Changing Accountant - getting files back

Builderfromhell

Someone I know told me today that they were having difficulty changing accountant.

They had been paying an accountant 250 euro a month and were advised that this was a little expensive. They made enquiries and found someone happy to do the same work for 120 euro a month.

Their new Accountant contacted their old accountant to get the accounts and paperwork but were told they would have to pay 2,000 euro for the documentation.

Is this normal procedure?

It seems like extortion to me as the client is then left with no choice but to continue with their original accountant for the rest of their business life or pay whatever fee they ask.

Any comments or observations welcome.

Clanket

I don't know the ins and outs of the particular case but an accountant cannot charge a client to release books back to them.

However, it may be the case that there is an outstanding bill that needs to be paid. Tell your friend to contact the accountant and find out exactly what makes up the 2k.

There's no point commenting on it unless you have more details.

ssbob

Builderfromhell wrote: »

Someone I know told me today that they were having difficulty changing accountant.

They had been paying an accountant 250 euro a month and were advised that this was a little expensive. They made enquiries and found someone happy to do the same work for 120 euro a month.

Their new Accountant contacted their old accountant to get the accounts and paperwork but were told they would have to pay 2,000 euro for the documentation.

Is this normal procedure?

It seems like extortion to me as the client is then left with no choice but to continue with their original accountant for the rest of their business life or pay whatever fee they ask.

Any comments or observations welcome.

As the poster said above, if there is outstanding fees then this could be normal, however if the accountant is charging for just the release of the books then that is incorrect. I would advise the following course of action:

1. Write to your accountant and explain to him that you are transferring accountants and that you need your most up to date accounts to do this. Also explain in this letter that there are no outstanding fees in relation to your account with him.
2. If you receive nothing back within 2 weeks, write to him again referencing your first letter but also mention that you will be informing his accounting body(which you should get from any previous correspondance)
3. Inform his accounting body about this explaining your situation(it will not get to this)

But again make sure there are no outstanding fees

Builderfromhell

Thanks.
I do not have full details but will ask them if fees are outstanding. I can see how witholding files until fees paid would make sense.
Otherwise I will suggest keeping matters civil and writing to the accountant as suggested above.

I am employed by this person as a builder and just wanted to help them out because, like so many others, they are only just making a living as it is.

dbran

Hi

A distinction can be made between

1) The transfer documents which are required in order to be able to provide a continuity of service to the client and
2) The clients books and records.

Under no circumstances can the previous accountant not give the transfer documentation to the new accountant once he has been given adequate permission by the client to divulge the information. This would be looked on as very unprofessional and unethical.

In certain circumstances where there are unpaid fees the accountant can exercise a lien over the books and records of the client. This would be an extreme step to take as there could be legal implications from this course of action.

However I would point out that we are only hearing one side of the story and accountants are also facing not being paid for services they have legitimately carried out in good faith.

Kind Regards

dbran

R0N BURGUNDY

in reality what usually happens is = you pay your outstanding bill, then you get all your stuff back.

dont pay = get nothing back. simples.

€250/month? so he owes for 8 months then.

Trophywife

If its o/s fees he'll have to pay them. If not he should get the accountancy bodies details that the accountant belongs to and report them for extortion. But I doubt thats the case. Its more likely fees being unpaid. Happening alot these days!!

kennyb3

If its a limited company the accountant should release the books even if there is an unpaid bill, as is they dont they could breach the company acts as the books need to held at the registered office. Of course this could be the accountants office though but usually not.

As dbran said the accountant could get a lien but this is very unusual and extreme.

The accountant can sue the client anyway for unpaid bills and will be in a very good position if they have a decent letter of engagement in place.

JD Dublin

In deference to previous posters, I won't say what I think of clients doing a runner on fees.

This is happenning all over the place and is a shift in the marketplace. In fairness peoples backs are to the wall, but that's no excuse for robbery, which is what this is IMO.

