Pinkney cautions many practitioners are leaving themselves exposed to significant risks unless they uphold strong ethical standards and heed the many compliance requirements. Non-compliance can lead to financial penalties, membership removal or severe reputational damage hampering their ability to operate.
“Clients want to see that you’re engaged in a professional capacity,” says Pinkney.
“It can’t be underestimated, because professional ethics is a cornerstone to having a platform to spot non-compliance, as well as develop practices that help you foster better relationships and better working practices.”
Here are the top five compliance areas where accountants are most likely to slip up:
1. AML obligations
Professional body AML supervisors continue to witness some firms not embracing the regulations and their obligations properly. Despite years of regulatory focus, Pinkney reveals that AML compliance remains a significant issue.
He says some firms continue to grapple with their AML requirements. “We still come across firms with years of experience in public practice that appear to be oblivious to AML requirements,” he says.
2. Personal tax compliance
Professional bodies continue to receive referrals about members who haven’t kept their own tax affairs in order.
“HMRC can refer directly to professional bodies,” he says. “It’s going to have a real damaging effect on you if you’ve been alleged that you can’t keep your own tax affairs in order.”
HMRC is currently consulting on behavioural issues surrounding non-payment of tax, including potentially tougher penalties. “Be aware of it, not just for yourself, but for your clients,” Pinkney says.
3. Corporate reform changes
With significant corporate reform on the horizon—including changing thresholds for entities and new accounting report requirements—staying ahead of these changes is crucial.
“Clients are looking to accountants as trusted advisers, assuming that they have the right knowledge to actually help them through this,” says Pinkney. “There’s going to be lots of changes coming forward in the next year or so.”
The consequences of falling behind include not just complaints, but potentially losing clients altogether. “I think clients will just vote with their feet,” he says. “Companies that can provide this advice and really embrace all these changes will be the ones that will be successful in retaining and adding to their client base.”
“Not engaging with CPD will leave you exposed to not having the knowledge that the accountant down the road has.”
Tim Pinkney, Director of Professional Standards, IFA
4. Professional conduct and ethics
With changing IT systems and increasing pressures on practitioners, adhering to the professional code of ethics is increasingly important.
“You’ve got to be completely mindful and aware of the Code of Ethics,” Pinkney says. “Engage with the IFA and professional bodies to actually ensure that you’re up to speed with all these areas.”
Failure to do so can result in complaints, financial penalties and even removal from membership, all of which can erode a firm’s brand and reputation. “You don’t want to be that accountant that’s listed in the magazine as falling foul, going to the committee and being removed from membership,” Pinkney says.
5. Continuing Professional Development (CPD)
Underlying all these compliance areas is the fundamental requirement for continuous learning and development. Yet some practitioners are failing to engage with CPD programmes, leaving themselves vulnerable and potentially losing a competitive edge.
“Not engaging with CPD will leave you exposed to not having the knowledge that the accountant down the road has,” says Pinkney. “Where will the clients ultimately go?”
Beyond client retention, CPD is a core requirement of professional membership. “If you don’t demonstrate and provide evidence that you’ve completed the required CPD, that’s a disciplinary outcome anyway,” he says.
Pinkney advises practitioners to keep an eye on several developing areas, including the Treasury’s response to the future of AML supervision in the UK (expected soon after a delay), potential mandating of professional body membership by HMRC and evolving ESG (environment, social, governance) requirements.
More information on IFA’s range of continuing professional development (CPD) here.
