Is it legal to get a family member to do your accounts?

Tiddlypeeps

I'm currently trying to set up a limited company and the accountant we intend to use is a sibling of one of the directors.

I was recently informed that this is illegal by some friends, but I can't find any legislation on the internet regarding the issue. Is it illegal to have a family member do your accounts?

sealgaire

Can't possibly see how this would be illegal

Tiddlypeeps

They claimed it was because it would be easier to fiddle the accounts. But I know for sure it is not illegal for an accountant who is a director of a company to do his own books, so i can't really see how this would be any different. Even if that was illegal both scenarios would be very unfair.

smcgiff

Two questions spring to mind.

Is the accountant an employee or is the company hiring him as an external accountant i.e. as a practice?

Is the company in audit?


There may be issues with Corporate Governance and the accountant's own organisation.

Padkir

Tiddlypeeps wrote: »

They claimed it was because it would be easier to fiddle the accounts. But I know for sure it is not illegal for an accountant who is a director of a company to do his own books, so i can't really see how this would be any different. Even if that was illegal both scenarios would be very unfair.

Don't think it could be in any way illegal, but that being said I don't have any proof! I would imagine the only area where independence issues would come into it would be with regards auditing.

KindOfIrish

If your business annual turnover won't be over threshold of 7 mln. euro(when registered auditor required), anybody can do your accounts, even yourself.

Tiddlypeeps

Great, thanks for clearing that up.

Johnmb

It's not illegal for him to do your accounts, but he will not be allowed to audit them if an audit is required.

Tiddlypeeps

smcgiff wrote: »

Two questions spring to mind.

Is the accountant an employee or is the company hiring him as an external accountant i.e. as a practice?

Is the company in audit?


There may be issues with Corporate Governance and the accountant's own organisation.

She has her own practice so i figure we are probably going to hire her as an external accountant.

No the company is not in audit, we haven't even registered yet.

What is corporate governance?

lucylu19

no it's not illegal for a sibling to be your accountant.
It would just pose a problem if they were your auditor!

djk1000

No matter who does the accounts, it's the directors that sign them off each year, so it remains the directors responsibility no matter who prepares them. You could do them yourself if you wanted to and there would be no problem.

If you need to have your accounts audited for some reason, then you need an "independent" auditor who will be putting there name to an audit report which will give their opinion as to the truth and fairness of the accounts. To ensure that this report is free from collusion, blackmail, coersion etc. The rules say that the auditor should not be connected with the company.

You probably won't need an audit and your accountant can advise you on why a small company might need an audit. The fact that you have a qualified accountant doing your accounts and bookkeeping would probably help an audit to go more smoothly anyway.

J.Ryan

It would be a breach of the companies act if the relative was to audit the books of the company (read the sections on who is disqualified from being an auditor).

If you are audit exempt then there is no issue.