Share this content

Practicing certificates: What you need to know

19th Nov 2012
Share this content
Kashflow logo

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.

NON-CCAB

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.

Replies (27)

Please login or register to join the discussion.

avatar
By coland
21st Nov 2012 11:57

Practising certificates

..always helps to spell practising correctly too!!

Thanks (3)
avatar
By WALLENDER
21st Nov 2012 12:02

Practising Certificate

Why no mention of the Institute of Financial Accountants? This is a professional accounting body (non CCAB). The ICPA is a trade body not a professional body.

Thanks (3)
avatar
By jonnybennett
21st Nov 2012 12:07

regulation

as an FCA, i would estimate that my qualification costs me well in excess of £1,000 pa in terms of membership fees, practising certificates and PII not to mention all the compliance time.  My unqualified competitors have a significant advantage over me.  They claim to be regulated by HMRC (money laundering regs); I am regulated by the ICAEW.  Which do you think the public has heard of?  waste of money.

Thanks (2)
avatar
By razia
21st Nov 2012 12:40

The CIMA Member in Practice Fee is £118 (not £103 as above) for the 2012-13 Subscription year which includes the practising certificate application)

Thanks (0)
By A mum and an accountant
21st Nov 2012 12:26

In progress....
I'm in the process of trying to get my ACCA practicing certificate. I've finally got my experience signed off but the next stumbling block is getting a continuity in practice agreement with another firm. I don't have any clients, I understand the necessity of it in the long run but it seems regardless of your competence, getting the correct paperwork in place before you even get the practicing certificate is a nightmare! And at the moment there's still no guarantee that I will get my practicing certificate. What if my experience is not enough?

Thanks (0)
Replying to tom2another:
avatar
By He would dares to ask
25th Dec 2014 22:01

How did you get on ?
I've started the process of getting the firm that I work for registered with av a for sign a practising certificate off.

I'm just finding one problem after another - getting some to sign off - the volume of paperwork.

If all goes well and I get 4 x 6 months of sign off what other hurdles will I encounter.

I want the.certificate on a part time basis initially and bulid thing up,

Thanks for any help you can give

Thanks (0)
avatar
By karen.morriscook
21st Nov 2012 12:31

regulation

It is not just the cost of obtaining the practice certificate it is all the time spent on the bureaucracy that goes with it.  It seems to me that when you have a regulatory visit they are not at all bothered as to whether the work has been done correctly and the right questions asked of the client just whether or not you have signed and dated the working papers. 

Thanks (0)
avatar
By caisterm
21st Nov 2012 12:35

Membership

I resigned from ICAEW after more than 20 years membership and 18 years with a practising certificate. For a small practitioner the Institute seems irrelevant to me and there is clearly no value for money in the membership and practising certicate fees.

It staggers me how much effort ICAEW put into checking and pursuing bureaucratic matters and threatening action against 'miscreants'. Contrast that with when I was acting as expert witness and was forced to report a medium sized firm to the Institute for the appalling tax advice and lack of duty of care that they had given to their client. In that instance ICAEW were unable to offer an opinion on the advice given and could only provide a mediation service.

It seems to me that if membership of ICAEW is supposed to be some assurance of quality then the Institute need to back this up with real action rather than the tick in the box culture that pervades at present.

Thanks (3)
Replying to ianthetaxman:
avatar
By toyen149
21st Nov 2012 14:50

Membership

I intent to agree with you.

 

I have been a member of the ICAEW for almost forty years and can assure you that in all that time  I never  felt that being a member of  the ICAEW gave me any added value to my practise.

With the ever rising costs and  constant changing regulations is a turn off  

I am seriously considering in resigning at the end of this year, but would like to continue in practise as a qualified accountant without membership of a professional body.

How have you managed since you resigned ?  and how do you describe your firm on your headed paper ?( since you would no longer be able to use the name Chartered Accountant on your headed paper)

Thanks (0)
Replying to North East Accountant:
avatar
By caisterm
21st Nov 2012 17:07

There has been no difference since I resigned. I have never marketed my firm and all new business comes via word of mouth. My letterhead used to say 'Chartered Accountants' and now says 'Accountants and Tax Advisers'. I still go on the same courses and subscribe to Taxation magazine so I keep up to date the same way as I always did. In the unlikely event that accountants are required to be members of a professional body I would apply to the Institute of Taxation - I passed their exams in 1993 but didn't take up membership as I was already with ICAEW

Thanks (1)
avatar
By stephen-taylor
21st Nov 2012 13:34

What About AAT?

I am currently studying Level 4. Why no mention of AAT?

Thanks (0)
avatar
By twickers
21st Nov 2012 13:36

qualified or experience question

A never ending debate/  the exams have become easier/ with longer periods to complete.

leading to too many people qualified by exam/ but no experience- chasing ever fewer vacancies.

As software now controls most practice work/ (how many of you could survive without Iris or

alternative)  why not give recently qualified a limited practice cert- say like the software company

allow them so many clients to begin with/ expand the certificate with the practice development.

At least give them the chance to put into use the knowledge gained on current laws and rules.

At the monent by the time they received a cert/ that knowledge is out of date ?.

no different from a driving licence/ you pass /you drive- and your insurance goes up or down

with how you drive and the experience gained.

 

 

Thanks (0)
avatar
By carnmores
21st Nov 2012 13:39

@caisterm

100% agree i managed 30 years, what a waste of a life

Thanks (0)
By ccassociates
21st Nov 2012 15:37

AAT

I am an FMAAT and have a practicing licence under AAT, however I am also a member of ICPA. I find that the latter are much more proactive and seek to provide many of the things I require to practice at discount, I also get lots of discounted software etc from ICPA. PII and web based CPD is included in my annual fee as are my tax manuals.

