Chartered
Tax
Consultant
Module 2
Research, Communication &
Professional Obligations
Patricia Quigley
18th/19th January 2013
www.charteredaccountants.ie
EDUCATING
SUPPORTING
REPRESENTING
1
Learning Objectives
• Research
• Communication
• Professional
Obligations
• Money
Laundering
• Methods for tax planning
/compliance
• Coherence/Relevance
Revenue; Client; Other
professionals
• Understand/ Implement
Ethical 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
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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
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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 GAP003
www.oecd.org/dataoecd/36/0/1908440.pdf
• OECD Managing and Improving Tax
Compliance
www.oecd.org/dataoecd/44/19/33818656.pdf
• EC Taxation and Customs Union Risk
Management Guide for Tax Administrations
http://ec.europa.eu/taxation_customs/
RM Procedures
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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
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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
• Set up and sections?
• File
• Engagement Letter • Current, signed and
cover the work?
• Anything not clear?
• Understand?
• Is help needed?
• Assistance?
• Training needs?
• Training?
• Realistic?
• Deadline?
• Is a database needed?
• Tax compliance
Importance of Risk Management
Example
Proper Procedures
Inadequate Procedures
Revenue issues a
Client database
demand for surcharge Up to date
for late filing. Client
queries why it issued Copy of letter to client
re payment and due
date on file
Compliance database
not updated due to time
pressure
Client disputes fee
Signed EL on file.
Negotiation of fee
needed if additional
work. No evidence of
agreeing extra fee.
Singed EL on file
setting out fee for the
work
No hard copy of letter
found. Soft copy on
system.
Negligence?
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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
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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
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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
Who
?1
• Point 2
•
Point
3
Form?
• Point 4
• Point 5
Position?
• Point 6
Defending?
Client; Revenue; Colleague;
3rd Party Professional;
Appeal Hearing?
Written; Oral Presentation;
Slides/Handouts?
Neutral observer? Summarise
findings
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.
2.
3.
4.
5.
Deadlines for steps and delivery
Notebook for recording ideas
List of sources
Use previous knowledge
Brainstorming – use colleagues
Research Process Overview
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Gathering information
Researching tax issues – sources
Useful websites
Drafting and completing the written advice
Jigsaw Analogy
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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
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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 Sources
Revenue Material
Case Law
The Client
•Revenue Staff Instructions
•Published Precedents
•E Briefs/Tax Briefings/SOPs
•Technical Guidelines
•Codes of Practice
•Authoritative interpretation of Law
•Irish Court decisions
•UK Case Law
•Irish Tax Reports/Digests/Irish
Law Reports/BAILII
•Read the file
•Ask Colleagues
•Website
•CRO
Secondary Research Sources
Magazines
•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
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Irish
www.irishstatutebook.ie/home.html
www.revenue.ie
www.gov.ie/departments
www.gov.ie/oranisations
www.egt.ie/misc/nuachtain.html
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
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UK
www.hmrc.gov.uk
www.tax.org.uk
www.direct.gov.uk
www.opsi.gov.uk
Research - Websites
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US
www.irs.ustreas.gov
www.taxsites.com
www.sawguru.com
Drafting the Report
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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
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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?
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• Conversation = ?
• Combination of
above
Conversation
Body Language
Visual
Written
Communication Skills
• 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
Communication Skills
• “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
Communication Skills
• 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
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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
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Timing
Time limit?
Informal agenda
Common ground
Summarise
• Body Language
• Notes
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Check with other
Is there a time limit?
Informal
Find some
Throughout and at
end
• Be aware/interpret
• Memory aid/file note
Arguments
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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
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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
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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
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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
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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 • Max 14 years/fine
Money Laundering
• Sec 33/42 CJA 2010
• Max 5 years/fine
CDD/records/reporting
• Sec 49 Breach • Max 5 Years/fine
Disclosure that may
prejudice
• Sec 49 Tipping Off
• Max 5 years/fine
AML Systems and Controls
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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
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“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
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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
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What must you implement?
Client Identification
Know Your Client Procedures
Ongoing monitoring
Risk Based Approach
Reporting Obligations
CJA 2010 ML
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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?
Know Your Client Procedures
• 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
Know Your Client Procedures
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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
Know Your Client Procedures
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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
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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
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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
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• Tax Assignments
• E Mails
• Letters
• Language
Methodical Approach
Plan/Draft/Review
Paragraphs/Sentences
Writing style
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.
