Planning and risk based work profile assessment

PROCESS AIM: To tailor, in the most efficient and risk appropriate manner, the work to be undertaken for every client within Silverfin.

The introduction of Silverfin provides the opportunity to adopt a base standard approach to our work that can then be varied to match the clients circumstances and requirements, and our assessment of the assignment risk. For the purposes of this note we do not cover the approach to tax work which is separately assessed in the Tax Risk Assessment reconciliation (see here for corporates).

Our approach in Silverfin is:

Task to be carried out for all clients: Planning

1) Check Perm Info reconciliation, some of which will be automatically populated from the central database or just require reviewing after the first year. Please note that some of the remaining reconciliations in planning will be blank until the questions in this reconciliation have been completed as they are used to tailor the questions in the rest of planning. 

2) Review Points brought forward from previous year (if any)

3) (Corporates) Complete Statutory Information reconciliation, using automatic download from Companies’ House, but noting any differences as notes on file to be resolved by updating Companies’ House (using First Order) or noting differences on Silverfin (where changes not possible)

4) Upload key document to Silverfin (unless already there from previous year) comprising signed accounts and (corporates) tax comp from previous year and any pre year end planning notes/notes of meeting

5) Complete Work programme – Planning. This is a mix of statutory or standards enforced tasks and risk assessment for that client, aiming to effectively define the work to be undertaken on that client for that accounting period. 

Compulsory questions to be addressed include competence assessment, deadlines (statutory and client), financial (are we still owed fees and what are recovery levels), check letter of engagement is within 3 year and covers task to be carried out, standard money laundering and KYC checks.

There are then a series of general risk questions that are replicated below that are aimed to highlight what work we should actually assess in the Preparation workflow phase:

  1. Were there any points forward from the prior year which need to be considered in the current year accounts preparation?
  2. Are there any areas of complexity which need to be highlighted: e.g. defined benefit schemes, share based payments, financial instruments?
  3. Are there any indication that the company may not be a going concern?
  4. Has there been any major changes in the business, industry, regulatory requirements, organisational structure or accounting systems or any other key events in the accounting period or expected within the foreseeable future?
  5. Key Issues Anticipated - This section should cover any other key matters to be addressed not dealt with above.
  6. Expected Significant Judgement Areas - This section should include any anticipated judgement areas which require to be documented at the planning stage and concluded on within the completion memo.
  7. Perform Correspondence Review and speak to Partner for additional information.

All of the above should then be taken into accounts and used to assess:

  1. Specific additional tasks to be undertaken for that client such as analysis of repairs and renewals
  2. The general approach to the other work to be performed.

This should then be used to complete the following:

a) Overall approach – note if and how we are to deviate from the standard approach to the work (see below). We provide further guidance on this assessment in this separate note on client specific risk factors here.

b) Key issues – specific tasks (not covered below by specific questions) so may cover odd capitalisation policy, UITF 40 revenue recognition, long term contracts, manufacturing WIP/finished goods valuation, warranty provisions, investment provisions, goodwill impairment, unusual depreciation rates, history of cut off errors, etc

c) Specific questions on areas such as what level of materiality should we apply, should we carry out a reconciliation of VAT outputs per returns to turnover, agree which profit and loss items require review. whether we prepare a budget for the work, etc

The overall logic to risk and assignment approach should be summarised in the Planning notes/memo at the end of the reconciliation which may be one para in the text box for simple clients or the ability to attach longer documents. Please do not duplicate here any matters specifically covered in the rest of the planning reconciliation.

Preparation – standard tasks for average client to be tailored in light of above

The base approach we take in Silverfin in that the below tasks should be undertaken for an average client. These should then be tailored and any differences from this noted under in the Work Programme – Planning reconciliation.

1) Review profit and loss and balance sheet analytical review reconciliations (where auto populated) at a suitable level and assess if any additional work is required or points for manager/clients.

2) Complete working paper reconciliations for all material balance sheet items, so where relevant: 

a) supporting schedule for stock (and use LoR)

b) complete fixed asset register where appropriate (extract/copy invoices into Silverfin)

c) extract aged debtor and creditor lists and review for older/negative balances

d) calculate/confirm material accruals/prepayments

e) reconcile VAT account and final balance

f) confirm bank reconciliation (and loans, etc) to statements

g) split HP, loans <1 year and > 1 year for companies

h) reconcile PAYE account and end balance

i) reconcile DLAs/capital/current accounts and confirm as appropriate (and use LoR/prepare schedules for client as needed)

j) prepare corporate tax calculation or tax working papers for sole traders/partnerships

k) reconcile dividends and ensure all paperwork is in order

l) reconcile share capital and shareholders (should be just rolled forward from previous year)

3) Only complete profit and loss analysis/reconciliations for those areas identified during planning. 

Other tasks 

To complete planning within Silverfin, the checklists within Planning and Completion must be assigned to the relevant manager and partner and then the individual reconciliations in Preparation workflow stared/unstarred as defined in the above process. This is explained in the video guide on planning here. We are working with Silverfin in setting up a more tailored starting approach here, but as a starting point please refer to this guidance as a default starting point.