PracticeAccounting FirmsAdviser: Elderly ladies present hidden risks

Adviser: Elderly ladies present hidden risks

Under normal circumstances, articles about practice management issues tend to fall into three categories; they're either about people, attitudes or finances. Sometimes, however, the pace of change in technical areas can be so fast that we are in danger of being left behind by those who are more aware of the risks.

Link: Small practice advice

Two such areas particularly strike me – money laundering and the introduction of international accounting standards (IAS).

In my own firm, we have been grappling with the detailed requirements of proving that elderly ladies in retirement in seaside towns are not drug smugglers masquerading as doting grandmothers.

Irritating, but necessary to deter real criminals, it’s an administrative nightmare, particularly where you’re dealing with private companies with many directors or trusts with quite a few trustees.

We were, as a firm, pretty rude about the bank’s attitude to all this, and their initial inability to cross-reference one signatory with a number of different accounts.

We’re a bit less critical now we’re faced with it ourselves, desperately trying to deal with individuals and not treat them as a collection of data.

But the real underlying issue here is not the problem of collecting details to verify identity, but the rules on reporting suspected money laundering to NCIS. And the further problem that one cannot talk to the client about the issue without ‘tipping off’ the suspect – your client – whom you may have known for years and consider a friend.

Much work has been done by our professional bodies to deal with the lack of any de minimis provisions in the legislation, and the latest CCAB guidance is very helpful in this regard.

But I cannot get my head around the fact that my company’s rivals working down the road, who are solicitors, are allowed to act in a back-duty case for a client without automatically reporting to NCIS, while I have to fill out a full report.

Where has the concept of a level-playing field between the professions gone? And when the local taxi driver walks in and says she needs to come clean about a bit of tax she hasn’t paid, how can I not tell her that she’s better off going to a lawyer, who has client confidentiality rules on her side?

At least in our practice we are aware and asking these questions. Recent research indicates that many others have buried their heads in the sand, and are hoping they can muddle through. An inordinately high-risk strategy, I would suggest.

Accountancy Age’s survey on the readiness of UK companies’ financial staff for the introduction of IAS showed that 50% of private companies rated the readiness of their staff for IAS as poor, or worse. I’m not convinced that smaller practices are in any better position.

I’d like to say this is due to the stilted language used in the standards, but I suspect the real reason is the more mundane approach of ‘I’ll worry about these things when I have to, and not before’. A high-risk strategy or negligence? You decide.

  • Mark Spofforth is an ICAEW council member and partner at Spofforths. Send in your questions for our adviser panel of experts on matters relating to small practices by emailing adviser@accountancyage.com. ?:

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