TAL-STA Industry Standard

Translation from “Taloushallintoliiton toimialastandardi TAL-STA”

Guidelines for Following Good Practice for Accounting Firms

TAL-STA Industry Standard by the Association of Finnish Accounting Firms

TAL-STA1, TAL-STA2 and TAL-STA3 adopted in the autumn meeting of the Association of Finnish Accounting Firms on 26 October 2011

TAL-STA4 adopted in the spring meeting of the Association of Finnish Accounting Firms on 3 June 2013

These guidelines for following good practice for accounting firms have been developed by the Association of Finnish Accounting Firms and shall take immediate effect. For inspections regarding the fulfilment of membership and authorisation requirements, guidelines of TAL-STA1-3 will be applied as of 1 July 2013 and of TAL-STA4 as of 1 July 2014.

The TAL-STA industry standard is intended to assist financial administration service providers and other providers of expert services in financial administration in following good industry practice. This industry standard sets quality requirements for the operations of financial administration service providers, and by fulfilling these requirements financial administration service providers can produce high-quality services and accurate information for their clients, authorities and other stakeholder groups.

An industry standard that would cover all possible scenarios is not feasible. The user of this industry standard must take into consideration that financial administration services are constantly changing and gaining new forms, for example as a consequence of technical innovation, developing legislation and adjustment to market conditions. Therefore, any other way of proceeding may be justifiable and acceptable, as long as it reflects the purpose of this industry standard.

 

TAL-STA1 – Ethical Guidelines

TAL-STA2 – Fulfilling an Assignment

TAL-STA3 –Accounting Service

TAL-STA4 – Payroll accounting service

 

Definitions

Accounting service

Keeping accounting records, preparing the annual accounts and other prescribed tasks materially connected to or arising from these, such as notifications to authorities.

Authorised accounting firm

The Association of Finnish Accounting Firms (Taloushallintoliitto) authorises companies providing external accounting and financial administration services. In order to be eligible, an accounting firm must comply with the rules of the Association and follow good industry practice.

Client

A legal or natural person with whom a financial administration service provider has entered or intends to enter into an accounting services contract or has previously been in a contractual relationship.

Financial administration service provider

A company providing outsourcing and expert services in financial or payroll administration, either as its principal or independent activity.

Payroll accounting service

Payroll accounting and related regular, statutory monthly and annual stakeholder notifications, excluding human resources management services.

Payroll administration service

Payroll accounting services and materially related additional payroll accounting services, such as various applications, notifications and calculations.

Specialist

A person or company with extraordinary competence, knowledge and experience in a specific area.

Subcontractor

A third party providing services in order to fulfil the client’s assignment.

 

TAL-STA1 – Ethical Guidelines

A provider of expert services in financial administration shall

  1. comply with current legislation and follow good industry practice
  2. act responsibly in its relationship with the client, always promoting the client’s best interests
  3. be independent and autonomous both financially and in other respects
  4. operate systematically, persistently, carefully and professionally
  5. promote the reputation of the industry through its own conduct
  6. contribute to maintaining and reinforcing good collegial relationships
  7. manage its public relations in a manner that inspires confidence
  8. make provision for professional development and well-being at work, both personally and concerning possible employees

In addition, a member firm of the Association of Finnish Accounting Firms shall

  • meet the membership requirements set in the rules of the Association of Finnish Accounting Firms
  • engage in communications that inspire confidence and indicate membership of the Association of Finnish Accounting Firms

TAL-STA2 – Fulfilling an Assignment

This industry standard defines the criteria that a financial administration service provider must meet in order to take on and fulfil an assignment.

1. Prerequisites for successful assignments and client relationships

1.1 Solvency and independence

A financial administration service provider must be adequately solvent in order to attend to business continuity as well as any obligations and risks associated with the business operations in question. In case of impaired solvency, immediate measures must be taken to restore it.

No external party or interest may affect the conclusion or fulfilment of an assignment or guide these towards a direction that might compromise the independence of the service provider. However, should the financial administration service provider or a representative thereof have a financial or other interest affecting the fulfilment of a client’s assignment, the client shall be duly informed. Such circumstances may arise, for example, when a party acts as an agent or representative of a third party, such as an insurance company, finance company or software house, or as a board member of a company in competition with the client.

