More good stuff for auditors – 4-20
Big 4 firms moving into legal work, how state based regulation is slowing the profession’s responsiveness to change, and tax situations when you should refer a client to an attorney.
4/13 – Journal of Accountancy – 10 situations when a CPA should call “timeout” – When a client’s situation starts getting dicey, a CPA needs to call a timeout so the client can retain legal counsel. A list of 10 situations in the article doesn’t just apply to CPAs preparing individual tax returns. Some of them apply to auditors.
To set up to provide framework for the discussion, consider the first situation, in which an individual has not filed a Report of Foreign Bank and Financial Accounts, also known as an FBAR. If the overseas account exists to avoid taxes, the situation can “go criminal” very easily. The client needs to talking to an attorney to provide attorney-client privilege as well as to minimize consequences.
Situation three applies to auditors. The attorney writing the article says CPAs really should not be talking to the client when employment taxes have not been paid. When big dollars are involved, the IRS will pursue criminal charges, according to the article. A client in this situation needs to have legal representation even before talking to an IRS agent. The standard interview questionnaire asks for responses which will indicate criminal intent. Bad answers to those questions makes a criminal prosecution far easier.
You can roll the last five situations together to cover any situation that feels like it’s heading for litigation or really serious arguments.
Bottom line? If things get real dicey with the client, stop your conversations and refer them to legal counsel.
3/8 – Accounting Today – Time to Move Beyond State-Based Regulation – Brainstretcher for you on how the state based regulation of entry requirements, varying continuing education requirements, and slow response time is a hindrance to serving the market. From the CEO of the Indiana CPA Society.
Accountants moving into legal work
3/21 – The Economist – Attack of the bean-counters / Lawyers beware: the accountants are coming after your business – Big 4 firms are trying to expand their legal work. Focus is routine, transactional work in countries outside the U.S. that allow accountants to do legal work or own legal firms. England, Australia, and Mexico are wide open. Large part of Europe is open to collaboration and cost sharing with legal firms.
3/25 – Going Concern – Big 4 Gunning for Big Law – Some highlights and comments on The Economist article.
4/20 – Economic Times – Ernst and Young hires 150 lawyers for new vertical e-Discovery – The firm has hired 150 attorneys in India to help review electronic documents during the discovery phase of lawsuits. Indian law does not allow consultants to offer both legal and audit work. Firm’s position is that doing discovery work for other firms does not constitute legal work.