Insolvency
As highlighted in the AB July 2020 issue, a number of measures to protect businesses from insolvency were introduced in the Corporate Insolvency and Governance Act. Many were due to expire in September but were extended until the end of December and the end of March (see also AB article ‘Insolvency and directors’ duties’).
The extended temporary measures include:
- Companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to meet virtually until 30 December 2020. This means that shareholders can continue to examine company papers and vote on important issues remotely
- Statutory demands and winding-up petitions will continue to be restricted until 31 December 2020 to protect companies from aggressive creditor enforcement action as a result of Covid-19-related debts
- Termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. However, small suppliers will remain exempted from the obligation to supply until 30 March 2021
- The modifications to the new moratorium procedure, which relaxes its entry requirements, will also be extended until 30 March 2021. A company may enter into a moratorium if it has been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding-up petition. The temporary moratorium rules will be extended to 30 March 2021.
Companies House
Companies House has been moving more of its services online and, where paper forms have been the only option, businesses can upload a document. See the current list of what can be uploaded.
Banking resolution service
ACCA has been supporting the launch of a new, free service to resolve disputes between SMEs and their banks, the Business Banking Resolution Service (see also ‘BBRS set to prove its worth’).
The service is free and is available for both historic and current cases; it can look at complaints dating back to 1 December 2001. The service will launch in the early autumn and businesses can register their interest on BBRS’s website.
BBRS can accept complaints from businesses registered in England, Wales, Scotland and Northern Ireland, and will be able to consider disputes in the wake of the pandemic crisis.
It will consider complaints being raised by or on behalf of a number of corporate structures, including sole traders, limited companies, partnerships, trusts, charities and community interest companies. However, businesses must first have complained to their bank within the required timescales, giving them the opportunity to resolve the dispute.
Money-laundering directive
The Consultative Committee of Accountancy Bodies (CCAB) guidance for the EU’s Fifth Money Laundering Directive has been reviewed and refreshed. Some of the changes bring the accountancy sector guidance in line with others, such as the legal sector; other changes expand and enhance the existing material.
The main changes include:
- a new appendix of case studies that explain who the beneficial owners would be for a range of client types/structures, for the purposes of client due diligence (Appendix E)
- updated guidance on the identity verification required for a range of client types for client due diligence purposes (Appendix B)
- expanded list of red flags of money laundering or terrorist financing when identifying and risk assessing a client
- expansion of the ‘reasonable excuse’ defence for failing to make a suspicious activity report. This now includes situations where all the relevant facts are in the public domain, or law enforcement is aware of all the relevant details. This is to bring the guidance in line with the legal sector
- dealing with the situation where a defence against money laundering request is neither granted nor refused by the National Crime Agency.
Read the updated guidance.
Are you MLTF secure?
Every accountancy firm must have policies and procedures for managing its money laundering and terrorist financing (MLTF) risks. This ensures a focus of resources on the areas of greatest risk.
Per the Money Laundering and Terrorist Financing Transfer of Funds Regulations 2017, a firm-wide risk assessment must be conducted and documented. This must be considered when creating or updating a firm’s policies and procedures. ACCA has created a firm-wide risk assessment factsheet and other guidance to help practitioners.
It is also vital that firms regularly check financial sanctions information by, for example, reviewing countries on the government’s sanctions list.
In addition, fraud and business risk areas need to be reviewed, and policies and procedures updated, in light of available information, such as that provided by HMRC or Companies House, with regard to activity that may impact on certain business sectors.
Cybersecurity
The National Cyber Security Centre (NCSC), with the assistance of ACCA, has commissioned independent research organisation Ipsos MORI to carry out a short online survey with accountancy sector organisations to explore their views on cybersecurity. The findings will inform the Cyber Security Threat to the Accountancy Sector 2020 report, to be published by the NCSC later this year.
SRA updates
Updated Solicitors Regulation Authority (SRA) guidance for accountants highlights when and how it would be appropriate for law firms to take money for their costs, especially anticipated costs (both the firm’s fees and disbursements).
The guidance should be read by reporting accountants, as planning and work programmes will need to be altered. The SRA is clear that the guidance is designed to help:
- plan what work might need to be undertaken and how to ensure that client money is properly safeguarded
- assess what factors might lead the accountant to decide that the report should be qualified and therefore submitted for further consideration of the risks posed.
Read the SRA’s guidance for reporting accountants and guidance for law firms.
