Standard Terms of Business
Last updated 31 March 2011
The following standard terms of business apply to all engagements accepted by Cobalt Accountancy. All work carried out is subject to these terms except where changes are expressly agreed in writing.
We are bound by the ethical guidelines of the Institute of Chartered Accountants of Scotland and accept instructions to act for you on the basis that we will act in accordance with those ethical guidelines.
General accounting and book keeping
During the course of work undertaken on your behalf we may be involved in completing the writing up of your books and records, insofar as they are incomplete when presented to us, from the information and explanations supplied to us.
We understand that you have agreed that it is your responsibility for:
- maintaining records of all receipts and payments of cash;
- reconciling cash book balances with the bank statements;
- posting and balancing the purchase and sales ledgers;
- extracting a detailed list of ledger balances;
- prepare details of the annual stocktaking, suitably priced and extended in a form which will enable us to verify the prices readily by reference to supplier invoices;
- prepare details of work-in-progress at the accounting date and make available to us the documents and other information from which the statement is compiled;
You acknowledge your responsibility for the reliability, accuracy and completeness of the accounting records.
You agree to make available to us, as and when required, all your accounting records and related financial information, necessary to carry out our work. You will provide us with all information and explanations relevant to the purpose and preparation of accounts.
You understand that we will not be carrying out an audit and accordingly will not verify the assets and liabilities of the business, nor the items of expenditure and income. To carry out an audit would require additional work to comply with generally accepted auditing standards so that we could report on the truth and fairness of the financial statements.
Usage and scope of work undertaken
Reports are prepared solely for your confidential use. They may not be relied upon by you for any other purpose whatsoever. Reports must not be recited or referred to in whole or in part in any other document. Reports must not be made available, copied or recited to any other party [without our express written permission]. Cobalt Accountancy neither owes nor accepts any duty to any other party and shall not be liable for any loss, damage or expense of whatsoever nature which is caused by their reliance on our Report.
To ensure that anyone reading any such report is aware of the scope of our work and the fact that we have not carried out an audit, we will generally annex a short statement. This statement must remain attached to any copy shown to any other party, such distribution to be only with our prior written consent.
Reasonable usage policy – telephone and e-mail support
Where a query, request for advice, or other such communication is received by phone or e-mail we will endeavour to answer it quickly and the cost of this is included in the package or services to which you have already engaged with us.
However where a calculation, collation of data or research of technical information is required that is estimated to take more than half an hour this may require an additional charge.
The rate of this charge will depend on the nature of the work involved.
Where such a charge comes into effect this will be communicated to you prior to any work being provided.
Written acceptance of this additional charge will be required via e-mail or signature.
We will observe the Bye-laws, regulations and ethical guidelines of The Institute of Chartered Accountants of Scotland and accept instructions to act for you on the basis that we will act in accordance with those guidelines. Copies of these requirements are available for inspection on request.
Where you give us confidential information we shall at all times keep it confidential, except as required by law or as provided for in regulatory, ethical or other professional pronouncements applicable to this engagement.
We reserve the right to act during this engagement for other clients whose interests may be adverse to yours. We will notify you immediately should we become aware of any conflict of interest to which we are subject in relation to you.
We are not authorised by the Financial Services Authority to conduct Investment Business. If you require investment business services we will refer you to a firm authorised by the Financial Services Authority.
Commissions or other benefits
Commissions or other benefits may sometimes become payable to us in respect of introductions to other professionals or transactions we arrange for you, in which case you will be notified in writing of the amount, the terms of payment and receipt of any such commissions or benefits. You consent to such commissions or other benefits being retained by us without our being liable to account to you for any such amounts.
We may, from time to time, hold money on your behalf. Such money will be held in trust in a client bank account, which is segregated from the firm’s funds. The account will be operated, and all funds dealt with, in accordance with the Clients’ Money Regulations of The Institute of Chartered Accountants of Scotland.
In order to avoid an excessive amount of administration, interest will only be paid to you where the amount of interest that would be earned on the balances held on your behalf in any calendar year exceeds £25. Any such interest would be calculated using the prevailing rate applied by the Royal Bank of Scotland for small deposits subject to the minimum period of notice for withdrawals. Subject to any tax legislation, interest will be paid gross.
If the total sum of money held on your behalf exceeds £10,000 for a period of more than 30 days, or such sum is likely to be held for more than 30 days, then the money will be placed in a separate interest-bearing client bank account designated to you. All interest earned on such money will be paid to you. Subject to any tax legislation, interest will be paid gross.
