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Accountant Letter of Engagement does not reflect the information I was given earlier

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    Accountant Letter of Engagement does not reflect the information I was given earlier

    Hi All,

    I'm about to switch accountants. They sent me their Letter of Engagement and I feel it does not reflect what I learn from them on the phone, on their website and in their brochures.

    First of all, I was given a PDF brochure about their plans and I decided to sign up for their gold plan. There is no mentioning of the details of the gold plan nor any reference to it.

    Below is the copy of the points in question from the Letter of Engagement:

    1.1.1 I thought it is the accountant company who is responsible for "maintaining proper accounting records and for preparing financial statements". - Could you please advise?

    1.2.3 "You have told us that the company is exempt from an audit of the financial statements. We will not check whether this is the case. However, if we find that the company is not entitled to the exemption, we will inform you of this." - I have not told you this and I do not even know what is an audit and whether my company needs it. - Could you please advise?

    1.2.5 "we cannot provide any assurance whether the financial statements that we prepare from those records will present a true and fair view." - I would have thought that you will make sure that the financial statements will be accurate and true. - Could you please advise?

    1.2.7 "Furthermore, as directors you have a duty to prepare financial statements that comply with the Companies Act 2006 and applicable accounting standards. If we find that the financial statements do not conform to generally accepted accounting principles, or if the accounting policies adopted are not immediately apparent, we must disclose this in the financial statements." -- Again, I would have thought that the financial statements are are prepared by you. - Could you please advise.

    1.5.4 "We will tell you the amounts of income corporation tax to be paid and the dates by which the company should make the payments." - I thought this is calculated automatically by Iris OpenBooks which I will have access to. Could you please confirm that I will be able to make invoices myself through the system. - Could you please advise.

    1.6.2 f) "to keep us informed about significant transactions" - Could you please make an example?

    2.1.1 You will continue to deal with all matters required by law, such as • Pay As You Earn including year end returns P35/P14/P60; • forms P11D; and • returns for sub-contractors. - Could you please advise as to what this means? If possible I would like you to deal with these as well.

    2.2.2 c) "if any casual labour is taken on, you are required to operate P46 procedures. The completed P46 form should be passed to us for processing;" - Could you please advise as to what this means?

    2.2.2 i) "any notice of coding received by you." - Could you please advise as to what this means?

    PART 2

    3.1 "We may, from time to time, hold money on your behalf. The money will be held in trust in a client bank account, which is segregated from the firm's funds." - Could you please advise as to what this means?

    11.1 "Our fees are calculated on the basis of the time spent on your affairs by the principals and staff and on the levels of skill or responsibility involved. Our fees will be billed when due, together with outlays and VAT and our invoices will be due for payment when issued." - I was informed that I will be paying a fixed fee for the Gold Plan. - Could you please advise?

    12.1 "Each party irrevocably waives any right it may have to object to any action being brought in those courts, to claim that the action has been brought in an inconvenient forum, or to claim that those courts do not have jurisdiction." - Could you please advise as to what this means?

    PART 3

    1.0 "that this agreement is entirely without prejudice to the Supplier’s right to take whatever action it deems fit against the Company, even if doing so increases my liability under this agreement." - Could you please advise as to what this means?

    Thanks all.

    #2
    To put it simply, it is your responsibility as the director to ensure that the accounts are up to date and correct. The accountant will assist you in doing so but can only work on the information that you provide.

    2.1.1 You will continue to deal with all matters required by law, such as • Pay As You Earn including year end returns P35/P14/P60;
    I would expect the accountant to prepare these documents. But it your responsibility to ensure that they actually are prepared.

    NLUK will probably along soon with some search results.
    Last edited by RasputinDude; 14 January 2013, 12:38. Reason: Further

    Comment


      #3
      Not sure about a search but there are a couple of things I would do in your situation and these would be...

      1) Speak to the accountant to get an answer to all your questions
      2) Try other accountants to compare. You are looking for a service that suits you and there are loads of offerings that may or may not differ. Pick the one you are comfortable with. You didn't say who it was so try one of the big contractor accountants. Nixon Williams, In Touch and SJD seem to have the lions share and with 20K contractors between them they can't be doing it wrong. I hated my single man accountant as he didn't know how contractors work so I got in a right mess.

      Remember though that the accountant offers you a service which has limited responsibility as all services do. As a director you are legally responsible for the final accounts, you sign them even if the accountant submits them. You have to understand what he is doing for you. Pleading ignorance at an investigation is not a defence. He can only carry out his service based on your actions as well, you have to give him the right information at the right time for him to prepare your accounts. It is not up to him to make sure you run your business properly. They can advise on what they know of tax law and the information you give them about your situation. If you just bung him receipts and it goes wrong you can't blame him. You have to understand what you are sending him and why.

      Try steps 1) and 2) above and see if it clears your questions up.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        If you do not understand the document the accountant has given you I would advise that you direct these questions to them.

        As we are not the accountant concerned (and we don't know the ins and outs of the offer) we will probably NOT give you the most accurate advice on these matters.

        PS. RasputinDude and NLUK have given you good general advice above. I would follow it.
        "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
        - Voltaire/Benjamin Franklin/Anne Frank...

