Are you a member in business AND in practice?

If so you must adhere to best practice and the law – even if you only do one or two small companies’ accounts. By Martin Nimmo, CIMA Professional Standards.

Some CIMA members believe that they are either a member in practice OR a member in business, when they actually do both sorts of work.

Indeed all members in practice would consider themselves ‘in business’ or they wouldn’t make money!

However, some members who do a paid daytime job - as a financial controller, finance director, IT specialist, management accountant and so on - also do accounts for small companies.

These members do not always recognise themselves as members in practice by CIMA’s definition. But they are, as well as being members in business.

The exposures and risks

Practice may not be your primary occupation - or even bring in much extra income - but it does bring high exposure to risk.

Find out if you are covered. Firstly are you a member and doing any work at all in practice for payment? Check Council Regulation 7 in part A of the online members’ handbook to find out if this applies to you. If it does you are required to register annually as a member in practice, even though you are chiefly a member in business.

There is an annual fee (currently £64), and you must:

• hold professional indemnity insurance (PII)
• ensure that your CPD covers your practice activities
• provide written terms of engagement for clients
• ensure continuity of the work of your practice in the event of illness, disability, or death
• make provision for internal complaints handling procedures.

Secondly: if you are living in the UK and being paid for accounting work by anyone who is not your employer (payment even includes an honorarium), you must be supervised under the Money Laundering Regulations 2007.

CIMA will do this for you on request if you are a member or registered student. Failure to be supervised is a criminal offence punishable by a fine and/or imprisonment. Financial Management and Insight magazines have published a great deal of information on money laundering. No excuse can be accepted for failure to recognise that you must be supervised.

This might sound like overkill for a couple of small company accounts being prepared for filing at Companies House, for which your payment might not even cover the cost of PII.

However, providing such services is your choice. If you make this choice, you must act responsibly as a professional accountant. There is a cost – not just financial, but in terms of best practice and standards - to ‘joining the club’ of people in practice, and if you are not prepared to pay that price, you shouldn’t take on the work.

No longer working?

This regulation could also apply to members who - having advised CIMA that they are no longer working (and in a few cases claiming full remission of their annual subscription) - might take on one or two clients to keep their hand in.

This is not really an option. You are still working, and you are just as liable to money laundering supervision and the need to register as a member in practice.

The risk is not just a fine and imprisonment, but the loss of your professional qualification. There is also a reputational risk to CIMA, and to other members, in working in an unlicensed way and taking shortcuts with best practice.

May 2008

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What did you think of this article? Email tim.cooper@cimaglobal.com.