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Staying compliant when you engage and disengage with clients

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It’s vitally important to get the process of engaging clients right and to know how to handle a client who chooses to switch to another accountant.

One of the most important things to remember is that you must act on assurances given to ACCA and address any issues raised during a review. They won’t be impressed if they come back and find you haven’t acted on the things you have promised to do!

Are you in a position to help the new client?

The key thing with new clients’ procedures is not only to make sure you have your engagement letters issued, as this is mandatory for this kind of work, but also consider ethics and resources. Have we got any conflicts of interest and have we got the appropriate skills and resources to do the work?

You must show that you have these procedures in place, such as a questionnaire to prove that you have been through these processes. In my experience, I once went out as to look at a sole practitioner that was auditing a PLC telecommunications company on his own, and he clearly hadn’t been through these procedures. It’s also a good idea to write to predecessor firms to make sure that there is no reason why you shouldn’t be accepting this particular assignment.

What needs to be covered in the engagement letter?

It is mandatory under the terms of ACCA for each client to have engagement letters. When ACCA carry out their reviews, not only are they looking to make sure the letters are in place, but they must also be up to date. Often you start off doing tax and accounting compliance for the client, and as time progresses, you may start to do their payroll as some of them can struggle with RTI. You might go on to pick up the VAT or management accounts – but have your letters been updated?

What are your mechanisms for reviewing and revising changes to your clients’ engagement letters?You also need to explain to clients the basis on which you are going to charge them. It doesn’t have to be in the letter of engagement, but that seems to be a fairly easy and standard place to put it. Similarly, you must inform them of their right to complain – if a client isn’t happy, they need to know whom they can issue a complaint to; not only from your own firm, but they also need to know they have the right to complain to the ACCA.

The Service Director Regulations require that if as a firm you are providing services, you include information on areas such as private indemnity insurance. This can be done through the ACCA website, and a lot of firms choose to publish this information on their own company website, but this aspect could be covered in the engagement letter.

Summary of the engagement letter process

  • Ensure they are all up to date
  • Explain to clients how you are going to charge them
  • Outline their right to complain
  • PI insurance details should be enclosed

Ending the client relationship

One area where there can be a lot of disagreement ending with complaints is disengagement procedures. We all at some point will have some clients that move on, and when it comes to that change you need to make sure that everybody needs to know who’s doing what, and when it’s going to be done by, to avoid any potential conflicts. Do you issue disengagement letters? These are a very clear way of ensuring everybody knows the state of plan when it comes to disengaging, so ACCA would strongly recommend that you consider the use of disengagement letters when the relationship with your client finishes.

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