HERBERT MORTON TERMS OF ENGAGEMENT
Financial Statements and Reports
We will compile your financial reports including your annual financial statements from information provided by you in accordance with Service Engagement Standard No 2 (SES-2) Compilation of Financial Information issued by New Zealand Institute of Chartered Accountants (NZICA).
We will compile Special Purpose Financial Statements to you for taxation and internal management use only and these statements should not be relied upon for any other purpose.
It is understood and agreed that:
a) You will attach our compilation report when distributing the financial statements to third parties;
b) The financial information will be prepared as a special purpose report for the Inland Revenue Department (IRD);
c) Due to the limited scope of the work performed in compilation, Herbert Morton Ltd cannot be relied upon to prevent or detect fraud, internal control weaknesses, errors, illegal acts or other irregularities. Of course, if anything of this nature does come to our attention during preparation of the financial information, we will inform you of this;
d) Herbert Morton Ltd will prepare the financial information and reports knowing that the intended use of these is for yourselves and IRD taxation purposes. You will need to advise us of any changes to the intended recipients of any financial reports. If you distribute the financial statements or other reports to any person without attaching to them the compilation report which includes our statement disclaiming liability, then you will indemnify us against all claims, actions, damages, liabilities, costs and expenses (including but not limited to reasonable legal costs and expenses) incurred by us and arising out of or in connection with any action, claim or proceeding brought by any third party in connection with the services provided by us to you;
e) Independence is not a requirement for a compilation engagement such as this. However, the CAANZ 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; and
f) For any Financial Statements or reports that we prepare a Compilation Report including a Disclaimer will be attached – this will be in the format specified in Appendix 1 to this proposal.
Tax Agency
You authorise us to act as your tax agent with the Inland Revenue Department for all tax types and associated entities to obtain information through all Inland Revenue media about all tax types (except NCP or CPR).
Penalty Tax Regime
The tax legislation imposes penalties as well as interest charges for tax short paid as a result of incorrect returns and late payments of tax. This legislation applies to all forms of tax – income tax, GST, FBT, PAYE, etc.
Generally the rules require a taxpayer to either have taken reasonable care or to have an acceptable interpretation if the penalties are not to apply. By using Herbert Morton Ltd to prepare your returns, it could be said you have taken the firm step towards that level of care, but it must be emphasised your obligations will not be fully discharged unless you provide all relevant information to us.
We will provide guidance and assistance so please do not hesitate to discuss any concerns you may have on this matter.
Confirmation
It is appreciated that from time to time you may desire a change in the scope of work to be undertaken by us, in which case your timely advice would be appreciated.
The arrangements outlined in this proposal will continue in effect from year to year unless we agree to change them. Any alteration to these terms will be confirmed in writing.
Know your customer
From 1 October 2018, all New Zealand accounting practices became subject to New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Where we are required to conduct customer due diligence, this Act does not allow us to act, or continue to act, for our clients unless we have conducted that due diligence.
Accordingly, we may be required to verify your identity for the purposes of the anti-money laundering laws. We may request from you such information as we require for these purposes and make searches of appropriate databases.
You confirm that you give consent to Herbert Morton Ltd collecting, using and disclosing your information (or information that we may collect from other sources) to verify with third parties and third party databases, including Government agencies (for example, NZ Transport Authority, Dept of Internal Affairs) for the purpose of complying with the Anti-Money Laundering and Countering Financing Terrorism Act 2009.
Your responsibilities
You must provide us with all information necessary for dealing with your affairs including information which we reasonably request, in sufficient time to enable our services to be completed before any applicable deadline. We will rely on such information being true, correct and complete and will not audit the information.
You authorise us to approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs.
You must keep us informed on a timely basis of changes in your circumstances that may affect our services.
Qualifications on our services
To the extent our services involve the performance of services established by law, nothing in the engagement letter or these terms reduce our obligations under such law.
You must not act on advice given by us on an earlier occasion without first confirming with us that the advice is still valid.
Our services are limited exclusively to those you have engaged us to perform. Unless otherwise specified in the engagement letter, our services cannot be relied upon to disclose irregularities and errors, including fraud and other illegal acts, in your affairs. Neither an audit nor a review will be conducted and, accordingly, no assurance will be expressed.
