Why am I being monitored?

Under Global Practising Regulation 14 all members holding an ACCA practising certificate or any others who fall within ACCA's regulations are subject to monitoring by ACCA, to ensure compliance with ACCA's regulations and with the bye-laws.

This is carried out in order to confirm the firm’s eligibility for registered auditor status, where applicable, and/or to monitor compliance with the Chartered Certified Accountants’ Global Practising Regulations (GPRs) and Code of Ethics and Conduct (CECs).

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Why are you reviewing my other firms which are either dormant or are a corporate partner and have no clients?

Whilst the firm is on our register of firms and the principal holds a practising certificate, it is still required to comply with the GPRs.  In addition, if the firm holds audit registration it must demonstrate it is eligible to do so.  Such firms, although they may currently have no clients, are entitled to accept a new client at any point in time and therefore monitoring compliance with the requirements is still required. 

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How often will I be monitored?

For audit registered firms in the UK and Ireland, ACCA is required to comply with certain conditions, which include frequency of monitoring. Although those conditions differ slightly, in order to maintain consistency, all audit registered firms will be monitored at least every six years. Monitoring will be more frequent if the firm is assessed as higher risk.

Firms without audit registration will be monitored on an 10 year cycle, unless assessed as higher risk.

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Why are FRC overseeing my audit monitoring review?

The FRC would like to remind firms that as the UK Competent Authority of statutory audit, the FRC remains responsible for the tasks delegated to Recognised Supervisory Bodies (RSBs) under the Delegation Agreements and Regulation 3(4) of SATCAR. Schedule 2 of SATCAR provides powers for the UK Competent Authority to request information from a statutory auditor for any purpose related to inspecting or investigating statutory audit work.

There is no provision that says that the FRC loses these powers if it has delegated any functions to RSBs. There is no requirement for the FRC to reclaim a task to exercise this power. Therefore, the FRC is entitled to ask audit firms for any information or access to information if it is considered necessary for inspecting or investigating statutory audit work even though the audit monitoring work is carried out by ACCA.

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How do you decide if a firm meets the control requirements for audit registration?

A firm's auditing certificates can only be held by a firm controlled by holders of an ACCA practising certificate and audit qualification or equivalent certificates issued by another relevant body. The firm need not contain any ACCA principals, partners or directors. Control is determined by the distribution of votes within the firm on all material matters and holders of the audit qualification must control at least 51% of such votes.

For limited companies, as well as demonstrating that the audit-qualified individuals have control of the shares of the firm, they also need to demonstrate that they control the board of directors including, where necessary, by having the casting vote at any meeting of the board of directors.

In addition, the firm must have in place arrangements to prevent unqualified individuals and persons (whether members of the firm or not) from exerting influence over the way in which audits are conducted. UK Audit Regulations 5(1)(g) and Republic of Ireland Audit Regulations 5(1)(g).

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Why are you asking about shareholdings?

GPR 3(2)(b) states that, unless they hold a practising certificate, ACCA members must not hold rights in a firm which in effect puts them in a position of principal of the firm.

Membership Regulation 8(2)(a)(iv) states that ACCA students must not hold rights in a firm which in effect puts them in a position of principal of the firm.

ACCA’s position is that less than a 5% shareholding in a firm would be acceptable but 5% or more would put the member/student in a position of principal of the firm.  This is because such a holding would allow an individual to affect the business of the company in that he/she would be able to place an item on the agenda at an AGM under the Companies Act 2006 (UK) or Companies Act 2014 (Ireland).

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My firm does not obtain signed declarations from the members of staff and/or subcontractors to confirm that they are fit and proper - will this be an issue?

Fitness and propriety regulations (GPR 8) apply to all persons employed by or associated with the firm. The firm, therefore, needs to consider the fitness and propriety of any person who is employed for the purpose of or in connection with public practice work. A declaration is a simple and easily implemented way to demonstrate this and will need to be reviewed on an annual basis.

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Why does ACCA request the full PII documents?

The PII schedule on its own does not provide sufficient details and we therefore need to have sight of your proposal form and policy, as well as the schedule itself, in order to determine whether your firm's policy is compliant.

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Why must I have fidelity cover?

Fidelity cover is a requirement for all firms which employ full and/or part time staff and must be in respect of all principals (partners/directors) and employees (GPR 9(1)(a)).

It is designed to indemnify the Insured (the employer) for the loss of money or property sustained as a direct result of acts of fraud, theft or dishonesty by an employee in the course of employment.

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Do I need run-off cover?

When a firm and a PC holder cease to engage in public practice it must ensure that arrangements exist for the continued existence of PII (and fidelity cover where appropriate) for six years after the cessation of the practice (GPR 9(5)).

