Compliance in the face of Coronavirus seems surreal. Particularly as I am writing this piece from the beautiful sunny island of St Lucia. At present, it is unclear as to how or when I am going to be able to return home and even if I do, what awaits me back in the UK. Out of the frying pan and into the fire? All businesses will have to find new ways to adapt to these exceptional circumstances. The life of a business owner or compliance officer is no different. As we travel around the country visiting our law firm clients, we always have a conversation with them about the adequacy of their business continuity plan. They all have one of course, written down somewhere and tested from time to time. Well the big test starts now as we are all about to find out.
Personally, I have been here before with SARS and Avian flue. During those times I was running a business employing over 1,000 people and making plans to deal with a potential 20% reduction in staffing levels was not easy but we go there in the end. The big question is will this be any different? Only time will tell and things will be a lot clearer by the time this article is published. But one thing that has changed since then is the advancement of technology. It really is possible for many staff to work from home or indeed the Caribbean! But for staff working in the finance department, this is not always the case. The systems and controls they have in place are typically paper driven and are only supported by technology. Annoyingly, most systems firms use to manage their client accounts have the functionality to operate completely paperless. It’s just they have not been developed sufficiently to make this possible. The reason for this is always the same, a lack of budget and time. When we get through this, and we will get through this, my message to firms will be to make sure your accounting function is paperless. It is still possible to have the same levels of authority in place for releasing monies and this would all need to be documented in a new Accounting Policy. But now is a great me for thinking to yourself, how could I be doing things differently so that I could be working from home on a laptop without coming into the office.
The pandemic has forced Financial Eye to change the way it operate too. Living the Eye Life no longer extends to travelling across the country visiting firms and carrying out compliance reviews. We have now commenced our “remote review” service which allows to complete all the relevant documentation remotely and is followed up with a conference call with the COFA and or the managing partner to run through the issues that need to be dealt with. From our most recent conversations we have had with firms, four of the most common themes most firms still need to address are;
Accounting Policy document – given what is going on in the world right now, this seems like the least of your problems. But if you don’t document the new processes that you will invariably be forced to put in place, you will make mistakes. Client accounts will become overdrawn and you will be required to notify the SRA of a breach. Getting our firms to document their authorisation processes has been a struggle and they are all good firms that take their compliance obligations very seriously. This needs to be addressed now and should remain your number one priority.
Residual balances – Most firms still struggle with these but it is vital that you have a written plan documented that shows the progress you are making in this area. A failure to do so may result in your next AR1 being qualified. And whatever you do, please do not have a policy in place that says you will simply pay any small balances to charity. You must attempt to return any balances, regardless of the amount, to your clients before you do anything else!
Central record of bills – under the new Accounts Rules you are required to keep a copy of all bills centrally and we have heard of firms relying on copy texts and Whatsapp messages to comply with this requirement. I think you may be skating on thin ice if that’s what you are doing and I would suggest you carry out a review of your policies and procedures in this area.
Interest Policy – do you have an up to date written Policy in place? Your interest policy cannot be that you do not pay interest. The SRA would take a very dim view of your firm it that is the case.
My number one priority right now is getting back to the UK before the airports are forced to close. Tempting as it is to carry on working here in the sunshine, I don’t think it would really be that fair on my fellow co-workers! I hope by the time you are reading this we will all have a much better understanding of what we are faced with and how to deal with it. Fingers crossed and stay safe.