1. Practice management
Benefits: The firm makes the most of its finite resources by planning its workload and is in a good position to offer pro-active advice to its clients which will help to enhance its reputation. Risk areas: Excessively busy periods where errors are more likely to occur. For example, fire fighting to meet one deadline after another. Not adequate time left to offer clients tax and business advice. Inefficient working practices.
1.1
Do you plan and control your workflow in advance to ensure best use of resources,
meet all relevant deadlines and avoid excessively busy periods?
Yes
No
N/A
1.2
Do you have procedures set up to deal with fee disputes and complaints?
Yes
No
N/A
2. Presentation and image
Benefits: By promoting a professional image the firm will enhance its reputation and help maintain or improve the quality of its client base. Risk areas: If the initial contact point for clients is unwelcoming or untidy this will not enhance the firm's image and may lose the firm prospective clients.
2.1
Do your firm's premises present a professional image, which is appropriate to your firm's client base?
Yes
No
N/A
2.2
Is your firm's promotional material kept up to date and relevant?
Yes
No
N/A
3. New client procedures
Benefits: The firm minimises its risks, only accepts clients which it has the skills, expertise and time to service, improves the quality of its client base and therefore its potential profitability.Risk areas: Independence, conflict of interest, lack of expertise, timing of work and capacity to provide services, money laundering considerations. Leading to loss of clients and complaints.
3.1
Do you have procedures in place to ensure new clients are only accepted if your firm has the relevant skills, expertise and time available to provide a professional service?
Yes
No
N/A
3.2
Do you keep a record of the information obtained when accepting a new client to ensure that your new client procedures are consistently applied?
Yes
No
N/A
3.3
Do you have procedures in place to ensure that work is not started on new client's affairs until you have obtained professional clearance, where appropriate, and agreed the terms of engagement in writing?
Yes
No
N/A
4. Human resources
Benefits: Staff will be employed to suit client base and will be adequately qualified and trained to ensure the firm minimises risks. A good workforce that is well looked after is likely to result in a low turnover of staff and therefore efficiency and potential profitability is improved. Risk areas: Client confidentiality, staff independence, poor quality of work, poor quality of personnel, reliance on inexperienced staff.
4.1
Do you always obtain written references before employing staff?
Yes
No
N/A
4.2
Do you have written terms of employment in place for all staff?
Yes
No
N/A
4.3
Do you obtain Fit and Proper declarations, confidentiality and Independence statements from staff and subcontractors?
Yes
No
N/A
4.4
Does your firm have a training policy to keep the firm's knowledge base at a high standard?
Yes
No
N/A
4.5
Do you control the allocation of work, so that staff are given work consistent with their capabilities and you take account of their training requirements?
Yes
No
N/A
4.6
Is appropriate supervision and review exercised over the work of your staff?
Yes
No
N/A
4.7
Do you conduct staff appraisals, at least on an annual basis?
Yes
No
N/A
4.8
If your firm's work is outsourced on a subcontract basis:
(a) Do you require the subcontractor to maintain a level of competence in the areas in which work is carried out on your firm's behalf?
Yes
No
N/A
(b) Do you have review procedures in place to maintain the standard of work carried out by the subcontractors?
Yes
No
N/A
(c) If work is outsourced to another firm at another location, do you have controls in place to ensure security of data transfer?
Yes
No
N/A
(d) Are your clients informed that work may be outsourced to another location?
Yes
No
N/A
5. Correspondence, interview and telephone notes
Benefits: To avoid misunderstanding, to enhance professional image by ensuring no information is overlooked when advising clients, and controlling what advice is issued to clients and by whom. Risk areas: Vital information overlooked, no record retained to support oral advice given in cases of dispute or misunderstanding, wrong advice being given by unqualified staff.
5.1
Do you control outgoing correspondence, emails and faxes?
Yes
No
N/A
5.2
Do you have clear instructions for staff on who is authorised to write letters to clients and tax authorities etc?
Yes
No
N/A
5.3
Do you have clear instructions for staff on the level of advice, if any, they are authorised to give in writing or orally to clients?
