Module 2 Research, Communication & Professional Obligations
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Transcript of Module 2 Research, Communication & Professional Obligations
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EDUCATINGSUPPORTINGREPRESENTING
www.charteredaccountants.ie
Module 2Research, Communication & Professional Obligations
Chartered Tax Consultant
Patricia Quigley18th/19th January 2013
1
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Learning Objectives• Research
• Communication
• Professional Obligations
• Money Laundering
• Methods for tax planning /compliance
• Coherence/RelevanceRevenue; Client; Other professionals
• Understand/ ImplementEthical responsibilities
• Applying MLO as a Chartered Accountant
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Introduction• Development of Professional Skills• Focus on application of these skills to tax
practice• Tax Research is an integral part of all tax
work• Research outcome must be
communicated
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Introduction• CAI Professional Standards – including
Risk Management• Money Laundering – CAI Guidance• Criminal Justice (Money Laundering and
Terrorist Financing) Act 2010• CA obliged to incorporate ML and RM into
daily professional activities
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Research Skills
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Research Skills
• Do you put off starting your research?• Is the deadline looming and your fear
growing?• Control your fear and improve output• Learn and practice a methodical approach
to research• Know where to access tax information
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Tax Research and RM
• What makes it easier for you if you are the reviewer?
• Report and file structure?• Cross references to research material• Always imagine yourself as the reviewer
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Research
• Same approach for all tasks• No task too trivial• Keep asking questions• Ask more questions
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Research Responsibility
Person• Delegator?• Person assisting? • You?• Same answer for
keeping up to date?
Person Responsible• NO• NO• YES• YES
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Risk Management
• Enron collapse and scandal• US SEC Investigation• Sarbanes-Oxley Act 2002 (SOX)• Public Company Accounting Oversight
Board (PCOAB)• Other countries followed US
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Risk Management
• Understand the RM procedures of your organization
• RM developments – CAI, legislation and regulations
• Incorporate RM into your daily work as a CTC
• Keep up to date with developments
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Key Reports on RM
• OECD GAP003www.oecd.org/dataoecd/36/0/1908440.pdf
• OECD Managing and Improving Tax Compliancewww.oecd.org/dataoecd/44/19/33818656.pdf
• EC Taxation and Customs Union Risk Management Guide for Tax Administrations
http://ec.europa.eu/taxation_customs/
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RM Procedures
• Know Your Client Procedures (KYC)• New client identification• Engagement Letters• Anti Money Laundering procedures (AML)• File maintenance• Controls over tax compliance work• Peer Reviews
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RM – Staring a New Task
• Consider RM for each assignment• The file is yours for the duration of task• You are responsible for RM• What are your RM checks at
commencement?
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RM “Personal” Checks• File• Engagement Letter
• Understand?• Assistance?• Training?• Deadline?• Tax compliance
• Set up and sections?• Current, signed and
cover the work?• Anything not clear?• Is help needed?• Training needs?• Realistic?• Is a database needed?
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Importance of Risk ManagementExample Proper Procedures Inadequate Procedures
Revenue issues a demand for surcharge for late filing. Client queries why it issued
Client databaseUp to date
Copy of letter to client re payment and due date on file
Compliance database not updated due to time pressure
No hard copy of letter found. Soft copy on system.
Client disputes fee Singed EL on file setting out fee for the work
Signed EL on file. Negotiation of fee needed if additional work. No evidence of agreeing extra fee.
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Negligence?
• Tax advice may be correct• More likely that RM left until last• Time pressures• “Too busy” is not sufficient• Methodical and daily RM needed
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Risk Management Summary
• Who takes responsibility for RM?• How often?• Should you change your habits?• Expect high standards when reviewing• Be methodical• RM is for all tasks – however “simple”
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Research – Getting Started
• Questions and Listening• Understand the purpose of the research• What “product” is expected from you?• Prepare well at the beginning• Methodical structure• Incorporate RM
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Listen and Question• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Who ? Client; Revenue; Colleague; 3rd Party Professional; Appeal Hearing?
Form? Written; Oral Presentation; Slides/Handouts?
Position? Neutral observer? Summarise findings
Defending? Particular stance with evidence to back it
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Process – Why?
• No research process = ?
