Terms & Conditions
Last rev June 2022
In accordance with the recommendations of the director’s professional body, the Association of Accounting Technicians, the following confirms the basis on which we provide services to our clients so as to avoid any misunderstandings of our respective responsibilities.
Nature of services – see at end for detailed explanation of these services
A. ANNUAL ACCOUNTS – SOLE TRADERS/PARTNERSHIPS
B. ANNUAL ACCOUNTS – LIMITED COMPANIES
C. PERSONAL TAX – INDIVIDUALS/SOLE TRADERS/PARTNERS
D. PARTNERSHIP TAX
E. CORPORATION TAX
F. PAYROLL PREPARATION, P.A.Y.E. AND N.I. RETURNS
G. VAT RETURNS
H. MANAGEMENT ACCOUNTS
I. MAINTAINING ACCOUNTING RECORDS
Anti money laundering legislation
All accountants must comply with onerous duties imposed by The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, the Money Laundering Regulations 2007, Proceeds of Crime Act 2002, and the Terrorism Act 2000 which are intended to inhibit the activities of terrorists and other criminals by denying them access to technical expertise. If we fail to perform these duties, we risk imprisonment.
Before we accept your instructions, we will need to obtain ‘satisfactory evidence’ to confirm your identity. In certain circumstances, we may need to obtain evidence confirming the identities of third parties, the source of any funds or other property, the purpose of any instructions or any other matter. We may also need to obtain such evidence after we have begun to act on your instructions.
We assume that our clients are honest and law abiding. However, if at any time, there appear to be grounds to suspect (even if we do not actually suspect) that your instructions relate to ‘criminal property’, we are obliged to make a report to the National Crime Agency (“NCA”), but we are prohibited from telling you that we have done so.
In such circumstances, we must not act on your instructions without consent from NCA. If NCA does not refuse consent within 7 working days we may continue to act. If NCA issue a refusal within that time, we must not act for a further 31 days from the date of the refusal.
‘Criminal property’ is property in any legal form, whether money, real property, rights or any benefit derived from criminal activity. It does not matter who carried out the criminal activity or how removed the property is from the original crime. Even if you are honest in your dealings, if your property represents a benefit from someone else’s crime, we must still make a report.
Activity is considered ‘criminal’ if it is a crime under UK law, no matter how trivial, and whether carried out in the UK or abroad. For example, tax evasion is a criminal offence but an honest mistake is not. We will assume that all discrepancies are mistakes unless there is contrary evidence.
Fees
Our fees are as detailed on the separate page, and are agreed with clients on an individual basis, taking into account the services they require. Standard payment terms are 14 days.
Ownership of records
In the event of non-payment of our fees for services rendered, we may exercise a particular right of lien over the books and records in our possession and withhold the documents until such time as payment of our invoice is received in full.
File destruction
Whilst certain documents may legally belong to you, unless you tell us not to, we intend to destroy correspondence and other papers that we store which are more than seven years old, other than documents which we think may be of continuing significance. If you require the retention of any document, you must notify us of that fact in writing.
Ethical guidelines
We will observe the ethical guidelines of the Association of Accounting Technicians and accept instructions to act for you on the basis that we will act in accordance with those guidelines. A copy of these guidelines will be supplied to you on request.
Customer service
We are committed to providing a high standard of customer service. If you have any ideas as to how our service to you could be improved, or if you are dissatisfied with the service you are receiving, please let us know. In the event that you have a complaint, we will look into this carefully and promptly and do all we can to explain the position to you or address your concerns. If you are still not satisfied you may of course make a complaint to the Association of Accounting Technicians.
Third parties
All accounts, statements and reports prepared by us are for your exclusive use within your business or to meet specific statutory responsibilities. They should not be shown to any other party without our prior consent.
No third party shall acquire any rights pursuant to our agreement to provide professional services.
Applicable law
These terms are governed by, and construed in accordance with, English law. The Courts of England will have exclusive jurisdiction in relation to any claim, dispute or difference concerning this engagement letter and any matter arising from it. Each party irrevocably waives any right it may have to object to any action being brought in those courts, to claim that the action has been brought in an inappropriate forum, or to claim that those courts do not have jurisdiction.
