“Diligent documentation is the most important thing when it comes to complaints, to be able to prove what you said you did.”
Caption 02:
Lorem tore v
eri tatis et quasi archi te cto be.
Caption 01:
Lorem tore v
eri tatis et quasi archi te cto be.
To avoid misunderstandings, when embarking on a business relationship, members should clearly state the services in their engagement letter. If job parameters change, so too should the engagement letter.
Rules for a happy engagement (letter)
BALANCE
“Documenting above the minimum requirements is best practice. It’s all about protecting you.”
“I'm really excited about being able to do forecasting. At the moment, it's all in spreadsheets and a bit static. We need to get it on dashboards in everyone's face all the time”
Extended text about the digital issue with a highlight called out.
See full issue
Assiduous documentation of communications and agreements between accountants and their clients is an essential part of practice management and can save members a lot of time and potential issues. Rebecca Stickney and Kate Dixon, Chartered Accountants Australia and New Zealand’s (CA ANZ) professional conduct leaders in New Zealand and Australia respectively, discuss some of the pitfalls and learnings from documentation complaints.
“An engagement letter is the foundation document of a relationship with a client,” says Stickney. “It sets out the core terms of the relationship, the scope of services to be provided and to whom, and the expectations of both parties. However, inadequate or lack of engagement letters is a recurring issue in complaints.
“CA ANZ provides various templates and guides (see links below) to assist members to comply with documentation requirements, including sample engagement letters, but a template is just the starting point, it needs to be carefully thought through and may need to be tailored to the particular job.”
According to Stickney a lot of members do not update their engagement letter throughout the course of the engagement, while some go a further step and reconfirm their instructions with an annual questionnaire.
“If you are wanting a long-term relationship with the client, some thought needs to be applied to how things could evolve over time.
“For example, when addressing fees, does your engagement letter contemplate what your business policies are? Does it reflect the timing of fee increases, such as annually or periodically?”
Sydney-based Kate Dixon cites a case which illustrates how good documentation can protect the member.
“A complainant claimed a member hadn't prepared a tax return with due care as she had lodged it without claiming a particular deduction,” she explains. “When this complaint was put to the member, she had a written record of the client’s instructions to lodge the return without claiming the deduction because the complainant didn’t have the necessary records to support the deduction.”
The member had a printed copy of the draft tax return which she used as a basis for her discussion with the client. When the complainant told her to go ahead and lodge the return, she made a quick file note on the draft tax return.
“So, while the instruction hadn’t been confirmed in writing with the client, she did at least have a file note and she was able to produce that. It was very clear that she'd received the instruction.”
Stickney says particular attention also needs to be given to specialist areas, such as assurance and insolvency engagements.
“There are technical standards that require the documentation of certain procedures performed by the accountant,” says Stickney. “A regular issue, including at the Disciplinary Tribunal level, involves breaches of the documentation requirements in the assurance standards. If you're doing specialist areas of work, you need to understand what those requirements are and follow them.”
Accountants who lack experience in these areas but occasionally perform a pro bono audit, for example, need to be particularly vigilant. “If you're practicing in a field that's not your routine area of practice, be very clear on what your requirements are under the standards, including whether there are extra documentation requirements to document your work processes,” says Stickney.
Stickney and Dixon periodically see cases where members use proprietary audit software but don't always follow through with all the steps – or they fail to adequately document their work. While such software products and templates are very important, they don’t replace a thorough understanding by the member of all the relevant requirements.
Acuity Special Edition December/January 2023
See full issue
Alexandra Johnson is a freelance writer and assistant librarian with the CA Library.
Story Alexandra Johnson
Is it time to revisit your letter of engagement?
It’s there in black and white
Other matters regarding documentation
Conflicts of interest, proposed safeguards and the clients written informed consent are also matters that must be documented.
“If there are no significant differences in your engagement terms this can be sufficient, but if your terms or instructions have changed, clients need to know that before new work starts,” she says.
“If you're doing specialist areas of work, you need to understand what those requirements are and follow them.”
– Rebecca Stickney, New Zealand conduct leader, CA ANZ
Stickney says most complaints about fees involve an aspect of bill shock, including billing for things which the client did not expect, such as on-charging Xero subscription costs or credit collection costs.
“You will set yourself up for success if you have good engagement terms and confirm in writing to the client the engagement scope and any changes in instructions or fees,” she says. “These are the foundational points of going into public practice. Don't set and forget.”