• Emphasis on end product only• Conclusions reached too quickly• RM not put in place
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Research Steps
1. Deadlines for steps and delivery2. Notebook for recording ideas3. List of sources4. Use previous knowledge5. Brainstorming – use colleagues
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Research Process Overview
• Gathering information• Researching tax issues – sources• Useful websites• Drafting and completing the written advice
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Jigsaw Analogy
• Casting a wide net• Sifting methodically• Select relevant parts• Disregard the rest
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Tax Research
• What is the primary source for your research?
• TAX LEGISLATION
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Tax Legislation
• Commentaries may be valid but not for all situations
• Daily habit of using tax legislation• Start with issues you know• Read legislation as “new” each time• Use latest version of legislation• Read entire section(s)
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Tax Legislation Example
• Is orthodontic work tax deductible?• Section 469 TCA 1997 – YES• What else did you learn?• Relief at standard rate from 2009• Nursing home at higher rate• References to Tax Briefing 50
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Tax Legislation
• Direct Tax Acts– Provisional Collection of Taxes Act 1927– Interpretation Act 1937– Waiver of Certain Tax, Interest and Penalties
Act, 1993– Interpretation Act 2005– Taxes Consolidation Act 1997 (TCA 1997)
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Tax Legislation
• Stamp Duty Legislation– SDCA 1999
• Capital Acquisition Tax Legislation– CATCA 2003
• Law of Value Added Tax– VATCA 2010
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Secondary Research SourcesRevenue Material •Revenue Staff Instructions
•Published Precedents•E Briefs/Tax Briefings/SOPs•Technical Guidelines•Codes of Practice
Case Law •Authoritative interpretation of Law•Irish Court decisions•UK Case Law•Irish Tax Reports/Digests/Irish Law Reports/BAILII
The Client •Read the file•Ask Colleagues•Website•CRO
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Secondary Research SourcesMagazines •CAI Weekly Newsletter
•Tax. Point•Accountancy Ireland
Internal Resources •Technical memos•Precedents•Databases
EU Research Sources •EU Regulations•ECJ•EU Treaty – State Aid Rules
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Research - Websites
• Irish• www.irishstatutebook.ie/home.html• www.revenue.ie• www.gov.ie/departments• www.gov.ie/oranisations• www.egt.ie/misc/nuachtain.html
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Research - Websites
• EU• http://ec.europa.eu/taxation_customs/inde
x_en.html• http://ec.europa.eu/community_law/introd
uction/treaty_en.html• International• www.oecd.org
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Research - Websites
• UK• www.hmrc.gov.uk• www.tax.org.uk• www.direct.gov.uk• www.opsi.gov.uk
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Research - Websites
• US• www.irs.ustreas.gov• www.taxsites.com• www.sawguru.com
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Drafting the Report
• Bits of the jigsaw are fitting together• Whole picture not yet appearing• Document and track the information• Are there gaps? Review again• Note your questions – ask now or later?• Research must support your conclusions
and recommendations
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Writing the Report
• Jigsaw – corner pieces now in place and sides joined up
• Clear where remaining pieces will fit• Stand back – “ask a friend”?• Join together legislation, case law and
other sources• Analysis must withstand scrutiny eg
Revenue
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Final Checks
• Layout and content• Conclusions – are they clear?• Does summary reflect main points?• Proof reading by a colleague• Sources and references included• Scrutiny check carried out?• Finalise your professional communication
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Communication Skills 1• Conversation• Listening
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Communication Skills
• Form?
• Conversation = ?
• Conversation• Body Language• Visual• Written
• Combination of above
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Communication Skills
• Meaning?• Communication =?• Sharing information
is?
• Examples ?
• “common” or shared• Sharing Information• At the heart of what a
tax professional does• Preparing tax comps• Company restructure
advice• Tax projections for
business plan
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Communication Skills
• “Effective communication is assisted by building a rapport with clients, colleagues, shareholders and other relevant stakeholders and creating a shared understanding”
• Paragraph 2.3.1 Module 2
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Communication Skills
• Focus on three skills
• Conversation• Listening • Writing
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Diagram / Chart
• Building rapport• Shared
Understanding• Effective
communication
Communication
Conversation Listening Writing
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Conversation
• 2/3rds of conversation spent on social topics
• Helps us to relax• Result is more effective communication• How to use this in your work?
