Terms of Engagement for Compilation of Financial Statements and Privacy Act Authority and Other Services
GENERAL TERMS OF ENGAGEMENT
- Thank you for agreeing to work with Nesti Chartered Accountants Limited (“Nesti”). This letter sets out our Terms of Engagement for our services. You will have agreed to be bound by these Terms & Conditions when you authorised Nesti to be your Tax Agent or to perform other work.
- We provide several types of services in our practice and we are bound by different professional rules depending on the nature of the work we undertake. In some cases, professional rules may not apply to particular services or individuals however in that event we will apply appropriate standards to our work that will be based upon equivalent standards to the most similar type of work covered by a professional standard.
TERMS OF ENGAGEMENT FOR COMPILATION OF FINANCIAL STATEMENTS (TERMS OF ENGAGEMENT)
- The purpose of this letter is to outline our understanding of the terms of engagement and the nature and extent of the accounting and business services we provide to our clients and to comply with the recommendations issued by Chartered Accountants Australia and New Zealand (CA ANZ).
- We provide a full range of service options, some of which you may wish to consider for the future, which include but are not limited to:
- To work with you on developing and growing your business so that it reaches your objectives and longer term goals. This may include business coaching, helping with developing business and marketing plans, setting regular financial or production bench marks, preparing cash flow and trading budgets, and assisting in monitoring your progress.
- The preparation of financial statements on an annual basis for the calculation of your taxable income.
- Preparation of GST returns and trading results on a regular monthly, two monthly, quarterly or six monthly periods, cash flow forecasts and budgeting.
- Keeping you informed on significant changes to tax and other business related legislation.
- Advising methods and ownership structures that will legally minimise your taxation payable.
- Completing your income tax return from information provided by you.
- Assisting and advising on the appropriate type of accounting recording system that is suitable to your business.
- Company administration services, including registered office facility.
- Trustee services, including independent Trustee.
- Company liquidations.
- Business valuations, and advising on buying and selling businesses.
- Personal financial planning.
- Some of the above services may be covered by a separate agreement e.g. liquidations, valuations.
FINANCIAL STATEMENTS AND REPORTS
- We will prepare interim management reports as well as your annual financial statements from information provided by you in accordance with Service Engagement Standard No 2 (SES-2) Compilation of Financial Statements issued by CA ANZ.
- As required by the Service Engagement Standards, we will include a Compilation Report with the Financial Statements including the following disclaimer:
On the basis of information you provided we have compiled, in accordance with Service Engagement Standard No. 2: Compilation of Financial Information, the special purpose financial statements of XYZ for the year ended 31 March 20xx as set out on pages x-x. These have been prepared on the basis disclosed in the notes to the financial statements on page x.
You have determined that the basis upon which the financial statements have been prepared is appropriate to meet your needs and for the purpose that the financial statements were prepared. The director is solely responsible for the information contained in the special purpose financial statements and has determined that the financial reporting framework used is appropriate to meet your needs and for the purpose that the special purpose financial statements were prepared.
The financial statements were prepared exclusively for your benefit. Neither we nor any of our employees accept responsibility on any grounds whatsoever, including liability in negligence, for the contents of the special purpose financial statements to any other person.
No audit or review engagement undertaken
Our procedures use accounting expertise to undertake the compilation of the financial statements from information you provided. A compilation is limited primarily to the collection, classification and summarisation of financial information. Our procedures do not include verification or validation procedures of the information. No audit or review engagement has been performed and accordingly no assurance is expressed.
- A compilation engagement requires us to apply compilation procedures, in accordance with SES-2 Compilation of Financial Information, to compile the Financial Statements from information you provide to us. Those compilation procedures do not include the performance of an audit or review in respect of either the information you provide or the financial information compiled from it. Accordingly, neither we, nor any of our employees, accept any responsibility for the reliability, accuracy or completeness of the information from which the financial information has been compiled.
- The financial information is prepared at your request and exclusively for your benefit. Neither the director nor any employees of Nesti accept any liability of any kind whatsoever, including liability by reason of negligence, to either yourself or to any other person for losses incurred as a result of placing reliance on the compiled financial information.
