Audit Insure Briefing 9 09

Kerryh

Informations

• Publié par: Mazeg
• Nombre de lectures: 50
• Langue: Español

Extrait

Welcome MynameisKerryHenryandI’mtheoriginatorofthemoderndayauditinsuranceproductsavailableto accountancyfirms.MybackgroundinAuditInsurancedatesbacktothelate1980’s. I’mactingtodayinthecapacityasa Corporate Authorised Representative of Apex Insurance Brokers (AFSL 236871) with a large number of accountancy firms, across Australia, as long term clients. AuditInsure™originsdatebackto1998andoffersthewidestscopeofcovercurrentlyavailableinthe AustralianmarketplaceandisunderwrittenbythehighlyratedandrespectedQBEInsurance(Australia) Limited(‘QBE’).AuditInsure™isexclusivelydistributedbyUnderwritingAustraliaPtyLtd(‘UAPL’)via licensedinsurancebrokers. AuditInsure™isthepreferredauditinsuranceproductrecommendedtoaccountancyfirmsandtheir clientsbythemajorityofinsurancebrokersacrossAustralia.Whilstthisisthebestindependent testimonialpossible,havingnumerousaccountancyfirmsasclientssince1998isafurtherendorsement. AboutAudit Insure™ AuditInsure™coversauditsofpreviouslylodgedreturnsaswellascomplianceauditsundertakenby StateandCommonwealthGovernmentAgenciesthatadministeranyformoftax,duty,workers compensationorsuperannuationfundsandcontributions. AuditInsure™isofferedona‘blanket’basis(‘allclientsin’)or‘declaration’basis(‘clientopt‐in’). Thereareseveralwaysthiscanbeachievedofflineoronline.I’lldiscusstheoptions*anddetermine whichbestsuitsyourpracticesoastoachievemaximumclienttake‐up.(*Ifanaccountancyfirmwants toreferinterestedclients,wecansetupauditinsurancecoverona‘clientbyclient’basis.) Sufficetosay,yourfirmisneartotallyremovedfromtheongoingprocess.ThePrivacyActstipulates initialclientcommunication,however,thereaftertherestoftheadministration;stationaryandhandling costsareoutsourcedtorelatedcompany,AuditServicesPtyLtd.Yourfirmhas24/7websiteaccessto viewclientstatusatanytime,plusreceivesmonthlyactivityreports. Accountancyfirmsaregiventheopportunitytoincludeamargintocoveranyinternalcoststo communicatewithclients.Themarginispaidonbothnewandrenewedbusiness.Mostaccountancy firmsaddanominalamountsoastoachievemaximumclienttake‐up.Someaddanextraunitofcost nexttimetheyarebillingtheirclientforgeneralaccountingactivity. Formany,thefinancialrewardcomesfrombeingabletofullyrecoverhoursandcostsincurredinaudit activity. AuditServicesPtyLtdhasalsoestablishedtheirownAuditInsure™policythataccountancyfirmscan utilisefortheirclientsiftheydon’twishtoestablishtheirownAuditInsure™policy. Again,Icanaddressthevariousoptionswithyourfirmatthetime.

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FSRA compliance QBE’sAuditInsure™policyisfullyFSRAcompliant.Referhttp://www.auditinsure.com/qbecl.pdf. ConsistentwithQBE’sobservationatthestartofFSRAin2004,ASICinlate2006ratifiedthatproviding auditinsurance,aseithera‘blanket’(allclientsin)or‘declaration’(clientsopt‐in),wasdeterminedtobe an‘incidentalcomponent’oftheaccountingserviceandthusnotincontraventionofFRSAprovisions. AnaccountancyfirmcandistributeauditinsurancetoclientswithouttheneedforFSRAlicensing.Refer http://www.auditinsure.com/asic.pdf.PleasenotethatASIC’sratificationhasequalapplicationtoany auditinsuranceproductofferings,asoutlinedabove.Pleasebewearyofanypartythatclaims otherwise. What’s the upside? Foraccountancyfirms? Zerocoststoestablishandnearzerocoststoadminister,astheprocessisoutsourced. ClienthastoengagetheaccountancyfirmtoaccessthebenefitsofAuditInsure™. Reducedclientangst. Higherlikelihoodthatclientswillengagetheaccountancyfirmonotherauditrelatedmatters thattheywouldtypicallyavoidonthebasisoffeesbeingincurred. Fullyabletorecoverhoursandcostsincurredinauditactivity,plusfewerwrite‐offs. InvoiceQBEandbepaidwith3‐5businessdays.Improveddebtormanagementandenhanced cashflow. Otherthantheinitialclientcommunication(typicallyundertakenbyemail)allotheractivitiesare outsourced.There’snofurtherhandlingbytheaccountancyfirm;nostationaryorpostagecosts; nooperationalsoftware;andlimitedinvolvementofbusystaff. Whilsttheprimaryfocusshouldbeon‘clientsign‐up’(keepingthecostaslowaspossiblewill assist),there’stheopportunityforanongoingrevenuestream. Forclients? Accesstopaidprofessionalassistance. Reducedangst. Nostressoncashflowtopayunexpectedaccountancyfeesresultingfromunplanned governmentaudits. Audit Insure 9 09 2

