Good practice in financial administration services

Translation from Taloushallintopalvelualan hyvä tapa

Good practice in the financial administration services industry is determined by, among other things, the instructions, guidance and recommendations published by the Finnish Financial Management Association, the good accounting practice recommendation, the general terms and conditions of the industry, and the industry standard TAL-STA.

Good practice in the financial administration services sector is neither fixed nor permanent but takes on new forms as the sector develops as a result of technological innovations, evolving legislation and market adaptation, among other reasons. As a result, another course of action may be justified and in accordance with good practice, even if it is not recorded in the sources mentioned above.

The industry standard sets a level of quality requirements for the operations of a financial administration service company. By complying with them, the financial administration service company can provide quality service and the right information to the customer, authorities and other stakeholders.

Industry standard TAL-STA

This guideline of good practice in financial administration services by the Association of Finnish Accounting Firms or the industry standard TAL-STA, has been approved at the spring meeting of the members of the Association of Finnish Accounting Firms on xx month 2020.

The TAL-STA guidelines apply from xx month 2020 onwards in the audit activities of the Association of Finnish Accounting Firms.

The industry standard is intended to help financial administration service companies and other financial management service providers to comply with good industry practice and minimise risks.

Contents 
A.    Ethical guidelines
B.    Framework for the management of assignments

1.    Systematic planning
2.    Financial conditions
3.    Independence
4.    Verification of conformity and quality of operations
5.    Resources 
6.    Technology and information security
7.    Confidentiality and data protection

C.    Receipt of the assignment

1.    Offer and pricing
2.    Signing, updating and terminating the agreement
3.    Acting in the event of a change of service company

D.    Execution of the assignment

1.    Providing the service
2.    Guidance given to the customer 
3.    Reporting and customer communication
4.    Documentation

 

A. Ethical guidelines

Providing financial management expert services means 
1.    complying with applicable legislation and good industry practice.
2.    acting responsibly, confidentially and with the customer's best interests in mind.
3.    being financially and otherwise operationally independent and autonomous.
4.    working in a planned, long-term, careful and professional manner.
5.    promoting the prestige of the industry through its own activities.
6.    contributing to maintaining and strengthening good collegial relations. 
7.    conducting public relations and information activities in a confidence-building manner.
8.    taking care of the professional development and well-being of its personnel while working for itself and as an employer.

B. Framework for the management of assignments

1. Systematic planning

The financial administration service company must plan its operations in such a way that it has the sufficient conditions in the long-term to perform the assignments.

2. Financial conditions

The financial administration service company must have sufficient financial capacity to be responsible for the continuity of its operations, its obligations and the risks associated with its operations. If these are significantly impaired, immediate action should be taken to restore them.

3. Independence

No third party or interest should influence the agreement and performance of the assignment or direct the agreement or performance of the assignment in a way that compromises the independence of the service provider.

However, if the financial administration services company or the service company's contact person has a financial or other interest that affects the customer's order, the customer must be informed. 

4. Verification of conformity and quality of operations

The financial administration services company must have adequate procedures in place to regularly verify that its operating procedures, practices agreed with the customer and the requirements set by legislation are complied with. 

Feedback from customers, staff and stakeholders can be used as evidence of compliance.

The financial administration service company must ensure that its personnel follows the agreed uniform work and documentation methods.

The financial administration service company must have a documented and up-to-date system of deputies to ensure the management of assignments.

The financial management service company must implement the necessary internal control practices in accordance with the scope of its operations in order to prevent irregularities. 

The financial administration service company must take care of its insurance coverage in such a way that it corresponds to the quality and scope of operations. Insurance coverage must be monitored annually. 

5. Resources 

The financial administration services company must ensure that it has sufficient expertise, and human and other resources at its disposal to carry out the assignments. It is essential for it to identify the situations in which it needs to refrain from an assignment or use specialist experts. 

The personnel of the financial administration service company must have the training and experience corresponding to their duties. 

The financial administration service company must take care of the competence of its personnel, maintenance of professional skills and professional development through continuous, planned and appropriate training. 