- The Compilation Report and Disclaimer does not diminish our professional obligations and duties. It advises third parties of the duties we have performed. Our compilation service does not include an audit or review engagement and accordingly no assurances will be expressed by us. Each page of the financial statements will be conspicuously marked as being unaudited.
- It is understood and agreed that you will provide us with accurate, complete and timely information necessary to compile such statements. You acknowledge and accept responsibility for all records and information supplied. You also acknowledge and accept responsibility for any failure to supply all relevant records and information.
- The responsibility for the accuracy and completeness of the assertions in the financial statements remains with you.
- Financial Statements for Trusts, Partnership and Sole Traders will be prepared according to the requirements of the Income Tax Act and may not be appropriate for other purposes.
- Financial Statements for Companies will be prepared according to the appropriate financial reporting standard and principles under the Financial Reporting Act and Financial Reporting Order 1994, or the Special Purpose Framework for use by For-Profit Entities if eligible.
- It is not intended that our engagement be relied upon to prevent or detect fraud and error. Responsibility for such prevention and detection remains with you and your management. If anything of this nature does come to our attention during the preparation of the financial information we will inform you of this.
- We will prepare the financial information and reports for the intended use of yourselves and Inland Revenue taxation purposes. You will need to advise us of any changes to the intended recipients of any financial reports.
- You will attach our Compilation and Disclaimer Report if and when distributing the financial statements to third parties.
- Unless stated otherwise in the Terms of Engagement, any advice or opinion relating to the services is provided solely for your benefit and is not to be relied upon by any other party.
- Independence is not a requirement for a compilation engagement such as this. However, the CA ANZ Code of Ethics requires us to act objectively and to be, or seen to be, independent. If we are aware that our independence may be compromised for whatever reason, we will disclose this in the financial report.
- Any working papers that we prepare while working on your information will remain the property of Nesti.
In addition to compiling the financial statements we also perform the following services as required:
We will prepare annual company resolutions for shareholders and directors as required by the Companies Act 1993.
MAINTENANCE OF STATUTORY RECORDS
We understand that we will be responsible for the maintenance of the following statutory records when we are appointed as the Registered Office for your company, unless otherwise instructed in writing by you:
- Register of Members
- Register of Directors
- Register of Directors’ Shareholding
- Register of Directors’ Interest
- Register of Charges – PPSR
- Minute book – shareholders’ meetings/resolutions
- Minute book – directors’ meetings/resolutions
- Other statutory records as required
FILING OF RETURNS WITH THE REGISTRAR OF COMPANIES
We understand that our office will be responsible for the preparation and lodgement of the annual return as required when we are appointed as the Registered Office for your company, unless otherwise instructed in writing by you. On advice from you we will also update the Companies Office records for any changes to company details.
ANNUAL IMPUTATION RETURN
We will prepare and file the Annual Imputation Return in conjunction with the company’s income tax return (if applicable).
For those clients for whom Nesti Trustees Limited is the independent Trustee, we will be responsible for the preparation of the minutes of the Trustees’ annual meeting. We will maintain the Trust records including details of trustees, beneficiaries, and deeds completed and liaise with your solicitor as required. For other clients, trust administration is available upon request.
INCOME TAX PLANNING AND RETURNS
- We will also assist you with tax planning and discuss options with you in order that you are able to make an informed decision so you may decide upon the proper course of action. We will prepare income tax returns for you and any associated persons you approve and from additional information you provide in writing. We will assist you to understand the importance and risk of signing these income tax returns as being true and correct statutory records.
- Where you elect to use the estimation provisions in relation to taxation payments, we will advise you of the effects of such an election. Any Use of Money Interest charge due to incorrect estimation would be your responsibility.
- You authorise us to act as your tax agent with Inland Revenue for all tax types and associated entities.
- Our service includes the following:
- The use of our firm’s address for Inland Revenue to serve tax assessments and notices and it will be our responsibility to check these tax assessments.
- We will advise the amounts and due dates for tax payments in a tax advice letter and/or email.
- We will provide you with every assistance in meeting your obligations but any advice on payments or reminder letters received from us should be reviewed by you to check that the payments appear reasonable and the date of payment is correct.
- There will be an annual fee for this service – this will not exceed $50 plus GST per entity.
- It will be your responsibility to ensure that payments are made on time.
- Any penalties arising from lateness, errors, wrong estimation or any other reason are payable by you.
