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Liz Kirkham offers some valuable advice to ensure your practice maintains good quality control procedures.

One fact in life cannot be disputed – try as we may, no one is perfect. A certain number of errors will occur in everyone’s work, especially when we are put under pressure by a heavy workload with deadlines looming.

Once we recognise the risk the next step is to limit the damage. The use of tried and tested procedures which are generally considered best practice by the profession can reduce the risks of work leaving the firm with undetected errors.

By minimising the occurrence of errors your firm will become more efficient, project a more professional image to clients, improve profitability and client retention, and minimise the risk of litigation.

Quality Assurance Reviews
To promote best practice and to help improve standards across the profession ACCA’s Monitoring Unit now performs quality assurance reviews on member firms as a matter of routine. These visits have highlighted some common weaknesses in firms’ quality control procedures.

The following examples may help you identify similar quality control and risk management problems in your firm:

Terms of Engagement
Although many firms now have engagement letters in place for all tax and accounting assignments, they do not always cover the other services offered. There is a risk of misunderstandings occurring if the respective responsibilities of your firm and its clients are not clearly set out in writing and agreed before any work commences.

Once engagement letters have been issued they are not always being reviewed at the start of each new assignment to check that the terms of engagement are still appropriate and they cover all the work carried out by the firm.

Control Over Outgoing Correspondence
Most firms ensure that the partners or sole principal review all outgoing mail, but this control is not always evidenced, for example, by initialling the file copy. Without an evidenced review any letters not seen by the partner will not be identified until a problem arises and the damage is done.

Recording Matters Discussed Orally
A permanent record is not always made of relevant matters discussed at meetings or on the telephone with clients, the tax authorities or when obtaining advice in connection with a client’s affairs from an expert. Properly constructed file notes can ensure that matters are not overlooked when offering clients advice and also be used to support your case if a misunderstanding turns into a claim for damages.

Keeping Your Client Informed
On the whole most firms inform their clients of any personal or corporation tax liabilities and when they fall due for payment. However, this is not always done clearly in writing. Not many clients fully understand the tax regime and even fewer understand a tax computation or tax return. It is therefore important to put the details in a letter that the client understands and can refer back to when the tax falls due.

Payroll Bureau Service
When preparing payrolls for clients, firms accept instructions about starters, leavers or changes in pay without obtaining written confirmation, either by fax or by letter. This risks misunderstanding which can lead to errors in the calculation of payroll. It is good practice for the clients to put payroll changes in writing and to ensure they are signed by a responsible person.

These are just a few of the potential risks that firms run by not applying best practice – can you afford not to use best practice procedures?

Liz Kirkham FCCA – Compliance Officer, Regulatory Affairs, ACCA

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