Disclaimer
We will not be liable for any loss suffered by you or any third party as a result of our compliance with the Anti Money Laundering Legislation or any UK law or at all.
Professional Indemnity Insurance
We have PII as required by the AAT.
Agreement of terms
Terms will be deemed to be agreed on commencement of engagement. Either party may vary or terminate our authority to act on your behalf at any time without penalty.
Notice of termination must be given in writing.
A. ANNUAL ACCOUNTS – SOLE TRADERS/PARTNERSHIPS
Your responsibility for the preparation of accounts.
1. You will make available to us, as and when required, all the accounting records and related financial information necessary for the compilation of the accounts. You will make full disclosure to us of all relevant information.
The accounts need to be approved by you before we am able to issue any report.
2. You are responsible for ensuring that, to the best of your knowledge and belief, financial information, whether used by the business or for the accounts, is reliable. You are also responsible for ensuring that the activities of the business are conducted honestly and that its assets are safeguarded, and for establishing arrangements designed to deter fraudulent or other dishonest conduct and to detect any that occur.
3. You are responsible for ensuring that the business complies with the laws and regulations applicable to its activities, and for establishing arrangements designed to prevent any non-compliance with laws and regulations and to detect any that occur.
Our responsibilities for the preparation of accounts
1. We will compile your annual accounts based on the accounting records and the information and explanations given to us by you. We shall prepare draft annual accounts for your approval.
2. We will advise you as to the adequacy of your records for preparation of the annual accounts and make recommendations for improvements that we consider necessary. We shall not be responsible if, as a result of you not taking our advice, you incur losses or penalties.
3. We will use reasonable skill and care in the preparation of your accounts but will not be responsible for errors arising from incorrect information supplied by you.
4. We will report, with any variations that we consider may be necessary, that in accordance with your instructions and in order to assist you to fulfil your responsibilities, we have compiled, without carrying out an audit, the accounts from your accounting records and from the information and explanations supplied to us.
5. We have a professional duty to compile accounts that conform to generally accepted accounting principles. Where we identify that the accounts do not conform to accepted accounting principles, or if the accounting policies adopted are not immediately apparent, this will be made clear in our report, if it is not clear in the accounts.
B. ANNUAL ACCOUNTS – LIMITED COMPANIES
Responsibilities of Directors
As director(s) of the company, under the Companies Acts you are responsible for:
• ensuring that the company maintains proper accounting records and for preparing accounts
• determining whether for any reason the exemption is not available in respect of the period.
You will keep records of sales invoices, purchase invoices, receipts and payments, together with any other documents relating to the company’s transactions and activities. It will also be necessary for you to provide a record of stock at the company’s year end.
For financial years beginning on or after 06 April 2008, a private company is usually required to file its accounts at Companies House within 9 months of the year end. The company will be liable to a fine if it fails to do so. In order to avoid this we will produce statutory accounts, suitable for filing, within the required period, provided all your records are complete and presented to us within five months of the year end, and all subsequent queries are promptly and satisfactorily answered.
You may require us to act as your agent and to:
(a) submit the accounts to the Registrar of Companies;
(b) complete and submit the company’s annual return;
(c) complete and submit any other forms required by law to be filed at Companies House, provided that you keep us fully informed of any relevant changes or events which are required to be notified to Companies House, within one week of the change or event; and
(d) maintain the statutory books.
Responsibility of the accountants
In relation to the accounts, we will prepare the company’s accounts on the basis of the information that is provided to us. We will also draft the accounts in accordance with the provisions of the Companies Acts, and related Accounting Standards for approval by the Board.
Should our work lead us to conclude that the company is not entitled to exemption from an audit of the accounts, or should we be unable to reach a conclusion on this matter, then we will advise you of this.
Where instructed to prepare your financial statements, we can carry out the following accounting and other services:
(a) write up the accounting records of the company insofar as they are incomplete when presented to us;
(b) complete the postings to the nominal ledger; and
(c) prepare the accounts for approval by you.
Otherwise, you may agree that you or your staff will:
(a) keep the records of receipts and balances;
(b) reconcile the balances monthly with the bank statements;
(c) post and balance the purchase and sales ledgers;
(d) extract a detailed list of ledger balances; and
(e) prepare details of the annual stocktaking, suitably priced and extended in a form that will enable us to verify the prices readily by reference to suppliers’ invoices.
