Liquidator’s entitlement to accountant’s files

It never ceases to amaze me the number of professional qualified accountants who believe that the files that they create are their own property. A company accountant is usually employed under a contract for services to enable the directors to comply with their statutory duties, to maintain proper books and records (Section 386 of the Companies Act 2006 – formerly Section 221 of the Companies Act 1985), prepare financial statements, for tax advice and compliance purposes such as for Part III if Schedule 18 of the Finance Act 1998. It may also be the case that a company accountant is also contracted as agent to be the company’s registered office and therefore receive all Companies House documentation and service of any legal documents upon the company. The documents created by the company accountant are usually not created for the accountant’s own purposes but to enable the contract with the client company to be undertaken and for the client company to be compliant with all its statutory duties. A liquidator is entitled to the company accountants files on the grounds of ownership of (a) documents created and retained and / or (b) that in any event as Liquidator it is reasonable that he or she (bearing in mind that they enter their office as a stranger) is legally entitled to obtain the accountant’s files in any event. Where for any reason the test of ownership of documents were to fail, then reliance upon the legal entitlement to call for such documents under Section 235 of the Insolvency Act 1986 places the accountant under a mandatory statutory duty to cooperate with the liquidator and comply with his or her reasonable requests for such information. Ordinarily the nature of any professional accountants files is such that they are concise, precise and extremely useful documents, which succinctly summarise a company’s books and records in a form so as to enable a Liquidator, to understand in a proportionate and cost effective manner, the Company’s transactions translated into financial statements. Furthermore, more often that not, it is impossible without obtaining the accountants files for a liquidator to have any reasonable expectation of understanding and investigating how the figures in the financial statements have been formulated from the Company books maintained by the director(s).

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