Can You Trust Your Accountant? If You See These Signs, the Answer Is No

According to the U.S. Bureau of Labor Statistics, 1,332,700 people in the US call themselves accountants, and according to the AICPA (American Institute of Certified Public Accountants), there are over 660,000 active CPAs.

With so many accountants out there, how do you know that you’re working with one you can trust?

According to the AICPA, 168 CPAs received disciplinary actions in 2016 and 78 have already been reprimanded in the 1st quarter of 2017.  Over 3,000 tax practitioners are listed as having received sanctions by the IRS in the past 25 years, according the IRS.gov website. We also hear horror stories in the news about individuals and organizations that have been financially ruined because the accountant they trusted mismanaged their funds or used them for personal gain.

These are signs you can look out for when working with your own accountant to help you recognize if there could be an issue.

They openly discuss other clients with you

The first sign that you shouldn’t trust your accountant is if they openly discuss another client’s business. Licensed accounting professionals such as CPAs, enrolled agents, tax attorneys, and certified bookkeepers are bound by a code of professional ethics that requires them to safeguard their clients’ identity and sensitive financial information from others.

While it’s perfectly acceptable for your accountant to relate a situation that you may be experiencing back to another client’s experience, they should never reveal the client’s name or provide details that could compromise the client’s identity.

Pay attention to how your accountant handles documents in their office. Are tax returns sitting in full view of visitors to the office? Are computer screens angled away from the view of passersby, or do they have privacy screens?

These types of details are important indicators to how an accountant does their daily work and how seriously they take their client’s confidentiality. If you can view another client’s bank statements or tax returns because they are left in full view, rest assured that others will have the opportunity to view yours.

They offer to “fudge” numbers to save you money or get a loan

Nobody likes to pay more on their tax return than they should, but a reputable and trustworthy accountant would never offer to fudge numbers on your returns or any other financial documents. If your accountant is willing to lie to the IRS or a financial institution on your behalf, not only are they breaking the law, breaching their code of professional ethics, but they are putting you at risk and should not be trusted. Further, if they are willing to lie on your behalf to others, you can bet they’d be willing to lie to you.

A trustworthy accountant knows how to maximize your deductions lawfully without falsifying your return and can advise you on how to better manage your finances in order to receive funding. The important thing to remember is that you’re ultimately legally responsible for the information that your accountant submits on your behalf.

They don’t answer your questions directly or to your satisfaction

You’ve hired your accountant because you expect them to provide advice and expertise to help you run your business. Your accountant should make every effort to answer your questions and thoroughly explain the reports and documents they are preparing. If your accountant pretends to know everything but can’t give you a straight answer, that could indicate they’re inadequately skilled in that area. A trustworthy accountant lets you know upfront what they do and don’t know and never tries to hide the scope of their knowledge.

Make sure that you thoroughly review any forms, documents, or reports with your accountant to make sure you fully understand what is being reported and what the numbers mean. If your accountant is dismissive or makes comments like “You don’t need to worry about that” without offering any reasoning behind the comment, you should raise an eyebrow. Ask them to explain it before you sign anything.

Your accountant should also return your phone calls and follow up with your questions in a timely manner. If you find yourself repeatedly asking the same questions without resolution, you should consider whether your accountant is qualified or has your best interests at heart.

They offer to sign documents or execute agreements on your behalf

Recently I read an article about a famous television star who is facing bankruptcy because her accountant mismanaged her finances. The mistake that this and other clients make is assigning total control to the accountant and not reviewing reports and statements. If your accountant pressures you into making them a signer on your bank or other accounts, or offers to sign tax returns or other binding contracts on your behalf, you should be wary of trusting them. Another warning sign to look for is if your accountant asks you to sign a blank form or check or doesn’t ask you to review the documents you are signing.

The accountant/client relationship should be built on a high level of trust. If you have the feeling that something isn’t right, follow your instincts and ask lots of questions. Make sure that you review and understand any payments or reports that are prepared and submitted by your accountant. A trustworthy accountant has your best interests at heart and does everything possible to make sure you feel confident in their abilities and the security of your personal and financial data.

Resources You Can Use

There are several resources you can use to check whether your accountant has any complaints or has been reprimanded by the AICPA or the IRS. Every quarter, the AICPA publishes a list of CPAs who have had disciplinary action taken against them. You can also search the IRS database of practitioners who have received disciplinary action over the past 25 years.

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from Fundera Ledger https://www.fundera.com/blog/trust-your-accountant