Where our engagement is recurring, we may amend our engagement letter and these terms where we consider it is necessary or appropriate to do so. If you do not accept such amendments, you must notify us promptly in which case you may terminate our engagement in accordance with the termination section below and those amendments will not apply prior to such termination.
Reliance on advice
We will endeavour to record all advice on important matters in writing. Advice given verbally is not intended to be relied upon unless confirmed in writing. If we provide verbal advice (for example during a meeting or telephone conversation) that you wish to rely on, you must ask us to confirm the advice in writing.
Investment and financial advisory advice
We are prohibited from providing you with investment or financial advice regulated under the Financial Markets Conduct Act 2013, as amended by the Financial Services Legislation Amendment Act 2019.
Professional obligations and confidentiality
We are required to comply with all applicable by-laws, rules, regulations, professional and ethical standards and guidelines of Chartered Accountants Australia and New Zealand and the New Zealand Institute of Chartered Accountants (NZICA).
These requirements include the NZICA Code of Ethics, which among other things contains confidentiality requirements. In accordance with these requirements, we will not disclose information we obtain in the course of this engagement to other parties, without your express consent, except as required by:
- laws and regulations (for example, disclosures required under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and as required by the Common Reporting Standard)
- professional obligations including:
- the provisions of the NZICA Code of Ethics that apply if we become aware of actual or potential ‘non-compliance with laws and regulations’ (NOCLAR). Where any such non-compliance poses substantial harm (such as adverse consequences to investors, creditors, employees or the public), we may be required to disclose the matter to an appropriate level of management or those charge with governance and/or an appropriate authority.
- the provisions of the NZICA Rules and Professional Standards that subject us to practice review, trust account audits, investigations and disciplinary procedures. These rules require us to disclose to NZICA, it’s practice reviewers and/or it’s disciplinary bodies our files and workpapers including client information. In accepting this engagement you acknowledge that, if requested, our files related to this engagement, may be made available to NZICA, it’s practice reviewers and/or it’s disciplinary bodies. Employees and contractors of NZICA are also bound by confidentiality under contract and by the NZICA Code of Ethics.
Accident Compensation Corporation
You authorise Herbert Morton Ltd to act as your agent for ACC levy purposes and for all associated entities.
This authorisation allows Herbert Morton Ltd to query and change information on my/our ACC levy account(s) through ACC staff, and through MyACC for Business.
This authority will also allow the organisations’ main representative discretion to delegate access to my/our ACC information to other members of the organisation.
Other delegated members of the organisation will also be able to query and change information on my/our ACC levy account(s).
Conflicts of interest
We will inform you if we become aware of any conflict of interest in our relationship with you (including between the various persons this engagement letter covers) or in our relationship with you and another client. Where conflicts are identified which cannot be managed in a way that protects your interests or you do not consent to the way in which we propose to manage the conflict then we will be unable to provide further services to some or all of the persons to whom this engagement applies. If this arises, we will inform you promptly.
We may act for other clients whose interests are not the same as or are adverse to yours, subject to the obligations of conflicts of interest and confidentiality referred to above.
Fees and Payment
Our fees are charged in accordance with the terms outlined in your engagement agreement. They are determined based on the level of skill, responsibility, importance, and value of the advice provided, as well as the associated level of risk.
Fixed Fee Arrangements
- Fees are paid monthly by automatic payment, due on or before the 20th of each month.
- The fixed fee will be reviewed annually to reflect changes in the Consumer Price Index (CPI) and/or any variations to the original terms of engagement.
- If unforeseen circumstances arise that make the agreed fixed fee inadequate, we will notify you of a revised amount and seek your approval before proceeding.
Time and Cost Arrangements
- Fees are invoiced upon completion of the engagement.
- Payment is due within 14 days of the invoice date.
Payment Methods
We accept the following payment methods:
- Internet banking
- Credit card (2.5% surcharge)
- Direct debit
- SmartAR fee funding
Late Payments
- Interest may be charged on overdue accounts at the discretion of the Directors of Herbert Morton Ltd.