2.
3.
4.
Plan the document
Use mind mapping
Write the first draft
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
Reviewing and Editing
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Sentences
Max 25 words
Split long sentences
Lists can shorten sentences
Reviewing and Editing
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Words - check for:
Language v Reader
Another word with same meaning better?
Too much jargon?
Too many technical words?
Is punctuation effective?
Writing Style
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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
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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
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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
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Format
Drafting Paragraphs
Topic Sentences
Passive and Active Voice
Technical Language
First, Second and Third person
Format
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State purpose
Summary – can be at end
Background – include assumptions
Heading
Heading
Recommendations
Conclusion
Drafting Paragraphs
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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
Topic
• Point 1
Writing
reports
can be
• Point
2
• Point 3
• Point 4
Playing the piano is a
• Pointskill
5
complex
• Point 6
Controlling idea
a difficult task for severa
reasons
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
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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
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Technical experts
Lay People
Non tax professionals
Adapt level
First, Second and Third Person
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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
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Standards of Professional Conduct
Ethics and Code of Ethics
Five Fundamental Principles
Applying the Framework
Five Threats to FFPs
Complaints and Disciplinary Committees
Overview
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Chartered Accountants Regulatory Board
CARB
Standards of Professional Conduct
Code of Ethics
The Rules of Professional Conduct
Copies on www.charteredaccountants.ie
CHARIOT link
Obligations
• Keep up to date with developments
• Implement the guidelines in your work
Ethics
• Ethics
• Morality
• Link
• Branch of philosophy
Fundamental 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
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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
• Point 1
• Point 2
Parts
B and3 B for public practice; C for business
• Point
C
Application of Conceptual Framework to
• Point 4 specific situations; Professional
• Point 5 Appointment; Conflicts of Interest; Gifts;
Expertise
• Point 6
Part D
Insolvency Work
Five Fundamental Principles
•
•
•
•
•
Integrity
Objectivity
Professional Competence and Due Care
Confidentiality
Professional Behaviour
Five Fundamental Principles
Integrity
• Point 1
• Point 2
• Point 3
• Point 4
Objectivity
• Point 5
• Point 6
Straightforward and honest in
all professional and business
relationships
Bias, conflict of interest or undue
influence of others not to override
professional or business
judgement
Five Fundamental Principles
Professional
Competence
• Point 1
and
Due Care
• Point
2
• Point 3
• Point 4
• Point 5
• Point 6
•Duty to maintain
professional knowledge and
skill at required level
•Client/employer to receive
competent professional
service based on current
developments, legislation
and techniques
Five Fundamental Principles
Confidentiality
• Point 1
• Point 2
• Point 3
• Point 4
• Point 5
• Point 6
•Respect confidentiality of
information received
•Non disclosure unless
authorised or legal duty
•Information not to be used
for personal advantage
Five Fundamental Principles
Professional
• Point 1
Behaviour
•
•
•
•
•
Point 2
Point 3
Point 4
Point 5
Point 6
•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
Threats and Safeguards
• 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
Threats and Safeguards
•Financial interest held by
Self
• Point 1accountant in client, eg shares
Interest
•
•
•
•
•
Point 2•Undue reliance on total fees from
Point 3one client
•Close
business
link
with
client
Point 4
•Concern about losing a client
Point 5
•Employment opportunity with
Point 6client
•Contingent Fee
•Loans to/from audit client
Threats to Safeguards
•Significant error discovered by the firm
Self•Financial
systems designed by
•
Point
1
Review
•
•
•
•
•
accountant being reported on by him
Point •Member
2
of assurance team has been a
of client
Point director
3
•Member
of
assurance
team
has
been
Point 4
employed by client with direct influence
Point over
5
engagement
performed for client that
Point •Service
6
directly affects the subject matter of
assurance engagement
Threats to Safeguards
Advocacy •Promotion of shares in a listed
•
•
•
•
•
•
Point 1
Point 2
Point 3
Point 4
Point 5
Point 6
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
Threats to Safeguards
Familiarity
•
•
•
•
•
•
Point 1
Point 2
Point 3
Point 4
Point 5
Point 6
•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
Threats to Safeguards
Intimidation •Threatened with dismissal
or replacement in relation
• Point 1
to a client engagement
• Point 2
•Threatened with litigation
• Point 3
•Inappropriate pressure to
• Point 4
reduce fees
• Point 5
• Point 6
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
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