Accountants Should Check Insurance Cover as Fears of Business Support Scheme Fraud Grow
Accountants have been at the coalface of the Covid-19 business support initiatives, having to brief and advise clients, for many months, on the various Government support schemes that have been established to support them. But could any of this advice come back to bite accountants and what insurance is required, if it does?
If recent guidance from the Institute of Chartered Accountants in England and Wales (ICAEW) is anything to go by, accountants need to tread very carefully over the next few months, ensuring that they are not seen to have been complicit in any fraudulent activity around Government support schemes.
This is, unfortunately, feared to be fairly widespread. According to an investigation by the National Audit Office, there is an error in payments totalling around £3.9bn with regard to the Self-Employed Income Support Scheme (SEISS) and the Coronavirus Job Retention Scheme (CJRS), with fraud and errors having been boosted by the speed with which schemes like this had to be established.
It is thought that HMRC will not be able to assess the full magnitude of the fraud around schemes like this one, and others such as the Bounce Back Loan Scheme, until the end of 2021.
Accountants are being warned that they need to be vigilant and mindful of their code of ethics. They could find themselves drawn into an investigation of fraud or money laundering, by virtue of having themselves made a claim, having supported a client’s claim and supplied confirmation of eligibility, by making or approving use of the proceeds of a loan or payment, or by aiding and abetting a client application.
If they worked to support a client, they are being urged to ideally obtain a letter of engagement from the client, outlining the limits to their role. But the ICAEW is also reminding accountants that they should step away from a client, if they suspect wrongful practice, or errors in the calculation of the support required, or witness no evidence of a client repaying monies that they have been advised they are not actually entitled to have claimed.
Accountants must act with honesty and integrity, whilst still trying to support their clients. They must not be drawn into any fraudulent or disreputable activity and should, if they suspect money laundering, make a Suspicious Activity Report.
With so much pressure on accountants, the needs for insurance back-up, should any legal case be brought against them, have probably never been greater. Accountants could face a variety of charges, if they have either assisted clients with wrongful claims, even if doing so unwittingly and in good faith, and could equally face actions brought by clients who feel they were given wrong advice, or no advice.
The whole situation is difficult for the profession and ensuring that the right insurance covers are in place maybe seen as priority for professionals within the accountancy sector. If you need assistance in assessing what insurance you need, and what limits of cover would suit your business best, we have experts who can help you. Just get in touch with us and we will help at least make this part of the road ahead less worrying for you.
Sources: https://www.icaew.com/insights/viewpoints-on-the-news/2020/nov-2020/accountants-must-be-wary-of-covidsupport-fraud https://www.icaew.com/insights/viewpoints-on-the-news/2020/oct-2020/nao-examines-massive-pandemic-financial-support-programmes