Module 2 Research, Communication & Professional Obligations

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www.charteredaccountants.ie

Module 2Research, Communication & Professional Obligations

Chartered Tax Consultant

Patricia Quigley18th/19th January 2013

1

Learning Objectives• Research

• Communication

• Professional Obligations

• Money Laundering

• Methods for tax planning /compliance

• Coherence/RelevanceRevenue; Client; Other professionals

• Understand/ ImplementEthical responsibilities

• Applying MLO as a Chartered Accountant

Introduction• Development of Professional Skills• Focus on application of these skills to tax

practice• Tax Research is an integral part of all tax

work• Research outcome must be

communicated

Introduction• CAI Professional Standards – including

Risk Management• Money Laundering – CAI Guidance• Criminal Justice (Money Laundering and

Terrorist Financing) Act 2010• CA obliged to incorporate ML and RM into

daily professional activities

Research Skills

Research Skills

• Do you put off starting your research?• Is the deadline looming and your fear

growing?• Control your fear and improve output• Learn and practice a methodical approach

to research• Know where to access tax information

Tax Research and RM

• What makes it easier for you if you are the reviewer?

• Report and file structure?• Cross references to research material• Always imagine yourself as the reviewer

Research

• Same approach for all tasks• No task too trivial• Keep asking questions• Ask more questions

Research Responsibility

Person• Delegator?• Person assisting? • You?• Same answer for

keeping up to date?

Person Responsible• NO• NO• YES• YES

Risk Management

• Enron collapse and scandal• US SEC Investigation• Sarbanes-Oxley Act 2002 (SOX)• Public Company Accounting Oversight

Board (PCOAB)• Other countries followed US

Risk Management

• Understand the RM procedures of your organization

• RM developments – CAI, legislation and regulations

• Incorporate RM into your daily work as a CTC

• Keep up to date with developments

Key Reports on RM

• OECD GAP003www.oecd.org/dataoecd/36/0/1908440.pdf

• OECD Managing and Improving Tax Compliancewww.oecd.org/dataoecd/44/19/33818656.pdf

• EC Taxation and Customs Union Risk Management Guide for Tax Administrations

http://ec.europa.eu/taxation_customs/

http://www.oecd.org/dataoecd/36/0/1908440.pdf

http://www.oecd.org/dataoecd/44/19/33818656.pdf

http://ec.europa.eu/taxation_customs/

RM Procedures

• Know Your Client Procedures (KYC)• New client identification• Engagement Letters• Anti Money Laundering procedures (AML)• File maintenance• Controls over tax compliance work• Peer Reviews

RM – Staring a New Task

• Consider RM for each assignment• The file is yours for the duration of task• You are responsible for RM• What are your RM checks at

commencement?

RM “Personal” Checks• File• Engagement Letter

• Understand?• Assistance?• Training?• Deadline?• Tax compliance

• Set up and sections?• Current, signed and

cover the work?• Anything not clear?• Is help needed?• Training needs?• Realistic?• Is a database needed?

Importance of Risk ManagementExample Proper Procedures Inadequate Procedures

Revenue issues a demand for surcharge for late filing. Client queries why it issued

Client databaseUp to date

Copy of letter to client re payment and due date on file

Compliance database not updated due to time pressure

No hard copy of letter found. Soft copy on system.

Client disputes fee Singed EL on file setting out fee for the work

Signed EL on file. Negotiation of fee needed if additional work. No evidence of agreeing extra fee.

Negligence?

• Tax advice may be correct• More likely that RM left until last• Time pressures• “Too busy” is not sufficient• Methodical and daily RM needed

Risk Management Summary

• Who takes responsibility for RM?• How often?• Should you change your habits?• Expect high standards when reviewing• Be methodical• RM is for all tasks – however “simple”

Research – Getting Started

• Questions and Listening• Understand the purpose of the research• What “product” is expected from you?• Prepare well at the beginning• Methodical structure• Incorporate RM

Listen and Question• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6

Who ? Client; Revenue; Colleague; 3rd Party Professional; Appeal Hearing?

Form? Written; Oral Presentation; Slides/Handouts?

Position? Neutral observer? Summarise findings

Defending? Particular stance with evidence to back it

Process – Why?