Or
f) provide us with a copy of the valuation produced by your independent stock takers.
And
(g) prepare details of work-in-progress at the accounting date and make available to us the documents and other information from which the statement is compiled.
You/your management are responsible for the detection of irregularities and fraud.
We would emphasise that we cannot undertake to discover any shortcomings in your systems or any irregularities on the part of your employees or others, although we will advise you of any such circumstances that we encounter in preparing your accounts, unless prohibited from doing so by the Anti Money Laundering Legislation.
We will report, with any variations that we consider may be necessary, that in accordance with your instructions and in order to assist you to fulfil your responsibilities, we have compiled, without carrying out an audit, the accounts from your accounting records and from the information and explanations supplied to us.
We have a professional duty to compile accounts that conform to generally accepted accounting principles. Furthermore, the accounts of a limited company are required to comply with the Companies Acts and applicable accounting standards. Where we identify that the accounts do not conform to accepted accounting principles, or if the accounting policies adopted are not immediately apparent, this will be made clear in our report, if it is not clear in the accounts.
C. PERSONAL TAX – INDIVIDUALS AND SOLE TRADERS
Spouses are legally responsible for their own tax affairs and should be dealt with independently. However, if both spouses wish we can disclose to your spouse such details of your financial affairs as are required to consider your combined tax position.
(a) we shall be pleased to act as your personal tax advisers in the UK.
(b) we will prepare your personal income tax and capital gains tax return together with all supporting schedules and prepare/check the Inland Revenue’s calculation of your self-assessment of tax and Class 4 National Insurance contributions.
(c) we will forward to you your tax return form and supporting schedules for your approval and signature. Once the approval signed by you is returned to us, we will submit it with the computations to the Inland Revenue. You authorise us to file the return electronically under the Inland Revenue Electronic Lodgement Service.
(d) we will advise you as to amounts of tax and National Insurance contributions to be paid and the dates by which you should make the payments, including payments on account and the balancing payment, and if appropriate we will initiate repayment claims when tax and national insurance contributions appears to have been overpaid.
(e) we will deal with the Inland Revenue regarding any amendments required to your return and prepare any amended returns that may be required.
(f) we will advise as to claims and elections arising from the tax return and from information supplied by you and, where instructed by you, we will make such claims and elections in the form and manner required by the Inland Revenue.
(g) You may ask us to undertake all correspondence with the Inland Revenue on your behalf. To avoid any problems would you please send to us any forms or correspondence received from the Inland Revenue as soon as you receive them. In particular would you please ensure that no payments are made to the Inland Revenue without our confirmation that the demands are correct.
(h) The Inland Revenue has powers to charge both interest and penalties if there is a delay in submitting a tax return. Such charges are automatic if the tax return is submitted after 31st January following the end of the tax year, or if any payments are made after the respective due dates.
(i) It is therefore important that all details required for the preparation of your tax return are forwarded to us as soon as possible after 5th April each year and by 30th September at the latest. If the information is received after that date, we will not accept responsibility for any penalties or surcharges charged by the Inland Revenue.
(j) The Inland Revenue audits a number of tax returns each year, many of these audits are the result of a random selection. Assistance in respect of such an audit beyond the answering of straightforward queries regarding entries on the tax return is additional work and will result in separate charges. we will keep you fully informed before undertaking any extra work in respect of such an audit.
(k) we will provide our professional services outlined in these terms & conditions with reasonable care and skill. However, we will not be responsible for any losses, penalties, surcharges, interest or additional tax liabilities arising from the supply by you or others of incorrect or incomplete information, or your or others’ failure to supply any appropriate information or your failure to act on our advice or respond promptly to communications from us or the tax authorities.
(l) You agree that we can approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs.
(m) we will submit a form 64-8 to the Inland Revenue, which authorises the Inland Revenue to send us copies of formal notices. In practice, the Inland Revenue will treat this as authority to correspond with us, in which case they will not correspond with you except to the extent that they are formally required to do so. However, this authority does not apply to all Inland Revenue correspondence, and even where it does, the Inland Revenue sometimes overlook it. You should therefore always send us the originals or copies of all communications you receive from the Inland Revenue.