This is in accordance with the Limitation Act 1980 under which claims can still be made up to six years after the event.

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Why have you asked me to arrange for the retroactive date to be removed?

Cover for any work undertaken before a retroactive date included in the policy will be excluded from the policy and the firm will be unable to make a claim on this work. ACCA requires that all work completed in the past will be covered by the Professional Indemnity policy. The only exception will be when the retroactive date is the date the firm started to provide professional accountancy services.

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Why do I need a continuity agreement?

ACCA requires all practitioners and regulated firms to make arrangements so that the professional needs of their clients will be dealt with if the practitioner dies or becomes incapacitated through illness.

It is a mandatory requirement under ACCA’s regulations that a written agreement is in place.

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What are the requirements?

Sole practitioners must have arrangements in writing with another firm.

Where the firm is a partnership, limited company or limited liability partnership then provision may be made in the partnership agreement, or memorandum and articles of association, or incorporation document.

The nominee or nominees must hold equivalent qualifications and be authorised to carry on the firm's work for which they have undertaken to be responsible – for example: nominees must hold a practising certificate from ACCA or another professional body and where the firm is a registered auditor then the nominee must also be a registered auditor and where the firm is ATOL registered then the nominee must also be on the ATOL register. 

Where the firm's practice is based in more than one country, it must comply with this regulation in respect of each country in which it is based and may appoint different nominees in respect of different countries.

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What form should the continuity agreement take?

ACCA has available a model continuity agreement for use by firms. The agreement can take the form of a letter but it must clearly make provision for the continuity of the practice in the event of its dissolution, winding-up or liquidation, and the death or incapacity of an individual holder of a practising certificate in the firm and it must be clearly agreed by both parties.

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Where can I get a list of firms that I can ask to be my continuity provider?

Any member seeking a continuity partner can look on ACCA’s online directory of firms for a suitable continuity partner or make a post on ACCA’s Practice Sector LinkedIn group.

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I am struggling to find a continuity provider; can you connect me with other firms who may be interested in being my nominee firm?

It is apparent that some firms find it difficult to find a continuity partner - particularly those firms that are registered auditors.

To help firms with this, ACCA is creating a list of members with audit registration that are willing to act as continuity partners for other ACCA registered auditors.

If you need information on this list or would be willing to be such a continuity partner, please email supportingpractitioners@accaglobal.com.

If you are looking for a continuity partner for non-audit work, you can look on ACCA’s online directory of firms for a suitable continuity partner or make a post on ACCA’s Practice Sector LinkedIn group.

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Why should I review my continuity agreement?

It is good practice to ensure your firm's continuity agreement is kept up to date. We recommend that you regularly check that the nominee firm has not changed its name, address or authorisation (eg it is no longer a registered auditor).

If your firm holds audit registration then the nominee firm must also be registered to carry out audit work, but it does not have to hold audit appointments or carry out work to be eligible to be a continuity provider. However, we recommend that from time to time you satisfy yourself that the nominee has maintained competence in the specialised areas of your practice, such as audit.

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My firm is a partnership but we do not have a partnership agreement; do we need to have a continuity agreement?

We recommend that all firms that are partnerships have a partnership agreement in place. If not, then the firm will need to have a separate written continuity agreement.

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I have updated my address and contact details - do I have to notify ACCA?

Yes, all firms must notify ACCA 28 days in advance of any change of address or contact details (GPR 12). Even if changes are made on the practising certificate renewal form, this does not negate the firm's responsibility to notify ACCA of the changes at the appropriate time.

The firm should send any new information to the Authorisation department in order for ACCA's records to be updated. The address is:

Authorisation Department
ACCA
110 Queen Street
Glasgow
G1 3BX
United Kingdom

Alternatively you can telephone us: +44 (0)141 534 4175 or by email authorisationemails@accaglobal.com.

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My firm is registered with you under the name Cheesecake & Sons. However this is a trading name as my firm is an incorporated company, Cheesecake & Sons Limited. Should you be made aware of this?

GPR 12 also requires a firm to notify ACCA 28 days in advance of incorporation and/or change of name.

All firms must be registered with ACCA in their full legal name and not the trading name.

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My firm has changed its shareholdings; should I notify ACCA of this?

The firm must promptly notify us of the changes in the shareholdings rather than wait until submitting the firm's annual certificate renewal.

In addition, if a member is a principal in any other firm which provides accountancy services then ACCA needs to be notified.

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Why do I need ISQM 1 and 2 procedures in place if I do not hold any audit appointments?

Note: The following doesn't apply if the firm doesn't hold audit registration.