1.2 Quality assurance and risk assessment

The financial administration service provider shall regularly assure the quality of its services using a method it considers appropriate. The objective of using a self-assessment method appropriate to the nature and scale of operations is to maintain a uniform way of operating from the point of view of clients and stakeholder groups. For example, the system is designed to ensure that deadlines that are significant to the provision of the services are adhered to. Quality assurance measures shall be extended to cover the company’s employees, when applicable. Tools used in quality assurance and development can include, for instance, feedback gathered from stakeholder groups and clients.

The adequacy and timeliness of working method descriptions shall be evaluated on a regular basis, for example annually. A review of internal control methods and significant risks shall be conducted simultaneously with the evaluation.

The financial administration service provider can safeguard business continuity through systematic risk assessment. Risk management shall address, among other things, whether the company is financially dependent on any single assignment from a client or whether the maintenance of the information system used by the company is secured.

The financial administration service provider should have a plan for circumstances where the fulfilment of assignments according to contract is compromised due to shortage of personnel or any other resource. Precautions may include, for instance, designating an external alternate or a partner accounting firm.

1.3 Financial loss cover

The financial loss cover of the financial administration service provider must correspond to the nature and scale of operations, and the adequacy of the insurance cover shall be monitored annually.

1.4 Conduct upon change of service provider

It is in accordance with good risk management practices and the ethical guidelines of the TAL-STA industry standard that the previous service provider of a new client should be contacted with the client’s approval, if this is required for the successful change of service provider or any other issue relating to the conclusion of the contract.

1.5 Documentation

The financial administration service provider shall document the essential parts of its work and working methods in an appropriate manner. The transfer of the material to the client upon termination of the contract as well as any essential notifications and reminders given to the client while fulfilling the assignment should be documented. Additionally, any negotiations with the client and any advice and instructions concerning essential financial figures provided to the client should be documented as considered purposeful. The documentation should be performed in a cost-effective manner, observing the nature and size of the clientele.

The purpose of documentation is to secure the operations of the financial administration service provider so that matters substantially affecting the provision of the services, such as the information available for the provision of the services, could later be verified. Appropriate documentation also enables a smoother transition of contact persons, ensures the transfer of essential information to relevant parties, safeguards the continuity and uniformity of working methods and guarantees consistent service quality. Documentation must be organised irrespective of the size of the company. A self-employed person can ensure the continuity of his or her business in a situation where he or she is unable to fulfil the agreed assignments through documentation and other arrangements, such as cooperation with another service provider or an alternate arrangement.

1.6 Competence, professional skill and adequate resourcing

The financial administration service provider shall plan its operations in a manner that provides adequate prerequisites for fulfilling the agreed assignments according to the contract in the long term.

The personnel of the financial administration service provider must have the education and experience appropriate for their tasks. The person in charge of an authorised firm must have passed the Finnish KLT accounting examination. The financial administration service provider shall ensure the competence of its personnel as well as maintaining and developing their professional skills through ongoing, purposeful training. The financial administration service provider shall take appropriate measures to instruct its personnel on the company’s uniform working methods.

The financial administration service provider shall ensure that it has the adequate expertise and human resources to fulfil its assignments. The financial administration service provider should always identify the situations that require withdrawing from a certain assignment or using specialists. The use of specialists and the costs thereof shall be agreed with the client on a case-by-case basis.

Work equipment shall be kept up to date and software upgrades shall be performed lawfully.

Any sources of professional knowledge, including printed or electronic professional literature, trade magazines and other sources, must be current and available to the entire personnel.

The financial administration service provider is responsible for the work of subcontractors as if it were its own.

1.7 Data protection and confidentiality

The provision of the services is based on confidentiality between the client and the financial administration service provider.

Any material, trade secrets and other confidential information concerning the client’s assignment, as well as the information produced by the financial administration service provider based on these, must be protected. Data protection refers to procedures that are technical or physical in nature or relate to actions of individuals.

Client files must be backed up on a continuous basis. Basic information and other data and material relating to individual clients must be stored in a systematic manner in order to safeguard smooth customer service.

The requirements and recommendations of data protection laws must be observed.

Upon disclosure of information, the disclosing party must make sure that the receiving party is entitled to the information.

It is recommendable to draw up a written non-disclosure agreement that will survive the termination of the contract for all parties in an employment or contractual relationship.

2. Agreeing on an assignment

2.1 Offer

An offer should be clear and specific so that the client may understand which services are included in the assignment, how the total price is determined and what may constitute additional work for which the financial administration service provider is entitled to charge separately.

Where possible, the client must be advised that the financial administration service provider shall only take on those service tasks that are agreed in the accounting services contract and that the client shall remain responsible for any other tasks belonging to a party with a legal obligation to keep accounting records, pay income tax and value added tax and fulfil employer obligations.