D. PARTNERSHIP TAX
(a) we will prepare the income tax and capital gains tax computations based on the partnership accounts from the accounting records and other information and explanations provided by you.
(b) we will prepare the firm’s annual partnership return, including the partnership statement of total income, gains, losses, tax credits and charges of the firm for each period of account ending in the return period.
(c) we will forward to you your tax return form and supporting schedules for your approval and signature. Once the approval signed by you is returned to us, we will submit it with the computations to the Inland Revenue. You authorise us to file the return electronically under the Inland Revenue Electronic Lodgment Service.
(d) we will deal with the Inland Revenue regarding any amendments required should the partnership self-assessment tax return be challenged.
(e) we will advise as to claims and elections arising from the tax return and from information supplied by you and, where instructed by you, we will make such claims and elections in the form and manner required by the Inland Revenue.
(f) we will deal with all communications relating to the partnership return addressed to us by the Inland Revenue or passed to us by you. However, if the Inland Revenue chooses the partnership tax return for enquiry, this work will be the subject of a separate assignment and we will seek further instructions from you. Assistance in respect of such an enquiry beyond the answering of straightforward queries regarding entries on the tax return is additional work and will result in separate charges. we will keep you fully informed before undertaking any extra work in respect of such an enquiry.
(g) If you have asked us to undertake all correspondence with the Inland Revenue on the partnership’s behalf, please send to us any forms or correspondence received from the Inland Revenue as soon as you receive them.
(h) The Inland Revenue has powers to charge both interest and penalties if there is a delay in submitting a tax return. Such charges are automatic if the tax return is submitted after 31st January following the end of the tax year. For partnership penalties, the amount due is multiplied by the number of partners. Delays in submitting the partnership return may also have an effect on the returns of all the partners, with the possibility of penalties, interest and surcharges being payable by each individual partner.
(i) It is therefore important that all details required for the preparation of your tax return are forwarded to us as soon as possible after 5th April each year and by 30 September at the latest. If the information is received after that date, we will not accept responsibility for any penalties or surcharges charged by the Inland Revenue.
(j) You agree that we can approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs and undertake to authorise such third parties to communicate directly with us.
(k) we will submit a form 64-8 to the Inland Revenue, which authorises the Inland Revenue to send us copies of formal notices. In practice, the Inland Revenue will treat this as authority to correspond with us, in which case they will not correspond with you except to the extent that they are formally required to do so. However, this authority does not apply to all Inland Revenue correspondence, and even where it does, the Inland Revenue sometimes overlook it. You should therefore always send us the originals or copies of all communications you receive from the Inland Revenue.
E. CORPORATION TAX
WE will prepare, in respect of each accounting period of the company, a computation for corporation tax purposes adjusted in accordance with the provisions of the Taxes Acts. we will also prepare the corporation tax return (form CT600) required under the Corporation Tax Self Assessment regulations. The corporation tax return, together with the supporting corporation tax computations, will be sent to you for approval and signature prior to submission to the Inspector of Taxes.
It should be recognised that in law a taxpayer cannot contract out of their fiscal responsibilities and that we prepare computations and return forms as agent for the company. You are legally responsible for making correct returns and for payment of tax on time. If we ask you for information to complete the tax return and it is not provided within the time-scale requested, so that the preparation and submission of the return are delayed, we accept no responsibility for any penalty or interest that may arise.
We will advise you of the corporation tax payments to which the company will be liable, together with the due date of payment. You must inform us immediately if the company pays or receives any interest or makes any other payment, or transfers any asset to any shareholder.
Where necessary we will deal with any queries raised by the Inspector of Taxes and negotiate with the Revenue on any question of taxation interest or penalties that may arise.
To enable us to carry out our work you agree:
(a) to make a full disclosure to us of all sources of income, charges, allowances and capital transactions and to provide full information necessary for dealing with the company’s affairs. we will rely on the information and documents being true, correct and complete;
(b) to respond quickly and fully to our requests for information and to other communications from me;
(c) to provide us with information in sufficient time for the company’s self-assessment tax return to be completed and submitted by the due date. In order to do this, we need to receive all relevant information by 6 months after the end of the company’s accounting year end.
