SMALL/SOLE
practitioner
Securing Documents in a Hostile Environment BY ADAM S. LONG, CPA, AND DIANE OLIVEIRA, SANSIVERI, LONG & CO., LLC
• Appraisals of any owned property • Bank statements, canceled checks and deposit slips • Copies of personal, business, trust and gift tax returns • Credit card statements • Deeds, closing statements and property loan documents • Depreciation schedules • Financial statements • Income, property or liability information • IRA and retirement account statements • Life insurance policies • Line of credit statements • Partnership agreements
A
s accountants, we are increasingly dealing with an array of situations that can create hostile environments for our clients, leading to more challenging engagements. Married couples who are divorcing; partnerships that are restructuring, adding or removing partners; families who are disputing estates; parties who are disagreeing over the buying and selling of property; and so on. In addition to the tax complexities involved, our roles become even more complicated when we have to transform from accountants to referees. As turbulence between two (or more) parties becomes inevitable, we must be prepared to neutralize ourselves from the emotional issues that arise. As accountants, we must remain our clients’ most trusted business advisors during these challenging times. By providing some stability, it may actually help benefit everyone involved. Our clients not only rely on us for tax guidance, they also need our assistance in reviewing, preparing and completing various forms, statements and documents. Although our preference may be to continue working with both parties, it may not be possible. Complications occur when information from both parties leads to a conflict of interest. At that point, it might be best to continue working with one of the clients and recommend that the other seek different representation. It may be necessary to advise a client to preemptively separate assets. For example, in a divorce situation have the client open a checking and/or savings account in his/her own name at a bank separate from any joint accounts. Close any of the joint accounts that are currently open unnecessarily, such as credit cards and lines of credit. Closing these mutual accounts will ensure that a spouse cannot increase any mutual liabilities that both will be responsible for in the future. When working with only one of the parties, practitioners may need records to which they do not have access. The following is a list of documents, or copies thereof, that should be secured:
To solve the problem of accessing documents, we recommend that our clients sign a letter authorizing us to speak on their behalf. Speaking directly to brokers, lawyers and other accountants could allow for easier access to information. Having a client also sign a power of attorney allows us to speak directly to the Internal Revenue Service, the state, banks, credit card companies, investment brokers and anyone else necessary to access these records. This will help us request transcripts of tax returns, investigate open issues and take action if necessary. Timing is critical as it may take several weeks to receive all of the requested information. Once you have taken the steps toward securing records and having clients open accounts separate from the other party, your next concern might be that the other party will attempt to damage or destroy records. On one end of the spectrum, have the client keep records somewhere where the other party does not have access to, such as a safe deposit box in his/her name. Or, it may call for the drastic step of obtaining a legal injunction to safeguard records. For any information that cannot be easily accessed from these sources, it may be beneficial to broker a meeting with all parties, which may also help to mediate and resolve the situation. Unfortunately, hostile environments take a toll on clients and practitioners alike. Since hostility can make it more difficult to obtain full access to financial documents, we should make every attempt to assist and protect our clients by finding alternative methods of accessing this information. Having more comprehensive financial records will be helpful toward providing exceptional services to clients. Adam S. Long, CPA, is a partner and Diane Oliveira is a tax manager at Sansiveri, Long & Co., LLC. Long is a member of the New Jersey Society of CPAs. Contact the authors at 973-472-1817.
NEW JERSEY CPA • JANUARY • FEBRUARY 2012
26