All's fair in love and war, but I think you'll find OP that your pal needs to pay what he owes, then he'll get the books back.

I've never seen a builder that left a site without being paid, so why should an accountant do work and not get paid?

And this mularkey of going to complain the accountant to his or her professional body - everyone is having their rights violated by their accountant - and everyone's trying that one on to get the records back from the previous accountant without paying the bill.

kennyb3

I’ve long wanted to write this post but never find the time but here goes....

Personally I’ve worked in practice for the last 7 years (you can see my firm’s website by clicking my username) and here is my experience. The first thing I would say is that your accountant wants you as a client - accountants never like to lose clients, now more than ever. Unless there is a particular problematic client we will always do our best to keep clients, meet their fee expectations and satisfactorily complete the work they require.

Accountants need to keep clients now more than ever and will always negotiate fees if you feel you are being charged too much. They know by over charging you won’t be coming back and with the first year being the most difficult recovery wise due to costs with client set up etc they will want you to return. Accountants only want to be paid what they feel is fair for the work being provided.

We are always willing to provide an estimate at the outset of any assignment, and if there is a time over- run we contact the client at this time (rather than shocking them with a bill at the end) and discuss same – explaining what is going on and why. The client will then come in at the finalisation stage and a fair fee is agreed. This is a process of negotiation rather than telling the client what they owe. Fees are regularly knocked down to make sure the client is satisfied – within reason. The only thing I will say is that your accountant won’t work for next to nothing, as a professional they attach a value to their time and I’m sure we can all agree this is acceptable providing it is at an appropriate level. If you have a grievance with the fee that is the time to air it.

As we all know the current market is extremely price sensitive and strongly price driven. Every second day there is a new poster on asking for a recommendation for a cheap accountant. However anybody who thinks that an accountant who is significantly cheaper (30%+) is putting in the same work/time is seriously mislead.

We have had some of our clients quoted 50% of the price of what we and other practices are charging. The obvious reason for this is that the accountants involved are desperate for money and cashflow (due to their own financial difficulties). They are taking client trial balances, putting them on Sage making no adjustments, checking no figures and simply filing the CT1 with revenue and the abridged accounts with the CRO or the Form 11 with Revenue in the case of sole traders. Honestly if you are going to go down this route you may as well do it yourself for free.

Obviously there are instances were there are individuals with no premises, staff etc who have significantly less overheads and thus can quote a lower price. However if going down this route I would always suggest a) finding out what body (ACA, ACCA, CPA etc) and b) asking to see their practising certificate. At least if something does go wrong you have some form of recourse. Also a word of mouth reference is worth getting – see more on this below.

The obvious issue with going with an ‘undercut merchant’ who doesn’t do the level of work required is that this will likely catch up with client in the form of a) A Revenue Audit at a later date (if extra tax is owed there can be very penalitive interest & penalties) b) The Office of The Director of Corporate Enforcement having an issue with substandard disclosures in the abridged account prepared by lazy accountants (if a company). Both of these can have serious consequences.

As one of our clients say to me recently, having a good accountant is like having insurance (against the above).

From speaking with Heather Briars recently, the director of CARB, it is clear that they are targeting members of their body who are performing extremely cheap and therefore they believe substandard audits in particular. These are easily identifiable via the practitioner’s annual return (no of audits divided by audit fees gives average audit fee).

As has been stated so many times over on here an accountant should be much more than a compliance mechanism. They should be involved in most aspects of your business – for example we prepare management accounts, provide training for bookkeepers, help clients produce budgets to cut costs and devise weekly sales targets etc.

This is particularly pertinent in the current environment. Your accountant wants to help you in every way possible as if you don’t have a business they won’t have yours!

If thinking about a switch my advice is to, as you would do when renewing car insurance etc., ring four or five practices in your area and compare their prices. In most cases you ll probably find their quotes are within 10-15% of each other. If there is one far lower than others alarm bells should be ringing.

