FAQ

Accounting and Book-keeping

Are all chartered accountants registered public accountants?

While all registered public accountants are considered chartered accountants, the converse is not true. To become a registered public accountant, the chartered accountant must obtain a practising certificate issued by the Public Accountancy Board, which is a statutory body created by the Public Accountancy Act of Jamaica in 1968.

Can all accountants provide auditing and other assurance services?

No. Not all accountants are qualified to conduct audits of financial statements as well as other assurance services. To conduct audits and other assurance service, the practitioner is required by law to be a registered public accountant.

Do entities always require an accountant?

No, however, it is recommended to have an accountant for a variety of reasons such as assisting the entity to capture, record, and report financial and non-financial information to assist users in making appropriate and timely decisions.

What is auditing and is it the same as accounting?

No, both are not the same and while auditors generally needs an appreciation of accountant, auditing involves the accumulation and evaluation of evidence to report of the degree of correspondence with some established criteria for example the international financial reporting standards (IFRSs). The accumulation and evaluation of sufficient and appropriate audit evidence makes auditing unique.

What is accounting and is it restricted to the addition and subtraction of numbers?

Accounting is more than merely counting numbers, but entails a systematic process of capturing, summarizing, classifying, recording, analysing and interpretation of information to assist users with planning, controlling and fostering relevant decision making.

Assurance Services

I am a chartered accountant but do not possess a practising certificate/license from the Public Accountancy Board of Jamaica, can I provide a report on financial statements as well as other assurance services?

This is an offence under the law to conduct such an activity without the requisite licensing from the Public Accountancy Board of Jamaica.

Are persons/firms performing audits of entities’ financial statements qualified individuals?

Yes. To conduct audits, practitioners are required to obtain the relevant professional qualifications, experience, training as well as obtaining licensing from the Public Accountancy Board of Jamaica.  The qualification, experience and licensing process could take numerous years.

I am also told that it is the responsibility of auditors to prepare clients’ financial statements, is this also true?

This is also false. It is also the responsibility of management to prepare the entity’s financial statements in accordance with the IFRSs. The auditor’s responsibility is to evaluate the fair representation of the entity’s financial statements in accordance with IFRSs.

Who are those ‘charged with governance within an entity?

This entails senior management, the board of directors and members of the audit committee.

I am told that auditors are responsible for detecting errors and fraud occurring within the entity, is this true?

This is false. It is the responsibility of management and those charged with governance to establish an appropriate system of internal control to detect errors and fraud.

Can my auditor provide my accounting and book-keeping services?

Generally no. Unless your audit firm is a large practice that has the ability to construct hypothetical “Chinese walls”. If not, then your auditor would not be independent, which means he would be unable to conduct an audit on the same financial statements prepared by him.

What are assurance services?

These are independent professional engagements which the practitioner issues a report about the reliability of an assertions made by management or an entity.

Business Valuation

Are business valuation exercises expensive and what are the costs?

The cost generally depend on the nature and the type of the target company which can vary, but could be expensive in some cases.

I am planning to purchase an entity, will I require a business valuation?

Generally no, unless other parties are involved such as the bank or you intend to use other investors, but it is normally recommended so as to ensure that you do under over value the purchase price.

I am selling my business, will I require a valuation?

It is not required, but highly recommended so as to ensure that you do not under value your business.

What are the main types of business valuation methods?

Cost approach, income approach and market approach.

Are all accountants able to provide business valuation services?

Not all accountants, however, those who possess experience and training in business valuation exercises.

Consulting Service

Do you provide the service of writing shareholders’ agreement?

Yes we do

What are shareholders’ agreements and are these a requirement for all companies?

Shareholders’ agreements are not a requirement, but again recommended. These are arrangements among shareholders dictating how a company should be managed, operated and financed. It also entails the specific rights of each shareholders during the formation, operation and winding or closure of the specific company.

Can accountants assist with the construction of partnershipagreements?

Not all accountants do, however those who possess a firm understanding of business or contract law as well as having the requisite expertise should be able to craft an effective agreement.

What are partnership agreements and is it a requirement for all partnerships?

It is not a requirement, but highly recommended for most partnerships.This is an agreement or a contract between the members of a partnership outlining the terms or arrangements of the said partnership.

What is the difference between a partnership and a company?

A partnership is an agreement between two or more persons (partners) to form an unincorporated entity with the principal objectives of making profits. On the other hand, a limited liability company is an entity incorporated by its shareholders/investors with an objective of earning profits and simultaneously limiting the liabilities of its owners.

Do you provide services relating to the formation of International Business Companies (IBCs)?

Yes we do.

Do you provide business formation services?

Yes we do.

What type of consulting services are offered by some firms?

Accounting, finance, human resources and information technology services.

Is it possible to consult with an accounting firm rather than employ a full time accountant?

Yes. Most firms do to minimise the expense of having  full time accountant and simultaneously benefit from someone with vast amount of experience.

What are the importance of consulting services to firms?

These services generally add value to entities and improve their operations especially when entities are not large enough to afford the services of some full time professionals.

Can my auditor provide me with consulting services?

Yes, however, these services must be disclosed.

What are consulting services?

An engagement where the practitioner provides advice and makes recommendation.

Corporate Secretarial Services

Can I form a company with one director with the intention of adding others in the future?

