Rest assured, by Tom Lewis

7 Jun 07
The imminent new money laundering regulations have spurred on CIPFA's plans for a practice assurance scheme for self-employed members. The basic framework will be decided at the AGM

08 June 2007

The imminent new money laundering regulations have spurred on CIPFA's plans for a practice assurance scheme for self-employed members. The basic framework will be decided at the AGM

CIPFA's AGM on June 12 will decide on an important set of proposed changes to the institute's bye-laws. These are designed to pave the way for the introduction of a practice assurance scheme for our self-employed members. This is a relatively small but increasing group of the membership. Employment trends in the public sector mean that many more members might move into self-employment in the future.

The institute has been considering the need for a practice assurance scheme for some time, to reflect changes in the regulatory environment and to bring CIPFA into line with other accountancy bodies in the UK and internationally. In particular, one of our obligations as a member of the International Federation of Accountants is to make arrangements for quality assurance of the CIPFA membership.

Now matters have been brought to a head by the European Union's new Money Laundering Directive, which will be implemented into UK law by the end of the year.

The institute has a responsibility to provide viable arrangements that will enable its members to comply with these new requirements. The formal responsibility for implementing the regulations in the UK falls to Revenue and Customs. However, the accountancy institutes and others can apply to R&C to be recognised as supervisory bodies, and that requires a practice assurance scheme.

Without one, CIPFA members in practice would have to register with R&C unless they were also members of other institutes. R&C's powers are likely to be extensive. For example, it will be able to require individuals to make themselves available to inspection on demand, and it will have the right to enter premises. It would also charge a fee, although the level has not yet been advised.

There are therefore very strong reasons for having a practice assurance scheme in place by the time the money laundering regulations take effect, and ensuring that its scope meets the definitions in the regulations. Although these have yet to be finalised, the indications in the government's draft regulations are that a scheme would need to cover many activities that CPFAs in practice undertake, including consultancy. We will review the final regulations in detail to ensure the CIPFA scheme is framed to meet those requirements.

In considering how best to implement a scheme, we had two main options: develop our own or adapt one already run by another accountancy body. Because of the complexity of the issues and the relatively small number of members involved, the bespoke approach would have been significantly more expensive for members.

We have therefore focused on the alternative approach and identified the scheme run by the Institute of Chartered Accountants in England and Wales as having the best fit and being the most cost-effective. The proposed fee levels — £200 a year for 2007 — compare favourably with those charged by the other members of the Consultative Committee of Accountancy Bodies.

The bye-law changes proposed at the AGM provide no more than a framework, and much detail remains to be decided. Work so far has concentrated on adapting the ICAEW scheme to the needs of CPFAs and on the required changes to the bye-laws.

After the AGM, we will turn our attention to the detailed design of the scheme and its governance. It is here that we are looking for help from members. We are setting up a new practice assurance panel to take us through the implementation stages and into the operational phase. This will be made up of equal numbers of members in practice, general CIPFA members and lay members.

As well as supervising the detailed scheme design, approving applications for practising certificates, and dealing with issues arising from the review visits, the panel will be an invaluable source of advice on providing support to members in practice and making adjustments to the scheme in the light of experience.

We want to take forward the detailed design and implementation of the scheme with input from those directly affected to ensure that their concerns are addressed. So we would like to hear both from members who are interested in volunteering for the panel and from those with queries and suggestions about the scheme.

Tom Lewis is assistant policy and technical director at CIPFA. The AGM will be held in Bournemouth on Tuesday, June 12. To comment on the scheme or volunteer for the panel, contact the dedicated e-mail helpline: [email protected]

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