All accountancy practices are required under Money Laundering 2007 rules to carry out clients due diligence checks before engagement to verify their identities. Copies of the clients’ identities evidence are to be kept on files for reference.
In addition to this, the following points should be considered:
Client’s background
To obtain information about the clients business operations, including what are the main law and regulations governing the industry the client is in? How do they ensure they are in compliance with the law and regulations at all times?
Do they have good accounting system in place or required advice and recommendation on this function? What are other services we can provide to add value to the clients business operations? Such as tailored accounting software to suit the management reporting purposes, provide payroll services, insurance and so on.
Client’s industry background
Does the firm have technically competent staff to deal with the clients’ affairs in the industry in question? Can the firm deliver high quality services to this client confidently and profitably?
If the industry is new to the firm, consider costs and benefits to carry out the research on the industry in question. It is always good to explore other industry background to explore new clients in new industry and increase your clients base.
You may obtain information about an industry using CCH business focus software.
Potential fee income
Based on the above information, to estimate what would be the fee income going to be generated from the new clients. The firm may consider offering fixed fee package for all the services required or charging fee based on the number of hours spent on the client’s affairs.
Discussion on fees before accepting the clients are encouraged to reach agreement and ensure the clients understand the fees structure, services to be received and the fees are subject to be reviewed should the terms of engagement has changed.
Former accountant
The partner should also find out whether the new client has accountant acting for them and the reasons for discontinuance. The new client should write to his accountant to notify them of their intention to appoint you as their new accountant and to authorise the accountant to discuss their business affairs with you.
In addition, the partner should also write to the accountant to ensure there are no matters to be brought to your attention not to accept the clients and confirmation should be in writing.
Engagement of clients
Letter of engagements should be issued, signed and dated by both the client and the firm. The letter should include the responsibilities of the directors and the firm acting for them as accountants, terms of business, fees structure, services to be provided, limitation of professional liability and so on.
Sales opportunities
The firm should continue to recognise business and sales opportunities and inform the clients when they arise and it is always good to encourage the staff to bring to your attention of such opportunities during the course of performing their duties. All staff should have good knowledge of the firm products and services.
Please feel free to send us email should you have any questions.
