Who needs a Practise Certificate?

Principals of firm not accountants but employees ACCA members performing 'public practise' work

Didn't find your answer?

I appreciate that this has probably been asked but after trawling through various posts I still can't quite get the answer. 

We are in a position where there is merger ongoing with my company (A) and another company (B) . B wants to perform work for clients which would be deemed public practice under ACCA definitions. 

I work for  A and is a similar business to B, however the directors of A are ICAEW qualified and hold PCs and I'm an employee of A and ACCA qualified and hold a PC, so we have covered our bases anyway. No one else employed in A holds a PC despite them being qualified as there are 2 principals and a senior employee (me) holding them and responsible for the work that is being done. 

B is a limited company and has one director, that is not an accountant and therefore not qualified nor can be and hold a PC

The most senior person in B is ACCA qualified (10+ years) and would be responsibile for the accounting work that is being prepared. They do not hold a PC. The question I am trying to answer is does the ACCA qualified individual need a PC as they are perfoming work that would require one or because the principal of B isn't an accountant it doesn't need one. If they do need a PC, they will struggle as not worked in an approved employer, so there is scope for me to join as a director of B (subject to my own due diligence) and then B taking advantage of my PC, which we believe would alleviate the issue.

 

Replies (16)

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By tom123
18th Aug 2022 11:55

I would want to be sufficiently well remunerated (over and above the day job) before that is the sort of thing I would 'share' so to speak.

Sounds more like a problem for the ACCA person in Co B to fix.

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Replying to tom123:
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By nicnol
18th Aug 2022 12:27

Thanks, given they and my current employer will be in the same group structure, and there is scope for me to manage that team, I'm not phased necessarily on that point.
It's more of a case of if that solution doesn't happen (for whatever reason) I am thinking that the onus is on the ACCA person in Co B to get a PC even if they are not a principal of the firm?

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By Sandnickel
18th Aug 2022 12:29

No the individual does not need a practicing certificate if they are employed. If the director is not qualified then ACCA cannot issue that company a practicing certificate.

As the companies are merged you need to check with ICAEW if that causes an issue with the practice certificate of A.

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Replying to Sandnickel:
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By nicnol
18th Aug 2022 12:40

Thanks. I get that ACCA cannot issue the company a PC, so was trying to ascertain if the the ACCA member employed needed one, so that they were not holding themselves out without one.

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Replying to nicnol:
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By Sandnickel
19th Aug 2022 09:24

Don't know why my comment didn't appear but I'll post again.

If the employee is a genuine employee and is not holding themselves out to be the principal / director of the firm then they do not need to have a practicing certificate. If the clients believe this member to be the principal or it is effectively a sham employment then the employee would be deemed to require a practice licence.

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By Paul Crowley
18th Aug 2022 12:35

Who is sorting this out?
Only principals need practicing certificates, employees are completely irrelevant
A director is a principal
Both ICAEW and ACCA have rules
A shareholder with a trivial shareholding and not a director does not even need to be a member
Sorting this stuff is for the directors, principals and shareholders to get organised correctly. Unless you know the exact detailed plan, you cannot help

I am ICAEW with 4 other persons holding trivial numbers of shares
None of them have a full qualification
But we are compliantly a firm of Chartered accountants because I am the only director with most of the shares

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Replying to Paul Crowley:
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By nicnol
18th Aug 2022 12:39

Thank you, whilst I am not a Director of A, I am a senior employee who sits on our operational board and a shareholder with a significant enough shareholding for it to be on my plate as we will soon be part of the same group our new "masters" have asked me to look into it.

As ACCA only ever mention principals needing a PC, I was trying to ascertain if in this case, as an ACCA member would be effectively doing work deemed "public practise" should someone in the business ie them, have a PC as an employee. It wasn't abundantly clear from what I have been reading.

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Replying to nicnol:
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By Paul Crowley
18th Aug 2022 13:04

Sort it out with ACCA
As I understand the ICAEW, A shareholder who is a member ought to have a PC, but subject to........
Not aware of company PC. Does ACCA have such a thing?
If you are checking it out then you should know who the directors will be and who owns what shares
That should be enough for the ACCA to get advice
The ICAEW man needs to do his own checks. If he gets it wrong it is his problem, not the company. ICAEW are hot on maximising penalties and costs, so he really needs to check
Aweb list every ICAEW disciplinary, but cannot be bothered with ACCA as most of them are foreign students caught cheating in exams, and there are just so many.

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By WhichTyler
18th Aug 2022 13:24

1. 'There is no such thing as a merger...'. this sounds more like it is effectively a purchase/takeover of A by B
2. Is B already performing 'work that would be deemed public practice' or is the combination with A a means to that end? Does B's owner even agree this is an issue?

If you are a shareholder (and key employee it appears) you should be able to get answers from the principals as to what the regulatory status of the firm will be post-combination and for them to demonstrate how that fits with the rules of the relevant institute. If they say 'it doesn't apply to us' or 'you'll have to sort that out', beware...

