Do CPAs’ Ethical Responsibilities End at Death?

By John H. Eickemeyer and James A. Woehlke

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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 or disability.

During their 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.

Of course, 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 an event.

First, a 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.

Second, a 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.

Third, a 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.

Finally, 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.


John 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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