What’s covered? What’s not covered? What’scovered? Professionalfeesincurredtoassistaclientrespondtoan‘audit’ofapreviouslylodgedreturnora ‘complianceaudit’undertakenbyaStateorCommonwealthGovernmentAgencythatadministerstaxes, duties,superannuationorworkerscompensation,plusfeestocompileandsubmittherelevantclaim. What’snotcovered? 1. Dishonestyorfraud. 2. Anyamendedassessment,finesorpenalties. 3. Auditsonreturnslodgedmorethan3monthsafterprescribeddatesoranyauthorised extension. 4. Knowncircumstances. 5. Anyactivitiesinvolvingmoneylaundering;foreignsourcedincomenotproperlydeclared;orthe useoftaxhavensorthelike. 6. Complianceauditsundertakenforthepurposeofanentitymaintainingitsmembership, subscription,registration,operatinglicense,OHSstatusetc. How doesAudit Insure™differ? Policyappreciation AuditInsure™shouldbeviewedasaformofa‘financialguarantee’. AccountancyfirmsneedtotakealongertermviewofhavingaAuditInsure™policythatwillallowthem tofullyrecoverhoursandfeesincurredinclient‘audit’and‘complianceaudit’activity,subjectofcourse toclaimsfrequencyandseverity. WhilstAuditInsure™coversotherprofessionalfeecosts,i.e.,obtainingalegalopinionetc.,accountancy firmshavetheoptiontolimitprofessionalfeestotheirservicesonly.Thisisonthebasisthat(a) establishingtheAuditInsure™policywasprimarilysothattheaccountancyfirmisthebeneficiaryand (b)theinclusionofotherprofessionalfeescostswillimpactontheoveralllossratioi.e.,other professionalsmaybenefit,whilsttheaccountancyfirmispenalisedbyapotentialadverselossratio. Ouraccountancyfirmclientsbenefitfromour15+yearsofspecialisationinAuditInsurance.

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Scopeofcover Indifferencetomarketofferings: Auditautomaticallyincludesanexamination,inquiry,investigation,questioning,revieworaudit of(a)yourclient’sactivitiese.g.,anOSRaudittodetermineifyourclientispayrolltaxcompliant and(b)anyreturns/declarationspreviouslylodgedbyyourclient.Auditalsoincludeswherean auditisconductedforthesolepurposeofdeterminingifanytaxordutyliabilityexistsorlevyif anyfineorpenaltyshouldbeimposed. Professionalfeesincurredcontinueuntilthesuminsured,nominatedforthatclientforthe relevantperiod,ofinsurance,hasbeenexhausted.Coverdoesn’tstopwhenafinalassessment isreceivedor12monthsaftertheauditcommenced.There’snotimerestriction,including whereacasemaybere‐openedinthefuturebasedonarulingchange. GovernmentAgencyreferstothoseagenciesoverseeingtaxes,duties,superannuationand workerscompensationpremiums.Withworkerscompensation,thisalsoincludesworkers compensationplacedwithprivateinsurersinTasmania,NorthernTerritoryandWestAustralia. Allclientsincluded‐allindividuals(andtheirspouseorpartner,irrespectiveofthesizeor sourceoftheirincome),trusts,superfunds(irrespectiveofmembersize),anytradingor businessentitiesandthelikearecovered. Progresspaymentswithoutanyqualifications(timingoramount)ordiscretionarywaiverson progresspayments,however,QBEisn’texpectingTaxInvoicesfornominalamounts. Noculpability. Missedclaims.Ratherthanlimitlatenotificationto30daysaftertheexpirydateforclaimsthat shouldhavebeenreportedduringthepreviousperiodofinsurance,wheretheAuditInsure policyisrenewed,the30dayperiodiswaived,buttheamountpaidoftheclaimislimitedto 75%.Yes,mistakescananddohappen. What level of sum insured is best? Notwosituationsarethesame,soit’simpossibletoprovideapreciseanswer.

However,overthemanyyears,claimshistorydoesprovidesomeguidance.Ifthesuminsuredselected isn’tultimatelysufficientforoneormoreauditsthatmayoccurduringthesameperiodofinsurance, comfortcanbetakenthatthemajorityofprofessionalfeesincurredwillbepaid.

Theselectedsuminsuredissharedbythe‘Namestobeinsured’listedbelowandisinclusiveofGST. DirectfamilymembersandcommonmajorityownedentitiesthatformaClientGroupshareaselected suminsuredthatisdependentontherangeofexposuretovariousgovernmentagenciesandthe complexityoftheClientGroup’sfinancialaffairsandstructure.