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Conversation in Your Work
• Look for a common interest• Ask questions about a shared situation• Avoid “rattling” on about yourself• Put the other person at ease• Lead into the tax issue at hand
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Work at Conversation
• Technology has reduced workplace conversation
• Conscious effort needed • Talk with colleagues as well as clients• Sharing of valuable work related
information
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Plan for Conversation
• Timing• Time limit?• Informal agenda• Common ground• Summarise
• Body Language• Notes
• Check with other• Is there a time limit?• Informal• Find some• Throughout and at
end• Be aware/interpret• Memory aid/file note
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Arguments
• Is an argument developing?• No hard and fast rules• Rapport lost and must be rebuilt• Have privately held beliefs taken over?
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Arguments - tips
• Professional responsibility – act in a professional manner
• Stick to the facts• Avoid personal beliefs• Be honest • Ask questions• Use listening skills and remember the
long term client relationship
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Listening Skills
• Talking comes easier than listening• Our minds are trained to be active• Train the mind for new practices• A quiet mind is not a “switched off” mind
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Listening – Quieten the Mind
• Mindfulness as a tool• Stop and listen • Fleeting moments of no internal
conversation• Try it – look out the window and stop the
noise for a moment
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Listening
• Finishing other’s sentences?
• Filling pauses?
• Formulating your response?
• Interrupting?
• Stop and let them finish
• Stop – do not fear silence
• Stop – your turn will come
• Stop – the other person will stop
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Representing Your Clients
• Develop your listening and conversation skills
• Listening is foundation stone for negotiating
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Representing Your Clients
• Revenue Audit• Understand the client’s concerns• Share full information with client on audit• Put your client at ease using conversation
skills• Listen to all views and have yours listened
to
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Money Laundering
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Money Laundering
• Criminal Justice (Money Laundering and Terrorist Financing) Act 2010
• CCAB-I GuidanceM42 Revised• Customer Due Diligence Requirements
under CJA 2010
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Overview• Money Laundering a world wide problem• 1991 EU legislation• Ireland – CJA 1994• CJA 2010 since 15/7/2010• EU Directive 2005/60/EC (3rd ML Dir)• CCAB-I Guidelines M42 Revised
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Accountants and Tax Advisors
• Tax advisors and accountants within scope of CJA 2010
• Must carry out CDD procedures• Risk based approach• Ongoing monitoring of client relationships• Risk sensitive basis
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Accountants and Tax Advisors• Retention of ID records for at least five
years• Retention of original/copies relating to
transactions for five years• Adoption of measures to prevent and
detect money laundering, includes training
• To provide staff training on AML
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Reporting Requirements
• Report suspicions of money laundering offences to Garda and Revenue
• Known as Suspicious Transaction Report (STR)
• Report all transactions connected with “Designated States”
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What is Money Laundering?
• Section 7 CJA 2010• “property that is the proceeds of criminal
conduct”• Involved in concealing, disguising,
converting, transferring, removing the property
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Money Laundering
• Sec 6 CJA 2010• Criminal conduct defined• Conduct that constitutes an offence• Broad definition• Includes “saved costs” form illegal acts• Tax Evasion included • No de minimis
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Terrorist Financing• CJA 2005 • Offence of financing terrorism• Designated persons includes
accountants, auditors and tax advisors• Obliged to adopt measures to prevent and
detect TF• Sec42 CJA 2010 – reporting of suspicions
or knowledge of TF in same manner as ML
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ML Tipping Off
• Section 49 CJA 2010• Offence to make any disclosure that could
prejudice and investigation• Knowledge re external report• Disclosure re ML allegation or TF offence
committed or being contemplated
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CJA 2010 Penalties• Sec 7 and 9 CJA 2010
Money Laundering• Sec 33/42 CJA 2010
CDD/records/reporting• Sec 49 Breach -
Disclosure that may prejudice
• Sec 49 Tipping Off
• Max 14 years/fine
• Max 5 years/fine
• Max 5 Years/fine
• Max 5 years/fine
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AML Systems and Controls
• CJA 2010• Risk sensitive policies and procedures• Identification and scrutiny of:• Transactions which are large or complex;
unusual patterns with no apparent economic or lawful purposes
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AML Systems and Controls• CJA 2010• Prevention of use of products favouring
anonymity• Determination of Potentially Exposed
Persons• Customer Due Diligence• Record Keeping and Internal Controls• Staff Training
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Customer Due Diligence
• “Effective” CDD essential -CJA 2010• Cornerstone requirement of Act• Effort concentrated on higher risk areas• Risk assessed before appropriate level of
CDD applied
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Customer Due Diligence CJA 2010• When should CDD be carried out?
