So you are probably wondering how a blog on modern slavery has ended up on an accountancy training provider's website! Let's go back a few steps, towards the end of March 2015 when a new piece of legislation was published: the Modern Slavery Act 2015. Now this may not sound like a piece of legislation which would impact accountants, but as financial advisors to our clients it is certainly something that we should be aware of.
Why is the Modern Slavery Act relevant for accountants?
Section 54 of the legislation requires 'commercial organisations' (ie. ones which supply goods or services within the UK and have a total turnover exceeding £36m per annum) to produce a statement not only on slavery but also on human trafficking. Care needs to be taken when dealing with a group as the determination of total turnover not only includes turnover of that individual business but also the turnover of any of its subsidiaries.
What does the statement need to include?
It needs to set out the steps that the commercial organisation has taken in order to ensure modern slavery and human trafficking is not taking place in any part of their business and any of its supply chains. If the organisation doesn't take any such steps then a statement to this effect must be made. The legislation not only covers the business but also its supply chains and commercial organisations need to understand its requirements and review for potential risk areas as soon as possible.
The legislation gives examples of what 'may' be included in the statement:
- the organisation's structure, its business and its supply chains;
- its policies in relation to slavery and human trafficking;
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
- the training about slavery and human trafficking available to its staff.
Is this yet another change to disclosures within financial statements?
Thankfully no - the legislation is clear that organisations do not need to include this within the financial statements. Instead they must publish it on their website and include a link to the statement on the website's homepage. In the rare scenario where a business of this size does not have a website, then it must instead make a copy of the statement available to anyone who requests it within 30 days.
What's the deadline for producing the statement?
The statement should be ideally issued as soon as possible after the financial year end, and at the latest within six months of this date. It must be signed by a director on behalf of the board of directors if it is a company, or a senior member of the governing body, ie. a partner of a partnership.
Where organisations do not comply with the new rules, an 'unlimited' fine could be enforced.
So if you haven't done so already, you need to inform your larger clients of their duty to produce a statement on modern slavery and human trafficking. The legislation became effective for financial years ending on or after 31 March 2016 so if you have client with a March year end, then this statement needs to be up on their website by the end of September!