Accountants

[Lotte69]

Can anyone please offer me some advice/help. For 3 years I had been going through a most horrendous divorce (thankfully its over now - just have to deal with the aftermath!). I had a family law firm who didn't seem to want to help with the financial problems connected to the divorce, so I was recommended someone by a friend that would be able to offer me some advice. This someone was a partner in an large accountancy firm. He seemed really lovely, I gave thanks to the heavens for him as I couldn't believe someone could be so helpful and giving to me whilst I was in my very vulnerable state. He met with me (out of his office), I gave him lots of information, lots of emails went back and forth, he did a couple of spreadsheets though I didn't ask him to - he offered, we met again (this time in his office but on a Sunday when there was no-one else there).
Like I say, I thought he was a wonderfully kind man willing to help someone in distress and on behalf of our mutual friend.
Then came the shock, he said he'd have to charge me for the work and although it was nowhere near what his normal charges would be it was up to £2,500. His bill, when it arrived, was £3,500.
Was I being stupid in believing that there were kind helpful people around that were willing to give up a little of their time and expertise to help someone that was in turmoil? I was never advised of any payment expected (though maybe I should have asked?) never a contract - nothing but lots of emails.

Can he do this?

My husband is an accountant in a large firm and he has advised that under ICAEW (England and Wales) and ICAS (Scotland) accountants cannot charge unless they have a signed engagement letter that sets out terms and conditions of engagement and any potential fees. The fact that he has not provided you with an engagement letter to sign means that payment cannot be enforced. As part of the engagement process you should have been asked for proof of ID (passport, proof of address etc) -this is a required before any engagement takes place under money laundering regulations.
Out of interest is the fee note an official one from the firm or from him personally? Not that it makes any difference as the rules stand whether he was acting independently or through his firm.
Basically DH has said this man has not only acted unprofessionally but outwith regulations and no payment would be enforceable if you have not signed clear T&C's.
Good luck and if I (DH) can answer any more questions let me know.

I have to sign a letter of engagement every year for them to continue to bill me.

Hi
Thank you very much for your reply. It was on the firms letter head. I received an email from him last week saying that he is being hassled by his credit control dept as they have passed their year end and requires payment. I've definitely not signed anything by way of an agreement, I wouldn't have done as I couldn't have afforded to get myself into anymore debt (on top of my solicitors charges).
Can you tell me when the new law was passed please, as I started to accept advice from him in June 2010. One of his 1st emails to me (which I still have) says that he will deal with it 'Goodwill'. I am still really concerned/scared though as I can't bear any further hostility.
A few things I am concerned about: 1/He has a lot of personal information about me which I entrusted him to, though I don't believe there is anything there that would or could be incriminating. 2/ When he told me that he would have to charge for the work done and told me it was up to £2,500, he did submit further information to me but said (in an email) not to worry as 'the clock had stopped' then the bill came and it was £3,500. He said he would wait for payment at the sale of the matrimonial home. I feel like I have been lured into accepting his help under false pretenses but can they 'make' me pay? I 'believe' they are a large firm and therefore may have a lot of weight behind them.

I would send the bill back to the firm's accounts department with a paper copy of the email where he said he would do the work goodwill and the one where he said the clock had stopped.

I think anyone would look at this case and see that he has taken advantage of your naivety - regulations as outlined in where's post are there to protect people like you from situations like this.

[address to the Senior Partner/Managing Partner/etc if you can find the person with the right title on their web site, otherwise just to the firm at the address on the invoice]

Dear Sirs

I was surprised to receive an invoice from your firm (copy attached) as I have not requested any services from you and there is no agreement between us for the provision of any services.

In view of this misunderstanding I do not wish to take the initial discussions I have had with [name of individual] any further and I request that you return to me any information I have provided [including without limitation x, y and z], and confirm that you have destroyed any copies therof and that you have cancelled the invoice referred to above.

Yours faithfully

Thank you to all, I can't tell you what your advice means. Naive I am shrinkingnora !
I shall send a letter to the managing partner but I can't ask them to return my papers to me as I don't want to give them my new address and risk further demand letters... or worse! I shall however, ask for their confirmation that they have destroyed all correspondence relating to the initial advice given. Thank you Mr A

...and Thank you CiderwithBuda , I'll send copies of the emails too!

I love this site!! :)

No, don't send a copy of the emails, they do not strengthen your case.

And do not refer to any 'advice given'. Use exactly the words in the draft I wrote

Oh. Even if he has loads of emails between us with which he could prove he gave me plenty of advice?
Ok, I shall do that Mr A.

I've asked DH and he says the letter above is good (MrA's) but that he would add the following;

I have taken advice and understand that in the absence of an engagement letter there is no contract in place between ourselves. If you continue to pursue this matter I will have no option but to seek advice from your governing body.

Good luck!

He is unlikely to push this very far as the sums involved (although High to you/me) probably not enough to get heavy. Plus not going through proper engagement procedures is usually a disciplinary matter. If he had sought to do this advice for cash outside of his firm he is in breach of partnership agreement.

