‘Beware of unqualified advisers during COVID-19’, small businesses warned
Small businesses are being cautioned to check that their accountant or accountancy practice is qualified to give advice, to avoid making ill-informed choices or potentially even committing unintended fraud.
The Institute of Financial Accountants (IFA) has advised businesses to steer clear of unqualified advisers, especially during the coronavirus changes.
Recent findings from a survey carried out by the IFA revealed it is not so widely known that anyone can call themselves an “accountant”. The survey found that only 18 per cent of respondents know the term “accountant” isn’t a protected term, and that an individual does not have to be qualified in order to set up a practice.
John Edwards, chief executive of the IFA, explained that there is danger in assuming that an individual has to go through a due process to qualify as an accountant.
“Everyone assumes that to be an accountant there is a due process an individual must go through to qualify, and that there are stringent controls or regulations in place to manage who and how these people can operate their business,” said Mr Edwards.
“The sad reality is that this simply isn’t true; 'accountant' is not a protected term, which means that literally anyone can decide they want to be an 'accountant' and start up a business tomorrow,” he cautioned.
While the number of individuals who do this is small, Mr Edwards warned that SME businesses are most at risk of hiring an unqualified accountant, and in doing so they may be leaving their business vulnerable to incorrect or potentially even fraudulent advice.
“This risk has grown over recent months, when even qualified accountants and businesses are grappling with the rapidly-changing legislation and business support schemes, let alone those 'accountants' who are unqualified and operating without the support and oversight of a professional body,” explained Mr Edwards.
“We are concerned that businesses might have made decisions based on relationship, price or similar, without ever checking their 'accountant' is qualified to give good advice.
“In normal day-to-day business this is of course a risk, but some operators might know enough to convince prospective clients they are qualified and expert; now, however, when legislation is changing at a pace, the gaps in their knowledge will widen and SME businesses could be left dealing with the consequences.”
He cautioned that at worst, this could mean a business inadvertently committing fraud, resulting in fines or even enforced closure of the business.
The term 'accountant' is not defined or protected by UK law and thousands of small businesses and individuals, believing they have engaged qualified accountants, may be at risk from harmful and costly business advice from unqualified, unregulated and possibly uninsured advisers.
It is accepted that although some unqualified accountants may do good work, an unqualified accountant is not answerable to any regulatory body and so cannot be disciplined.
Generally speaking, the term “unqualified” in respect of accountancy, is used to describe those who are legally allowed to offer accountancy services to the general public even though they are not professionally qualified to do so, are not regulated by a professional accountancy body or have any professional indemnity insurance.
The IFA assured that the key to checking that an accountant is qualified is to ask if they are a member of a professional accountancy body and then check that membership with said body.