Other documentation issues that can arise include inadequate documentation of work performed, key communications, advice, policies and conflicts of interest. Members are expected to understand the documentation requirements particular to their area of practice stipulated in the professional and ethical standards.
“Diligent documentation is the most important thing when it comes to complaints, to be able to prove what you said you did.”
– Kate Dixon, Australian conduct and discipline manager, CA ANZ
“Diligent documentation is the most important thing when it comes to complaints, to be able to prove what you said you did or didn’t do,” says Dixon “If you have written records, you may not even have a complaint lodged against you, because you can use those records in your discussions with the client.
Acuity Special Edition December/January 2023
See full issue
CA Library has curated a reading list of 26 titles on strategies to make remote and hybrid working successful.
Resources
CA Library has curated a reading list of 26 titles on strategies to make remote and hybrid working successful.
Remote and hybrid working
CA Library have brought together 20 titles on how to adapt, thrive and stay relevant in The future of work.
Preemptive actions to lower the possibility of client fee disputes:
How to avoid client bill disputes
Sholto Macpherson is an award-winning journalist and editor of DigitalFirst.com, a blog on the latest in accounting technology for accounting firms and SMEs
Story Sholto Macpherson
See full issue
Acuity Special Edition December/January 2023
Acuity Special Edition December/January 2023
Assiduous documentation of communications and agreements between accountants and their clients is an essential part of practice management and can save members a lot of time and potential issues. Rebecca Stickney and Kate Dixon, Chartered Accountants Australia and New Zealand’s (CA ANZ) professional conduct leaders in New Zealand and Australia respectively, discuss some of the pitfalls and learnings from documentation complaints.
“An engagement letter is the foundation document of a relationship with a client,” says Stickney. “It sets out the core terms of the relationship, the scope of services to be provided and to whom, and the expectations of both parties. However, inadequate or lack of engagement letters is a recurring issue in complaints.
The shoehorn approach
“CA ANZ provides various templates and guides (see links below) to assist members to comply with documentation requirements, including sample engagement letters, but a template is just the starting point, it needs to be carefully thought through and may need to be tailored to the particular job.”
According to Stickney a lot of members do not update their engagement letter throughout the course of the engagement, while some go a further step and reconfirm their instructions with an annual questionnaire.
“If there are no significant differences in your engagement terms this can be sufficient, but if your terms or instructions have changed, clients need to know that before new work starts,” she says.
“If you are wanting a long-term relationship with the client, some thought needs to be applied to how things could evolve over time.
“For example, when addressing fees, does your engagement letter contemplate what your business policies are? Does it reflect the timing of fee increases, such as annually or periodically?”
Stickney says most complaints about fees involve an aspect of bill shock, including billing for things which the client did not expect, such as on-charging Xero subscription costs or credit collection costs.
Stickney says most complaints about fees involve an aspect of bill shock, including billing for things which the client did not expect, such as on-charging Xero subscription costs or credit collection costs.
Is it time to revisit your letter of engagement?
Other documentation issues that can arise include inadequate documentation of work performed, key communications, advice, policies and conflicts of interest. Members are expected to understand the documentation requirements particular to their area of practice stipulated in the professional and ethical standards.
“If you are wanting a long-term relationship with the client, some thought needs to be applied to how things could evolve over time.
Sydney-based Kate Dixon cites a case which illustrates how good documentation can protect the member.
– Rebecca Stickney, New Zealand conduct leader, CA ANZ
Sydney-based Kate Dixon cites a case which illustrates how good documentation can protect the member.
The member had a printed copy of the draft tax return which she used as a basis for her discussion with the client. When the complainant told her to go ahead and lodge the return, she made a quick file note on the draft tax return.
“So, while the instruction hadn’t been confirmed in writing with the client, she did at least have a file note and she was able to produce that. It was very clear that she'd received the instruction.”
Stickney says particular attention also needs to be given to specialist areas, such as assurance and insolvency engagements.
Acuity Special Edition December/January 2023
See full issue
Resources
A toolkit for preparing engagement documents:
Dispute prevention, management and resolution toolkit
The six golden rules for managing conflicts of interest:
Golden rules for addressing conflicts of interest
Preemptive actions to lower the possibility of client fee disputes:
How to avoid client bill disputes