2.2 Cost estimate and pricing

To the extent possible, a cost estimate should provide the client with an accurate view of the total price of the service. Seeing the total price of the service on an annual level, for example, might be useful for the client.

The assumptions concerning the number of entries and working hours that form the basis for the cost estimate should be documented and clarified to the client.

While fulfilling an assignment, should the financial administration service provider become aware that the final price will substantially exceed the cost estimate provided to the client, it must inform the client without delay.

Any agreements on additional work should be documented and detailed as clearly as possible.

2.3 Accounting services contract

A written accounting services contract should be concluded with the client at the beginning of an assignment unless there are special grounds for an oral agreement. While preparing the accounting services contract, the client must be identified reliably.

Should the financial administration service provider prepare financial statements based on accounting material created by someone else, the assignment must be limited and liability issues agreed with the client.

The contract shall be updated to correspond to the assignment whenever necessary.

3. Obligations while fulfilling an assignment

3.1 Fulfilling an assignment

An assignment shall be fulfilled in a careful and professional manner, adhering to the accounting services contract, current regulations and appropriate practices.

The financial administration service provider generally has the right to trust the information and material provided by the client, unless there are special grounds for believing otherwise. The financial administration service provider is not expected to systematically assure the truthfulness of entries while keeping accounting records or preparing annual accounts. Responsibility for the truthfulness of the material provided by the client lies with the party with a legal obligation to keep accounting records or a representative thereof. This applies both to the material provided monthly and the material provided for the preparation of financial statements, including valuation and accrual principles.

In individual cases the financial administration service provider might be expected to investigate any discrepancies it has detected in the material or at least remark on the need for further investigation. Should the financial administration service provider repeatedly notice discrepancies that reoccur regardless of pointing them out to the client, it should consider the possibility of terminating the contract.

The financial administration service provider shall notify the client of possible errors in the material supplied by the client. Unless otherwise agreed, the financial administration service provider shall, however, not be responsible for controlling or correcting any computational or other errors in the material provided by the client or for verifying information provided by the client.

The purposefulness of the assignment should be reviewed at least annually for any substantial changes.

3.2 Internal processes of the client and division of tasks

The financial administration service provider shall, to the extent possible, detail what is expected of the client in the fulfilment of the assignment according to contract. If possible, the client shall also be advised on managing internal financial administration processes insofar as these affect fulfilling the assignment in a manner that makes the overall financial administration process functional.

Where applicable, the client shall be advised to see that the financial administration service provider always has up-to-date basic information on the client. The client shall name and authorise a contact person who will provide the financial administration service provider with any information and decisions in relation to the business that are required for fulfilling the assignment.

The client shall be informed that fulfilling the assignment requires that the client assumes an active approach with regard to monitoring and interpreting legislative and other changes that affect the client’s industry and business operations and communicates these changes to the financial administration service provider, so that the latter may contribute to the provision of the services in accordance with the assignment.

3.3 Client communications

The financial administration service provider should consistently inform its clients of substantial changes in financial administration laws.

4. Considerations upon termination of a contract

Upon termination of a contract, the current assignment shall be completed as agreed.

During the period of notice, those tasks shall be performed that would be performed during a corresponding period under an ongoing contract. A two months’ notice period is generally perceived as reasonable, even in the absence of a written contract. This provides each party with the opportunity to withdraw from the contract in a controlled manner.

If the contract terminates in the middle of the financial year, having received an advance payment as set out in its price list the financial administration service provider shall prepare the balance sheet specifications based on the information available to it. Equally, the financial administration service provider shall prepare the necessary specifications of the calculation of salaries and payroll accounting.

If the financial year ends and the contract terminates before the preparation of the annual accounts has been completed the financial administration service provider may close the accounts, if the client pays an advance payment and provides the financial administration service provider with the information and material needed for the closing of the accounts.

Even if the client does not commission the financial administration service provider to perform its contractual duties during the period of notice, the financial administration service provider may still collect a service charge in accordance with its price list for the period of notice. In such a case, the service charge for the situation in question must be specified in the price list.

The financial administration service provider shall keep the basic information and other documentation concerning the assignment for a minimum of five (5) years from termination of the contract.

 

TAL-STA3 –Accounting Service

This standard specifies what measures a financial administration service provider can take to assure the quality of the accounting service it provides.

1. Purpose and framework of the industry standard

This industry standard is aimed at financial administration service providers who provide their clients with an accounting service under an accounting services contract.

