I recently posed the following question to small-firm CPAs: If you become disabled or die tomorrow, what would happen to your accounting practice? If you haven’t planned for this possibility, the answer probably isn’t going to be pretty. A few days later, the New York State Society of Certified Public Accountants published an article in The Trusted Professional imploring small-firm CPAs to take action and implement a practice continuation agreement (PCA) to protect their clients, their practices and their families. The reason this issue is getting increased attention is because the profession is aging and far too few small-firm CPAs have a plan in place. Despite the fact that PCAs have been the subject of numerous publications and articles for more than 20 years, PCAs continue to be “a well-kept secret,” with as few as 6 percent of solo practitioners having a PCA in place.
Peter Larkin provides legal counsel and representation to accountants and accounting firms in connection with all aspects of their businesses. He is co-chair of Wilson Elser’s national Accountants practice. In addition to professional malpractice defense and commercial disputes, Peter’s practice encompasses risk management, ethics proceedings, and transactional matters involving accounting firms. He also represents businesses and banking institutions in a wide array of commercial disputes.
In a recent Wilson Elser Client Alert, “A Trap for the Unwary Advertiser ,” Tom Manisero (Partner-White Plains) discusses a practice that can trip up accountants looking to use their current client list as a starting point for their advertising. While your clients undoubtedly can be fertile ground for expanding your practice, you have to be careful not to violate the Treasury Regulations implemented in connection with IRC § 7216, which protects confidential information obtained from 1040 clients.
Earlier this year, the New York Times reported that the SEC was “bringin’ sexy back” to accounting investigations. That’s probably not good news for those auditing public companies.
In 2002, “accounting scandals” became a household phrase as the accounting frauds at Enron, WorldCom and others came to light. Although accounting fraud was nothing new, the public and political reactions to these scandals led to the passage of the Sarbanes-Oxley Act and the formation of the Public Company Accounting Oversight Board (PCAOB), as well as a significant increase in the number of SEC investigations.