ACCA Quality Checked: have you got what it takes?

Alice Rae explains, in the ACCA In Practice magazine (April 2009) how firms can achieve the standard to be awarded ACCA Quality Checked and outlines some of the common weaknesses identified on visits to member firms.

The ACCA's quality assurance scheme, ACCA Quality Checked, encourages firms to adopt best practice procedures based on five principles designed to enhance the delivery of a firm's services to its clients. To be awarded ACCA Quality Checked a firm needs to show it has developed procedures to:

clearly identify its clients' needs;
maintain efficient paper-based or electronic systems;
provide training and development to keep both partners and staff technically up to date;
communicate effectively with statutory bodies, ACCA and other regulators and to keep clients informed of opportunities or obligations of which they may have been unaware; and
adhere to statutory, regulatory compliance and ACCA's Code of Ethics and Conduct.

Ms Rae explains that the ACCA Quality Checked review covers a variety of practice management issues and quality control procedures in all client service areas and she identifies the most common systems weaknesses identified at ACCA Quality Checked visits. Some of these are covered below.

The engagement process

Firms do not always have a means of controlling the engagement process and in many cases, may not obtain all the necessary information from a new client, such as confirmation of identity and professional clearance, before issuing the engagement letter to the client or accepting the appointment.

Engagement letters

Some firms have not yet issued engagement letters to all their clients setting out the scope of the appointment. In many cases, engagement letters reviewed on visits are out of date and do not cover all relevant services provided by the firm.
Note: Contract Engine from Bizezia includes all the tools required by accountants to manage the engagement letter process – effectively and profitably for firms as it facilitates the identification of “extra” work undertaken that elsewhere is so often missed.

Forward planning of work

Poor planning leads to problems. To avoid excessive highs and lows in the volume of work and reduce the likelihood of errors occurring because staff are working under pressure, firms should plan the workflow in advance.

Advising clients of their tax liabilities

In many cases firms may explain tax liabilities to clients face to face at a meeting or over the phone without later confirming this in writing with the client. This is particularly relevant if clients incur penalties due to late payment and try to blame their adviser for the resulting penalties.
Note: the tax engagement letters in Contract Engine from Bizezia incorporate a promise that the firm will always confirm tax liabilities in writing.

Approval of tax returns

Now that electronic filing of tax returns is with us, some firms do not obtain their client's signed approval of tax returns submitted online. It is best practice to always obtain signed approval of returns before submission to HMRC.
Note: the tax engagement letters in Contract Engine from Bizezia incorporate a promise that the firm will always obtain signed approval of tax returns from clients.

Approval of accounts

Firms sometimes rely on their clients signing their tax returns as approval for the figures included in their unincorporated business accounts and do not obtain separate approval of the accounts. As the annual accounts of many unincorporated businesses are prepared on the basis of information and explanations provided by clients, it is important that they acknowledge their responsibility for the information they have provided and formally approve their year-end accounts.
Note: the accounts engagement letters in Contract Engine from Bizezia incorporate a promise that the firm will always obtain signed approval of accounts from clients.

Use of disclaimers

Often, various documents, such as projections, management accounts and income references, which may be relied upon by third parties are prepared by accountants. It is best practice to include a suitable disclaimer to minimise the firm's exposure to the risk of third parties relying on this information.
Note: the standard Terms & Conditions in Contract Engine from Bizezia incorporate a paragraph explaining that a “given in good faith” disclaimer will always be appended to a reference or other information provided to third parties.