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Requesting an Accountant’s Letter— What You Should Know

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.

What is An Accountant’s Letter Confirming Income?

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.

Legal Limitations Regarding Accountant’s Letters

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).

What To Expect From an Accountant’s Letter

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:

  • Australian Credit License (ACL): Only accountants with an ACL can provide an assessment predicting if a client can meet their financial obligations.
  • Statements of Fact: Instead of an assessment about whether a client can meet their financial obligations, accountants are allowed to provide clients with a statement about their historical financial position. This information can be verified as true and does not pose a risk like a “prediction” would.
  • Business Use: Accountants are advised against providing accountant’s letters stating the intended purpose of the loan. Writing a letter to vouch for a loan being for “business use” without taking the correct measures to investigate can be quite risky.

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.

Our Approach to Accountant’s Letters

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.

Empire Accountants Accountant’s Letters

  • We Ask Permission: Our team will always ask you for permission before we disclose your financial affairs from any inquiring third-party organisations.
  • Statements of Fact: The information we provide on your behalf will be factual statements of your financial history. This includes finalised financial statements, tax returns, or management reports.
  • Other Documents: We are happy to source documents or other evidence about your financial standing that would be considered factual and fair for us to distribute.
  • Transparency: If a third-party organisation asks us or you for predictions about whether you can meet your future financial obligations, we will be open and honest about our abilities and what we can provide.

Need An Accountant’s Letter?

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.

Beth Gozzard

Written by Beth Gozzard

Managing Partner at Empire Accountants

Beth co-founded Empire Accountants in 2015 out of a true passion for helping small business owners confidently navigate the complexities of tax and financial growth. She works closely with local operators and non-profit organisations to deliver clear, data-driven frameworks that empower informed decision-making.

View Professional Profile & Contact Beth

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