Useful assurance advice for less experienced accountants

All businesses, regardless of size, have to abide by laws, rules, guidelines, and standards. Accessing appropriate resources and implementing appropriate procedures are crucial for maintaining compliance for independent contractors and smaller businesses. This is to guarantee that everyone connected to your company, members and non-members alike, is aware of and behaves in accordance with professional membership groups such as the ICAEW.

To achieve compliance, use your deep knowledge of your clients to identify applicable laws, regulations and standards. This may extend beyond tax and accounting laws to include specialist rules requiring additional training or external assistance, so staying informed is crucial; subscribing to practise alerts and making use of the guidance available on the websites of pertinent organisations are both effective ways to keep up with changes. When in doubt, consulting ICAEW’s Advisory Services can provide the necessary clarity.

Firms must have access to up-to-date legislation, regulations, by-laws and ethical guidance – all of which can be achieved through a subscription service. Mechanisms like Continuing Professional Development (CPD), email alerts, and memberships in relevant organisations are essential for keeping informed about applicable laws and regulations. Additionally, firms should be aware of regulated work that requires separate registration or licences, such as audit, insolvency, investment business, probate or ATOL. For firms with staff, it is especially important that they know how to access relevant laws, regulations and professional standards.

Best practices for compliance

Implementing best practices can significantly streamline compliance efforts, and they can be anything from providing in-firm guidance on money laundering, ethics and accounts to auditing standards. In addition, maintaining a list of legislation and other regulations applicable to each client file ensures that all assignments comply with relevant laws and regulations. Utilising work programmes and checklists, along with disclosure checklists and model accounts for statutory account checking, can also further enhance compliance. Moreover, ensuring that all relevant personnel undertake specialist CPD is crucial for staying updated and informed.

Anti-money laundering (AML)

The 2017 Money Laundering, Terrorist Financing, and Transfer of Funds Regulations were put in place to emphasise the need for documented risk assessments and client verification. Small firms, despite their close client relationships, often face challenges in documenting AML compliance. To address this, they must document their risk assessment along with any ongoing client due diligence. This should be followed by frequently revisiting the risk assessment list with each new piece of work to ensure continued compliance, and keeping evidence of risk assessment and client verification in a dedicated section of a permanent file or a separate AML file to streamline this process. 

Smaller firms should also consider a periodic review of the whole concern to assess and document money laundering risks, as this offers an opportunity to establish procedures that assess and document individual client risks. This in turn ensures that their reporting of any suspicious activities to the National Crime Agency is accurate. This review is also the perfect moment for staff to receive a refresher course on AML. 

Clients’ money regulations

Handling clients’ money involves potential risks such as money laundering and mishandling, so understanding and complying with the Clients’ Money Regulations is pretty instrumental in mitigating these risks. The key to this is for firms to familiarise themselves and their staff with the regulations and related guidance. Developing written procedures and standard communications for handling clients’ money can further ensure compliance.

Identifying what qualifies as clients’ money and ensuring it is paid into a dedicated clients’ bank account is essential. Obtaining a bank letter acknowledging the status of the client bank account and following specific procedures for handling clients’ money, such as withdrawing fees only with client agreement or after 30 days of an undisputed fee statement, are necessary steps for maintaining compliance.

Professional Indemnity Insurance (PII)

In the case of ICAEW member firms, they must have PII that meets the Professional Indemnity Insurance Regulations. The first step to achieving this is by assessing the risk profile, which will help determine if additional cover is necessary. Understanding the PII Regulations thoroughly is crucial; verifying that policy includes the correct wording and does not have exclusions that override minimum requirements is essential. So is ensuring rolling policies meet the minimum level of cover required by the PII Regulations is also important.

Maintaining PII cover at least at the minimum level prescribed by the regulations and any other applicable regulations involves using a participating insurer who complies with a professional membership organisation’s minimum policy wording. Then, firms must promptly notify their insurer of any claims or circumstances that may lead to a claim.

Data protection and security

With the advent of GDPR, maintaining secure personal data and robust documentation has become increasingly important. Registering with the ICO as data controllers and ensuring compliance with UK data protection laws – especially if storing data outside the UK – are crucial steps for protecting client information.

Statutory accounts disclosures

Producing quality statutory accounts requires updated procedures and training, so use specialist software and disclosure checklists to ensure full compliance with current laws and accounting standards.

Tax compliance

With the heightened focus on tax evasion and avoidance, firms must maintain high standards of conduct through systems and procedures that ensure compliance with tax obligations and broader societal responsibilities. This involves staying updated on tax laws, accurately reporting client information and adhering to ethical guidelines to prevent any legal issues.

Regulated areas

Certain areas of work, such as audit, insolvency, investment business, probate and ATOL reporting, require specific licences or authorisations, so firms must have the necessary registrations to conduct work in these regulated areas. In addition, staying informed about the requirements for each area and maintaining the appropriate credentials will help prevent any legal or professional issues.