“Merger possible. Jail certain.” John G. Johnson telegraphed this famous quote to his robber-baron clients when his client asked for a merger that would have violated the Sherman Anti-Trust Act.
As CPAs, we need to possess integrity, and we also need to consider the integrity of our clients in both the client acceptance and client retention processes. Integrity means intending to do the right thing in all situations.
“I am looking for a new accountant because my accountant will not take a deduction for something I want to deduct. My sister’s hairdresser’s brother said that I should get this tax break.” As silly as that reasoning sounds, prospective clients bring up these types of issues all of the time. Ethically, what is appropriate for one client may not be the right advice for another client. One question that CPAs should always consider is why a prospective client is looking for a new accountant. A prospective client may not have a strong relationship with its current accountant or may be looking for an accountant to take an aggressive and possibly incorrect financial statement or tax position. Warning signs include when a prospective client:
- wants to defer income to a future period for a more favorable future year
- listens to his/her friends regarding tax treatment of transactions
- retires and still wants to deduct “business expenses” (e.g. personal car)
Taking on these types of clients is not worth it if your personal ethics are challenged. Client acceptance and retention should always be a priority in our work as ethical CPAs.
About the Authors:
George is an instructor for the AuditSense team, specializing in providing ethics and core-level staff training. Since 1976, George has worked in many areas of accounting, focusing on Auditing and Accounting Education. In 1976, he participated in the Internal Auditor Intern Program at the Clark Equipment Company. While working for the public accounting firm of Deloitte, Haskins, and Sells, George served as a Senior Assistant Auditor and a Comprehensive Business Services Consultant.
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Elizabeth Pittelkow is an Accounting Manager at ArrowStream, and she works in the areas of accounting, taxes, and financial reporting. Elizabeth previously worked in Finance at Motorola and in Assurance at PricewaterhouseCoopers. While at PricewaterhouseCoopers, she audited large public-accelerated GAAP filers, IFRS filers, private equity-owned companies, and non-profit businesses.
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