Probably the easiest way to select a good accountant is by word of mouth references. I would say 95% of our new business comes from a recommendation from someone else (the other 5% being that they are local to the area and drop in or pick up the phone after looking in a directory). This is the quickest and best way of finding out if an accountant is reliable, professional, easy to deal with and most of all reasonable in terms of fees.

Anyway those are just some of my thoughts on fees as this is an issue that regularly comes up.

Probably one last thing to add is that as there are regularly people who come on and complain about the fee that is charged i’d suggest:

1. Getting an estimate at the outset
2. Consider asking for a fixed fee and get this signed off in a letter of engagement
3. If unhappy with a fee suggested – negotiate and air your side of thing
4. Ask why the fee exceeded the estimate
5. If still unhappy ask for a breakdown of the time input into the various areas
6. Negotiate further at later date when both parties have had a chance to consider things
7. As a last resort make a complaint to their body.

And sure here is a few things that might help you pick a good accountant (not just a cheap one). I hope I’m not too biased.

1. Word of mouth, word of mouth and word of mouth (the single most important thing)
2. Check that they are member of a body
3. Make sure they have a presence – a home, office etc. So they don’t up and vanish
4. Look for an up to date practising certificate when visiting them.
5. Phone them early on in your dealing with them and ensure they a) speak to you or b) get back to you promptly. People regularly complain that their accountants ignore them
6. Review their correspondence – you don’t want someone who prepares a letter littered with mistakes looking after your accounts (attention to detail is critical – although note everyone make the odd spelling error).

Hope this helps someone out there and if anyone has any comments or wants to ask anything feel free to PM me.

Trophywife

In relation the the original posters problem. I've had dealings with a client who was with an "accountant" for 10 years +. The client then wanted to move (to my practice) as he was having problems with the revenue and returns not being filed etc. He was paying a direct debits of over 500 per month to this "accountant". So when he asked the current "accountant" for his records back he said there was and o/s fee of 2.5k to be paid before he released them. There was a lot of two and fro-ing for months and disputes over the fees, and he ended up paying them just to get his books and records back to be rid of the guy. His annual accounts should have cost no more than 3k as we later found out from doing his accounts/book keeping.

To cut a long story short, it turned out the "accountant" had not filed returns for the client for over 3 years and there was a lot of money then owing to the revenue all at once plus warrants from the sheriff which cause a lot of unnecessary stress and inconvenience to the client and money too, and high interest and penalties accruing.

The "accountant" was not belonging to any accountancy body and was not qualified either. A court case is now in progress to recover fees paid for which no work was done and for the interest and penalties accrued to the revenue.

I would advise anyone who thinks they are getting a "bargain" by having an unqualified person, or an accountant who is not a member of a professional body, to avoid that situation at all costs because in the long run it will end up costing a lot more in monetary values and a hell of a lot of sleepless nights. Its definitely NOT worth it!!!!

ants09

not all unqualified accountants are unprofessional as some of them are as good as qualified accountants. and not all qualified accountants are professional also just because they belong to a professional body doesnt mean you get a better service.

Trophywife

ants09 wrote: »

not all unqualified accountants are unprofessional as some of them are as good as qualified accountants. and not all qualified accountants are professional also just because they belong to a professional body doesnt mean you get a better service.

True, but it might not be worth risking dealing with an unqualified accountant, at least there's some come back if they're part of a professional body and a client has a problem with them. There's no come back with an unregulated accountant. A cost/benefit analysis needed!! ha

Would you let an unqualified surgeon operate on you!!!

ants09

you cant compare surgeons with accountants as your trying to compare apples with oranges !

kennyb3

ants09 wrote: »

not all unqualified accountants are unprofessional as some of them are as good as qualified accountants. and not all qualified accountants are professional also just because they belong to a professional body doesnt mean you get a better service.