• No research process = ?

• Emphasis on end product only• Conclusions reached too quickly• RM not put in place

Research Steps

1. Deadlines for steps and delivery2. Notebook for recording ideas3. List of sources4. Use previous knowledge5. Brainstorming – use colleagues

Research Process Overview

• Gathering information• Researching tax issues – sources• Useful websites• Drafting and completing the written advice

Jigsaw Analogy

• Casting a wide net• Sifting methodically• Select relevant parts• Disregard the rest

Tax Research

• What is the primary source for your research?

• TAX LEGISLATION

Tax Legislation

• Commentaries may be valid but not for all situations

• Daily habit of using tax legislation• Start with issues you know• Read legislation as “new” each time• Use latest version of legislation• Read entire section(s)

Tax Legislation Example

• Is orthodontic work tax deductible?• Section 469 TCA 1997 – YES• What else did you learn?• Relief at standard rate from 2009• Nursing home at higher rate• References to Tax Briefing 50

Tax Legislation

• Direct Tax Acts– Provisional Collection of Taxes Act 1927– Interpretation Act 1937– Waiver of Certain Tax, Interest and Penalties

Act, 1993– Interpretation Act 2005– Taxes Consolidation Act 1997 (TCA 1997)

Tax Legislation

• Stamp Duty Legislation– SDCA 1999

• Capital Acquisition Tax Legislation– CATCA 2003

• Law of Value Added Tax– VATCA 2010

Secondary Research SourcesRevenue Material •Revenue Staff Instructions

•Published Precedents•E Briefs/Tax Briefings/SOPs•Technical Guidelines•Codes of Practice

Case Law •Authoritative interpretation of Law•Irish Court decisions•UK Case Law•Irish Tax Reports/Digests/Irish Law Reports/BAILII

The Client •Read the file•Ask Colleagues•Website•CRO

Secondary Research SourcesMagazines •CAI Weekly Newsletter

•Tax. Point•Accountancy Ireland

Internal Resources •Technical memos•Precedents•Databases

EU Research Sources •EU Regulations•ECJ•EU Treaty – State Aid Rules

Research - Websites

• Irish• www.irishstatutebook.ie/home.html• www.revenue.ie• www.gov.ie/departments• www.gov.ie/oranisations• www.egt.ie/misc/nuachtain.html

http://www.revenue.ie/



http://www.gov.ie/oranisations

Research - Websites

• EU• http://ec.europa.eu/taxation_customs/inde

x_en.html• http://ec.europa.eu/community_law/introd

uction/treaty_en.html• International• www.oecd.org









Research - Websites

• UK• www.hmrc.gov.uk• www.tax.org.uk• www.direct.gov.uk• www.opsi.gov.uk






Research - Websites

• US• www.irs.ustreas.gov• www.taxsites.com• www.sawguru.com





Drafting the Report

• Bits of the jigsaw are fitting together• Whole picture not yet appearing• Document and track the information• Are there gaps? Review again• Note your questions – ask now or later?• Research must support your conclusions

and recommendations

Writing the Report

• Jigsaw – corner pieces now in place and sides joined up

• Clear where remaining pieces will fit• Stand back – “ask a friend”?• Join together legislation, case law and

other sources• Analysis must withstand scrutiny eg

Revenue

Final Checks

• Layout and content• Conclusions – are they clear?• Does summary reflect main points?• Proof reading by a colleague• Sources and references included• Scrutiny check carried out?• Finalise your professional communication

Communication Skills 1• Conversation• Listening

Communication Skills

• Form?

• Conversation = ?

• Conversation• Body Language• Visual• Written

• Combination of above


• Meaning?• Communication =?• Sharing information

is?

• Examples ?

• “common” or shared• Sharing Information• At the heart of what a

tax professional does• Preparing tax comps• Company restructure

advice• Tax projections for

business plan


• “Effective communication is assisted by building a rapport with clients, colleagues, shareholders and other relevant stakeholders and creating a shared understanding”

• Paragraph 2.3.1 Module 2


• Focus on three skills

• Conversation• Listening • Writing

Diagram / Chart

• Building rapport• Shared

Understanding• Effective

communication

Communication

Conversation Listening Writing

Conversation

• 2/3rds of conversation spent on social topics

• Helps us to relax• Result is more effective communication• How to use this in your work?

