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ATTENTION ACCOUNTANTS: Failure to comply with changes to the TAA could land you in trouble with the taxman

by , 19 August 2013
If you're an accountant, be warned. You must comply with the recent changes to the Tax Administration Act (TAA) or prepare to face harsh penalties. Read on to discover what these changes are so you can get up to speed and comply.

If there's one thing SARS doesn't tolerate, it's non-compliant behaviour.

This means if you're an accountant and aren't compliant with the recently introduced changes to the TAA, you'll face the full might of the law.

Are you aware of what the changes to the TAA mean for you as an accountant?

If you're an accountant, the new legislation requires you to register with SARS and a controlling body. Failure to register is a criminal offence.

According to Act, any person providing advice on the application of a tax act, or who completes or assists with completing a tax return, should register with SARS and a controlling body.

Nicolaas van Wyk, CEO of the Southern African Institute for Business Accountants (SAIBA) cautions that these changes have far-reaching implications for you as an accountant.

'The Act does more than just regulate the conduct of tax practitioners. A careful reading of the TAA will reveal that SARS is empowered to monitor and control the complete financial reporting supply chain. Criminal liability is allocated to a wide range of areas, and is not limited to only the information reflected on a tax return and submitted by a tax practitioner,' said van Wyk in a statement.

This means since you as an accountant, as well as the bookkeeper, accounting officer, independent reviewer and auditor are all involved in the financial reporting supply chain of any business, you may be held criminally liable if you've assisted a business to unduly avoid, postpone or evade taxes.

'It's therefore not only tax practitioners who are affected by the TAA. The fact is that generally, tax practitioners rely on the work performed by the bookkeeper, accountant and auditor to determine a business's tax liability,' says van Wyk.

In terms of the changes to the Act, SARS can also demand a new 'statement of account' from you as an accountant if you've prepared financial statements for a business or taxpayer.

In this statement, you'll have to explain how you prepared the financial statements and whether the financial statements reflect the true nature of any transaction, receipt, accrual, payment or debit. If you make a false statement, you'll be held criminally liable.

That's why it's crucial that you apply the correct accounting framework when preparing financial statements for your clients.

You can no longer use a 'don't ask, don't tell' approach when preparing financial statements, warns van Wyk.

In fact, van Wyk says if you have reason to believe the financial information presented to you by your client has been prepared recklessly, is incorrect, inconsistent or has been prepared without the required diligence, you have a legal duty to rectify the non-compliance or resign as the client's accountant.

Here's how to ensure you comply with the TAA

Van Wyk advises you do the following to stay on the right side of the TAA:

  • Inform your clients about the duties that have been imposed on you by the TAA;
  • Implement engagement procedures to mitigate the potential risks; and
  • Update your knowledge of accounting standards.

The bottom line: 'The TAA has changed the relationship between the accountant and his client. In order to protect themselves accountants will be forced to remove any emotional attachment to their clients and adopt a much more formalistic and legalistic approach,' concluded van Wyk.

If you're a business owner, it's also in your best interest to keep your books in order. This'll go a long way in ensuring your accountant complies with the TAA.

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