Sources of professional information must be up-to-date and available to all personnel.

6. Technology and information security

The financial administration service company must ensure that its information networks, tools and information systems are maintained with expertise and information security.
 
The financial administration service company must ensure that the information in the information systems and the documents in electronic form are backed up automatically so that up-to-date information can be easily restored in the event of problems.

7. Confidentiality and data protection

Materials, trade secrets and other confidential information related to the customer's assignment must be protected by appropriate physical, technical and administrative procedures.
 
All employees and subcontractors of the service company must have a written non-disclosure agreement which is valid even after the termination of the contractual relationship.
 
When disclosing information, it must be ensured that the recipient is entitled to receive the information and that he or she can be reliably identified.

C. Receipt of the assignment

1. Offer and pricing

The offer and pricing must be clear so that the customer can understand which services are included in the assignment, how the total price of the service is formed and what additional work the financial administration service company is entitled to charge separately.

If during the processing of the assignment it is found that the final price will substantially exceed the assignment or price estimate given, the financial administration service company shall inform the customer without delay.

2. Signing, updating and terminating the agreement

A written assignment agreement must be entered into with the customer at the beginning of the assignment.

When agreeing on services, it must be made clear to the customer that the customer is responsible for the responsibilities, obligations and risks of his or their own operations, regardless of the service agreement, and that the service company takes over only those agreed service tasks.

The service company must maintain in the agreement or its appendices an up-to-date description of the parties' roles and responsibilities in providing the service. 

The service company must agree with the customer on contact persons who have the right to give instructions to the service company, deliver material and receive information from the service company.

Additional work not covered by the assignment agreement should be agreed in writing.

3.  Acting in the event of a change of service company

In the event of a change of service company, the customer's former and new service providers must contribute to a successful change. With the consent of the customer, they may exchange information related to the order.

D. Execution of the assignment

1. Providing the service

The service is provided with care and expertise, in compliance with applicable legislation, the guideline below, the assignment agreement and good practice in the financial administration services industry. 

The financial administration service company must have or immediately acquire an understanding of the customer's business to the extent that it is relevant to the quality of the assignment. 

The customer is responsible for the correctness, sufficiency and completeness of the material and information on which the assignment is based. The service company must inform the customer of any material deficiencies or errors in the material or information provided by the customer.

2. Guidance given to the customer 

The customer must be instructed that the performance of the assignment requires their own activity in monitoring, interpreting and informing the service company of legislative and other changes concerning their industry and operations so that the financial administration service company can perform the service in accordance with the assignment.

If necessary, guidance must be provided to the customer on the content of the material provided by them so that the service can be produced correctly. 

The service company must clearly and verifiably instruct the customer to ensure that the service company always has up-to-date basic customer information available. 

It is also recommended that the service company direct the customer to act in an efficient and appropriate manner of managing their own financial administration.

3. Reporting and customer communication

The financial administration service company must inform its customers of material changes in financial administration legislation as necessary.

The reports and information produced for the customer are good for the quality and scope of the customer's operations. 

It is a good idea to give the customer guidance on the interpretation of the reports and the meaning of the information provided. If the service company reveals any material threat to the customer's liquidity, solvency, profitability or other finances, it is important to inform the customer.

4. Documentation

In order to manage the risks associated with its operations and the quality of its service, the financial administration services company must document its work and working methods in an essentially appropriate and person-independent manner. Documentation should be arranged regardless of the size of the service company.

The financial administration services company shall keep the basic information and other documentation concerning the assignment for at least five years after the termination of the contract.

In order to ensure the smooth operation of customer service, the basic and other information of individual customers, as well as materials, must be documented and stored in a systematic manner. 
The documentation is to be carried out in an appropriate way, taking into account the quality and scope of the customer structure.

Negotiations with customers and the consultation and guidance given to them that contain material financial values must be documented in relevant respects. 

The handover of the material, as well as the relevant remarks and reminders given during the assignment, must be documented.