Accountancy Age Article December 2003

Facing the Challenges of 2004

If we practitioners thought 2003 was challenging in terms of understanding and contributing to the various developing areas of regulation, then the New Year will prove at least as demanding as those regulations come into force:

• The impact of the higher audit threshold of £5.6 m on existing audit work – whether maintaining our audit registration remains economic and whether perhaps cross-practice assistance from another registered auditor can be developed to enable a few audit clients to be retained and serviced
  

• Implementation of the Money Laundering Regulations, the detail of which has yet to be published – can we safely inform clients of the regulations’ existence without ‘tipping them off’? Should we expect a definitive response from money laundering enquiries made of other professionals when taking on new clients? How do we protect ourselves from criminal complicity, and how can we sensibly make reports to NCIS without a de minimus level? How can we get the necessary training for our staff when we need it?
  Definitive guidance has yet to emerge with early suggestions how to proceed taking quite contrary positions. However the best advice seems to be to protect yourself by taking all sensible precautionary means - and in the hope that government will quickly modify reporting requirements to practical and meaningful levels
  

• For ICAEW practitioners the advent of a Practice Assurance scheme could be with them by June 2004. PA is a public demonstration of how we distinguish ourselves from unqualified competition through maintaining and enhancing the standards of our professional work. Introduction and upkeep of appropriate records and systems to record how these standards are met will create new demands on already hardworking staff.
  

There is also the prospect of an infrequent visit by inspectors – a novelty for those practitioners who previously had no regulated work. However such inspections will be a far cry from the draconian measures and penalties inflicted by the Joint Monitoring Unit under Audit Regulations – with visits intended to be helpful and supportive – not seeking to trip up practitioners – and with any disciplinary measures a last resort to get a recalcitrant member to see reason.

Each of these issues has been addressed in my earlier Adviser articles as the development process took place – now we face the results of an uneven programme of consultation for, while both the DTI and ICAEW consulted very widely on these projects, the government singularly failed either to involve or test out proposals of the Money Laundering Regulations, on affected parties – a wide range of professionals.

In conclusion whilst there should be little to fear and a good chance that both the higher audit threshold and scheme of Practice Assurance can be sensibly managed, the same cannot be said for the Money Laundering Regulations which, from the outset, look set to fail to achieve their objectives.

In this, my final article for the time being I hope that you have found this series both interesting and informative and where SPA’s website will keep you posted on further developments. May I wish you all a peaceful festive season and prosperous New Year.

Peter Mitchell runs a two partner practice in Great Missenden, Bucks, is an ICAEW Council Member and is Chairman of The Society of Professional Accountants

www.spa.org.uk