We are required under the client money regulations to appoint an alternate to administer the client bank account in the event of the death or incapacity of the principal. The alternate appointed by this firm is Cowan & Partners, CA of Leith, Edinburgh.
Our fees are computed on either the basis of time spent on your affairs by the principals and our staff, and on the levels of skill and responsibility involved or as agreed. However we endeavour to provide fixed quotes where possible. These will be issued to you prior to accepting appointment. The quote forms part of our contract and as such is required to be signed and returned to our offices. Where appropriate, work will be undertaken on receipt of an electronic confirmation received by e-mail.
If it is necessary to carry out work outside the responsibilities outlined in this letter it will involve additional fees. Accordingly we would like to point out that it is in your interests to ensure that your records etc. are completed to the agreed stage.
Invoices are payable in full at the time the engagement to which these terms and conditions related has been completed or an agreed interim stage reached.
It is our normal practice to request that clients make arrangements to pay a proportion of their fee on a monthly standing order. These standing orders will be applied to fees arising from work agreed in this letter of engagement for the current and ensuing years. Once we have been able to assess the amount of work and time involved we would be grateful if you would agree to pay an amount to us on a regular basis.
Our terms relating to payment of amounts invoiced and not covered by standing orders, where appropriate, are strictly on receipt of invoice. At the firm’s discretion interest and compensation for recovery and administration costs may be charged on all overdue debts at the rate of 10% or at the rate for the time being applicable under the Late Payment of Commercial Debts (Scotland) Regulations 2002 whichever is the higher.
Retention of and access to records
During the course of our work we will collect information from you and others acting on your behalf and will return any original documents to you following the completion of the work to which these terms and conditions relate. You should retain these records for at least ten years from the end of the accounting year to which they relate.
Whilst certain documents may legally belong to you, we intend to destroy correspondence and other papers that we store which are more than ten years old, other than documents which we consider to be of continuing significance. If you require retention of any document you must notify us of that fact in writing.
In the course of providing the agreed services to you, we may engage external assistance from time to time.
In these circumstances, we shall continue to maintain the necessary confidentiality and protection with regard to your affairs.
As part of our ongoing commitment to providing a quality service, our files are periodically subject to an independent regulatory or quality review. Our reviewers are highly experienced and professional people and are, of course, bound by the same requirements of confidentiality as our principals and staff.
Help us to give you the right service
If at any time you would like to discuss with us how our service to you could be improved, or if you are dissatisfied with the service you are receiving, please let us know, by telephoning Kathryn McBean.
We undertake to look into any complaint carefully and promptly and to do all we can to explain the position to you. If you feel that we have given you a less than satisfactory service, we undertake to do everything reasonable to address your concerns. If you are still not satisfied, you may of course take up matters with The Institute of Chartered Accountants of Scotland.
This engagement letter is governed by, and construed in accordance with, Scots law. The Courts of Scotland will have exclusive jurisdiction in relation to any claim, dispute or difference concerning this engagement letter and any matter arising from it. Each party irrevocably waives any right it may have to object to any action being brought in those courts, to claim that the action has been brought in an inappropriate forum, or to claim that those courts do not have jurisdiction.
Internet communications are capable of data corruption and therefore we do not accept any responsibility for changes made to such communications after their despatch. It may therefore be inappropriate to rely on advice contained in an e-mail without obtaining written confirmation of it. We do not accept responsibility for any errors or problems that may arise through the use of internet communication and all risks connected with sending commercially sensitive information relating to your business are borne by you. If you do not agree to accept this risk, you should notify us in writing that e-mail is not an acceptable means of communication.
It is the responsibility of the recipient to carry out a virus check on any attachments received.
Health and Safety
We acknowledge our statutory responsibility to co-operate with your health and safety requirements in respect of our presence on your premises at any time. In return, you undertake to provide our directors and staff the same protection for health and safety purposes as is due to your own staff.
Data Protection Act 1998
We may obtain, use, process and disclose personal data about you in order that we may discharge the services agreed under this engagement letter, and for other related purposes including updating and enhancing client records, analysis for management purposes and statutory returns, crime prevention and legal and regulatory compliance. You have a right of access, under data protection legislation, to the personal data that we hold about you. We confirm that when processing data on your behalf we will comply with the provisions of the Data Protection Act 1998. For the purposes of the Data Protection Act 1998, the Data Controller in relation to personal data supplied about you is Kathryn McBean.
