Avoid Assuming Responsibility in the Art of Accounting
Even though Accountants are good people who look forward to helping and serving their clients, sometimes they present the appearance of assuming responsibility that they don’t which should be avoided at all costs. The following are some of the examples:
While facilitating work on a client’s tax return, accountants sometimes ask a client to send certain documents directly to them. Among them include brokerage and bank statements. Since these documents are sent despite the engagement terms with the client, clients make the assumption that what is received is indeed viewed consequently placing a huge burden on them.
In case there is an unusual trading activity, huge transfer or major drop in value or change in asset allocation or type of securities purchased, those clients who know that accountants receive these statements may expect that these be reviewed and have the changes brought to their attention besides following up on what happened. These may create liability on the accountants. This can also happen when accountants access online statements.
As such, the best thing for accountants to do is not to accept statements sent to them or even have access to these account. Whenever you need something, ask your client to offer what you require.
Trusts and Wills
While it is important to review trusts and wills when making preparations of fiduciary tax returns, unless one is engaged in reviewing the terms of the will or do estate planning, accountants need not request these documents for filing purposes. If you really don’t need them, there should be no reason of having them. All the documents you have presents the assumption that you are indeed reviewing them and by not saying anything, you appear as assenting to them.
As a basis of the assets inherited by clients, you will require the estate tax return Form 706. However, there are some actions indicated on Form 706 like a disclaimer to a credit shelter trust or foreign accounts listing unknown to you. It is difficult to limit your review on only a single item that you may need to know in order to get a tax return done. As such, if you request the entire Form 706, then make the client aware of the review that you intend to do and then charge for this. If he doesn’t want to pay for your review, then avoid accepting the copy of 706. When securities are sold, tell the client to send you the basis and leave it at that.