(d) to forward to us on receipt copies of all statements of account, letters and other communications received from the Inland Revenue to enable us to deal with them as may be necessary within the statutory time limits.
You agree that we can approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs and undertake to authorise such third parties to communicate directly with us.
We will submit a form 64-8 to the Inland Revenue, which authorises the Inland Revenue to send us copies of formal notices. In practice, the Inland Revenue will treat this as authority to correspond with us, in which case they will not correspond with you except to the extent that they are formally required to do so. However, this authority does not apply to all Inland Revenue correspondence, and even where it does, the Inland Revenue sometimes overlook it. You should therefore always send us the originals or copies of all communications you receive from the Inland Revenue.
F. PAYROLL PREPARATION, P.A.Y.E. AND N.I.
Payroll and year end returns
In order for us to prepare your payroll and year end returns we will require the following information from you:
(a) Personal details of all employees (i.e., name, NWE number, home address, etc.).
(b) All P45s received by you.
(c) If any casual labour is taken on, you are required to operate P46 procedures.
Completed P46 forms should be passed to us for processing.
(d) Notification within two weeks of any employee who is ill for four or more calendar days, including weekends, bank holidays etc. This will enable us to operate statutory sick pay for you.
(e) Notification of any employee who becomes pregnant. This will enable us to operate statutory maternity pay.
(f) Details of any money or benefits made available to employees by you or by a third party through you.
(g) Hours worked, rates of pay, bonuses etc.
(h) Notification of employees engaged by you or leaving your employment.
(i) Any notice of coding received by you.
The end of year payroll returns must be received by the Inland Revenue by 19th May following the end of the tax year otherwise penalties will be levied. There may also be interest payable if the final tax and National Insurance payment, due by 19th April following the end of the tax year, is late. we cannot guarantee to have the returns etc. completed in time to meet this deadline unless we have all the relevant information within 10 working days of the end of the tax year.
We will assist in the preparation and submission of PAYE returns as required by the authorities concerned. However, it should be understood that our appointment as your agent does not absolve you/the company or its directors from their statutory responsibilities.
We would draw your attention to the strict rules and time limits for the submission of such returns and the substantial penalties that may arise if these are not observed. It is therefore essential that we receive full information from you promptly to enable us to ensure that the returns are made on a timely basis. Completed returns will be sent to you for approval and signature prior to submission on the company’s behalf.
P11D benefits for directors*/officers* and employees*
If you have asked us to prepare forms P11D for your approval, we will require details of all benefits, perks or reimbursed expenses received by the directors*/officers*/employees.*
There are penalties for the late submission of forms P11D. In order to avoid these, you must ensure that we receive complete and accurate details of all benefits and expenses for the tax year (NB: not accounts year) within 14 days of the end of the tax year.
Subcontractors
You may wish us to be responsible for operating the Construction Industry Scheme for the subcontractors you engage. In order for us to do this, we will require the following information from you:
(a) written confirmation that you have checked or “verified” each new subcontractor with HM Revenue & Customs; and
(b) written confirmation stating whether HM Revenue & Customs has advised that the subcontractor should be paid net or gross.
We will advise on employment status to the best of our ability however we cannot give any form of guarantee or assurance that HM Revenue & Customs will not challenge the employment status of one or more of your subcontractors and we cannot be held responsible for any loss or consequential loss as a result of any action or penalty imposed by HM Revenue & Customs.
G. VAT RETURNS
You may require us to undertake the completion of your VAT returns. we cannot be held responsible for any penalties or default surcharges arising from the late submission of VAT returns. However, we will endeavour to meet the relevant deadlines if we receive all the company’s VAT records within 14 days of the end of the VAT return period. You have undertaken that you/your staff will ensure that:
(a) all relevant VAT records are forwarded to us within 14 days of the end of the VAT return period;
(b) valid VAT invoices are received for all payments where VAT is being reclaimed;
(c) the VAT rating of supplies is correctly dealt with, i.e. between positive and zero rates and exempt supplies;
(d) we are notified in writing of any positive-rated own consumption;
(e) any input VAT on non-business expenditure is clearly marked on supporting invoices;
(f) we are notified each quarter of any payments to or for the benefit of directors or staff for fuel used for private mileage, together with the business mileage for each such person, for each quarter;
(g) all supplies made by the business are shown in the records made available to us.