• Prior to:• Establishing business relationship• Carrying out a transaction >€15,000• Carrying out a service with real risk of ML
or TF• Carrying out a service where doubts of
previous ID information
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CJA 2010 CDD
• What must you implement?• Client Identification• Know Your Client Procedures• Ongoing monitoring• Risk Based Approach• Reporting Obligations
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CJA 2010 ML
• Monitoring of Designating Persons• Reporting Obligations STRs• Exemptions from Reporting• AML Guidelines CCAB-I M42 Revised
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Client Identification CJA 2010
Before entering a business relationship:• Identify and verify client’s ID• Using documents from reliably,
independent sources• Identify owners of client – ownership and
control and verify ID of beneficial owners• Obtain information on purpose and
intended nature of business relationship
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Know Your Client Procedures
• Establish name, permanent address and DOB of client
• Is client true beneficial owner?• Identify source and intended use of funds• Assess client’s business activity/pattern of
transaction• Is this appropriate in context of business?
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Know Your Client Procedures
• Risk assessment needed to determine level of information needed
• Face to fact contact with new clients• Original documents to be seen • Passports/Driving Licences• Utility bills to verify address
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Know Your Client Procedures
• Partnerships – identify at least 2 partners• Corporate Clients• Legitimate trading or economic purpose• Company search• Identify true beneficial owners• Identify 2 directors • Get list of directors >10% shares
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Know Your Client Procedures
• Quoted Corporate Clients less onerous• Stock Exchange in EU or listed countries• Certificate of Incorporation • Memorandum and Articles of Association• List of directors’ names, DOBs,
occupations and business address• Trusts/clubs/societies/intermediaries/agents
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Simplified KYC
• Sections 34 and 36 CJA 2010• Simplified basis of verification• Accumulated knowledge of client
sufficient to prove identification• Risk sensitive basis
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Ongoing Monitoring
• Accounting firms must monitor activity• Scrutiny of transactions and source of
funds• New information must be consistent with
other knowledge• Documentation to be kept updated
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Risk Based Approach
• Focus on clients and areas of higher risk• EU 3rd Money Laundering Directive• “…where there is the greatest risk of the
services of those legal professions being misused for the purpose of laundering the process of criminal activity or for the purpose of terrorist financing”
*Legal profession includes tax advice
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Monitoring
• Sec 60 CJA 2010• Designated persons subject to monitoring• Supervision and monitoring by a
“competent authority”• CARB is the competent authority for CA
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Reporting Obligations
• Who to report to?• Gárda Síochána and Revenue • Who reports?• Designated Person• Employees report internally • Accounting firm decide if reporting
needed• Firms must have reporting procedures
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Reporting Obligations
• What to report?• STR – Suspicious Transaction Report• All crimes reporting regime• Extends to all suspicions• Tax evasion = “proceeds”• Health & Safety breaches to save costs• No de minimis –petty cash/shoplifting
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Reporting Exemptions
• Legal Professional Privilege exemption stems from Article 20 3rd EU ML Directive
• Information received in “privileged circumstances”
• Exemption from making STR• Overridden where intention of furthering a
criminal purpose
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Reporting Exemptions• Article 21 3rd EU ML Dir extends LPP to
tax advisors• “ in the case of auditor, external
accountants and tax advisors who..may defend a client in the context of judicial proceedings or ascertain a client’s legal position, the information they obtain..should not be subject to the reporting obligations…”
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CTC Reporting Exemptions
• Distinguish between reportable and non reportable situations
• Qualifying Disclosure under Sec 1077E TCA 1997 is main exemption
• Intention to regularise tax affairs and reduce penalties
• Client relationship must exist
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CTC Reporting Exemptions
• Can apply to all forms of disclosure to Revenue
• Does not apply to ST in routine tax compliance work that is not acted upon
• Exemption overridden by intention of furthering a criminal purpose
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AML Guidance• CCAB-I Guideline M42 Revised• Submission for Ministerial approval• Sec 107 CJA 2010 – Court of Law takes
account of Guidelines• Take all reasonable steps and exercise
due diligence• Evidence of compliance is a defence• Serious legal, regulatory or professional
disciplinary if Guidance not followed
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Record Keeping• Sec 55 CJA 2010• Accountancy firms to keep records for 5
years from end of client relationship• Records showing evidence of procedures
applies• ID records/Beneficial Ownership• History of services and transactions• Good File Maintenance practices
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Communication Skills 2
Writing Skills
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Writing Skills
• Written communication• Primary communication tool for tax
professionals• Huge volume of e mails and reports• Technical ability and creativity plus• First class writing skills
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Writing Skills Overview
• General• Effective Writing
• Tax Assignments
• Methodical Approach• Plan/Draft/Review• Paragraphs/Sentences• Writing style
• E Mails• Letters• Language
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Before you Write
• Is writing the best form of communication for the task?
