Accountant’s letters, declarations and capacity to repay certificates
An ‘Accountant’s Letter’ is a document prepared by an accountant at the request of their client for a bank, lender, or another party for the purposes of approving a loan, lease or rental agreement for a client. Accountant’s letters are also commonly referred to as ‘accountant’s declarations’ or ‘capacity to repay’ certificates.
The actual format of the information requested can vary widely, but in essence, the lender’s request is for us to provide or confirm information, about a client’s historical, current or future financial affairs.
There are three major accounting professional bodies who operate in Australia – CPA Australia, Chartered Accountants and Institute of Public Accountants. They have jointly issued an Open Letter to Lenders. This letter is available here.
Their position is that credit assessment is the responsibility of the lender. The lender has specific obligations under their credit license when making such assessments.
Here at Bee Group Accountants we try to do everything we can to assist our clients.
However, effective the 1 August 2023 we will only be accepting formal engagements to prepare supporting financial information in limited circumstances.
We do not hold, nor are we authorised under an Australian Credit Licence. Providing an opinion or statement about a client’s ability to meet financial obligations to a lender are regulated activities (credit assistance).
Engagements that request a form of confirmation, assessment of capacity to repay, statements as to future income or expenses, or a request to explain information to you as our client in connection with the credit contract all carry significant risk for us.
As such we will not accept engagements for this type of declaration or letter.
We will be able to provide factual information only such as the period for which we have prepared your accounts and tax returns. We can also assist with providing gross taxable income after adding back non-cash deductions. Documentation that we can supply you in support of your application will include previous tax returns, financial statements and where available, notices of assessments.
The professional bodies have provided us with a template that we will be using in the future to provide this factual information. Where we do elect to enter into this form of Engagement, this format will be how financial information will be supplied to a lender along with the supporting documentation.
Should you wish to discuss the specific requirements of your situation, please contact our office to have a chat with your Client Services Manager.