I also represent ICPA on our local working together committee where there is also an AAT rep, I never get any feedback from AAT regarding WT, yet all ICPA reps report back and issues are published in monthly mag and on the website and on social media for all to contribute and participate. All in all I think that ICPA is more useful to me in my day to day business and gives me more value for money.

ICPA cannot supervise me under ML however they are far more active in the field than HMRC and keep me updated on ML issues more than AAT does.

Thanks (1)
avatar
By HAXEYJULES
21st Nov 2012 20:10

Sacked ACCA

Within 2 years of my exams, I realised being a member of ACCA gave me nothing but a headache.  As we specialise in mainly small businesses and onsite work there wasn't any benefit of paying all those fees.

In order to satisfy the Lenders out there wanting verification, i joined the ICB and am regulated under them.  Cheaper and more helpful, well worth it.

 

Thanks (0)
avatar
By philfromleeds
22nd Nov 2012 11:26

Honest Accountanting

Providing one prepares accounts on a true and fair basis, matches revenue with expenses etc you have an honest set of accounts providing you the accountant have a picture of the whole business. For most of us that is a small business. This also applies to small Limited Companies.

I have health problems which affect my income. So I realized I could not afford the AAT membership with the associated CPD costs in money and time.

The biggest problem I have is when I am doing something not in my normal zone. I have no colleagues who therefore widen the knowledge in a firm. This is my biggest problem. I am currently completing the joint Co House and HMRC accounts service pdf. Im stuck with the deffered taxation boxes. Can anyone help?

Thanks (0)
avatar
By chrisdxuk
22nd Nov 2012 13:27

Somewhat saddened

Reading the article, accountancy is becoming a trade not a profession, and the comments I feel really saddened. I have always wanted to be an accountant since, my late teens, and found it to be very worthwhile and fulfilling. Surely as philfromleeds says provided you give good advice, prepare the numbers in the correct manner and offer a valid opinion that is something to be proud off.

Thanks (0)
avatar
By rizvan
22nd Nov 2012 14:38

Legal requirement of not being a qualified accountant f

Can any senior please guide me in this regard,

I am establishing my own bookkeeping and general accountancy firm, I am not a qualified accountant yet but have more than 3 years experience in accountancy practices.

I am a graduate (accounting and financial management) and nearly qualified in next year.

I need to show to UKBA (for visa purposes) that I can even setup this bookkeeping and accountancy firm without being member of any accountancy body as there is not any legal prohibition to do such bookkeeping firm as most of the accountant doing for individuals, small business and companies (not audited company accounts). 

Even companies house doesn't have any requirement of appointment of a qualified accountants for unaudited accounts. Same is HMRC  - They assign agent logins without demanding whether your are qualified accountant/tax adviser or not. But still need to show to UKBA that I can do such firm...

I just need that document of legal provisions that for (bookkeeping) tax returns, unaudited accounts etc there  wouldn't be requirement of being a qualified accountant.

 

Thanks (0)
Replying to Tornado:
avatar
By philfromleeds
23rd Nov 2012 17:48

I can write you a letter

Dear Rizvan,

Contact me and I will confirm to ukba that you do not need to be a member of any accountacy body to practice as an accountant.

[email protected]

But it would be better to get a good job instead.

Wishing you every success

 

Phil Leaman

 

 

 

Thanks (0)
By ccassociates
23rd Nov 2012 09:56

@Rizvan

Look at the Institute of Certified Bookkkeepers.and the ICPA

Thanks (0)
avatar
By rizvan
23rd Nov 2012 10:59

@CCassociates

Many thanks.

I have looked their website and no such information, not any customer services personnel able to point the applicable rules.

I would appreciate your effort if you please specify the rules if you have gone through.....

Thanks (0)
avatar
By philfromleeds
23rd Nov 2012 17:36

There is no law against you calling yourself an Accountant

Hi Rizvan,

If you feel confident enough to practice as an accountant you can call yourself an accoutant and practice as an accountant.  And if you cant to the job you will find out. Here I am talking about ability.

Give it a go either you will be messed up or you will mess up people.

You can not call yourself a Chartered Accountant because you are not a Chartered Accountant.

Same goes for Certified.

I call myself a Bookkeeper/Accountant.

I advertise on the back of my car as a Bookkeeper. I dont think an a successful accountant would advertise on the back of his car.

 

 

 

 

Thanks (0)
avatar
By rizvan
24th Nov 2012 10:08

@Phil Leaman

Many many thanks really.

Yes, I would send u an email as well.

I cannot be employed but only self employed as per this visa of UKBA rules.

I really appreciate your interest towards and thankful to you.

Let me know as well, if I would ever be of your help any time regarding anything I can do.

Thanks (0)
avatar
By rizvan
24th Nov 2012 10:13

@CCassociates

Yep, thanks alot 

Thanks (0)
avatar
By Adams78
28th Nov 2012 20:30

AAT

Can I just warn you all (including Stephen-Taylor) that when one qualifies in AAT, you cannot become a student member of ACCA while holding practising certificate (if you wish to study for ACCA that is)!

Something that Accounting bodies do not seem to inform students about....!!

Thanks (0)
avatar
By SNOOPDOG
29th Mar 2018 22:46

Everyone is too serious - loosen ye knickers or underpants.
When I was ' Financial Controller ' The Royal Bank of Scotland came to visit me requesting all my credentials. The Directors had charged me with overseeing a MBO and reporting the monthly trading profits to ROYAL Bank of Scotland who had invested £300,000.
I told them I was a Grammar school classics Scholar with degrees in political sciences and criminology.
I reported to them for a few years then afterwards they crashed the Bank.
I should have asked for their credentials.

Thanks (0)