Conversation in Your Work

• Look for a common interest• Ask questions about a shared situation• Avoid “rattling” on about yourself• Put the other person at ease• Lead into the tax issue at hand

Work at Conversation

• Technology has reduced workplace conversation

• Conscious effort needed • Talk with colleagues as well as clients• Sharing of valuable work related

information

Plan for Conversation

• Timing• Time limit?• Informal agenda• Common ground• Summarise

• Body Language• Notes

• Check with other• Is there a time limit?• Informal• Find some• Throughout and at

end• Be aware/interpret• Memory aid/file note

Arguments

• Is an argument developing?• No hard and fast rules• Rapport lost and must be rebuilt• Have privately held beliefs taken over?

Arguments - tips

• Professional responsibility – act in a professional manner

• Stick to the facts• Avoid personal beliefs• Be honest • Ask questions• Use listening skills and remember the

long term client relationship

Listening Skills

• Talking comes easier than listening• Our minds are trained to be active• Train the mind for new practices• A quiet mind is not a “switched off” mind

Listening – Quieten the Mind

• Mindfulness as a tool• Stop and listen • Fleeting moments of no internal

conversation• Try it – look out the window and stop the

noise for a moment

Listening

• Finishing other’s sentences?

• Filling pauses?

• Formulating your response?

• Interrupting?

• Stop and let them finish

• Stop – do not fear silence

• Stop – your turn will come

• Stop – the other person will stop

Representing Your Clients

• Develop your listening and conversation skills

• Listening is foundation stone for negotiating

Representing Your Clients

• Revenue Audit• Understand the client’s concerns• Share full information with client on audit• Put your client at ease using conversation

skills• Listen to all views and have yours listened

to

Money Laundering

Money Laundering

• Criminal Justice (Money Laundering and Terrorist Financing) Act 2010

• CCAB-I GuidanceM42 Revised• Customer Due Diligence Requirements

under CJA 2010

Overview• Money Laundering a world wide problem• 1991 EU legislation• Ireland – CJA 1994• CJA 2010 since 15/7/2010• EU Directive 2005/60/EC (3rd ML Dir)• CCAB-I Guidelines M42 Revised

Accountants and Tax Advisors

• Tax advisors and accountants within scope of CJA 2010

• Must carry out CDD procedures• Risk based approach• Ongoing monitoring of client relationships• Risk sensitive basis

Accountants and Tax Advisors• Retention of ID records for at least five

years• Retention of original/copies relating to

transactions for five years• Adoption of measures to prevent and

detect money laundering, includes training

• To provide staff training on AML

Reporting Requirements

• Report suspicions of money laundering offences to Garda and Revenue

• Known as Suspicious Transaction Report (STR)

• Report all transactions connected with “Designated States”

What is Money Laundering?

• Section 7 CJA 2010• “property that is the proceeds of criminal

conduct”• Involved in concealing, disguising,

converting, transferring, removing the property

Money Laundering

• Sec 6 CJA 2010• Criminal conduct defined• Conduct that constitutes an offence• Broad definition• Includes “saved costs” form illegal acts• Tax Evasion included • No de minimis

Terrorist Financing• CJA 2005 • Offence of financing terrorism• Designated persons includes

accountants, auditors and tax advisors• Obliged to adopt measures to prevent and

detect TF• Sec42 CJA 2010 – reporting of suspicions

or knowledge of TF in same manner as ML

ML Tipping Off

• Section 49 CJA 2010• Offence to make any disclosure that could

prejudice and investigation• Knowledge re external report• Disclosure re ML allegation or TF offence

committed or being contemplated

CJA 2010 Penalties• Sec 7 and 9 CJA 2010

Money Laundering• Sec 33/42 CJA 2010

CDD/records/reporting• Sec 49 Breach -

Disclosure that may prejudice

• Sec 49 Tipping Off

• Max 14 years/fine


• Max 5 Years/fine


AML Systems and Controls

• CJA 2010• Risk sensitive policies and procedures• Identification and scrutiny of:• Transactions which are large or complex;

unusual patterns with no apparent economic or lawful purposes

AML Systems and Controls• CJA 2010• Prevention of use of products favouring

anonymity• Determination of Potentially Exposed

Persons• Customer Due Diligence• Record Keeping and Internal Controls• Staff Training

Customer Due Diligence

• “Effective” CDD essential -CJA 2010• Cornerstone requirement of Act• Effort concentrated on higher risk areas• Risk assessed before appropriate level of

CDD applied

Customer Due Diligence CJA 2010• When should CDD be carried out?