• Do not overuse e mail• Would a telephone call or meeting be
better?• Risk Management – always keep written
record
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Writing Tips
• Remember you will not be there to pick up misunderstandings
• Use suitable words for reader• Avoid long words where short will do• Max words in sentence = 25• State your ideas early• Paragraph for each new point
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Methodical Approach
1. Plan the document2. Use mind mapping3. Write the first draft4. Review and finalise the document
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Planning the Document
• What do you want the document to do?
• What action do you want reader to take?
• Explain; describe; suggest; outline; recommend; clarify; propose?
• Implement; review; chose?
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Stating the purpose
• State the purpose in the introduction• Simple language• “The purpose of this letter is to outline the
rules of residence for Irish tax purposes and to explain how they affect you for 2013”
• If more than one reader – focus on main reader
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Mind Mapping
• Draw or write main topic in centre of page• Use single words on related issues• Connect each word to main topic with a
line• Highlight and colour code for clarity• Identify groups and name each one• List groups in order of importance
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First Draft
• Identify a key point for each group of ideas
• Anticipate reader’s questions• Answer these in the document• KP = paragraph heading• Key points developed in each paragraph
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Reviewing and Editing
• Edit a hard copy• Review each paragraph for sentences
and choice of words• Does each paragraph have its own
message?• Use bullet points where these help
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Reviewing and Editing
• Sentences• Max 25 words• Split long sentences• Lists can shorten sentences
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Reviewing and Editing
• Words - check for:• Language v Reader• Another word with same meaning better?• Too much jargon?• Too many technical words?• Is punctuation effective?
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Writing Style
• It is developed over time• Note effective styles you come across• Adopt elements of good examples• Your writing should speak to the reader• Use real examples and apply to current
situation
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Writing and Tax Advice
• Presentation• Structure• Spelling and
Grammar• Flow• Tone
• Well presented• Well structured• No mistakes
• Logical• Professional
business tone
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Writing E Mails
• Is an E mail necessary?• Avoid over-use • Telephone instead?• Unintended offence can arise• Risk Management• Make guidelines and stick with them
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E Mail Guidelines
• Is e mail the appropriate communication?• Check the e mail for - four eye review• Too long? Attach a letter• Planning and layout – as for
letters/reports• Introduction, paragraphs and headings• Keep copies of “sent” e mails
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Letter/Report Writing
• Format• Drafting Paragraphs• Topic Sentences• Passive and Active Voice• Technical Language• First, Second and Third person
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Format• State purpose• Summary – can be at end• Background – include assumptions• Heading• Heading• Recommendations• Conclusion
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Drafting Paragraphs
• Take a break between drafts• One main idea per paragraph• Main idea contained in topic sentence• Topic sentence usually the first sentence• Connect new concepts by repeating the
word at start of next sentences
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Topic Sentence• Announces the topic of the paragraph• Makes a general point that will be
explained• Helps reader know what to expect• Helps writer to stay focused on subject• Each topic sentence has a controlling
idea
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Topic Sentence
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Topic Controlling idea
Writing reports can be a difficult task for several reasons
Playing the piano is a complex skill
that involves musical knowledge, a sense of harmony and hours of practice.
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Topic Sentences
• Controlling idea in topic sentence gives clarity to reader
• Reader will be clear on what to expect in the following sentences
• Review for central point of paragraph• If central point is “buried” – re write topic
sentence
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New Concepts
• Making a connection between items• Introduce item in sentence• Repeat item in next sentence• “Section 216A 1997 provides an
exemption for “relevant sums” derived from the letting of a “qualifying residence”. A relevant sum is one which…..”
