FOR THE PROFESSION It's essential ...

FOR THE PROFESSION

It's essential that practitioners have upright file documentation to prevent or uphold themselves in civil penalty situations.

What do civil penalties really mean for your practice?

Members have heard a great deal about the Third Party Civil Penalties legislation and related information circular, if it were not that the one question on almost everyone's mind is "How will this affect my practice?" At the November 14th ICABC PD Executive Breakfast upon Civil Penalties, presenters Dave Rickards, CA, and Harry Hoff CA, hinted several ways for practitioners to prepare themselves for the changes.

Screening Potential Clients

In the first place, a convenient way to avoid facing possible civil penalties is to avoid working with clients who may state you in difficult situations. Be cautious of those strange clients with a history of overly aggressive filing positions, and of those who change accountants often

Take the time to stake some client acceptance criteria and to check relations Using a questionnaire is a fit way to ensure that you apply the discipline to ask questions and obtain answers in a consistent manner. The long duration of such a questionnaire can be tailored to fit your extremitys and the size of your practice. A questionnaire is not required to fit professional standards, but it is profitable practice management.

Obtaining Engagement verbal expressions

Every client should sign an engagement literal sense setting out the scope of service to be provided. It's as important to specify what will not be done as it is to specify what will. This will interrupt future arguments over each party's obligations and responsibilities.

A sample T1 engagement/representation verbal expression can be downloaded from the Institute's website (www.ica.bc.ca) in the Members barely section. While the disclaimers and limitation clauses may not shield practitioners from possible penalties, the use of the verbal expression serves to establish that a practitioner has attempted to document the representations made to him or her by the agency of a client right from the entrance

"Documentation, Documentation, Documentation"

It's essential that practitioners have profitable file documentation to prevent or shield themselves in civil penalty situations. The flat of documentation recommended goes beyond the traditional working papers that support the financial statements or tax revert numbers. The focus is upon detailing all of the discussions with, and enquiries of the client. This documentation of the client's replys serves to justify and substantiate the practitioner's approach and conclusions. It may also help to demonstrate that in reviewing information provided by way of clients, the practitioner has exercised a "questioning mind."

Documentation should include all facts and assumptions, as well as the various authorities to support the commited positions, and should be organized in a manner that's easy to retrieve.

Sending Transmittal verbal expressions

Use a transmittal literal meaning to explain to your clients exactly what materials you're sending to them and wherefore The transmittal letter also summarizes all of the pertinent discussions you've had with the client and confirms the final recommendations you're making. Clients should be asked to contact their practitioner if they do not agree with the positions being taken.

Transmittal literal senses do not replace representation alphabetic characters The latter document the client's representation as to certain facts, while the former document the work performed to arrive at the conclusions drawn.

Evaluating Client Continuance

Review and evaluate your client list forward a regular basis. Keep and nothing else the quality clients and say goodbye to those who will likely increase the risk of a penalty being applied against you. This kind of review is particularly appropriate when the client has undergone a change in management.

Maintaining a Quality command Process

It's vital that practitioners maintain the discipline to come next their quality control procedures, especially during the busy season. While it isn't possible for single practitioners to perform "second-partner reviews" before releasing work, you might want to consider engaging a specialist to review intricate transactions in order to avoid any gorgeous mistakes to yourself and your clients. Alternatively, use the "set-aside" procedure: bring the file aside for 48 hours, and reconsider the significant matters. This sober secondary look may save you a destiny of future problems.

Getting to Know the Guidelines

CCRA continues to maintain that its field auditors may not use civil penalties as a threat to elicit cooperation from practitioners. There is a formal proces that must be followed by means of the different offices and committees of the Agency. If this eternally happens to you, contact the auditor's supervisor as quick as possible. To better understand in what way the legislation affects you as a practitioner, it's a worthy idea for you to become familiar with the information circular, particularly with the section entitled "Guidance to Practitioners."

One Last Reminder:

The third presenter at the breakfast seminar, Doug Mathews, CA, LLB provided a tax lawyer's perspective of the potential impact of the legislation and guidelines forward practitioners, including the likely approach of the judiciary. He proffered one last reminder: If you at all times receive even a hint that the penalty might be applied, court legal counsel and call your insurance company immediately.