CH3- Practice governance Flashcards
Business structure
Members are recommended to have a memorandum of understanding or other governing document setting out the basis on which their business will be conducted and any arrangements between principals
Practice names
Firms name must comply with partnership and company law
Should not convey an unprofessional image
Name should not be misleading
Practice brand
Must comply with legal requirements as to names of partners, principals and other participants
Comply with practicing designation guidelines
Not advertise and specialist service unless the firm has relevant expertise
Should be of a suitable professional standard
Temporary incapacity of a sole practitioner
Member is recommended to have suitable arrangements to allow firm to continue in event of illness or temporary incapacity
Should consider whether firm has sufficient resources to meet obligations in absence, or whether they should be discharged by another firm, under a prior arrangement, or by a locum practitioner
Member should ensure that replacement as sufficient experience and expertise to act and that they have adequate insurance for their work
Death or permanent incapacity of sole trader
Ensure there are suitable arrangements in place for future management of firm
Arrangement should be in a written agreement and provides duration and extent of responsibilities and nature of legal relationship
Take legal advice
Business continuity plan
Ensures continuity of business in event of serious incident such as fire, flood, major IT system or security failure, terrorist incident
Dissolution or merger of practice
Notify to all clients to allow them to decide whether they wish to continue instructing new practice
Ensure appropriate professional indemnity insurance remains in place
Member should consider taking specialist legal advice in respect of assignment of engagements and other contractual matters
Cessation of practice
Liability in respect of services provided continues after member has ceased to practice and continuing professional indemnity insurance must be arranged
Retiring partner advised to consider obtaining indemnity from continuing partner claims made against him after retirement
Regulated investment business activities
Financial services and market act 2000- defines regulated activities
For an activity to be a regulated activity, it must be carried on ‘by way of business’
Members of firms which are DPBs (designated professional body) can offer certain exempt regulated activities
Can comment on suitability of product recommendations but not recommend alternative products
The ATT/CIOT are not DPBs- they can give general advice on making certain investments but cannot comment on specific product recommendations- to do so would be an offence