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Passive and Active Voice
• Active voice more effective for tax communications
• Where do you want reader’s attention to be focused?
• Focus on “Who or What” = Active Voice• Focus on Information = passive• Active voice directs advice at client’s case
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Passive v Active Example
• Passive• Gift tax on the sale of
the business may qualify for relief if certain conditions are met
• Active• You will be entitled to
gift tax business relief if you satisfy the conditions set out in sections 90-102A CATCA.
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Technical Language
• Who are you writing to?
• High Use• Low Use• Medium• Identify category
• Identify Category
• Technical experts• Lay People• Non tax professionals• Adapt level
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First, Second and Third Person
• Letters can move between all three• Be aware of your use of each• Do not “jump” from one to another• Move logically and smoothly
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Stating Assumptions• Make your assumptions or conditions
clear• Advice is based on assumptions stated• Conditions must be met for consequences
to be certain• State assumptions at start• Conditions will feature throughout letter
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Professional & Ethical Obligations• Standards of Professional Conduct
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Code of Ethics
• Standards of Professional Conduct• Ethics and Code of Ethics• Five Fundamental Principles• Applying the Framework• Five Threats to FFPs• Complaints and Disciplinary Committees
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Overview• Chartered Accountants Regulatory Board• CARB• Standards of Professional Conduct• Code of Ethics• The Rules of Professional Conduct• Copies on www.charteredaccountants.ie• CHARIOT link
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Obligations
• Keep up to date with developments• Implement the guidelines in your work
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Ethics
• Ethics
• Morality
• Link
• Branch of philosophyFundamental nature of morality
• Ideal code of conduct
• Ethics as a general concept and CAI Code of Ethics
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Ethics
• CAI Ethics Resource Centre
• “..no one definition of ethics..no clear boundaries between ethics, business and practice issues”
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Ethics
• Heather Briers Director of CARB• “..it is important that we..are seen to ‘take
ethics to heart’…there is an expectation that chartered accountants observe high standards of conduct…to act in a manner contrary to their own personal interest.”
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Ethics
• Heather Briers Director of CARB• Factors to consider • Consequences of the action• Motivation of the action• Inherent “rightness” of the action
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Code of Ethics
• Framework for ethical decision-making• Code sets out Five Fundamental
Principles• Chartered Accountant has a responsibility
to act in the public interest• Compliance with the ethical requirements
of Code
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Code of Ethics
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Part A Fundamental Principles; Conceptual Framework; Guidance on Ethical Principles;Threats to be eliminated/reduced to comply with FPs
Parts B and C
B for public practice; C for businessApplication of Conceptual Framework to specific situations; Professional Appointment; Conflicts of Interest; Gifts; Expertise
Part D Insolvency Work
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Five Fundamental Principles
• Integrity• Objectivity• Professional Competence and Due Care• Confidentiality• Professional Behaviour
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Five Fundamental Principles
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Integrity Straightforward and honest in all professional and business relationships
Objectivity Bias, conflict of interest or undue influence of others not to override professional or business judgement
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Five Fundamental Principles
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Professional Competence and Due Care
•Duty to maintain professional knowledge and skill at required level•Client/employer to receive competent professional service based on current developments, legislation and techniques
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Five Fundamental Principles
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Confidentiality •Respect confidentiality of information received
•Non disclosure unless authorised or legal duty
•Information not to be used for personal advantage
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Five Fundamental Principles
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
ProfessionalBehaviour
•Comply with relevant laws and regulations and avoid any action that discredits the profession
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Fundamental Principles Examples• Risk Management Policies should take
account of five principles• Conflict of interest checks – takeover bid• Checks that required level of experience
and expertise allocated to work• Confidentiality checks – four eye reviews
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Your Obligations
• Putting safeguards in place to eliminate or reduce threats
• Comply with the Code• Implement appropriate practices• Attend training sessions• Consult the Code for guidance
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Conceptual Framework
• Part B of Code – examples
• Threats and Safeguards• Professional Appointment• Conflicts of Interest
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Threats and Safeguards
• Part B Section 200.3 to 200.16• Five Categories of Threat• Self Interest• Self-Review• Advocacy• Familiarity• Intimidation
