Practicing certificates: What you need to know
Word of a recent regulatory case drew attention to the sanctions that can be applied to members practicing without a certificate. The penalties can range from fines, to warnings, to exclusion of membership, reports Rachael Power.
One AccountingWEB member brought home the risks recently when he found out he was being investigated for practicing without a certificate by his professional body. As co-director of a firm offering business planning services he thought he did not need a certificate, but on hearing about the investigation, he discovered he was wrong. That case is now progressing through his body's regulatory mechanism, but the incident highlights that some practitioners may still be unaware of the rules and regulations around the practicing without a certificate.
Principal partners cannot practice without a certificate
Head of regulation at ACCA Sundeep Takwani explained, "It's not about what you physically do, but how the public perceive it. If you are a part of an accountancy firm as a principal partner you fall under the provisions, which are you must have a practicing certificate," he said. Practicing without one is a disciplinary matter.
ICAEW regulations say a member must hold a practicing certificate if they practice in any jurisdiction in the EEA without holding a licence or authority in accordance with their regulations.
Takwani also explained what signs to help the practitioner's case ACCA seek.
"What we would look for is how quickly they took steps to regularise their position. We would try and get information on what they are doing, establish where and if they were falling foul of regulation," he said.
ACCA can take a range of action against miscreants, starting with a report from an independent assessor. If a transgression is found and judged to be in the public interest, the report will go the body's independent disciplinary committee, which is made up of non-accountants who decide an appropriate course of action.
ICAEW has a broadly similar mechanism, and added that if a member fails to to certify their continuing professional development - as we have seen in a number of recent disciplinary cases - they must revoke their ICAEW practicing certificate.
They said: "If a partner in a partnership, or a statutory director in a corporate entity, either of which provide accountancy services in anticipation of reward in the UK or European Community, an ICAEW practicing certificate is required."
Membership requirements and costs (CCAB bodies)
Members of the Consultative Committee of Accountancy Bodies (CCAB) must hold a practising certificate and are subject to periodic quality reviews.
They must also hold professional indemnity insurance cover as specified and commit themselves and their professional teams to continuing professional development.
Regulated practitioners are usually required to have written arrangements with an equivalent firm to look after clients if the practitioner dies or becomes incapacitated.
Key differences among some of the bodies are listed below:
ACCA - Practicing certificate cost: £393 (£83 part time). PII: Minimum indemnity of £50,000 per claim, with firms earing £700,000 or more required to cover claims up to £1m or 25x the previous year’s highest fee, whichever is larger. CPD: 40 hour-equivalent units required per year.
CAI - Practicing certificate: £295 (€421). PII: Minimum of £100,000 or 2.5x gross fee income below £600,000 (€856,000). CPD: A choice (or mix) of two approaches: input-based CPD of 20 hours structured and 50 hours unstructured CPD per year, or output-based CPD where evidence is kept to demonstrate development work undertaken.
ICAS - Practicing certificate: £489. PII: Annual minimum cover of 2.5x gross fee income for firms earning less than £600,000 subject to a minimum of £100,000; those above the £600k threshold need annual cover of £1.5m for any one claim. CPD: Self-directed, with a record to be kept of activities undertaken.
CIMA - Practicing certificate: £103. PII: No set minimum, but cover to be based on an evaluation of firm’s exposure. CPD: Self-directed development activities must be logged in the CIMA professional development cycle.
ICPA - Monthly membership: £660 (£55/month). PII: £300,000 cover included in membership fee. CPD: Members must carry out quarterly package of CPE delivered via web.
What to do if you are being investigated
- AccountingWEB members' advice included seeing a solicitor, with several recommendations for Accountants' Defence
- Try and regularise your position as quickly as possible, as suggested by ACCA
- Keep in regular contact with your professional body and comply with its recommendations
- Fix it quickly, said ICAEW. Report yourself to your professional body and co-operate with any investigation and emphasise any mitigation
Qualified by experience
The scenario that triggered this article highlighted regular arguments on AccountingWEB about whether being part of a professional body ensures higher standards, or whether experience is more important, as members of these bodies may have passed exams years ago and have no other proof of technical competence. At the Iris World Event in October, accountant David Logan argued that accountancy was becoming more of a trade than a profession and that qualified firms were increasingly facing competition from people who could set up shop without all the regulatory rigmarole.
In the past, numerous AccountingWEB members have confessed that they no longer saw the relevance of their professional bodies, and were considering resignation. There is still no legal requirement for those doing tax returns and giving tax advice to be a member of a professional body and with the big jump in the audit threshold to £6.5m turnover/<50 employees/balance sheet total >£3.26m, the need for audit registration will become increasingly irrlevant.
With institute fees still rising, the debates around the need for formal recognition and regulation and the value of experience over qualifications are sure to continue.