“we all get stuck like this.”
by ed mendlowitz
202 questions and answers: managing an accounting practice
question: a longtime business client who owed me a large balance for unpaid fees sent a letter dropping me. he then wrote me a letter requesting me to send “his” papers to his new accountant.
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can i insist on being paid first or do i have to send the papers? i made some notes on a worksheet adjusting his numbers that went on the tax return. do i have to send this also and if so, do i have to write these up in proper journal entry form?
answer: you must send the papers that “belong” to the client, and cannot hold the papers hostage for payment. this includes all adjusting entries you made when you prepared the business tax return.
because you did not make actual journal entries, but did make notes that were used to adjust the numbers, those notes would be considered part of the client’s books that “belong” to the client and need to be sent to the client.
you do not need to do any additional work such as putting them in proper journal entry format as long as the notes could be followed by the new accountant. if there are other notations on the worksheets that do not affect the amounts on the return, you could cover those before you photocopy the worksheets.
this is tough stuff for any accountant. you’ll need to be more diligent in the future of collecting your money. this is not an isolated instance. we all get stuck like this.
this is a controversial and annoying issue and the cpa seems to lose no matter how you argue it, or what approach you want to take. the general consensus i get is to give the papers and chalk it up to a bad experience, and try to not let it happen again.
3 responses to “yes, you have to share work papers”
roger rotolante
you should not do work for clients that do not pay. you are lucky that they are leaving you.
hand over all the client’s paperwork as soon as you can. when a client leaves it does not mean he wont pay you. if they want work done in the future, have them give you a retainer before you do work.
nina tross
i disagree – if the client did not pay me for the business returns or quickbooks work then all i have to return to the client are the original documents they provided me such as bank statements or credit card statements. but my “papers” or any notes i made do not belong to the client unless they are for work they had previously paid for. i also do not have to “clean up” my work to make it more accessible to any new accountant. if a client is leaving i am not doing any work in the transition except to return their original documents then charge them for anything else including copies of prior returns.
frank stitely
i believe you will find that items like depreciation schedules are considered client records even if the accountant prepared them and did not get paid.