GOODS AND SERVICES TAX RETURNS
- We will prepare the GST returns if requested, from information supplied by you. We will be replying upon you to obtain and keep all relevant GST tax invoices for the required period of time.
- It is understood that you will provide all the necessary information and records at least 10 working days prior to the date for filing the GST returns to enable the preparation of the returns to be both true and correct.
- We will sign the GST return as agent. If, for whatever reason, we or any of our employees are exposed to penalties for doing this, you will indemnify us for these penalties. We will endeavour to reconcile your GST returns to your financial statements.
Our payroll service undertakes to prepare the PAYE returns required from information supplied to us. We will sign the PAYE return as agent. If, for whatever reason, we or any of our employees are exposed to penalties for doing this, you will indemnify us for these penalties.
FRINGE BENEFIT TAX
We will prepare returns based on information supplied to us and sign the return as agent. If, for whatever reason, we or any of our employees are exposed to penalties for doing this, you will indemnify us for these penalties.
- We will assist you in preparing notices of responses including advice on how to approach a particular dispute and receive instructions from you.
- We will provide representation if requested for discussions and/or meetings with Inland Revenue.
- We will advise you on options that may be available to you in any dispute with Inland Revenue.
- The nature of tax disputes may require us to ask for payment up front to cover disbursements and ours or other specialist fees in which case our Standard Terms are hereby amended to reflect this section of our Agreement.
DEPARTMENT OF STATISTICS RETURNS
We are to prepare Department of Statistics Returns as requested.
CONSULTANCY AND ADVISORY
We can assist you with various Consultancy and Advisory Services, including business planning, acquisitions, structures, financial, forecasting, taxation advice, succession and estate planning as required.
We will perform the function of a liquidator to the required statutory requirements. Liquidation work is subject to our Consent to Act being given in writing and other provisions as set out in our terms and conditions for liquidation work.
TIME TABLE FOR COMPLETION
We aim to provide you with an efficient and timely service and a completion date can be discussed if required. Generally, we aim to complete annual financial statements within three months of receiving all the relevant information.
CA ANZ requires practitioners to be subject to review from time to time in order to ensure that Professional standards are being maintained. Reviews are based on sample files and specific client files may be selected by the reviewer for examination. The reviewer is officially appointed by CA ANZ and is bound by declarations of secrecy, making sure that confidentiality is maintained. Furthermore, the reviewer is the only person from CA ANZ who has access to your records, and no copies are made, but the review could include anonymous reference to information provided by you. If you have any questions about practice review, please do not hesitate to contact us.
OWNERSHIP OF DOCUMENTS
It is agreed that ownership of all documents supplied by you to assist in the performance of our professional services shall remain your property. All documents produced by us in the performance of our services, such as workpapers, shall remain our property. It is agreed that the above has no effect on our rights to claim a lien over books, records, accounting records, accounting software records and databases and any other documents supplied by you or generated by us as part of carrying out services for you.
For the avoidance of doubt, Nesti retain the copyright in work performed for you, and you may not reproduce it or sell it to others for personal financial gain. Should you replicate any Nesti work or document you agree to pay Nesti’s rendered fee for that service, such fee to be determined at the sole discretion of Nesti.
LIMITATION OF LIABILITY & INDEMNITY
In consideration for Nesti agreeing to act as your professional services provider and perform any services covered by this agreement, no claim for direct or indirect damage against us in respect of any services provided shall in any case exceed the fee rendered for the services in respect of which such damage arose.
In consideration for Nesti agreeing to act as your professional services provider and perform any services covered by this agreement, you agree to indemnify Nesti against all claims of any kind brought by any person or entity in connection with any services provided to you.
We confirm our understanding that the adequacy and extent of your insurance covers are regularly reviewed by brokers/insurance companies and discussed with you by them and that we are not responsible, nor liable, for this function.
INSTRUCTIONS & PRIVACY MATTERS
- We may require information from you to be able to action your instructions. Any information that you give us is treated as confidential and is used only in your matter. However, we may also need to disclose this information to contractor third parties in so far as they are providing services for us to complete your instructions. We will get an understanding from contractor third parties to keep your information confidential.
