Providing Client Records: What You Need To Know
In light of a recent decision by a federal judge mandating that President Trump’s accounting firm hand over his records (and President Trump’s subsequent appeal), you may be wondering what privacy an accounting firm can offer--who, if anyone, can gain access to your records? What exactly does this process look like?
When you’re not the president of the United States, things operate a little differently. But how, exactly?
Obligations of CPA firms
A CPA firm has access to a variety of client records and papers, and usually they sit undisturbed. Occasionally, someone asks for them--the original owner, lawyers, investigators, or lenders. The CPA firm them ensures that the request is made in writing, and responds in accordance with professional standards, state board of accountancy regulations, both state and federal laws, and rules of other regulatory bodies.
The CPA firm crafts their response based on the variety of statutes, standards, and other regulations, and are often expected to do so quickly because of the nature of the requests. In some cases, CPA firms have a person in charge of records acquisition that can determine and enact appropriate courses of action. This ensures all rules are followed, and records are optimally protected.
If a current or former client (or party representing them) requests records, a CPA firm will typically provide records, though complications can occur in business situations in which multiple parties are involved, there is joint ownership, etc. In this case, the CPA must assess individual situations using the requestors information and what they know about the client business, which can help protect against record misuse. Often, CPAs will consult with legal representation to ensure that business partners who have never been involved with finances before are authorized to do so.
Third party requests
When someone like a lender, shareholder, or civil or criminal investigator requests records, CPA firms proceed with caution. If there is even a little bit of doubt about the legality of turning over records, a firm consults their attorney. Subpoenas are sometimes involved in these requests, in which case advice from lawyers is absolutely necessary to protect the firm.
When requests come with accompanying legal documentation, a CPA firm should contact their legal team. The key in many of these situations is in keeping communication clear and frequent between all parties involved--CPA firm, client, and legal counsel. If it is determined that a firm should surrender documents, they will never give over originals, instead making copies of relevant materials.
There are a great variety of legal and professional standards that govern these types of requests, so rest assured that your CPA firm is doing everything it can to protect your information. If you’re curious about your particular nonprofit accounting firm’s process for these type of requests, just ask! The industry values transparency, and you have a right to know!