- This topic has 1 reply, 2 voices, and was last updated 6 years ago by
.
- Posts
Hello Mike,
When a client offers a space for rental to the firm/ member of team at a nominal rent, can this represent either “gifts” or “purchase of goods&services from client”?
There are 2 separate questions on this that gave different answers.
One was an offer to a member (Smith & Co [06/08]). This client was in a real estate industry and the space for rental was a property developed by it. The threat described was “gifts”
The other was an offer to a firm (Bill [06/11]). The threat described was “purchase of goods&services”.
I thought it was weird for this offer to be treated as a purchase of goods&services since the client was in the business of manufacturing of industrial machinery here, and the space for rental was one of its warehouses. But is it actually right?“When a client offers a space for rental to the firm/ member of team at a nominal rent, can this represent either “gifts” or “purchase of goods&services from client”?”
Yes
In the first example, the transaction is in the ordinary course of business of the client and, so long as the rental payable is not at a discounted rate, there should be no problem. Think in terms of banks and their auditors. When the audit firm wants to open a bank account, is it really necessary that the account should be with a bank that is not a client of the auditor. So long as the terms of the arrangement are at arm’s length, there should be no problem
But where the client is a manufacturer and has spare space available in their warehouse, that is no longer in the ordinary course of business so any discounted rental charged is, in my view, out of order and a threat to objectivity
OK?
- The topic ‘Business purchase’ is closed to new replies.