Failure to retain these records leaves you open to an accusation of wilful complicity if the company is investigated later on. Similarly you can keep screenshots of text or Whatsapp messages (both received and sent). The best way to document your advice is to keep copies of all emails, minutes of meetings and to reflect back any conversations that may have taken place in writing. You ensure that you have full records, accountants, forecasts and a record of all the advice you have given. Whilst your obligation is to the business, this does not mean that you should compromise your professionalism. You may wish to make them aware that if the company became insolvent the decisions of the directors would be under scrutiny and they could face further action if their decision making was found to be unsound in the run-up to formal insolvency. If you believe that insolvency is the only realistic outcome, you may be able to convince your directors that it is time to wind up the company and/or appoint an insolvency practitioner to enable them to limit the damage. other directors, investors, beneficial owners and any others who may need to know. You my wish to encourage the directors to keep all stakeholders informed - e.g. This may include contacting the relevant tax authority (HMRC in the UK) to discuss an installment plan for any unpaid tax and to notify them of a possible insolvency. You may wish to suggest a strategy for business recovery or insolvency with your employer/client. You should therefore explain the possible consequences of failing to act on your advice and check that the directors and management have understood you. Continuing to trade while the company is insolvent may make directors personally liable for the company’s debts. Critically, if this point arrives, the directors’ responsibilities shift from the interests of the company’s shareholders to the interests of its creditors. It is against the law in the UK (and many other jurisdictions) for a company to continue to trade when it can no longer pay its debts when they become due or when its liabilities outweigh its assets. Conversations may become emotional, even heated, but remaining professional and using a direct communication style will help decision makers understand the situation. For instance, a company may have struggled during the global pandemic and hope that the easing of restrictions will lead to recovery may make its directors reluctant to accept your advice about the reality of the situation. If your advice is met with resistance, remember that hope can often be powerful motivator. Alternatively, the available information may enable you to explain that the company is beyond recovery and something needs to be done. You will be used to forecasting and you should be able to ascertain whether business activity is being undertaken in a way that makes sense against that forecast and can therefore be justified. As a management accountant you will need to ensure you have adequate information on which to base your decisions and advice, in order to comply with the fundamental principle of Professional Competence and Due Care. Sometimes the best interest may be the dissolution of that business, and this can cause professional friction between you and your employer/client.īusiness decisions should always be based on evidence. You have an obligation under the CIMA Code of Ethics to provide a professional service and work in the best interest of the business. Senior decision makers in that company may be reluctant to accept the situation and it may be up to you to initiate a difficult conversation or provide advice that will not be welcomed. As a management accountant, you are also likely to be in a good position to see that the financial health of a company seems to be taking a downturn. Whether you are a Member in Business or a Member in Practice, you may be faced with an employer or client decision to continue to trade despite the company being insolvent.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |