24 July 2023

Does your bank really need an accountant's letter?

We have noticed an increase in lenders asking their clients to get an accountant's letter to support their loan application.

You may not realise the purpose of such a letter but essentially the lenders are attempting to push some of their risk onto accountants. For example, should you fail to meet your obligations under the loan – the lender could turn to the accountant and argue “you certified that the borrower had capacity to repay – we now hold you responsible for the loan”.

We are also finding that lenders are confirming loan approvals and then stating “we just need one final document to get you the funds and that is a letter from your accountant”. They make this statement in a flippant manner as if it is “nothing” for your accountant to quickly provide this letter. And then argue that it is the accountant holding up your access to the loan funds.

We note that accounting professional bodies such as CPA have advised their members to decline requests for accountant’s letters. The position of CPA is that credit assessment is the responsibility of the lender and they should not be looking to pass their risk onto other parties.

With this in mind, we ask that you question your lender further if they request an accountant’s letter. Ask them whether there is an alternative to getting an accountant’s letter? What other information could you provide them to give them the confidence to approve your loan without an accountant’s letter?

If we provide an accountant’s letter we can:

  • NOT “attest” to financial information. This would be an assurance engagement and would require us to conduct a full audit in compliance with relevant assurance standards. This would be a separate engagement with associated costs.
  • NOT confirm you will be able to continue to meet your obligations under the loan. Predicting future income and expenses is not within the scope of our role as accountants and business advisors.
  • NOT necessarily use the template letter or wording provided by the lender. Often their template manages their risks by pushing the risk onto the accountant.
  • NOT provide a letter that contains opinions or estimates
  • Provide a letter that contains:
    • factual information that can be verified
    • information provided as at a certain point in time
    • eg. The business turnover for the year ended 30 June was $xxx

Please reach out as soon as possible if you have received an accountant’s letter request and our team will act promptly to assist.




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