Professional Clearance Guidance
An incoming accountant may contact an outgoing accountant for professional clearance, for instance to enquire whether there are any issues that they should be aware of when considering taking on a new client and agreeing to an engagement.
Professional clearance may occur when you have disengaged from a client or a client has disengaged from you.
You may have parted ways on good terms or there may be occasions when a business relationship has broken down.
You are under no obligation to give a view on a client or share your personal experiences. Clearance of this nature should be viewed as a professional courtesy rather than an obligation.
AIA has no regulatory requirement for letters of professional clearance or their content and we do not provide a standard letter of professional clearance for members to refer to as every professional engagement differs.
However, you should not ignore a request for professional clearance and should always respond back to the incoming accountant even to acknowledge that you are unable to provide information.
You should make it clear why you are acting in a particular way and provide a reason in order to maintain your own integrity and avoid a complaint of unprofessional behaviour against you.
Code of Ethics
AIA’s Code of Ethics offers guidance on ‘Changes to Professional Appointments’ at section R320.4 and a specific section on communicating with the proposed accountant at Section R320.7 which recommends that you ‘provide any information honestly and unambiguously.’
You still have a duty to your former clients and should remember that a smooth transition to a new accountant is part of that, including protecting your reputation and that of the Association.
If you decide to provide professional clearance a good approach is to consider the type of client information you would wish to receive yourself.
You should remain mindful of the risk of making statements that cannot be substantiated. In this way you can avoid being drawn into discussions about client behaviour especially if your business relationship has broken down.
The way in which you respond to a superseding accountant can be helpful without being subjective.
If you have serious concerns about unacceptable client behaviour a telephone conversation may be helpful if you do not wish to commit your concerns in writing. It may be helpful to advise the new accountant to ensure that their terms of engagement are clear enough to facilitate a reasonable client expectation and to allow them to deal with unreasonable demands.
If you have a concern about confidentiality, you should look at Section 114 of the AIA Code of Ethics. The AIA Code of Ethics is a Principles Based Code which should be used to reach a conclusion as to the action you will take.
Any confidentiality obligation is generally superseded by a requirement to comply with any laws relating to illegal activity. If you have serious concerns about a client there may be information in the public domain that you can point to.
Handover of information
For an accountant providing services to clients for fees, a common potential area for dispute is the return of client documents, particularly when an engagement comes to an end.
This is particularly important when an engagement ceases, and a request is made for information to be transferred either to the client, or an incoming accountant.
You should use professional judgement, stay within the law and the AIA Code of Ethics when addressing the handover of information.
See more guidance on the handover of information as part of a change in professional engagement.
Suspicious activity and ‘tipping off’
If you have made a Suspicious Activity Report (SAR) or a report to the HMRC Fraud hotline or direct to HMRC (or the jurisdictional equivalent if you are outside the UK) in the process of disengagement of your former client, you may wish to consider informing the new accountant.
If you suspect money laundering, you must ensure you do not breach the Proceeds of Crime Act 2002 s.330 ‘Tipping Off’ offence (or any jurisdictional equivalent).
Guidance on reporting suspicious activity.
In the United Kingdom, if the incoming accountant is supervised by another professional body under Schedule 1 of MLR2017 then you may share your concerns.
Note: the guidance above does not constitute legal advice and if you are in any doubt you should seek your own professional/legal advice.
You should refer to AML Guidance for the Accountancy Sector (AMLGAS) for more detailed guidance.
