Responding to an official enquiry instigated by the Australian Taxation Office (ATO) on behalf of your client can be time consuming. It is a frustrating time for your client and as their accountant, they look to you to help them respond to their situation. Having a proven tax audit insurance offering in place not only ensures that you are compensated for your time, it ensure that you will not need to pass on additional fees to your client – so you can put the needs of your client first and foremost.
With a proven tax audit insurance offering you are able to focus solely on what is best for your client, align the interests of your firm and your client, maintain your integrity, uphold your client relationship, and avoid placing your firm at risk. Importantly, you do not have to worry about compliance concerns that may affect your firm.
Aligning the interests of your firm and your client
Place yourself in your clients’ shoes. Imagine a scenario by where you have been selected for an audit by the ATO. You are unsure of what the protocol is and you contact your accountant asking them what comes next.
Your accounting firm has a proven tax audit insurance offering in place – Audit Shield. You opted to accept this coverage when it was last offered. Your accountant explains that any additional fees would be covered and that there is no additional payment necessary for them to respond to the audit.
Switch back to your accountants perspective. You know that since your firm has Audit Shield in place you don’t need to worry that part or all of your time won’t be compensated for assisting your client. You can focus 100% on your clients’ needs, without considering the financial burden on you and your firm.
Considering a non-conventional tax audit insurance solutions, such as self-insurance puts your firm in direct conflict with your clients. In essence, this model is marketing a need to your clients that your actions of self-insurance clearly indicate, on the whole, a need that you do not believe exists.
Integrity maintains client loyalty
One very important characteristic that someone wants to ensure any business has that they deal with, is integrity. Your client wants to be sure that any offering that you are presenting to them is in their best interest. Having profit making as the primary motivation behind a tax audit solution would seems opportunistic at best or aggressive at worst by clients.
Although every accountant would argue that despite the fact that any audit response for their clients reduces the profit that they would be making on a self insurance model, they will never compromise the level of work they would do, do the clients feel the same way? If the audit finished up with a negative adjustment, could the client wonder whether the firm did everything they could for them, or because the firm was doing that work for “free”, they may not have. The perception of the client often runs second to the intention of the accountant.
Audit Shield is a no net cost/no loss offering. No net cost because the client’s pay your firms in advance to participate, and no loss because doesn’t matter what sort of year the firm has with numbers of audits, your firm never loses as their fees will be covered. There is never an incentive to not do your best and utmost for your clients.
Clients should always come first
Your clients are your most important asset and the needs of your clients should always come first. The more you help your clients, the more you should be able to charge them. A self insurance offering flips that paradigm into the realm of the less you do for your client the more you make. This is a dangerous slope to slide.
Just like audit activity is unpredictable, as is the amount of work that you will need to put in when responding to a client that is being scrutinised. If you ask your client what they really want then it is likely they will want to ensure that all services you are offering them are truly value for money and is one that puts them first.
Why placing your firm at risk for a financial return isn’t worth it
Conventional tax audit insurance is proven, highly valued and comprehensive. Other, less conventional methods, such as self-insurance requires accounting firms to take the commercial gamble that they have collected enough upfront fees from their clients to fund their obligations to cover the fees for their clients. What if there is a shortfall?
We are not saying that a profit isn’t important but considering implementing a non-proven tax audit insurance solution that isn’t backed by a prominent underwriter, with a dedicated claims team may end up costing you and your client more in the long run.
What do the clients think they are buying
Doesn’t matter how it is dressed up, whether you want to call it a retainer, a guarantee, a warranty, or even a compliance plan, the nature of the underlying offering is still an enforceable right by a client to be indemnified, based on terms and conditions, up to limits, for an event that is outside the control of the accountant and the client. The firm is at risk of either potentially acting as an insurer in breach of the Insurance Act and the Corporations Act, or at the very least are ignoring the possibility for it to be still a financial product.
Accountancy Insurance’s Audit Shield, is the long-standing, proven tax audit insurance solution for accounting firms that eliminates risk, aligns the interests of your firm and your clients, maintains your integrity, and mitigates compliance concerns. When including a tax audit insurance solution into your suite of offerings, Audit Shield is the safe bet.
Director, Accountancy Insurance