In common with all accountancy and legal practices the firm is required by the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007 to:
- Maintain identification procedures for clients and beneficial owners of clients;
- Maintain records of identification evidence and the work undertaken for the client; and
- Report, in accordance with the relevant legislation and regulations.
We are obliged to comply with the terms and conditions of the above legislation. We will provide details if requested.
Limitation of liability
We will provide our professional services with reasonable care and skill. However, we will not be held responsible for any losses arising from the supply by you or others of incorrect or incomplete information, or your or others’ failure to supply any appropriate information or your failure to act on our advice or respond promptly to communications from us or other relevant authorities.
You agree to indemnify us against liabilities and claims reasonably and properly incurred arising out of any representation, supplied to us orally or in writing in connection with this agreement. You have agreed that you will not bring any claim against any of our employees on a personal basis in connection with services provided to you by the firm.
Should any dispute arise in connection with this Agreement, the parties shall attempt to settle same by negotiation however should the dispute not be resolved within 30 days of the first intimation of the dispute then the parties shall attempt to settle it by Mediation in accordance with the Centre for Effective Dispute Resolution (CEDR) Model Mediation Procedure.
Company accounts preparation & Corporation tax
Your responsibilities as directors
As directors of the company, you are required to prepare accounts for each financial year, which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those accounts, you are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business.
You are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the accounts comply with the Companies Act 1985 (the Act). You are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
You are responsible for determining whether, in respect of the year, the company meets the conditions for exemption from an audit set out in section 249A(1) of the Act, namely that:
- it qualifies as a small company in relation to that year for the purposes of section 247;
- its turnover in that year is not more than £5.6 million; and
- its balance sheet total for the year is not more than £2.8 million.
You are responsible for determining whether, in respect of the year, the exemption is not available for any of the reasons set out in section 249B of the Act.
The exemption is available only if you, as directors, sign a declaration on the balance sheet stating that:
- for the year in question, the company is eligible to take advantage of audit exemption;
- the members have not required the company to obtain an audit of its accounts for the year in accordance with section 249B(2) of the Companies Act 1985; and
- you acknowledge your obligations to keep proper accounting records and to prepare financial statements which give a true and fair view of the state of the company’s affairs and of its profit or loss for the period.
You have undertaken to make available to us, as and when required, all the company’s accounting records and related financial information, including minutes of management and shareholders’ meetings, necessary to carry out our work. You will make full disclosure to us of all relevant information.
You are responsible for ensuring that the company complies with laws and regulations applicable to its activities, and for establishing arrangements designed to prevent any non-compliance with laws and regulations and to detect any that occur.
Our responsibilities as accountants
As the company is totally exempt from audit, we have no statutory responsibilities to the company. Our only responsibilities arise from those specifically agreed upon between us in respect of other professional services.
We do not have any responsibility to report whether any shareholder of the company has notified the company that he or she requires an audit. Consequently we have no responsibility to carry out any work in respect of this matter.
Should our work indicate that the company is not entitled to exemption from an audit of the accounts, then we will inform you of this. In these circumstances, if appropriate, we will discuss with you the need to appoint an auditor.
We have a professional duty to prepare accounts that conform with generally accepted accounting principles. Furthermore, as directors, you have a duty to prepare accounts that comply with the Companies Act 2006 and applicable accounting standards.
We have a professional obligation to comply with best practice guidance issued by the Institute of Chartered Accountants of Scotland on the preparation of accounts.
Scope of work
Our work will not be an audit of the accounts in accordance with Auditing Standards. Accordingly, we will not obtain any evidence relating to entries in the accounting records, or to the accounts or to the disclosures in the accounts. Nor will we make any assessment of the estimates and judgements made by you in the preparation of the accounts. Consequently our work will not provide any assurance that the accounting records or the accounts are free from material misstatement, whether caused by fraud, or other irregularities or error. In addition, we have no responsibility to determine whether you have maintained proper accounting records in accordance with section 221 of the Act and we will not address this point unless you specifically request us in writing to do so.
Since we have not carried out an audit, nor confirmed in any way the accuracy or reasonableness of the accounting records maintained by the company, we are unable to provide any assurance as to whether the accounts that we prepare from those records present a true and fair view.
As part of our normal procedures when preparing the accounts, we will attach the accountant’s report to them. This report will state that they have been prepared from the accounting records of the company and information and explanations supplied by the directors.
