Senior Accounting Officer sign-off – businesses in good shape to comply, but at a cost
uncertainty created through lack of objective standard
4 March 2011
A large proportion of UK companies needed to complete a review of their accounting systems in order to comply with the Senior Accounting Officer (SAO) legislation, according to new research by Deloitte, the business advisory firm.
The poll of 114 senior finance and tax figures from leading UK businesses conducted this week comes as the first wave of SAO sign-offs are expected. It reveals that just 11% of companies indicated they are completely confident in their compliance, although 69% expect ultimately to file an unqualified certificate.
Over three-quarters (77%) say they undertook a review of their reporting systems and nearly half (46%) of firms say VAT is the area of tax which is causing them most concern, followed by PAYE (32%), corporation tax (11%) and Excise & Duties (8%).
Despite assurances from HMRC that the introduction of SAO sign-off would not result in increased compliance or other costs for affected companies, 50% disagreed saying that the costs have been significant. On a more positive note, however, 13% believe the costs of compliance have at least in part been set-off by savings found as a result of review activity.
Alan MacPherson, tax partner at Deloitte, comments: “The introduction of a new requirement with no objective standard against which SAOs can measure themselves has led to uncertainty within the business community. This uncertainty has contributed to additional costs for business, which in a number of cases have been significant. In addition, there is also considerable nervousness for many CFO’s who, as the most commonly appointed SAO signatory, are being exposed to personal reputational and financial risk as a result of the penalties imposed for non-compliance.
“However, in spite of the unease in the business community, our experience is that the majority of clients are now in good shape to comply. It is important for businesses to remain level-headed and use the review as an opportunity not only to ensure key risks are managed but also realise opportunities to save money either through more accurate claims or streamlined processes.”
The SAO legislation requires a senior financial officer to certify annually that the systems in place within their company are fit for the purpose of reporting taxes. It came into effect for tax returns (including VAT and employment taxes) for financial years starting on or after the date of Royal Assent on 21 July 2009. The legislation broadly affects companies with a turnover of £200million.
Notes to Editors:
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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