Taking on a new client and seeking professional clearance

If a potential new client has expressed a desire to move their accounting requirements to you from another firm, one of your first steps is likely to be seeking professional clearance to take the appointment as well as sourcing as much information on the client and their business as possible.

In order to obtain this information you will want to make contact with the current accountant seeking professional clearance and also requesting a number of client documents and files to be forwarded to your firm. You can download Handpicked Accountants’ sample professional clearance letter here.

Professional clearance and due diligence

While it is not compulsory for all accountants to send a clearance letter upon being appointed, for the vast majority of chartered accountants this may well be a requirement as set out by your professional body and their Code of Ethics.

Whether or not you are required to issue a professional clearance letter, it is often a recommended course of action and should form part of your due diligence when taking on a new client.  This process will bring to light any reasons you should not take on the client. Remember, obtaining professional clearance is not about asking for permission to take on the client, rather to clarify that there are no factors which will impede your ability to act with integrity or which would otherwise threaten compliance.

Furthermore sourcing client documents and records from their current accountant rather than relying on the client to provide it themselves helps to ensure that you are starting the relationship with the benefit of the most comprehensive and up to date overview of their business to hand.

Importance of client consent

When requesting client information to be forwarded to your firm remember that the outgoing accountant will only be permitted to divulge this sensitive information with the client’s prior consent. It is therefore recommended that you ask your new client to notify their current accountant of their intention to switch and also grant them permission to share any confidential information with you as requested. This is most commonly done through a termination letter served by the client to the outgoing accountant. The client can either send this to the incumbent accountant directly, or else you may want to enclose this within your professional clearance letter to help speed up the process.

The outgoing accountant may ask for a fee to be paid in exchange for the production of client documents. The general rule is that a ‘reasonable’ fee can be asked for in order to compile and forward on the required information, however, due to the vague terminology used, what constitutes ‘reasonable’ is open to interpretation.

What if I don’t receive a response – can I still accept the new engagement?

You should make a concerted effort to ensure a response is received before you undertake any new work for the prospective client. This may mean that you have to chase up the enquiry with the outgoing accountant should a response not be forthcoming at the first time of asking. If your efforts are proving unsuccessful you are advised to send a final request using a tracked delivery service, giving a fixed date for a response. If you do not hear anything by this date you will typically be within your right to accept this as confirmation that there are no matters to which you need to be alerted to, although you should check with your governing body if you are unsure whether this ruling applies to you.

To learn more about the Handpicked Accountants and discover the benefits of joining, contact our team. We will be happy to talk you through the process and explain how you could become part of the Handpicked Accountants network.