Under section 55 of the Finance Act 2004, you are responsible for notifying HM Revenue & Customs of when the company comes within the charge to corporation tax. You agree that you will also notify us of this at the same time.
We will prepare from the accounts and other information and explanations provided by you the company’s corporation tax return and computations, together with all supporting schedules and, where necessary, amended returns.
We will send you the tax return and supporting schedules for you to approve and sign. We will then submit it, with the accounts and computations, to HM Revenue & Customs. You authorise us to file the return electronically.
We will advise you of the amounts of corporation tax to be paid and the dates by which the company should make the payments. Where appropriate we will initiate repayment claims when tax has been overpaid.
If you wish, we will advise you whether quarterly corporation tax payments ought to be made, but in order to do this you will need to provide us with appropriate management information.
We will advise as to possible claims and elections arising from the tax return and from information supplied by you. Where instructed by you, we will make such claims and elections in the form and manner required by HM Revenue & Customs.
We will deal with all communications relating to the company’s tax return addressed to us by HM Revenue & Customs or passed to us by the company. However, if HM Revenue & Customs choose your return for enquiry this work may need to be the subject of a separate assignment in which case we will seek further instructions from you.
We will prepare the tax provisions and disclosures to be included in the company’s statutory accounts.
DIY tax returns
The purpose of this engagement is to assist you to prepare and submit your own self assessment tax return.
This will include assisting you to prepare the relevant summaries of income and expenditure for the year.
We will help you to prepare your personal income tax and capital gains return together with such supporting schedules as are appropriate.
We recommend that a copy of your tax return and supporting schedules is kept by you and forwarded to us for our records. We will discuss with you how the return will be submitted to HM Revenue & Customs.
We will highlight to you how much tax and national insurance contributions you should pay and when. If appropriate we can initiate repayment claims when tax and national insurance contributions have been overpaid. Would you please ensure that you inform us of any payments made to HM Revenue & Customs.
We can assist you to deal with HM Revenue & Customs regarding any amendments required to your return and prepare any amended returns, as required.
We will advise as to possible claims and elections arising from the tax return and from information supplied by you. We can help you make such claims and elections in the form and manner required by HM Revenue & Customs.
We can advise you on how to deal with all communications relating to your return addressed to us by HM Revenue & Customs or passed to us by you. However, if HM Revenue & Customs choose your return for enquiry this work may need to be the subject of a separate assignment in which case we will seek further instructions from you.
Personal tax returns
Preparation and completion of self assessment tax return, including preparing the relevant summaries of income and expenditure for the year.
We will prepare your personal income tax and capital gains return together with such supporting schedules as are appropriate.
We will send you your tax return and supporting schedules for you to approve and sign. We will discuss with you how the return will be submitted to HM Revenue & Customs.
We will tell you how much tax and national insurance contributions you should pay and when. If appropriate we will initiate repayment claims when tax and national insurance contributions have been overpaid. Would you please ensure that you inform us of any payments made to HM Revenue & Customs.
We will deal with HM Revenue & Customs regarding any amendments required to your return and prepare any amended returns, which may be required.
We will advise as to possible claims and elections arising from the tax return and from information supplied by you. Where instructed by you, we will make such claims and elections in the form and manner required by HM Revenue & Customs.
We will deal with all communications relating to your return addressed to us by HM Revenue & Customs or passed to us by you. However, if HM Revenue & Customs choose your return for enquiry this work may need to be the subject of a separate assignment in which case we will seek further instructions from you.
The projections will be drawn up from information and explanations provided by you, either directly or by way of discussions with you. The work carried out on your behalf will be limited to compiling the projections from the information so provided and presenting it in the appropriate manner. We will work with you to draw up the appropriate estimates and assumptions necessary, but these will be based on the information provided by you. You will remain solely responsible for such estimates and assumptions and hence for the resulting business plan/cash flow forecast.
As the projections relate to expected future events the actual results will almost inevitably differ from the projections. Those differences may be material. Accordingly, whilst care will be taken to translate the information and explanations provided into meaningful forecasts based on your assumptions, we cannot accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of any material or statements included in, or omitted from, the projections.
To ensure that anyone reading the projections is aware of the scope of our work and the fact that we have not carried out an audit, we will annex to the projections a short report. This report must remain attached to any copy shown to any other party, such distribution to be only with our prior written consent.