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Accountant’s reports can be an opportunity for auditors to provide valuable services to clients and develop new revenue streams. Here, we outline the options, issues to think about and support available from ICAEW.

The professional life of an accountant does not begin and end with audit – even if it may sometimes seem this way. As well as being engaged to perform financial statement audits, firms offer general accounts preparation and tax compliance work, and many will also get requests for other types of accountant’s reports from a variety of sources and on a variety of matters.

Examples include accountant’s reports on government grants and loans, applications for other facilities and funding, charity street collections, service charge accounts, mortgage references, profit forecasts and the safeguarding of client monies – to name but a few.

Some accountant’s reports are produced purely for the client or because a third party (who has a relationship with the client) has requested them. Some may be required by a government, trade body or regulator to meet legislative or regulatory requirements.

Accountant’s reports can take the form of assurance reports where an opinion is provided, or they may take the form of a report based on a set of agreed-upon procedures (AUP). An AUP engagement involves performing certain specified procedures on factual information and reporting the findings without giving any form of opinion on the implications of the work performed. Management or other users of the AUP report are able to draw their own conclusion on the basis of the work performed by the accountant. Some engagements with clients and other third parties may contain a mixture of AUP reports and reports with an opinion, as with Air Travel Organisation’s Licence (ATOL) reporting to the Civil Aviation Authority (CAA).

Some types of accountant’s report may offer some flexibility in the manner of reporting, particularly those of a non-regulatory nature. But where accountant’s reports are bound up with legislation and regulations, the specific requirements of each type of report may offer little flexibility for change, as the regulators specify the form and content of the report. There are, however, wide variations between the form and requirements of different types of report and the terms of engagement. Reporting to the Solicitors Regulation Authority (SRA) under the SRA Accounts Rules is, for example, different to reporting to the CAA on ATOL regulations.

ICAEW support

The faculty regularly meets and discusses issues with regulators such as ATOL, the CAA and SRA and, where necessary, it informs members of developments in articles and other types of guidance. During 2021, for example, there was an ICAEW Insights article providing updates for ATOL Reporting Accountants on reporting to the CAA on escrow accounts; a workshop and Insights article on pros and cons of the main types of accountant’s report offering assurance on how grant recipients are using their funding; and articles for reporting accountants on SRA Accounts Rules in ICAEW Insights and in Audit & Beyond.

ICAEW also provides guidance on certain types of accountant’s report in helpsheets, and there are Technical Releases available from this faculty and specialists in other parts of ICAEW.

Technical Releases offer lots of useful information on certain accountant’s reports. Because of the sheer volume of requests related to accountant’s reports, it is not always possible to engage with every regulator, trade body and other type of organisation to develop and issue guidance for every report. However, ICAEW has issued a Technical Release (TECH 10/12 AAF) offering generic guidance on reporting to third parties to help members approach these types of engagements. TECH 10/12 AAF offers, among other things, guidance on example wording and opinions that ICAEW considers unacceptable to accountants providing special reports, as well as example extracts for an AUP engagement letter.

Accountants are regularly asked by clients to sign reports requested by third parties, such as trade bodies, regulators and others the client has a relationship with. When not party to these arrangements, accountants are not obliged to perform the engagement and sign the report. Even when the accountant chooses to assist the client and contracts to perform such an engagement, they have the ability to resign at any point.

There may be more requests for assistance on the way as focus increases on audit and corporate governance reform. So auditors may want to use the links below to explore the extensive online assurance resources of ICAEW, including its recommendations for companies on developing a meaningful ‘Audit and Assurance Policy’ that could make corporate information including accountant’s reports more informative.

Proceed with caution

While requests for accountant’s reports can open up new service and revenue streams, firms need to make sure that they have the relevant skills and experience to do the work and that they are actually eligible to provide the report. Some accountant’s reports require the signature of a registered auditor. A helpsheet for ICAEW members and students (see ‘ICAEW resources’, below) offers examples of affected reports and highlights the danger of inadvertently carrying out engagements that require registered auditor status when a firm does not hold an audit registration. There are also legal liability issues to consider and helpsheet guidance on this, too.

Reporting accountants need to be very clear about the scope of the engagement. You need to think about what you are being asked to do, for whom and what report is required, and this should all be reflected in the engagement terms. Make sure you can actually provide the required report: the work being performed must give you the evidence you need to give the opinion or the factual findings required in the report. You may also need to negotiate changes to the report wording or the associated work to deal with risks identified. Where this is not possible, you will need to consider whether you can perform the engagement.


ICAEW’s Assurance hub

‘A policy for progress’ outlining ICAEW’s Audit and Assurance Policy recommendations

A buyer’s guide to assurance of non-financial information

Technical Releases on audit and assurance published by the faculty, including those on accountant’s reports. They include, for example, Technical Releases on: ATOL reporting to the CAA, assurance reporting on Master Trusts and on internal controls of service organisations made available to third parties, SRA Accounts Rules, a framework document for accountant’s reports on grant claims, and more.

‘Reporting to third parties’ resources can be accessed through a hub page

All technical helpsheets (and FAQs) for ICAEW members are listed in an alphabetical index by topic. This resource hub includes helpsheets related to ATOL reporting, references on clients’ financial status and SRA Accounts Rules. It also includes guidance on ‘Registered auditor signing requirements’.

‘Managing professional liability’ guidance

Articles that may be helpful include:

Audit & Beyond

This article was first featured in the March 2022 edition of Audit & Beyond.

Audit and Beyond March 2022 cover