Yes
No
N/A
5.4
Do you and your staff make formal file notes of important issues discussed or advice given on the telephone and in meetings with or about clients?
Yes
No
N/A
5.5
If you are a sole practitioner, do you have procedures in place to maintain quality controls when you are absent from the office?
Yes
No
N/A
6. Office filing
Benefits: Time saving and efficiency of document retrieval, minimise risk of matters being overlooked or information lost and therefore promotes good client relationships. Risk areas: Loss of documentation, important information being overlooked, permanent information being archived or destroyed.
6.1
Is your filing system simple, systematic and understood by all members of staff?
Yes
No
N/A
6.2
Is filing done promptly?
Yes
No
N/A
6.3
Does your firm have a file retention and destruction policy?
Yes
No
N/A
6.4
Does your firm ensure it maintains confidentiality when disposing of documents and old computers?
Yes
No
N/A
7. Security of computer data files
Benefits: Continuity of practice, easy efficient access to information on computer, ensures integrity of files and minimises any exposure to risk. Risk areas: Loss of data files through fire, computer failure or bad file management, errors occurring through use of old data, breaches in confidentiality, file corruption and computer viruses, breach of copyright or law such as Data Protection Act in UK.
7.1
Does your firm keep its data confidential and secure?
Yes
No
N/A
7.2
Do you have a contingency plan in case of fire, theft or major system failure?
Yes
No
N/A
7.3
Do you backup your data files regularly?
Yes
No
N/A
7.4
Do you use anti-virus software and update it regularly?
Yes
No
N/A
7.5
Do you comply with any relevant data protection legislation?
Yes
No
N/A
7.6
If you do not retain a hard copy of work carried out on computer, do you have an adequate computer file retention and destruction policy?
Yes
No
N/A
8. Personal tax
Benefits: Reduced exposure to risk, enhance client relationships, protect reputation, and improve efficiency and potential profitability. Risk areas: Late submission of tax returns, claims and elections; errors occurring on tax returns submitted; completeness of information and income; errors in tax calculations; advising clients incorrectly of tax liability, due dates etc; under-assessing the tax liability.
8.1
Do controls exist to ensure that terms of engagement are clearly defined in writing and up to date?
Yes
No
N/A
8.2
Is the progress of tax returns logged and monitored to ensure deadlines are met and no returns are overlooked?
Yes
No
N/A
8.3
Do you inform your clients of their tax liability and due dates in writing, either by letter or in electronic form, i.e. email?
Yes
No
N/A
8.4
Do you have a control procedure to ensure that the work generated does not contain errors and omissions?
Yes
No
N/A
8.5
Do you have procedures to check the final return for completeness and errors?
Yes
No
N/A
9. Corporate tax
Benefits: Protecting the firm's reputation with clients and tax authority, enhancing professional image, minimising exposure to risk, by efficiency increasing profit potential. Risk areas: Late returns may incur penalties and may also initiate a tax enquiry into the company's affairs; under assessing the tax liability; completeness of income especially for non-audited accounts; incurring interest on late payment.
9.1
Do controls exist to ensure that terms of engagement are clearly defined in writing and up to date?
Yes
No
N/A
9.2
Do you use a reminder system to ensure any claims and elections are not overlooked and that any deadlines are not missed?
Yes
No
N/A
9.3
Do you inform your clients of their tax liability and due dates in writing?
Yes
No
N/A
9.4
Do you have procedures to check the final return for completeness and errors?
Yes
No
N/A
10. Accounts preparation
Benefits: To enhance the firm's professional standing with the clients and tax authorities because errors are detected before work is released, improved efficiency, cost effectiveness and potential profitability Risk areas: Material errors in the accounts go undetected, statutory deadlines or deadlines imposed by the clients or client's bankers are missed, working papers do not support the figures shown in the accounts, statutory requirements are overlooked.
10.1
Do controls exist to ensure that terms of engagement are clearly defined in writing and up to date?
