct 2020 14:25

Thanks for the kind words

Yes I have got much better. I think as you get older you get better at reading people which like you have done. This one took me off guard. One bad client like one bad tenant can drag you down so important to find ways if this client is a good fit, nice and mentally sound ! Whats that saying 20% of clients can take 80 per cent of your time but only generate 20% of your income.

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By adam.arca
30th Sep 2020 20:31

Personally, I’m siding with the OP and swimming against what seems to be the received opinion on clearance letters these days.

If a client is a nightmare, then saying nothing and just passing the bomb on isn’t doing as you would have done to you. I don’t see anything contentious in what the OP wants to say; it appears very balanced and professional and can always be prefaced with an “in our opinion.”

Nor do I see any risk in the client coming back to you if the prospective accountant passes: the client has already expressed their opinion of you in seeking to appoint a new accountant and that presents the perfect reason for sacking them if needed.

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By fawltybasil2575
30th Sep 2020 21:18

@ JimLittle (OP).

You are ethically and morally obliged to respond promptly to the prospective new accountant.

However, you are clearly (and understandably) nervous that any written comments which you make to that prospective new accountant might possibly be used against you (albeit this in practice is unlikely).

The recommended course of action is that you respond in writing, stating that there are a couple of points which are best explained in a phone call if he would be good enough to phone you.

If he does phone you, just make your points briefly (and without emotion) and note the conversation on file.

If he doesn’t phone you, then just make a file note to that effect (you should NOT “chase” a response), move on, and don’t look back. You have your standards, and your ex-client has theirs, and “never the twain”.

Basil.

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ALISK
By atleastisoundknowledgable...
01st Oct 2020 09:41

In your handover pack, maybe include your list of client queries which were/weren’t resolved?

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By Calculatorboy
01st Oct 2020 10:57

It's a big No No.

Just say you know of no professional reasons etc , full stop.
It's the oncoming accountants responsibility to review records etc.

Besides if records were that bad I've have alerted the client in covering letter when final accounts were prepared

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Replying to Calculatorboy:
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By JimLittle
01st Oct 2020 18:19

I think the majority in the forum have stated not to go into detail about the issues we have faced.

I probably will keep it short and sweet and request the accountant to call rather than sending emails on queries as don't want the client copied on emails between two accountants discussing accounting and tax matters.

Actually we did mention the bad records in the letter to the accounts

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By Ian Bee
01st Oct 2020 11:37

The letter you receive will ask something like "is there any reason why we should not take on this client." From memory the ICAEW does give examples of what reasons there may be but I would think it means something serious like a disagreement over items in the accounts that remain unresolved.

As others have said, you should stick to the facts in writing and only state reasons why they should not accept the client.

It does no harm to call the accountant, possibly easier to do so anyway to discuss the items they have asked for in the handover, and then mention things like unpaid bills etc in passing.

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By 356B
01st Oct 2020 12:00

Do you know/trust the new accountants? I've had calls from previous accountants which are tainted with "sour grapes" at losing the client, so unless you know the new accountants, your call may be disregarded.

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Replying to 356B:
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By JimLittle
01st Oct 2020 14:13

I don't know the accountants but they seem decent though having dealt with other accountants in the past with professional the trend seems to be to show off to the new client and try to undermine the old accountant

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By 356B
01st Oct 2020 12:01

Do you know/trust the new accountants? I've had calls from previous accountants which are tainted with "sour grapes" at losing the client, so unless you know the new accountants, your call may be disregarded.

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By fawltybasil2575
01st Oct 2020 12:56

@ JimLittle (OP).

I must respectfully disagree Ian Bee’s statement (his 11.37 post today) that, when contacting the prospective new accountant, you should:-

“only state reasons why they should not accept the client”.

The ICAEW ethical guidelines (I would assume that other accountancy bodies have similar requirements, albeit this is not necessarily the case) state that the incumbent accountant should draw the attention of the prospective new accountants to facts which the incumbent believes should be CONSIDERED by the prospective new accountant, to enable that prospective new accountant to THEMSELVES determine whether or not to act.

Basil.

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Replying to fawltybasil2575:
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By JimLittle
01st Oct 2020 14:10

ACCA’s Code of Ethics and Conduct states: ‘The prospective
accountant shall write to the existing accountant requesting all
the information which ought to be made available to enable
the prospective accountant to decide whether or not to accept
the appointment.

All very vague and ambiguous.

