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Changes to Quality Assurance Department’s (QAD) pre-visit information (PVI) request

Author: Professional Standards Department

Published: 03 May 2023

In this article, ICAEW’s QAD explains recent changes to its PVI requirements, including requesting information about employee and bounce back loan creditors. QAD has worked with Turnkey to make it as easy as possible for IPs to provide this information.

We are changing our PVI request to ask insolvency practitioners (IPs) to identify open cases where:

  • the company had a bounce back loan (BBL)
  • claims were submitted to the RPS for employee claims.

Both areas are currently ‘hot topics’ for recognised professional bodies (RPBs) because if IPs don’t carry out their responsibilities properly, they may impact the public purse and other stakeholders.

Inadequate investigations and/or recovery or reporting of BBLs may enable directors to avoid relevant action either in terms of recovery of the loan or disqualification. All IPs with cases which have a BBL should have received a letter from the Insolvency Service last autumn, highlighting that fact and reminding them of their investigation responsibilities.

Dear IP 117, issued in December 2020, sets out the expectations of IPs when dealing with employee claims. We are sadly continuing to see cases where IPs:

  • don’t have books and records or relevant records against which to check employee claims;
  • accept director’s confirmations of employee liabilities without seeking, or being able, to verify them; and
  • haven’t told the RPS.

The most common cases relate to holiday pay claims. We have seen a number of cases where high claims (some for 30 days or more) haven’t been queried by the IP, notably in respect of lockdown periods, where employees say they carried days forward. While there may be some instances where an employee may legitimately have a high number of outstanding holidays, we would expect significant claims to be a red flag, meriting further enquiry by the IP. We also expect IPs to be mindful of the carry-forward guidance issued by the UK Government which can be found on its webpage: Holiday entitlement and pay during coronavirus (COVID-19) - GOV.UK (www.gov.uk)

We have been in contact with Turnkey to let them know about these changes. Turnkey has changed the regulator case data grid so that the required case information will include employee claims. In relation to BBLs, it will add a flag on a creditor that it’s a BBL and in Turnkey’s IPS SQL software, it will ask IPs to use a note to indicate this, so it’s picked up in the report.

IPs’ work in both areas will be a specific focus during our visits.

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