Accountants face a catch-22 over charging for accountants letters

Accountants are facing a dilemma about whether they should charge small business clients for so-called accountant letters needed to apply for COVID-19 grant applications.

The NSW, Victorian and Queensland governments have adopted the accountant letters as part of their coronavirus business support applications so that accountants, tax agents or BAS agents can verify a business has met the decline in turnover test needed to be eligible for a grant.

But accountants have found small business owners are asking them to sign the letters for free, in some instances without checking if the information on the letter matches the requirements for the grant program.

Stacey Price, accountant and BAS agent at Healthy Business Finance in Bendigo, says it can take several days to understand the eligibility guidelines for grant programs in each state, which helps her determine whether she should sign the letter.

“I’ve had clients tell me they don’t understand why I’m charging for it because it’s just a letter,” Price tells SmartCompany.

Price says while she understands businesses are facing financial distress due to trading restrictions, the grant letters add to her workload. 

This year, COVID-19 business support shifted from the federally administered JobKeeper program to jointly funded schemes between the federal and state governments, which are now administered by the states.

Current support includes grants, payments contingent on decline in turnover and maintaining employee headcount, and hardship payments that are either offered on a one-off or weekly basis. 

‘We’re in a catch-22’

Price says accountants and tax agents have had no choice but to participate in the state’s grant applications because they would like to help their clients get access to funding.

“We’re in a catch-22, where we didn’t ask to be involved in this but we also understand why the government is getting our confirmation,” she says.

Price has also had new clients approach her for assistance with the letter after their regular accountant refused to sign it for them.

“This is someone we have never dealt with, we don’t know anything about their business, and they want us to sign a letter because they think it’s just a signature,” she says.

A spokesperson from Service NSW confirmed that more than 292,000 applications for business support have been lodged as of Monday. About 82% of those applications have been approved, which is a total of $2.3 billion in payments.

However, only $1.8 billion has already been paid to businesses, with the remainder to be paid in the future.

Gavin Ord, senior manager business policy at CPA Australia, says the intention of state governments is that accountants will check the information that businesses include on their letters.

“Our members are now part of the integrity checking of the system and therefore they have to do more than just sign off, they actually have to check the information,” Ord tells SmartCompany.

For these reasons, CPA Australia is encouraging its members to charge its clients for the time it takes them to check and sign the letters.

However, Ord says he knows that some accountants are completing the letters free of charge because they acknowledge the financial hardship their clients are experiencing. 

“Some of the clients wanting these letters are in very high levels of financial distress and may not be able to afford the advice at this time,” he says.