The purpose of this standard is to describe the measures that a financial administration service provider can take to assure the quality of its work. This industry standard does not primarily contain guidelines related to the content (substance) of accounting regulations. The recommendation concerning good practice for preparing annual accounts ("Hyvä tilinpäätöstapa") issued by the Association of Finnish Accounting Firms addresses accounting legislation that is relevant for this industry standard.

In preparing this industry standard, no requirements concerning listed companies, groups or international reporting standards, such as IAS/IFRS or US GAAP, were taken into consideration. If such services are provided to a client, the applicable sections of this industry standard may be adhered to.

2. Provision of accounting service

The accounting service shall be provided in accordance with current accounting legislation and, at a lower level, accounting guidelines, the accounting services contract, good industry practice and the TAL-STA industry standard issued by the Association of Finnish Accounting Firms. The service shall be documented appropriately using either forms prepared by the financial administration service provider or quality forms produced by the Association of Finnish Accounting Firms.

2.1 Obligation to gain knowledge, investigate and verify

The financial administration service provider should have or immediately acquire an understanding of the client’s business to the extent that is relevant for the successful fulfilment of the assignment.

The financial administration service provider is not expected to systematically assure the truthfulness of entries while keeping accounting records or preparing the annual accounts. Responsibility for the truthfulness and adequacy of the material forming the basis for accounting entries lies with the party with a legal obligation to keep accounting records or a representative thereof. If necessary, the financial administration service provider shall obtain further clarifications in order to post a business transaction correctly according to its nature.

2.2 Adjusting the client’s internal routines and advising the client

As the party fulfilling the assignment, the financial administration service provider should attempt to inform the client of any essential matters concerning the service.

The financial administration service provider should in cooperation with the client evaluate and adjust the client’s internal routines that have a material effect on the fulfilment of the assignment in order to promote the successful provision of the service.

If necessary, the client should be advised on verifying the factual content of vouchers as well as the integrity and completeness of accounting material.

The financial administration service provider shall not be responsible for regularly and actively controlling the client’s material, but if the financial administration service provider notices any defects in the accounting material, it should attempt to discuss the matter with the client. If necessary, a written notification in accordance with the General Conditions of Contract KL2004 should be given.

3. Keeping accounting records and reporting

Vouchers verifying transactions must be truthful and entered as required by their nature. In keeping accounting records, the accountant shall investigate the content of vouchers to an adequate extent, taking into consideration the stipulations of items TAL-STA2 3.1 and TAL-STA3 2.1.

The financial administration service provider shall for its own part ensure the effortless viewing of the audit trail.

The financial administration service provider should not without notification accept any material or repeated deviations from the accounting services contract by the client, for example relating to deadlines for providing material.

3.1 Reporting

The financial administration service provider should only provide the client with reports that have been agreed on in the accounting services contract or otherwise. The structure of reports produced for the client should meet the client’s needs as well as possible. The financial administration service provider should, as an expert in finances, advise the client on the sufficient level of reporting so that, for example, calculations concerning the adequacy of finances could be performed as needed.

It is recommendable to advise the client on the interpretation of reports. Any information that is essential for the client’s operations should be clarified with comments. Comments are particularly important if a report reveals a matter concerning the company’s liquidity, solvency, profitability or other financial aspect that the client should pay attention to or cannot reasonably be expected to understand. The principles governing the keeping of accounting records shall be observed.

Reports are based on the information provided by the client, and to this extent the client is responsible for the accuracy of the reports.

Reports prepared during a financial year should reveal which posting principle was used.

The financial administration service provider should have the name of the designated recipient of reports in writing. This is agreed upon in the accounting services contract. The recipient shall be confirmed upon transfer of data.

4. Preparing annual accounts

Any financial statement documents produced by the financial administration service provider shall be clear and presentable. In fulfilling a client’s assignment, the applicable parts of the guidelines concerning good practice for preparing annual accounts ("Hyvä tilinpäätöstapa") guidelines issued by the Association of Finnish Accounting Firms shall be observed.

In order to close a client’s accounts in accordance with accounting legislation, lower-level instructions, recommendations and other general financial statement principles, the financial administration service provider should gain an adequate understanding of the client’s business, routines of posting financial information and accounting principles applied in the preparation of previous years’ financial statements. Basic accounting issues are solved, if possible, while keeping accounting records and these solutions should be documented as deemed relevant.

The financial administration service provider should have as a part of its quality assurance practices an adequately reliable system that ensures that all essential tasks related to the closing of accounts are performed.