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Threats and Safeguards
• Nature and significance of threats may differ
• Financial statement client• Non financial statement client• Tax client may be audit client
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Other Legislation and Regulation
• SEC Regulations• Sarbanes-Oxley Act• Anti Money Laundering legislation• Legislation and Regulations take
precedence where more stringent requirements
• Seek guidance from CAI
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Threats and Safeguards
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Self Interest
•Financial interest held by accountant in client, eg shares•Undue reliance on total fees from one client•Close business link with client•Concern about losing a client•Employment opportunity with client•Contingent Fee•Loans to/from audit client
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Threats to Safeguards
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Self- Review
•Significant error discovered by the firm•Financial systems designed by accountant being reported on by him•Member of assurance team has been a director of client•Member of assurance team has been employed by client with direct influence over engagement•Service performed for client that directly affects the subject matter of assurance engagement
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Threats to Safeguards
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Advocacy •Promotion of shares in a listed entity where the entity is an assurance client
•Accountant acting as an advocate on behalf of an assurance client in litigation or dispute with third parties
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Threats to Safeguards
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Familiarity •Close or immediate family relationship with a director or officer of the client•Same as above with employee of client with direct influence over engagement•Former partner is a director/officer of client or former employee able to exert influence•Account accepts gifts•Long association with senior personnel of assurance client
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Threats to Safeguards
• Point 1• Point 2• Point 3• Point 4• Point 5• Point 6
Intimidation •Threatened with dismissal or replacement in relation to a client engagement•Threatened with litigation•Inappropriate pressure to reduce fees
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Professional Appointment
• Code of Ethics Section 210• Clients have the right to chose and
change accountants• Accountants have the right to chose for
whom they act• Pre-acceptance checks for five threats• Illegal activities, money laundering,
dishonesty?
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Risk Management
• Know Your Client Procedures• Cover the five threats• Obtain an understanding and knowledge
of client, owners and management• Post appointment – regular checking• CJA 2010 – legislation now in place
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Competency
• Are you competent to perform the services?
• Is expert advice needed?• Legal advice/foreign taxes/investment
advice?
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Change in Appointment• Prospective accountant to determine if
there any reasons, professional or other, for not accepting engagement
• Existing accountant bound by confidentiality
• Care needed if suspicion/knowledge of money laundering or terrorist activity
• Prospective accountant responsible for obtaining information
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Conflicts of Interest
• Avoid• Competing directly with a client eg joint
venture with a major competitor• Performing services for disparate clients
who are in dispute• Use safeguards• Separate engagement teams/Chinese
walls/ Confidentiality agreements/Reviews
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Complaints and Discipline
• www.carb.ie• Complaints Committee and Disciplinary
Committee• Breach of bye-law or regulation• Failure to comply with Standards of
Professional Conduct• Discrediting Institute, self or accountancy
profession
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Disciplinary Action
• Breach of Fundamental Principle 4• Failing to deal with a client’s tax affairs in
a timely manner
• Breach of Fundamental Principle 5• Failing to respond to correspondence with
the client’s representatives
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Round Up
• Research Skills• Methodical Approach• Integrate Tax Research into daily work• Tax Legislation is primary source of
research• Risk Management procedures critical• File maintenance and documentation
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Round Up
• Communication Skills• Create shared understanding• Good communication = rapport• Conversation and Listening Skills• Representing your client• Effective writing skill critical• Writing is primary communication
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Round Up
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Round Up
• Ethical Guidelines - Keep up to Date• Standards of Professional Conduct• Codes of Ethics and Rules of Professional
Conduct• Five fundamental principles• Integrity/Objectivity/Professional
Competence/ due Care• Applying the Framework – Part B
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Round Up ML
• CJA 2010• CCAB-I Guidelines M42 Revised• Accountants and tax advisors within
scope of CJA• Procedures and Reporting Obligations • Definition of ML very wide – includes tax
evasion
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Round Up ML• Penalties and fines for failure to report
and failure to keep records• Tipping Off is an offence• Customer Due Diligence• Client ID/KYC/Monitoring• Risk Base Approach• STR and Exemptions• Record Keeping
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Learning Outcome
• You know how to do methodical research with emphasis on Risk Management
• Awareness of how to use Communication Skills
• Updated on Professional Obligations• Aware of your responsibilities to keep up
to date