Taking up your appointment as a client's new accountant

If you, as a Member in Practice, are approached by a prospective client who asks you to take over from another accountant, you should consider the opportunity very carefully before acceptance. There may be good reasons why the prospective client feels it is appropriate to change; there may be lack of satisfaction, their current accountant may be restricted in what services he can offer, or very simply, the client and the accountant may have difficulty in working with each other.

A Member in Practice who is asked to replace another professional accountant, or who is considering tendering for an engagement currently held by another professional accountant, should therefore attempt to discover whether there are any professional or other reasons, such as circumstances that threaten compliance with the fundamental principles, for not accepting the engagement. For example, there may be a threat to professional competence and due care if a professional accountant in public practice accepts the engagement before knowing all the pertinent facts.

It might also be that the apparent reasons for the change in appointment may not fully reflect the facts and may indicate disagreements with the existing accountant that may influence the decision as to whether to accept the appointment. An existing accountant is bound by confidentiality.

In summary, there are obviously threats that could conceivably arise in difficult situations, chiefly to compliance, integrity or professional behaviour, and there must be safeguards you may feel may be necessary to put in place if accepting the engagement. Where it is not possible to reduce these perceived threats to an acceptable level, you should decline to enter into the client relationship. Acceptance decisions should also be periodically reviewed for recurring client engagements.

The extent to which the professional accountant in public practice can and should discuss the affairs of a client with you as the proposed accountant will depend on the nature of the engagement and on:
(a) whether the client’s permission to do so has been obtained; or
(b) the legal or ethical requirements relating to such communications and disclosure.

A Member in Practice will normally need to obtain the client’s permission, preferably in writing, to initiate discussion with an existing accountant. Once that permission is obtained, the existing accountant should comply with relevant legal and other regulations governing such requests. It is usual procedure to approach the existing accountant in writing first of all, explaining in polite terms that their client has asked you to take over.

In the absence of specific instructions by the client, an existing accountant should not ordinarily volunteer information about the client’s affairs; you should be particularly careful of any suspicious circumstances, especially in the context of possible money laundering.
You may sometimes be asked to undertake work that is complementary or additional to the work of the existing accountant. Such circumstances may give rise to potential threats to professional competence and due care resulting from, for example, a lack of or incomplete information.

Section 210 of the CIMA Code of Ethics gives good general advice on threats and safeguards in this context.