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AuditInsure™cancoverallindividualclients(although,maynotsuitpurewageandsalaryearners), trusts,superannuationfundsandtrading/notforprofitentitiesetc.upto$50mturnover/revenue.For clientsover$50mturnover,it’sbesttheyhavetheirown‘standalone/tailored’policyastheirneedswill bemoredetailed.Thesamescopeofcoverapplies–referwww.auditprotect.com.au. Suggested‘shared’SumInsuredsfollow.Refer#belowforadditionalguidance.

SumInsureds

$5K$10K$15K$20K$25K$30K$35K$50K

 1. Individualx1   2. Individualsx2  3. Individualsx3   4. Individualsx4   5. Individuals+Trust   6. Individuals+Trust+SMSF   7. Selfemployed   8. Selfemployed+Trustand/orSMSF   9. 1.to6.above+businessupto<$500Kturnover   10. 1.to6.above+businessupto$1.5Mturnover   11. 1.to6.above+businessupto$2.5Mturnover   12. 1.to6.above+businessupto$5Mturnover   13. 1.to6.above+businessupto$10Mturnover   14. 1.to6.above+businessupto$15Mturnover   15. 1.to6.above+businessupto$20Mturnover   16. 1.to6.above+businessupto$30Mturnover   17. 1.to6.above+businessupto$50Mturnover

#thereasonfor2options,inmostcases,recognisesdifferingclientneeds.SomeIndividualsmayhavemore investmentsorseveraltrustsoralargermemberSMSFthanothers.Somebusinessesmayhaveseveraltrading entities.Ifindoubt,we’drecommendthehighersuminsured.Notethat‘Individuals’aresamefamilyordirectors ofthesamebusinessandlistedbusinessesarecommonmajorityowned.)

Excess and pricing Thereisnilexcess. Pricingisdeterminedbythe‘shared’SumInsuredselected. Asanexample,‘BloggsClientGroup’consistsof‘MrBloggs,MrsBloggs,BloggsSMSF,BloggsSmall Businesswitha‘shared’SumInsuredof$10,000,theannualpremiumis$305. RememberthatAuditInsure™coversboth‘auditoflodgedreturns’and‘complianceaudits’.

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Claims Theclaimsprocessissimpleandtransparent,withclaimsinvoicedtoQBEandpaidwithin3‐5business daysfollowingreceiptofrequireddocuments. Oncetheaccountancyformorclientreceivesnoticeofan‘audit’(inthebroaderdefinition),a ClaimsAdviceiscompletedandforwardedwithacopyofthe‘audit’notice. Theaccountancyfirmproceedstomanagethe‘audit’usingtheinternalresourcestypicalforthe typeof‘audit’andchargesstandardhourlyrates.RememberthattheAuditInsure™policy needstobeproperlyused,asanyinflatedcostswillimpactthelossratiowhichdeterminesthe levelofpremiumsorthecontinuityoftheAuditInsure™policy. Oncetheauditiscomplete,werequireaTaxInvoicemadeouttoQBE;WIPswherethefeesare over$1,000;plusacopyofthefinalletterfromtherelevantgovernmentagency.QBEmay requireadditionaldocumentstoaccesstheclaim. Where‘audits’arelongdated,progresspaymentscanbemade. QBEhasanexcellenttrackrecordinpayingclaims,howeverfromtimetotime,claimsarisethatare subjecttofurtherquestioning,whichcandelaythesettlementprocessorareultimatelydeclinedasa resultoftheapplicationofapolicyexclusion. Overthelast10years,QBEhasencounteredanumberofclaimdifficultieswhereaccountancyfirm clientshavebeenencouragedtosign‐upforinsurancecoverwiththeknowledgethatcircumstances haveemergedthatwillleadtoanauditoccurring,i.e.,alargerthanusualGSTortaxrefundortaxloss;a significantcapitalgainevent;clientswheretherelevantgovernmentagencyhasalreadycommunicated theirintenttoinvestigatetheiraffairs;company/phoenixrestructuring;clientsidentifiedasaudit targetsasaresultofapracticeaudit;etc. Inonecase,apartnersignedupjust12ofhisclientsand10wereshortlyaftersubjectedtoaudits,with mostclaimsrejectedduetocircumstanceslikethoseoutlinedabove.Sadly,theseclientswereleftwith anunexpectedclaimoutcomeandtheaccountancyfirmwithanumberofuneasyclientrelationships. Thankfully,the1,000’sofpaidclaimsandpositiveoutcomesfaroutweighsthesmallernumberof problematicclaims. How do clients sign up? Sincethelaunchoftheoriginalproduct10yearsago,anumberofvariationshavebeentrialledto maximiseclienttake‐up,whilstatthesametimerelievingaccountancyfirmsoftheneedtobeinvolved intheongoingadministrationprocessorincurringhandlingcostssuchasstationary,receipting,banking, payments,personneltime,clientsupport,etc. Mostaccountancyfirmshavearangeofclientservicedeliveryoptions,i.e.,annualcontractsorad‐hoc billingetc.Havingastandardisedapproachsimplywon’tdelivermaximumclienttake‐up.

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