Yes
No
N/A
10.2
Do you track and monitor work in progress to ensure efficient throughput of work?
Yes
No
N/A
10.3
Does your accounts preparation documentation clearly record how the accounts have been constructed and the source of the information used?
Yes
No
N/A
10.4
Do you record your review and finalisation procedures?
Yes
No
N/A
10.5
Do you have standard procedures in place to systematically check accounts for errors, omissions and statutory disclosures?
Yes
No
N/A
10.6
Do you use suitable accounts formats, including a balance sheet where the client has assets and liabilities?
Yes
No
N/A
10.7
Do you always obtain client approval of the accounts?
Yes
No
N/A
11. Management Accounts
Benefits: Minimise the firm's exposure to risk in high-risk area, enhance professional image, increase efficiency and potential profitability. Risk areas: Material errors going unchecked, information often used by third parties for decision making, based on client's projections and assumptions with little independent conformation.Definition: Management accounts are defined, for this purpose, as any accounts or financial statements which have been prepared by the firm to aid management in decision making, either for internal use only or with the knowledge that a third party may place some reliance on them when making decisions, for example, regarding loan applications, tendering for work, or continuing or increasing existing overdraft facilities. These may be in the form of interim accounts, draft accounts or full management figures and analysis.
11.1
Do controls exist to ensure that terms of engagement clearly defined in writing and up to date?
Yes
No
N/A
11.2
If you use any significant estimates or assumption in the preparation of management accounts, do you clearly identify these to the users of the accounts?
Yes
No
N/A
11.3
Do you have procedures in place to ensure that accounts are checked for errors and omissions?
Yes
No
N/A
11.4
Do you obtain client approval of accounts before releasing them to third parties?
Yes
No
N/A
11.5
If you issue draft accounts, prior to obtaining client approval, do you mark them as draft?
Yes
No
N/A
11.6
Do you restrict the use of management accounts to the purpose for which they were prepared?
Yes
No
N/A
11.7
Do you include a disclaimer, stating that in preparing the accounts you have relied on information and explanations supplied to you by the directors?
Yes
No
N/A
12. Payroll and related tax compliance work
Benefits: Minimise risk exposure, to present a professional image and an efficient service to clients. Risk areas: Errors coming to light through inspections carried out by the tax authorities resulting in assessments being raised and penalties and interest being charged; not meeting deadlines for tax payments and any tax returns.
12.1
Do controls exist to ensure that terms of engagement are clearly defined in writing and up to date?
Yes
No
N/A
12.2
Do you control the timing of the work to ensure no payrolls are overlooked?
Yes
No
N/A
12.3
Do you obtain written notification of any changes to salary rates and starters and leavers on the payroll?
Yes
No
N/A
12.4
Do you keep copies of the written authority to operate or change tax codes issued by the tax authority?
Yes
No
N/A
12.5
Do you inform the client in writing of any payments and submissions to the tax or other statutory authorities in time to meet relevant deadlines?
Yes
No
N/A
12.6
Do you have procedures in place to review and control payments made on behalf of clients whether this is a mandate to sign cheques on the client's own bank account, an authority to make payments through the bank automated credit system or where money is transacted through the firm's client bank account?
Yes
No
N/A
13. Sale tax or VAT compliance work
Benefits: Present an efficient professional image to clients and minimise the firm's risk exposure. Risk areas: VAT or Sales tax can be a complex tax with an inherent risk that errors both by the client and accounting staff will occur therefore detection of errors is paramount. Risk of missing deadlines for submission of returns and payments and possible risk of incurring interest and penalties.
13.1
Do controls exist to ensure that terms of engagement clearly defined in writing and up to date?
Yes
No
N/A
13.2
Do you control the timing of the work to ensure deadlines are met and no work is overlooked?
Yes
No
N/A
13.3
Do your working papers show a clear 'audit trail' identifying the source of the information used?
Yes
No
N/A
13.4
Do you keep a written record of any specialist advice you might obtain?
Yes
No
N/A
Click on submit to see the sections of the checklist you need to work on