• Prior to:• Establishing business relationship• Carrying out a transaction >€15,000• Carrying out a service with real risk of ML

or TF• Carrying out a service where doubts of

previous ID information

CJA 2010 CDD

• What must you implement?• Client Identification• Know Your Client Procedures• Ongoing monitoring• Risk Based Approach• Reporting Obligations

CJA 2010 ML

• Monitoring of Designating Persons• Reporting Obligations STRs• Exemptions from Reporting• AML Guidelines CCAB-I M42 Revised

Client Identification CJA 2010

Before entering a business relationship:• Identify and verify client’s ID• Using documents from reliably,

independent sources• Identify owners of client – ownership and

control and verify ID of beneficial owners• Obtain information on purpose and

intended nature of business relationship

Know Your Client Procedures

• Establish name, permanent address and DOB of client

• Is client true beneficial owner?• Identify source and intended use of funds• Assess client’s business activity/pattern of

transaction• Is this appropriate in context of business?


• Risk assessment needed to determine level of information needed

• Face to fact contact with new clients• Original documents to be seen • Passports/Driving Licences• Utility bills to verify address


• Partnerships – identify at least 2 partners• Corporate Clients• Legitimate trading or economic purpose• Company search• Identify true beneficial owners• Identify 2 directors • Get list of directors >10% shares


• Quoted Corporate Clients less onerous• Stock Exchange in EU or listed countries• Certificate of Incorporation • Memorandum and Articles of Association• List of directors’ names, DOBs,

occupations and business address• Trusts/clubs/societies/intermediaries/agents

Simplified KYC

• Sections 34 and 36 CJA 2010• Simplified basis of verification• Accumulated knowledge of client

sufficient to prove identification• Risk sensitive basis

Ongoing Monitoring

• Accounting firms must monitor activity• Scrutiny of transactions and source of

funds• New information must be consistent with

other knowledge• Documentation to be kept updated

Risk Based Approach

• Focus on clients and areas of higher risk• EU 3rd Money Laundering Directive• “…where there is the greatest risk of the

services of those legal professions being misused for the purpose of laundering the process of criminal activity or for the purpose of terrorist financing”

*Legal profession includes tax advice

Monitoring

• Sec 60 CJA 2010• Designated persons subject to monitoring• Supervision and monitoring by a

“competent authority”• CARB is the competent authority for CA

Reporting Obligations

• Who to report to?• Gárda Síochána and Revenue • Who reports?• Designated Person• Employees report internally • Accounting firm decide if reporting

needed• Firms must have reporting procedures

Reporting Obligations

• What to report?• STR – Suspicious Transaction Report• All crimes reporting regime• Extends to all suspicions• Tax evasion = “proceeds”• Health & Safety breaches to save costs• No de minimis –petty cash/shoplifting

Reporting Exemptions

• Legal Professional Privilege exemption stems from Article 20 3rd EU ML Directive

• Information received in “privileged circumstances”

• Exemption from making STR• Overridden where intention of furthering a

criminal purpose

Reporting Exemptions• Article 21 3rd EU ML Dir extends LPP to

tax advisors• “ in the case of auditor, external

accountants and tax advisors who..may defend a client in the context of judicial proceedings or ascertain a client’s legal position, the information they obtain..should not be subject to the reporting obligations…”

