Requesting an Accountant’s Letter— What You Should Know
Posted 8 Sep '23
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Posted 8 Sep '23
As the years pass by, it’s become more and more common for banks, mortgage lenders, and even rental agencies to request accountant’s letters. Understandably, these third-party organisations want to confirm the financial stability of those they lend or rent to.
Although requesting an accountant’s letter seems like a good idea in theory, there are limitations to what insight an accountant can legally provide. Let’s review why accountants are limited to the type of information they can provide and what clients and third-party lenders or renters can expect from a legal accountant’s letter.
By requesting an accountant’s letter, lenders and renters are essentially asking for information to assure them of your likelihood of fulfilling your financial obligations. They want your accountant to confirm for them that you can afford that mortgage, refinance, or rental.
Even the best accountants in Brisbane don’t have a magic ball and can’t predict whether clients can meet their future financial obligations. Especially within our present, challenging market, the world of finance is quite unpredictable and providing “predictions” would be a risk for accountants.
Asking an accountant for an “accountant’s declaration” or “capacity to repay” certificate asks them to do something outside their legal licensure. Moreover, accountants are not permitted to advise clients regarding personal loans or mortgages unless they possess an Australian Credit License (ACL).
Anticipating these issues of accountants being asked for more than they can provide, The three governing bodies in Australia (CPA, CA & IPA) established accountant’s letter guidelines. These regulations are in place to ensure all clients, accountants, and third-party organisations are on the same page about what can and cannot be included in an accountant’s letter.
Review the full guide by CPA Australia or take a quick peek at the most pertinent points here:
When asking your accountant for an accountant’s letter, remember they can only provide factually and historically true information. While most third-party lenders and renters should know of these restrictions, some still ask for accountant’s letters that push the boundaries of what is allowed.
Here at Empire Accountants, we are committed to helping our clients achieve their future goals, whether purchasing a new home or renting an apartment. As professionals, we must meet our governing body and insurance requirements regarding requests for accountant’s letters.
We are happy to play a part in helping you achieve your goals by providing an accountant’s letter stating facts about your financial history. We can source this information from accounting software, bank statements, or any other programs where this data may be stored.
A member of our Empire Accountants team would be happy to chat with you more about what information we can and cannot supply. Contact Us today with any questions you may have or to request an accountant’s letter.
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