Completed financial statements should be reviewed analytically and communicated to the client as agreed.

5. Recommendations

5.1 Recommendation concerning naming the party preparing the financial statements

The Association of Finnish Accounting Firms recommends that member firms mention the name of the financial administration service provider preparing the financial statements in the balance sheet book, next to the list of contents or in another section recommended by the Association of Finnish Accounting Firms. The financial administration service provider may, if it so wishes, list the pages it prepared.

For example:

Financial statements prepared by:
Maijan Tilit Oy, Authorised Accounting Firm
Mikkosentie 5
12345 Mikkola

5.2 Recommendation concerning the preparation of the report of operations

The financial administration service provider shall not prepare a report of operations on the client’s behalf, but shall advise and instruct the client in the production of accurate information.

TAL-STA4 – Payroll accounting service

This standard specifies what measures a financial administration service provider can take to assure the quality of the payroll accounting service it provides.

1. Purpose and framework of the industry standard

This industry standard is aimed at financial administration service providers who provide their clients with a payroll accounting service under an accounting services contract.

The purpose of this standard is to describe the measures that a financial administration service provider can take to assure the quality of its work. This industry standard does not primarily contain guidelines related to the content or application of payroll accounting regulations. The guide to payroll administration service in an accounting firm (PHT-opas Palkkahallintopalvelu tilitoimistossa), published by the Association of Finnish Accounting Firms and available to its members, contains guidelines on payroll accounting and payroll administration services and practices, among other topics.

2. Provision of payroll accounting service

The service shall be provided in accordance with current legislation and guidelines that govern payroll accounting, the payroll accounting services contract, good industry practice and the TAL-STA industry standard issued by the Association of Finnish Accounting Firms. The service shall be documented appropriately using either forms prepared by the financial administration service provider or quality forms produced by the Association of Finnish Accounting Firms.

2.1 Obligation to gain knowledge, investigate and verify

The financial administration service provider should have or immediately acquire an understanding of the client’s business to the extent that is relevant for the successful fulfilment of the assignment. In order to fulfil the client’s assignment it is important to determine and document client-specific operating methods, such as locally agreed terms and conditions.

The client him-/herself or the client’s representative shall be responsible for the accuracy, adequacy and completeness of the documentation on which the payroll accounting assignment is based. If necessary, the financial administration service provider shall obtain further information in order to execute payroll accounting correctly.

2.2 Adjusting the client’s internal routines and advising the client

As the party fulfilling the assignment, the financial administration service provider should attempt to inform the client of any essential matters concerning the service. Division of responsibilities and advice related to the assignment should be reviewed, kept up to date and assessed regularly.

The client should be advised that the client shall be responsible for the compliance with labour legislation and collective labour agreements and that the financial administration service provider shall not make decisions related to these on the client’s behalf.

Where possible, the financial administration service provider should in cooperation with the client evaluate and adjust the client’s internal routines that have a material effect on the fulfilment of the assignment in order to promote the successful provision of the service.

If necessary, the client should be advised on verifying the content of payroll accounting documentation as well as on the submission of the documentation.

The financial administration service provider shall not be responsible for actively controlling the client’s documentation, but if the financial administration service provider notices any defects in the documentation, it should attempt to discuss the matter with the client. If necessary, a written notification in accordance with the General Conditions of Contract KL2004 should be given.

Upon the termination of the services, the financial administration service provider, in cooperation with the client, shall see to it that each party for its part cancels any authorisations made for enabling the provision of the service.

The financial administration service provider shall advise the client on indirect labour costs related to the payment of wages and salaries and on the client’s responsibility to monitor the sufficiency of insurance contributions related to the role of an employer.

2.3 Confidentiality

Due to the sensitive nature of payroll accounting information, confidentiality shall be emphasised in the assignment.

Unless otherwise explicitly agreed, the service provider shall provide information related to payroll accounting only to contact persons named by the client and receive assignments only from such contact persons.

If authorities or other parties request payroll accounting information, the recipient’s right to receive this information must be confirmed. Information shall be provided in writing.

3. Provision of reports to the client

In addition to mandatory payroll accounting reports and calculations, the financial administration service provider should only provide the client with reports that have been agreed on in the payroll accounting services contract or otherwise.

Reports are based on the information provided by the client, and to this extent the client is responsible for the accuracy of the reports.

It is recommendable that payroll accounting provides information on the payment of wages and salaries without delay to the party responsible for the company’s financial reporting.