CTC Reporting Exemptions

• Distinguish between reportable and non reportable situations

• Qualifying Disclosure under Sec 1077E TCA 1997 is main exemption

• Intention to regularise tax affairs and reduce penalties

• Client relationship must exist

CTC Reporting Exemptions

• Can apply to all forms of disclosure to Revenue

• Does not apply to ST in routine tax compliance work that is not acted upon

• Exemption overridden by intention of furthering a criminal purpose

AML Guidance• CCAB-I Guideline M42 Revised• Submission for Ministerial approval• Sec 107 CJA 2010 – Court of Law takes

account of Guidelines• Take all reasonable steps and exercise

due diligence• Evidence of compliance is a defence• Serious legal, regulatory or professional

disciplinary if Guidance not followed

Record Keeping• Sec 55 CJA 2010• Accountancy firms to keep records for 5

years from end of client relationship• Records showing evidence of procedures

applies• ID records/Beneficial Ownership• History of services and transactions• Good File Maintenance practices

Communication Skills 2

Writing Skills

Writing Skills

• Written communication• Primary communication tool for tax

professionals• Huge volume of e mails and reports• Technical ability and creativity plus• First class writing skills

Writing Skills Overview

• General• Effective Writing

• Tax Assignments

• Methodical Approach• Plan/Draft/Review• Paragraphs/Sentences• Writing style

• E Mails• Letters• Language

Before you Write

• Is writing the best form of communication for the task?

• Do not overuse e mail• Would a telephone call or meeting be

better?• Risk Management – always keep written

record

Writing Tips

• Remember you will not be there to pick up misunderstandings

• Use suitable words for reader• Avoid long words where short will do• Max words in sentence = 25• State your ideas early• Paragraph for each new point

Methodical Approach

1. Plan the document2. Use mind mapping3. Write the first draft4. Review and finalise the document

Planning the Document

• What do you want the document to do?

• What action do you want reader to take?

• Explain; describe; suggest; outline; recommend; clarify; propose?

• Implement; review; chose?

Stating the purpose

• State the purpose in the introduction• Simple language• “The purpose of this letter is to outline the

rules of residence for Irish tax purposes and to explain how they affect you for 2013”

• If more than one reader – focus on main reader

Mind Mapping

• Draw or write main topic in centre of page• Use single words on related issues• Connect each word to main topic with a

line• Highlight and colour code for clarity• Identify groups and name each one• List groups in order of importance

First Draft

• Identify a key point for each group of ideas

• Anticipate reader’s questions• Answer these in the document• KP = paragraph heading• Key points developed in each paragraph

Reviewing and Editing

• Edit a hard copy• Review each paragraph for sentences

and choice of words• Does each paragraph have its own

message?• Use bullet points where these help


• Sentences• Max 25 words• Split long sentences• Lists can shorten sentences


• Words - check for:• Language v Reader• Another word with same meaning better?• Too much jargon?• Too many technical words?• Is punctuation effective?

Writing Style

• It is developed over time• Note effective styles you come across• Adopt elements of good examples• Your writing should speak to the reader• Use real examples and apply to current

situation

Writing and Tax Advice

• Presentation• Structure• Spelling and

Grammar• Flow• Tone

• Well presented• Well structured• No mistakes

• Logical• Professional

business tone

Writing E Mails

• Is an E mail necessary?• Avoid over-use • Telephone instead?• Unintended offence can arise• Risk Management• Make guidelines and stick with them

E Mail Guidelines

• Is e mail the appropriate communication?• Check the e mail for - four eye review• Too long? Attach a letter• Planning and layout – as for

letters/reports• Introduction, paragraphs and headings• Keep copies of “sent” e mails

Letter/Report Writing

• Format• Drafting Paragraphs• Topic Sentences• Passive and Active Voice• Technical Language• First, Second and Third person

Format• State purpose• Summary – can be at end• Background – include assumptions• Heading• Heading• Recommendations• Conclusion

Drafting Paragraphs

• Take a break between drafts• One main idea per paragraph• Main idea contained in topic sentence• Topic sentence usually the first sentence• Connect new concepts by repeating the

word at start of next sentences

Topic Sentence• Announces the topic of the paragraph• Makes a general point that will be

explained• Helps reader know what to expect• Helps writer to stay focused on subject• Each topic sentence has a controlling

idea

Topic Sentence

• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6

Topic Controlling idea

Writing reports can be a difficult task for several reasons

Playing the piano is a complex skill

that involves musical knowledge, a sense of harmony and hours of practice.

