Accountant's Report

Principals, Partners and Directors (PPDs) whose company handles client money—or entrusts the handling of client money to an unnamed Client Accounting Service Provider (CASP)—must have their client account inspected as part of their membership. This is achieved through providing an Accountant’s Report or by undertaking the Letting Partnership’s financial ‘HealthCheck’.

PPDs must provide an Accountant’s Report or HealthCheck for every company they are legally responsible for. This must be done on an annual basis and within six months of the company's financial year-end.

Reports must be completed by a chartered or certified accountant who is a member of one of the Financial Reporting Council's Recognised Supervisory Bodies (RSBs) and has a practicing certificate. The accountant must not have a connection to anyone at the company during the accounting period stated in the report.

Eligibility

An Accountant’s Report or financial HealthCheck is not required if your company is regulated by RICS or the Law Society of Scotland. If you have Client Money Protection (CMP) with Money Shield, an Accountant’s Report or HealthCheck will not be required until your CMP expires.

Where client funds are held subject to the Estate Agents Act 1979, the Accountant’s Report must be completed by a registered auditor as per section 1239 of the Companies Act 2006. This refers to pre-contract or contract deposits in connection with the purchase of landed property or a connected contract. This does not apply if you only hold client funds in connection with lettings.

Client money must be held in a bank or building society regulated by the Prudential Regulation Authority (PRA) with permission to accept deposits under the Financial Services and Markets Act 2000. More info...

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New companies and PPDs

Submit an Accountant’s Report immediately if your company has not had an accounting year-end since handling client money or since starting to use a CASP. The report needs to cover the period from when your company began handling client money (or began using a CASP) up until the present day (interim report).

Your accountant should complete as many of the 17 tests on pages 1–3 of the Accountant’s Report as they can, and complete at least one reconciliation.

PPDs applying for membership (and current members whose newly acquired company has already had an accounting year-end) will need to submit a report immediately for the company's most recent financial year.

Client Accounting Service Providers (CASPs)

My company uses a CASP

If you entrust client money to another company to manage, you must still belong to our Client Money Protection (CMP) scheme and your CASP must regulated by us at Propertymark or by RICS. The CASP must be the only firm with the ability to make payments/withdrawals from the client account.

IS THE CASP CLEARLY IDENTIFIED IN YOUR CONTRACTS?
Provided the CASP handles all your client money and is clearly named in your both your terms of business and tenancy agreements, you do not have to provide an Accountant’s Report. This is because liability for your client funds will lie with your CASP and not fall back to your company. The CASP’s legal name must be clearly identified in all references to client money. If they are not identified on your contracts, you will need to provide an Accountant’s Report for client money entrusted to them upon joining and annually thereafter.

My company is a CASP

To act as a CASP for a company regulated by Propertymark, your company must also be regulated by Propertymark or by RICS. This means you need to become a member of Propertymark and will be subject to our membership rules and company obligations. In addition you must:

own and have sole control over each client account
keep client money in a specifically designated client account for each company you handle client money for
receive client money directly to your designated client account
submit an annual accountant’s report for all the client money your company handles
supply your member client with a copy of bank statements from the client account at least monthly
hold professional indemnity insurance with no exclusion or limitation in respect of fraud or dishonesty (fidelity cover relating to any third party's own money may be limited or excluded)
have a minimum limit of indemnity of £2m in respect of any one claim