This may seem a strange question from an accountant, but many of you are probably scratching your head and wondering if there is a clear definition. The term accountant covers a wide range of services, some more general and some more specific. While the term solicitor is a legal term, this is not the case for an accountant.
You may need clarification by now: Can anyone call themselves an account? What qualifications do they need? Most importantly, as a client, do you have any cover?
How many different types of accountants are there?
Before we look at the term accountant in more detail, it’s best to get an idea of the different types of accountants. As Chartered Certified Accountants and members of the Association of Chartered Certified Accountants, we are among the more recognised types of accountants, but there are many more:-
- Chartered Accountant
- Chartered Certified Accountant
- Chartered Management Accountant
- Chartered Public Finance Accountant
- Tax Accountant
- Forensic Accountant
- Auditor
- Management Accountant
- Cost Accountant
- Payroll Accountant
- Financial Accountant
Did you know that, according to English law, you do not need a qualification to call yourself an accountant? There are no licensing requirements to promote and trade as an accountant in the UK. The industry rubberstamp, seal of approval if you will, comes from membership of bodies such as the Association of Chartered Certified Accountants.
How qualified is your accountant?
The more recognised qualification for an accountant is Chartered Accountant (CA), recognised worldwide except in the USA. As there is no standard accountant qualification, you will notice several different bodies working with various types of accountants. This is a list of the more recognised institutions:-
- Institute of Chartered Accountants in England and Wales
- Association of Chartered Certified Accountants
- Chartered Institute of Management Accountants
- Chartered Institute of Public Finance and Accountancy
- Institute of Chartered Accountants of Scotland
- Chartered Institute of Taxation
- Association of Accounting Technicians
- Association of International Accountants
- Institute of Financial Accountants
- Institute of Certified Bookkeepers
Theoretically, you could open an accountancy business tomorrow with limited qualifications and experience. The reality is that bona fide accountants tend to be members of recognised institutions and will ensure their employees are suitably qualified. So, as a customer, you have the backdrop of qualified accountants and a business that is part of an established institution, such as the Association of Chartered Certified Accountants.
If you don’t ask the questions or do your research before appointing an accountant, you could be disappointed later by their lack of experience and knowledge.
Do all accountants have professional indemnity insurance?
In the financial world, the term accountant tends to prompt confidence, security, and the belief that you are in safe hands. However, when you dig a little deeper into some businesses and, in some cases, one-person operations, things may look different.
In what could be described as self-regulation, recognised accountancy institutions will have several conditions by which members must abide. These conditions will consider a range of issues such as training, services, marketing, and other areas critical to the accountant-client relationship and the reputation of the broader industry. One of these conditions is likely to be professional indemnity insurance, so if an accountant made an error, they would be covered to reimburse the client.
It’s dangerous to assume that all accountants, whatever their area of expertise and services, will automatically have professional indemnity insurance. If your current or potential future accountant does not have any degree of insurance, whether professional indemnity insurance or another form, this should be a red flag.
What if there is no insurance cover?
In theory, whether or not there is insurance cover is irrelevant. In principle, you can still sue your accountant for malpractice, negligence, etc., where you have been disadvantaged by substandard service. The problem many will face is the source of funding for potential compensation.
If your accountant is set up as a limited company or LLP, a legal entity in their own right, it will depend upon the amount of assets held within the business. Assuming your complaint is upheld by your accountant or through a legal process, any compensation will come from the business. If there are no assets within the business – it’s unlikely there will be any redress to the directors and employees – so you may win the battle for compensation without any payment.
The situation is different when the accountant is self-employed and working in their own name, as any legal claim would cover their personal assets. It is less likely, but certainly not out of the question, that you will come across self-employed accountants working in their own name, but they will likely have some insurance cover.
How experienced is your accountant?
Legally, any accountant can promote a range of services with varying levels of expertise and experience. As is the norm for many people, you might appoint an accountant to do your basic accounts with a temptation to stay “in-house” as other things emerge, such as an HMRC investigation. Do they have sufficient experience to represent you in a potentially expensive HMRC case?
Unfortunately, we have encountered many situations where clients automatically assumed that their accountant had experience across the board. In reality, when it comes to HMRC investigations, they may not be aware of the basics, such as the information you are required to provide and other optional details. You will often find that optional information will open more doors for HMRC to a more intrusive investigation, which may not necessarily unearth any wrongdoings. However, fees alone could be significant!
While it’s essential to cooperate with HMRC, it’s also important to put client interests front and centre. A mishandled investigation, which gives HMRC carte blanche to delve into your financial records, can be both time-consuming and costly to unravel and resolve. We have been called in numerous times to rectify what should have been relatively simple investigations, firefighting, and undertaking a strategy of damage limitation. Not easy.
Reputation and word-of-mouth
Business founder Chris Wilkins FCCA is a Chartered Certified Accountant and Registered Auditor and is central to our growing reputation. Wilkins Southworth is a member of the Association of Chartered Certified Accountants, and our colleagues have a range of professional qualifications. Ongoing investment in training and an experienced team has led to a strong flow of recommendations based on word-of-mouth and our reputation.
Our business philosophy is simple: client interests are always front and centre, with full transparency regarding services and charges. It’s crucial to create foundations of trust and honesty in a professional relationship – elements central to our client services.
Summary
Very often, the accountancy industry is compared and contrasted with solicitors and other providers of legal services. In reality, it is illegal to undertake the work of a solicitor or other legal representative without the appropriate qualification. Regarding accountancy, there are no such legal barriers, no standard qualifications, and, in some cases, no client protection.
It’s dangerous to assume on what basis your accountant is operating and what protections are available. If you don’t ask the question, many of them won’t give you the information. Most of the questions covered in this article are already on our website, but if you require additional information, you can call or email us anytime.