IFA licensing requirements
The agreement between the IFA and CAA states that ‘the IFA will designate and regulate ARA firms and ARAs in accordance with the provisions within the IFA Regulations and in full compliance with the requirements of the CAA’s ARA Scheme Key Components document and which forms part of this agreement’. Therefore, the IFA licensing arrangements are built on existing membership and professional development requirements.
Obligations of the designated ATOL reporting accountant/firm
The designated ATOL reporting accountant (ARA) must:
- Be a member of the IFA and hold an IFA practising certificate.
- Be an employee or principal of the registered firm (if you are a sole practitioner you are the principal of the firm).
- Comply with the IFA's Bye-Laws, Code of Ethics and Regulations.
- Comply with the provisions of the licensing arrangement.
- Be independent of the ATOL holder. This means that you cannot act for a client where the client is effectively your employer, or was your employer in the two years prior to engaging you as their ARA.
- Demonstrate sufficient experience and level of competence to conduct ATOL work.
- Have undertaken adequate CPD appropriate to maintaining and developing competence for an individual seeking to be an ATOL Reporting Accountant and have met the training requirements. This includes successfully completing the CAA ATOL training package (as updated from time to time) and the training package assessment has been shared with the IFA.
- Have taken and passed a professional examination covering assurance work (this may be limited to individual modules of a professional qualification but which must include an assurance qualification).
- Have reviewed and follow guidance including, but not limited to, CAA’s revised Official Record Series 3 (ORS3) (formerly known as Guidance Note 10) issued on 7 February 2020 .
- Meet the continuing professional development guidelines of the IFA.
- Inform the IFA’s membership department by email if they no longer wish to be a designated ATOL reporting accountant. It should be noted that the accountant still has obligations to deal with enquiries or complaints relating to the period when they were a designated ATOL Reporting Accountant.
The firm (including sole practitioner) must:
- Provide accountancy services to the general public for reward (engaged in public practice).
- Conduct only those services permitted under the terms of the licence when acting under the licence.
- Comply with the IFA's Bye-laws, Code of Ethics and Regulations.
- Comply with the provisions of the licensing arrangements, which includes submitting an annual return
- Communicate promptly to the IFA any changes that might affect the firm/ATOL reporting accountant eligibility to conduct this type of work or any firm changes such as, but not limited to, changes in the addresse(s), trading name(s), names and contact details of the principals of the practice and changes relating to the designated ATOL Reporting Accountant. This type of communication should be sent in writing to the IFA no later than 10 business working days after taking effect to the IFA’s membership department [email protected].
- Appoint a contact principal who will be responsible for communicating with the IFA, ensuring that the firm complies with the licensing arrangements for ATOL reporting work and conducts annual compliance reviews in the firm.
- Be independent of the ATOL holder as required by the IFA’s Code of Ethics Part 4A Independence for Audit and Review Engagements.
- Have Professional Indemnity Insurance (PII) to cover in excess of the liability cap calculated by reference to the ATOL holder’s licensable revenue limit or bond as explained above. The Reporting Accountant is required to have this in place prior to reporting on an ATOL holder.
- Maintain an appropriate level of competence in the conduct of ATOL work and this is best achieved through the use of relevant policies and procedures, manuals, work programmes, checklists, internal compliance reviews, firm-wide training and fit and proper declarations. Such documentation must be kept up to date if the firm is to retain its competence.
- Make arrangements so that all members, principals and employees performing ATOL-related work are, and continue to be, competent to carry out ATOL reporting for which they are responsible or employed.
- Issue a letter of engagement to its ATOL clients outlining the nature, scope and terms of the service being provided and this should be kept as evidence of agreement by the client.
- Keep appropriate records of work undertaken on behalf of its clients for at least six years, or longer depending on legislation. These records can be held on paper or digitally.
- Notify its clients of the named person in the practice to be contacted in the event of a complaint and of their right to complain to the IFA. This information can be included as part of the engagement letter.
- Review, at least once a year, its compliance with the licensing arrangements and guidance by the CAA and take action when issues are identified.
- Inform the IFA in writing if the firm no longer wishes to have a licence to conduct ATOL reporting work. It should be noted that the firm still has obligations to deal with enquiries or complaints relating to the period of the licence.
- Co-operate with the IFA in monitoring visits.
IFA obligations and rights
The IFA will:
- Deal openly and fairly with firms/ATOL Reporting Accountants.
- Consider any applications under licence based on the information provided and the criteria required by the CAA in the ARA scheme. The IFA has sole discretion as to whether or not to issue the licence to the firm/ATOL Reporting Accountant.
- Conduct monitoring desk-top reviews/visits of licensed firms/ATOL reporting accountants as part of its overall monitoring process.
- Use the information in the firm’s annual return and the accountant’s annual declaration in their assessment of licensing the firm and designation of the accountant as an ATOL reporting accountant.
- Communicate with the proper authorities such as the CAA regarding regulatory and disciplinary matters.
The IFA will determine whether a firm/designated ATOL Reporting Accountant is liable to disciplinary action under the IFA’s disciplinary arrangements if they:
- in the course of carrying out ATOL reporting work or otherwise, have committed any act or default likely to bring discredit on themselves, the IFA or the profession of accountancy; or
- have performed ATOL reporting work inefficiently or incompetently to such an extent, or on a number of occasions, as to bring discredit on themselves, the IFA or the profession of accountancy; or
- have committed a breach of the IFA Bye-laws, Code of Ethics and Regulations; or
- have breached any of the provisions of the licensing arrangement.