7 Nov 2019 01:48pm

Practice Q&A: contracts and errors

Our resident experts answer questions on how to handle contractual obligations and record keeping around anti-money-laundering work

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Caption: Illustration by Yukai Du

Q: How long should I keep client documents and records?

A: Practices hold a wide range of documents and records in relation to their clients for a variety of professional and legal reasons. To comply with data protection requirements, any such documents and records containing personal data may only be held for as long as is necessary.

The ‘necessary’ period can usually be justified by reference to statutory or regulatory retention periods and any requirements set by professional indemnity insurers. The retention period will also take into account factors such as whether the firm has received (or has been notified of ) a complaint, claim or inquiry.

Typically, accounts preparation working papers, audit files, and documentation relating to income tax, corporation tax and VAT will need to be held for the current year plus six further years, although there are exceptions. Documents created as part of anti-money laundering customer due diligence processes will need to be retained for five years after the relationship ends and documents of title (such as lease agreements) usually need be retained for a period of 12 years after the end of the interest in the property.

These and other indicative retention periods are explained in ICAEW’s document retention helpsheet (available at ethics/ethics-helpsheets/document-retention).

All firms should ensure they have a clear document retention policy which addresses how documents and records are stored, who has access to different types of documents and records, the firm’s retention periods and how documents and records will be securely destroyed after the end of the specified retention period.

Further guidance is available to members from the ICAEW Ethics Advisory Service on +44 (0)1908 248 250.

Chris Turner, professional consultant, ICAEW Advisory Services

Excel top tip: Know your errors

Tearing your hair out over Excel errors? It can be helpful to know what the different types mean – so you know what to look for to fix them.

#### means that the cell isn’t wide enough to show the value in it – double click the edge of the column header to resize automatically. #NAME? means Excel doesn’t recognise a named range or function used in the formula – use Data
=> Name Manager to figure out what the allowed names are and check for typos. #NUM! or #VALUE! Means the formula is seeing a non-numeric input where it expects a number; make sure you don’t have cells formatted as text.

#DIV/0! Is pretty straightforward – the formula divides by 0, which is undefined. Watch out for bracketing if this doesn’t look correct to you. #REF! means that the formula refers to a cell that doesn’t exist or has been deleted – be careful when copying a formula closer to the workbook boundary than the original to avoid this one. #N/A! is only seen with lookup formulas and indicates that the function cannot find a match. Watch out for trailing spaces! #NULL! Means your formula contains an inappropriate space, eg between two ranges.

Finally, if you want to hide errors with some other value, try:
=IFERROR(YourFormula, AlternativeValue) Find more Excel top tips and training with the Excel Community –
David Lyford-Smith, technical manager, Tech and the Profession, Tech Faculty

Q: My online AML service requires me to delete all searches and reports if I terminate my agreement. Is this acceptable?

A: Section 7.1 of the CCAB Anti-Money Laundering Guidance for the Account- ancy Sector requires records relating to customer due diligence (CDD), the business relationship and occasional transactions to be held for five years from the end of the client relationship. This is based on the legal require- ments of regulation 40 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 17).

Where your firm makes use of third party providers as part of your anti- money laundering procedures, their terms and conditions must be read carefully. It is unlikely that you will be able to comply with your record keeping obligations if you have agreed to terms requiring you to delete all searches and reports (or similar) after you terminate the agreement with the service provider.

If it is not possible for such a clause to be removed or amended, it may be better to use an alternative provider. If you already use a provider which includes such a clause and they are not prepared to remove or amend it, you should seek legal advice on your position.

Further guidance to members is available from the ICAEW Anti- Money Laundering helpline on +44 (0)1908 248 250.

Chris Turner, professional consultant, ICAEW Advisory Services

Five in brief

1) Additional reporting

The Companies (Miscellaneous Reporting) Regulations 2018, effective for financial years beginning on or after𠊁 January 2019, require reporting on s172(1) matters and executive pay ratios. FRC guidance available.

2) Off-payroll working

The extension to the private sector of the off payroll working rules (IR35) is due to take effect from April 2020. These are the rules designed to establish whether a contractor is genuinely contracted, rather than a disguised employee.

3) Going concern

The FRC has strengthened ISA (UK) 570, Going Concern. The revised standard is effective for audits of financial reporting periods beginning on or after 15 December, 2019. Early adoption is permitted.

4) IFRS 16

The new leasing standard, IFRS 16, Leases, is effective𠊏or annual reporting periods starting on or after 1 January 2019.

5) Brexit

The ICAEW Brexit hub, which offers help, advice and resources for accountants𠊊nd businesses
on preparing for leaving the EU, sets out 10 questions for businesses to consider as they prepare.