Agree that amended letter sounds best way forward.

Def go with Mr Anchovy's letter.

I stand by my draft without any further addition, reason being we don't know if this firm has a governing body (look at RSM Tenon for instance) so we don't want to demonstrate ignorance and leave them a crack to come back at us.

Furthermore an engagement letter is NOT required to establish a contract for the supply of services so again this opens up a potential argument.

I think you're right Mr A, less is more, the more one writes the more cracks you open.
I've looked through the firms web site and there is no mention of a governing body, they are however a member of HLB International (not sure if they are classed as such) but HLB don't mention having a governing body?

... and the term 'governing body' is not correct anyway.

My DH is a partner in one of the Big 4 accountancy firms (dont want to say which one as am sure he wouldnt want me plastering his details all over MN) and he assures me that an engagement letter is absolutely required by accountants to establish a contract for services - of course I am sure there are some not so reputable firms out there who do not follow proper procedure. DH is a stickler for procedure which can be a pain at times

MrA interesting you mention RSM Tenon - I was just speaking to a friend who works PwC ( she was NOT involved in the Tenon audit thank goodness) and she says things are pretty fraught just now.

Governing body was my term as I was unsure whether the OP was in England/Wales or Scotland and unsure whether it would be ICAEW or ICAS so apologies -I should have checked with DH :)

Good luck Lotte - I do hope you get this resolved, it must be very worrying for you.

With the greatest of respect to both you and your DH, either you are asking him the wrong question or he is giving you the wrong answer. This is a common problem when advice is given second-hand.

It may well be the case that the regulations of all reputable bodies who provide practicing certificates for accountants in the UK (and there are many, not just ICAEW and ICAS) require their member firms to ensure that a signed engagement letter is in place before undertaking chargeable work, however in the eyes of the law a contract may be formed without any signed document. Furthermore, we have no idea whether the firm in this case is a member of any professional body which has regulations governing engagement letters (anyone in the UK can operate an accountancy practice without any regulation apart from anti-money laundering and I gave an example of one such firm).

So if the OP says "I haven't signed an engagement letter" the firm can come back and say "you don't need to - we have a verbal agreement" and the OP is then on the back foot refuting that. However if the OP says "We don't have an agreement" the firm is on the back foot to provide evidence that they do.

Hi. I realize it's been a while since I posted but I am still watching the thread and interested to read both comments from whereismymind73 followed by MrAnchovy.
I have not written to the firm yet Mr A, as I felt I wanted to wait to see whether they send another reminder letter first (they do not have my current, temp address so it would be forwarded via my postal re-direction). As I said on 17th, the firms web site make no mention of a governing body, they are however a member of HLB International, but HLB don't mention having a governing body?
However, I'd be interested to hear your views on what HBL say here (copy this link): http://www.hlbi.com/index.php?option=com_content&view=article&id=108&Itemid=164* as they seem to be saying that their members must* have policies and methodologies which conform to the IFAC Code of Ethics for Professional Accountants and national codes of ethics.
Having looked at the 'Code of Ethics for Professional Accountants' SECTION 240, point 240.1, Fees and Other Types of Remuneration, my friendly adviser broke the terms straight away as there was never any* payment discussed let alone a term of engagement agreement.
As said previously, I accepted his advice believing that it was just that and certainly not advice that attracted fees and now believe that he later decided (or was told) that he had to make charges for the advice given.
Thank you,
Lotte.

Firms don't have governing bodies, the term is meaningless.

HLB International is just a group of separate firms collaborating together, their rules are not capable of being enforced by third parties (i.e. you) and have no impact on your contractual relationship with a member firm (unless of course that contract specifically says that they will abide by the rules, but as you say you haven't got a contract in writing that cannot be the case).

Now if they come back to you saying 'yes we have got a contract and we have supplied you these services', that is the time to raise a complaint and find out if they are member firms of ICAEW or whoever.... but you want to get into a lengthy dispute where you are not familiar with the ground rules do you? You want to attempt to nip this in the bud by relying on the black and white of Contract Law, not fuzzy codes of practice.

If you don't write to them refuting the contract you are weakening your position.

This is my last word on this matter I am afraid.

I understand. Thank you for your advice and input Mr A.

I also work for one of the big 4 and completely agree with Mr A.

What I would add is that although a contract can be formed without an engagement letter, if the firm or company this chap works for is relatively big, they are likely to have internal procedures which should have been followed. One of these would be an engagement letter.

If I did this at work, (ie a load of work without obtaining engagement letter, following internal money laundering and identity checks for example) I would highly, highly doubt the firm would chase you for this. Rather I'd be in a load of trouble - not least the fact I'd done a load of work without making sure you didn't have a criminal record etc! Actually, I wouldn't even have been allowed to raise an invoice without all those checks.

Also - £3,500 sounds loads to you and me. But it really won't be for them. I suspect this is an end of their financial year "let's try and get as much money in as we can" type thing. If you do as Mr A has said, I would be extremely surprised if they pursued. They have far more to lose than you.