The Importance of Section 17 in the SAIPA Code of Conduct
In a world where compliance is tightening and the news filled with fraud, corruption and jail sentences, Accountants and Tax practitioners should refresh themselves on their Professional Code of Conducts as it relates to the taking over of a new client. Practitioners should be aware that they are legally and ethically bound by this section of their code. Section 17 of SAIPA's code of conduct covers the professional handover of a client to a new practitioner.
Of particular importance is the sending of the Professional Letter to the exiting Accountant. SAIPA's code stipulates that the receiving Accountant should contact the exiting accountant to request whether there are any Professional Reasons why the engagement should not be accepted.
In turn the exiting Accountant should reply without delay and forward all the clients documents and files on to the receiving Accountant, and if no reply is received then the receiving accountant is expected to do due diligence.
Accountants should realize that with the increase in compliance related legislation that they too are at risk, this simple step at the start of an engagement can ensure you avoid clients that could pose a compliance risk to your practice and license.
Although the steps are outlined in the SAIPA code of conduct, it would be wise for Accountants to ensure their Professional Letter covers the essential areas of risk and not simply the question of "should we or shouldn't we accept the client.
Incorporating questions like these could provide better insight into the compliance of the tax or accounting client you are taking over:
- Have you had any issues with payment of your account?
- Has the client deliberately delayed the compliance related work and statutory deadlines throughout your engagement?
- Has your client struggled at any point to make payment on any of their taxes?
- Has your client had any Debt Arrangements with SARS during your engagement?
- Has your client been deregistered or requested to be deregistered for VAT or any other taxes?
- Has the client pressured you to perform your work as fast as possible where you have felt this posed a risk to the quality of your work?
As can be seen incorporating questions like these can help the receiving accountant make a more informed decision about the client they onboard. Ensuring this practice in our industry and looking out for your fellow accountant will only help raise the bar in terms of the image of the accounting industry.
SARS is improving their AI capabilities and Practitioners should ensure they plug the gaps especially for those who hop from one practitioner to the next to try and fly under the "Tax-Radar". Not being aware of what is coming your way can set you up with a client that could potentially be on SARS' radar.
The more the practice of Professional handover is followed with clients being aware thereof, the better the compliance and experience will be for Practitioners and Taxpayers alike.
It is well known that SARS knows exactly what is going on in every taxpayer's bank account. Practitioners should ensure their clients are aware of this because those trying to dodge SARS will bring along with them lots of trouble as SARS clamps down.
Another risky practice that is common is the closing of one business because it has become a VAT Vendor and the vendor has failed to adapt to their reality of paying VAT and as a result they don't make enough provision for VAT and then can't "afford" it.
What then happens in many cases is the deregistration for VAT and the client opening new accounts and changing accountants (often unbeknownst to the Accountant). SARS will pick up these red flags and this will be a very high-risk factor for the Accountant. Accountants should support their clients in adjusting to their new reality as vendors and ensure vendors are aware of their responsibility to make provision for vat.
The role of the Accountant and Tax Practitioner needs to be brought into the spotlight as it relates to their value which is not being recognized enough. Many see these professionals as simply professionals who data capture and submit information when in fact their skills reach much further than that.
Accounting and Tax Professionals spend many years of study and devote their lives to continual professional development. Their skills in the development and growth of business should be exploited more than just the tax optimization and daily tasks of tax and accounting. When used correctly, the skills of an Accountant and Tax Professional can elevate your business to the next level.
In closing practitioners should ensure they sell the value of their service and not the price, this is the only way to continue uplifting the standard of our industry.
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