- We may also need to provide information to various government agencies or third party agencies responsible for processing applications and other instruments associated with completing your instructions. Such agencies may or may not keep such information confidential depending on their statutory and policy requirements. If divulging your information to these agencies is problematic in your particular circumstances, we need you to inform us of this ahead of time.
- We will not disclose to you confidential information which we have in relation to any other client.
- We do not accept responsibility and will not be liable for any direct, indirect or consequential damage or loss caused by errors or omissions in information provided by third parties, even if we subsequently rely on that information in actioning your instructions. This extends to information provided by government agencies.
- We hold professional indemnity insurance that meets or exceeds the minimum standards specified by CA ANZ.
- Both Nesti and you agree to the use of electronic technology as set out in section 16 of the Electronic Transactions Act 2002 for the purposes of communications between us. This means that all relevant provisions of the Electronic Transactions Act 2002 will apply. In particular, you consent to receiving documents signed by electronic signature from us in terms of section 22.
- You authorise us (without further reference to you) to destroy all files, documents and data in your matter (other than any documents that we hold in safe custody for you and have indicated that we hold in safe custody for you) 7 years after our engagement ends, or earlier if we have converted those files and documents to an electronic format.
- Nesti will become your tax agent and will enter required details onto the Inland Revenue website for tax agent’s client management.
- If you enter into any form of credit arrangement, including any monthly payment plan with Nesti, then you are deemed to have authorised Nesti to carry out credit checks and credit maintenance. You irrevocably authorise Nesti to pass on any information Nesti has collected on you to Veda Advantage. You understand that: Veda Advantage will give Nesti information about you for that purpose; and Nesti will give your personal information to Veda Advantage, and that Veda Advantage will hold that information on their systems and use it to provide their credit reporting service; and when other Veda Advantage customers use the Veda Advantage credit reporting service, Veda Advantage may give the information to those customers; and Nesti may use Veda Advantage’s credit reporting services in the future for purposes related to the provision of credit to you. This may include using Veda Advantage’s monitoring services to receive updates if any of the information held about you changes; and if you default in payment obligations to Nesti then Nesti may pass on information about that default to Veda Advantage, and Veda Advantage may give information about your default to other Veda Advantage customers.
- You authorise any third party to provide to Nesti any information requested of them by Nesti that is or may be relevant to Nesti in carrying out its obligations to you under any instructions received from you.
OUR FEES & PAYMENT
- Payment may be made direct to our bank account as indicated on our invoices. Please ensure you record the name of the account you are paying.
- We will invoice our services to you on a monthly basis, or on termination or conclusion of a matter, or if work is likely to take some time or is ongoing, then interim invoices may be sent to you. As we are sometimes required to make payments on your behalf during the course of your work, you may be asked for sufficient funds to cover the costs of these payments before they are made. Services include written and oral advice.
- Any account queries must be brought to the attention of Nesti in writing within 10 days of invoice/statement date. Any queries after this date will incur an administration fee of $50 plus GST.
- If you are likely to have difficulty meeting any account please discuss this with us so that we may endeavour to make arrangement to suit your circumstances.
- Payment is required on or by the 20th day after the date of invoice unless otherwise agreed or stipulated on our invoice. We reserve the right to charge interest of 2% monthly on accounts remaining unpaid 30 days after the account is issued. You will indemnify us and pay all costs and expenses on a solicitor/client base if legal action is necessary, and/or Collection Company’s fees, which may be incurred in recovering from you any overdue amount. Any reminder letter/statements may be charged at $20 plus GST each.
- Our services are invoiced based on a number of considerations. These include the time spent on each assignment, its complexity and its importance to you, urgency, and the degree of skill, knowledge and responsibility involved. Therefore our hourly rate is only a guide to our final fees, and is not the only factor we take into account in fixing the amount we charge you.
- An example of minimum hourly (or part thereof) rates, exclusive of GST, are:
Administration and secretarial support $60
Accounting software (e.g. Xero, MYOB) support $80
Accounts and income tax preparation $150
Tax and specialised advice $250
- The time it takes us to complete work varies from case to case. We will endeavour (but do not guarantee) to complete the work by an estimated deadline. However, it may not be possible to meet such a deadline, depending on the complexity or nature of the work involved. We are also not responsible for the time taken by third parties and government agencies to complete their parts of work done for you.