Topic Sentences

• Controlling idea in topic sentence gives clarity to reader

• Reader will be clear on what to expect in the following sentences

• Review for central point of paragraph• If central point is “buried” – re write topic

sentence

New Concepts

• Making a connection between items• Introduce item in sentence• Repeat item in next sentence• “Section 216A 1997 provides an

exemption for “relevant sums” derived from the letting of a “qualifying residence”. A relevant sum is one which…..”

Passive and Active Voice

• Active voice more effective for tax communications

• Where do you want reader’s attention to be focused?

• Focus on “Who or What” = Active Voice• Focus on Information = passive• Active voice directs advice at client’s case

Passive v Active Example

• Passive• Gift tax on the sale of

the business may qualify for relief if certain conditions are met

• Active• You will be entitled to

gift tax business relief if you satisfy the conditions set out in sections 90-102A CATCA.

Technical Language

• Who are you writing to?

• High Use• Low Use• Medium• Identify category

• Identify Category

• Technical experts• Lay People• Non tax professionals• Adapt level

First, Second and Third Person

• Letters can move between all three• Be aware of your use of each• Do not “jump” from one to another• Move logically and smoothly

Stating Assumptions• Make your assumptions or conditions

clear• Advice is based on assumptions stated• Conditions must be met for consequences

to be certain• State assumptions at start• Conditions will feature throughout letter

Professional & Ethical Obligations• Standards of Professional Conduct

Code of Ethics

• Standards of Professional Conduct• Ethics and Code of Ethics• Five Fundamental Principles• Applying the Framework• Five Threats to FFPs• Complaints and Disciplinary Committees

Overview• Chartered Accountants Regulatory Board• CARB• Standards of Professional Conduct• Code of Ethics• The Rules of Professional Conduct• Copies on www.charteredaccountants.ie• CHARIOT link

http://www.charteredaccountants.ie/

Obligations

• Keep up to date with developments• Implement the guidelines in your work

Ethics

• Ethics

• Morality

• Link

• Branch of philosophyFundamental nature of morality

• Ideal code of conduct

• Ethics as a general concept and CAI Code of Ethics

Ethics

• CAI Ethics Resource Centre

• “..no one definition of ethics..no clear boundaries between ethics, business and practice issues”

Ethics

• Heather Briers Director of CARB• “..it is important that we..are seen to ‘take

ethics to heart’…there is an expectation that chartered accountants observe high standards of conduct…to act in a manner contrary to their own personal interest.”

Ethics

• Heather Briers Director of CARB• Factors to consider • Consequences of the action• Motivation of the action• Inherent “rightness” of the action

Code of Ethics

• Framework for ethical decision-making• Code sets out Five Fundamental

Principles• Chartered Accountant has a responsibility

to act in the public interest• Compliance with the ethical requirements

of Code

Code of Ethics


Part A Fundamental Principles; Conceptual Framework; Guidance on Ethical Principles;Threats to be eliminated/reduced to comply with FPs

Parts B and C

B for public practice; C for businessApplication of Conceptual Framework to specific situations; Professional Appointment; Conflicts of Interest; Gifts; Expertise

Part D Insolvency Work

Five Fundamental Principles

• Integrity• Objectivity• Professional Competence and Due Care• Confidentiality• Professional Behaviour



Integrity Straightforward and honest in all professional and business relationships

Objectivity Bias, conflict of interest or undue influence of others not to override professional or business judgement



Professional Competence and Due Care

•Duty to maintain professional knowledge and skill at required level•Client/employer to receive competent professional service based on current developments, legislation and techniques



Confidentiality •Respect confidentiality of information received

•Non disclosure unless authorised or legal duty

•Information not to be used for personal advantage



ProfessionalBehaviour

•Comply with relevant laws and regulations and avoid any action that discredits the profession

Fundamental Principles Examples• Risk Management Policies should take

account of five principles• Conflict of interest checks – takeover bid• Checks that required level of experience

and expertise allocated to work• Confidentiality checks – four eye reviews

Your Obligations

• Putting safeguards in place to eliminate or reduce threats

• Comply with the Code• Implement appropriate practices• Attend training sessions• Consult the Code for guidance

Conceptual Framework

• Part B of Code – examples

• Threats and Safeguards• Professional Appointment• Conflicts of Interest

Threats and Safeguards

• Part B Section 200.3 to 200.16• Five Categories of Threat• Self Interest• Self-Review• Advocacy• Familiarity• Intimidation


