CPAs’ Ethical Responsibilities End at Death?
John H. Eickemeyer and James A. Woehlke
NOVEMBER 2007 - Lawyers
occasionally receive calls from the survivors of deceased CPAs or
their estates’ lawyers, seeking guidance about what to do
with a deceased CPA’s client files. On one occasion, a befuddled
estate attorney was concerned because a decedent’s heirs had
rented a dumpster and were planning to clean out their father’s
office the following weekend. The lawyer knew New York attorneys
have an ethical requirement to plan ahead for their death or disability
(see Planning Ahead: Establish an Advance Exit Plan to Protect
Your Clients’ Interests in the Event of Your Disability, Retirement
or Death, New York State Bar Association) and assumed CPAs
must have similar ethical requirements. The short answer is that
CPAs’ professional ethics rules do not contain a similar requirement.
Nevertheless, it is an excellent practice to plan for the return
or other proper disposition of client records in the event of death
lifetimes, CPAs would be appalled to think of disposing of their
clients’ records carelessly. In addition to being thoughtless
and insensitive about a client’s needs and expectations,
client confidences could be improperly disclosed in violation
of the AICPA’s Code of Professional Conduct, Rule 301, “Confidential
Client Information.” In addition, New York State Board of
Regents Rule 29.1(8) prohibits disclosure of personally identifiable
facts, data, or information about a client. Advice for CPAs on
the best practices for disposal of client records abounds; however,
the estates and heirs of CPAs are not bound by professional rules,
regulations, or best practices.
CPAs are not bound by professional ethics to have a will to protect
their families in the event of death, or a durable power of attorney
in the event of severe disability. It is just proper planning.
It is also
prudent to plan for the proper disposal of client records in the
event of a CPA’s death or disability. The following are
helpful planning techniques CPAs can use in preparation for such
CPA must identify a colleague who will agree to assist her family
in the event of her disability or demise. If a CPA anticipates
that this colleague might wish to buy her practice, she and the
colleague could agree in advance on a formula to use in determining
a price. Alternatively, the arrangement could simply contain terms
under which the colleague would continue the practice until a
purchaser could be located.
CPA should talk with his spouse, companion, executor, and adult
children about the realities of selling a practice. They will
have to act quickly before the practice evaporates. If the CPA
has not identified a colleague to assist in the event of disability
or death, he should show them how to identify such a person and
which safeguards should be in place to protect the practice if
someone is contracted to temporarily continue the practice until
a buyer is identified.
CPA should keep clients informed. The CPA should prepare a communications
program so clients can be confident their affairs will be smoothly
and competently handled. This communications program could include
drafts of letters prepared now for the CPA’s family to put
in final form and mail to clients when required. A CPA should
also make sure that clients are made aware of how they can obtain
their files and records in the event they wish them returned.
a CPA has the responsibility of educating representatives on the
proper disposal of client records. This could most easily be addressed
by using an agreement such as the one mentioned in the first step.
This would save a CPA’s heirs from the need to arrange for
a commercial shredder while assuring clients that their records
will be disposed of properly.
H. Eickemeyer, JD, heads the directors and officers/professional
liability litigation practice group at Vedder Price Kaufman &
Kammholz P.C., New York, N.Y.
James A. Woehlke, Esq., CAE, is the general counsel
for the New York State Society of CPAs/FAE, New York, N.Y.
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