It’s really common for us to be asked by clients to provide a letter confirming business activity when it comes to securing finance, be it business or personal. These are usually pushed by the lenders and brokers as easy ways to get your loans approved.
Unfortunately, there are a number of issues and risks with what the banks are asking us to confirm. While the letters seem simple enough, we have been advised by our professional body, Chartered Accountants AUS & NZ, what we can and can’t confirm.
What information can my accountant provide in an accountant’s letter?
• Your gross taxable income
• Principal sources of income
• Years your tax returns have been lodged, and
• Confirmation if your accounts have been audited
What information can’t my accountant provide in an accountant’s letter?
Your accountant cannot provide information that they cannot factually verify. They also, cannot provide a service for which they do not have professional indemnity insurance. Both of these situations would be a breach of their professional obligations.
Examples may include, but are not limited to:
• Estimate or validate your future income or expenses
• If your business is solvent and will remain solvent
• Your ability to service a loan.
While we understand this may be disappointing but it is imperative we operate within the guidance from our professional body.