Cessation of practice and closing of a firm
Do you need to close your firm because you are retiring, changing careers or planning to resign from the Order?
Here are the 4 steps you need to take to make sure that you are in good standing with the Order and that you formally cease your business activity, as stipulated by the Règlement sur la tenue des dossiers et des cabinets de consultation et sur la cessation d’exercice d’un membre de l’Ordre des comptables professionnels agréés du Québec1.
Cessation following the death of a CPA
If you are part of the estate of a deceased member whose firm you must close, please consult the guide for estates [PDF] and contact the Order by email at email@example.com or by telephone at 514 288.3256 , or toll-free at 1 800 363.4688.
First and foremost, it is important to inform the Order and the administrator of the professional liability insurance plan of your new professional situation.
If you are still a member of the Order and you have already closed your firm, login to your file to update your employment situation, if applicable. Take the opportunity to update your professional activities.
Planning on closing your firm soon? Inform the Order of your intentions by email at firstname.lastname@example.org and perform steps 2 to 4 in the cessation of practice procedure.
If you are no longer a member of the Order and do not have access to your online file, please contact the Order to inform us of your new professional situation.
Inform the administrator of the professional liability insurance plan, ACPAI Insurance, of your new professional situation by updating your contact information and completing a new declaration.
Advise the provider or administrator of your additional professional liability insurance coverage (ACPAI Insurance or another broker, as applicable) that you will cease to practice within a partnership or a joint-stock company, as applicable.
Make sure you also obtain five-year discovery insurance coverage.
Before you start planning to close your firm, you must designate a transferee for your files. If you have not done so, now is the time.
A transferee is a CPA (who holds a public accountancy permit to perform audit and/or review engagements) who takes over the files of another CPA who is closing his or her firm and ceasing to practice the profession. Given the requirements of this role, the transferee is usually a member who offers services to third parties in the same areas as the transferor.
Sometimes, a CPA who remains a member can keep his or her files and take on the role of transferee. He or she must, however, obtain authorization from the Order and provide certain relevant information.
If the transferee chooses to resign or surrender his or her public accountancy permit during the file retention period set out in the Règlement, he or she must designate another transferee and transfer all of his or her files.
The transferee plays a specific role during the cessation, including the following:
- Review the files and perform the urgent acts required to protect the client, as applicable.
- Have and maintain up-to-date competencies in the areas related to the transferred files to be able to answer clients’ questions.
- Keep the files for a minimum of 5 years and adhere to the retention periods required by other bodies, such as governments.
- Have the proper permit, as appropriate (public accountancy for audit and/or review engagements).
- Take all files, whether physical or electronic.
- The transferee is not required to take over the clients of a member whose firm is closed, that is, to continue to work with them in the future. Clients are free to do business with the professional of their choice. The transferee must, however, assume the role for the entire period set out in the Règlement and cannot transfer the files to another CPA who has taken on the clients.
- The transferee is not responsible for the acts performed by the former CPA in these files in the event of legal action.
- If the person responsible for transferring/sorting the files requests compensation, this must be negotiated directly between the parties. The Règlement has no provisions in this regard.
Under the Règlement, the files must be retained for at least 5 years. In some cases, the files must be kept longer, especially if required by other laws or regulations, for example for personal tax files, which must be kept for more than 5 years.
Files must always be destroyed in a confidential manner to protect the confidentiality of the information in the documents.
After taking the necessary steps to designate a transferee and inform the Order and the administrator of the professional liability insurance plan of your new situation, you must make a declaration respecting the cessation of practice to the Order.
- The transferee’s name and contact information
- The date of cessation of practice and a copy of the cessation agreement signed by both parties
- A list of all your active and inactive files for the past 5 years, the type of engagements and the year they were performed, as well as the fiscal year end for each one
- Confirmation of the physical and/or electronic transfer of all your files (active and inactive for the past 5 years) to the transferee, and confirmation of their receipt by the transferee
- A copy of the notice sent to your clients informing them of the situation and providing the transferee’s name and contact information
- Written confirmation of your professional activities following your cessation
It is now time to transfer your files to the transferee.
You must give all your physical and/or electronic files to the designated transferee. However, you may retain certain files and assume the role of transferee if you remain a member of the Order. Read step 2 for further information.
The original documents in the files must be returned to the clients.
The transferee may agree to keep only the electronic version of the files. However, the transfer conditions, including the retention period, remain the same. It may then be necessary to destroy certain files; such files must always be destroyed in a confidential manner.
IMPORTANT: The client file contains copies of the CPA’s working papers (engagement letter, financial statements, income tax returns, etc.) and the client’s original documents (e.g. invoices, cheques, T4s, pay stubs, books of minutes, etc.).
The CPA’s working papers contain all the copies of exchanges with the client (engagement letter, management representation, emails, etc.), the worksheets, the copies of the documents resulting from the CPA’s work signed by the client (financial statements, income tax returns, etc.). This part of the file belongs exclusively to the CPA, who is required to keep it. The CPA’s working papers cannot be given to the client.
- Chartered Professional Accountants Act
- Règlement sur la tenue des dossiers et des cabinets de consultation et sur la cessation d’exercice d’un membre de l’Ordre des comptables professionnels agréés du Québec
- Declaration respecting the cessation of practice [PDF]
- Cessation of Practice Guide for estates [PDF]
Do not hesitate to contact our team to guide you through the steps of closing your firm by emailing us at email@example.com or by calling us at 514 288.3256 , or toll-free at 1 800 363.4688.
- The Règlement does not apply when the partnership or joint-stock company within which you practice or practiced continues to be operated by other CPA partners or shareholders who continue to practice the profession. However, the Order should be notified of any changes to the structure of said partnership or joint-stock company, and rules regarding organization names and logos must always be adhered to.