SMEs at risk from unqualified advisers during Covid-19 changes
The Institute of Financial Accountants (IFA) is cautioning small businesses to check that their accountant or accountancy practice is qualified to give advice, to avoid making ill-informed choices or potentially even committing unintended fraud.
Recent findings have revealed it is not so widely known that anyone can call themselves an “accountant”, as shown by research from the IFA which found that only 18% of respondents know the term “accountant” isn’t a protected term, and that you do not have to be qualified in order to set up a practice.
John Edwards, CEO of The Institute of Financial Accountants explains “Everyone assumes that to be an accountant there is a due process an individual must go through to qualify, and that there are stringent controls or regulations in place to manage who and how these people can operate their business. The sad reality is that this simply isn’t true; “accountant” is not a protected term which means that literally anyone can decide they want to be an “accountant” and start up a business tomorrow. While the number who do this is small, SME businesses are most at risk of hiring an unqualified accountant, and in doing so may be leaving their business vulnerable to incorrect or potentially even fraudulent advice.”
He continues “This risk has grown over recent months, when even qualified accountants and businesses are grappling with the rapidly-changing legislation and business support schemes, let alone those “accountants” who are unqualified and operating without the support and oversight of a professional body. We are concerned that businesses might have made decisions based on relationship, price or similar, without ever checking their “accountant” is qualified to give good advice. In normal day-to-day business this is of course a risk, but some operators might know enough to convince prospective clients they are qualified and expert; now, however, when legislation is changing at a pace, the gaps in their knowledge will widen and SME businesses could be left dealing with the consequences. At worst, this could mean a business inadvertently committing fraud, resulting in fines or even enforced closure of the business. What an unnecessary risk.”
The term “accountant” is not defined or protected by UK law and thousands of small businesses and individuals, believing they have engaged qualified accountants, may be at risk from harmful and costly business advice from unqualified, unregulated, and possibly uninsured advisers. It is accepted that although some unqualified accountants may do good work, an unqualified accountant is not answerable to any regulatory body and so cannot be disciplined. Generally speaking, the term “unqualified” in respect of accountancy, is used to describe those who are legally allowed to offer accountancy services to the general public even though they are not professionally qualified to do so, are not regulated by a professional accountancy body or have any professional indemnity insurance.
The key to checking that your accountant is qualified, is to ask if they are a member of a professional accountancy body and then check that membership with said body. This is a steadfast, fool proof way of ensuring you are working with a credible accountant or practice, as to be a member the professional bodies require proof of qualifications and insurance, and also mandate minimum standards their members must meet. This does of course vary slightly from body to body, but to join the IFA for example, members must be qualified, have experience, have all correct insurance and up-to-date regulatory requirements, and subscribe to a code of ethics which guides their behaviour. In turn, practising members are issued with annual practising certificates – which you can ask to see – and they must also commit to continued professional development throughout the year to keep skills up to scratch and current too.