        Comment


          #5
          Originally posted by Gulliver View Post
          Hi All,

          I'm about to switch accountants. They sent me their Letter of Engagement and I feel it does not reflect what I learn from them on the phone, on their website and in their brochures.

          First of all, I was given a PDF brochure about their plans and I decided to sign up for their gold plan. There is no mentioning of the details of the gold plan nor any reference to it
          Thanks all.
          Kinell. Have you actually gone back to them and asked them? Y'know, seeing as its their T&C's!?
          I couldn't give two fornicators! Yes, really!

          Comment


            #6
            Originally posted by BolshieBastard View Post
            Kinell. Have you actually gone back to them and asked them? Y'know, seeing as its their T&C's!?
            I sent them these questions and they said:

            "Most of your questions relate to the letter of engagement, the answer to your questions are basically that as a director you are responsible for the financial affairs of your company and what we do is assist you to fulfil those responsibilities. As our services cover all aspects you need not worry about any of the items in our letter of engagement. It is a standard form issued by our professional body."

            Since they didn't address the individual points, I sent them another email:

            "I confirm that I have read your responses marked with red. However, I feel that all of my questions has not been answered. Could you please reply to my individual questions one by one? I understand that this is a standard engagement letter, however, I believe that the contract I'm going to sign must reflect the information I was given from the Client Services Summary.pdf, from the Contractor Accountants | Contractor Accountants in Watford - Meades Contractors LLP website and Louise. I did not find the details or any reference to the gold plan, nor do I know why would my accountant hold money for me in a separate bank account, there is no reference in the Letter of Engagement about the use of Iris Openbooks, how my data is collected etc etc."

            to which they responded:

            "It appears to me that the confusion lies in what the letter of engagement stands for. To put it simply, it is our version of our terms and conditions and does not reflect anything to do with the service we are offering to provide you with. We don’t issue a contract for services as we don’t believe in tying clients in to contracts when their own circumstances may change and to hold them to a contract would be unfair. We also don’t need a contract because we stand by the level and professionalism of our service.

            Therefore, I recommend that you take independent legal advice over the letter of engagement if you are uncomfortable signing it. Rest assured that all of the points in the letter are perfectly standard in the accounting profession.

            If you are not prepared to sign the letter then, regrettably, we will not be able to act for you or your company."

            Confused! She is saying it's not a contract but a T&Cs but then what will make sure there is a legal document that includes all the things they promised to do in the Gold Plan? Eg if I have a debate with them and I go to a court I will only have the T&Cs in my hands. But the T&Cs does not include any reference to the gold plan and what's included in the gold plan so they can say there is no gold plan at all, I simply signed the Letter of Engagement!

            Also, why would an accountant hold monies for me in a separate bank account???

            Why can't they just answer my questions one by one?

            I wanted to work with them because they are local and they use Freeagent which is my choice of accounting software. I do not want to go to an accountant who does not use freeagent as I want real time tax and business forecasts!

            Comment


              #7
              Originally posted by Gulliver View Post


              Also, why would an accountant hold monies for me in a separate bank account???
              *IF* they need to hold money for you, then it is held in a client account; not their trading account. Solicitors do a similar thing. It is to keep *your* money away from *theirs*.

              I'd look at the sticky thread for accountants and contact one of them. Incidently, I use Contractor Accountant experts UK | Accountancy Service for contractors who are not on the list.

              Comment


                #8
                If you have nothing in writing detailing what services will be provided to you in their 'gold plan' and there is nothing on their website then it may be worthwhile looking for another accountant - being local should not really be your prime consideration. Also, most of the questions you have put to them are about your responsibilities as a company director; if you are going to run a company you should thoroughly investigate what's involved. An accountant can only do so much for you otherwise they will risk being seen as an MSC
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                Comment


                  #9
                  Originally posted by Gulliver View Post

                  I wanted to work with them because they are local and they use Freeagent which is my choice of accounting software. I do not want to go to an accountant who does not use freeagent as I want real time tax and business forecasts!
                  I would then strongly suggest you speak to Nixon Williams, In Touch and SJD. They all support freeagent. I see BFCA is listed on the freeagent site and they are contractor specific also. I tried a local bod and he didn't know contracting so supplied me with a really poor service. I switched to SJD and haven't had a hiccup in 4 years. I have never had to or felt the need to go meet them in all that time so strongly believe that a better, knowledgeable service tailored to my needs is much much more important than popping round to see someone who doesn't know my business inside out.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment


                    #10
                    I recommend that you take independent legal advice over the letter of engagement if you are uncomfortable signing it. Rest assured that all of the points in the letter are perfectly standard in the accounting profession.

                    If you are not prepared to sign the letter then, regrettably, we will not be able to act for you or your company.
                    This is your answer above.

                    They may sound scary to a fairly new company director, but the terms of engagement sound fairly reasonable to me. There are a number of legal responsibilities which your accountant will do their best to help you comply with but ultimately it is your responsibility as the director. Unfortunately, you are going to run into this type of thing sometimes when you run a business.

                    As the accountant says - you should take independent legal advice if you aren't happy or try a different accountant though the terms don't sound all that unreasonable.
                    Free advice and opinions - refunds are available if you are not 100% satisfied.

                    Comment

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