[Fulltext] How do you keep your client happy and still stay on the right side of the bank? That's a dilemma for many practitioners around the country. The Practice Advisory Service endorses Ray Pembroke's approach which was outlined in Accountancy Ireland some time ago. If you recognise the dilemma then you may find this approach helpful.
A typical Friday will find me in good form - looking forward to going to Bollards after work, a game of golf on Saturday and the Rugby Club on Sunday. But on a recent Friday the happy mood was broken when a note arrived from a professional client asking me to complete a form from one of our financial institutions. Not an unusual request you might think, but these so-called Accountants' Reports are not as straightforward as they seem. If you decide to complete the form you should be prepared to accept your fate.
So when I saw this note and form on my desk, I decided to give the request my "usual treatment", which is set out below. I would suggest that if you are faced with similar requests you should deal with them in this way too.
Interestingly, one of the financial institutions developed an Accountants' Report form along the lines of the sample letters published in my original article. While I would accept the main headings in their form, it would benefit from some modification. I must stress that any "reports" or "certificates" using this form should be accompanied by a letter with a suitable disclaimer.
My approach
My approach in dealing with these forms for Accountants' Reports/ Certificates for financial institutions is to ignore them and write a letter providing factual figures from the accounts or returns prepared for the client. We avoid giving opinions on and projections of future income. We provide information on the tax position in the manner outlined below (Letter 2), and refer the financial institution to the client in respect of any information which they can provide themselves. We do include a suitable disclaimer on the letter in which the information is provided
Reports on the up-to-date tax position
Since the tax amnesties some financial institutions require accountants to provide information on the up-to-date tax position of their clients. One problem with this is that it is not always clear what point in time the financial institution is seeking information for. Is it to the date of the last accounts? Or is it all taxes outstanding at the date of the request? If the latter, then this is a major task for the accountant. I take a middle of the road view, and provide up-to-date information on the taxes that we normally look after i.e. Income Tax and Corporation Tax. In relation to other taxes dealt with directly by the client such as VAT, PAYE/PRSI and Sub-Contractors Tax, I point this out to the financial institution, perhaps providing some background information as to how the client handles them.
In my experience these reports are accepted by most, if not all, financial institutions and satisfy their requirements in relation to our clients. While some practitioners do not charge for these Accountants' Reports it is the policy of my firm to charge on an individual basis.
Standard Bank Requests (SBR1)
Almost 20 years ago, in August 1982, the Irish Banks Standing Committee and the Northern Bankers' Association formed an agreement with the Institute of Chartered Accountants in Ireland for the use by auditors of a Standard Bank Request form (SBR1) when approaching banks for information. In Northern Ireland this has now been replaced by Practice Note 16 (N16 on Chariot 2000). This has worked well both for the banks and accountants, and has been accepted for use by other financial institutions including the Building Societies and Credit Unions.
There are, however, certain sections of the form which are not being properly completed by the banks. Section 2 which requires details of the full titles and dates of closure of all accounts closed during the accounting period has presented problems. In particular, full details of all bank accounts in both sole and joint names are not being included on the returned forms. Bank accounts set up by the branch with related Retail Deposit Centres and Building Societies are not being returned on the SBR1. Section 4 on contingent liabilities has tended to be ignored by bank branches as has Section 3 on the nature of security held directly from the customer, or notes like "as before" and "see previous correspondence" have been entered. In my experience small banks are best at completing the SBR1 properly and tend not to charge for the completion of the form. The main clearing banks typically charge clients �?�£15 - �?�£25 to complete the SBR1.
While some of the financial institutions seem to be operating the 1982 agreement, others appear to be sending the SBR1 to the client for apparent "vetting" before it is forwarded to the accountant. Indeed in some cases the client is instructed to return the form to the accountant. "Paid cheques" requested as part of the audit process are in some instances given directly to the clients for onward transmission to the accountant. Requests for information backed by bespoke letters of authorisation are also being sent directly to the client for onward transmission to the accountant.
My advice to practitioners encountering the problem is to write to the Manager of the relevant branch outlining that this practice is not in accordance with the 1982 agreement, and copy your letter to John Bowen Walsh at the Institute who has been in correspondence with the banks.
Finally
I believe that these difficulties between accountants and financial institutions can be overcome through consultation and agreement. It is important that financial institutions consult with the providers of the information they require, and that they adhere to agreed procedures in providing information to accountants.
In summary, my "Do's and Don't's" in regard to dealing with these forms are:
1. Never complete standard Accountants' Reports supplied by financial institutions. Supply the information instead in a letter based on the information which you have in your files.
2. Always include an appropriate disclaimer as part of your letter.
3. Query financial institutions who do not follow agreed procedures in regard to the completion of Standard Form Requests / client/ company authorised information requests.
4.Tell the Institute about any unusual requests from financial institutions, and where procedures are not being followed by those institutions.
Remember that, as a group working together, practitioners have clout when they deal with issues involving the financial institutions on a similar basis.
Back to my weekend now which turned out to be the weekend Ireland thrashed the Scots for the first time in 12 years. Perhaps for accountants, no more or less than for the Irish Rugby team, things will get better. Sometimes it happens!
Accountancy Ireland, Vol. 32, No. 2 April 2000