Of course this is true, but at least if they have a professional qualification it shows they have a minimum knowledge. Add to that that you have recourse with their body. With an unqualified person you have to get a solicitor involved and if you ve signed a letter of engagement you ll likely lose.

I totally get your point though but I think unless an unqualified accountant comes strongly recommended it is less risky to go with a qualified one who is an accredited member of a body (i.e have paid their fees not just qualified). See a practising cert as i ve already said is a good idea.

ants09

kennyb3 wrote: »

With an unqualified person you have to get a solicitor involved and if you ve signed a letter of engagement you ll likely lose .

sorry for my ignorance but how can you say if you sign a letter of engagement from a unqualified person you ll likely lose ???

accountants are like other business there to make a profit and i know off a few accountants that are qualified that have a praciticing cert and that are qualified and dont have a practicing cert and also unqualified that are pretty good at what they do.

personally speaking i think the term accountant should be protected

and also personally speaking you can go to members of other bodies to do your accounts and taxes who are not accountants in a strick sense of the meaning like MAAT and AITI etc

Trophywife

ants09 wrote: »

you cant compare surgeons with accountants as your trying to compare apples with oranges !

Just saying qualifications are there for a reason, any old joe soap can purport to be an accountant and not have a clue. Less risky if you just deal with a qualified person and there's likely to be less problems as the job will be done properly!!

ants09

Trophywife wrote: »

Just saying qualifications are there for a reason, any old joe soap can purport to be an accountant and not have a clue. Less risky if you just deal with a qualified person and there's likely to be less problems as the job will be done properly!!

i know a few people that qualified as accountants and never prepared a set of accounts ! only brought the accounts up to the t-b stage :rolleyes:

qualification doesnt mean you get the job done propertly and anybody that thinks that well i wont say what i think

qualification means you excelled in the exams and experience means you should be able to do the job properly

Trophywife

ants09 wrote: »

i know a few people that qualified as accountants and never prepared a set of accounts ! only brought the accounts up to the t-b stage :rolleyes:

qualification doesnt mean you get the job done propertly and anybody that thinks that well i wont say what i think

qualification means you excelled in the exams and experience means you should be able to do the job properly

I never said people without a qualifications couldn't prepare accounts, maybe you should read my posts properly! And obviously there are people working in industry who are qualified and don't prepare financial statements per say.

What i said was that there is less of a risk if you deal with someone qualified!!!:rolleyes::rolleyes:

Exams are there so a persons learns the law, regulations and techniques necessary to work in the profession. And practical experience is essential to qualify with any professional body.

ants09

Trophywife wrote: »

less problems as the job will be done properly!!

Trophywife wrote: »

What i said was that there is less of a risk if you deal with someone qualified!!!

kennyb3

ants09 wrote: »

sorry for my ignorance but how can you say if you sign a letter of engagement from a unqualified person you ll likely lose ???

Because quite simply most letters of engagements will state that the accountant charges fees based on time accruing, and by signing you are entering a binding contract. As long as they can show from their time recording system they have spent X amount of time on the job for XYZ reason they are likely to win.

As regards, the qualified v unqualified issue - i ve made it clear on my views, you have yours i'm not going to sit here bashing it out with you. The public will decide.

EamonOSullivan

Just going to back to the orginal point, can your friend go back to the accountant and ask them what work they did for the money they are looking for. If they actually have done some work, then maybe the new accountant can cut your friend a deal when they realise that the books are up to date etc.

Also if your friend goes back to the accountant, they may be willing to cut a deal i.e. give a discount, just to get your friend out of their hair.

I understand your friend is probably looking at this and thinking that the original accountant overcharged, but in my experience, most accountants keep the fees down as low as they can just to hold the business. The other side of the coin is that the new accountant may be undercharging - they may either not do the work, or look for a payment at the end to justify extra work they had to do. Alternatively the new accountant may up the annual fees the first chance they get, or may go back to full-time employment once the economy picks up.