Problem Accountant

[bob]

I have been a silent director of a limited company for a few years but due to the lovely recession we are all in I have had to take a hands on role within the company.

I went back over the last few years accounts, transaction by transaction, and I have found a litany of running errors caused by the external accountant we pay to create the end of year accountant and verify the employee taxation.

The errors were not obvious from the abridged accountants so hence we did not see them until now.

Question
Do I have any come back with the accountant? ? As he messed them up should I even trust him to sort them out? Can I claim money or damages back from the accountant?

 

[mathepac]

I think you need to speak with your fellow directors and relay your concerns to them, informally at first but then maybe via a properly convened and conducted EGM.

As you are no doubt aware, the accuracy and sign-off on the end-of-year accounts and returns is responsibility of the directors, collectively.

 

[papervalue]

Please give examples of some of the errors amd we may be able to advise you more. Could their be other logical reasons for differences.

 

[Graham_07]

You also say the errors were caused by the external accountant in the preparation of the year end accounts. Were the prime records prepared by the company/directors and did the external accountant change something in arriving at the year end accounts ? As papervalue said, perhaps if you gave some examples further answers could be given.

 

[bob]

It is a small company with three directors and five employees
Books prepared by the primary director. Some errors were made by accountant transferring the information over into his accounts package, others I can only see them as careless errors.

1. First error by the accountant, which he has confirmed as his mistake,
the accountant advised us on the PRSI class for the non-proprietary directors, so we paid employers prsi when we should not have... not too bad as can claim it back for the past few years.

2. Incorrectly applied tax bands so we under paid tax for past few years.

3. Submitted paper work late when they were signed off in time.

4. Completed nominal accounts for VAT but over looked an underpayment for a few years until I found it now. He agreed it was incorrect.

5. Over looked the depreciation of one fixed asset.

6. Added up invoice totals incorrectly... Not too bad as can sort it out in this years accounts

They are all small annoying things that have sucked so much of my time over the past few months when it could be spent elsewhere. I really feel sore that the accountant had already been paid and now I have to re do his job. These sort of errors are not obvious from the final years accounts.... or as directors are we supposed to go over them line by line, and look at all the transactions behind them?

Should I even bother trying to get money back off the accountant or should I just go elsewhere?

 

[Graham_07]

You do seem to have had quite a few problems alright. The directors shouldn't be expected to trace every item in the final accounts back to the prime records. However ultimately the aggregate cost/loss needs to be taken into account. Look at your letter of engagement with him. That should list who is responsible for what. You could complain to the accountants professional body and, if you have suffered quantifiable loss and his negligence is responsible then you may consider a claim on his professional indemnity insurance. Some may go that route, others might just move to another firm.

 

[DBRAN]

Hi Bob

Sorry to hear you are having so many problems with your accountant/auditor.

The issue here centres around whether these errors you have uncovered caused the accounts to not show a true and fair view of the company's affairs.

Basically the responsibility to prepare the accounts rests ultimately with the directors. The function of the auditor is to report to the shareholders as to whether the accounts show a true and fair view. This does not necessarilly mean they are free from ALL errors. From my initial reading of your posting these errors although annoying may not have been material enough to affect the decision a user of the accounts would have made had he known of these errors.

Even if the accounts do not show a true and fair view I believe you need to show you significanty relied on the accounts and have suffered damages as a result of this reliance. Needless to say it is very difficult to sue the auditor.

The direcotors can "hire" a third party to "prepare" the accounts (who also be the auditor). Whether you have a case against the accountant will depend on the letter of engagement that you signed wth him on taking on the assignment and contract law. For instance if this letter of engagement says that you are to be responsible for preparing the wages and PAYE returns then you will have less success in your action against them.

My advise is to put this down to experience, tell your accountant that you want a big discount/credit note next year and no mistakes next year or you will leave or find another accountant/bookeeper.

Hope this helps


DB