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Replying to WhichTyler:
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By nicnol
18th Aug 2022 14:14

Thanks for your reply
1. A and B will be owned by the same Parent. Merger wasn't the correct terminology to use
2. B wants to perform work that would be deemed 'public pratice' - B's owner doesn't understand the rules (current overseas parent)
3. We're trying to ascertain whether or not B needs a PC in its own right through one of it's employees as the principals are not members of accountancy bodies that require a PC or by virtue of the fact that no principals are members of accountancy bodies that even if the ACCA employee is doing work deemed 'public practice' they do not require one. The onus is on the ACCA employee and whether or not they can justify why they haven't or don't need a PC if they are the one that is responsible for the work going out, but we're trying to help out (as we're going to all be one big happy family soon!)

It may be that they don't need a PC. In company A it's easy, there are 2 directors who are ICAEW members, and both have a PC. I as the Head of the Accountancy Team, although not a Director, got a PC and had ACCA in to check everything just to cover "bases" so to speak from a PC persepective.

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Replying to nicnol:
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By Sandnickel
18th Aug 2022 14:50

What is the work that is being provided by the employee? Are they signing off accounts?

The onus may be on the employee on a personal level to avoid any disciplinary action but on a company level it is entirely up to the owners of the business to ensure compliance. Who owns the parent? I think ICAEW may need to be consulted here in addition to ACCA.

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Replying to nicnol:
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By Paul Crowley
18th Aug 2022 17:27

A can of worms
I assume Co A is regulated by ICAEW
I assume Co B is unregulated, and has HMRC as the AML Regulator

The employee of B is irrelevant
This is an ICAEW problem to resolve
And I suggest that the issue is resolved before the group is formed

The ICAEW members of parent co need to advise ICAEW correctly and quickly
The time limit is something like 14 days
And ICAEW likes to penalty farm on simple errors

To be a principal in a firm of Chartered accountants requires an ICAEW membership to be agreed so that ICAEW can penalise ALL members. It is money not exams, with no entitlement to claim membership or use the designation. Just be exposed to penalties, fines, costs and public humiliation on Aweb

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Replying to Paul Crowley:
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By nicnol
19th Aug 2022 08:35

Co A and Co B will be sister companies with the same parent (who is an overseas entity). I don't know if the parent co has qualified accountants who are still actively members of their respective bodies but we assume not otherwise I'm sure that this issue wouldn't have arisen.

It would be a lot simpler if A were purchasing B but not the case unfortunately.

ICAEW have already been spoken to by our CEO (who is the director of A and an ICAEW member), but as no ownership/directorship in B it's not an issue as A has no control.

I am loathe to speak to ACCA as I find them less than helpful on occassions. It really depends on who you get on the phone that day!

Thanks for your reponses though.

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Replying to nicnol:
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By tom123
19th Aug 2022 09:42

Be very wary, @nicol, of any pressure being put on you.

I note you are a 'senior employee' but not actually a director. We have all been there at one point or another. One can end up in invidious positions of maybe taking the flak for something whilst never enjoying any upside, or actually having proper control.

All sounds very complicated, with overseas parents and everything..

At the end of the day you don't want to jeopardise your own good standing with ACCA for someone else's plaything..

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Replying to Paul Crowley:
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By Mr_awol
19th Aug 2022 11:41

I agree with everything apart from third para, as im not convinced there will be (m)any ICAEW members of parent co.

The OP says above that he is a 'significant enough shareholder' to have an input but also refers to the overseas co as the company's "new masters" who, i believe he says elsewhere no (current, at least) qualifications and/or memberships.

My assumption from that is that this might not be an ICAEW issue for very long as it will cease to be an ICAEW regulated practice if it doesn't tick the following boxes:
- 50 per cent or more of the directors are members; and
- more than 50 per cent of nominal value of the voting shares is held by members; and
- more than 50 per cent of the aggregate in nominal value of the voting and non-voting shares are held by members

Maybe I've got the wrong end of the stick but on the limited info available I'd be quite nervous about being a part of this (dont let that put yo off OP - im sure you know far more about the detail than youve shared here and that there's an upside for you. I've just seen a couple of firms absorbed where, shall we say, 'wealthy overseas outsourcers' have become bored of taking a slice of the pie and have gone into the acquisitions market to try and scoop up most of it - not the type of firm I'd want to be a part of if I'm honest).

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Replying to Mr_awol:
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By Paul Crowley
19th Aug 2022 12:43

Agree
This question is now so far distant from opening question as to be a completely different question
PARENT is that parent going to be 100% owner of both companies?
It now looks to me to be an avoidance of regulation by design

I see much more simple versions on the odd few departing clients.
Recently saw one where the former qualified accountant director/shareholder chose to become an employee (not director) in the company now owned by an unqualified with the same surname
Regulatory risks seriously curtailed, but employee still able to do references as a qualified.
Difficult to criticise the choice to get rid of regulation
Just not what I would choose to do

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