I am just wondering of responsibilities of an accountant in relation to geting detail in relation to business purchases ...
It now transpires that the other partner has not filled in any cheque stubs or given any evidence of invoices to accountant for the bulk of transactions. These items have just been recorded in that accounts as purchases. When further information was requested the accountant says that as cheque stubs werent completed he had to record them just as purchases.
It's not amazing. The accountant's role here is to compile a set of accounts and tax return based on the limited information and verbal provided by the proprietors. The fact that they were provided with incomplete records and false representations is not the accountants' fault. It's ridiculous to expect an accountant, engaged to prepare accounts by an incomplete records client, to forensically review & report on all accounting deficiencies within that enterprise. No doubt, if they did, they would most likely be told that they had exceeded the terms of their engagement and their fees wouldn't be paid.It seems the accountant did not tie up payments to specific items or receipts which does appear amazing .
. I suppose a request should be made for copies of certifications to see if anything was highlighted there. When the accountant was asked he just said this is all he was given & he just accepted it..
Did the second partner not sign the partnership accounts, nor their own tax return? If not, why not? Why weren't they, as partner in the business, failing to exercise at least a modicum of basic financial control within their own business? Why did they never look at a bank statement or a cheque book?He certainly didn't discuss any issues with the other partner.
If I was preparing accounts on behalf of a partnership and I had to guess what some expenditure was, I would make sure to tell both partners in a meeting and in writing.
Hi
While there is merit in both Brendan's and T McG's point of view, I believe that an accountant is bound by the rules of ethics of their respective association that they do not allow their name associated with a set of accounts that are misleading to the public or third parties.
4. Financial information on unincorporated entities may be compiled by accountants for a number of different purposes. Unincorporated entities may not require full financial statements, which give a true and fair view.
10. When compiling financial information, the accountants use their accounting expertise to collect, classify and present accounting information from the sources made available to them. This normally entails summarizing detailed data into a manageable and understandable form. There is no requirement for the accountants to test the assertions underlying the information. This guidance is not designed and does not enable the accountants to express any assurance on the financial information being compiled. Nevertheless, users of the financial information compiled derive benefit because Chartered Accountants are required to carry out professional work with due skill, care, diligence and expedition and are subject to the Rules of Professional Conduct, the Ethical Guide for Members and other guidance of the Institute.
18. Under the terms of the engagement the client is responsible for the reliability, accuracy and completeness of the books of account of the entity and for the provision and disclosure to the accountants of all information relevant to the purpose and compilation of the financial information.
19. The engagement to compile the financial information cannot be regarded as providing any assurance on the adequacy of the entity's systems or on the incidence of fraud, non-compliance with laws and regulations or weaknesses in internal controls.
28. In certain circumstances, adjustments and/or disclosures that the accountants consider appropriate may not be made in the financial information, or appropriate information may not be provided to the satisfaction of the accountants. If the accountants consider that the financial information presented is misleading then they should withdraw from the engagement and should not permit their name to be associated with the financial information.
29. In considering whether financial information is misleading, the accountants consider whether the financial information appears to be appropriate for the purpose for which it is compiled, appropriate in respect of the basis of preparation agreed and free from material misstatements that appear obvious to them as a result of, for example, misclassifications in the financial information or mistakes in the application of the basis of preparation.
"10 ...users of the financial information compiled derive benefit because Chartered Accountants are required to carry out professional work with due skill, care, diligence and expedition and are subject to the Rules of Professional Conduct, the Ethical Guide for Members and other guidance of the Institute."
I know we are probably only hearing part of the story here but do you think that the above shows due care and skill? Burying all the unidentified cheques into purchases? If he asked the partners what were all these cheques and he was told to put them in purchases that is another story. But the impression I have is that he did not.
Other guidence = Follow ICQ1 and quality control.
24. The accountants are under no obligation to perform procedures that may be required for assurance engagements such as audits or reviews as part of this type of assignment.
I presume you mean ISQC 1 "Quality control for firms that perform audits and reviews of financial statements, and other assurance and related services engagements".
This is irrelevant here as M48 specifically states:
Can't we all just agree that the accountant has a responsibility to adhere to certain professional standards, that at a minimum (whether under the guise of ISCQ1 or not) would require him to at least ask the partner with whom he deals (since it'd be madness to expect the accountant to have to deal with all of the partners of a partnership on all matters), what the unknown cheques were for.
If he asked and was told they were purchases, he has probably satisfied his professional obligations, and if he didn't ask and just decided to claim them as purchases then he's acting the maggot.
Gimme back my lunch money or I takes my ball and goes home
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