Otherwise,
You/your staff will be responsible for completing and submitting VAT returns. We will not be responsible for checking the VAT treatment of supplies made, i.e. between positive and zero rates, and exempt supplies unless specifically requested in writing to make a detailed review. We will, however, ensure that the sales figure in your accounts is reconciled to your VAT returns submitted, provided you:
(a) let us have copies of all returns submitted; or,
(b) complete our VAT return form that we will forward to you on request.
Similarly, we will not specifically check the deductibility of input VAT and the validity of supporting invoices unless specifically requested in writing to carry out a detailed review.
Or
At the time of this letter you are not VAT registered. If registration becomes necessary, we will endeavour to ensure that you register in time provided that:
(a) you notify us in writing within 14 days of the end of each month of the total value of supplies you have made in that month; and
(b) you notify us immediately in writing if the value of taxable supplies that you will make in the next 30 days is likely to exceed the annual registration limit then in force.
It should be understood that our appointment as your agent does not absolve the company or its directors from their statutory responsibilities. We would draw your attention to the strict rules and time limits for the submission of such returns and the substantial penalties that may arise if these are not observed. It is therefore essential that we receive full information from you promptly to enable us to ensure that the returns are made on a timely basis. Completed returns will be sent to you for approval and signature prior to submission on the company’s behalf
H. MANAGEMENT ACCOUNTS
This involves us in completing the writing up of your books and records, insofar as they are incomplete when presented to us, from the information and explanations supplied to us and preparing draft accounts therefrom for your approval.
We understand that you have agreed that your staff will be responsible for:-
(a) maintaining records of all receipts and payments of cash;
(b) reconciling cash book balances monthly/quarterly* with the bank statements;
(c) posting and balancing the purchase and sales ledgers; and
(d) extracting a detailed list of ledger balances.
You will also provide estimates of any stocks at the end of each period.
You understand that we will not be carrying out an audit and accordingly will not verify the assets and liabilities of the business, nor the items of expenditure and income. To carry out an audit would require additional work to comply with generally accepted auditing standards that we are not authorised to carry out.
We would emphasise that we cannot undertake to discover any shortcomings in your systems or any irregularities on the part of your employees or others, although we will advise you of any such circumstances that we encounter in preparing your accounts.
The accounts are prepared for your exclusive use within your business. They should not be shown to any other party without our prior consent. To ensure that anyone reading the accounts is aware that we have not carried out an audit, we may annex to the accounts a short report. This report must remain attached to any accounts shown to any other parties.
These accounts are not suitable for submission within the self-assessment tax return, or for summary thereon.
I. MAINTAINING ACCOUNTING RECORDS
You may require us to carry out some or all of the following accounting and other services:
(a) keep the records of receipts, payments and balances;
(b) reconcile the balances monthly with the bank statements;
(c) post and balance the purchase and sales ledgers;
(d) extract a detailed list of ledger balances;
(e) prepare details of the annual stocktaking and work in progress, suitably priced and extended in a form which will enable us to verify the prices readily by reference to suppliers’ invoices;
(f) complete the postings to the nominal ledger; and
(g) prepare the accounts for approval by yourselves.
You/your management are responsible for the detection of irregularities and fraud.
We would emphasise that we cannot undertake to discover any shortcomings in your systems or any irregularities on the part of your employees or others, although we will advise you of any such circumstances that we encounter.
J. LIMITED ASSURANCE ENGAGEMENT
A Limited Assurance Engagement (LAE) is 3-way agreement between the client, an appropriately licensed independent accountant, and a specified third party, for the independent accountant to provide an objective report which is intended to provide some insight as to the accuracy of the client’s financial statements, based upon a limited examination of the information supporting the financial statements.
Important: A LAE is not an audit. Both an audit and LAE require an appropriately qualified independent accountant to provide an objective opinion as to the accuracy of financial statements. However, an LAE is distinguishable from an audit because it is based upon a less rigorous examination of accounts and is intended (if the evidence allows) to result in the professional opinion that “nothing has come to our attention to refute the principal’s confirmation that the financial statements give a true and fair view.” This is in contrast to the aim of an audit, which is to produce a professional opinion that the financial statements give a “true and fair view.”
