Schedules of Service
This schedule should be read in conjunction with our standard terms and conditions. The purpose of this schedule to our engagement letter is to set out the basis on which we are to compile the statutory financial statements of the company.
Statutory responsibilities
As directors of the company, you are required by statute to prepare accounts (financial statements) for each financial year, which give a true and fair view of the state of affairs of the company and of its profit or loss for that period. In preparing those accounts you must:
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Select suitable accounting policies and then apply them consistently.
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Make judgements and estimates that are reasonable and prudent.
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Prepare the accounts on the going concern basis unless it is not appropriate to presume that the company will continue in business.
You have engaged us to prepare the accounts on your behalf
It is your responsibility to keep proper accounting records that disclose with reasonable accuracy at any particular time the financial position of the company. It is also your responsibility to safeguard the assets of the company and to take reasonable steps for the prevention of and detection of fraud and other irregularities with an appropriate system of internal controls.
You are responsible for determining whether, in respect of the year concerned, the company meets the conditions for exemption from an audit set out in section 477 of the Companies Act 2006, and for determining whether, in respect of the year, the exemption is not available for any of the reasons set out in section 478 of the Companies Act 2006.
You are also responsible for making available to us, as and when required, all the company’s accounting records and all other relevant records and related information, including minutes of management and shareholders’ meetings.
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You will also be responsible for:
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Maintaining records of all receipts and payments of cash.
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Maintaining records of invoices issued and received.
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Preparing details of the following and reconciling at the year-end: stocks and work in progress; fixed assets; amounts owing to suppliers; amounts owing by customers; and accruals and prepayments. if these relate to the business.
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You will be responsible, unless otherwise agreed, to maintaining your books and records in a digital format using cloud based bookkeeping software
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You will be responsible, unless otherwise agreed to keep the bookkeeping up to date by completing and fully reconciling balances with the bank statements, at least every three months, or as otherwise agreed
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Allowing us on-line access to the cloud bookkeeping system
Our work will not be an audit of the accounts in accordance with International Standards on Auditing (UK and Ireland). Accordingly we shall not seek any independent evidence to support the entries in the accounting records, or to prove the existence, ownership or valuation of assets or completeness of income, liabilities or disclosure in the accounts. Nor shall we assess the reasonableness of any estimates or judgements made in the preparation of the accounts. Consequently our work will not provide any assurance that the accounting records are free from material misstatement, irregularities or error.
As part of our normal procedures we may request you to provide written confirmation of any oral information and explanations given to us during the course of our work.
We have a professional duty to compile accounts that conform with generally accepted accounting principles. The accounts of a limited company are required to comply with the disclosure requirements of the Companies Act 2006 and applicable accounting standards. Where we identify that the accounts do not conform to accepted accounting principles or standards, we will inform you and suggest amendments be put through the accounts before being published. We have a professional responsibility not to allow our name to be associated with accounts that may be misleading. In extreme cases, where this matter cannot be resolved, we will withdraw from the engagement and notify you in writing of the reasons.
Should you instruct us to carry out any alternative report it will be necessary for us to issue a separate letter of engagement.
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Our service to you
We will not be carrying out any audit work as part of this assignment and accordingly will not verify the assets and liabilities of the company, nor the items of expenditure and income. To carry out an audit would entail additional work to comply with International Standards on Auditing so that we could report on the truth and fairness of the financial statements. We would also like to emphasise that we cannot undertake to discover any shortcomings in your systems or irregularities on the part of your employees.
If an audit of the accounts is required, you will need to notify us in writing. Should our work indicate that the company is not entitled to exemption from an audit of the accounts, we will inform you. If we decide to undertake an audit assignment at your request, a separate engagement letter will be required.
We will attach to the accounts a report developed by the Consultative Committee of Accountancy Bodies (CCAB) which explains what work has been done by us, the professional requirements we have to fulfil and the standard to which the work has been carried out. Web links are provided in the report so that you can obtain further information from the Association of Chartered Certified Accountants about:
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The technical guidance for the work, and
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The related ethical and other professional requirements.
To ensure that anyone reading the accounts is aware that we have not carried out an audit, we will attach to the accounts a report stating this fact.
The intended users of the report are the directors. The report will be addressed to the directors.
Once we have issued our report we have no further direct responsibility in relation to the accounts for that financial year. However, we expect that you will inform us of any material event occurring between the date of our report and that of the annual general meeting that may affect the accounts.
Limitation of liability
We specifically draw your attention to the limitation of liability paragraphs in our standard terms and conditions which set out the basis on which we limit our liability to you and to others. You should read this in conjunction with the limitation of third party rights paragraphs in our standard terms and conditions which exclude liability to third parties. These are important provisions which you should read and consider carefully.