- Invoices unpaid more than 7 days past the due date may be submitted to SmartAR fee funding as a draft payment arrangement.
- If debt recovery through a collection agency becomes necessary, you will be responsible for all associated costs, including interest and collection fees.
Third-Party Costs
- Unless otherwise agreed, our fees do not include the costs of any counsel, other professionals, or third parties engaged with your approval. If such services are required, we will seek your approval before proceeding.
Suspension of Services
- We reserve the right to suspend or cease services with written notice if payment of fees is unduly delayed. This right will only be exercised where it is fair and reasonable to do so.
Lien
If permitted by law and not prohibited by professional standards or guidelines, we may exercise a lien over all materials or records in our possession relating to all engagements for you until all outstanding fees and disbursements are paid in full.
Disclosure permissions
In accepting this engagement, you provide us with your express consent to disclose your information to:
- our service providers or regulatory bodies to the extent required to perform our services in respect to this engagement;
- our professional advisors or insurers to the extent required to protect our interests in respect to this engagement; and
- our external peer reviewer to the extent required to review this engagement.
We will take reasonable steps to ensure any such recipient (other than a regulatory body) keeps such information confidential on the same basis we maintain in respect to your information.
We may retain your information during and after our engagement to comply with our legal requirements or as part of our regular IT back-up and archiving practices and also for professional reasons (e.g. to perform the work under this engagement or to comply with our professional and ethical obligations) . We will continue to hold such information confidentially.
We may mention that you are a client for promotional purposes.
Privacy
We may collect, store, use and disclose your personal information for the purposes of providing the services described in the engagement letter to you and to comply with our obligations in section 9 above. We will comply with the Privacy Act 1993 when collecting, storing, using and sharing your personal information. Our Privacy Policy provides further details of our privacy practices and our obligations to you.
Ownership of materials
We own the copyright and all other intellectual property rights in everything we create in connection with this engagement. Unless we agree otherwise, anything we create in connection with this agreement may be used by you only for the purpose for which you have engaged us.
All working papers prepared by us (in any form whatsoever, including physical and electronic) remain our property. We will retain these papers in accordance with our normal record keeping practices in accordance with our professional and legal obligations.
You agree we can use your logos and trademarks for the sole purpose of providing advice to you in connection with the engagement, unless you tell us otherwise.
Limitation of liability
To the maximum extent permitted by law, we are not liable to you for:
• indirect, special or consequential losses or damages of any kind; or
- liability arising due to the acts or omissions of any other person or circumstances outside our reasonable control, or your breach of these terms.
Limitation of third party rights
Our advice and information is for your sole use, and we accept no responsibility to any third party, unless we have expressly agreed in the engagement letter that a specified third party may rely on our work.
Termination
Each of us may terminate this agreement by giving not less than 21 days’ notice in writing to the other party except where a conflict of interest has arisen, you fail to cooperate with us or we have reason to believe that you have provided us or any other person with misleading or factually inaccurate information, in which case we may terminate this agreement immediately. Termination will not affect any accrued rights.
Communication
You must advise of any changes to your contact details. We may send any communications to the last contact details you have provided. Unless you instruct us otherwise we may, where appropriate, communicate with you and with third parties via email or by other electronic means. The recipient is responsible for virus checking emails and any attachments. There is a risk of non-receipt, delayed receipt, inadvertent misdirection or interception by third parties in any form of communication, whether electronic, postal or otherwise. We are not responsible for any such matters beyond our control.
Applicable Law
Our engagement is governed by New Zealand law. The New Zealand courts have non-exclusive jurisdiction in relation to any dispute between us.
Interpretation
If any provision of the engagement letter or these terms is void, that provision will be severed and the remainder will continue to apply. If there is any conflict between the engagement letter and these terms, these terms prevail.
Disputes and complaints
If you have any concerns about our costs or services, please speak to the person responsible for this engagement, who is identified in our proposal. To resolve your concerns we have policies and procedures in place to deal appropriately with complaints and will use best endeavours to resolve a complaint or dispute to the mutual satisfaction of the parties involved. We may require you to detail your complaint in writing to allow us to fully investigate any concerns that you raise.