Yes, this is possible.

Can I commence the formation of a company with a single director?

Yes, the formation of a company requires a director and a company secretary who are not the same persons in this case.

Is it required to have an accountant to assist with the closure of a company?

The Companies Act requires a registered public accountant to provide a report especially in cases where the entity ceases to exist without assets or liabilities.

My entity has been performing badly since inception and I would like to close down operations immediately, is this possible?

The closure of a business can be a very complicated task especially when the entity has assets and liabilities outstanding. However, in any case, you will need an accountant to assist in this process.

Can accountants assist with formation of companies in Jamaica?

Yes, accountants as well as attorneys generally have the necessary experience and knowledge as it relates to business formations in Jamaica.

I have recently incorporated an entity, but want to ascertain whether or not there might by subsequent obligations on the part of the entity

Formation of a company is generally the genesis of its obligation. Meaning, the entity will have obligations to file returns under the Companies Act of Jamaica as well as various taxation laws that exist in the country depending on the industry, which it operates.

Land and Property Conveyance Services

What is the current rate of transfer taxes in Jamaica relevant to property sales?

It depends, but transfer taxes levied during the life of the person transferring the property is assessed at 2% currently.

Are other cost involved in the purchase of properties?

Generally yes. There are other charges such as transfer taxes paid on the part of the seller. Stamp duty and registration fees as well as preparing the letter of possession which is to be shared equally between both parties.

What are the fees professionals charge to assist in real estate transactions?

These vary and involve other factors such as the preparation of sales agreement which might be as high as $120,000 plus GCT. In addition up to 4% in some case to assist with the execution.

Can accountants assist with the purchase or sale of properties in Jamaica?

Not  all, but only those who have experience and knowledge of these types of transactions.

Am I required to acquire the services of an attorney to assist with the purchase or sale of properties in Jamaica?

No, but it is generally recommended.

Taxation Service

I am a registered taxpayer for the purposes of GCT, but do not display my GCT certificate, is there anything wrong with this practice?

The GCT Act requires registered taxpayers to display their GCT certificate at a conspicuous place within their entities

I am a professional operating a practice with employees, should pay them gross and ask them to file their taxes?

The employer is required by law to deduct employees’ taxes at source and remit the same within fourteen days after the subsequent month to Tax Administration Jamaica.

I am a professional who is not a registered taxpayer under the GCT Act, but I generally invoice clients and collect GCT, do I have a tax exposure?

It is an offence under the GCT Act.

I am a professional, should I collect GCT?

You are required to charge GCT on any taxable supply if you are a registered taxpayer under the GCT Act.

What are GCT input taxes?

GCT paid on the purchase of a good or service under the GCT Act.

What are GCT output taxes?

General consumption taxes (GCTs) levied./charged on a taxable supply by the supplier.

My business collects GCT, but a huge portion of the expenses involves labour, which does not attract GCT input taxes, should I still pay over the GCT collected?

GCTs collected are the revenues of the government and not private entities, hence, should be remitted where output taxes exceed input taxes.

I am a Jamaican resident working in a country during a particular year of assessment where I have already paid income tax and I think I will not be required to file taxes in Jamaica.

This is not correct. You will still be required to file and declare your income and pay the applicable income taxes if necessary in accordance with double taxation treaty between Jamaica and the country that you have worked during the said year of assessment.

I am a full time employee who receives other benefits from my employer are these subjected to income taxes in Jamaica?

Yes, unless these are being relieved from income taxes under the Act.

I am a director of an entity receiving small amount of benefits, will I be required to file an income tax return?

Yes

My business has always incurred losses since its commencement, is it required to file an annual income tax return?

Yes, entities are required to file a return and make a declaration of its income whether or not it is experiencing losses.

I have just formed or incorporated my business, but have not really commenced operations, do I need to file a return for the first year?

Generally, yes. Unless, you can prove to the taxation authority than for the relevant year of assessment, the entity in question had not conducted any trade or earn an income.

I am a foreign investor, who comes to Jamaica to invest in businesses, do I have possible income tax obligations here?

You might have obligations here in Jamaica depending on whether or not you are a resident or non-resident.

If I am not a Jamaican resident, do I have tax filing obligations within the island?

Non-residents may have taxation obligations which entail filing of an annual return if they earn income which emanated from Jamaica.

Should I report only my income earned in Jamaica if I am a resident of the island?

The law requires residents to report income from all sources whether or not the said income is earned within or outside of the island.

I am an employed individual, do I need to file taxes?

The law requires all residents to make an annual declaration of their incomes in accordance with the Income Tax Act, except in limited situations indicated in the Act. For example, if all your income are taxed act source from employment. If not, you are required to file a return. For example, if you are employed and have others sources of income.

Training and Seminar Services

I am told that accounting and mathematics are the same, is this true?

This is false.

I do not have formal accounting education and experience, is it possible to be trained as an in house accountant?

Yes this is possible.

Do you conduct workshops and what are the types conducted?

We conduct seminars of all kinds involving taxation, financing, financial analysis, auditing and IFRSs.

Do you provide training services for entities that have established accounting and finance departments and in what areas?

Yes. We provide training to entities of all sizes. We provide basic and complex IFRS and taxation training as well as how to set up and manipulate accounting software.