January Tip of the Month – Documenting Advice and Decisions

In some engagements CPAs should not only document the advice given, but also obtain the client’s written consent to the decisions made. This can be done with an “informed consent” letter that provides advice and obtains the client’s understanding and consent. Informed consent letters clarify that the CPA advises and informs, and the client decides. With this letter, it is difficult for claimants to make it appear that the CPA made the decisions.

Informed consent letters can be used to better manage risk in areas such as Sub-S or C Corporation selections or conversions, estate tax planning, and aggressive or gray tax strategies. Documentation should be factual, professional, and without personal comments that may be inappropriate and damaging to the integrity of the documentation. Remember that the documentation may eventually be presented to the “ladies and gentlemen of the jury”—a standard that can be used to determine the adequacy or appropriateness of your documentation.

For more information about CPA firm insurance issues, call CAMICO at 1.800.652.1772 or visit www.camico.com.


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