A LAE is suitable for those clients who are exempt from the obligation to conduct an audit but who want a degree of independent professional verification of their financial statements, either for their own internal use or for presenting a more credible financial statement to a third party, such as a bank or an investor.
If we undertake a LAE, it will be strictly in accordance with these terms and conditions.
My responsibilities
We will:
1. warrant that we hold the necessary licence to carry out a LAE.
2. contact the identified third party if practicable (if a class of persons, such as shareholders, is to rely upon the LEA this may be impracticable) to verify that we understand the full purpose, nature and extent of their intended reliance upon the LAE in the Statement of Purpose below.
3. ensure that the identified third party receives a copy of the terms and conditions contained here.
4. subject to satisfactory agreement between all parties identified in this appendix, carry out an appropriate objective assessment of the client’s financial statements and the supporting accounting evidence that we deem necessary to complete the LAE.
5. tell you what supporting evidence we require to enable us to complete the LAE.
6. produce a report based upon our objective assessment. our report may be either as described above, qualified, or withheld, as our objective assessment requires.
7. provide our services subject to applicable accounting and ethical standards;
8. withdraw from the LAE if we form the view that we are being required to breach such standards.
The client’s responsibilities
You will:
1. remain responsible for the maintenance and accuracy of your accounting records and financial statements.
2. inform us of the accounting basis on which your financial statements have been prepared and of any departures from this.
3. make available to us, as and when required, all accounting records and related financial information that we deem necessary for completion of the LAE.
4. voluntarily inform us of all facts and matters that it would be reasonable for you to assume would be material to our professional conclusion as to the accuracy of the financial statements.
5. inform us of the full purpose for which you require the LAE (which will be set out fully in this letter).*
6. identify all third parties who you intend should rely upon the LAE and their full reasons for such.*
7. not, without our written agreement, disclose the LAE report to any person unless specifically identified under Authorised Third Parties, below, or use the LAE for any purpose other that contained in the Statement of Purpose below.*
8. signify your agreement that the Statement of Purpose, below, is a full and accurate description of the purpose, nature and extent of your and the third party’s reliance upon the LAE, and your agreement with the terms of this appendix.
9. pay our fee for undertaking the LAE, even if the resultant report is unfavourable to your interests, or withheld. This is because we have agreed to undertake the LAE but cannot guarantee to produce a favourable report.
*This is to protect you and us. The LAE must be undertaken, and our report produced, with a particular purpose and third party’s in mind. The LAE will not, therefore, be applicable to other purposes or third parties, and might be misleading in another context, leading to unintended and unmanaged liability for any resultant loss caused to third parties.
Third party’s responsibilities
You will:
1. if you agree that the content of this appendix fully and accurately describes the purpose, nature and extent of your reliance upon the LAE, sign and return a copy of it to us to signify your agreement with the terms of this appendix.
2. if you do not so agree, provide a full and accurate written description of the purpose, nature and extent of such reliance. we will then reissue this appendix duly amended.
3. not disclose the LAE to any non-party hereto without our written agreement.
My Liability
1. We will not be liable to third parties not listed as Authorised Third Parties.
2. The Contracts (Rights of Third Parties) Act 1999 is excluded from this agreement.
3. We will not be liable for any loss caused by inaccuracies in the LAE due to our negligence or non-deliberate breach of agreement or duty.
4. We will not be liable for indirect loss arising from our negligence or breach of agreement or duty.
5. We will not be liable to any person if the purpose, nature and extent of their reliance on the LAE are not fully and accurately recorded under Statement of Purpose, below.
6. In so far as any liability cannot be excluded by law, our total aggregate liability whether in contract or tort (including negligence) or otherwise, shall not exceed £10,000.
The Client’s Liability
The client will indemnify us for any loss caused to us by the client’s failure to inform us as to the full nature and extent of the purpose of the LAE, or by use or disclosure of the LAE outside the scope of this agreement.
The Third Party’s Liability
A third party will indemnify us for any loss caused to us by the third party’s failure to ensure that the Statement of Purpose is a full and accurate representation of the purpose, nature and extent of the third party’s reliance upon the LAE, or by use or disclosure of the LAE outside the scope of this agreement.