- We do not invoice disbursement for small volumes of printing, photocopying, postage, stationery and other administrative expenses. Rather, such costs are covered by an Office Service Charge billed annually with your accounts and tax preparation invoice.
- Some services (e.g. liquidations) require payment up front of a deposit and further costs may subsequently be incurred in which case you agree to pay us those subsequent costs.
- If you have a dispute regarding our fees you should in the first instance contact us. If the dispute remains unresolved, you agree to the matter being submitted to either CA ANZ for review by their fees resolution service (whose decision is final) or referred to The Disputes Tribunal division of the Auckland District Court (to be heard in Auckland).
UNPAID ACCOUNTS AND FRUSTRATION OF INSTRUCTIONS
- You undertake not to frustrate the completion of your instructions by, for example, not acting in a timely manner or not providing the necessary information for us to complete your instructions. If you unreasonably frustrate our efforts to complete your instructions, we reserve the right to invoice the full amount for the instructed work even though your instructions may not have been completed.
- If your account remains unpaid and there is no satisfactory explanation for non-payment, then in addition to our other rights as set out elsewhere in this Agreement it is agreed that Nesti has the right to claim a lien over books, records, accounting records, accounting software records and databases and other documents supplied by you or generated by us as part of carrying out services for you until all accounts are paid, start proceedings for the recovery of the amount owed plus interest plus collection costs and legal costs on a full indemnity basis, and do no further work for you. This may mean that we will not file certain records with government agencies and that you may incur penalties form that government agency in which case we will not be liable to you for those penalties. We may list a default with credit reporting agencies; refer to the Privacy Section of these Terms of Engagement.
- You may terminate our services and authority to act for you at any time in writing. This does not apply to liquidation work. If our services or authority to act for you is terminated, you must pay us all fees due up to the date of the termination and all expenses incurred up to that date before we will pass your records and documents including any accounting software records and databases onto your new tax agent and/or accountant or to you. If you are a Xero subscriber and we have provided you with access to Xero then we will work with your new tax agent on the transfer of records.
2. If we are the registered office for your company and you terminate our services, you acknowledge that you are required to pass a director’s resolution changing the company’s registered office and address for service and give effect to such change. You authorise Nesti to amend the details at the Companies Office to the address of your new advisor or to your residential address if you fail to do this, though we are under no obligation to monitor this matter.
- Failure by us to enforce any of the terms and conditions contained in this contract shall not be deemed to be a waiver of any of the rights or obligations we have under this contract. Furthermore, if any provision or item of this contract fails, all remaining provisions shall stand enforceable between the parties.
- Any personal guarantee made by any third party shall not exclude you in any way whatsoever from the liabilities and obligations contained in this contract. You shall be jointly and severally liable with any guarantor under the terms and conditions of this contract. If you are a company or trust, your director(s) or trustee(s) shall be jointly and severally liable with you to us for the performance of all obligations including but without limitation payment to us of all monies due to us for the provision of services.
- We shall not be liable for delay of failure to perform our obligations arising from any Act of God or if the cause of the delay or failure is beyond our control.
- You agree to receive various electronic correspondence from us from time to time including, but not limited to, newsletters.
- These Terms of Engagement and any other agreements we have with you are governed by New Zealand law and are subject to the exclusive jurisdiction of the New Zealand courts. You agree that any dispute will be filed and heard in the relevant court or tribunal at Auckland only.
- We are entitled to change these Terms of Engagement from time to time. The current version of our Terms of Engagement is posted on our website at nesti.co.nz. It is your responsibility to download a copy of the Terms of Engagement. Your continuing to use our services is deemed acceptance of the current Terms of Engagement.
Singular and Plural Terms: Singular words in this Agreement include, where appropriate, the plural and vice versa.
References: References to “us”, “our” and “we” are references to Nesti and its agents and employees. References to “you” and “your” are references to the entity(s) signing these Terms of Engagement and include your successors and permitted assigns, and its agents, authorised officers and employees.
Joint and Several Liability: If the entity signing these Terms of Engagement comprises more than one person or entity then each such person or entity will be jointly and severally liable on all of the covenants under this Agreement.
Headings: The headings and subheadings in this Agreement are for convenience only and will not affect the construction of the terms and conditions of this Agreement.
Nesti Chartered Accountants Limited