What you write and say matter!

The syndic’s column

As a CPA, what you say has value. Your clients rely on the opinions and advice you give them not only in writing, but also verbally. Therefore, you should always act competently. 

Section 19 of the Code of ethics states the following:

“19. A member shall act with due care, in keeping with current professional accounting and assurance standards, with the other standards or rules set out in the CPA Canada Handbook and with current scientific knowledge.” (Author’s emphasis)

Section 19 does not apply only to the preparation of financial statements or accounting documents. CPAs should also act with due care and competence in performing all mandates entrusted to them, including tax return preparation and business valuation engagements. 

In addition, section 19 does not limit the method of communication used by CPAs. Whether you sign financial statements, send an email or a letter, or use any other form of written communication, you should act competently. The ethical obligation of CPAs also applies to verbal opinions.

The Order’s Disciplinary council reminds us of this obligation using the following case.

Real life scenario

A lawyer had been the client of a CPA for about 30 years, and had entrusted him with his bookkeeping, quarterly deduction at source and sales tax calculations, employee T4 slips, bank reconciliation and trust accounting. 

Since the CPA was well aware of his client’s financial position, including his professional and other investment income, he knew that his client’s income far exceeded his personal needs. 

Following a legislative amendment in 2004 allowing the incorporation of lawyers, the client asked the CPA several times whether he should incorporate. Each time, the CPA responded that there was no advantage to doing so, adding that since he would be required to pay taxes either way, he should pay them now rather than later.

The CPA was alleged to have failed to provide his client with information and proper advice on the pros and cons of incorporation as part of a tax planning arrangement. 

According to the Disciplinary council, as soon as the respondent (i.e. the professional) learned in 2004 or 2005 that his client could possibly reduce his tax burden by incorporating, he should have done an analysis (or asked another professional to do one) to determine whether there were any advantages or disadvantages to incorporation. 

According to the expert witness who testified at the hearing, the CPA made a fundamental mistake. The Disciplinary council found the CPA guilty of the offences, and he was struck off the roll for one month.

Takeaway

Regardless of whether you express a written or verbal opinion, be it in your office or at a networking event, you must always act competently. Your client should be able to rely on your professional opinion. 

Therefore, before providing an opinion, you should thoroughly assess the facts, ask relevant questions to gain a better understanding, and carefully review the matter at hand.