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Home > News > Good housekeeping by accountants can prevent regulatory sanctions down the line

Good housekeeping by accountants can prevent regulatory sanctions down the line

05 September 2016 |

Recently the ICAEW Disciplinary Committee Tribunal has published a decision concerning a practitioner’s failings as to the foundations of client care. This article is a brief recap of the fundamental requirements and a reminder that good housekeeping can prevent regulatory sanctions later on down the line.

In this case the practitioner’s firm (effectively the practitioner himself with his wife holding a minor interest) received a visit from the Quality Assurance Department (QAD) back in July 2006. Of concern to the QAD was (amongst other things) an apparent lack of engagement letters being sent to clients at the commencement of instructions. It seems surprising to have to explain such trite requirements here but, given the failing, this is why it matters:

Code of Ethics 240.2b 

The arrangements agreed shall be confirmed in writing prior to the commencement of any engagement, normally in an engagement letter, including a confirmation of any estimate, quotation or other indication, and where the basis of future fees will differ from that of initial fees, the basis on which such fees will be rendered. Where there is no engagement letter the professional accountant in public practice shall confirm the initial discussion in writing to the client as soon as practicable.

Disciplinary Bye-Law 11.1

Every firm shall ensure that all new clients are informed in writing of the name of the principal to be contacted in the event of their wishing to complain about the firm’s services, and of their right to complain to the Institute.


In short, 240.2b sets down the requirement to write to your client and set out the basis on which you will be charging for your services.  Regardless of the need to set out fees, it is established best practice to ensure that all elements of your arrangement with your client are enshrined in writing, with the client signing a copy or returning an email to provide confirmation of receipt and agreement.  This makes chasing any fees far more effective notwithstanding that this provided a diligence trail evidencing that 240.2b has been complied with.

As for 11.1, it is a sad fact that one of the first things you have to tell a client is how to complain about you but that is the world we live in and ignoring it puts you in breach of the Disciplinary Bye-Laws.  Combining your complaints procedure into the standard text of your client care letters allows you to kill two birds with one stone and further developing your evidenced trail of diligence.

You never know, it might just be that the above client care procedures keep your clients happier and all the more likely to use you moving forward even if unfortunate events happen.

As an additional point to note, the practitioner involved gave assurances to the Regulator back in 2006 that the above issues would be rectified. As of 2013 this had still not been done and so the 2016 tribunal also found that the practitioner had breached Disciplinary Bye-Law 4.1(a):

if in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the Institute or the profession of accountancy

Telling the Regulator one thing and then doing another is just the sort of thing the Bye-Laws are designed to prevent!

If you have any questions regarding this article or wish to discuss this topic further then please contact Marcus Lavell.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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