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By Montrose
01st Oct 2020 18:32

Tongue in cheek suggestion.
"I note that Ms . X has approached you to assist her with her affairs and those of Z Ltd. I hope you will be able to sort out what I was unable to economically to her satisfaction"

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By Montrose
01st Oct 2020 18:32

Tongue in cheek suggestion.
"I note that Ms . X has approached you to assist her with her affairs and those of Z Ltd. I hope you will be able to sort out what I was unable to economically to her satisfaction"

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By ColA
02nd Oct 2020 10:22

The last thing you want is a professional indemnity claim - I had a similar situation some time back with a trio of awkward company directors inappropriately styled ‘Wise’ in their company name.
They never paid a bean but alleged I failed to file with HMRC on time - a good engagement letter detailing their responsibilities put a firm end to the matter.
Their insolvent company was dissolved within two years!

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By Brodders
02nd Oct 2020 10:23

I really don't doubt your intentions, you strike me as totally genuine not wanting someone else to go through your pain.

Sadly my advice - for the benefit of your own mental health - would be to only do what you are legally required to do and move on and try and forget it. Not "right", but the world isn't fair is it and sadly it is for the new advisers to learn themselves about this individual. The quicker you never have to think about them again, the better.

Good luck

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By C Graham
02nd Oct 2020 10:24

She owes you money - very simply let the new accountants know that she has not settled your fees so you will not release information until you are fully reimbursed.

And leave it at that. The new accountants will know they have a client who potentially does not pay. At least make sure you get paid for the time and stress which at the same time suggests the client may be a liability.

If she instructed you to sort out her mess that is fine if she pays. Plenty of disorganised business owners who chuck a bag of notes and receipts and no idea of transactions. If it took more time than anticipated then you rightly charged for it.

And you can put that on your invoices as a description of additional hours. Nothing you are not entitled to disclose because its an unpaid invoice for your fees. Job done!

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Replying to C Graham:
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By JimLittle
02nd Oct 2020 13:45

Yes checked the lien part I have absolutely no right to lien and have to provide the documents as they are deemed under to be accounting records under my accountancy body regulations.

It was a mess of all messes - complete shambles. Actually undercharged for the work I did at the last minute to ensure client did not get any penalties.

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By JD
02nd Oct 2020 10:30

Do communicate, even if it is a simple phone call, keeping it factual, as you have a clear obligation to “state reasons that should be considered before they accept the client”.

It is after all a simple professional courtesy and you will no doubt will deal with the new accountant at some point in the future, in some other circumstances.

or to put it another way could you defend a complaint made against you by the new accountant, because you had said nothing.

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Replying to JD:
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By JimLittle
02nd Oct 2020 13:54

"state reasons that should be considered before they accept the client”." thats from a legal or disagreement point of view not if the client is difficult.

I don't want to get in a dialogue with the new accountant trying to justify my work and inevitably the client will starts questioning me without any understanding or realisation she created the issues in the accounts and could not answer the basic of questions. She is in her 50's but behaves likes stroppy teenager. I doubt anyone will even come across someone like that who is completely irrational and incoherent

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By 2003bluecat
02nd Oct 2020 10:31

A bit late for the OP now but we also do what another poster has mentioned; where the record keeping is substandard we detail this in a cover letter (or Letter of Rep if you prefer) that the director(s) sign agreeing with our assessment and/or treatment.

Especially useful when they inevitably feel the need to move accountants as this can be sent as part of the requested information.

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By Cylhia66
02nd Oct 2020 10:50

If I was the new accountant I would like to know these things about this potential new client and I probably would not take them on as from experience when things go wrong they usually blame you and take no responsibility for their lack of professionalism.

I don't think what you are saying is difamatory either, especially if you have evidence to support this. The fact that they can't say what their transactions are is extremely concerning and I would absolutely stay away from a client like that. There's a risk they could geopardize my reputation ultimately. Not worth it.

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By Ian29
02nd Oct 2020 10:51

The parameters are:
1) Keep yourself right. This means avoid criticism from the new new accountant (why didn't you tell me); the client (how dare you) and your Institute (unprofessional conduct).
2) The wording suggested has two elements. The first part ending "... very disorganised..." is fact. The second part is a problem. To say "... neither can they explain any transactions that are considered material." creates a Money Laundering problem. If you make the statement of that nature you should have submitted a SAR, refused to finalise the accounts and resigned. If the client reports you to your Institute they will consider whether you properly applied Money Laundering procedures - irrespective of the client's actual complaint.
My advice is to prepare a (hard hitting) response in draft and then send it your Institute for their advice and response. However, avoid any ML problems.
The covering email to the Institute would say, for example, "I wish to ensure I clear myself professionally and wish to inform the new accountant of the circumstances so that they can make their own informed decision of whether to accept appointment, avoiding an accusation of not informing them of all pertinent matters."
When the Institute answer your query you have a defence against the new accountant and the Institute. If the client complains it loses its force.

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@enanen
By enanen
02nd Oct 2020 10:58

♪♪ 'Let it go, Let it go....'♪♪

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