Every bookkeeper, either in house or external outsourced provider, has heard this before.

“Just follow the figures I gave you.”
“The difference is timing only.”
“Submit first. We can explain to IRB.”
“The long outstanding suppliers is my friends ”

Then something goes wrong.

The client says :
“I thought you checked everything.”

A 63-year-old accounting firm partner was recently charged with allegedly assisting and advising a company to prepare a tax return that under-reported RM2,526,144.24 in tax.

The alleged issue was not some complicated offshore tax scheme.

It was much simpler. RM10.68 million of sales transactions allegedly appeared in the company’s bank statements but were left out of the sales ledger.

The accountant was accused of checking and approving that ledger.

She pleaded not guilty and claimed trial.
Nothing has been proven, and she remains innocent unless proven guilty.

But the charge itself should wake up every accountant, bookkeeper and tax service provider.

Many of us believe:

“I am not the director.”
“I did not earn anything from the under-reporting.”
“The company signed the Form C.”
“I only prepared the accounts.”

Section 114(1A) under the Income Tax Act 1967 does not stop at the person signing the tax return.

If you assist or advise in preparing another person’s return, and the return results in understated tax, you may also be exposed.

The punishment can be a fine from RM2,000 to RM20,000, imprisonment of up to three years, or both.

Forget the RM20,000 for a moment.

The real risk is the criminal charge.

Your professional reputation.
Your practising career.
Your partnership.

All can koyak because of one file.
The law gives you a defence.

You must show that your assistance or advice was given with “reasonable care”.

In court, saying this may not be enough:
“The client told me verbally.”
“The client never disclosed it.”
“I trusted the management accounts.”
“I was rushing to meet the deadline.”
“I see the invoice only.”

The questions may become :

Did you reconcile the bank statements against the sales ledger?
Did you question the missing transactions?
Did you ask in writing?
Did the client reply in writing?
Did you disclose that the accounts were prepared from incomplete records?
Where are your working papers?

This is the difference:

“The client lied to me” is an explanation.
“I asked the client in writing, and here is the reply” is evidence.

Bookkeepers are not paid merely to key in the numbers/documents given by clients.

We are accepting professional responsibility for the work we prepare and review.

If the bank statements do not agree with the sales ledger, ask.
If the client cannot support a figure, document it.
If the records are incomplete, disclose it.
If the client refuses to answer but still pressures you to submit, be prepared to walk away.