The word ‘Quality’ is often used in a business context without there being a clear idea of what it actually means. In the context of accountancy practices quality is often thought to be synonymous with compliance but there is more to it than that.
Think of quality as amalgam of best practice, risk management and Compliance. Best practice tends to be equated to the best use of technology, but thought should be given to what do you in the first instance, not what techn9ology you use to achieve your objectives. There are a plethora of software products available to accountants in practice and care needs to be taken to ensure that you choose a product that matches the size of your firm, the way that you work and the type of clients that you act for.
Risk Management is becoming increasingly important as the compliance work becomes process driven and firms place more emphasis on advisory work. Deadlines must be managed carefully to prevent any claims and advice must be given in a consistent way evidenced by a good audit trail.
There are also traditional areas of risk such as references for third parties, business valuations and management accounts which need to be addressed.
Compliance is always changing, and the requirements get more onerous all the time. The main areas relating to accountancy practices are GDPR and Anti-money Laundering, but Professional Indemnity and Continuing Professional Development requirements also need to be considered.
Areas connected with Anti-Money Laundering that accountants fall short on include:
- Lack of supporting evidence for risk assessment
- Proformas not tailored to the practice
- Policies, procedures and forms adopted but not referred to at client level.
- Forms referred to at client level which don’t form part of the firms stated procedures
- Risks are identified but no procedures set out for mitigation.
- No reference to risk assessment or ongoing monitoring of individual client due diligence risk.
- Records requirements/destruction of records procedures are unclear.
The engagement process is becoming increasingly important, not least for Anti-Money Laundering purposes. Accountants handle a vast amount of data – both client and employee – on a daily basis. Firms will need to ensure that their systems are robust enough to meet GDPR requirements and that the data is protected in line with GDPR provisions. To determine whether operations comply with GDPR, firms may need to carry out an audit on current procedures in order to identify if and where they fall short of GDPR standards.
By failing to comply, accountants leave themselves open to significant penalties. Organisations in breach of the regulation could be fined a standard penalty of €10m or 2% of annual global turnover, up to a maximum of 4% of annual global turnover, or €20m, whichever is greater.
As accountants position themselves as strategic advisers to clients, GDPR is an opportunity for firms to demonstrate to clients that they can securely hold and process information in line with data requirements, and that protection of client data is a priority for the practice. As a result, clients are likely to see their accountants as trusted professionals to whom they can entrust business and personal data, and with whom they can partner to drive their business forward.
The importance of compliance clearly should not be ignored.