• Nature and significance of threats may differ

• Financial statement client• Non financial statement client• Tax client may be audit client

Other Legislation and Regulation

• SEC Regulations• Sarbanes-Oxley Act• Anti Money Laundering legislation• Legislation and Regulations take

precedence where more stringent requirements

• Seek guidance from CAI



Self Interest

•Financial interest held by accountant in client, eg shares•Undue reliance on total fees from one client•Close business link with client•Concern about losing a client•Employment opportunity with client•Contingent Fee•Loans to/from audit client

Threats to Safeguards


Self- Review

•Significant error discovered by the firm•Financial systems designed by accountant being reported on by him•Member of assurance team has been a director of client•Member of assurance team has been employed by client with direct influence over engagement•Service performed for client that directly affects the subject matter of assurance engagement



Advocacy •Promotion of shares in a listed entity where the entity is an assurance client

•Accountant acting as an advocate on behalf of an assurance client in litigation or dispute with third parties



Familiarity •Close or immediate family relationship with a director or officer of the client•Same as above with employee of client with direct influence over engagement•Former partner is a director/officer of client or former employee able to exert influence•Account accepts gifts•Long association with senior personnel of assurance client



Intimidation •Threatened with dismissal or replacement in relation to a client engagement•Threatened with litigation•Inappropriate pressure to reduce fees

Professional Appointment

• Code of Ethics Section 210• Clients have the right to chose and

change accountants• Accountants have the right to chose for

whom they act• Pre-acceptance checks for five threats• Illegal activities, money laundering,

dishonesty?

Risk Management

• Know Your Client Procedures• Cover the five threats• Obtain an understanding and knowledge

of client, owners and management• Post appointment – regular checking• CJA 2010 – legislation now in place

Competency

• Are you competent to perform the services?

• Is expert advice needed?• Legal advice/foreign taxes/investment

advice?

Change in Appointment• Prospective accountant to determine if

there any reasons, professional or other, for not accepting engagement

• Existing accountant bound by confidentiality

• Care needed if suspicion/knowledge of money laundering or terrorist activity

• Prospective accountant responsible for obtaining information

Conflicts of Interest

• Avoid• Competing directly with a client eg joint

venture with a major competitor• Performing services for disparate clients

who are in dispute• Use safeguards• Separate engagement teams/Chinese

walls/ Confidentiality agreements/Reviews

Complaints and Discipline

• www.carb.ie• Complaints Committee and Disciplinary

Committee• Breach of bye-law or regulation• Failure to comply with Standards of

Professional Conduct• Discrediting Institute, self or accountancy

profession

http://www.carb.ie/

Disciplinary Action

• Breach of Fundamental Principle 4• Failing to deal with a client’s tax affairs in

a timely manner

• Breach of Fundamental Principle 5• Failing to respond to correspondence with

the client’s representatives

Round Up

• Research Skills• Methodical Approach• Integrate Tax Research into daily work• Tax Legislation is primary source of

research• Risk Management procedures critical• File maintenance and documentation

Round Up

• Communication Skills• Create shared understanding• Good communication = rapport• Conversation and Listening Skills• Representing your client• Effective writing skill critical• Writing is primary communication

Round Up

Round Up

• Ethical Guidelines - Keep up to Date• Standards of Professional Conduct• Codes of Ethics and Rules of Professional

Conduct• Five fundamental principles• Integrity/Objectivity/Professional

Competence/ due Care• Applying the Framework – Part B

Round Up ML

• CJA 2010• CCAB-I Guidelines M42 Revised• Accountants and tax advisors within

scope of CJA• Procedures and Reporting Obligations • Definition of ML very wide – includes tax

evasion

Round Up ML• Penalties and fines for failure to report

and failure to keep records• Tipping Off is an offence• Customer Due Diligence• Client ID/KYC/Monitoring• Risk Base Approach• STR and Exemptions• Record Keeping

Learning Outcome

• You know how to do methodical research with emphasis on Risk Management

• Awareness of how to use Communication Skills

• Updated on Professional Obligations• Aware of your responsibilities to keep up

to date

Documents

Module 2 Research, Communication & Professional Obligations