Advice and feedback from the Practice Assurance Committee

The Practice Assurance Committee (PAC) is concerned that non-compliance in some areas has increased. If the QAD identify non-compliance in these areas, they will report the matter to the PAC who may refer the firm to the Professional Conduct Department. Here are some examples of where firms have problems.

Signing audit reports when the firm is not a registered auditor

The PAC is concerned about an increase in the number of member firms signing audit reports without registered auditor status.
 
A registered auditor is a firm that undertakes regulated audit work and is registered with a recognised supervisory body such as ICAEW. Only audit registered firms can sign an audit report. Examples of where firms get this wrong are when they sign an Accountants’ Report for the Solicitors Regulation Authority, or an audit report for a charity thinking it’s an examiner’s report.
 
The PAC can refer firms that sign such reports without the appropriate registration to the Professional Conduct Department. The helpsheet,  Accountants’ and auditors’ reports -  When do they require a registered auditor? PAS1 HS21, gives examples of financial reporting engagements that members in practice may only perform as a registered auditor.

Complaints procedures

It’s a requirement of the bye-laws that you tell new clients about their right to complain and explain how they can do it.

That includes telling clients that they can complain to ICAEW if they want to. Although you don’t have to tell them this in an engagement letter, it does have to be in writing and the Practice Assurance Committee thinks it’s important you tell new clients before you do any work for them. Including the information on your invoice won’t be enough.

There’s more guidance on what you have to do in the Duty on firms to investigate complaints and in the helpsheet, What if you haven’t issued an engagement letter?

I have a PC, so that’s OK isn’t it?

The PAC is worried that some members don’t understand the complexities of the PC requirements. Sometimes members get caught out, so remember…

You still need a PC

• if you have a PC with the ACCA, you will also need a PC from ICAEW;
• if you’re a principal in a firm that is in public practice, you need an ICAEW PC, even if you have no client responsibilities;
• if you’re a principal in an entity that is, in turn, a principal in a firm providing accountancy services, you need a PC;
• interim managers and firms providing compliance services might need a PC (check the guidance).

Make sure you’ve thought about potential problem areas. You might still need a PC even if you don’t use ICAEW’s logo, or don’t call yourself a chartered accountant.

Sometimes you won’t need a PC

• if you’re giving time freely as a volunteer trustee or treasurer;
• if you’re working as a sub-contractor; or
• if you’re helping friends and family for no fee.

PC fee exemptions

Some sole practitioners who have recently obtained a PC may qualify for a fee exemption. For more detailed guidance, call Advisory Services on +44 (0)1908 248 250.

QAD are coming!

Practice Assurance is starting its second cycle of visits. Some firms had visits in 2005 so they may have their second visit from QAD in 2011.

Avoid any pitfalls and make sure you prepare for QAD’s visit. If you have any questions, contact QAD on +44 (0) 01908 546211.

How can you prepare?

• Have a look at our tips on the type of problems we find on our visits.
• What’s changed in your practice? Have you missed something? eg,
  - Have you set up a new subsidiary?
  - Does it qualify as a member firm?
  - Does it have PII?
• Have new laws and regulations come in since the last visit? Think about their impact on your firm. eg,
  - Has the firm carried out client due diligence on all clients? Has the firm been carrying out ongoing monitoring? This is a requirement of the Money Laundering Regulations 2007.
  -The Provision of Services Regulations.
• Has your firm registered under the Data Protection Act? Most accountancy practices need to register.
• Look at the closing meeting notes we agreed last time. What did you say you’d do? Have you done it?
• Carry out your own compliance review before we visit using the checklist on our helpsheet: Practice Assurance Compliance Review (PAS4/HS01).