For business owners that need to prepare accounts, pay taxes, and keep their finances in order, the typical order of play is to engage the services of an accountant. Professionally qualified and highly skilled accountants can minimise your tax burden while keeping you on the right side of the law.
However, it is important to check that your accountant is regulated and governed by a professional organisation that ensures financial standards are met and best practises adhered to. One such organisation is the AAT which awards skills based accountancy awards to its members and maintains standards of professional competence and ethical conduct.
A large number of complaints are received each year against financial agents, approximately two-thirds of which are leveraged against unregulated operators. The harsh truth is that anyone can call themselves an accountant whether they have the skills and qualifications or not. It’s a growing problem that leaves businesses wildly exposed to any number of financial issues.
Benefits of using a regulated accountant
It is clear for those who wish to keep their financial accounts in good order, using a regulated account provides some security. Those professionals that are backed by a governing body are not only guaranteed to have the necessary qualifications, but there will also be a clear resolution process in the event things go awry.
Regulated accountants will:
- Provide a high standard of professional service to their clients
- Be held to a code of conduct
- Perform business activities in a professional and ethical manner
- Will engage in ongoing training and professional development
- May be required to have professional indemnity insurance
In contrast to the reassurance and security provided by using a regulated accountant, businesses engaging the services of an unregulated professional may be exposed to a number of possible risks including,
- May not be held to a professional standard
- Not required to continue professional development or undertake training
- Could risk exposure to incorrect tax reporting
- May be exposed to money laundering activity
- Does not need to have indemnity insurance
- Possible embezzlement of funds
Unregulated accountants can cut corners in many ways including misreporting information on tax returns or misappropriating funds. Behaviour can range from unethical to illegal but the result is the same. In many cases it’s the business owner who suffers the consequences and usually ends up out of pocket.
What are the government’s plans for regulation?
As the issue of unregulated accountants is broad ranging, affecting every industry in the country, the government is considering controls and tighter restrictions. At the minimum, accounting professionals may be required to hold professional indemnity insurance which will give their clients protection in the event of any intentional wrongdoing.
While this may be a step in the right direction, many industry professionals including the AAT, insist that the only way to ensure proper protection and maintain adequate standards is to demand that any accountant performing business is required to be part of a regulatory governing body. This will ensure that accountants remain operating under strict ethical practises and be accountable for their actions.
The Working Together initiative brings together a number of professional financial governing bodies and representatives with the HMRC. This collaboration allows both sides to raise issues, and improve communications and operations for both the financial industry, individual agents, and the HMRC.
Conclusion
The issue of mandatory regulation is still currently pending, so until it is resolved business users can protect their own financial interests. By using only accountants who are offering paid for tax and accountancy services to be registered with a professional agency, clients will at least be afforded some level of protection from poor business practises.