Legislation requires ACCA (as a supervisory body) to ensure that its audit registered population has an internal quality control system in place and to assess this at each firm inspection (CA 2016 Sch 10 Part 2 13(7)(c) in the UK and SI 312 109(f)(IV) in the Republic of Ireland).

ISQM 1 and 2 is applicable from 15 December 2022. The objective of ISQM 1 and 2 is to establish and maintain a system of quality management through a robust, proactive and effective approach. ISQM 1 applies to all firms that perform engagements under the IAASB’s international standards. ISQM 1 replaces ISQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance and Related Services Engagements.

This ISQM (UK) applies to all firms performing audits or reviews of financial statements, or other assurance or related services engagements (i.e., if the firm performs any of these engagements, this ISQM (UK) applies and the system of quality management that is established in accordance with the requirements of this ISQM (UK) enables the consistent performance by the firm of all such engagements).

In the UK, this ISQM (UK) applies to firms that perform engagements undertaken in compliance with performance standards issued by the FRC which comprise:

(a) Audits of financial statements undertaken in compliance with International Standards on Auditing (UK)

(b) Reporting accountants acting in connection with an investment circular

(c) Reviews of interim financial information by the independent auditor of the entity (International Standard on Review Engagements (UK) 2410 (Revised May 2021))

(d) Engagements to provide assurance on client assets to the Financial Conduct Authority and 

(e) Assurance engagements specified by the FRC as 'public interest assurance engagements' performed in accordance with International Standard on Assurance Engagements (UK) (ISAE (UK)) 3000 (July 2020). 

The firm should ensure that it complies with the requirements of ISQM 1, including the requirement for ongoing monitoring and remediation, conducting an annual evaluation and ensuring that persons with ultimate and operational responsibilities are subject to periodic appraisals.

Guidance

ACCA's compliance team has identified various common issues during recent audit monitoring visits - please read these and consider them in conjunction with your firm's audit procedures.

You can get more guidance here.

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Should I issue engagement letters to all my clients?

Firms must record in writing and send to each of its clients a letter of engagement that clearly defines the scope of responsibilities and the terms of the contract with each client.

This must be done before any work is undertaken or, if this is not possible, as soon as practicable after the engagement commences.  You must retain a copy of the engagement letter which has been signed by the client.

The letter of engagement should comply with Statutory Instrument 2009/2999 in the UK and Statutory Instrument 533 of 2010 in the Republic of Ireland - these set out the information the provider of a service must make available to a recipient of the service.

Engagement letters should have been updated to take account of the current requirements under GDPR and the DPA 2018. Practitioners must send their privacy notice to clients as part of the engagement letter.

Further guidance can be found here.

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From time to time I receive a tax refund for one of my clients; is it an issue that sometimes the refund is paid into the office account by mistake?

Section 350 of the Code of Ethics and Conduct requires the firm to pay all clients’ monies into a designated client account. This will include tax refunds.

However, fees paid in advance are not regarded as clients’ monies for these purposes and should not be paid into a client account (CEC 350.21).

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My firm does not have Exempt Regulated Activities registration but a client recently asked my firm for advice on mortgage rates: what should I say?

Unauthorised firms may still refer clients to another adviser but may only give general advice and cannot comment on the advice given to the client by an authorised person.

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The arrangement I have for fee protection is not an insurance distribution product so why are you requesting for more information?

We would only request further documentation if it is not clear whether or not the fee protection that your firm offers to its clients falls outside the definition of insurance distribution.

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What should be on my professional stationery?

If a firm is a registered auditor and is holding itself out to be so then it must include the relevant statement as set out in section B4 which includes the country its registration applies to.

If a firm relinquishes its audit and/or ERA registration, it must ensure that all references to the specific registration are immediately removed from its stationery.

Except for audit work and investment business, firms are not permitted to state they are registered or approved for any other work. They may only refer to themselves as 'Chartered Certified Accountants', 'an ACCA practice', or 'Member(s) of the Association of Chartered Certified Accountants'.

For limited companies there are additional requirements under Section 41, Companies Act 2006 in the UK and Sec 151 of Companies Act 2014 in the Republic of Ireland. In particular it must include:

• the name and legal form of the company
• the place of registration of the company and the number under which it is registered
• the address of its registered office

Using the ACCA logo on your stationery

If you wish to use the ACCA logo on your stationery, please note that there are specific requirements concerning its positioning, size and colour. The artwork and guidelines are available by emailing logo@accaglobal.com.

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Is stationery just my letterhead?

Stationery includes websites and other electronic materials by which a firm communicates or markets itself.

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Further information to help with regulatory compliance