SOLE TRADERS & PARTNERSHIPS (updated June 2009)
1 Responsibilities of accountants
1.1 Based on the accounting records maintained by you, or on your behalf, together with the information and explanations given to us by you, we shall compile draft accounts for your approval. We shall then issue signed annual financial statements and it is our practice to include an Accountants Report. Unless otherwise agreed in writing we shall plan our work on the basis that no report is required by statute or regulation for the year. In carrying out our engagement we will make enquiries of management and undertake any procedures that we judge appropriate, but are under no obligation to perform procedures that may be required for assurance engagements – such as audits or reviews.
1.2 1.3 Our work will not be an audit of the accounts in accordance with International Standards of Auditing (UK and Ireland). Accordingly, we will not obtain any evidence relating to the validity of the 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 and cannot be relied on to identify weaknesses in internal controls.
1.3 Our Accountant’s Report shall state, with any variations that we consider may be necessary, that, in accordance with your instructions, we have compiled, without carrying out an audit, the financial statements from the accounting records of the business and from the information and explanations supplied to us.
1.4 We have a professional duty to compile financial statements which conform with generally accepted accounting principles (GAAP). Should we identify instances where the financial statements do not confirm to GAAP, or if the accounting policies adopted are not readily apparent, we shall highlight such matters if they are not clear from the financial statements.
1.5 As part of our normal procedures we may request you to provide written confirmation of any information or explanations given to us orally during the course of our work.
1.6 Finally you are responsible for ensuring that the business 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.
1.7 You have undertaken to make available to us, as and when required, all the accounting records of the business and related financial information necessary for the compilation of the financial statements. You will make full disclosure to us of all relevant information including minutes of management meetings, which we need to do our work. You will provide us with all information and explanations relevant to the purpose and compilation of the financial information, and you will disclose to us all relevant information in full. You are responsible for ensuring that, to the best of your knowledge and belief, financial information, whether used by the business or for the financial statements, is accurate and complete. You are also responsible for ensuring that the activities of the business are conducted honestly, and for safeguarding the assets of the business and for taking reasonable steps to prevent and detect fraud and dishonesty. You will approve and sign the financial statements to acknowledge responsibility for it, including the appropriateness of the accounting basis and for providing us with all information and explanations necessary for its compilation.
1.8 We also have a professional responsibility not to allow our name to be associated with financial statements which we believe may be misleading. Therefore, although we are not required to search for such matters, should we become aware, for any reason, that the financial statements may be misleading, we will discuss the matter with you with a view to agreeing appropriate adjustments and/or disclosures in the financial statements. In circumstances where adjustments and/or disclosures that we consider appropriate are not made or where we are not provided with appropriate information, and as a result we consider that the financial statements are misleading, we will withdraw from the engagement.
1.9 The accountants’ report helps users derive comfort from the involvement of chartered accountants who are subject to the ethical and other guidance issued by the institute in relation to the preparation of the financial information or statements. It also helps prevent users from deriving unwarranted assurance from the financial information or statements where no audit or assurance work has been performed and no opinion is expressed by the accountants. We will report to you, as appropriate, that in accordance with this engagement letter, we have not carried out an audit but have compiled the financial statements from the accounting records and from the information and explanations supplied to us. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than you for our work or for this report.