Information provided by clients

Rachel

Hello

After recently upsetting my client by asking for further information I wonder if some of you could share your knowledge/experience with me.

Most of my clients provide me with everything, sales invoices, purchase invoices, bank statements, credit card bills etc sometimes lottery tickets and even had £15 once! From there if they have summaried their accounts I check to source docs, ask for the odd clarification and produce accounts etc. There no problem and I have no problem if there is an investigation etc as I am comfortable that I have included everything.

However, I struggle when I am just giving a spreadsheet with very basic info on and expected to produce accounts. Yes, I know it is the clients responsibility that the accounts are correct but I feel that I have a responsibility if I am producing the Accounts and preparing return that to ensure that my client is aware of what they can claim and that they are not fraudlent.

What is the minimum information that you as a MIP will produce accounts from?

If you haven't seen any source documents do you have a disclaimer that you get clients to sign?

How do you phrase questions requesting further info. For example if it the expenditure just said meals, how would you establish whether it was subsistance or business entertaining?

Many Thanks for reading and any advise will be gratefully received.

Rachel

* I do have letters of engagement for each client
* I do check ID etc for MLR

reader

I guess it depends on the client and the level of risk. For example, if you are dealing with a client for the first time or someone you suspect is money laundering the level of risk is high and therefore you would need all the source documents. However if you have been dealing with the same client for many years and know them inside out I guess the minimum info would be a detailed spreadsheet (i.e. a spreadsheet were all the individual transactions are listed, as opposed to a TB where there is only a balance) and if you were unhappy about any of the transactions you would have to phone (ideally e-mail, so you have the response in writing) the client and request more info.

Re: disclaimers, you should get your clients signing letters of engagement and letters of representation which should state that it's the client's responsibility to keep proper records and to ensure that the accounts and tax comp are not fraudulent.

I know of instances were qualified accountants have refused to provide an accountant's certificate if the accountant has produced a set of accounts that the accountant was not entirely happy with. In these instances it is really important to get the client to sign the letter of rep.

Re: subsistence and entertainment, I would simply ask "is the balance made up of expenses relating to subsistence while on business trips or is the balance made up of expenses that relate to entertaining clients or suppliers".

Hopefully next year when you do the accounts it is easier because you'll be used to the type of transactions the client is putting in "meals" etc. Although in the first year, it is definitely worth asking all the tax questions because you don't know the client's accounting system so the level of risk is high.

I hope that helps

Disclaimer: I'm not an MIP; I'm just a level 4 student; I take no responsibility for any fallout that results from practitioners acting on the above advice

Curzy

In this situation where little information is passed over, I would ensure that I have a full letter of rep in place, in which the client is taking responsiblity for the information provided etc.

Any questions I would put in writing via email so that you have a paper trail. Just ask a direct but polite question, ie in order to identify if this expense is allowable for tax purposes, could you please clarify if payment xxx was subsistence or incurred when entertaining a client etc. Also explain that it would be easier for you to have the receipts rather than disturb him etc and that you can identify easier what is and isn't allowable for business purposes.

If they are not forth coming in this information, again cover yourself by writing a cover letter to the client explaining that you have calcuated their tax liability from the information they have provided and clarify any area's where they have or haven't given you any information.

Lastly, if the client is not forth coming with any receipts etc and you are very uncomfortable then resign as his accountant.

At the end of the day you can only go on the information provided to you by the client so cover yourself as much as possible or at worst resign.

It's a little odd that he doesn't want to pass you over receipts, as you say must clients give you to much.

I once had a client give me a receipt from Ann Summers for quite a large sum of money. The client was a male barrister! I discretely returned the receipt in the pile of misc. papers not need by myself.

Good Luck!